A graphic that says 5 things we wish we had known.

Listen On

Show Notes

All right. So today we’re gonna talk about five things we wish we would have known when we started in vacation rentals. So Jordan’s, what is the first thing for you that you wish you would’ve known when we got started in this and just mind you, we started what? 15 months ago? Yeah.

Number 1:

So I would say for sure on the front end we wasted so much time finding the right area to buy. We spent a lot of time driving around different parts of michigan in areas looking back that were a complete waste of time, The return on investment would have been terrible. So a little bit of guidance on where to even begin to start looking based on revenue returns and those types of things would have been an awesome and awesome value add for us when we got started and that kind of plays into my number two would be look in secondary markets.

Number 2:

I feel like initially when we got started we were looking in primary markets, right? We were looking in, we started, hey, let’s talk about Gatlinburg, Let’s talk about florida. Let’s look at traverse city. So all the places that everybody else wants to be is kind of the place that we started initially looking. And then we started looking again some of the inland lakes and that kind of stuff found it real challenging on the inland lakes. But in terms of secondary markets, I think we’ve found a lot of good niches. So right outside of primary markets where you can get affordable houses and still get very high average nightly rates. What do you think? Yeah, I think that’s a great point and I think it’s, it’s important to know you alluded to it, but close to amenities where people want to be, but just far enough outside them where the premiums of pricing for houses are a bit more palatable.

Number 3

Alright, so number three, what do we got for number three. Number three is gonna be for sure, just we knew going in and I think everybody who’s ever tried to do short term rentals has run into this but the turnovers for housekeepers and for contractors and forgetting plumbing leak fixed with four hour window between you know potential guests, those types of things having that database built up has been a huge, huge challenge for us.

So if you were to start over today let’s say I just got an offer accepted on a place we haven’t closed, we don’t even have it furnished. But what can I do today to build out that database to get a feel for who’s going to show up, who’s gonna be responsive, any tips on that? Yeah. So for us we started our business outside of where either one of us had a network.

So we had some unique challenges just because of that right out of the gate, we didn’t have any type of local contacts when we started, so getting into an area and getting involved in wherever you can for chamber of commerce maybe or or different areas where you can get plugged into the community and meet people who are out hustling and trying to find business, getting connected with those type of groups of people we’ve found for sure has led from one referral to another referral and it’s been a really good way to meet people and continue to grow that database of, of contractors for us.

Yeah. And I would say the probably number one thing I would say on that is a lot of times. You just gotta try a lot of people out, right? But once you find one good contractor, ask them, hey, do you know anybody that does this?

Do you know anybody that does that? So we had an electrician, he came and did a good job, did quality work. He was very responsive affordable prices. Hey, do you know anybody that does flooring? Oh yeah, I got a guy that does point and then he referred our painter. So literally those are poor, probably three of our best contractors. But they all came from asking somebody that already kind of embodies what you are looking for out of a contractor So even if you don’t need anybody, even if we already have our best painter ask the next guy. Hey, do you know any painters? You know, it never hurts to have a long list of good referrals. So you never know when you’ll have to kind of go from one to the next to try to get someone in to, to take care of business Alright.

Number 4:

Number four, I’ll take number four. This could be number one. I would just say one thing I wish I would’ve known now was that interest rates were going to go up as fast as they have and if I could do anything different, I would have probably the year that we started, we bought one, Well we bought two but if we could have bought three or four, get it, got it on long term loans. I mean that would have been a game changer. Also like some of the loans we were looking at then you’re like, oh my gosh, the rates 56% and you know, that was extremely high at that time now. It’s like, oh man, what would we do for those types of loans now? So, but you never know where loans are gonna be, where rates are gonna be five years from now, right?

They could go up another couple of points So I guess the best time to start now would be right now, lock in what’s available anyway that you would think to mitigate some of the loans going forward. Would it be locking them in and then being able to I know sometimes you get a pre payment penalty, What would you recommend for somebody right now that is locking in a couple short term rentals? Yeah, I think knowing your long term goals is the first thing place really you need to start is determining how long you’re gonna hold that product and making sure that the tool you’re using to purchase it is in line with that. So whether it is a normal conventional type of loan or a commercial loan. Sometimes people are looking into doing hard money loans and some things like that. The rates tend to be a lot less favorable for some of the but depending on how long you’re gonna hold it, it could still make sense.

But I do think right now if you’re going to do anything with alone, you want to make sure that there is not a pre payment penalty because in the circumstance where rates drop, you could substantially increase the value of your asset by getting those rates refinancing to lower rates. So I think the main thing I would be looking for is making sure you’re not locked in with pre payment penalties to interest rate. That’s that’s on the high side at the moment.

Number 5:

Alright. # 5 5th and Final one. Yeah. So for us, one of our core values for our company is to make sure that everyone that we touch, everyone involved has an amazing experience and that goes for contractors that goes for tenants that goes for the neighbors of the places that we’re purchasing and there’s always a dichotomy and a balance there between hey, we want our guests to have fun.

We want them to let loose and have a good time but not at the expense of the neighborhood in the community that those houses are in. So one of the things that we have implemented, I wish we would have have had the knowledge of this product before is the noise control and noise sensors and Tony can kind of talk a little bit more about that. Yeah. So we just signed up for NoiseAware is kind of a monthly subscription. Basically we have five or six properties right now. They send us sensors. They don’t record any conversations or anything like that. They just monitor spikes in noise so you can put some outside, you can put in the house and if the noise is elevated between your quiet hours which you can adjust so far us quiet hours are between 10 and eight o’clock. If there’s a 10 minute period of time where they are above that certain threshold then they will send out a text message to your guests and just say, hey notice the noise is elevated.

If you wouldn’t mind quieting it down. So that would be the kind of the first step and then you just got to kind of set up your systems for, hey, what happens if they don’t follow that type of response to that So build out the systems on that. So we’ve also adjusted some stuff on the front end where it’s like, hey in the communication, when they check in, it’s like, hey just so you know, quiet our, you know, the township has quiet hours between 10 and eight. So if you wouldn’t mind just helping us facilitate that, we’ve also just mentioned like, hey there, it might feel secluded initially when we, we got it, we’re like, hey, it’s on 2.5, 3 acres were good, nobody can hear anything. But we did get a letter in the mail about a noise violation.

So we’re very protective of that now that we know that there are some neighbors that can here, we’re just trying to, to mitigate it on the front end. So there are tools for that. But then also just on your communication with the guests, I think you can help prevent some of that on the front end. Yeah, super important. I think for the longevity of our business is to make sure that the communities that were operating in the neighborhoods don’t have a bad taste in their mouth because of what we’re doing. So it is a very important thing I think across the board for people to be aware of is, hey, let’s not ruin this for, for everybody else by not monitoring and being responsible with our business. Yeah. So those are the top five things that we wish we would’ve known when we got started.

If you’re not on the email list yet, head over to michigan short term rentals dot com right there on the front on the home page, there’s gonna be a email sign up. You’re gonna get four pieces of email communication that are just gonna help you on your short term rental journey Help you find kind of those hot spots within michigan or at least help you try to evaluate what those look like. We also have a calculator, like a furnishing calculator that will help you get a price for what it’s gonna cost to furnish a three bed two bath property with, you could even put in hot tub, that kind of stuff So just trying to give you free tools to help you along the journey. So go ahead and go over there and and sign up and until next time.