Cold open

SPEAKER_02 0:00

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SPEAKER_00 0:27

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_02 0:39

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

SPEAKER_04 0:50

What is up, Micah Man?

SPEAKER_02 0:52

I'm chilling, Stevie Stacks. How you doing?

SPEAKER_04 0:54

Oh, good, man. Recovering from the COVID. I remember last week we joked around I might have it and actually had it. So so the first podcast, uh last week's podcast we did, I was just like, man, you know, I was feeling, I told you I was feeling sick, and so I got tested and I had the COVID. And um, so I'm getting over it. Got uh today. I just just went this morning and got tested and negative, so it's gone, still still a little fatigued and stuff like that. But I'm getting back to the to the grind, and uh enough about me. How you been, man?

SPEAKER_02 1:26

Man, I'm good, man. Just dealing with insurance crap. And uh actually, our current guest might actually be able to help me with it and actually gave me some good advice before the show. So uh cool, that's about it.

SPEAKER_04 1:36

We got a great guest on this episode 211211, your favorite Airbnb, VRBO, home away uber lift, all that share economy fun stuff in the world coming at you from Fort Worth in Arlington, Texas. And our guest, as you alluded to, is Mr.

32 years in real estate before Airbnb existed

SPEAKER_04 1:54

Doug McCarty. How you doing, Doug?

SPEAKER_03 1:56

Good boys. What's going on? Nice to be on here.

SPEAKER_04 1:59

Thank you, thank you. Thanks for hopping on, man. You're a clubhouse legend. Uh yeah, we know you from Clubhouse, man. Tell us a little about tell your tell our fans a little bit about yourself.

SPEAKER_03 2:11

Uh, my name's Doug McCarty. Uh, been in the uh real estate game for 32 years now. Um, basically started out in short-term rental business before it was even a thing, apparently. Uh started getting into the campus housing, kind of what got me into the short-term side of it, you know, midterm side of it. Uh, bought a few properties here and there on golf courses, and uh basically had a bunch of guys that like to stay in my units uh on the golf courses, which were weekend stays and that kind of stuff. And that's where I kind of learned the the short-term side of it and figured out that you know, four weekends I could make more than a monthly rent. And uh we just started enhancing it from there and building the portfolio and uh going towards campus housing, going towards commercial. Uh my mentor got me into commercial and uh built a little bit on that side of it. And then uh, you know, in the last probably 14 years, we really, really honed our craft in the short-term rental industry and uh built ourselves into the experience concierge service, uh, which is the uh that's the money side of it because we all know the short-term rentals bring in a good chunk of change, but that's all that that's barely even half of what we bring in on the experience side. So that's kind of 32 years, man.

SPEAKER_04 3:34

That's a long time.

SPEAKER_03 3:35

Yeah, old part.

SPEAKER_04 3:37

So before so before we dive into the um uh short-term rental side of it, how it applies to our show. Um, so people that right now, I mean, you've been through a few cycles, right? You've been through a few uh real estate cycles. Yeah, uh, what do you what are you seeing right now that can compare to the stuff that you've gone through earlier and and and other cycles?

SPEAKER_03 3:58

Right now, so up until uh about 30 days ago, um

Market shifting to 28 days on MLS - 18 to 30% correction coming

SPEAKER_03 4:04

everything was selling within one to four days. And as of yesterday when I was on MLS, uh three different regions I always check. Uh, they're up to 28 days right now on average on market. So once we once we hit that 30-day mark, it's it's gonna turn the other direction, it's become it's gonna become a buyer's market again. Because once people get to 30 days, they start to they start to worry, they start to fret. And um if their house is on the market for that long, they're gonna go, okay, we need to lower the price because I need to get rid of this now for the best amount of money I can get rid of it for. And how do they do that? They got to lower the price, right? So that's where that's where the cycle is gonna start to go. Um, I don't know how big the turnback's gonna be on this one. Uh I'm guessing anywhere between 18 and 30 percent. But I don't I think that's just gonna get it back to origination from 2018, and then things will normal out, I think. But other than that, it's just all speculation. We'll see where it goes and see how it ends up, and and uh hopefully the foreclosure market will kick in again and we can have some fun.

unknown 5:12

Right.

SPEAKER_04 5:13

One thing I just I just want to point out because I always see a lot of people on the online that are like, hey, you know, don't worry, you know, rates in in the 80s were were eight percent, rates in the 90s were six, seven percent, rate, whatever. I was like, yeah, but those houses were like 30,000 and 50,000 back then. Now they're like the same houses, like 300,000 plus you're putting you're putting those same rates or close to those same rates, so that's a big difference.

SPEAKER_03 5:39

So one year ago today, so if you take a house that was 150,000 one year ago today, uh was thirteen hundred and ninety-eight dollars on a 30-year fixed mortgage. Today, that same mortgage is eighteen hundred and sixty-five dollars, right? Just at two just in a two percent increase, right?

SPEAKER_04 5:59

Right.

SPEAKER_03 5:59

So if we hit that six and seven percent mark, yeah, it's gonna go up a little bit, but again, it's that's a healthy number.

SPEAKER_02 6:07

Yeah, okay. Now this leads me to the question because you've been in the game 32 years, right? And when you start to see these market cycles, what would you what advice would you give someone going into the short-term rental space looking to buy right now and get the biggest return on their investment? Is it a good time to buy, or what will be your suggestion to them?

SPEAKER_03 6:27

My suggestion to anybody wanting to get into the short-term rental game is know the game. Property is the last thing you need to worry about. It's you being the best host that you can be and putting the people in the beds that's making you money. So if you don't know the short-term rental game, you're gonna be behind the eight ball because with everything that's going on with Airbnb and BRBO and travel starting to slow, you're only gonna get 50%, 45%, 40% bookings, and that's barely gonna break you even. So that's the that's the key to it. So somebody that's just coming in doesn't have the 12,000 names that I have that I can continue to put my people into missing areas. Like, like if you started today and a month later you said, okay, I'm only 30% full. I need to figure out how to fill this. Well, you got to go to social media, you got to go to friends, you got to do whatever it is you got to do to put people in those rooms. Well, I had those people already in trusting in me, know my units, already have that stable relationship with them. I can call them and say, you know what? I need people to fill these three units. I'm just gonna give you 50% off and I'm gonna fill them as long as you stay for a week. And I can fill my units. Those other people, the new people coming in, cannot because they're just playing the STR game. In other words, they're going Airbnb, VRBO, and whatever booking and and hopefully or something, and and and praying that somebody stays in the unit.

SPEAKER_04 8:01

Oh, I like that praying so the praying method, yeah.

SPEAKER_03 8:05

Yeah, I mean, that's all they got. Because, like I said, you know, my biggest preach in any of this, the STR is not the game, the area is the game. Sell the area that will bring the people to your STR. Once they find out how great of a host that you are and what you offer to them, and marketing your area, that's gonna change the game.

SPEAKER_04 8:28

So, how does one successfully market their area?

SPEAKER_03 8:32

So, right now, um if you ask me that question

Sending a six-person crew to scout 25-mile radius partnerships

SPEAKER_03 8:36

15 years ago, I said I have to work my ass off to get all the information that I have now. Today, we can go in, I send a crew of six in to set up a unit. So one guy does all the furniture, one guy does all the logistics, and then I have a team of three or four that go out 25 mile radius of my unit, and they find everything there is to do in that city. And then we start partnering with those people. So we say, okay, we own an STR here, we show them numbers from other cities. So that's the other advantage I have because I already have a proven concept. And I just let them know, hey, look, we want to send people to you, we want to hire you on occasion to come cook for our guests. Uh, if you've got a bike rental place, we want to we want to rent your bikes, we want your bikes to be supplied to our units at any given time. Um, if you've got a boat rental service, you know, we want to buy the the tickets for them, upcharge our service for that, just get them to the boat, and then we'll pay the boat people. We never want the money to go from the people's hands to the services' hands. We want the money to go to our hands that we pay the service so that way we can take our cut early.

SPEAKER_04 9:48

I like that, man.

SPEAKER_03 9:50

If you don't get your money first, you will probably not get as much as you want.

SPEAKER_04 9:55

That's cool. That's a man, you're full of dropping gems right now. Um, so so what so you said that the area, so okay, you send out your people to scout out 25 mile radius, you know. That's that's about as far as someone will go on vacation, right? They won't go farther than that little bubble, I would assume. Um yeah, yeah. And so so what kind of areas do you look for that'll make good short-term rentals in general?

SPEAKER_03 10:22

Um, right now, I mean, we're so the 32 units that we own, and then we manage another 88. So right now we are in all 50 states and we are in four countries. So we're in the proud areas, and then now we're just kind of searching out other areas that our guests are asking for.

100% direct book across all 50 states and four countries

SPEAKER_03 10:41

So if we're not in an area that a guest would like to stay, like our Kansas City, we just bought one in Kansas City and we're working on that one. And and the reason why I did that in Kansas City is because I want to know we don't we're not on the big platforms, so we do everything internally. We're 100% direct book. So I want to learn how Airbnb and VRBO function in true life. So I hired my team basically. I said, here's the deal. My company is owned by my by me, and 25% of it is owned by my team. So my team, I says, here's a BRB or here's a BRBO and an Airbnb for you guys. You guys are gonna run this, own it, everything. But we need to set it up on Airbnb so that way we can understand the platform so I know what I'm talking about. Because I really don't. I mean, when it comes to Airbnb and BRBO, I really don't know exactly everything that's going on with that system. I just hear all the complaints on Facebook, you know, bitching area and and all those Facebook groups, and I try to answer questions, but some of my questions I'm answering are are incorrect because I'm 100% direct book and they're relying on a platform. So that's another that's the second reason why I started the platform that I started.

SPEAKER_02 11:56

You knew you said something earlier because man, this is fascinating. You have what 30, you own 32, manage 88, and you're not on the OTAs. Bravo that because I know you've been doing it for 32 years. So you said you have a list of 13,000 clients. So how did you collect that list and then how do you market to that list?

SPEAKER_03 12:15

So in the beginning, um, anybody that stayed with us, um, so I just built it, you know, footstep by footstep. Friends would ask me to stay at these units, and then I'd tell my friends, hey, look, tell your friends about our unit so that way I can get more names. And then everybody that stayed with us, I would just we would meet them at the door, somebody would meet them at the door, walk them through the property, show them everything that went on, which we still do today. Every person that stays in our properties gets introduced to the property by somebody. Whether they've been there six, seven times, it don't matter. We there may be something that has changed, we still walk them through the process. But at the end of that walkthrough, um, we just tell them, hey, for insurance purposes, I need your first and last name, I need your email address, and I need your phone number. And that's how I started gathering the information in the beginning. Then I figured out that these people wanted to do a lot of things around the areas, and that's how I started enhancing our system. So I hired a basically a concierge service person that ran these people. So, like if you go to Vegas and you go to Caesars Palace and you're one of the upper echelon people, you don't check into the front door, you check into the side door, they say, Hey, Mr. McCarty, how you doing?

The Caesars Palace concierge model - knowing every guest's golf handicap and fishing lures

SPEAKER_03 13:30

Uh, let us grab your bags for you. They'll be up in the room when you want. What did you want to do today? You need tickets for the games, you need tickets for the shows, uh, you need a reservation anywhere, you're getting a massage. We know your wife loves massages and jewelry. Does she need to go shopping? This is the exact system I built. I know every piece of information that these people like to do now. So I've got files on guys that have been staying with me for 25 years that are basically the white pages of New York.

SPEAKER_04 14:00

So they show up, and you know, so and so Mr. Smith likes to go fishing, so you got it all set up for him.

SPEAKER_03 14:06

Yeah, I know what I know what fishing lures he likes, I know what fishing rods he likes, I know what fishing poles he likes, I know what boat he has at home, so that maybe I can get a lichen similar kind so he has no issues running it. I know, you know, if he's a golfer, I know what golf clubs he hits, I know what shoes he wears, I know what golf balls he hits, I know what courses he does like, I know what his handicap is, so I don't put him on a hard course, I put him on an easy course, so he has a great and fantastic day, so he remembers my system.

SPEAKER_04 14:33

This is so cool, man. It's like, okay, uh as I don't know what we are, millennials or whatever the hell. We weren't we weren't brought up learning these kind of things, you know, learning about the the four season, I don't know, whatever you call it, the the the high-end hotels that would that would have concierges to to learn, you know, to to have help with guests' experience and relation. We're not used to that. We grew up with the you know, just regular staying at whatever holiday inn motel six. And um, so when we when we're getting coming of age, starting our Airbnbs and stuff like that, we're just like, okay, we're giving people a place to stay, and we're not really diving in like you do, and that's that's so cool. And we do need to learn that, man. That was separate us from the pack big time.

SPEAKER_03 15:15

You would you would be surprised that the amount so the amount of business that you will get for return business will outweigh the new business because you'll get a guest that stays with you five times a year at five different locations. When you're off of Airbnb, you're getting one person staying with one of your units, and maybe never even knowing that you have four other units.

SPEAKER_02 15:38

I'm happy you you brought that up because I think that's what the OTA strip from you is you're just a number. So now, hey, you got this unit, now they have split stays where now you can stay at this place for three days and the rest of the four days go stay somewhere else, which Airbnb seems to be basically stripping your brand from the from your home. And I think you've done a great job of branding your home. Now, with you doing this, what what kind of units do you provide? Do you do houses, uh apartments? What do you use?

SPEAKER_03 16:09

Uh we own all of our houses. So we do houses and cabins.

SPEAKER_02 16:14

Okay.

SPEAKER_03 16:14

Uh, that's our that's our main forte. Um, so when we sold off the other 32 units that we had, um, they were all houses and probably eight of them were condos. Um, so I got out of the HOA area because I kind of saw where it was going because all the HOAs are getting so up in an uproar with all this stuff. So I just sold them all off. But the housing part, the cabin part, um, you know, some of my best units are are the the basically you call them three season because they don't have heat and they don't have, you know, they've got a wood burning stove, they don't have an air conditioner, uh, and they've got a uh composting toilet. You know, so those are some of my best units. They're not luxury, but the amount of service that we provide for them, so if they stay at this cabin, like my upper my units in upper Michigan. So those units there are we have a we have a snowmobile garage where we've got six snowmobiles that these people can go up there and go snowmobile in anytime they want. Um, we've got a neighbor about a mile and a half away that has about 13 horses, so people can go horseback riding that we rent out to them. Um then we've got the lake, which is a four-minute walk from the front door where they can go fishing all summer. And then we've got John boats that they can rent and go out on a lake with. And this is these these these cabins are full all year round except for maybe two months. And we get we get $99 a head on those. Not a bit, a head.

SPEAKER_04 17:46

Or not so you don't you don't use Airbnb or VRBO at all, and you're 100% direct book. Now why don't why don't you just uh sprinkle in a little bit uh Airbnb VRB? I know a lot of hosts that do mostly, I mean even up to 80-90 direct booking, you know, they'll be they'll be talking about talking about it online, but they still utilize for the just so the for the exposure that Airbnb gives them.

SPEAKER_03 18:13

Because when you get to the point where I've got 10,000, 11,000 names, my referral rate right now is probably 100 to 200 names a year. And that's what we're getting out of it. So now we vet our clients before we even let them in, and we want to know who they are, what they are, and what the process are, what they're thinking. So we're going after the five to 12 percenters. So, in other words, those people are making 250 to a million dollars a year. That's my perfect clientele because the $250,000 people are these 25, 27, 28 years old that don't know what service is, but they've got money to burn. And the people that are making that million dollars a year are the people that are established and know what they want, and they appreciate the service that we give. So we're getting the best of both worlds because we're teaching the new guy what service really is, and we're giving the old guy exactly what he already wants.

SPEAKER_02 19:14

Wow, you know your target avatar down to the T.

SPEAKER_03 19:18

Yeah. I mean, I I know the expenses, and that's what the key to all this is is data. I mean, I'm kind of a data freak. I like to know exactly what these people want. I mean, I've I've got probably 10 clients. I know exactly where their plane is at all times.

SPEAKER_02 19:36

Wow. Now you you said you have units in Upper Michigan. Are there any other places that you operate in?

SPEAKER_03 19:42

Oh, we're in, like I said, we're in all 50 states. With I mean, then you gotta remember we we manage another 80, 85 units. So these are clients that have stayed with us and said, Hey, we love what you're doing with your units. Can we put our our house in your system? And that's what we've taken on. So we've taken on areas that we needed properties in that people like to travel to. So basically, we've we've basically said yes, and we've

Turning down a thousand units and charging 40% of gross to manage

SPEAKER_03 20:09

turned down probably a thousand units. And we only take on what we want, not what we need.

SPEAKER_02 20:15

So, and that's a good question. See, now you you said you turn down units. What what's the reason you would turn down a unit?

SPEAKER_03 20:21

Number one, the client. Number two, the unit isn't in an area that we need. Um, because we are we are a hundred percent management. That means you don't get a say, you don't get a say in anything that we do. Period. You just get to collect your check and be happy. If you need to take it out of service and go stay at it, that's fine. That's the only time you get to call us and give us advice. Other other than that, it's all on us. You just you either get your check or you get a bill. If we had to do some remodeling or fix it up or whatever it is to do, we're a complete management company.

SPEAKER_02 20:56

How much how much do you charge for someone to list with you?

SPEAKER_03 20:59

Uh 40% of gross. Wow.

SPEAKER_02 21:05

Oh, go ahead, go ahead, Steve.

SPEAKER_03 21:06

Yeah, well, how much money can you can you tell that you how much percentage profit do you usually I make I make more on on our the the amount that we pay people on the 60%, we make more than most most management companies even think of bringing in on 15% management fees. Again, our services bring in 53% of our money.

SPEAKER_01 21:29

Wow.

SPEAKER_03 21:30

So other management companies aren't doing the services. No, they're only doing the management. So in other words, they're doing their expenses, they're they're they're managing the place, they're they're they're they're billing for the handyman to go out there, adding 15% on top of that, they're billing for anything else that goes on. And by the time it's all said and done, that four thousand dollars they're collecting for rent is now twenty two hundred.

Experience revenue is 53% of income - the horseback ride upcharge system

SPEAKER_03 21:54

So there's not a lot left to go around. But me, that twenty two hundred, and then You add another 2800 on top of that for our experiences, we're giving that to them. So we're making more money than than everybody else is. It's just that we're doing it in a different way. My logistics is a is a crazy nightmare, and and we spend more on logistics than most 10 unit owners do in an entire year on everything.

SPEAKER_02 22:24

So no, I'm gonna go to your experiences. So let's say they want to go horseback riding at the place down the street. How do you get paid off that service?

SPEAKER_03 22:35

So basically, I would call uh Double X Ranch and just say, hey, look, I've got a client that has uh him, his wife, and three kids. Uh we need five horses, and they will take them out on the trails. Uh basically, they just say, Okay, Mr. McCarty, it's it's uh they want a two-hour, four-hour, six-hour tour. It's this much. I go, okay, great. Uh, I call the client, tell them how much it is, I add my 20% on top of it, and there it is. And then basically I take I you gotta remember all my guests, I have their credit cards, I have their checking accounts on file. I can ACH people, I can charge a credit card, whichever way they want to pay, I can charge them.

SPEAKER_02 23:20

You're just like the hotel room. You can pick up the glass, you're just gonna get charged for it. The the the wine bottle, you're just gonna get charged for it on the way out.

SPEAKER_03 23:28

Correct.

SPEAKER_02 23:29

I love that.

SPEAKER_03 23:31

If you want it, you can get it from us as long as it's legal.

SPEAKER_04 23:35

See, I was waiting for that to wink, wink, wink.

SPEAKER_03 23:39

Yeah, yep, yep, yep.

SPEAKER_04 23:41

Hey, if you got places in Nevada, you know, there's things that are legal over there too.

SPEAKER_03 23:45

Yeah, outside of Nevada.

SPEAKER_04 23:48

Oh, out there you go, the city proper. Um, so how many names you said you had a you had a list of?

SPEAKER_03 23:54

So right now we're sitting on we just broke 12,000, so we're a little over 12,000.

SPEAKER_04 24:00

12,000 names. All right. And if you can't house them, you find a nice place for them and you get a kickback from that too.

SPEAKER_03 24:09

Correct. If we do a referral, um, we get uh we get 25% of the referral.

SPEAKER_04 24:15

Wow, that's beautiful, man. Wow. Uh and what systems are you using to collect all this data and keep it? Are you using like mail chimps to email people email them or anything like that? Or how you do it?

SPEAKER_03 24:26

Well, again, we're really old school. So we came up with the notion of Excel, and then when OneNote came along, that kind of saved our life. And then uh when OneNote came into effect with their automation system, so in other words, OneNote. So all your telemarketers work off with OneNote, so they can click on the OneNote category and it'll show the person's number and it'll work with their phone system to call them. Same thing with us. So when that person calls in, it gets routed. It it we know who's calling in, we'll route it to the concierge, and the concierge will see the phone number, he'll type in the phone number, and it'll bring up all his information in front of him, and he'll say, Okay, Mr. Smith, how are you today? Even before you know there's a conversation, we already know who's on the other end of the line. No matter what. We've got every phone number that he has tied to Mr. Smith, whether it's kids' phone numbers, his wife's phone number, his phone number, his office phone numbers, his secretary's phone number, everything.

SPEAKER_04 25:21

Okay, I guess here's the thing. So, okay, we're just like I said, we're we're youngsters in this game, in this game, anyways. Um, and we're learning how to collect the data part. Okay, we got that down. We're getting to collecting the data, and then we're learning, okay, there's an app called MailChimp where that'll send people emails. Hey, come stay with us uh for Easter for Christmas. Uh, you know, so no, we got those two things kind of down. Um, I'm assuming that's not how you do it, and and what could you teach like our generation how to how to reach out to people or not reach out to people, or what should we do?

SPEAKER_03 25:55

The the biggest thing is don't overcrowd a person. Nobody likes to be crowded by a salesperson. So if you're gonna call them and offer them something, it needs to work for them, not for you. So, in other words, in the beginning, when I really needed to get people in our system, I offered, look, if you tell

Three referrals earn one free night, no blackout dates if it's open

SPEAKER_03 26:15

three friends that stay with me for three days, I will give you a one-day free stay. And if they did that nine times, that gave me basically so each person that's three, three, and three. That's nine days. They got one day, so I got 10 days filled. So they just keep repeating that to build themselves up to a three-day stay. They could the free stay is good anytime I'm not booked in any location.

SPEAKER_04 26:45

Nice. Now, could they use that one day for New Year's Eve or something like that? Far away. Really?

SPEAKER_03 26:53

I don't care if it's if it's not booked, if they want to, if they want to book it three years in advance and it's not booked, yes.

SPEAKER_04 27:01

Wow, that is cool.

SPEAKER_03 27:02

So you start that's it's it's that it's it has to work for them, not for you. You have to remember, you you can't black out dates. All you're trying to do is fill your empty dates now.

SPEAKER_04 27:16

So I I I assume you uh I know the answer to this question before I even ask, but do you have you you don't have automated emails going out to these people?

SPEAKER_03 27:23

Absolutely not. We never send out automated emails. Every email they get is in the beginning, two days prior to their to their show. Then they get an email two days after, respecting them for their show, and then there's always a uh a letter on the table personalized to them, thanking them for staying and letting us know is there anything that we missed that we could have done better for you during this period? If it is, please call your concierge, let him know we will get it fixed, and if there is a problem, we'll make it right. And then if they do call, we automatically give them a one-day free stay in the future if there was an issue.

SPEAKER_02 28:08

Wow, beautiful. That's awesome.

SPEAKER_04 28:12

What were you gonna say, Mike? I cut you off.

SPEAKER_02 28:13

I forgot now, man, because now I'm like, I gotta definitely improve my systems. So with you not sending automated emails, how do how do you contact them to come back? And how do you, you know, because I know you're real big on referrals, but how do you get that return guest to come back?

SPEAKER_03 28:32

Um basically we just we'll reach out when we're empty. That's the only time that we'll reach out to people. So, like if we've got from now until December, let's say we've got 20 to 30 open weekends, we'll start reaching out now to

Filling empty weekends by calling prior inquiries with 20% off

SPEAKER_03 28:49

people who that have stayed in that area prior and say, hey, look, you know, we've got a weekend here that's open. Would you like to stay that weekend? We'll we'll cut the discount down to 20% because we don't really care what the nightly rate is. All we care about is getting them there so we can sell the experience because they already know what's going on. We already know how much they spent last time. So we look and see at everything that they've spent with us in these locations and say, hey, look, last time you were there, we noticed that you uh you rented our yacht and we you you went out to uh a basketball game and then you took your kids uh to elevate. Um is there anything that we can do for you during that period of time now to get this thing going? We basically book it for them before they said yes.

SPEAKER_02 29:37

Hmm. And you and like since you don't list on OTAs, do you lose like a property management system? How do you manage all this?

SPEAKER_03 29:45

Um, yeah, so I I started using Building um probably 10, 11 years ago, and then it didn't grow with us like the way we wanted. So then I had uh my IT guy basically design an XL OneNote system for us um that cost me about 25 grand because we had so many names and so much information, and uh so now we own it and we just have to do some minor updates every now and then so we don't have to pay because when you're that big and you've got that many clients and that many units, so 110 units on 90% of your OTA uh secondary products is gonna cost me five grand a month anyway. So, like hostfully and and guestly and all that, that's gonna cost me five grand a month. So I'm spending 60 grand a month a year for them versus 25 grand one-time fee and just doing some minor updates on it and paying a uh an IT guy 120 grand a year to keep everything up.

SPEAKER_04 30:45

Man, you are a business, yeah.

SPEAKER_03 30:47

I think you are the business, 100% business. Yeah, no, there's if you if you're just if if you're doing this through your social security number, you are strictly a hobby.

SPEAKER_02 30:57

I love it. That is true.

SPEAKER_04 31:02

This this is mind blowing. This is mind blowing because uh okay, we we we talk about a lot of uh you know short-term mental stuff, Airbnb, you know, VRBO, we talk about uh doing we're you know heavy into direct bookings now, and we're we're all you know, because because the way Airbnb has been doing us for a while, we've been wanting to jump ship and and and start our and you know, go heavy into our own brands and go and go heavy into direct bookings, and it's just to speak to someone that that does 100 direct bookings is just is is eye-opening because there's more to it than just okay, I got my own website, and now I'm gonna send people emails and and hopefully you know they'll come straight to me. You're forming relationships over years with these people, exactly. And and so what you want.

SPEAKER_03 31:54

I mean, right, you want somebody that feels comfortable with you and your system to spend money with you. I mean, you gotta remember, millennials nowadays don't give two shits about nothing, they just go spend their money and they don't give a crap. If they happen to take an instance where they've got the most incredible service they've ever had in their life, that's memorable to them because they've never had it. And they say, Well, let's call that guy and see if he's got any places located in this destination where we're gonna go. Let's call him and see if he's got anything in Paris. Let's call and see if he's got anything in the Caymans or Aruba or something like that. Maybe maybe he's a maybe he's a kind of a travel agency, and that's kind of what we are now.

SPEAKER_04 32:36

Now, now I think you know it one observe is is from just dealing with um most most of our business being from the the big dogs, you know, Airbnb V RBO, it's it's turned a lot of hosts bitter, and and not and and this is this is why. So so things incidents have come up in the past where guests want to cancel for whatever XYZ reason, even if it's the cheesiest reason, Airbnb will give them 100% refund, right? And so with that, and now I know there are legit reasons for people to cancel, you know, stuff comes up, but what it's made us into is like, no, no, it doesn't matter what reason comes at us, we're gonna say no, no, no, and put it on Airbnb because they're gonna probably give you a refund, anyways. Call them, blah blah blah. And it's turned us into like a lot of a lot of us into bitter hosts where we're we're not gonna we don't bend, we don't bend for nothing for any excuse, whatever.

SPEAKER_03 33:27

Now I assume I remember you guys were never the end game, you were all the start.

SPEAKER_02 33:34

Exactly.

SPEAKER_03 33:34

You are a liability to them.

SPEAKER_02 33:37

Thank you.

SPEAKER_03 33:39

I know Micah loves that.

SPEAKER_02 33:40

People don't believe me when I say that. I'm like, you're the biggest liability as the host to Airbnb.

SPEAKER_03 33:46

Go ahead, every host out there that doesn't do their job, they're the ones screwing up the next experience for the guests to come back and spend money with Airbnb. They don't give, excuse my friends, two shits about the host. It's a fact.

SPEAKER_02 34:00

They don't.

SPEAKER_03 34:01

No, they don't. They just all they care about is the money. Where does the money come from? The guests.

SPEAKER_04 34:07

So, so that all that being said, and all that the way we've been abused by Airbnb in a way, used and abused, like you said, and and it's turned a lot of us into bitter hosts where we don't bend for any anything. We we we're suspicious of the guests that they're gonna try to screw us over with the help of Airbnb. It's just turn it's just this weird dynamic, right? Whereas I know I I know you probably you since you have these relationships with these with your guests, um, they're part of the family, you know, that stays with you. Um, you probably you probably are more lenient if and something comes up, one of these guests, hey, I gotta cancel. I know it's a week away, boom, boom, boom. You probably work, you're more willing to work with them than someone like us who's been burned so many times.

SPEAKER_03 34:53

Absolutely. First thing we do is get on the phone and get it filled. That's the difference between me and you guys on the Airbnb because I can call somebody and get that unit filled and just say, Hey, look, I've got a unit that just came up available. We know you tried to book it a month and a half ago, and you called us about it because that that's automatically tagged in our system. If anybody called on it prior and say, Hey, look, it just came

Country-club billing - sign for everything, charged 24 hours after checkout

SPEAKER_03 35:16

available to you. Um, we'll give you a 20% discount right now if you want to book it.

SPEAKER_04 35:20

And plus, that's that's beautiful. Plus, the guests that you helped out because they had to cancel of whatever for unforeseen reason. Repeat guest, repeat guest. They love you, thank you, and they're gonna be.

SPEAKER_03 35:30

You guys have to remember, I don't bill to this day is over, so they don't have any money, they don't have any money out of their pocket anyway.

SPEAKER_02 35:38

No, how now how does that work? How does that work?

SPEAKER_03 35:41

You come stay, Micah. You come stay at one of my units, you book it for the weekend, you show up, you do everything you want. We sell you. It's it's a country club. You just sign for everything. At the end of the signature, I already have your credit card, I already have your checking account. I'm gonna send you an email with an itemized list, just like a hotel does. Says this is what we're charging your card and your checking account. You have you have 24 hours to respond to defeat any charges on that card or anything, and at the end of that 24 hours, we fill it directly.

SPEAKER_02 36:13

I like that. That that is next level. I like that. You did it like a country club. Hey, come do whatever the hell you want. You can go swimming, you're gonna be paying for all of it. You can go to Disney World.

SPEAKER_03 36:24

They're not they're not paying for it until the end.

SPEAKER_02 36:26

Yeah, it's just like Disney World.

SPEAKER_03 36:29

You go with that little band, little band, just keep bringing it up. You want that $30 cheeseburger? Bring it up.

SPEAKER_02 36:38

Yeah, because and I wondered why Disney World did that because I took my son last year and they're like pushing, hey, get this band, get this band. You don't have you just walk out your room and you do whatever you want, and you'll see people just slaping the band on everything. Man, by the time they leave, they're probably leaving with a ten thousand dollar charge.

SPEAKER_03 36:54

But exactly. Same thing. It's just like when you go to a hotel and all those little the the you know, the peanuts and and the MMs and the waters are all sitting on that weighted tray, and you take one off, you get charged for it when you leave.

SPEAKER_04 37:09

I'm gonna take my Dave Ramsey envelope with me and pay with cash everywhere.

SPEAKER_03 37:15

I love that, man. But you don't pay for anything with me until you leave. Damn, that's cool. And the other thing that that that you know you hinted on was it's leaving a bad taste in the hosts that are trying to do things right. So the hosts that are trying to do things right, it's leaving a bad taste in your mouth. It is because you have no recourse. So, what's your recourse? Well, you go start your own, or you do your own way, or you go out and and use a platform like we've built. So, if I told you what does a website cost to build nowadays, $250, $3,200 basically to get something that's absolutely functional with all the credit card stuff and all the information and all that. So if I charged you five dollars a month, or every five dollars for every booking that you listed with me, how long would it take to burn that up? A couple years? So that's the site that we've built, and it's run by hosts that actually know what they're doing. That's the host that we want on our site. We want the host that gives a crap about their clients. We give you a built-in CRM behind the scenes so you can track the information. You get to keep all your information. I'm not holding nothing from you. My site, I just want you to use it for what it's for. It bills you five bucks every time you get a booking, and it bills the guests ten bucks, and that's it. No other fees, no nothing. And you have to work out all your complaints, you have to vet your own guests, you just have to use it just like a direct booking site. The only difference is I'm paying the hosting fees, I'm keeping up with the data, I'm keeping up with the website, and I'm giving you guys the opportunity to use other people on the platform to refer out in case yours is booked.

SPEAKER_02 38:56

Oh, I like that.

SPEAKER_04 38:58

And what's your site called?

SPEAKER_03 38:59

It's stayinarhome.com.

SPEAKER_04 39:03

Stay in our home dot com.

SPEAKER_03 39:06

Yep. Um, we just we just started on the new renovation of it. So, in other words, we are building, we built the first one from WordPress, um, and we've we're starting to outgrow that. We we can't keep up with it because now we're adding anywhere between three and five new hosts a day. So we're we're finally nine months old and things are starting to click and people are starting to understand. And um, so hopefully by August, we'll have this new site completely done. Uh, once we get to 500 guests, I'm gonna make it a host-owned site. So, in other words, if you are a host on my site, you are gonna have the ability to get five shares of my company for every listing you have for every year you're on it.

SPEAKER_02 39:50

You know what I like about your how you're doing it? You're creating a place for business owners. Correct. And when Airbnb first came around, I used to always say it like on the first few years of our podcast, I said Airbnb created a lot of non-business minded business owners because you can just list something, get paid, and it's just there's no business behind it. You hey, you got to go go out, find people to network with, refer people, build a business on the backside, go network with other businesses so you can create a referral program. That that is that's what I love about that. I'm definitely gonna be going to stay in our home.com. I love that.

SPEAKER_03 40:30

Yeah, and that's that's the biggest thing about it. So we're building, I think we've got 13 YouTube's on how to enhance your business that we're just getting ready to release and put on the website for you so it explains how to use the system and how to actually vet your guests, how to understand your guests, and how to give the guests the best experience they've ever had, so they use you, use you and our platform again. That's that's what it's all about. People need to be taught this system because 80% or 85% of the people out there are just butts in the beds. People, they're Airbnb built. They don't understand, they don't understand this service industry. They just think it's just a money grab right now until everything falls out, which is fine. That's that's what the world is all about. Just make as much money as you can until it falls out, and then maybe either they'll sell the property or get rid of their arbitrage. That's what that's who cares. All they're doing, all they're doing is handsome me.

You only lose money when you buy - always the right time if you buy it right

SPEAKER_03 41:29

Because I've already in it, been doing it, know how to do it. I just want to teach you how to do it. So if you want what I got, come see me, we'll help you get there.

SPEAKER_04 41:38

That's that's that's great, man. That's and that's what that reminds me. And I talk to people like at work and stuff like that, that they kind of know me as the the Airbnb guy, right? And and just you know, from what people are talking, and and they'll come up to me, I want to do it, but you know, I want to buy a house to do it, but the market I'll wait till everything crashes, and then I might get into it. I'm like, when you do finally get into it, you're gonna go up against people like us that know what we're doing, right? We're gonna go up with uh people that are getting in the reps for years, and you think you're gonna just make money against us. I mean, it's it's just the mentality they're gonna wait for something to happen to start, right? Instead of getting in the reps as soon as they can.

SPEAKER_03 42:18

Get off your ass and do it. The best time to buy a property is now. You only lose money when you buy it, so it's on you to buy the property right, but it's always the right time to buy it, just don't buy it wrong.

SPEAKER_04 42:34

Nice man, because you only lose money when you buy it. Man, this is great. This is great, this is great. We're glad we're glad you hopped on. We see you on Clubhouse all the time. You hop on our clubhouse all the time, which oh, yeah, and dropping knowledge, man. We ain't even got to the insurance part of it and stuff like that. But that'll be uh episode number two when you come back again.

SPEAKER_03 42:53

Absolutely, yeah. Come out to Clubhouse on Wednesday. I'm gonna break down arbitrage versus ownership. I'm gonna break it down number to number and show oh, do that.

SPEAKER_02 43:02

I want to be in there. I'll I'll be there.

SPEAKER_03 43:04

Why arbitrage is not as great as you think it is. Hmm, it is good, but owning is always better.

SPEAKER_04 43:13

You might unless you want to ask him an insurance-related question of stuff going down. If you wanted to ask him one real quick, Mike. Oh, I don't insurance, like from what uh your situation that happens.

SPEAKER_02 43:25

Oh, yeah, yeah. So actually, this may be good for the people on the podcast. So basically, I have a homeowner's insurance policy with uh USAA, and then my business is covered by uh proper, which is my business, and I lease my primary residence to my business. My business runs everything from there. So I had an insurance claim where I filed the insurance claim with USAA, who's the homeowner's insurance. And then Proper comes in, they're like, hey, we're gonna cover the loss of income because his unit's clearly gonna be down. He can't host anyone. USAA then comes back and's like, well, hold on. Since you have a second insurance policy we're gonna be the second people on the insurance we're gonna be the backup so uh then uh I ran that by Doug and Doug gave me some really good advice I don't know Doug can probably go into the advice that he gave me just for look just for legal aspects of it I can't go into what we moved into okay uh I told you that off site yeah that'll be off site then I don't have any uh we can't go into some of that stuff because I can because of what I do I I mean I am I am I am an adjuster and own an adjusting firm so I work for you and I work for the insurance company so the advice oh I didn't know you were still an adjuster okay uh definitely advice that I give is just personal information that I that I give out to to help you get through

Insurance adjusting background and dual-policy coordination advice

SPEAKER_02 44:45

the situation who to call uh with you within USAA or within proper okay we'll cut this whole part of the podcast though no this is good people can reach out to Doug directly and ask him questions you know I'm sure absolutely I'd be more than happy to on uh you know behind the scenes I just don't like to do it on live air recordings there you go there you go so we'll leave this part in reach out to Doug for all your insurance related questions absolutely so hey let me ask you guys a question to finish this off so you guys have been doing this for about two and a half three years uh what's your biggest trial uh of uh short-term rentals or podcast what's your what either one i mean the podcast is is helping you get people to understand the str business while growing yourself as an str I understand that that's what the podcast is teaching you guys it's it's getting you into areas that you weren't in by renting so it's people are telling you all the all the tricks and and tips to all this stuff making you a better host what's the biggest trial that you have implementing that information into your own system man i know mine my biggest trial has literally been just focusing on getting off the OTAs and right now I've been doing it um I moved over to a different PMS I moved over to Boosley um that's been my biggest trial is getting off the P if getting off the uh Airbnb's the VRBOs it's just they have too much power and control over your your listing and you you own the property you know it's like you shouldn't have this much control.

SPEAKER_04 46:28

That's been my biggest trial that was my biggest trial is getting off the OTAs okay I I guess mine you know I I would say is turning this um as you stated earlier going from hobby to like a full like a real business you know and and because as it as it grew you know we'd hit certain plateaus where we get stuck at you know we get at five properties and get stuck there before and try to fill out our systems been able to take on more properties and you know get to 10 and then we get stuck at 20 for a while and it's just each phase of growth it it it brings on a shitload of more challenges and and more problems and and then we get stuck in this mess for a while until we figure it out until we can grow to the next level so trying to turn this tame the beast and turn it into a real business automated business that's that's working without us or you know or we can work on instead of inside that's the biggest challenge that we've faced focus on the numbers not on the units focus on the numbers not on the people right now that'll tell you where your problems are numbers yeah how much money your unit's making or why it isn't making enough money if you focus on those items it'll tell you where you're missing out or not doing as much because the money tells you exactly what's not going on so in other words if you don't have uh if you don't have Eric Inc at the top as your main source of income and then every unit underneath it is an LLC and all those units aren't funneling 50% of the profits to Eric Inc, you don't know where any of the money is you need to run you need to run one business and everything else is its own separate business underneath and those separate businesses feed the big business and the big business pays your salary and pays anything else that you want to go buy and plus number two if you're not doing it that way you're paying an extra 18% in taxes more than I am. Tax okay the if we could dig in a little deeper how are you saving 18% in taxes well number one I've got unit I've got Doug McCarty Inc.

SPEAKER_03 48:45

which is paying my taxes my W2 all that so I get

Paying yourself $32,950 W-2 saves 18% in taxes with S-corp setup

SPEAKER_03 48:50

a write off employee benefits number one so that saves me six percent right there LLC number one is being all the bills are being paid through Doug Inc and then it's being paid back out up to that company so now I get a write off both expenses on both companies whoa so that's another 13 because it's six and seven okay I'm gonna have to rewind that a few times to get to my mind to get a CPA if you guys don't have a CPA you're gotta have a CPA. My CPA is 100% and you need to tell them to structure it that way because you have to have an ink you have to have an incorporation whether it's an S Corp or a C Corp.

SPEAKER_02 49:35

Whatever the whatever the top company is you have to have that that's your that's your umbrella that runs everything else yeah well my when my CPA told me about the S Corp tax savings I was mind blown and he implemented that I was like damn you're you're wanting to get out of your W-2 so you can pay yourself the W 2 that's what you want.

SPEAKER_03 49:56

And then you take the minimal amount that you want which in other words the poverty level is $32,950. That's my salary that's what I make I get every tax benefit I could possibly get from that my company owns everything else I own.

SPEAKER_04 50:13

Only reason why I have a W 2 is so I can buy a car I love it and and property too right properties are all bought by the company oh shit that's amazing man business credit man there you go business credit will buy you anything you want in three months that's what I tell people that's really the biggest piece best piece about arbitrage and no one talks about they're so focused on getting more arbitrage I'm like losing you're losing more business credit by not owning the company because I can teach you how to triple your income just by owning in the same three months that's a fact we have to do another episode I noticed and I noticed a number keep coming up on this episode that the number 32 you've been doing this for 32 years you have you own 32 properties and and you make and you make 32 000 a year man that's just uh that's your number well it that that yeah I guess I never even thought of that that's that's amazing that you put that correlation together that's why that's why I write down notes um man thanks for hopping on we could be on here for hours but uh yeah appreciate you hopping on we'll do a round two for sure and we have so many more questions um and so any closing notes for our for our listeners I know you're heavy and this is a hospitality business this isn't just uh you know Airbnb the biggest thing is just just let it go that's the only thing advice I can give you in life when you're when you're dealing with a bad guess just let it go move on to the next one find the right guess it's just like doing sales you find you you get to 20 no's to get to the one yes same thing with the good guess you go through a few bad ones then you get a bunch of great ones work the great ones let go of the bad ones just let it go who cares it's property you don't get emotional over property property is for one thing making you money that is it boom and Doug real quick can you tell people where they can find you uh yeah uh you can get me on uh stayinarhome.com you can get me at stay in our home instagram stay in our home uh stay in our home Facebook uh stay in our home tick tock uh clubhouse Doug McCarty I have a short term rental room every Wednesday at one o'clock uh anything else I mean Doug McCarty uhCalendy you can get me on there schedule a meeting I'm totally approachable uh I'm getting into the uh coaching and teaching aspect of it uh we're starting to do one on ones I've got nine mentees and uh four pro bono mentees that we're doing so we're just we're just trying to I'm just trying to get out there and teach people how to do the right thing.

SPEAKER_02 52:57

Good stuff.

SPEAKER_04 52:58

Yeah thank you for doing this because this is good stuff I'm definitely maybe joining that mentorship because uh yeah the direct bookings I'm trying to join as much direct booking mentorships as possible so because when this thing falls you're gonna have to learn how to pivot got to man is anything else you had Steve uh thanks for hopping on man we'll see you Wednesday on our clubhouse awesome sounds great all right thank you thanks guys appreciate it thank you take care all right man that was a good episode man I love the fact that he ain't on none of the OTAs man I'm trying to that's what I'm working my ass off to get to man I've been I was actually doing my boostly stuff getting everything uploaded so yeah that that was a good episode really good episode you know and and it's it's it's really mind opening that he he's he's all about hospitality and that's what this business should be about uh Airbnb soured a lot of us hosts and we're you know we're putting we're just you know on edge all the time that people are going to try to screw us over with the help of Airbnb and so when we when we do adjust to doing our own you know our own uh websites and doing our own direct bookings we need to we need to change how we're looking at this it is hospitality first we do need to form these great relationships with guests so they'll be repeat guests and and that's what he's all about man he knows them inside and out he knows what they love he's ready is ready you know once they walk in the door they're ready to go they don't have to open up uh you know I was gonna say yellow pages that ages me and look for who could take me fishing this and that now Doug's got you covered he's got he's got your your fishing guy ready to take you out fishing he's got the horseback riding set up he's got everything set it's it's uh hospitality man concierge you got concierge that's an old school term too we don't even mess with but um we got to learn these things if we're gonna be a brand that people want to keep using over and over and plan their year around seeing us that's a fact man gotta get out there and that that's what I think you hit it on the head man I think the OTA strips that from you even shit I mean if you book through Airbnb they're having problems with you asking for payout so I mean hell if you want to offer extra services you know you gotta you definitely gotta have your own shit man I'm I'm loving what he was saying man what'd he say Airbnb doesn't give two shits about you so I love that so many it's the truth too man like at this point in our business and I I can't go too far into details but we we talked in our group like you know I talked to someone um at a at a company who knew some you know who knows behind the scenes things of Airbnb and they said you know they think Airbnb might be becoming a property management company and might start offering concierge services so it's just certain things you got to be on the lookout for and I I got to make that poll I'm I was asking people would you let Airbnb manage your property for 25% I don't know if it's gonna be yeses or no's but we're gonna find out but so yeah just build your own brand we're in a time when you got to build your own brand that's it man thanks for coming on live that thrive at gmail.com live that thrive.com all that fun stuff find us hit us up come on our show yes sir yeah follow us on IG and uh Wednesday every Wednesday 7 30 p.m we have our clubhouse room and remember because we had so many people late signing up for our last masterclass be sure to join the email list so you can get that early access a lot of people are coming in late today of so yeah be sure to get that early access and uh 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 56:42

Bye bye