SPEAKER_00 0:00

Welcome to Live Let Thrive, a podcast about the Airbnb life, the share economy, and everything in between. Here are your hosts, Micah and Steve.

SPEAKER_02 0:11

What's up, Stevie Stacks? What is up, Micah Man? I'm chilling yourself. Oh man, freaking stressed out from trying to keep everything organized and Airbnb, VRBO, booking.com chaos going on. It's just a mess, dude.

SPEAKER_05 0:25

Oh man, that's why you gotta switch to hostfully, bro. Then you ain't gotta be dependent on the big OTAs. What's hostfully? The guidebook people? Nah, nah. Not only do they have guidebooks, they also have a property management platform system that they now use. Uh, we use hostfully, it takes care of all of our direct bookings, it manages all of our calendars all in one place, and we can even provide discount codes to our guests that book directly on our website, and it integrates with a Boostly's website as well, which provides our websites.

SPEAKER_02 0:55

I have a Boostly. I want to I want to start getting some direct bookings.

SPEAKER_05 0:59

Oh man, that's why you got to get switched to Hostfully and set up that Boostly integration. Get your website up, and it helps you with your Google AdWords. So then you're no longer being P I M P'd by Airbnb.

SPEAKER_02 1:11

Ha ha, I like that, man. We keep it real. It sounds like Hostfully keeps it real too.

SPEAKER_01 1:16

Yes, sir. Hostfully. Oh ho, hostfully. Hi, this is Will Slickers with hospitality.fm, and we would love to hear your thoughts about this podcast and what draws you to continue to listen or to even start listening in the first place. If you could fill out the survey with the link in the show notes, we would love your feedback. And now back to the episode. Hello, hello, hello.

SPEAKER_05 1:37

And welcome back to another exciting episode of Live Let Thrive.

SPEAKER_02 1:46

What's up, Michael Man?

SPEAKER_05 1:48

I am chilling, Stevie Stacks, on this Friday night. How are you doing?

SPEAKER_02 1:51

Great. I almost called you Michael because Michael Chang is our guest today. So I caught right, I almost called you Michael. Micah. Yeah. What's up, Micah? Man. Uh, we're sorry, getting a rocky start already, but dude, I'm doing good. I'm doing good. Uh this is my this is you know, this is my Zen. I'm ready to talk some shop on this episode 234 of your favorite Airbnb, vrbo, booking.com, short-term, mid-term, long-term rental podcast in the world.

SPEAKER_05 2:18

Yes, sir, man. We're back at it. It's funny you call me Micah Man. I went into a clubhouse room yesterday, and uh they brought me on stage, and Kirk was there, and he goes, It's Micah Man. I'm guessing that's starting to stick with our audience here.

SPEAKER_02 2:33

So everybody knows me as Stevie Stax because of you. Yeah, I told you that story about our uh uh my old uh loan officer, whatever from Wells Fargo. Uh, may he rest in peace. And and he gave me that nickname, you know, Stevie Stax. And then I told you about that, and you called started calling me that, so it's stuck, man.

SPEAKER_05 2:50

Let's go.

SPEAKER_02 2:51

Stacks of money, that's what's up. Oh, well, anyways, about enough about us. We have a special guest on the show, Micah. Who we got today, Stevie Stax. We have a certain Michael Chang on the show. How are you doing, Michael? I'm doing well. Thanks, guys, for having me on. Cool, cool. Let me do a little lead-in for you if you don't mind. If I can still read, uh, Michael is co-founder and partner of Trust Bacation Rentals, based in New York. He it says we, I'll change it up. He owns and operates a portfolio of short-term Airbnb rentals in Philadelphia, Pennsylvania, and the Smoky Mountains, Tennessee. Prior to building his own business, Michael was a new uh Michael was a New York City-based investment banker who spent over a decade advising leading technology companies, private equity firms, family offices, and venture capitalists. He is advised and executed over $40 billion in transaction value across 50 plus deals. Michael was a senior vice president in the technology investment banking group at Jeffries. Prior to Jeffries, he was director and in the Mergers and Mergers and Acquisitions Group of Bank of America, Merrill Lynch and Vice President of Mergers and Acquisitions Group at Citigroup in New York City. What's going on, Michael Chang? Man, I feel bad making you read all that. I'm sorry. A lot of my bad. Yeah, and especially since Friday night accidentally I forgot about the podcast, had a little whiskey, so you know, I got through it. That's the main part. I got through it, and welcome to the show. I want to start off with the first question how do you go from billions and mergers and acquisitions to um short-term rentals? How the hell does that happen?

SPEAKER_04 4:29

It happens when you work like 120 hours a week and you don't see your friends or family, and you know, you're just you want to change, um, you know, kind of high finance in New York for 10 years, and it was great. And you know, I love the experience, but I just knew that there's just something else for me in life and real estate Airbnbs. Um, it was I was lucky to find it. Um, and it just gave me, and you know, it says we in the bio because my wife and I started a business together, so it's definitely no we. Um but it's been a great ride over the last five years.

SPEAKER_02 5:09

You started five years ago.

SPEAKER_04 5:10

Yeah, we start. I mean, we started really, I guess, six years now. We started as a side hustle in December 16. Um, wife's dad has uh has a building and a small building uh in New York, and it was a vacancy. It was like a three, two, uh, three bedroom, two bath. Tenant through the doubt. We read about Airbnb. Like, let's try it. You know, we did it a few months, like, oh wow, this is pretty amazing. This kind of class B minus product with you know, not a lot of thought into the furniture, can do this kind of cash flow. And you know, I was a numbers guy, so I was like, okay, well, there's there's something here we need to, we need to like really figure this out. So that was a start.

SPEAKER_02 5:49

Yeah, so it's funny you should say that because back in the day before Airbnb started becoming like crazy deal, I've been to New York a few times, New York City, and man, I mean, to stay outside of Manhattan, miles and miles away is still gonna cost you 200 bucks a night. And I was like, God dang, dude, there was no there was no options, you had to pay out your ass to stay in New York City, you know. Anywhere, anywhere close by, anywhere far away, it was expensive. So then Airbnb started popping up like yours and started, whoa, holy crap, we can print money with these things.

SPEAKER_04 6:19

I mean, three bedrooms, like you could I we were I think in the beginning we didn't know what we were doing in the beginning. We're doing like 250 a night. Well, in the beginning, actually, we were doing single rooms because we're like, Oh, okay, well, this is better it's better to do single rooms because we can make more money this way. Obviously, you know, that wasn't correct. Um, but it it got us started. But yeah, I mean, you know, those it would do like you know, sometimes do more than 10k a month, and it was just like this is ridiculous, and you know, and we were you know 25 minutes outside of Manhattan. Um, so we just knew we did that once we did that first one, we knew there was something there. So from there, we you know, we grew to like four we were about 40 units both in in New York and in Jersey City, which is right across the river from from Manhattan, and you know, over like three years, so you know, we're both still working, but doing it as a side hustle until my wife we got married and then she quit her job to do it full time, so able to kind of scale that. And I mean, you know, now people won't believe the kind of numbers you could put up in New York City back in the day. Uh yeah, yeah.

SPEAKER_02 7:29

But they came at you hard, right? With the ban.

SPEAKER_04 7:31

Yeah, yeah. The the ban. I mean, there's a there's a deeper ban actually that's gonna start up in you know three weeks. I mean, we're we're not we're not in New York anymore. So you know, you know, as you you you introduced me, we're in Philadelphia and Tennessee. Uh, we learned our lesson, but it uh now there's even stricter rules that are coming on the 9th of January. So, you know, there are a lot of operators still in New York City, but the the game, you know, it's the game's gonna change a lot.

SPEAKER_05 8:00

Now and doesn't Philly have kind of strict laws or coming down with policies and laws at the moment?

SPEAKER_04 8:05

Yeah, yeah. Philly too, not as strict as New York. Uh Philly is as long as you're in a residential, you excuse me, as long as you're in a commercially zoned district, certain kind of commercially zoned districts, you you're able to to Airbnb. So like I said, we learned our lesson from we learned our lesson from uh New York City, uh, and we're on we're in commercial buildings in uh in Philadelphia. So regulations are actually good for us because I mean, you know, good for us in a way that supply is going to be constrained, uh if not declining in the near term. Got rid of the riff ref. Yeah. I I I mean, you know, there are people out there doing like a good job. They're just not, you know, the rules weren't clear. So like I got a lot of respect for people that do this business. It's not an easy business. You guys know that it's a lot of it's just like a lot of single pre single man shops, single woman shops are like you know, two people, couple just trying to like make it right, trying to make some money for them and their family. So I got a lot of sympathy for people that uh they get impacted by some of these rules because behind every every Airbnb, it's like there's someone's like dream, you know. So I'm very, very uh cognizant of that. But I mean, we've we've been lucky to be able to grow the business in in Philadelphia, you know, we have the background in in investment banking and have some money from that. So, you know, been able to build a nice business. And for us, it really was just like we want to build something where you know we can spend time with our kids, spend time with each other, just like have a life that we wanted versus just busting our hump for you know 80 hundred hours a week and never seeing each other and all that stuff. So that was like you know, it's just like when intention. Some people's intention is to to get a Lambo for us, it's just like spend time with the family.

SPEAKER_05 9:52

I love it. I love it. Now what now your portfolio mixture, you said you have a total of 26 units and you said they're a mix of ownership and arbitrage. What's your balance? Like, is it 6040, 50-50?

SPEAKER_04 10:02

How does that have we own six of them on the recipe arbitrage? We actually just signed a deal today for 13 more units in in Philly. So, yeah, yeah, we we we'd like to Philly market. Um, but yeah, like there, there's uh, and we can talk about it more, but yeah, there's if you combine arbitrage and buying, it's really, really powerful. Like you really can uh you guys know this, right? Yeah, I'm preaching, I'm preaching to choir, and for your audience, uh, you really maximize, you know, for me, it's all about how much how much money I get to keep at the end of the year, right? It's not about how much revenue. I know a lot of people like you know puff about revenue and listings and whatnot. But for me, it's all about how much money in my pocket. And for me, that's like after taxes, too. So I gotta I want to keep as much of that as possible, right? And do units that are like, you know, our units are, you know, they they they do a lot better. They're like 85th to 95th percentile in the market, so they do well. Um, so we you know, we take the we pick we say quantity over quantity all the time. We only take the we only take the best units. Like these units we're taking right now are three bedrooms that are parking, amenities, and all that good stuff. So um just like do stuff with intention, I guess. That's that you know, I feel like that's where uh that's what we've had to guide us in in this journey for us.

SPEAKER_02 11:20

Yeah, I like that because I mean I do a mix uh of you know arbitrage and and ones we own, and plus we manage also. So uh I've always told people, and and I was able to um to purchase uh one of the arbitrages, and I'm working on purchasing two more of the are the ones that are we arbitraging, you know. I'm just working on the owners, they they like me, I'm paying on the first of the month, blah blah blah. I'm I'm their best uh tenant ever, kind of thing. And so um fixing little things, and so I it's it's just a it's it's an it for me, it's an entry way to buy this product, and and plus I get to test it. It's kind of like I get to test it out, test drive, you know, and see, oh, this thing can make me three or four grand a month, you know. If I buy it from this person at 300 grand, and you know, even if the mortgage is 2500 a month, I'm still gonna make you know two or three grand a month on this thing. You know, I'm just I'm just I get to try it out first, you know. That's what's cool about being doing arbitrage and ownership thing. And so when when you said when you said um, so you got 26 and six of them are are um owned, right? Six of them are owned restored arbitrage.

SPEAKER_04 12:23

We own with the six, we own the vacation cabins in Tennessee.

SPEAKER_02 12:27

Okay, so this is what came to my mind. Oh, go ahead.

SPEAKER_04 12:29

Sorry, no, go ahead, no, please.

SPEAKER_02 12:31

So this is what came to my mind. We had a I guess a few shows ago. Um, what's his name, Micah? Um uh Sab Sabio, Sabio, Sabio, Sabio, yeah, yeah. I know Alex. Oh yeah, yeah, you know Alex. I know Sabio, yeah, yeah. Okay, cool. Well, that's what he was talking about. He brought up this thing called cross-segregation, right? Uh, of getting a house and and you do you purchase it one, purchase the house every year, and you get to do the cross-segregation study, and you get to um write off 100 bonus depreciation. He's hitting head, he's legally hasn't had to pay taxes in a few years because he gets to write off all that depreciation up front. And I was like, Holy crap! So he's combining, you know, buying you know these places, plus he's doing short-term rentals and making all this money, plus he has a uh W-2 income still because he makes a lot of money doing that. Hey, it's gonna be a shitload of taxes you're gonna pay. You gotta do something. So he's doing the cross egg and it counterbalances all that, plus, with some leftover. I'm like, Whoey shit, you know, you learn something new every day. So that's what out that's what's cool about it.

SPEAKER_04 13:26

Yeah, I mean, that's exactly what we do. Uh, I mean, Alex is a little different because Alex, you know, he actually has a W-2 job, so he's a healthcare professional. And I won't get into all the details, but that's exactly what if you have a full-time job, but you'd still do short-term rentals, as long as you meet some certain rules, you'll still be able to offset that bonus depreciation, offset that expense against your active income, which is really powerful. There's nothing else like that actually, anywhere. So for anyone that's curious about this, you really need to dig in because you can save yourself a lot of money and compound your capital a lot faster. However, and this is where the arbitrage game becomes supercharged, is if you take your arbitrage income and you can protect your arbitrage income using the same strategy as what Alex has described, like buy places, cost seg them, get the bonus, and then that protects against all of your arbitrage income. So it does both for the active income and both for arbitrage income. And it's actually easier to do against arbitrage income because of other tax rules, which I won't get into, but that's my finance background, you know. Like I'm pretty conversant in these things, so um, and you don't pay self-employment tax on arbitrage income. So that's another 15.3 percent that you save. So I mean, I'm still not smart enough because I live in New York City, so I still gotta pay state and local taxes. But if I lived in Tennessee or Florida or Texas, good, I don't wouldn't pay anything.

SPEAKER_02 15:03

Wow. Wow, he was in California too. That's a high tax place. Yeah, and he doesn't pay taxes over there. That's that's insane.

SPEAKER_04 15:10

He's paying state taxes for sure. I mean, he's not paying federal taxes, he's paying state taxes. So you state tax uh just state tax rules aren't um they don't they don't recognize uh bonus appreciation. That's just a federal rule concept, anyways. That's this is too much. Like I don't want to bore your audience with like no go ahead.

SPEAKER_05 15:27

I mean, I'm I that's that's the type of stuff we're into.

SPEAKER_04 15:30

Yeah, no, I state and local taxes, uh, they don't respect us, but the bonus appreciation, it's a federal rule, it's not a state or local rule. So the states don't um don't don't respect that. So you have to add that back under state returns and pay your state taxes.

SPEAKER_02 15:46

And one and one more thing on that, on that note before we get into other other other topics. Um, so he has a great uh CPA, right? And and the one the lady from Bigger Pockets, uh, forgot her name. I'm sorry. Manda. Manda. There you go. She and she she's the one that told him that started telling him to do short-term rentals because that would turn him into a real estate professional and he could write off a bunch more stuff. So yeah, it's just it's just um another reason to get into arbitrage, to get into short-term rentals, to get into you know things like that, so you can um save a lot of money in taxes, which is our number one uh expense in life, right?

SPEAKER_04 16:22

Oh that that I'm so glad you mentioned that. People don't think about that. People are like, oh like housing or whatever, but now your taxes, if you're I mean, you're paying 40%, right? I mean, that's you know, every dollar you make 40 cents goes to the government. Like if you if you imagine you get that 40 cents back, I mean, your world is different, right? So um, yeah, so I mean it's kind of like you know, I can make a million dollars in banking, right? But that's you know, I'm gonna take it home like say 500. I make 500 in in for tormentals, like you know, I keep the 500, so um without you know, and then doing your own thing. So, you know, we're talking about why I'm in this game is because you know, I spend five hours a week managing that portfolio because you know, I got VAs and got all the systems planned out now, and my time is spent on growing the business and you know, living life, like you know, being my family. I got a one-year-old daughter, so that's the most and am I gonna I I know you know, I know you're real about that. You're you're big on the family side too. So I'm all I'm 100% about that. Like that is my focus, is you know, camp hounding capital, and then like just being able to spend my time how I want. I don't know about I'll be waiting for your book, the five-hour work week. Uh used to be the 120 hour 20-hour work week. So see these bags, see these bags under my eyes. I'm still there, man.

SPEAKER_05 17:44

Hey, so I I noticed you you said you own six. Now your six that you own, you said they're in Tennessee. Uh, was there a reason why you wanted to choose to go to like to vac the vacation rental market route?

SPEAKER_04 17:55

Yeah, that's a great question. Uh, I wouldn't buy, like I wouldn't buy in Philadelphia, for example. Um, well, maybe now the rules are a little clearer, but cities change their rules all the time. So that's a that's a big piece of advice for everyone here. It's if you buy something, just make sure that you know it's in a place that either like really respects property rights, right? Or second, uh, just as a long-standing tradition of uh short-term rentals so that they don't change like in Tennessee, in in in Pigeon Forge and Gatlinburg, the entire economy is based on uh tourists, overnight rentals. Like if you ban that, like the people there, they don't they wouldn't eat you know, so that that's the best protection you have, right? It's like the people that live there and pay taxes, like they depend on the industry. That's your best protection. And you know, when you're in Philadelphia or New York, for example, just the the the tenant laws, the hotels are really strong there. So they see, I mean, you're taking they feel like they're taking their money, so uh they you know, they got the politicians uh on speed dial, and eventually they'll come back and get you. So look, arbitrage is great, right? Like, you know, you find a good market, you make a lot of money on it, that's great, great cash flow. But if you just keep getting more arbitrage units, at least in my opinion, that's not a path to long-term wealth, right? You like you're just running on the hamster wheel, it's very capital intensive, too. It might be very profitable, but you don't have a lot of cash in your pocket at the end of the day because you feel this need to continue to grow. And you know why? It's because the landlords are always giving you more units, and you know, you don't want to look weak in front of your landlord, right? You're like, Oh, I have to take it, or or Steve's gonna come take it, right? I'm gonna have a competition in my building, or you know, Mike and that's my landlord's gonna be like, Oh, maybe something's wrong with his operation. Why is he taking these units? So you always feel this pressure to do more with that. And in the end, all you own is a furniture and a lease that's not assignable. Whereas, like, if you own property, like you own the property, there's a tax benefit, there's appreciation, there's leverage. Um, it's a you know, if you combine those two things, it's a beautiful thing.

SPEAKER_05 20:03

Um so glad you brought that up because I tell people if you're just picking up arbitrage after arbitrage, you could have really taken some of that capital in those next 20 arbitrages you got and bought a house. If you really think about it, you know, you could have just bought something, furnished it, and ready to go. Uh, but you know, it's one of those things, it's it's a mindset thing, you know, you have to have that, and I know you're a family guy like me, so I have to have that long-term goal and mindset in place. So I'm I'm happy you brought that up to the listeners.

SPEAKER_04 20:29

Yeah, look, I mean it's different, you know. If you're like a 20-year-old college student, you're just like, I want to try to get to a certain number as fast as possible. Look, I respect that too, right? Um, but if you're a little older and you have a family or you're, you know, no, that's if you think about if you're thinking about life in a different way, right? About like more like long-term kind of steady wealth creation, I think it's a better way. Um, because the arbitrage game, too, you gotta remember, like, I knew, you know, we've been around for a while, and I sent I seen a lot of dead bodies after COVID, you know, guys that had like 150, 200 units. People just didn't like we just stopped hearing from them, you know, in our mastermind groups and our groups. They just stop, they just they disappeared, and you just worry about them, you know, because you know, like it, you know, it was kind of game over. And that's the thing. It's a it's a very highly levered business model. So you just got to be careful, like you know, you you don't want to you don't want to do all this, you don't want to spend all this time, like all this work, all this money, and then like lose it all, right? Like BK and lose it all. Like, that's not what you want. You want to like, you know, every year, like you're you're growing, you know, 10, 15, 20, because in like four years, you're gonna double up, right? Versus trying to grow like double up in two years, three years, and then in five years you don't have anything. I think all the people that are like day traded, like bought like these crazy stocks or crypto, like where are they at now, right? Like it doesn't work. It just doesn't like you got to time it really good. If you I mean if you're that smart, like good for you, but very few people are that smart. Most people uh you know, hold Bag they they pulled bags at the end of the day.

SPEAKER_05 22:03

Hey man, depending on fast money is a dangerous game.

SPEAKER_04 22:06

It's a dangerous game. That's a slow, you know, like real estate's a nice slow game. Airbnb already is like such a cheat code on real on the you know, like real like I own one short-term rental in Philly for tax reasons, and I think I make $250 a month on that. And like so in a year, what is that, right? Make like $3K, right? In one of my, you know, in one of my smoky cabins, like during Christmas, like we'll cash all like $18K a month. So those are like six years in one month.

SPEAKER_05 22:40

That's what I tell people, man. That's the good thing, and that's my future goal is to get into vacation rental markets because of that reason. Like I see the numbers, I'm like, people cash flowing 10, 15, 30, 10, 15, 20,000 in a month. I'm like, damn, I gotta get to that vacation rental market. That that's a beautiful thing.

SPEAKER_04 22:56

Yeah, and it doesn't lose, and you know, in bad months, it doesn't even lose money, right? Because it's just not I mean, if you do it right, uh we we don't lose money. Well, I don't we have not, you know, I don't want to jinx myself. Um, but if you do it right, like those markets are really, really steady too. So it's really important to um it's really important just yeah, like approach with intention and just kind of do the work up front so that you can grow steadily, consistently, don't crap out. And in five, 10 years, like you're like, okay, I've done the really, you know, have a really nice port, nice portfolio of 10 short-term rental properties, you know, say they're half a million, a million each got five to 10 million bucks of property, loans being paid down. I got a nice business, got a nice STR, I got a nice like arbitrage business that's doing three, four hundred K a year, and you're working 10 hours a week, and you know, you get to take your you can walk your kid to school, you know, play with them, pick them up, give them a bath, put them down, and like life's good, right? Versus like before I was like, I was like traveling, I was stressed out on my phone, I was taking calls like every second I was awake. Um, that's the that's the life of uh I mean like invest in banking's cool, right? Like private jets and four seasons and billion dollar deals, like big paychecks. It's great. Like, no, I mean I wouldn't give that up. I wouldn't I wouldn't trade it back, but um, you know, different different like things at different points in your life.

SPEAKER_02 24:20

So, so early on when we first started this podcast, many years ago, um, there was a guy that came on and started telling us about the Smoky Mountains, he's printing money over there, and he said, Y'all should get in on this thing, you know. He goes, but uh goes now the prices are high because when I got in, nobody knew about it, and now we're paying like 80,000, 100,000 for these things. And me and Micah were like, Oh man, that's a lot of money. And so so now you're laughing, probably, because like those days are way gone, right? Man, you should listen to that guy, dude.

SPEAKER_04 24:51

I gotta talk to him, maybe I gotta figure out what the guy's doing. I'm gonna follow him. What was his name? Do you remember?

SPEAKER_05 24:55

That's Lucas Carl, man.

SPEAKER_04 24:57

Lucas Carl. Oh, Luke, Luke, Luke and Avery. Yeah, dude, Avery, Avery, Avery was my broker first going in there, man. No, dude.

SPEAKER_02 25:07

Yeah, you listened to him. We didn't listen to him, you listened to him, yeah, and we could have got him for cheap back then. And you got in at decently cheap, I'm sure, uh, compared to what they're valued at now. So, so what what prices were you getting into back then and these things? So these smoke mountain spaces.

SPEAKER_04 25:24

I I got credit. My wife is the one that found it smoky, so really credit to her. Like she, you know, networked with Avery, uh, who's who's Luke's wife, and you know, does the broker thing. Um, but we started buying in uh mid-2020, so we weren't that early. But what we did was we we bought everything off after the first deal with Avery, we bought everything off market. Um, so we were able to develop, you know, a way to get stuff off MLS, like not on MLS. So we're able to, you know, get stuff at good prices. And you know, more importantly, just getting good locate, you know, good product, good location. Like that's that's even more important, actually. Uh, and not overpay, right? We we were we were never in any bidding wars. I mean, there are people that paid a lot of money. I just funny story. We we did actually find something on MLS that we really, really liked. It was just uh it was a brand new cabin, beautiful view. It was a floor forward, it's beautiful pool, like like one of the best pools I've seen. And the house is like it was like brand new, like finish. Um, it was like it basically looked like gold, like it was like this shimmery, like really, really golden brown color. And my wife were like, Oh, how this is really good, we should get this. And uh, we bid uh in hindsight a kind of stupid number. Thank god we got outbid by someone else that paid a hundred grand more than us. Like, thank god, like sometimes the best deals that you know, like like as but discipline as you can be, you still make mistakes, and like I you know, thank god, or that's someone's looking out for us because like we lost that, and now like obviously you know that thing's not trading at that level, it's not trading at 1.8, it's probably like way below that. Um, but thank god that got the the person that bought it at 1.9. Like, thank you for them because uh it saved us the time, saved us a big headache there. But yeah, anyways, it's just just a funny anecdote. Uh, sometimes the best deals are the ones that you don't do, actually.

SPEAKER_05 27:05

That is true. I mean, they said 25 of people are underwater right now, man. They it's it's it's getting ugly out there, so yeah, good looking, good job to that person.

SPEAKER_02 27:14

So speak towards that because you're saying you're making these uh like during the holidays, $18,000 a month profit on these and these cabins over there in the Smokies. Now, I know that the secret was out a few years back of the Smokeys, and everybody went there. So, is there saturation in the Smokies? Oh, definitely.

SPEAKER_04 27:31

There's uh something Air DNA that came out, you know, that you know, supply continues to grow in the smokies, demand is you know, the growth of demand growth is coming down, so there definitely is an imbalance now. Um, we're gonna see more of that in 2023. So, really important that if you're still if you're there, that you just you make sure you operate at a high level, right? You gotta be 50th percentile or above, right? Because the smoky is still gonna get people, right? You gotta understand, like people are still gonna come to smokies. It's not like people are gonna not go to smokey's, it's just they're gonna have a lot more choice. So you just make sure that you are you know a cabin that gets chosen. So cabins that are mismanaged on price, you know, not great decor, that kind of stuff, ad location, those are the ones that are gonna um, I think feel more pain, but all of us are gonna feel some pain there. Uh, but you know, that is kind of the nature of the game a little bit. You know, you have to their cycles, right? It goes up, it goes down. So I was talking about like just being consistent in the in the growth of your capital. Um like if you went all in the last six months, for example, and smokies, then you know, if you don't have a big cash reserve, you're gonna you might be in some trouble for the next uh 12 to 18 months.

SPEAKER_02 28:43

12 to 18 months, wow. What is up, live let thrive fam? Here's some more Stevie Stacks talking about mother loving hostfully, the only PMP you'll ever need for your growing short-term rental business. What's a PMP you ask? Well, it's your property management platform, of course, the thing that runs all your things. And hostfully's PMP plugs in all your listings across all your different platforms like Airbnb, VRBO, Booking.com, and more, and puts it all into one convenient spot where you can update, edit, change, improve any of your properties instantly with just a couple of clicks. It's insanity. So, in other words, it takes this clump of chaotic mess you created while building your short-term rental business, and it cleans it all up for you nice and pretty, like puts a bow on it, makes it run efficiently, saving you hours and hours of your own precious time so you can go do what you do best, grow your damn business, or build a kayak or jump into a cold river naked. I don't know what you'd think, and I really don't care. But Host Flee cares, and they're here for it, and you. But seriously, my short-term rental management company has grown to over 70 properties in eight different cities across three different states, and I sure as hell couldn't have done it without the help of Hostfully. For real, I've been using them for a minute. A minute in the urban dictionary sense, meaning a long, long time. Now, y'all, you know we keep it real on Live Let Thrive, and Hostfully keeps it real as well. And they keep that PMP hand strong, because PMP ain't easy. So show some love to LLT by clicking that link in our show notes and getting a hundred bucks off Hostfully's property management platform, plus two free months of their industry leading digital guidebooks. Two free months. Holy crap, hostfully.

SPEAKER_05 30:34

Now, I do have a question for you. So, like, you know, Airbnb is now showing the total price, and you know, everyone on Instagram was just flipping out. They're like, you know, everybody's booking just took a jump off a cliff. Have you started to notice that in either the Smokies or Philly?

SPEAKER_04 30:49

No. Wow. No, sir. No, sir. No, we um look, I think the people that uh the people that complain candidly are the ones that like have trouble in their business, and like that's the only way they can like kind of talk about it. The people that are making money, they don't have time to talk on, they don't have time to post about how you know about stuff like that. Um, no, we're fine. Uh again, I think if your product is good, you're gonna get booked, especially in a in a good markets that have steady demand, like in Philadelphia, like you know, Tennessee, like an Austin, you know, things like that, right? Like those markets are always gonna get booked. So as long as your product is a certain level, like you'll you'll you'll be okay. Like you'll get booked. Maybe your rate might not be as great as before, right? Like 2021 rates were an anomaly, right? Those were those aren't coming back. And if you if you bought based on that price, like it's gonna hurt a little bit, like it's gonna be materially below that level. But if you have a good product, you might not get that price, but you'll get the occupancy. The problem is if you don't have that pro you don't have that product, it doesn't matter how low you cut. I just under a certain level you can cut, right? Until you get like the the squatters and the the druggies and you know, you know, partiers, right? Like you get you get the people that you know start cooking in your in your in your places. Um and then you're out of the game.

SPEAKER_02 32:15

That's my target market, bro. 29 bucks for a three-bedroom. Yeah, fuck yeah. Come on in, cook it up.

SPEAKER_05 32:26

No, in those markets, because you know, like having a 12, 18 month reserve, you know, when stuff goes slow. How do you analyze those vacation rental market properties? Are you just because I know it's everything's based on short term? Like, how do you analyze to say, okay, this is a sh as a short term, this is gonna do this? Because in metro markets, I analyze it based on long term, and then the short term is just icing on the cake, right? How are you analyzing those deals?

SPEAKER_04 32:50

Um, so I I have a I have my own system that I design uh where I rec I, you know, uh so I'm you know, my finance background is like I have an MBA from Cornell and you know 10 years in in a bank, you know, looking at deals, right? And you know, underwriting is underwriting and building Excel models is like what I did for a very long time. So, you know, building my model and then you really using air DNA, using a couple different methods to get the occupancy data to get the ADR data to you know get us to uh a revenue that we're comfortable with, right? And then developing a a you know base case, high case, low case, and then knowing our knowing our um expenses, right? To drive a profitability number, and then taking it that how much investment we're going in there, what's my payback period? So a bunch of different things that we look at to uh make sure that we're you know getting into an investment that we we think has a high probability of success. Um, I mean, like I respect definitely the long-term, you know, kind of having the long term as a fallback. Uh that definitely works. It's a really good approach because you know you always have a fallback position. But in the smokies, though, like you would never do the smokies because there's no those cabins do not have a long-term renter in there, right? Those are short-term, those are all vacation folks. Yeah, they don't ever, yeah. Like you you you want to you won't even cover your like electricity. I mean it'd be hard to cover your electricity bill with uh with the long-term rent.

SPEAKER_05 34:12

Yeah. Yeah, that that's why I eventually want to get into the VR space because it is way different from the metro markets, definitely.

SPEAKER_04 34:20

Metro markets are metro markets are great for uh for for arbitrage. Where do you uh remind me where where are your arbitrage where are your units?

SPEAKER_05 34:27

We arbitrage in the DFW area, and then I buy in a smaller rural area, but I'm gonna start once I start really ramping up to the number of long-term doors I want in the metro areas, I'm gonna move over to the vacation rental market because I'll have that model.

SPEAKER_04 34:42

What do you think are the Dallas rules that are coming out?

SPEAKER_05 34:45

I'm it sounds like to me, it sounds like they're going more towards the Philly route because you guys said you're good in commercial. Seems like they're more or less Dallas just one doesn't, you know, the older demographic just wants them out of residential neighborhoods. That's basically what it's sounding like. Um, I don't know what else have you heard, Steve?

SPEAKER_02 35:06

Say, yeah, same thing. The single family homes and residential areas. Uh they don't it doesn't look good for them. Um, we might still be able to do it out of uh, you know, apartment complexes, uh multifamily stuff like that, kind of like what Arlington does. Arlington, Texas did the same kind of thing. Um, but yeah, single families is not looking good. And it's funny, I'm in a group that that talks about this, and what you know, they that they're part they're involved in the fight, and a lot of today. Some were like, Well, what is y'all's plans? If you know, I have like five houses in Dallas. What are y'all's plans if this if this goes through? You know, what do we do? You know, well, I hope you didn't base your numbers on short-term rental numbers because you gotta either turn them into regular traditional long-term rentals or you know, corporate rentals, or or sell these, or sell these things, you know. I mean, there's not really you can't just say uh your business is dying because of this one thing, you shouldn't have based your whole business on that model. Yeah, yeah, yeah.

SPEAKER_04 36:03

Yeah, you know, for people that are bought that bought based off that, definitely um, you know, getting in some trouble, right? And and that's why like you know, my point, we like I would never I would never buy short-term rental, like I would never buy short-term rental based off of just those numbers in an area like Dallas, right? Like I would it would have to pencil as a at least an MTR, if not a LTUR, for me to do that deal. But they're just those deals don't have a lot of juice in there, right? So I think for me, it's more like doing the work to try to find markets. There's another one that we found too that we really like where kind of vacation rental market um that we feel will have longevity there that we can buy, invest, and give us some really you know good cash-to-cash returns. So yeah, I like following the herd is uh it's not it following herd is tough, right? Because you're you're kind of late to the game, so you're buying other people's bags at different at a certain point there. So you just have to kind of be careful.

SPEAKER_05 37:03

Yeah, because I know right now everyone's running down the Alabama Gulf Shores. So like you start seeing those markets where everyone's just piling in there. So yeah, you definitely gotta. I like how you said you're doing your own research on different markets. Uh, because I mean, think uh Rose Tipka came on and she told us about a market up in Michigan, like or I think it was Michigan, we had no clue about, but it's killing it, you know. So there are still those markets out there, especially if you know an area, like if there's I think there's areas in the Pacific Northwest that people would die for it. They just don't, you know, you if you just know about it and take advantage of it.

SPEAKER_04 37:36

Yeah, so yeah, like just networking, talking with people that you get along with, um, you know, just being acting, you know, kind of being a being a good person, right? Like sharing your information. You got people, someone's looking for help, help them out. Um, and then everyone does better. So very much, very much on that mindset. Like Alex Sabia, too. Like, he uh he helped a lot of people helped me, like questions I had on a new purchase that I bought, like he helped me out trying to figure out you know what to do, you know, certain things I didn't know about. Like he's like, Oh, okay, I did this and that and the other. It's like, okay, well, this is actually really good advice. Um, so even people that have been, you know, I've been doing it for a long time. I still get it, you know, still learn from others. So keeping an open mind for sure. Uh, you know, listen to you guys, especially your show. Y'all's uh got good nuggets, really, really good, uh, really, really good nuggets. So I love it.

SPEAKER_05 38:23

Ah, thank you for listening, man.

SPEAKER_02 38:24

We try that's what we should change our name to good nuggets. That's instead of Live That Thrive. Um, I'd touch on one thing because you you know, you mentioned in the past, I mean is the you know, so people come into markets, but you're you're established and you do things a certain way that you're you're not worried about these um these scrubs coming into the market, right? So, how do you differentiate different it's a hard word to say when you're on a whiskey? Differentiate your your units from from those, you know, young young scrubs coming through, these 20-year-olds that are trying to, oh, I'm gonna get me an arbitrage and do this and that, and then they get their asses kicked, but you do okay. How do you do how are your units different than theirs?

SPEAKER_04 39:03

Yeah, like I I mean there's some really smart 20-year-old kids, so uh uh you know, I don't want uh Chen Z to give me mad. Not too many, not too many. Uh but uh, I would say you you know, one thing is they're undercapitalized generally, they don't have enough money to, you know, they have enough for the basics, they're like, you know, kind of more of an IKEA special versus doing, you know, kind of giving giving the design, using design to your advantage and having it look good, right? I'm lucky my wife comes from a luxury goods background, she spent a bunch of years at Tiffany's, so she really understands like the luxury game, making stuff look nice and giving the guests a good experience, right? So that I think that's the first thing is not maybe not enough capital to actually do it right. And second is just not having the right systems in place. And what I mean by that is they're just on Airbnb, they're not on all the different platforms, and they don't know how to actually do like have a proper guest experience. So, you know, they can't consistently keep above a seven, you know, 4.85, 4.9 reviews, and they're constantly, you know, have a bad guess, then they have to take down their listing, redo it again, and then you know, they're always like brand new listing, or like you know, eight reviews at like 4.73, and then you know, a week later that listing's gone and to do it over again. Like I like I know this game too, right? So um, you know, that then that that makes it a lot tougher business because you're always going uphill because your product's just not good enough, and you know, you can't scale that way, right? Like you're gonna recreate your listings every like two months. You can, but you know, it's just a lot of time. Um that time can be spent if you kind of did it right in the beginning, right? That time can be spent on on growth.

SPEAKER_02 40:43

You you know that reminds me of. So we have a buddy, a friend of the show, he listens and and he's um friend of ours too, Elijah Ballel. You know, you know, Micah, you know Elijah. He comes to all of our yeah, he comes to all of our events and stuff. Uh, so so two arbitrages that we manage for somebody. Uh, they wanted out, you know, it's a slow season, people are struggling, and they're trying to buy a house. So they just wanted them off the books and said, Hey, can you chop these around, see if anybody wants them? So Elijah said he'd take them, right? And so they're, I mean, they're even giving them the furniture dirt cheap, you know, the IKEA special, like you mentioned. And he's saying, and I said, Well, you get this furniture dirt cheap, you're getting into these things, you can start making money day one. He's like, you know what? Uh it's a good deal and all, you know, but yeah, I don't want that furniture, you know. I I I want he he mentioned you, Micah. He's like, you know, I want the I want to travel, I want to, I want to target a certain demographic, I want to have king-size beds, I want to have this kind of furniture, this kind of sofa, this kind of TVs. He goes, So that stuff that got in there, you know, it doesn't fit what I'm going for, even though it's dirt cheap. I'm gonna go ahead and put in what you know, the stuff I'm gonna have my designer design it correctly, and I'm gonna have my things that that that target the people I want to put in there. And I was like, Whoa, that was uh gangster right there. That was pretty cool.

SPEAKER_04 41:54

Yeah, you don't want to inherit someone else's problem. Look, I mean, sometimes it's because something's cheap, it's cheap for a reason, right? Like, don't get fooled by that. I mean, you're trying to operate you still gotta pay that rent, so yeah. No, it's funny that the deal that we're doing right now, there's a bunch of furniture in there, but we're it's like the landlord was like, Oh, you know, there's like I'll sell it to you. I was like, I don't want it, you can throw it away if you want. Um like I don't want any, like, and he was like, Oh, really? Like, you should. I was like, I don't need like I wouldn't put full-size beds in a bedroom, like they're king beds, like people are on vacation. Like, that's how you get that's how you get to 85 percentile and above, right? Like, that's the game. That's not like queen beds that like metal, like metal um bed frames, no box spring. Like, that's not gonna do, like, that's just not gonna work. Someone that's gonna pay like 275 a night's not gonna want that, right? You're gonna get like someone's pay like a buck quarter, a buck and a quarter, and you know, leave your kitchen in a mess. And I don't know, it's just it's just not like there's just a way to do this um properly, which you know, we've been able to develop over the last few years. And for us, it's like look, we built a mousetrap that we know works, so we're just gonna replicate that mousetrap. Like, not smart enough to build another mousetrap, just one thing that works and just replicate that.

SPEAKER_05 43:04

One thing you guys are really you guys are both robbing from Good Jeremy is because like if you're buying turnkey units, because I I watch a lot of Alex Savia too. I I follow all the short-term rental people. He just bought one, I think, down in uh I think the Smokies are somewhere.

SPEAKER_04 43:16

And he said it's closed, yeah.

SPEAKER_05 43:18

Yeah, and he's like, hey, I uh this thing was turnkey, but he said I had to go get new stuff because when you're when you're buying, doing like the turnkey thing, especially right now when people hop into the game, you do have to be prepared to spend that extra cost because we all operate differently, right? Some people don't operate with the target market, some people don't operate uh to the level that you want to operate at. So you got to be prepared to go ahead, yeah, you're getting it turnkey, but you might have to get rid of all that stuff because if they're operating, catering to this group and you want to cater to this group, you got to set aside that cost. So in the short term rental space, I don't think there's a such thing as a turnkey investment. There it's turnkey, but it's not because you definitely have to change things up, man. Like people just don't operate the same. So systems are different as well, you know. Like I gotta have a sta fi in all my systems. They probably don't have those. So it's so many things that that come into play on that. Good point.

SPEAKER_04 44:08

But hey, hey, you gotta look at you gotta look at Sabia's la uh latest uh video about how you kind of kind of hack around um stafy. I actually think it's like way, I actually think it's a better system. I I actually think it's a very elegant system that he's cracked, and we're gonna do the same thing in our cabin. So I think it's a great idea, actually.

SPEAKER_05 44:25

Go ahead, do the throw it out there.

SPEAKER_04 44:27

Uh no, so basically, like you know, you throw out a QR code, right? So basically, you know, everyone wants what's what's what's the first thing you go when you go to an Airbnb? What's the first thing you gotta do? Besides use the bathroom, maybe right. First thing you gotta do is what's the Wi-Fi, right? Everyone's like, What's the Wi-Fi, right? So, you know, you walk around the house and look for the Wi Fi, right? It's either in the manual or maybe they post this sign. So what's a better way of doing that? Post a QR code, and now everyone posts COVID knows QR code, public QR code, it goes to like a Linktree site, for example, right? Has your thing on there, but it's also like, hey, give uh send uh give us your email for you can also be like, give us your email for the um for the Wi-Fi information, right? They have a subscribe button there, it goes right into your MailChimp, and then the return message can be like, this is your Wi-Fi password. So it's the same thing as Stafi. And or you can put it on other parts of the other parts of the link tree. And also then you can like say you have a ref uh a referral code for Doordash or GoPuff if you're in Philly, right? Like we do, or discounts for other um discounts for other vendors in your market, for example. So instead of StaFi, where you know you get the email like Waha, and you're paying like 200 bucks of equipment, it breaks down, you got to get someone to fix it. Like this is way more elegant. You have no other equipment besides your internet, you get the email right into your mail chip, and you might make some money from the referral codes, and you like give them a better experience because they click on it for the house guide, click on it for coupons, this, that, and the other. So you it's a revenue source for you versus being a revenue source for Stay Fife, sir. And that's Sabio, that's not me. And we're doing that because Sabio uh craft a code on that, and I love it.

SPEAKER_05 46:08

I like that. I like that link tree play. That link tree play is a big one. That that is a big one. I like that, and then it's free. I know it's free.

SPEAKER_04 46:15

You can send it link you want, and and you and you you can manage it remotely. You never have to worry about your your state fire breaking down, someone underplugging your internet, any of that stuff, right? And you're not paying for the equipment, you never have to worry about it.

SPEAKER_05 46:28

Like that. Has he found uh has he found a way to grab their email, their their their phone number, though?

SPEAKER_04 46:33

Uh I mean you can you can you I mean you can pay for the higher tier and then have it um take the email too. I mean, take the phone number too. There are ways that you can play around. Look, once you get them to on your site, you can do whatever well, you can do whatever the heck you want, right? It doesn't have to go to a link tree, you can just go to a landing page, for example, that you know is just like, hey, you like thanks for staying at the cab and enter your name and phone name into your name, address, phone number, whatever, your birthday, for example, whatever it is, that goes on a form into MailChimp. And then if you know the MailChimp, you can set it up where it gives you an email right away or text right away if you want to hook it up to um to uh uh Twilio or something, right? So then it shoots them over the uh the Wi-Fi information. You can do any you can do anything once you have it on the website, you can do anything you want.

unknown 47:18

Amen.

SPEAKER_04 47:18

That's the beauty of it.

SPEAKER_05 47:19

I want to be in touch with you regarding that because I want to know your progress because that that is dope. I like that. I like that.

SPEAKER_04 47:25

Yeah, no, not my again, like you know, I just you know, like try to find good ideas from people and just try to you know just tweak it so it works for me. So um again, like just keep you an open mind, right? Uh, on how you can be better, because there are a lot of smart people in this industry, and uh just find smart people and I learn from them.

SPEAKER_03 47:45

Go ahead, Steve.

SPEAKER_02 47:46

Yeah, uh on that note, how do you um let me see what's your percentage of stays that are direct stays instead of like from Airbnb and stuff like that?

SPEAKER_04 47:53

This is this is this is the sad part. I uh I gotta learn from you guys. No, we're we're probably 70 Airbnb and the rest uh verbo, booking, expedia, but we're we're predominantly Airbnb. Uh direct booking is like sub two percent, maybe.

SPEAKER_02 48:09

Oh, okay.

SPEAKER_04 48:09

It's not much. Philly, Philly people don't come back, right? So that's one thing. Philly doesn't really work. Uh smokies, it would would work. We haven't cracked the code yet. You know what what I talked about, what Sal what Alex just did, we're gonna, you know, we'll obviously we'll try that as well. Um but we yeah, we haven't we haven't cracked the code. I have a different mindset about direct bookings. Um I want my you know, Airbnb does a great job of marketing, and I know building your house on someone else's land.

SPEAKER_05 48:37

Um Mark Simpson.

SPEAKER_04 48:40

I get it, I love Mark. Um but I would say, you know, if I can build a really, you know, if I they're helping me with marketing, you know, their systems are gonna be way better than mine, right? So why don't I just build a really nice house on that and then drive traffic to that and it's gonna convert for me? Um, there's definitely a risk of getting kicked off of that. So definitely mindful of that. But we're just you know, again, we we don't know how to do that kind of direct marketing well. And I I did the math, it's just like we might make a little bit of money on that, but I'd rather spend that time on you know, making money, like doing stuff that we're already good at, just kind of like taking that mouse trap that we know how to do and just like pouring resources and time into that versus trying to build different mousetrafts because um it's hard, like it's hard to find something that works, right? And that's the thing, also, like people in a lot of different markets. I don't know how people do that well. I mean, some people can do it really well, but for me, it's like find like one, two good markets that like you really know, get know the right cleaners, know the area, know all that stuff, and then just like grow there. Uh, that's our strategy.

SPEAKER_03 49:46

Good idea.

SPEAKER_02 49:47

Yeah, yeah. Um, here's one thing with the because we go through this too, you know, we're trying to get to the direct bookings and and I lost my trade of thought. Because you're saying you got like around two percent, right?

SPEAKER_04 50:00

Two percent very, very low, yeah.

SPEAKER_02 50:02

And and I'm thinking automatically, I was thinking, well, Philly, yeah, you see it once, you're good. But but the smokies, I was thinking, man, that's more like a family-oriented thing. They go there and they see like a family vacation. It's like this is really nice. We're gonna rent this. This is a beautiful place, we're gonna rent it next year. Everybody, we're gonna rent this freaking place next year, and I think that would that would just be a uh a layup, right? I mean, in my mind, I'm like, you just you have all your your QR code, boom, boom, boom, rent it next year, you get a 10% discount. I don't know however you want to do it, but it seems like a layup.

SPEAKER_04 50:33

We we've done that, yeah. That's exactly what we do. That's like the for us, I think kind of the lowest common denominator there is just like we get their emails from you know, we get their emails a certain way, and then we will every month, like one of the VA sends the email, like you know, find some local event, and then if you come back, you know, use our direct booking site and take 10% off. Uh, actually, we we give 200 bucks off because 10 on some of those nights are too big, so I can't give that, I can't give up, I can't give up that much margin.

SPEAKER_01 51:00

Right, right.

SPEAKER_04 51:01

Um, but I'll just pay him, yeah, give them a couple hundred bucks off to rebook. We've had one or two. I mean, the thing's only been there for like two years, so there's not enough time for that to enough emails and time for me to come back. But I agree with you, right? Like you have to know, you gotta you need to know, you gotta get the info for your own guests, right? Or they're Airbnb's customers. So you gotta get your email, name, phone number, and then like converting that into direct bookings. We need to we need to do a better job of. So if you guys got future guests that are like ninjas of that, please uh book them so I can listen to your listener to the show.

SPEAKER_05 51:35

One thing I will say, Steve made a good point. People coming back is definitely a it's a target audience type thing, right? So when you come to Philly, I don't know what your target audience is, but wow, I've been getting people to direct bookly come direct book with me in Dallas, is I'm I'm I'm starting to really shift towards business travel. So I had this company, they just booked my two of my places directly in Dallas, but I'm just kind of networking with the business. So then they come back. I think Philly, if business travel is like kind of more your style or niche up there, you could definitely get people to book direct. So direct bookings is very much it's a target audience thing. If you're just having uh more or less tourist transient, it's usually not going to get direct. So I wouldn't even waste my time if that's not your target, you know. So yeah, that that target audience is really peak key when it comes to direct bookings. Um, if you want to listen to guys want to listen to a really good episode on like getting direct bookings and like vacation rental markets, I would say listen to our episode with Rose Tipka. She does a very good job of doing it. Like, and it's kind of how Steve said it, the family-oriented thing. Like she networks with all the local people. And same with uh, what's his name? Um, Doug.

SPEAKER_02 52:46

Doug's how's it say Doug?

SPEAKER_05 52:48

Doug's the beast. Doug's the next level at it. Like he he has them, like he knows his audience so well. Like he has some fishing poles already laid out when they come. He knows they like to fish. He he he goes, Yeah, Doug takes it to another level. I was like, damn, like if a concert's coming, he sends them an email for the concert, but he goes and buys them tickets for the concert. I'm like, damn, bro, that's crazy. And they're guaranteed to come. Like, hey, oh yeah, like they're coming. It that was next level. It's so much and it's one of those things, like you said, Michael, it's one of those things that you just kind of have to spend time doing it. He's been doing it 30 damn years. So, I mean, you know, so yeah, yeah, yeah.

SPEAKER_04 53:28

It's it's definitely time and like uh that's a lot of work. Um, I look, I I respect people that really take the hospitality to that level. Um, that's I think that was kind of like that's the Airbnb. That was the maybe Airbnb ethos, you know, like just really hosts is there, guiding them through a neighborhood. Um, and like got you know, bless them that they do that. That's that's great to hear. I love that. I'd love to hear that. Um, we got to figure out a way to do it like that fits what we try to what we do. Um we're at kind of the opposite in a way where like we try to talk to the guests as little as possible.

SPEAKER_05 54:04

Same here.

SPEAKER_04 54:06

Like, like it's a win if we never if they never talk to us, is actually for us and get us a five-star review. That's actually a win, right? Because you know, we all the automated messages, all everything is like they have everything they need, they don't need us. Um, but yeah, that doesn't translate to you're right. That doesn't translate into direct bookings.

SPEAKER_05 54:24

That's just uh that that's funny you say that because I I am the very much same way on Airbnb. Um, when I do get them, because once they're on Airbnb, I do try to, you know, I try to guide them as much as possible to book direct, you know, like the the stafy and stuff. But I am like that. I'm kind of like, uh, hopefully it's talk to me at least possible. I don't mind direct booking guests call me because they are a great source of sending someone else to your place. That is the good thing about it.

SPEAKER_04 54:50

For sure, for sure. Um, yeah, look, I yeah, we that's definitely something that uh taking note of. We'll definitely listen to Doug and Rose. Um, we we yeah, that's something that we can definitely improve on. Uh we're just trying to right now is it's like trying to get more for us. We think arbitrage right now, arbitrage in 2023 is gonna be look, I think arbitrage in the last we haven't we actually didn't really grow last year because the rents were crazy, right? Like there was like very little supply, and the you know, rents were 20 percent 20, 25 year over year like increases. So rents are crazy, no concessions, really no supply. And we're like we're like competing. It was funny. I was talking to I was talking to someone today that owned the building, and he said they had to get some ace, they they had to get some work on the seat on the on the roof. It was a million bucks that got quoted. They waited for a little bit, and then during co or during like last year, there was like the the vendor came back and said it was like 2.4 million to fix it, and they're like, No, we're gonna wait. And then they waited like till they just signed a contract with them like a few weeks ago, then it's back on at 800k. So just just a sense, I mean, just it's just one example. It's just like you know, this pricing was just crazy. So we waited. So we waited to we wanted we waited till like the market was just more rational. We did our underwriting, we're like, this we can't make money here, so we don't, so we didn't do it, just wait it, be patient. And now we're seeing, you know, deals for like three months up front, three and a half months up front, you know, significant discount to asking rent, uh, you know, more friendly tenant terms to us, uh, because it's winter and people are worried, there's more inventory coming online. So, you know, it's the thing. You just you gotta sometimes the best thing to do is nothing, right? Or sometimes the best thing to do is arbitrage, sometimes buy, just have different skill sets. So when the market, whatever market condition you're in, you can still thrive and still make money, right? Ultimately, it's to make the goal isn't to like be busy and like you know, just like hustle culture. We're like, I gotta be doing something, right? Sometimes the better thing to do is just like do the research and just wait. And then when the time comes, like right now, like we think it's a good time. Um, just you know, got these 13 units, we're looking at 40 more, and we didn't do like we didn't grow anything in the last few years or last year and two months in Philly. Um, but now we're gonna you know put the put the pedal to the metal.

SPEAKER_05 57:06

I hope the credit, the the listeners just heard that gym you just dropped. That's one gym that about arbitrage, people don't really pick up on. If you pick them up in the winter time, get way better rates, way better concessions. You pick up arbitrary, that's the perfect time to pick up arbitrage in the dead middle of winter. Or go to do it.

SPEAKER_04 57:25

No, I I want I want to pick up units in the middle of January, right? So that like my first month, it's gonna be bad, but it's gonna be bad anyway. So I discount it, get some guests in there, and then when March comes out, and I have a review, I have a five-star, you know, eight reviews, all good reviews, because like they didn't pay that much, and like it's a brand new place, so like they love it, and that's when the high value bookings come, right? Like, you don't want to like you don't want to launch when it's busy, right? Because you have to give low rates, so you're losing money and when you should be making the most money, right? So like I'd rather discount if I'm gonna make a hundred bucks. I mean, if I'm gonna charge a hundred bucks, I'll I'll go to 80 bucks, it's fine, I lose 20 bucks. But if I'm like, it should be 400, I get 20% of that, I mean 80 bucks back just to get that book. Like that math just doesn't work for me. Um, but that also, you know, you need experience doing that, you need money too, right? Because then you're gonna you're gonna be, you know, kind of pretty light those first few months. So you're gonna make sure that you have uh you have uh you have a reserve, right? So that um if it's if the winter is colder than you think, uh you you can you can still be okay and you don't panic.

unknown 58:29

Yeah.

SPEAKER_02 58:31

The main word I heard I heard from that was patience, man. Because like so many people want to do do something right away, right? And people that you know that that took our little course that we we did a little uh you know, a little thing back a few months ago, and they're all hyped up about getting into it and everything. They never did, um, which is most people they never jump into it, but then there's some that just want to jump into it right away, do you know, get whatever rent they can and and you know overpay, you know, just to just to get in the game. Whereas a little patience, you know, back then they were dictating, no, this is the rent, no concessions, no nothing. Now it's starting to crack a little. I I mean I have a buddy that um contributes for bigger pockets pretty big, and he and he pretty yeah, not to shoot my own horn, but is a pretty big dude in bigger pockets. But he he called me up uh, you know, FaceTime. He's like, 'cause I because I put something, I put a comment on one of his things. Hey, let me let me do some short-term rentals at your at your brand new uh complex you're putting up because and he was pretty much saying, Hey, why would I do that? You know, I'm getting top of the market rent, I'm getting this much money, I'm getting all my rents, I mean, I'm getting 100% occupancy. Why would I give some to like someone who wants to do short-term rentals? It doesn't make any sense. And I'm like, I was like, You're right, dude. I mean, if you're getting if you have no trouble filling your units and you have no trouble getting the top dollar, you know, for every single unit, that's fine. And we were just in a in a time where that's where that was happening, you know, it's not like that anymore. I mean, things are coming down, and so that's when we we were able to get good deals and get in there and say, Hey, you're at 50 occupancy. Uh, we can help with that. We can grab a few units and we could do some midterm, short-term rentals in your place, and they'll and they'll give them to us, you know. It just depends on the time, and and the timing is a is a huge thing, and being patient and getting those good deals, yeah.

SPEAKER_04 1:00:17

Like you're right, just being just being patient, being patient, right? Doing the work up front, underwriting the deal properly, and then you're gonna make money, right? You're gonna make money consistently. Like that is the the goal of this is to make money. The goal of this isn't how many dual wars you get, how many revenue, how much revenue you have, right? It's it's how much money you're making. And you know, gosh, if you're making 300 bucks a month and you're working your you know, working your butt off and managing short-term rentals, like that doesn't pencil for me either. Like it has to make enough money for it to worth it to work to be worth the time because it's it's it's uh you know now we've automated it, but in the beginning, like it's it's definitely work, like you know, you're uh you're working, you're working hard, right?

SPEAKER_02 1:00:59

Uh big time, yeah. So who has the best cheesesteak? Uh I for I forgot the name.

SPEAKER_04 1:01:12

It's not Pat and Gino's. I should have just said Pat and Gino's. I should just say Pat or Gino's just to just there's a place by the Home Depot actually, um in South Philly that's like really, really, really good. It's like five minutes from the from the um from the uh it's it's called it's called John's, actually, John's barbecue. Um it's like right on the rural tracks in the kind of South Philly there. Um it's only open like certain times of day, but it's like a really, really good cheesecake there. Uh cheese stick there. Uh so that's where I go. Forgot the name. Um nice.

SPEAKER_05 1:01:43

Check it out because that I'm I'm supposed to be going to the northeast here soon. That's the only part of the United States I have not been to. So I was supposed to go, but COVID hit and I was took me out, couldn't go. Uh so yeah.

SPEAKER_02 1:01:55

I I'll tell a quick story real quick. Yeah, so about because a few years back, I mean, it was I guess it was the first time that the Powerball passed a billion dollars, whatever. My dad was saying, We gotta buy tickets, we gotta buy tickets. I was like, I don't play that shit, whatever. So he's like, No, no, no, because I work, you know, I still work, I'm I'm I'm this is my last year with the airlines, but I still work for an airline where we you know fly for free, whatever. He said, Let's get give me let's let's hop on a plane and go to Philadelphia and buy some lottery tickets. I'm like, Why the hell are you gonna go to Philadelphia? He's like, Because I I studied it, you know, 13 of the past 15 um Powerball winners are from that's that area, you know, uh the northeast and the Philadelphia, uh Pennsylvania area. I was like, What? He's like, Yeah, yeah, I saw it on the news. I was like, Oh, I was like, he was bugging me, bugging. All right, freaking let's fly to Philly. You're buying me some cheesesteaks, though. I'm gonna get us on a plane, but you're buying us some cheesesteaks. And we talked to some people on the plane, and we're just like, Okay, which one should we go? Pats or genos, you know, that's all we ever heard of. That's all every here in Texas. We all we had Pats and Gino's. He goes, Don't go to those tourist spots. He goes, Go to this place over here, take this, take this road over here. It's called um Steve's Prince of Stakes. That's what that's I you know, you might have heard of it. I never heard of it, whatever. A little freaking hole in the wall, whatever. We went in there, and you know, like I said, we flew in, took the train, freaking, you know, graffiti fucking scenery all the way down to the downtown area. I was like, No, this is a gritty ass city, man. This is in the winter time, too. And then and then we uh I went to this Steve's Princess Steaks, a hole in the wall, fucking carpeted peeling off. I mean, this little, but the cheesesteak was uh fucking out of this world, dude.

SPEAKER_03 1:03:32

Nice.

SPEAKER_02 1:03:32

And they said, Don't don't get whipped, uh uh what's it called? Whip, uh, the the cheese whiz on. Don't get cheese whiz on it. Get this provolone, get whatever. I did the cheese whiz. I gotta do cheese whiz, you know. Anyways, fresh vegetables, fresh slices of these steaks. I mean, this thing was amazing, right? So I do remember that. So they said to stay away from those touristy spots, get get go to this um Steve's Prince of Steaks. You said another one that's probably pretty good, really good. We bought like a freaking everybody heard that we're going to Philadelphia, and so we're we bought like 500 of these damn lotto tickets. I think we didn't hit nothing, and uh it was an experience. I'll talk about it the rest of my life. So I'm cool, I'm I'm glad I did it. But I was really not too impressed with Philadelphia, man.

SPEAKER_04 1:04:14

I wasn't really it's uh yeah, no, it's uh it was gritty, it was gritty, it's definitely a gritty city. Um uh but the the food, the food, the food scene there is actually pretty pretty legit. And uh coming from New York City, uh, you know, there's some really good restaurants there, and but you know, people like people come to people go to Philadelphia, and that's the thing on on the market side, right? Like you want to find markets that you know there's a lot of a lot of different people come, right? So you have a lot of different sources of demand, like Philly has a sports, it's business, has uh education, right? Has a lot of universities there, has a lot of hospitals there, and it's in the northeast, right? So, you know, northeast higher adr, so we have more money to spend. Um, so that's I mean, look, I don't want to keep pitching Philly because I got a bunch of people that listen to podcasts now gonna be my competitors. Um, so it's actually really bad. So don't come at all. Um uh go to go to Dallas Fort Worth.

SPEAKER_05 1:05:11

Oh man.

SPEAKER_02 1:05:12

Damn. Right, you know, Sean. Our buddy's Sean Rasij, he he's in Philly and he he was getting his ass kicked. So he's not a big fan, and he's a lot more followers than we do. So yeah, I don't think a lot of people are flooding Philly anytime soon. Yeah, yeah, yeah. No, Sean, Sean uh Sean's Sean's doing great.

SPEAKER_04 1:05:31

Sean's Sean's I think he just got a penthouse or something like that. So uh he's doing well.

SPEAKER_05 1:05:35

He's fine. We went to his yeah, we went to his last penthouse before he uh I think he did get turned into a peer space. So yeah, it was a really cool penthouse, man. So he's a real cool dude, fan of the show.

SPEAKER_02 1:05:45

So he's pimping, pimping, yeah. But he was having a lot of troubles in Philly though, because of the regulations and stuff. Oh yeah. Yeah, yeah. Uh but if he goes your route and gets commercial, he's cool.

SPEAKER_04 1:05:57

Yeah, like we l we learned our lesson, right? So just you know we we we we got our bumps and bruises in in in new york and and and also you know it's just not it it actually is a blessing in disguise because now we operate we have to operate remotely right i mean philly is still an hour and a half drive like i can't i've never uh i can't say never i did one time like an emergency drive down there to like fix something which ended up not being an emergency at all so uh that was kind of a waste of a four hour like four hour round trip drive but you know when you manage when you when you have properties away from you you actually have to force yourself to develop the systems and people so that when something goes wrong like that it can operate by itself right because you just can't physically be there um so actually that's you I think that's just a blessing because if you're if it's further away then you can actually run a automated a run a real business. For me it's like you're always working and you're if you're the one cleaning or you're the one doing all the customer service and there's no path for you to get out I don't consider that a business right you really just kind of bought yourself another job because without you there'd be no business. So it's not really a business should be able to offer it without the owner there. Right. That's a real but so that's like a business that has its own clean for the Airbnb game then it's like its own cleaners, maintenance, customer service right that you're just there making sure that everything works right. And that's when you can actually build the business and so that's what I always like that's what I always preach to people too is like get units that are profitable enough to support a cost structure that takes you out of it. If you're always in it then you're never gonna be able to grow and you know you won't be to it's hard to kind of achieve those you know aspirations that you had for yourself before you did all the hard work and put all that blood spot you know put all that money into it too like 10k for a two bedroom it's still $10,000 cash. It's still real money.

SPEAKER_02 1:07:51

You can find us on credit cards do all that stuff but in the end like you're still on a hook for that that money and just want people to make money from that right and not be uh you know not have this fire sales where they have to get out for nothing um because it's a it's it's painful you know so yeah just like just like balance you know like for us it's like I'm older I'm 42 years old right seeing a lot like it's just balance right just like you know not too hot not too cold just like stuck steady eddy like grow you know live your life uh take care of your kids make money be happy you know go to the gym be healthy like just you know those things you know like you know just enjoy life there you go like you know Ed Steve no no yeah I tell my partner Federico you know we we built this business together we we um arbitrage own manage over 70 units you know I'm saying and so and so we've we've grown this in the past couple of years and and written recently you know some more clients are struggling you know and so it's just been the oversaturation of certain markets and and people are are freaking out you know the the profits aren't what they used to be right now and this and that and but and but I told him dude it's it's it's the cycle of of any business any business you know horse and buggies came came along back a long time ago I bet the first dude that made a horse and buggy was killing it right then everybody then everybody made horse and buggies and he's like what but but I mean it's just every single business right but you got to make the best horse and buggy I guess you got to make the best like you said you know make a a premium quality product that can uh you know outlast you know these these scrubs that come to the market that start trying to price their thing as low as possible and and giving a a shitty product but you just you just make a great product uh at a and making a good profit at a good price and and you're just gonna outlast these people I said this it yeah right now it's oversaturated but all these people are gonna go away as soon as their arbitrage leases you know end or even before because I'm even before I'm hearing a lot of these complexes saying yeah these people are just a lot of people are just giving up their lead you know walking out you know whatever evictions they're doing evictions left and right and so it is it's just the cycle of any business as long as we're doing as best as we can providing a good product don't worry about these scrubs that come to the market try to drive the prices down they're gonna go away they're gonna go away yeah if you're competing on prices is a loser's game um you just you're gonna attract the wrong people and it's gonna cause real problems for you.

SPEAKER_04 1:10:21

So yeah look I mean I look this it's gonna shake out in the next 12 18 months a lot of people that got in you know past six nine months that didn't do it right um you know they're gonna have they're gonna have to learn they're gonna have to learn in they've been playing the game on easy mode for the last I like that time that's six nine months but the game's gonna go on hard mode real real soon so you know like that boss is not gonna be that easy to beat anymore so you gotta be careful and you're competing against a lot you're gonna you're competing against people like me right people like you like people that have systems have people um if you're like a solo operator there that you know is still trying to figure things out if you're just on Airbnb for example right like you need to be on all platforms I tell everyone I tell everyone that like you gotta be we're on booking we're on verbo we're on expedia um like those things are like that's a that's a must have for real for like an STR business but it's not easy it's easy to say it's hard to do right you got to actually learn how to use booking.com and deal with their policies you gotta learn how to like invoice properly you gotta learn how to avoid chargebacks and manage messaging managing calendars like all these different things you gotta you gotta manage different review processes different like different um uh damage policies and a lot of people can't do that um that's where that if you can right then you are gonna be a like you're gonna if you gotta be able to do things that other people can't right that's how you're gonna be successful because if you're just doing everything if you're doing everything if you're just on price labs and Airbnb and like you know getting the eight thousand dollar like package from IKEA you're just like everyone else and it works when the game's on easy mode but it does not work when the game's on medium or hard mode and like that's where the game is being played now.

SPEAKER_05 1:12:05

Um so just you know level up or level out or get out boom level up or level out I love that I think that's a good place to end this podcast what do you think Micah yes sir man like man thank you for coming on and dropping these gems man I I love how you you've got a diversified portfolio you got the arbitrage side you got the owner side and man this is really good talking to you I'll definitely I'm gonna be in touch with you and Alex I'm about to slide Alex's DMs now actually but yeah I love that uh tip you gave out uh shout out to Alex that's it's all his idea we're I'm just I'm just copying his so uh no thanks for having on guys uh this is real this is really fun uh you guys great show um and you know thanks for letting me tell the story oh yeah for sure thanks for hopping on bro where can people find you uh best place to find me is on Instagram uh my handle is uh Michael Chang B M B M I C H A L C H A N G B N V.

SPEAKER_02 1:13:00

Uh that's where I talk about my journey and if I can be helpful for you there send me an DM and um hopefully I can uh be of service to you awesome bro thanks for hopping on and we will uh hopefully you know talk to you again in the future likewise thanks again for having me on appreciate later man that was another good episode man uh you dropped a lot of good gems man i i love that vacation rental market play i think that's definitely something i'm gonna get into in the future vacation rentals and multifamily because yeah vacation rental markets it's the money people make it's insane in that high season insane it it is and and so many and and i always tell my stories about padre so many of these places come hey fully furnished so that like that's a perk and then i i've talked to designers before you know like Sarah and them like uh first thing we do is throw away all that stuff they got in there you know it's like it don't matter foolish furney it's fully fully furnished ain't really a perk it's just furniture you got to get rid of it really is man and one thing he said I actually wrote down something I need to re you when you've been in okay so me and you we've been doing this six seven years six years now right our units and I saw a video from TJ he said this too back in the day it's it's like what you always say you could have just gone and got some IKEA shit thrown in a house and grandma's furniture yeah exactly but then we're like if you have units that you own and been operating a while this is a cost that people don't really talk about you have to have time to revamp those units.

SPEAKER_05 1:14:30

That is something people don't talk about and that's something I'm I have to do right now I just thought about it I have one unit it's been operating for like six years right my my one of my first house that I had it's been operating for like six years but the markets change right I need a king size bed in there. When I was doing it back in the day I was just doing the queens in all of your room like damn I forgot to put a queen king size bed in there. And my unit that I opened up the newer one it's more updated than the one that has like 200 reviews you know what I mean so I'm like well damn I got to update it to look like that one with the king size bed.

SPEAKER_02 1:15:00

So that's one thing people do take into account when you do own these properties and I wish I would have asked him about that uh because I know he's been doing the vacation rental markets for a while after you've owned a unit for a while new things come into place you have to be ready to upgrade that unit like right now one thing I'm doing I'm putting rice cookers in all my places that's one new thing that the Airbnb and the other platforms are you know putting as a checkbox you know rice cookers uh bread bread makers and stuff but yeah that's one thing that revamp cost yeah that that kind of reminds me you know as um my buddy uh David Law you know David Law he helped out yeah yeah D Law um he's been in the hotel industry for fucking 30 40 years it'd be a long time right yeah so they are they've been do they've been doing this for years they've been doing like okay we know the furniture is functional the furniture looks i mean it's okay it's not it's not bad whatever but every few years they do a whole complete facelift man and and is and we can pick up furniture there from hotels for a decent price and and it still looks good still functions still nice you know nice beds nice sofas whatever but they know they can't just keep this old shit in there they all it's it's part of their business plan they gotta re they gotta keep reinventing themselves they gotta keep making the what's what's popular now what's modern what's good looking now you know even if it looks you know even if it's functional and everything's fine and they're making all right profits they got to look to the future we got to switch this shit out every few years we can't just stay complacent.

SPEAKER_05 1:16:32

I love you said that man because that's actually a good if you go stay at like a five star hotel look at the stuff they have up in there. Like it's there for a reason. These people are done markets research is on everything and we're throwing that stuff out because I remember uh remember we talked to Kim and Ann and that's how they started their business was they went to the people they got all the stuff from the hotels that were they were given rid of getting rid of and that's how they started their business. So yeah man that that revamp that's huge man and hotels are on top of that like one thing I seen at a last hotel I said it was actually Texas Live. You know they have those new beds now where it's not really it's just a headboard but it's attached to the wall but they have lights all around it after you you can turn the lights on it goes all around man there's so much stuff if you have the budget man if you could deck your place out like a hotel hotels like a nice hotels are decked out they just don't have kitchens and stuff but yeah you can get a learn a lot from that yeah so we always got to keep changing keep grinding keep in reinventing ourselves and our businesses we can't stay complacent. Facts man facts this is a very good episode man um yeah y'all uh definitely thank y'all for continuing to listen hit us up live let thrive at gmail.com find us uh on Facebook Instagram I'm back on Instagram I'm gonna try to stay there for a while this time Facebook Instagram uh wherever else you can find us follow uh at live let thrive and then um also um we are going to be launching our YouTube membership in about a couple weeks and once we get some videos up just some you know content some snipped content and then some content that you've never seen before we're gonna get that launched and uh y'all remember to subscribe and then once we have that up go ahead and join little cheap cost $9.99 a month and uh yeah man Stevie Stacks Argus Rentals arg E S T rentals at gmail dot no not e gmail dot com just the dot com forget the gmail argus rentals.com that's my company we'll hook you up we'll we'll manage your units so good and we'll find you units we're finding turnkeys for you too man hit me up Stevie Stacks you'll talk to me you'll talk to the man the legend the myth all that stuff and um ugly houses crack houses trap houses hit up Micah there you go ugly houses trap houses crack houses I'm about to put that on a bandit sign oh man yeah hit me up and uh yeah if you got anything for sale keep us in mind DFW Central Arkansas Houston let us know off market only and uh yeah thank y'all for continuing to listen to us and we are out peace later thank you for tuning in to this week's episode of Live Let Thrive be sure to tune in next week for all the latest in the world of Airbnb and all that entails.

SPEAKER_00 1:19:24

Bye bye