Scaling to 36 Airbnbs Using This ROI-First Design Strategy

0:00Okay, so I'd love to talk about budget cuz this budget feeds into the amenity strategy. When we are when we're running through a design, you know, like I mentioned, the strategy is the front lifting part, but we also need to establish budget before we get into design. That's a big mistake that people get into because they start falling in love with this design and they're like, "Oh, but I love that so fun." They start justifying things and it adds up. We're not that type of firm. We understand that budget is directly tied to your investment analysis, which is where you're going to get the return.

0:33But, there are cases where maybe a client comes in at slightly too low of a budget and this market needs a bit more. So, we're going to give all that education, but at the end of the day, you know, we're going to work with the budget. So, where we kind of reverse engineer the budget and say, "Here's where we're at with budget. We're going to drop in the highest priorities and go down this list and leave the remaining budget for the lowest priorities." So, amenities are always number one. That's the first thing that we budget for. So, we run the data analysis of the competitors in the area and we're taking notes on all the amenities.

1:06Then we're going to run that list, so we're going to call it the non-negotiable amenity list and that's non-negotiable for your area because it's proven that the top properties have these amenities. That's how we can prove there's it's very hard to say an a a hot tub will yield this exact dollar amount return because there's so many variables. Maybe you get a bad review. Maybe you know, there's other factors in the home. You'd have to have a vacuum where only one thing is different to know that that one tweak, you know, made X amount dollar change.

1:38But, we still are strategic here. So, we're going to Again, the evidence is in the top properties. If they they have those amenities, we're going to check it off as like, "This it's working in this market." But, we're going to then cross-reference it with our target audience and make sure that it makes sense for their travel goals and their travel preferences. Now, an example of this is we were designing in in Florida. It was in like the Miami Fort Lauderdale area, and we saw that game rooms were a big amenity. So, we had that on our list of non-negotiables, but we were designing for a bachelorette group, and we had this great bonus space.

2:14So, initially we were like, "Okay, we could put the game room there." And we started thinking through what would the game room look like, and we're like, "Pool table, ping pong, arcade games." And then we were like, "You know what? Like like girls are not going to use this. Like they're not going to play pool together. They're not going to like sit at the arcade game. Like what are we doing here?" So, we said that was an exception where we said it was proven by the market, but we're going to scrap this and do what's best for the audience. So, then we came up with other creative ways to use this space, and we landed on what we called like the the speak easy lounge area that we had a stage and a big sectional.

2:50It's very moody, and disco balls, and the lighting was really cool, and the stage had a karaoke setup, and a great like backdrop, a good like photo op moment. All these things that are important to the girl groups. Like they may have gone out like of the property to have that experience, but instead we brought that experience in. So, that's a unique amenity. So, again, we're going to cross reference it with the target audience, but we also want to bring in unique amenities that are going to set your property apart because if you have those differences, then you're not competing on price.

3:20You can justify like more, and people will see that when they're scrolling, they're like, "Okay, this is a higher price, but they have a pickleball court, and I can imagine my, you know, family enjoying this pickleball experience." So, to justify unique amenities, there's two like I guess check boxes that we need cuz it's cuz they're usually big expenses. So, we really got to be careful here. We're going to check that it makes sense for the target audience. Then we're also, if it's not very prevalent in your market, we're going to look to a similar but more competitive market.

3:53So, the Smoky Mountains, that's a huge cabin region. Maybe if you're in a small cabin region, that's more of a local cabin region, you know, we can look to the Smokies because the reason for travel, the experience that people want to have is very similar, but they're ahead of the time. So, we can pull notes from a more competitive market and bring them into your smaller market. And that's how we come up with the unique amenity list, but we're also going to pump budget in. We're not just going to say, "Let's insert a hot tub and we're good to go." We actually have to think about the marketing strategy and how we're positioning the hot tub to show up in photos.

4:29Cuz we know that's going to sell. So, we're like, "There's going to be a hot tub. Let's again just do a cabin and it's it has a great view." Let's say it's a cabin that, you know, has a drop-off, but you can see the valley. We're going to like look at where can we put the hot tub? And like likely we're going to put it on a back deck if there's a deck and it can support it and all that good stuff. And then we're going to think through, how are we styling this hot tub? And what will the photo look like? So, we're going to then design and style and we're going to put budget there. So, we're thinking like with the end in mind. My team jokes a lot.

4:59They're like, "Is it all about the pictures?" And I'm like, "Yes, it's all about the pictures." Like it is kind of a running joke, but at the same time like the pictures, that's your number one marketing tool. Like that is what you have to sell — Yes. — So, now back to the budget, that's where we're putting a lot of the budget and the conversation around budget is into amenities. Then we're going to go into your larger gathering spaces and your primary bedroom, kind of what what is the host or what who's booking?

5:31Like what are they going to be experiencing? Cuz we want them to, you know, leave a good review and to feel good about it. Then the kind of third tier is like your fifth bedroom, your bathrooms. It's actually a little bit opposite from residential real estate where your kitchens and your bathrooms don't sell short-term rentals, they sell residential homes because you're going to be living there. They also sell long-term rentals cuz if you're going to be living, then you want to have a great kitchen and great bathroom spaces. But if you're just going for a vacation, you actually care more about the amenity spaces and the gathering spaces.

6:06So we're typically going to stay away from like major kitchen renovations. If we can just do a facelift and paint cabinets and put in that usually will give you a better return and then take the 20 grand that you would spend on a kitchen and put it into a pickleball court or a putting green or, you know, a pool or something else. So, that's where we That's how we think about amenities. It's how we think about budgets. Yeah. — Yeah, that's amazing. And And my wife says the exact same thing about the pictures.

6:38It's so funny you said that cuz you know, she'll she'll look for for things that, you know, just she knows it's just going to photograph better, you know, and and it's like might not be as, you know, nice of a piece or you know, just like it's just something unique, you know, and and she like says it all the time. Like it's just got to the photos have to be awesome. And it's so true cuz and you know, you look at the competition and most most listings out there and it's just terrible.

7:13Like so many iPhone pictures and just no intentionality that went into pictures. So, I think that's such great advice. And and you know, you mentioned the budget is kind of like the starting point. Is there a rule of thumb that you give people, you know, when they're evaluating properties around budget? Cuz that's that's a question I get a lot, too. It's like, how do I How do I come up with what I should expect, you know, to to be spending on this? — there's our quick easy calculation and I can get into that.

7:44And then we have our more in-depth calculation. So, we The way we run our process, we have at the very beginning like a free consultation if you just want to learn about Summer Led. The consultation is all around the investment analysis. We're actually not going to get into what we think about the design and what choices we would make because we haven't run like the strategy yet. So, we're just going to show you does design make sense in your market for your specific property. So, we're going to pull in comps and compare what it would look like to be in the 50th percentile versus the 75th percentile, but we're also going to be fair and say if you were just an average property, you're spending less.

8:21You're going to have, you know, less in furnishings, less in amenities. Where if you're going for that top property, the top 75th percentile or above, like you're spending more. Really, I should say you're investing more. You're not spending more. So, that quick rule of thumb — And sorry to interrupt there, but does does design always So, sometimes design doesn't make sense is what you're saying. — Yeah, that's before like for certain properties. It's like more like there's not a vacation reason to for coming.

8:52Maybe it's like, you know, where do you wherever you live, like your suburban town, and if there's not a lot of short-term rentals and it doesn't make sense to design an experience, then maybe not. Maybe if you're just hosting like — Yeah. — just regular travel, you know. Yeah. — Non-leisure travel. — So, we'll we'll look at that and show you the ROI on design, but that that budget rule of thumb, to get to a quick budget, we're going to say 5 grand per bedroom, 8 grand per common space, 10 grand per amenity space. And then there's certain amenities if we know like, "Okay, you're likely going to put in a hot tub and a pickleball court." We'll check those boxes on our analysis to add up to the budget.

9:29And that's very high-level, and it's a conservative budget. We don't actually spend 5 grand on a bedroom. But what that does, it it it trickles into the other things cuz we're just saying you have, you know, a four-bedroom house, you have three common spaces, there's two amenity spaces, and it's quick math. The five grand per bedroom actually trickles out into like the bathrooms and the hallways and the other things, the front entries. — Right. — So, one more time, like five grand per bedroom, eight grand per living space, 10 grand per amenity space. And then, if you know you're going to do a hot tub, it's about 12 grand for a hot tub, about 20 grand for a pickleball court.

10:05There's other amenities on that list that we kind of already know it's going to likely be included. So, then we when you're working with us, we run the strategy, and we're going to present the more detailed budget. Like, this primary bedroom's going to be X, this is going to be this. This amenity will be here, and we're going to break down the budget by space. We already know the client's budget, and a lot of times we're aligned on budget cuz we've had that initial conversation. If there is a reason where we're like, we really think this home deserves this amenity, we'll bring that up, and we'll bring back the investment analysis to look at the return.

10:40But, we're not have there's no motivation for us just to have our clients spend money just to spend money. Like, our motivation is for them to be like, I had such a great ROI, I'm going to refer everybody to you and like come back for more. Like, that's like when our clients are winning on the ROI, like we're winning, too. So, we're trying as much as we can to knock budget and prioritize like the actual, you know, revenue-generating spaces. — Got it. That makes sense. And that kind of like brings up the question then of when do you start working with a client?

11:15Is it like when they're considering the property, or it's after the purchase, or what what is that what what I guess what is the whole overarching process look like, and what's the time frame for that? — we want you to go live as fast as possible. And like, we do work very fast. But, my ideal, and this is what I do on my own properties, I start engaging our our team when I'm about 2 weeks away from closing, when we're just waiting on documents, like likely going to close. We've already had the inspection report, the appraisal's already happened, then I go ahead and start on design.

11:46So, our strategy takes about 1 week, and then the design period, so you're going to know exactly when we're designing, and it's a 2-week period. So, we always hand off your design on Friday, and we've done that because traditional interior design, you engage with them, and then it's just forever ongoing. Like, you know, like there's not like an end date. Like, it could just keep going and going and going. Like, we give them a hard, we are handing it to you on this date. So, that's 2 weeks for design, 1 week for strategy, and then we have a project management add-on, where if you want us to do all the ordering, hiring of contractors, we go out there in person, we style it, and we go through the photo shoot, we actually schedule the photographer, send them the shot list, and work with them, then that's another typically 6 weeks

12:35For project management. So, design's done, and then there's some revision baked into there, revision time, and then we order. Where when we're our design team is sourcing furniture, they're only selecting items that are in stock and ready to ship, and our rule is it has to arrive within 3 weeks. Like, maybe there's a large sectional that comes in 3 weeks, but everything has to arrive before 3 weeks. It does not make sense in a short-term rental to get like a custom piece that like you're picking the fabric, and all this, and then it takes like 2 months to get there. You're losing your revenue cuz you're not booked.

13:08Like, that's not worth it. So, — Yeah. — again, strategy 1 week, design 2 weeks, project management 6 weeks. So, in total, it's around 9 weeks for a turnaround time, but that's if there's no major renovations. If it's like we're doing a full garage conversion, all this, that adds time. And you'll know that up front from our team that, you know, does the consultations. — Yeah. So, some of that overlaps with with time frame that that you still haven't closed yet.

13:41So, you're talking about basically about 2 months from closing to having the the pictures done and the listing live. — Our goal is like by month three of closing, you're live. So, for some cases, you're not even paying a mortgage by then. There's that like grace period. That's great for our clients. Then they're not fronting a mortgage. But yeah, like within two to three months, if you get started and schedule a consultation while you're under contract. And I think you should because when you're under contract, that's when you're doing, you know, your due diligence and you should be reaching out to contractors and designers and getting everything prepped and ready to go.

14:20So, as soon as you close, like you're pressing order on this furniture and you're getting contractors in the house and going as quickly as possible. — Got it. Okay. Cool. And and are you I just got an email actually, so it's kind of timely to ask this question, but there's another somebody who works on on short-term rental design that I I know and I'm on his newsletter and he just sent out this newsletter how amenities are always changing and he was specifically talking about like the mini golf course.

14:52He's like, you know, 3 years ago, just a few holes was all you needed. Now you need like contours. And in the future, you know, next 3 years, you might need like a full-on like mini golf course with all the different I don't know, statues or whatever it is that they put on mini golf courses. So, and he said this happens with all the amenities that like in these super ultra-competitive markets, like everyone's always trying to one-up each other. So, it's like an arms race of amenities. And so, you know, if you put in the thing 3 years ago, it's probably outdated at this point.

15:26It's kind of like it's good to recognize that, but at the same time it's a little bit demotivating, you know, cuz it's like, well, if you start to think about that, then if I spend all this money on amenities, like is there concern that 3 years from now it's all worthless and I have to start over again, you know, or is there a big refresh that I need to do, or you know, how do you think about that when it comes to amenities? Are there certain amenities that are longer lasting, or what's your opinion when it comes to this? — So, I will say the the competition is very real, and that's why it's important to not just put up what's good today, but anticipate some market change.

16:07So, go a bit above and beyond to set yourself up for year one, year two, year three, but I think it's just like getting in the mindset of you are a business owner, and no business is just going to put up a website and have their product, and then like let it just sit, and it's going to like run it, you know, run for like as long as, you know, you want it to run, and you don't have to make any changes to it. Like you're always upping your marketing strategy as a business owner, you're refreshing your website, you're refreshing your content, you're you have product improvement people, you're changing your product, like you're listening to your customers, like it's always changing.

16:45So, like your short-term rental will likely change, too. So, you should anticipate that. Like I do feel like it's demoralizing when you're like not anticipating it, and you're like, ah, I've got to do this. So, you know, have a good reserve account, and understand you've got to have some like reinvestment side of your reserves that you're going to go in and reinvest. And also understand that like these assets that you're putting into the home, they also are depreciating. They're over time, even the wear and tear is going to cause you to have to like refresh and put things in there.

17:19So, while we're making smart choices to set you up, you know, not just have a change within 6 months, we want to set you up for the future and we're also choosing when it comes to the actual items for high traffic areas, we are choosing nicer items that, you know, are for sofas in a living room that are like performance fabric. We don't have to go name brand, but we're going to go to our sources that we can select a fabric that, you know, you can spill things on and it won't leave a stain. Whereas other areas, we can get get away with cheaper product cuz it's a lower touch area.

17:52So, we're always thinking about that, but to answer your question, like yes, you will have to likely refresh, especially if you're in a Nashville, a Scottsdale, a Fort Lauderdale, maybe some of these smaller markets, it won't be as frequent, but the big competitive markets, like it is an arms race and the client, like our guests, are leveling us up and competitors are leveling us up, which is not new news in like the business world. Like that's every business is same problem.

18:26— Yeah. Yeah, so it's good to go in just like with that understanding and plan for it, is what you're saying. Yeah, that makes sense. Okay, cool. Well, there's two more questions that I have. One of them was are there any amenities that you feel like are just no-brainer, like you you just for everyone you should for sure just put these amenities in, because they're just lower cost, high ROI, or whatever, they just appeal to everybody. — Well, we design nationwide and markets are like, you know, the US is so diverse.

19:02We have so many different markets, so it's hard to say every single market like 100% across the board, but we do know the number one amenity for ROI is a hot tub. It just is. You have the data. — Oh, it is? — Airbnb puts it out too. And from our findings when we we've designed over 1,500 properties and we've been in like every market, the hot tub it it does rule over any other amenity, but there are cases where it doesn't make sense. But typically hot tubs are getting you an ROI. They are great for seasonality because when it gets into cooler months, then you're typically like able to still get bookings because you have the hot tub and it's just a gathering space.

19:43I mean there's like game rooms a classic, but with all these like amenities, it's not about just checking off the box and being like I put in the hot tub, I put in the game room. It's about marketing around it. So a game room, we don't like just to say, "Yep, we're going to put the pool table and the arcade games." Like what theme is the game room? Like what experience are we providing here? So if it's a cabin, like we'll go a total like cabin game room, like you know, hunting games and cool like murals on the wall.

20:16If it's a bachelorette group, that'll look way different. Or if it's a desert game room, I don't know. It's just all about like again the pictures at the end. So how are you marketing and presenting this amenity out there? But I'll just say those two. Hot tubs and game rooms are the ones that we see, you know, the most common.