A design that says episode 11 and The critical component to a successful short term rental.

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Inspector & Cleaner Book Mentioned in Podcast

Here is an example image of one of our cleaning book pages. The inspector can flip through the pages and make sure that critical areas are placed, cleaned, or refilled appropriately. Fewer words, more images, more efficient.

[00:00:00.090] – Tony

Even in companies that they sound like they’re companies, they sound legit. And you think all this stuff is probably taken care of. Once you start asking for it, you’re going to be shocked at how many don’t actually have it.

[00:00:15.010] – Intro

Welcome to the Michigan Short Term Rentals Podcast, the show about buying, optimizing, and managing short term rentals in the state of Michigan. Gift insights and recommendations from vacation rental operators to help take your property to the next level. Are you ready to profit from your short term rental? Let’s get started.

[00:00:36.570] – Tony

Welcome to the Michigan Short Term Rentals Podcast. My name is Tony Staccato. I’m here with my co host, Jordan Painter. What’s up, Jordan?

[00:00:44.440] – Jordan

What’s up?

[00:00:46.110] – Tony

Not much, not much. Just a lot of irons in the fire.

[00:00:49.500] – Jordan

All three of us, you and Gary and I had the opportunity to head over to South Haven and take a look at the project this week. So that was exciting.

[00:00:56.070] – Tony

Absolutely. That’s a big project as well. So we’ll be excited to have that completed, I think, over the last couple of weeks, man, the big thing that we’ve been dealing with is getting the financing on these couple of properties. It seems like it’s taking longer than usual. Yeah.

[00:01:12.060] – Jordan

Moving at a snail space. So it’s an interesting dynamic of trying to come up with cash flow to keep the project going while we’re waiting for the financing to come through for some of the instruction and making decisions on what order to take care of the projects and how to go about getting it done in a timely manner for sure has been an adventure.

[00:01:31.350] – Tony

Yeah. So we got a five unit in South Haven that we paid cash for and then we’re refinancing out. But we’re already working on the rehab of it, so we’re cash flowing that and then we have another five unit in Stevensville. And man, I mean, we’ve done some loans over the last couple of years and it just seems like a lot of the terms are kind of changing a little bit. I don’t know if it’s just banks are getting a little bit. The risk appetite is not what it was, call it a year or two ago, but we got some good banking partners and they’ve been willing to work with us and kind of meet us in the middle. But definitely seems like risk appetite from the banks are changing a bit, don’t you think?

[00:02:13.100] – Jordan

It definitely has, and I think our projects are fairly unique where we’re trying some things that don’t have a huge track record in the bank size with trying to take these multifamily units that are long term rentals and flip them over to short term so that we can accommodate larger groups. So not sure if the underwriters at the banks are sharing our vision of success yet, but we’re going to prove to them the concept. Hopefully the next time we find an idea like this, it’ll be a lot easier once we got some track record and some numbers on the books to prove to them that it’s working.

[00:02:45.270] – Tony

Yeah. And I think maybe just if we could give a valuable tip to the listeners, I think it would be just get the term sheet up front. I feel like we’ve talked with the bankers and text thread emails on the phone and we kind of got an idea in our mind on what the terms are going to be. And then when we get the official term sheet, like a month later, we get hit with some surprises. Like someone’s surprise, not a huge deal, right. But hey, we want you to keep six months of mortgage and interest in the bank. Not a big deal, but when you’re doing a couple of big projects, change like that can really catch you off guard. So making sure you have the term sheet and you guys kind of have the vision for what the terms are and just know what that is to avoid any surprises.

[00:03:34.630] – Jordan

Yeah, that’s big. And the other thing that’s been interesting for me coming from the residential world is that there is a little bit more flexibility in the negotiation taking place. So we have had the opportunity to go back and forth and make suggestions and changes on the commercial loan structuring a lot more than you have on the residential side. So that has been good. So that’s something that if you’re doing commercial loans, don’t hesitate to push back and ask for different terms or come up with different scenarios that might work. And the banks that we’ve been working with two different ones on these deals have both been fairly accommodating to some of the requests we’ve made.

[00:04:07.740] – Tony

Well, what do you say we get into today’s topic, the critical component to being successful with short term rentals.

[00:04:14.490] – Jordan

Oh, yeah. So any of the listeners out there who have ever considered doing short term rentals or jumped in the game kind of understand probably what that critical component is. So what do you think, Tony?

[00:04:25.690] – Tony

Cleaners. Cleaners are going to be the most important part of your business. And it’s not something that you hear a lot of people talking about, but it is the hardest part. Whether it’s a property manager or yourself, managing finding teams and finding people that can clean for your property is going to be the most challenging part of the business. And I can tell you our wives actually interviewed, I don’t know, ten to 15 cleaners when we got started, and they whittled it down to three people that they thought were just going to be really great cleaners for us. And two out of the three no call, no show, we had them all scheduled to do the first clean on our property and two out of the three no call, no showed. So we had one cleaner, same day turnover, and they had to improvise and ended up bringing in their fiance to help clean. So they got it done, which was great. But that just goes to show, like, you got to have backup plans because you just never know. And I guess I would kick that off with one person that I really picked their brain when we got started.

[00:05:38.830] – Tony

The thing that they told me was if you can actually find somebody that they have a spouse that complements them as well, in which we found that. But it was like, let’s say we find a cleaner and we find that their spouse is a handy person, that’s the team that you really want to look for, they can fix those little things that go wrong as well. So it’s been a huge help for us. But let’s talk about finding cleaners, because it’s not the easiest thing to find cleaners these days either. So, Jordan, if you needed to get a cleaner for the property, where are you starting?

[00:06:14.340] – Jordan

Yeah, so I think when we first started the process, we went on. I think it’s important to any community that you’re operating in to get on any type of social network that you can within the community. So most communities have a page that you can go on. So find as many of those as you can, and then we would just go on those pages and type in requests for people that would do housekeeping cleaning, maintenance, landscaping, contractors, all those different services that you need. And we were able to find really good options that way. I think another one is just starting with the housekeeping companies that are local, and we’ll get into some of the liability issues later on the podcast. But what we kind of found starting out was most of the companies that do the cleaning, they’re very structured. They don’t want to work weekends. They don’t really like the pressure of having different cleaning days. They want to have a set schedule. So we have run into some barriers finding housekeepers that are actually legit, companies that are willing to accommodate the type of needs that we have for short term rentals.

[00:07:17.600] – Jordan

So starting with those companies, trying to see if you can have someone that’s professional and able to do that, and then filling in the holes with whether it be somebody that needs some side income and just can work on the side a little bit when you need them, versus somebody that’s full time is important. So the social media pages is a great place to start looking. What other areas should people be looking at?

[00:07:37.840] – Tony

Tony, your example would be like, hey, if you’re looking for a cleaner in Grand Rapids, it’s find a Grand Rapids community page where people post about stuff that they might be posting about restaurants in the area or hey, I need a landscaper. Who do you recommend? Right? That’s what you were going with.

[00:07:57.060] – Jordan

Yeah, for sure.

[00:07:58.010] – Tony

Yeah. So that’s where I would start, too. And you can also use the search functionality. Look and see if anybody has already asked for a cleaner. Get all their recommendations, reach out to them, do a post yourself. Look at all the cleaning companies in the area. Call them. But Jordan’s right. It’s like, let’s say I have a property that gets a last minute booking today, and then we need a cleaning maybe tomorrow or the day after. The bigger companies have a hard time being agile with those types of last minute responses. So it really is the key is going to be kind of getting the combination of having somebody that is maybe a one person show that can accommodate that. But the other place I would go is what vendors, what contractors in other areas? Again, maybe it’s the landscaping crew, maybe you have a painter, maybe you have an electrician. I would reach out to those people in that area and say, hey, I’m actually looking for a really good cleaner. Do you have anybody that you would recommend? And we’ve had an electrician give us a referral to a cleaner in the area.

[00:09:06.240] – Tony

So that’s definitely where you’d want to start, especially if they’re good contractors and good vendors that you just know, like and trust the way that they work, it’s likely that they have connections to people that operate similar to them as well. So that would kind of be the other spot. And then I think that’s really it.

[00:09:24.200] – Jordan

To that point, though, I think another area where we were able to find a couple of good ones was the couple of quality people that we found in the beginning. We went back to them and said, hey, do you have any friends that would be willing to come and help you? And that was another area. We brought some people in that if they’re willing to vouch for them, they know they’re going to have to work alongside them. They’re not going to bring in people that they’re going to have to babysit. So we did find a couple of decent ones that way over the last couple of years.

[00:09:48.110] – Tony

Yeah, definitely. And then there’s going to be a few things that you’re going to really want to make sure that you have when you get started with them. One of the big ones is a W Nine. You’re going to want to make sure that you get that up front from them. What you don’t want to do is bring somebody on. They come in with the assumption of, hey, we’re getting paid under the table. And then at the end of the year, you hit them with, hey, I need your W Nine so that you can pay taxes. And then they get stuck with a tax bill that they weren’t necessarily expecting. So be clear upfront with that. Make sure they know that they’re going to be getting a W Nine. Have them fill out the W Nine so that you have it on file so that you can file the appropriate paperwork at the end of the year. But then there’s a couple of other things that you’re going to want to make sure that they have. And even companies that they sound like their companies may sound legit. And you think all this stuff is probably taken care of.

[00:10:42.190] – Tony

Once you start asking for it, you’re going to be shocked at how many don’t actually have it. So one of the things you’re going to want to make sure they have is liability insurance, right? So let’s say a cleaner goes in, you hire them, they go in, they leave the water running in a bathtub, it overflows and causes $20,000 worth of damage in the house. If they don’t have the insurance for that, who’s the insurance going to go after? At that point? They’re going to go after the homeowner or the property management company they would also try to go after. But that’s the big thing. It’s super cheap to get liability insurance, too. So it’s just something that you really want to make sure that they have just to protect the homeowner or yourself. And then workers comp, you’re going to want to make sure if they’re not paying workers comp, you’re going to want to make sure that you work with your insurance company to make sure that you’re actually paying workers comp on behalf of any of the cleaning contractors that you have super cheap. So what we’ve done is just say, hey, you make sure you have the liability insurance.

[00:11:46.340] – Tony

We’ll make sure we get the workers comp paid on our end free. So we’ll just say, hey, we got $40,000 in cleaning fee for the year. So what they’ll do is charge us 1% of that 40,000, and that covers the workers comp for any contractors that we have. Again, somebody gets hurt in the home, who are they going to go after, the homeowner or property management company? So this will just make sure that you’re covered appropriately. And I would say Shield Insurance has been a huge help in just kind of navigating those waters and making sure that we have all our eyes dotted and T’s crossed there so that’s somebody that you could definitely reach. Out to, they’d definitely be able to write a business liability policy for your cleaning contractor or your cleaning company that you hired if they don’t have it already. And you did touch on income. I think that’s a big part of making sure that you have somebody that you can count on is this is not an area that you want to skimp out on and try to pay the lowest amount that you possibly can because you’re going to get what you pay for.

[00:12:51.580] – Tony

So I think we pay our cleaners fare. We range anywhere from $25 an hour to $40 an hour. The $40 is typically going to be kind of the small company that has eight cleaners on their team. They obviously have to pay their cleaners well and they need to mark up so that the company can make money. So in that instance, we’re paying close to $40. They do seem to be pretty efficient. Again, they’ve been cleaning for a long time. If we find somebody that has a little bit of cleaning experience or just seems like they’d be a great fit for the position, we’re going to start out at $25 an hour, so we’ll try to do some things for them, too. We’ve sent some Christmas presents. We’ve given some bonuses. We’ll pop in with some Starbucks coffee. So you want to make sure you’re doing the little things, too, and not just paying straight $25 an hour. And that’s kind of it. Make sure you’re rewarding them for just being on the team. We’ve had some cleaners that have been with us since the beginning, and if you can find somebody that will stick around for a couple of years in this industry, it’s huge.

[00:13:55.850] – Jordan

Yeah. You got to make sure that you create a culture that your people feel valued and that you pay them adequately and that they ultimately don’t have a better option somewhere else. And so especially for something like cleaning, if you can be in that $25 an hour for a cleaner, there’s not many other options that they can do that are as flexible and that pay like that. So we’ve had good luck with that. But I do think creating that culture of valuing people is really important in this area. It’s kind of a thankless part of the job. It’s very important if you look at all the most important things factors. When people are coming into a place, it doesn’t matter how good your communication is, it doesn’t matter how good the location is. If they come in and your place is growth, it is not going to be comfortable for people. So you got to make sure that you incentivize the cleaners enough to do a good job. And that leads us to the next critical component of this topic, which is we’ve got a great team of cleaners that have been with us a while.

[00:14:51.790] – Jordan

We’ve got great checklist, great systems, so you want to have all of that lined up so that they know exactly what needs to be done each time. But when you’ve got a three hour turnover and a big house to clean, it’s really easy for these cleaners to miss things. So the next one that we really highly recommend that we’ve had to implement this over the last year is having a person that their responsibility is to do the final walk through after the cleaning is done, and inevitably, they’re going to find things that aren’t quite the way that we want them to be. So, Tony, walk us through the process of what it looks like to bring that person on and what they’re looking for.

[00:15:29.260] – Tony

Yeah, so we have one person that will kind of go through each of the houses after they’ve been cleaned and give it a once over again. Jordan said, you got 3 hours to turn this house over. So there’s a lot of pressure. You’re in a hurry. Having a second set of eyes on a house, you’ll inevitably find something else that they might have missed. It might have been, hey, they forgot to sweep under the kitchen table, or typically just the little things that they miss. But having a second set of eyes, that their main job, is just catching all those little things that they didn’t catch definitely helps. Again, you really want your guests, when they arrive to the house, to feel like they’re the first people to have stayed in that house. And it can be hard to do again with the cleaning crews in there just hurrying. And typically there’s like two to three of them. So maybe it’s a little bit difficult for everybody to be on the same page to make sure that they accounted for everything. So we just make sure that we pay somebody to go through each house after it’s done.

[00:16:30.400] – Tony

They spend anywhere from ten to 30 minutes, depending on if there was something big that they might have missed. But we have had some misses. We’ve had a lot of great reviews. Being across all our properties were 4.99 in reviews. So our cleaners have definitely done a good job. But I can tell you, I’ve been at the property, I’ve seen things that they’ve missed, and it just reinforces why it’s necessary to have a second set of eyes on it. So if you could implement that as well, I think it would be very beneficial to you and your property. The other thing that we do is we’ll create a cleaning book. It basically has a checklist, but there’s a lot of words, a lot of things that you want to make sure that they don’t miss. But one thing we’ve started doing is we’ll basically create six, seven pages of just really big pictures of the areas in the house which are critical. Maybe it’s pillows, positioning, that kind of stuff, and just having arrows pointing directly at the thing. Big red arrows. So it’s like super easy. You’re basically just reading images and seeing the arrows.

[00:17:38.150] – Tony

And then the cleaners can look at that and say, okay, hey, this is what I’m going to be getting basically graded on after. When somebody comes in, this is what they’re going to be looking at so the cleaners can walk through it. It takes maybe ten minutes to just look at that book, look at those arrows and the images, make sure everything is the way it needs to be. The inspector comes in, looks at that book, grabs it and does a walkthrough and make sure that everything is where it needs to be. I mean, I’ll tell you what, the thing that gets missed the most is just positioning of decor. Again, the pillows I mean, I’ve walked in, it’s little stuff, right? You walk in, you see maybe it says Michigan Lake Shore on it, right, and it’s upside down and you’re like, okay, it’s not a big deal, but it is the details measure this. So that’s where, again, just having the inspector, having the book that helps them walk through that way, you’re basically there with that book telling them exactly what you want them to focus on. So make sure you’re doing that.

[00:18:34.530] – Tony

And I’ll see if I can actually maybe include a document or include a link to one of our pictures with arrows on it. So if you want to check it out and see what we’re doing, you can take a look at it.

[00:18:46.470] – Jordan

The last thing to really keep in mind is going to be having a backup plan. Tony mentioned earlier in the podcast, our first couple of weeks getting into this game, we had two of our three cleaners not show up. And so we had to scramble and try to find a way to get these places turned over and clean. So having a good backup plan is important. That’s why it is helpful. What we found is it’s really challenging to have a balance of good cleaners who value your business and keeping them busy in the off season and then keeping them motivated to work for you in the peak season. So having a backup plan is really important to make sure that if a cleaner doesn’t show up, you have somebody to call to back them up. And I think also one of the things we’re talking about coming into this next summer is having overstaffed. We need to overstaff in the summer months and really cut it back in the winter. So we’ve looked at some options of having college students home for the summer is kind of back up extra cleaners to help us to get a little bit heavier on staffing that time of year to make sure that we do have people if worse comes to worse and we need backup.

[00:19:51.830] – Jordan

So what else have we done, Tony, to make sure that we’ve got a good stable of cleaners?

[00:19:55.720] – Tony

Yes. So again, I would say to have a backup plan, just know that if you’re close, you are the backup plan. If the cleaner calls and says they can’t make it, then you are the backup plan. So you’re going to have to go over there and clean it yourself. My wife and I, we’ve spent some time cleaning. It took us way longer than it takes the cleaners to clean it. So it’s definitely not my favorite thing to do, but just know that you are the backup plan. But if you’re managing from a distance, let’s say it’s 3 hours away. 4 hours away, they don’t always give you the most notice if they’re not going to make it. Like there’s been 20 minutes, heads up, like, yeah, not going to make it today. So you just got to make sure that you have some different options available to you, especially if you’re managing from afar. And again, it’s just going to make sure that we have enough cleaners in that area. So just don’t get over reliant on one cleaner. Otherwise you’re kind of setting yourself up for disaster down the road.

[00:20:59.570] – Jordan

Yeah. I’d also say if you’re having a down day, find Tony Stankado on LinkedIn, scroll through all the pictures he’s posted. Eventually you’re going to come to one with him holding a toilet brush with a big old smile on his face. So having it down, pick me up, look him up, see what this business is really about.

[00:21:17.350] – Tony

Absolutely. Well, if you guys get a chance, if you don’t mind heading over to your podcast player of choice, spotify Apple podcast, leave us a five star review. Really appreciate you tuning in. The reviews definitely help us get found in those players and so we’d really appreciate that. And then if you’re not on the Michigan short term rentals.com email list, head over there. Get on that list. There’s going to be four valuable emails that you’re going to get once you sign up. One of them has 650 zip codes that we’ve already analyzed properties in that area, so you can filter it, see which one is projected to have the highest income. We have Furnishing calculator that will give you an insight on how much does it cost to furnish a four bed, two bath with a hot tub and a grill. So then you can put that into your calculator. It also has a property grading tool. So if you want to look at properties the way that we look at properties, it’s going to allow you to put in, hey, here’s how much the projected income is, here’s how many people it sleeps, here’s how big the yard is.

[00:22:19.130] – Tony

Here’s how many neighbors there are. You put all that stuff in there, it’s going to give you a letter grade. All of our properties are letter grade B. If your property falls below a B, you might really want to question whether that’s that’s going to be a property that is right for you. So again, go over there, sign up for that email list, get those emails, start learning. Definitely think it will help shortcut some of the process for you. So until next time.