Cold open

SPEAKER_00 0:00

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

SPEAKER_05 0:11

Hello, hello, hello, and welcome back to another exciting episode of Live Let Thrive.

SPEAKER_01 0:21

What is up, Micah Man?

SPEAKER_05 0:23

I am chilling, Stevie Stacks. Just got back from a little vacay, but uh, I'm chilling. How you doing?

SPEAKER_01 0:29

Oh good, man. Um, a little under the weather. Went uh my daughter passed a little sickness around the house, got it from school, I guess. And so we all got it. I was the last man standing, and I finally got it. So, but I'm powering through. It's gonna be my Michael Jordan flu game, so I'm gonna be good. I'll be good. Um, this is episode, by the way, 225 of your favorite Airbnb, VRBO, home away, Uber, Lyft, all that share economy fun stuff in the world coming at you from Arlington and Fort Worth, Texas. Deuce in a quarter episode, Micah.

SPEAKER_05 1:02

Let's go to Deuce and a quarter.

SPEAKER_01 1:05

And we have a special guest. Oh, a special guest. Who we got today, Stevie Stacks? Who do we got? You know, we asked him for a bio, and he said, You guys know me. You that's that's how you know he's a big time when he says, You know me. I ain't got to put no bio. Anyways, I'll make a bio for

Sean Rakidzich intro: 222,000 YouTube subscribers and the arbitrage model

SPEAKER_01 1:22

you. He is the host of Airbnb Automated, a YouTube channel all about the STR, short-term rental industry, specifically the arbitrage model with over 222,000 subscribers. He runs the Facebook page, the hosts of Airbnb Automated with over 46,000 subscribers. He's a guru, he's a leader, he's a teacher, a business, a motivational speaker, a wealth of information in the STR world. He gives away tons of information for freaking free, and he's fucking ripped and never misses leg day. He's the goat, he's motherfucking Sean Rakij.

unknown 2:02

Welcome.

SPEAKER_01 2:04

Rakij. I got it close. I was like, man, I did I just doing a good intro, and then I then there you go. It's hard. His name is hard to say, but his game is hard to play and he plays it well.

SPEAKER_02 2:15

Oh, that was really smooth, actually. It was really smooth. Good job. Thank you, man. Thanks for having me. How you doing, Sean? Doing really well, actually. Um, that's so cool to be under Deuce in a quarter. Um, Deuce in a quarter. Inaugural Deuce and a Quarter podcast.

SPEAKER_01 2:30

Looks like you're in outer space. There's like a champagne supernova behind you.

SPEAKER_02 2:34

Oh, I I painted that.

SPEAKER_01 2:35

Um, and he's an artist too, guys. Yeah, so if you haven't heard of Sean, you've been living in a cave, he's the goat, he's the the the short-term rental goat, the the arbitrage guy, and we're so happy to have you

2014 start: three empty Houston apartments became 103 units by 2020

SPEAKER_01 2:47

on the show to drop some knowledge.

SPEAKER_02 2:49

Yes, yeah, totally thanks for having me, guys.

SPEAKER_01 2:51

Yeah, I would I guess real quick, just um a brief synopsis of how you started in this world. I mean, we we all kind of know it, but yeah, for the people that you know, and I said you guys know me because you're my friends. I didn't mean to like be all try to like I'm just I don't know, we're just messing with you.

SPEAKER_03 3:06

Like you guys, you can um so uh when I started my Airbnb, so it was my third significant business. At the time, I was running uh a newspaper media consultancy. Basically, newspapers are dying, like they have been for a while, and I was working with the Houston Chronicle, helping them reach millennials, and so I was hiring sales guys and relocating them to Houston, and I had a bunch of apartments in a high-rise, and then they moved out, relocated to other markets as we expanded, and then all of a sudden I had like three empty apartments that I was paying rent on. So I was like, you know, I'm gonna put these on Airbnb, and that's gonna be the way I'm gonna cover my rent. That's 2014, and that's how I got started.

SPEAKER_02 3:40

Very fast.

SPEAKER_01 3:42

I I've seen some of your videos on how you got your start, and I what it was pretty cool about, like you said, you were bringing in people to Houston, you know, to work for you and putting them in in year-long leases, uh, even though they were only you were only signing them for a few months, you were just hoping that they would stay. So it was like a it was like a like a happy, uh, happy accident, whatever they say, um, a happy mistake, because you were stuck with these uh empty unit, empty units you were paying for. And then what so what what got you to decide to say, I'm gonna try this Airbnb thing?

SPEAKER_03 4:13

So the Airbnb thing was just because it was the nearest like reach. I tried to put like an executive in one of my apartments for like a month-the-month corporate housing, and I just failed at it. So Airbnb at the time was really the lowest barrier to entry to get that thing full without knowing what you're doing, because knowing how to do corporate housing still requires a little skill. So um, it was really just low-hanging fruit, and then that was it. I didn't take it seriously though for a couple of years. I had like three apartments with people doing Airbnb. I was making money, but I was still thinking that my other business was gonna be like my big thing. And then um, the year that Houston hosted the Super Bowl, where the Falcons were up like 21 to nothing in the first quarter. Yeah, remember that? Um, that was the year that I knew I was gonna do like Airbnb

The 2017 Super Bowl weekend that netted $15,000 and changed everything

SPEAKER_03 4:54

um because there's gonna be so much money in the game. So I picked up like six more apartments. I had 10 by that February and made like 15 grand in a weekend net profit. And I'm like, all right, this is it. Oh, yeah.

SPEAKER_01 5:05

Yeah, so so that so you were doing it were you under the under the radar at the time? Did you weren't telling the complex you were doing it?

SPEAKER_03 5:11

Well, here's the thing at the time, 2014, there was no lease languages that you could not lift list on logic websites, nothing like that, right? And since my leases were under my LLC, there was actually a very fine loophole at the time where the only thing that prevented the business, maybe, was a no subletting clause. But since my LLC did not have a declared occupant on my LLCs, anybody who's staying in the occupant, it wasn't a sublease because the LLC is almost like a shell occupant and the human inside was the true occupant. Um, so it wasn't technically subletting um by many interpretations of contract law. So for two or three years, like I just told people I'm a company, I'm gonna sign some lease and we're putting people in here, and I didn't have to say Airbnb or not. And every time a leasing agent called me and said, You can't do this, I'm like, well, actually, let me educate you on your leases. Um, and then like 2000, end of 2017, we started to see like anti-Airbb language. 2018, we started to see anti-airb languages in the Texas TAA lease.

SPEAKER_05 6:11

Okay. Now, are you still picking up arbitrage units?

Picking up 100+ doors in five months as rents fall and landlords call back

SPEAKER_05 6:15

And are you and then not only are you picking them up, like with rents going up, how are you combating that to make yourself still viable in the Airbnb space? Rent rents aren't going up, rents are coming back down again, actually.

SPEAKER_02 6:26

Um finally, finally. But over the last four months, everything went up. Everything was nuts.

SPEAKER_03 6:32

Um, yeah, so we just picked up 55 doors in Houston over the last couple of months. Uh we picked up, we're picking up 20 in Austin. Right now, we're picking up 20 in Waco. We're working on a deal here in Dallas for something in the teens. I can't say exactly how many in, and we got a deal in Philadelphia we're working on too. So um, yeah, we're picking up them like they're going out of style because landlords are finally calling us back and they're giving us free rent, which is like a big part of our strategy. It's going well.

SPEAKER_05 7:00

Now, I see you're picking them up in Houston, and Houston has been like, if you ever go into like a Houston group, everyone's like throwing furniture out the window. Let's get the hell out of here. So, what are you doing to make sure you're still viable in that market?

SPEAKER_03 7:13

We're actually picking up stuff in the suburbs. We're not doing inner loop properties yet. Um, give us six more months a year as everybody dies. We'll come back in and you know pick up from everyone else's ashes. But we're we're outer loop, right?

SPEAKER_05 7:26

Makes sense. Got it. Okay.

SPEAKER_01 7:28

Now, was there a period of time we weren't picking up as many units? You took took a break, I guess.

SPEAKER_03 7:33

Well, kind of. We we went from 10 units at the Super Bowl to 103 on New Year's Day of 2020. We had 103. Then COVID hit, right? We broke like we we broke that growth trend and ended up downsizing to like 65 doors, then came back up over 100. And we were trying to grow these last six months last year, but with the rental market going kind of nuts, we ended up in a spot where we we landlords just weren't calling us back because there's a false sense of confidence in the market. So people are like, Oh, we don't need you, but now they're calling us back. So all the the hundred doors we're picking up right now, we would have been nice to pick them up over the course of a year, but I guess we're gonna take them in five months, you know, just because of time.

SPEAKER_01 8:14

It's a beautiful thing, man. Um, so the free rent strategy, you gotta you gotta go over that because a lot of people get into the space, but

The free-rent negotiation system: eight weeks up front by knowing your value

SPEAKER_01 8:21

then a lot of them don't ask for the free rent and don't, or they just say no, or they don't know how to get the free rent. How do you how do you do that?

SPEAKER_03 8:27

How do I get free rent?

SPEAKER_01 8:28

Yeah.

SPEAKER_03 8:31

I'll give you I'll give you more a simplified answer, I guess, because it's I've got a whole sales system, and the free rent part comes like after we've already got approved for the building and we're like negotiating some finer details, but I'll give you more conceptual answer. A lot of people don't go for free rent because people are so kind of bent out of shape hoping that they can get their opportunity. They go, I really want to get an Airbnb, right? So they're asking landlords, like with their hands out like this, like like Oliver Twist, like, can we please have a lease, right? And there's such an imbalance in the power exchange between a landlord and the tenant in that way. If you want a landlord to say yes to things that you offer, you have to know your own balance. When you go to, hey, I'm gonna solve your occupancy problems, I'm gonna fix your issue, which is that you know, you're looking at, you know, the next six months to a year, you know, the market's gonna be kind of crazy. And if you've got a multifamily building that doesn't have 90% occupancy right now, you probably not look at 90% occupancy for the next year. It's like an argument you can make. So say, hey, I'm gonna get five doors or I'm gonna get 10 doors from your building, but in exchange, I want six weeks or eight weeks of rent. I've got some negotiation negotiation, negotiating techniques, um, where we'll like we'll give them a concession, something that would already have been baked in the deal, but they don't know about yet. So, hey, Till, we'll do this for you. Give us our six weeks or eight weeks of rent. There's a long answer to the question, which uh I think we have that much time because the way that I approach pitching landlords is like a sales system. And we start by getting the landlord to agree to the idea and concept, right? We're pitching the idea of short-term rentals first. Uh and we we get them to agree, go through the lease application, kind of get to the end of the sale before we start to ask for certain things. But the whole premise of our sale is based on the value that we provide. And that this is where I think a lot of people go wrong is when somebody's getting into the short-term rental space, they're so excited to get into the short-term rental space that what they're looking for is just any landlord to tell them yes. So they're coming to landlords with this really weak position, going, hey, please, can you give me a property? I would love to have a property. And then the landlord's like, yes or no. And then lots of landlords, when they see that kind of approach, are like, yes, but I'm gonna charge you more rent, right? Because the person who typically tends to get into Airbnb without any backstory, without any history or experience, uh, they don't know their own value. They don't know what they're really providing to the landlord. So the only real difference to a normal lease you get is a landlord trying to take advantage of this new Airbnb host. So instead, if you know the value that you offer to a landlord, like the fact that um you can give them a three-year-long lease where turnover for three years, or um, there's other aspects of how we run our businesses that might actually be better than a regular tenant. When you approach a landlord where where you know your position of value, you can start to negotiate for things in return. And especially in this market right now, if a multifamily building, you know, is 85% occupied, they're already in a tough spot. And as the market starts to pull back, owners aren't gonna be confident that they're getting over 90% occupied in the next year. So you can really go to multifamily and say, hey, I'll take five or I'll take 10 doors from you. Um, but in exchange, I want some free rent because what I'm doing is I'm giving you certainty that you're gonna hit your occupancy metrics over the next year. And that's a that's a big factor.

SPEAKER_05 11:29

Definitely is because I mean, hey, if they ain't got the occupancy, they can't go get more, you know. I love that. Now, with this strategy, are you only doing apartments because you can you have the advantage of, hey, I'll give you this much occupancy. So are you only doing apartments or do you do houses as well?

SPEAKER_03 11:44

We have a preference in our urban areas to do studio apartments. That's our preference because we can do 30 in the same

Why studios and three-bedrooms win, and two-bedrooms get skipped

SPEAKER_03 11:50

building. We like that. Um, certain markets like Philadelphia, all the apartments in Center City, Britain House, they're taken, right? So um, like Sonder, like Rip City. So we do a lot of town homes in Philadelphia market. Uh, we do some houses in Houston, um, Austin's all apartments, Dallas is mostly all apartments, and even in Dallas, we had three bedroom apartments for a few years at one building and they're just making so much money. So we typically like studios or three bedrooms, but we still prefer them to be apartments because we can pick up a lot in the same building. If we have to, as part of our growth strategy, pick up houses, we'll do it. Um, we're picking up houses now, but we're actually doing co-hosting for those. So we've got 150 arbitrage, and now we're up to like three co-hosting properties, and we've got 10 more that we're negotiating right now. So we have houses, but we're gonna be not arbitraging them.

SPEAKER_05 12:37

Now, okay, now on your Dallas, because you said you're picking up more in Dallas, are the new regulations going to affect your Dallas units, or are you just doing it like where they have to be five units or more commercial? How does that affect you?

SPEAKER_03 12:49

So it looks like most of our properties are gonna be fine.

SPEAKER_05 12:53

Yeah.

SPEAKER_03 12:53

If if the whole thing is it has to be five units or more, great. If it's even if multifamily and residential neighborhoods still can't be done, then it will affect one of our buildings for sure. Um, but all of our buildings are big, big buildings. None of our properties are four unit or less. So we should be free and clear on that.

SPEAKER_01 13:11

Gotcha. Now go back to one thing you said. Um, you said it's either studio to you to you guys, either studios or three bedrooms. You didn't say or you said one bedrooms or or you jumped to three. You didn't say two bedrooms. Why not two bedrooms?

SPEAKER_03 13:23

Well, we actually jumped one bedroom too, if we can avoid them. Um wow. Well, the reason why, so one bedroom is effectively as a studio, but it costs about a thousand dollars more to furnish. And the photos don't come out as cool a lot of times because studios have this more open floor plan, which gives you more room to do cool stuff, right? So studios can look cooler for cheaper and give you the same occupancy, which means they're going to be more profitable. Two bedrooms are kind of stuck in the middle, right? They can sleep seven or eight people at best at best, and you're not getting into the group sizes enough that allow you to get that upsized revenue. That makes sense. But for the increase of rent between a two-bedroom and a three-bedroom, you'll make a lot more money, or four-bedroom, you make a lot more money. But the increase in rent between a one-bedroom and a two doesn't give you like an upsized revenue return. So you can either go with groups as a strategy or you can compete on price as a strategy. So, studios we do to compete on price, and three bedrooms are larger, we do to start to access the group like high margin properties.

SPEAKER_01 14:18

I love that, man. That's cool.

SPEAKER_05 14:21

No, I noticed another thing. I noticed you said with the two bedrooms, they're in the middle. Have you avoided those? Because you've seen they're kind of in competition with like the three-bedroom houses. Have you seen anything anything like that?

SPEAKER_03 14:32

When we get offered two bedrooms, we try to negotiate their prices down to materially the same as one-bedroom properties. And if we can get the rent down in our negotiation, kind of like how we try to negotiate for free rent, we'll tell them, hey, two bedrooms are cool, but not at that price point. We'll take them at this price. If we can get the rent down, we'll take them, but we won't take them at face value nearly ever.

SPEAKER_05 14:56

Wow. Now that that that's next level. I hope y'all took notes on that because that's one hell of a gym.

SPEAKER_01 15:02

Okay, how is how was being homeless? How did that help your business?

SPEAKER_03 15:07

Um, I was actually just talking to somebody about this today. Um, I tried to share truism earlier, which is, you know, when right, they're you know, they they're afraid that maybe they won't succeed. And if they run into an obstacle big enough,

How being homeless made quitting impossible

SPEAKER_03 15:20

they might just give up. Like Airbnb regulations, like in Dallas, if there's regulations where you have to get a permit or something like that, some people might just give up trying, right? But I had to correct my own truism because I'm like, well, that actually didn't apply to me because I I was homeless when I started my first nothing was going to stop me. So if I wasn't homeless, I probably wouldn't have started my first successful business.

SPEAKER_01 15:43

Nice, nice. So being homeless, you started from the bottom, you started from the bottom, now you're here, and um and you and we're here, and and you and you are you made it, you know, moved on up, you're up at the top. So so I know you're not one of those flashy gurus with the with the Mercedes. I mean Mercedes is with the with the um you know high-end cars, I think. Um, what's it called? You know, the bikini models all over you, stuff like that. But um, but you do have a yeah, you do have a pretty cool pad, man. We we we got to hang out at your pad. Uh Julie George and the gang showed up and came to town, and we had a good time, man. So so why why was it important for you to get like a pimped out penthouse in down in downtown Dallas with a million dollar view?

SPEAKER_03 16:27

Well, I actually decided that I needed to show some form of journey with my right because people are watching, and you know, there's a lot of naysayers, and there's a lot of people who really want to show that it's valid, and there's an element of showing that you're successful that allows to help people understand that it actually will work, right? Um, but I didn't want to do it in a cliche way, so I'm like, you know, I'm gonna move into a place that I like, a place where I can shoot YouTube videos, a place that says that the background says, Yeah, he's doing he's doing good, right? Um, so that's why I got the place. Um, and then after I moved in, I'm like, oh, I could peer space this too. This would be sick. Um, so that was like an off, like off topic thing. Um, but yeah, I did it because I figured it'd be a place that I can be a creator, do my thing, work from home, passively show that I'm I'm moving up in the world without having to stand in front of a car, you know? So I figured that'd be that it'd be the least cliche, least pushy way to say, hey, this is now you did mention peer space.

SPEAKER_01 17:26

So you so you are allowed to peer space your your place.

SPEAKER_03 17:29

Actually, no, I just got two lease violations back to back a year and a half later. I've been here for a year and a half, and now they just gave me two lease violations because somebody threw a crazy party. And um, yeah, it was actually my assistance. This is what happens when you do business with friends, probably. My my assistant's fraternity brother connection threw a party here, and it just went nuts, I guess. So oh no, now we're now we're reworking this, right? I don't think they wanted to give me any trouble because you know I'm the most expensive dude in the building. They don't want to like drop me for that. Peer space had people here three or four days a month for two hours at a time, so it's almost like very little load. So I did the ask for forgiveness, not permission thing, but now I think it's starting to become a point of contention. So we'll see.

SPEAKER_05 18:16

Yeah, I can just imagine this. You know, I didn't even think partiers would go to Peer Space, but I mean, most it's someone you know, it's a friend, so I understand it. Okay.

SPEAKER_03 18:22

Oh no, like my best paying Peerspace was a kid's graduation party. He graduated with a master's in some form of uh science and engineering something out of SMU and they paid four

Peerspace at the penthouse: $4,000 graduation parties and lease violations

SPEAKER_03 18:33

grand for the evening to rent my place. You can't beat that, and they were out before midnight, bro. Nah, like you can't beat that. So yeah, so like people do use Peer Space for gatherings. I've had a lot of wedding proposals. Um, I've had a lot of music videos. Like had a mariachi band last week come in. That was cool. Guy that used to perform with uh Prince just shot here one day. Like really cool stuff. Meeting some really cool people.

SPEAKER_05 18:57

That is dope. Yeah, yeah, that those are connections that are valuable connections right there.

SPEAKER_03 19:02

Oh, I got that guy's phone number for sure.

SPEAKER_02 19:04

I made that connection, so wasn't gonna miss it.

SPEAKER_01 19:07

Now become a networking tool for you.

SPEAKER_05 19:11

For sure. So it sounds like you've expanded outside of Airbnb, gone into peer space. Now, for your short-term run side, have you guys also gone off Airbnb, such as like verbo booking.com? Are you just only on Airbnb right now?

SPEAKER_03 19:24

Oh, we're we're absolutely on verbo. Um, and the next move, of course, is direct bookings, sixpedia, stuff like that. For sure. Absolutely. Okay, and what made you expand? Well, we should have done it four years ago, right? Um Airbnb kind of push and host around is probably why we were super naive um until we got to 100 properties. And yeah, so my YouTube channel is called Airbnb Automated. So I also just stuck to Airbnb as part of my brand, like you can grow an Airbnb. That's part of my problem. But when Airbnb did the whole code COVID thing and canceled everybody's stuff, um, we kind of woke up. That was the thing. Um, and so that's when we started pushing into the RBL or Verbo now. Um, but direct bookings is the next arc, everybody should be doing direct bookings.

SPEAKER_01 20:08

So no, real quick, real quick before we get into direct bookings, I know that's gonna be that's a hot talk bit right there. Um you did you did um you did go go pretty scorched earth on Airbnb whenever they did that um covet thing and they and they canceled everybody's bookings, right? So so what came out of that? Because I thought I thought Airbnb um started sending you some some legal stuff for for talking so much shit.

SPEAKER_03 20:29

Uh well they actually just asked me to take the video down, but since the video was founded on actual data, they couldn't force it down because it wouldn't like there's no libel there. Um, they just asked me politely to take it down. I'm like, no, you gotta stay accountable. The brand protection team asked me to not use the word Airbnb in my YouTube name. So now it's Sean Rocky Jeeach, it's not Airbnb automated anymore, but I still show up in the Airbnb automated search tag. That's like my still my biggest search tag on YouTube. That's the only thing they've been that that's the only thing that they've done since going like since going public that you know has been an issue. So so they made you wow, so they sent the legal team to make you take that down brand protection team, and uh they're sending notices to people who have B B or Airbnb in their names for their hospitality businesses, not just me.

SPEAKER_05 21:22

Okay, wow, happy you said that. All right, watch out. Oh geez. Uh no, okay. Now for someone who's looking to get into arbitraging, because you know things are going crazy, prices of rents are preparing back down. Um what advice would you have for someone who's like looking, hey, I just want to get in, I want to get 10 units. What advice would you have for them?

SPEAKER_03 21:45

Um, a lot of people deliberate. So the first thing you can do that doesn't require any skill is start an LLC. The older your LLC, the better. Um, next is sales training, product knowledge. Understand how this industry works and how a landlord like might actually need your help.

Start your LLC today: the older it is, the better your approval odds

SPEAKER_03 22:00

Um practice sales and then do your market research while you're practicing sales and your LLC is getting older. There's a lot of preparation, right? Good preparation will lead to getting 10 doors. Um, that's probably my main advice. I got YouTube videos on sales techniques. I I'll probably just direct them to those as well. Um on sales techniques for our specific industry. Um, but I think what a lot of people do is they try to do research and try to decide if they're gonna get in the industry and then they start an LLC two or three months later. But they should start it today and then go through all the tedious stuff because then that LLC could actually get approved for release four or six months down the road in trouble. But that's where a lot of people get snagged up.

SPEAKER_01 22:38

So why is it so important to put all your properties into an LLC?

SPEAKER_03 22:42

Well, it's this is super hypothetical, but let's say a landlord says cool, right? And then four months later, let's say a bad party happens or something happens where the landlord wants to change their mind. Well, now if the landlord's like, you need to leave, and then you're like, Well, no, we got a lease. He'll like, I'll evict you, and it's gonna go on your personal eviction record if I evict you. That's a really high-risk situation, right? You don't have an eviction on your record. So forming through an LLC gives you protection, um, where two businesses are now, you know, pushing back at each other, and then you don't have to worry about it tagging you in an eviction court if something ever did wrong, um, did go wrong. And there's another thing that we could talk for a long time on, but I learned from my attorneys in Philadelphia, there's something called course of dealing in the uniform commercial code. It's a business legal term. And um, even if you don't have a contract with another company and you start doing business with another company, and you guys are doing things like all like if you're doing things one way and you start to like get into a rhythm with the company, and then they try to change that on you and get aggressive, you can defend yourself in accordance to course of dealing. If you can prove course of dealing, it's you don't even need to have a contract, like arguably. It's not an easy defense, but uh an attorney can take it.

SPEAKER_01 23:51

Have you had to use attorneys? Have you ever been kicked out of places and had to use attorneys?

SPEAKER_03 23:56

I've had a lot of weird legal stuff in Philadelphia because people are kind of shady. Um part of a settlement agreement. Um, I cannot get, I can't go into detail. Um, I'm quite happy with the settlement agreement, but there's gonna be a like a confidentiality clause signed in it. So um, but I and all I can say it was worth paying all three of them. It was worth it. So, you know, I don't know how much more I could say without them coming up.

SPEAKER_01 24:24

So, yeah, so that's another that's another thing. Um, Phillies were trying hard to ban short-term rentals. Uh, how's that fight going right now?

SPEAKER_03 24:33

They keep kicking the date down the road, they kicked it to January 3rd. So now January 3rd, you have to be registered. But with the way that they're doing it, it's likely that they're gonna kick it back again. And the moment that they kick it back again would be the moment I tell everybody, sure, jump into Philadelphia, they just can't they can't get their stuff together.

SPEAKER_01 24:48

So now you have a big presence in the space, you know. You're you're what'd you say, you're niche famous? That's what you said on one of your videos, so pretty cool. Um, so how are you using that uh notoriety, I guess, to help in the fight against uh cities, major cities getting banned?

SPEAKER_03 25:04

I'm not the person for it. I can spread awareness, but I can't show up at a meeting and go, hey guys, fight for the little guy, because I'm not the little guy, right? My presence at a town hall probably gonna be, but I can do PSAs. We did a video where my my friend Sean Raid, a real estate agent here, he's like, Sean, can you meet with this person from city council? Can we do a like a like a like a blip on your YouTube? And I did that. I'm gonna work with um Theoron from uh Theor and Lewis. He does uh not like nonprofits sharing Dallas, yeah. Uh no, he's uh he's from Detroit.

SPEAKER_01 25:39

Yeah, yeah, yeah. Yeah.

SPEAKER_03 25:40

Yeah. So um I'm gonna work with him. We're probably gonna do a state of the market on some cities that are trying to ban and give everybody kind of like some resources on the YouTube channel. But that's about as much as I can do. I can't act like I can't act like I speak for the people anymore because I'm just too big.

SPEAKER_01 25:54

Yeah, yeah. He's he's uh we're he's good buddies of ours. He's uh right now he's doing the sharingdallas.org, which you know you can people can donate to, and they're doing the fight to keep it from getting banned in Dallas.

SPEAKER_03 26:05

So he he he helps uh a lot of we've got a we've got a meeting lined up, so I've yet to get debriefed on all the like stuff.

SPEAKER_01 26:11

So yeah, he's the man, he's the man, super the the superhero. Yeah, he's super cool. He's super cool, yeah.

SPEAKER_05 26:18

And I'm happy he's in working with Dallas to get everything straightened out too, and I'm happy he's doing it in Philly as well.

SPEAKER_01 26:23

Yeah, so you had a you had a rough uh a rough upbringing, right? So I don't want to go into it, but like, are there any good habits that came out of some you know having a rough upbringing that kind of helped you turn this into a the massive business that it is? And there are are there any lingering bad habits that you got to be aware of?

SPEAKER_03 26:41

Oh, dude, dude. Um I used to say that everything uh like just rolled off my back like Teflon. I think my childhood made me like indestructible in a lot of ways. Um, but I was also deeply validation seeking, right? So um I would work really hard for people just to get a pat on the back. And I think that taught me work ethic because the I mean, I needed to experience work ethic for that to happen. So that came through with that. So my validation-seeking behavior made me extremely resourceful. Um but now I think there are there are gonna be aspects of how I lead people that need to change because how I got here and why I got here was for probably the wrong reasons, and so now I've got to go through like a little bit of an existential tunnel, um, probably to hit my next phase of like growth leadership. Love that.

SPEAKER_01 27:34

Yeah, and how how has Burning Man helped all that?

SPEAKER_03 27:37

Uh well, Burning Man wasn't the only thing, but uh I started traveling about a year ago and taking a lot of time off. When I first retired-ish, you know, I did my retirement thing a year ago, I had like this crisis of purpose because no one needed me, and that was really weird, right? To have no one need you. Um then I got used to that, started to feel really free in my travel, started to really loosen up, chill out. Um, I I backed off the companies completely and I wasn't worried about it anymore. Um, Burning Man was the point where I showed up somewhere that money didn't matter. That was cool. One of the very first situations I've been in where money just didn't matter because you couldn't spend any. And I realized I hide in productivity. Like obviously, I was in a new environment, new people, and I spent like three or four days just hanging out my camp cooking for people because I just didn't know what to do with my time while everybody's out doing Burning Man stuff. I'm at my camp cooking and just trying to be helpful. And I realize I sink into this behavior of trying to see, that's why I probably am so active on YouTube. Um, and I realize that I need to be more uh I need to be more brave, socially speaking. I'm kind of an introvert, so that's something you'll learn at Burning Man. I don't think it applies to my business, but it's been helpful for me.

SPEAKER_05 28:42

Dude, I'm I'm I'm a major introvert, right? And that is one thing that I've I went to a conference this weekend, and that's one thing I'm really learning to break out of is my introvertedness. Say that again.

SPEAKER_03 28:54

You went this week? Did you go to Joe Dispenza?

Burning Man, introversion, and hiding in productivity

SPEAKER_05 28:56

No, no, no, no, no. I went to uh Thatch Win. Uh he's one of my mentors. I went to his conference and uh he he really it was like really about breaking through, you know what's holding you back, and that does one thing that really breaks I I struggle with. Like all my goals behind me, I have be a better communicator because I it affects my communication skills. So I'm I man, I know how it is being an introvert, man.

SPEAKER_02 29:19

Feel that feel that what was that? I said I feel that.

SPEAKER_05 29:23

Oh, yeah, for sure. No, my next question for you is this is the ultimate question because I know you're 100% big on arbitraging. Do you ever plan on buying? And if so, when?

SPEAKER_03 29:35

Um I will buy a fat multifamily building when I can pry it out of the weeping hands of an investor who made a big mistake. Oh, I like that.

SPEAKER_05 29:46

Man, so you you want to go straight into multifamily. What size? You don't care, just multifamily?

SPEAKER_03 29:51

100 unit plus probably. Wow.

SPEAKER_05 29:55

And you and you don't want to do it with any syndicators, just 100% arbitrage cash.

SPEAKER_03 30:00

I might play with some syndications, but I'm not gonna call that buying. My reason for syndicating would be more of a networking move than an investment.

SPEAKER_05 30:07

Ooh. Man's guy's tough. I like that. That's a good way to think about it. Yeah.

SPEAKER_01 30:14

Now, now uh one thing, one hot topic also in the industry is um short-term rental insurance. Do you use short-term rental insurance? If so, which ones do you use?

SPEAKER_03 30:22

Um, what's really funny is I'll recommend to people to use either proper or um what's that other one? Super hog. Super hog is good. Yeah, so I'll recommend, but I don't because all of our units are studios. And Airbnb's aircover is good enough that we can get paid for $200, $500, $2,000 cleans, you know, pretty simply. The total amount of damage that can be done to any one unit is pretty low when I have studio apartments. So it's really not worth spending a premium on these little tiny units. And it's a streamline that way. Um, if we did start doing bigger houses, um, yeah, we probably we probably would use proper superhog or something like that. If we had like a four-bedroom, five-bedroom house that was like luxury, and the lot, like the risk of loss was greater. Like, if we could take a $25,000 loss on furniture, like somebody just totals all of our furniture and it would exceed $25,000, at that point I probably would get an insurance fund.

SPEAKER_05 31:16

Hmm, that's a good it's funny you say that because we we just had a conversation, our uh mastermind, like, hey, is it worth it even having super hog on you know places that ear that you're doing Airbnb because air cover could should cover it. That basically answered my question.

SPEAKER_03 31:30

Well, you know, insurance companies are are a casino, right? What they do is they're they're like a bookmaker, right? So they're they're making a spread and they're keeping what's in the middle. So when you're big enough, not paying premiums on 200 units, you save all those premiums. If you put all that money into hiding and then cashed it in when you did have an event, you're likely going to survive it. The only thing is if you have a if you have a problem like your first four months or six months of being a big company, it could be a big expense that puts you down. And that'd be the only reason why people bring insurance in is because yeah, even though you're losing a little bit of topside, it still prevents you from the black swan event, you know. So if you have a if you have a risk of ruin that has to be considered, then insurance is safe.

SPEAKER_05 32:13

I like that.

SPEAKER_01 32:14

Oh, that's a good point right there. I just uh off topic, I just got rid of all my um home warranties for all my houses that I own because they don't they they stop uh uh approving anything. So I'm like, why am I paying monthly fees for this crap if you deny every single claim that I throw at you?

The $14-an-hour housekeeper system: hiring from McDonald's and training in-house

SPEAKER_01 32:30

So I'm just gonna go at it, just make a pile of money to use when something goes wrong. I have my handyman in place and go from there.

SPEAKER_03 32:35

Yeah, and you guys can do a self-insurance policy too. They were originally designed for um uh crops for farmers, but you can put two thousand or two million dollars a year away tax-free um into your own insurance policy. What you will so um I've got a guy's name, Brooks. You want to set up a self-insurance thing? I got you. It has nothing to do with life insurance, so um, it's like it's like it's like a 401k in steroids or something like that.

SPEAKER_05 33:02

Oh, yeah, yeah. We definitely have to, you're gonna have to definitely send us that information.

SPEAKER_03 33:06

Yeah, I'll just introduce you to the guy. He's out doing weird stuff, he's traveling, but when he's back, I'll put you in touch with so.

SPEAKER_01 33:12

What made you want to go into teaching this? And and and you have this huge following on on YouTube and of course Facebook. So uh, what made you want to go into it and how is how is teaching other people how to do this actually helped your own business?

SPEAKER_03 33:25

Well, um, I wanted to prove something back then. I only had 10 doors I wanted to prove that what I did was valid, the whole validation seeking behavior. Um, but then I fell in love with the concept of making videos and creating there's an artistic side, and I'm I mean you know I'm an art kid, so um I fell in love with the process of creating videos, and the one thing I was good at was Air D. So I was creating videos on the topic. Now holding myself accountable was probably the big thing. That's how it really helped me, held me accountable. Um, because like I'm going to grow my business on YouTube, and then I had to. So it's cool to have an accountability partner, like the anonymous world that I was you know teaching to, but also gave me a chance to trial and error some stuff. Because if I didn't have a YouTube channel, I probably wouldn't have tried things just to find out if it would work. Um, because I wanted to try stuff and come back to YouTube and say if it worked or not. So I was more innovative and more risk-taking, I think, because of the YouTube channel.

SPEAKER_01 34:16

Well, what was something in all this that oh Micah? You look like you're just gonna ask something about the YouTube.

SPEAKER_05 34:21

I'm not gonna say ask anything, I'm just gonna make a comment to any of the listeners. What he just said is actually really, really key because he said he used his YouTube channel to hold him accountable because he has to produce the produce the YouTube content. So, in order to do that and then for it to be effective and genuine content, he has to go and do the work. That's actually the same with this podcast. That's the real only reason it's really been running this long, is because, well, damn, if we're gonna be talking about short-term rentals, corporate housing, Airbnb, we have to do it. And so, like, look at Steve, I mean, you just ramped up your business, you know, to with the management side. So the people that are out there that want to, you know, grow their business, that's actually a really great thing you just said is put it out there on Instagram that you what you do and people will follow you. And then for you to hold yourself accountable, keep pushing it out there. You know, I I love that. That's a really good thing for any people or affluencing influencers or whatever you want to be.

SPEAKER_03 35:10

Well, if you think about it, right? The whole concept of do or die, right? If it's do or die, you're gonna do, but with how prevalent social media is, it's like do or death of your reputation for being the person that didn't do what they said they were gonna do. So it's like in a way, it's like a social do or die by putting.

SPEAKER_05 35:26

Yeah. And just one more thing. And one thing that I noticed, like me and you are real big on, and I know you've talked about it and I've talked about it, is these random people, you know, with the sponsored ads on Instagram selling courses and things. That's, you know, if they haven't found someone who's genuine, you know, who's putting out the free content, I'm happy you always bring that up. You know, like quit just going to these random gurus who just paid for an ad space and now they're all over and now they're making all this money and ripping people off. So hold yourself accountable, keep posting genuine content to anyone out there. This is really good stuff. But yeah, go ahead, Steve. My bad.

SPEAKER_01 36:01

Yeah, the cappers, that's what um Clubhouse is for. I was so speaking of keeping yourself accountable, holding yourself accountable and using the YouTube channel to do that. What are what is like some one or some of the biggest like it was like the great idea at the time you wanted to try it and then and you tried it and it was the biggest failure, is the biggest flop. And I mean, can you speak towards that? Because I mean, I'll you know, a lot of people like to talk about their successes. What was one of the biggest bad ideas that you had?

SPEAKER_03 36:30

You know what's really funny is a lot of times things work, people just don't try, right? Um, a lot of ideas work, people just don't try. Um what did we fail at? Did we completely screw something up? I think probably a compensation style. We probably try to like run a compensation package that didn't work for a certain position.

SPEAKER_01 36:49

Um, like for example, speaking of compensation package, because like cleaners, you have them on an hourly, right? You pay them hourly, yeah.

SPEAKER_03 36:57

Yeah, it works.

SPEAKER_01 36:58

So that's most people paying by the job. So why how how did you get that to work?

SPEAKER_03 37:02

Well, it works because if somebody needs to do extra work, they're staying extra time, they get paid for their extra time. There's no longer resentment when somebody throws a party or there's deep cleaning that um, there's no resentment that they have to be thoroughly paid for it. And also, when you pay people by the hour and you have a good training system, like our housekeepers aren't housekeepers, right? Our housekeepers are from McDonald's, our housekeepers are baggers at a grocery store, our housekeepers are people who used to be a babysitter and they're getting they're taking a job at a race. When we pay them $12 to $14 an hour, it's two to three dollars more per hour than they're used to making. So they're super happy to work for $14 an hour, no experience necessary. We train them in our our like franchise housekeeping system, and they're like, this is so cool. I'm making so much more money. So we have their loyalty at $14, where other people are like, Oh, you're underpaying your housekeepers. Yeah, if we hired a housekeeper with five years' experience in the game and we pay them $14 an hour, they wouldn't take the job because they know they can make $30 an hour. We're not hiring housekeepers, right? We're training people to become housekeepers, and it doesn't work for $30 an hour. Like, you know, the moment they get done with our training program, they could go take double pay somewhere else, but they're loyal to us because they don't know that yet. And hopefully, by the time that they know that there's an industry, they're loyal to our company for other reasons, not just the compensation, right? So yeah, there's an element there, human resources, man.

SPEAKER_01 38:23

This is beautiful, man. And so you have your own in-house cleaning company?

SPEAKER_03 38:26

Everything is in-house. We've got like 30 housekeepers.

SPEAKER_05 38:30

Damn, that's smart, man. That's the way to do it.

SPEAKER_03 38:33

You want to own every piece of value delivery in your business and every piece of value creation in your business. You don't want anybody else doing your customer service, you don't want anybody else doing your housekeeping, you don't want anybody else doing your maintenance or your moving or your staging. You want all of it to be in-house. Now, when you're too small, oh, you're gonna have an interior designer do your interior design until you're a big boy, right? But you that's an example of like you kind of have to work with people when you're timing. But when you get big, you can own it all. We've got a director of real estate that does all of our door negotiation, right? We pay him a hundred doors we pull down are all because of him. And if we paid somebody else as a salesperson, the cost for those hundred doors would have been astronomical, you know.

SPEAKER_05 39:13

Geez, man, that that that that's that's powerful, man. Instead of and I remember I was talking to a guy this weekend, he he makes he runs like a four million dollar a year wholesaling business, and they were like, Well, how does you do it? Do it, you know. When you train these people up, why don't they leave? He goes, Well, I don't he said exactly what you said. Like, I don't go get the guy who's who's a sales guy, teach him sales, I bring him in-house and I teach him sales. That's the same way you got to run your cleaning business, you got to bring that in-house. And I was telling Steve about that. I'm like, dude, we have enough units, we can start our own cleaning company, we can bring everything in-house. I'm happy you did that. That that is awesome, man. I hope people are taking notes. That's huge.

SPEAKER_03 39:47

Yeah, it's probably the biggest thing about staying competitive right now.

SPEAKER_01 39:51

Yeah. And uh, do you utilize virtual assistants?

SPEAKER_03 39:55

We have assistants that we have remote workers, but they're all United States based, just for culture and quality purposes.

SPEAKER_01 40:02

And why did you go that route instead of paying someone five bucks an hour in the Philippines or four?

SPEAKER_03 40:06

Because this is hospitality and guest experience, it's super important. And the last thing I want is somebody to get offended that they're having a hard time checking into a property or they're like hot water heater isn't working and they're talking to somebody in Polynesia or something, and then they get offended. We want somebody who's nearby, you know, just for just for those high-risk situations.

SPEAKER_01 40:28

Interesting. And and how do you how do you find good uh um, I guess they're still virtual um, you know, remote workers. How do you find good employees to do that job?

SPEAKER_03 40:36

So for all positions, no matter what you hire for, the most expensive positions you hire are going to be when you run a job ad, cold ad looking for people you like you don't know. Most of our remote workers come from referrals. We'll have housekeepers that are good, a manager that we hired that's good. And when you have good workers, you incentivize them to refer people into your company, and those will be your best and cheapest hires. So all of our remote workers are internal referrals.

SPEAKER_01 41:03

Nice. And uh, what about maintenance people?

SPEAKER_03 41:06

Um depending on the area, like Austin, we still only have 11 properties. Um Fort Worth, we have like maybe 15, and apartment complexes do so much maintenance that we don't really need a lot of maintenance work. But in Dallas, we have like a pseudo-full-time maintenance guy that does other stuff when like when he's not busy. But um, we will contract out somebody else piece by piece in other cities where we don't have a big enough presence. So, but we do have one maintenance guy in Dallas that will also um he'll refresh listings, he'll move in new furniture, pull out bad furniture. We we keep him busy with other non-maintenance.

SPEAKER_05 41:45

No, no, in situ, I'm happy you brought up the maintenance thing in situations where like the management just goes bad, right? What what do you put something in your lease to like, hey, if this management team slacks, you know, I get a concession because I know you're real big on concessions and you know.

SPEAKER_03 42:00

We try we try to negotiate the right to repair

Right-to-repair lease clauses and the Sonder masterclass in negotiation

SPEAKER_03 42:02

and deduct when management's being bullish. We try to work that in because we don't we we're not asking for free money because people get afraid of stuff like that. But we put like if management has difficulty responding to maintenance requests, we have the right to, with our own resources, conduct maintenance and deduct the cost the landlord would have had to repair or something, something in of that language, and then the landlord will sign on to that. So when they're not fast enough to repair, we send our own maintenance guy. We're we're cost effective, so when we send them the repair and deduct, it's not some crazy price, so they tend to go away.

SPEAKER_05 42:38

I would have should have known that, should have done that.

SPEAKER_03 42:40

Yeah, well, if you if you want the best leases on the planet, go look at Saunders. Saunder has these lease agreements that if the stock market drops 700 points, they don't have to pay rent for a month or two months or something like that. So they're their legal team thought of everything. Wow, yeah, yeah.

SPEAKER_05 42:54

I've heard you talk about that too. Wow, yeah, Saunders next level, right?

SPEAKER_03 42:57

Masterclass of negotiation.

SPEAKER_05 42:59

But are isn't Saunders struggling right now, or no?

SPEAKER_03 43:03

Um, well, they're they're losing money, yes. Um, but they went public at 1.8 billion dollars, you know. I mean, wow. So for the the for the owner, it worked out just fine, you know.

SPEAKER_01 43:16

So when are you going public, man?

SPEAKER_03 43:18

Uh dude, I'm not this portfolio. Uh this portfolio, once we break 300 doors, I'm gonna give Hayley part ownership, but we're gonna keep this one internal, and I'm gonna use this portfolio as my pitch deck to do like a VC backed one that might go public, but that's you know, later.

SPEAKER_05 43:33

Man, like one thing I love about you, man, you always have everything, you're you have a farther vision from everything. Hey, once I hit 300 doors, we can do this. You know, I love that you you're you man, you're laser focused. I can see why you have books on that.

SPEAKER_03 43:45

There's books on that. There's a book called Traction. Get a grip on your business. That's good. Um traction. Now, your visions always have to be flexible, right? You need like it's like following the North Star, right? You gotta have your North Star concepts, like things that you're really working towards, but where you are. Compared to that, vision will always change based on the wind and the weather and stuff, and you just have to stay flexible. There's stuff that you're reaching for right now with an arm's length. You should have a rigid plan to get to the next step, but you never you need to have a loose plan to get to the next town, you know, that kind of thing.

SPEAKER_01 44:15

So, so like to run this operation, even though you're saying, okay, we're not to 300 units yet, it's still pretty massive, and you got employees. What kind of system do you use to run all this? I mean, like an operating system, like a like EOS

No PMS software: why human touch beats automation at 150 doors

SPEAKER_01 44:27

or something like that.

SPEAKER_03 44:29

Well, we've got a lot of best practices and standard operating procedures within the company. Everything is human touch. We've got softwares that will help people do more stuff. We've got one software that's pretty central. It's basically mixing uh like a time clock system and a group text message system, and our housekeepers work through this thing called connectity. Um, and we use Google Business, and those are the really only main business like softwares that we need. We don't like using uh PMSs, so we use host hub just to connect our calendars. We use wheelhouse for pricing management, um, but uh everything is still highly human touch. We we try to keep things as people driven as possible.

SPEAKER_01 45:04

No PMSs.

SPEAKER_03 45:05

No PMS.

SPEAKER_02 45:06

What the hell?

SPEAKER_03 45:08

Do you use PMSs? Go ahead. I mean, I don't really want to. I really don't want to. Um if we might use you know, we might use hostfully at one point. Um I like their I like their front end, it's really sales driven. And if we uh use a software, we need to know that the software is going to create um incremental growth.

SPEAKER_05 45:27

So that'd be okay. You did say you're gonna use hostfully if if it so like when you plan on doing your direct bookings, you still won't use a PMS, and how would you plan on going about that?

SPEAKER_03 45:39

Well, as long as we can connect the counters, that's really all that we need, you know. Um, a lot of people automate themselves into a rigid position of failure where if something breaks, they don't know how to fix it, right? Yeah, you know, and even a even an airplane, like a like a these jet planes can land and like take off on their own, but they still have a pilot, right? A pilot still makes a lot of money to sit in that chair. So no matter how elegant your software, no matter how elegant your systems, you always need a human that knows everything to be watching those systems. So that's what we grow the way that we grow. Because we ever have like dock in a software, the person who docks in the software knows more about the software than probably the person selling us the software, and that's that's where you want to be before you start onboarding stuff.

SPEAKER_01 46:22

So is that where you learn like to actually build a real business to you know that from the books like traction or something like that, to make like a CEO, managers, supervisors? I mean, how did you formula formulate all that?

SPEAKER_03 46:35

Well, I've read a lot of books. I've started my first company in 2010, so it's been 12 years, but I mean, books like traction are good, or the leadership pipeline, book called Multipliers is a great leadership book. Brain Steering is a good book on innovation. Um uh uh like even the basic books like One Minute Manager, Who Moved My Cheese, those are really good books. Um, a lot of a lot of uh Dale Carnegie system books or John C. Maxwell are great. Haley loves John Maxwell, by the way.

SPEAKER_05 47:02

She reads a lot of Carnegie all day. I love it.

SPEAKER_03 47:05

Yeah, that's right. Um, you know, so you know, just I can't, there's so many books that I've read. Maybe out of every 10 books I've read, I get one book worth of real information. But um over time, it's like the books and the experience, 12 years. Um, and you know, I guess you just kind of learn the hard way, or you get lucky and learn from someone else.

SPEAKER_01 47:24

So, how how would you like okay, your manager, you'll style, right? Or you the you're the CEO, you're the boss, you're the president. How how are you able to um come to terms with the with the fact that you are what you you want to please people? You said you want you want that um, yeah, what was it called? Adoration, or you want the patent in the back validation, and then but be a hard ass say, hey motherfucker, you keep fucking up, you're gone, or you stop fucking up. I don't know how how do you how do you fight those two urges in you?

SPEAKER_03 47:51

Well, so the validation seeking behavior tends to come out in the YouTube content. Um, my relationship with the business tend to be more like my one-on-one mentorship is pretty soft, you know. I've got a pretty soft hand, but I'm I I I embody a an authority position right away, which people don't ever really want to test that fence. Um, I tend to be more bad cop than Haley. Haley, Haley's very much a relationship style manager, so she wants to make sure that everybody loves their job. And I'm the kind of person that's like, we need to make sure that we're performing because if we don't perform, we won't have a job. So Haley and I embody really good different perspectives in how leadership should work. And we we kind of have this good cop, bad cop, but I tend to embody um the hard ass by nature, you know, more of a performance-driven manager type. So it doesn't come out my leadership stuff. I don't need to prove to people who work for me that I'm good enough, you know, because I rate their check. Um, yeah, it's really weird how that can actually have a duality where to the world of like, guys, please believe in arbitrage. But the people who work for me are like, hey, you're slacking on your KPIs.

SPEAKER_01 48:57

Speaking of Haley, one cool thing that you said in a video was um Haley versus the VA when it comes to like uh getting giving the guest a refund for something, right? You said something like if it, you know, she Haley got so good at you know, not you know, winning every single uh refund case, you know, through Airbnb or through whatever, um, that you had to you had to make a position where there's a VA that actually goes against her to say, hey, maybe they do deserve kind of a refund. That go ahead to tell us about that. That's hilarious.

SPEAKER_03 49:26

Yeah, so that that position is actually called a guest experience manager. Um, it's very much like a product manager position in tech company where um company is so good at defending themselves from claims that the guest, it's almost like our guests need to have a public defender in court, right? Somebody needs to be assigned to them to make sure that they're well represented. And that's kind of the position because we get so good at shutting everything down, it doesn't matter if the guest was right or wrong. We're just good at shutting down because we're like, hey, Airbnb, screw you. Like, you know, we don't want to pay you anything because you're Airbnb, but somebody's got to look out for the guests. So we decided to do that, and there's been huge implications. Having somebody that kind of within the organization that's wanting to make sure that the guests is accommodated, it it just it shoved our like it increased our five-star review percentage, like exponentially, just because guests felt heard, they felt seen, they felt understood to have that middleman liaison that always gave them the benefit of the doubt and always really listened. Even if we paid out zero more claims, everybody else like felt heard and seen, which increased our review count.

SPEAKER_01 50:33

That was that was really cool, man. That was a that was a mind-blowing thing that we're doing. Um, so so I guess that it kind of in our, you know, we we're up to like you know 70 units, but we have a we have a thing like some what is some you know, we manage for other people too. So we have a c most clients are hands-off, that they trust us, you know, go give just send me the checks, everything's good, hunky dory. But then we have every now and then we have a client that's like, hey, they left a stain on this table that charge them a thousand dollars. They left, you know, people like that. I'm like, so we we're kind of have that set up in our own thing. We're we're fighting for the clients. We're like, listen, you can't go after these, these are the guests, these are the people that pay the bills, you know. You can't go after them for every little thing, you're gonna, it's it's bad for business.

SPEAKER_03 51:13

Yeah, it is. Yeah, well, it is, but it's bad for business when it comes to relationships long game. If you want people, um we go after guests for every little thing through Airbnb because they're not loyal to Airbnb, they're not loyal to Airbnb, let alone us, right? So if a guest does cause damage, um actually I'm about to release a video on this on YouTube, by the way, how to actually pull this off. We can get paid on absolutely every little thing, and there's no way that they can come back on us against us on our review. Our process for this is really, really good. And a guest that's going to break something and then be a dick about it. Do you want that guess back in you? Right? So a guest breaks something, be like, hey, you you stained four towels, X, Y, Z something, and we have to set, we have to file a claim, you know, so Airbnb's insurance will cover it. If you don't want to pay it, just tell Airbnb that you can work it out with them. But in order for us to get paid for these towels, we have to invoke this claim with Airbnb. And if somebody's gonna act like a child about the fact that they legitimately did damage and we still need to start a claim to get insurance to cover it, we don't want that person to come back anyway, right? So that can go into a little private note. Like we might have we might have used Stafi to grab their information and you know, like try to get people to come back directly, but that person, we're gonna skip them, we're gonna take them out of our email list, you know? So people are so afraid of negative reviews or guests not coming back, but they stop to ask, do I want this guest back?

SPEAKER_01 52:35

There you go. You know, and speaking of negative reviews, how important is it for you to be a super host?

SPEAKER_03 52:40

Not at all, not at this, not at this scale. Um, it's cool to have, it's cool to have, sure. You should always try to have it because it

Superhost doesn't matter anymore when you're multi-channel at scale

SPEAKER_03 52:48

still is an advantage, but the amount of things that you may have to do with 150 properties, the amount of sacrifices you have to make at 150 properties to keep Airbnb happy can cost way more money, big, big, like big picture, than superhosts were because there are going to be inevitable situations at 150 properties where you have to shoot the moon to uh get Airbnb to be happy, right? Um, and now that you're going Verbo, Expedia, Marriott, homes and villas, multi-channel, direct bookings, your mix on Airbnb is going to get lower and lower and lower. So I think superhost on Airbnb becomes less important, right? I think it's important to manage their algorithm as much as possible so you can get good placement. But outside of like appeasing the algorithm, I don't think the sacrifice is necessary for superhost or anymore.

First 30 days algorithm hack: $35 first night, aggressive price arc, full occupancy

SPEAKER_01 53:33

Speaking of the algorithm, how how many you got any uh hot tips on how to how to tickle the algorithm a little?

SPEAKER_03 53:38

Well, yeah, um, the first 30 days are the most important, right? A lot of people set up a listing and wait like as they're still staging the thing, they'll set up a listing before it's ready. Don't do that. But set if you have a studio apartment, set up the listing three days before it's ready. If you have a three-bedroom house, set up a listing 10 days before it's ready, maximum, right? You can set up a listing and block it for 10 days if it's a three-bedroom, but don't as live you want it as full as possible, right? That first 30 days, if you're 100% occupied in the first 30 days, Airbnb will put you like at the very top of the algorithm. And phase two of Airbnb's algorithm, like you, it's like if you're a C student the first year of college, then the next three years of college, they're like, well, since you're a C student, the best you can be is B plus, and the worst you can be is D minus, right? But you can't go any further. The algorithm starts to channel you into something, right? But then over the course of years, your long-term reviews start to matter and your long-term occupancy percentage, there's more hard data that will even further define your rank, right? So Airbnb kind of has a shotgun blast first 30 days, and you start to define into a channel. So you really want to hit the algorithm hard in the first 30 days. Um, and that's probably the most important. And then the next most important thing is really booking conversion, right? Al algorithm impressions is cool, but booking conversion is next. And people's photos are the most important thing, and a lot of people don't understand what you can do with photos the same, like to keep your booking conversion up.

SPEAKER_01 55:02

Now, do you like for the first thing you mentioned? The first 30 days is important. Do you just have your prices like super low just to fill it up 100%?

SPEAKER_03 55:10

Yeah, so I'll make a listing today for a place that's available tomorrow, and I'll drop tomorrow's rate for a studio apartment to 35.

SPEAKER_01 55:17

Damn.

SPEAKER_03 55:18

And then but the next day's like 45 or 50, next day is like 65, 70, next day 70, 72, 75, 80, 82, 83, 85. And we have this crazy, like, like aggressive arc, but that gets us booked tomorrow right away, guaranteed. And we're doing it so that way for the next two years of this listing's life, we make an extra 150, 250 a month for the rest of the life of the property because our ranking is better, you know. So we're doing what we have to do the for the first two weeks, but it has implications.

SPEAKER_01 55:45

How do you keep a riff ref out for you know, cheap rinse something for 35 bucks a night?

SPEAKER_03 55:49

Well, so your risk is what that you're the one you have one new listing and you make a listing that's available tomorrow for 35 bucks, and your one risk is that possibly your first guess is Riff Raff. Right? Yeah, you're you're not doing 35 a night for the life of the property, right? You don't have like your exposure to Riffraf in a way is like five days long, right? And you do you have the ability to like screen where they can only have positive reviews, only have a guy, like have a government ID, another blank blank blank, you know. So you can actually be more stiff on your screening for the first couple of weeks because some good person's out there ready to book for 35 for the first night, maybe book a five-night stay. A lot of times we'll get like a five or 10 day stay for our first booking because our prices were so sweet. Then, because we've got lead time, now that 10-day booking affords us lead time for the the the days to come. Now we can be a little bit more loose on our requirements because we got the lead done. Um, but yeah, it's like your first and second booking might be the only ones really at risk.

SPEAKER_05 56:47

I love that because you're looking, you're playing the long-term game. Go ahead.

SPEAKER_03 56:50

Exactly.

SPEAKER_05 56:50

Yeah, yeah.

SPEAKER_03 56:52

It's like you need to have a really good first date with Airbnb on every new listing, right?

SPEAKER_01 56:57

You got to put out, man.

SPEAKER_03 56:58

Yep, get them hooked.

SPEAKER_01 57:02

And so, and so one more thing I wanted to bring up because that's really cool too. Hi, you talked about a dirty trick that you that you did to uh the algorithm. Uh, could you go over that dirty trick, please?

SPEAKER_03 57:12

Wait, not to the algorithm. You're talking about my nasty trick in Austin.

SPEAKER_01 57:14

Nasty trick in Austin. Sorry, sorry, the nasty trick. Okay, so what I did not a dirty trick, a nasty trick.

SPEAKER_03 57:19

So we picked up 11 apartments that were the rents were about a thousand a month, and then we rent we rented furniture. We did rent to own. Total staging cost, launch cost, we got into each unit for about $1,200 per unit. So we did rent to own. Normally it costs us like $5,500 per unit to set up, but because we did rent to own furniture, it only costs us $1,200 to activate each door. We got 10 weeks of rent for free on that. So now the return on investment for that property is over a thousand percent ROM. Wow.

SPEAKER_05 57:48

Now, now question Since you're doing rent to own, are you since you got 10 weeks free? Are you just boom getting your money and then just paying off the furniture and everything else?

SPEAKER_03 57:56

No, no, because the rent-to-own, what you should do, what we're doing is that adds to our cash basis, right? If you do a deal with 10 weeks of rent for free, you're $1,200 out of pocket, then you generate $5,000 or $7,000 before you have to pay your first month of rent. You can you can actually take $5,000 and start three more doors before you pay the first month of rent on the next door, right? You can you you can magically generate cash with with rent to own furniture in 10 weeks free, you can just grow like a fucking wildfire. We don't want to get too greedy, that's why we didn't go do it like that. But we're we're definitely thinking about it. I mean, it's tempting, it's so tempting. Just a leap for problems. So we we want to keep keep our rent to own mix down just in case something goes wrong because it's highly leveraged. But man, you can make cash appear out of nowhere with rent on furniture.

SPEAKER_05 58:44

I'll tell people if you're gonna arbitrage do it the way he's doing it, uh, hop into his course because this is the only way I suggest doing it. Because that that right there is fucking crazy. Damn.

SPEAKER_03 58:54

Yeah, that's riding the lightning. I still think that anybody who's new should pay out of pocket for their furniture for the first couple deals deals. Always focus on free rent. If we don't get at least eight weeks of free rent, we're not gonna do a rent-to-owned deal. I really want 10 weeks of free rent if we're gonna do a rent-to-owned deal because it's an increased cost on the furniture. We're gonna pay 300% of the furniture cost by doing rent-to-own, right? Lifetime. And if we get 10 weeks of rent for free on the front end, we get all this cash, and lifetime value of money or the time value of money makes the 10 weeks of rent free right now worth the markup on the furniture on the back end. It's like a math equation.

SPEAKER_05 59:28

Wow, can't beat that.

SPEAKER_01 59:31

It's mind-blowing stuff. Real quick, my my wife, which she came to the the event that at your place too. Uh with the Julie George Shindig, she said, Do you have any more of these awas frescas? Uh, let me know. I'll I'll go back up the truck.

SPEAKER_02 59:45

I got two cases. Come swing through.

SPEAKER_01 59:47

Okay, should be happy to hear that. Man, dude, this has been a great show. Uh, we're so happy that we finally got to have you on the show. Um, work, you know, everybody knows where to find Sean. Everybody knows where to find Sean.

SPEAKER_03 1:00:00

Type my name into Google and just ignore all the all the hate speech about the fact that I'm Serbian or whatever.

SPEAKER_01 1:00:05

So oh, there's there's hate speech out there.

SPEAKER_03 1:00:08

I'm just saying, since I'm Serbian, there's probably people talking trash about Serbs.

SPEAKER_01 1:00:11

Oh, I was gonna ask one of the questions. Is because you brought it up on a and you did it very gently on one of your IGs, uh, about a hater saying, Oh, look at few rich people out there frolicking and and burning man, and and we can't afford to do that. I don't know. It was somebody hating on you for and for that, and then complaining that you got 50 more units. How do you speak to haters?

SPEAKER_03 1:00:31

Um, you try to give them some love and you try to teach them where their perception is wrong. If they're open-minded to hear your perspective, then cool. If they're not open-minded, you walk away. Focus on the people you can help.

SPEAKER_05 1:00:46

Don't for real, don't waste your time talking to the downtrodden.

SPEAKER_03 1:00:51

And if if they're if they're not ready to grab your hand when you reach your hand out, then I mean you you get you extend your hand once, and then you move on to the next person. So that that one conversation might stick in their head for three or four years, and they'll wake up one day and go, damn. You know, maybe but maybe I did do my job. We'll find out.

SPEAKER_01 1:01:13

Well, man, thank you so much for hopping on. Uh, we got any more questions for our man, Micah.

SPEAKER_05 1:01:18

Man, that is it, man. You absolutely killed it. Um, I will say if anyone is looking to do arbitrage, head over to Airbnb automated because this is the only way to do it, because his way of doing it is killing it. And uh, yeah, man, Sean, thanks for coming on. I mean, it's been like five years. I think I tried to get you on a year three, and I think you were just rapidly growing your business at the time. So thanks for popping on.

SPEAKER_03 1:01:38

And I was super nervous about doing podcasts. I didn't want to like wrap up in anybody else's brand at the time because you know, I'm I'm still learning like what the internet was as far as social media goes, as far as influencing goes. So I just kind of kept it close to the chest, but it's good to be here.

SPEAKER_01 1:01:51

Definitely cool, brother. Wish you more luck in the future and thank keep keep. I mean, he gives up tons of free information, guys. Just go check out his channel, it's all free, it's all fucking free. I'm sure he has courses too. But but I mean, you can you can start your business just by watching his videos. That's uh, I mean, we've used so much of the of your uh of your tricks of the trade in our business. Thank you so much. And we've paid for stuff too. We've paid for some pricing things, and and it's really, really helped us fill our calendars, man. So we appreciate all that you're doing for the community.

SPEAKER_03 1:02:18

Glad that you're looking you learned from me about how to use rule sets, super important.

SPEAKER_05 1:02:22

Love rule sets, yeah. But go get that course, the rule set one. He killed it in that, yeah.

SPEAKER_01 1:02:28

And the pricing course.

SPEAKER_03 1:02:29

Well, the pricing one is the rule sets one. That's rule set.

SPEAKER_01 1:02:31

Oh, that's sorry, my bad, my bad. Yeah, that's what I meant.

SPEAKER_03 1:02:33

Yeah, it's it was my favorite thing to teach, right?

SPEAKER_05 1:02:36

Yeah, but yeah, man, thank you for coming on. And as Sean always says, see you on the other side. Hey, you took him right out of my mouth. Good job, man. Thank you. Later, brother. That was the arbitrage goat, Sean Rakizic. Man, Steve, how are you feeling after that one? That was cool, man.

SPEAKER_01 1:02:58

It was like it was surreal, man. Uh I was a little nervous, you know, going into it because it's like it's the goat, it's the guy that we've all been following for years now, right? And um, and he has so much knowledge in this industry. You ask him anything, he has he has um something to say about it, right? And uh, and he's been making amazing videos for so many years. Like I said, go check out uh uh Airbnb automated Sean and his name, yeah. It's on the thing. Go go find Sean out there, and and you'll be able to, yeah. I'll say it, Rakiji. There you go. I wrote it how I could spell it, so spell it, whatever. I'm off, I'm a little bit off. I'm uh foggy headed, you know. I'm a little under the weather, so it's it sucks that it happened on this episode, and we had a little technical glitches, but it's all gonna be worked out in post. But, anyways, it was so amazing having him on. It was having a a celebrity in our world on our show, the biggest celebrity, if you think about it. And um, oh man, we uh you get so much information from him. I'd I'd love to just pick his brain, just like even off you know, off the podcast. But I mean, he has so much, he's probably forgotten more about STR than most people ever know.

SPEAKER_05 1:04:06

For real, especially on the Airbnb side. He he he's been killing it for years. If you don't know, if you haven't been to his YouTube channel and you're in the arbitrage game, you're probably arbitraging wrong. But yeah, uh, definitely go check him out, man. Uh, I tried to get him on years ago. I think he was, yeah, yeah, he's yeah, he yes, he was saying, like, yeah, he had he was really watching his brand. So, yeah, man, definitely check him out. Um, good friend of ours led us into his penthouse. Hell, cool dude. So, yeah, definitely go check him out. And uh, thank y'all for continuing to listen. And we've been able to bring on some cool guests, and we're gonna continue to bring on some more cool guests.

SPEAKER_01 1:04:37

Here's here's the what real quick what I'm most impressed about how he's done all this. You know, he built it from the ground up, but he's hired people to to run it for him 100%, and that takes a lot of um trust in other people. You have this baby, you have this thing making you a lot of you have this thing that made you rich, and you're just gonna hand over the keys to someone else, and you're gonna just do whatever, do whichever, whatever you want to do. If you want to go travel the world, you want to go Bernie Man, you want to go whatever, you want to raise a family. Hey, it's not just for people that are single that are just gonna want to run around the planet, right? You want to raise your family and and then have someone else run the business for you. That takes a lot of uh courage, man, to to figure that out and trust other people to to do it all for you. And he's figured it out and he's um teaching everybody else how to do it as well.

SPEAKER_05 1:05:21

Facts, man. I love it, man. And uh yeah, that's one thing. I yeah, he he actually is the one who gave me the idea once I get to a certain number of doors, I am gonna pass off the keys and we're just gonna write it out, you know. Um yeah, uh, we're just gonna write it out after we pass off the keys. So I love that. You know, pass it off and enjoy your life, man. Go to Burning Man, you know, I'll look at it.

SPEAKER_01 1:05:45

That's what's up, man. Where can people find us, Micah?

SPEAKER_05 1:05:48

Man, you can find us on Instagram, uh, TikTok, the join the Facebook group. I mean, real quick, y'all. I have been, I I I am off social media. Uh that's why you hit me up. Yeah. A lot of people have been hit me up, inbox me, where you at, where you at. Um, I'm off social media right now. I've been taking a real live hiatus, but I'm really taking it just for just to really get in my hustle. Because you guys know once I get on my off social media and get in my hustle, I can just be focused. And uh me and me and my mahogany are both off. You know, we're focused on buying our real estate, the number of the doors we need. We've traveled, went on a kind of a nice little uh mindset um mastermind, really good stuff. So yeah, man. Uh so you can still follow us on Instagram, me and Steve's Instagrams, I think, are at the bottom. Uh, but yeah, follow us and hit the link tree if you need anything from us. Find us on all social media platforms. Uh, enjoy, but you can still interact with the LLTTU crew on the Facebook page. They're always posting. So uh yeah, thank y'all for continuing to follow us, listen to us. And uh, Steve, you have anything else?

SPEAKER_01 1:06:51

Keep living, letting it thriving, baby.

SPEAKER_05 1:06:54

Let's go. We just gave y'all the GOAT and we are out. Peace later.

SPEAKER_00 1:07:00

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. Bye bye.