Cold open and Federico's Airbnb origin story

SPEAKER_00 0:00

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

SPEAKER_03 0:11

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

SPEAKER_06 0:21

What's up, Micah Man?

SPEAKER_03 0:22

I'm chilling, Stevie Stacks on a beautiful Friday. How you doing?

SPEAKER_06 0:26

It is a beautiful Friday, right?

SPEAKER_03 0:28

Yes, sir.

SPEAKER_06 0:29

And I'm doing pretty good, man. Um, oh, tomorrow morning, uh, USA versus um France. Gold medal, gold medal match, gold medal game, basketball. Oh, you're following the Olympics yet.

SPEAKER_03 0:42

I I have been, but like we got our asses kicked by Nigeria and a few other people, so I kind of was like, eh, Kevin Durant ain't gonna bring it home for us.

SPEAKER_06 0:50

So they recovered, they recovered, man. Oh, so anyway, so yeah, this is episode 175 of your favorite Airbnb VRBO Homeway Lyft Uber, all that fun stuff, share economy podcast in the world, and we have a special guest.

SPEAKER_03 1:05

We have our guy Federico joining us today.

SPEAKER_06 1:08

We just Federico Zimmerman, and where are you from, Fede?

SPEAKER_01 1:14

Hey, so thank you for having me, guys. Uh, finally, um, I've been a big listener from the beginning. Uh, so I'm from Buenos Aires, Argentina. Uh and you probably know me as you mentioned me many times in the show as a still partner. I also worked with Micah, so do a lot of things uh in the share economy and Airbnb. So excited to be here, diving to a lot of questions and things as as we grow.

SPEAKER_06 1:42

Yeah, it's gonna be a fun show, man. We've we've I've known FedE for a long time because you know we both work at uh American Airlines, that's where I met him. And um, so we've we've we've known each other, hung out for a long time, even vacation together, stuff like that. And um, I introduced FedEd to Micah, and they you know they hit it off, and you did you do some work for Micah, and then um yeah, so and we formed our our our company together, our just rentals. So that's yeah, that's the that's how we met. And um, so FedE, man, you've been you've been all over the world. How long have you been using Airbnb for?

SPEAKER_01 2:15

Yeah, so I I always try to remember when was the first time I used Airbnb. So with 10 years in the early industry, I've done over a million miles, been to over 65 countries. So I've been around. Uh I never remember, but I I experienced whole type of accommodations and all types of Airbnbs from Thai houses, shared rooms. Uh I remember once in Madrid I stay at these people's place. It was just a room, no light, uh no lock in the door. They have people in and out of the apartment all the time partying, uh, it was cheap. Um yeah. So I I lived, I experienced everything. Uh capsules in Tokyo, uh, you know, resorts, residential suites in hotels. I mean, I had a chance to see all types of accommodations. Um as I've been telling you, I that's why I tried to bring, I tried to bring the best, right? Uh to the company that that we're building and to to our guests.

SPEAKER_06 3:16

Yeah, yeah. You you mentioned real quick the the capsules in Tokyo. I've I've heard about these. It's like like what are they like almost like a coffin that you sleep in?

SPEAKER_01 3:25

It is a coffin. I'm 6'4, I think, because I use meters. I'm from Argentina. Um, but yeah, so my my my my feet were my my legs were hanging outside of the of the capsule because I don't feed in that thing. Uh and it's weird because you get there and you know it's super automatized. I know Mike is gonna love this because you get there and you pay on a vending machine. So you don't even have person. So you get you get to a hotel, you pay on a vending machine, that's good that gives you a paper with a code, and you open your your room with that. That's it. No interaction with people or anything.

SPEAKER_06 3:58

And you get your own little pond and your little pod, your little um yeah. That's cool, man. Um so so when when did you start uh dipping your toes in the water of trying to be a host? When when did that start?

SPEAKER_01 4:11

Okay, so I'll say so um I started like two years

First hosting experience in Buenos Aires

SPEAKER_01 4:19

ago uh in my my place, in my my house here in Buenos Aires. Uh I live in a thirsty area, so we had an extra room. We thought it would be a good idea to have some extra cash uh for the expenses. So we opened the place. Um and the first person, the first couple we got was a couple from Brazil. They came here over the weekend. I was so excited to say, okay, I want to interact with them, do a barbecue, and they were vegans. So that it was they were just using the room. And then we had another another girl from she she was half American, half Chilean moving to to Argentina, so she stayed here for a month until she found a place, and we still keep in touch, and that was pretty much uh our experience as guest in my house before we started, you know, uh with the company.

SPEAKER_06 5:06

That that's cool. You mentioned like you still keep in touch, and then we're gonna do this this um, it's not really like an interview style show, we're gonna do like a round table, you know, because we all know each other, and we're just gonna talk um a lot of different topics today, including growth and scaling. But like you mentioned that you still know that girl that

Relationship-driven hosting and growth through word of mouth

SPEAKER_06 5:23

stayed there, y'all still know her, and that's what to us what I've noticed from the beginning of doing Airbnb, it's like a relationship type deal, right? And so, I mean, I've I've met people and and I've kept in contact with some people and stuff like that. Some people kept in contact with me that I wish wouldn't have, but you know, it's uh it's a relationship type deal. And so today, uh Micah, we're gonna discuss um growing growth, our companies, you know, because you know Fed is you know helping us both out, and I got the we got the Argus Rentals together, me and him. So we're just gonna dive deep into that because that's um that's the hardest part of uh of uh business, I think.

SPEAKER_03 5:58

It's going too fast. So how are y'all how are y'all picking up y'all units and scaling at the moment?

SPEAKER_06 6:05

Mostly word of mouth, man. Mostly word of mouth. Because I mean, you know, someone will say, Wow, you know, that they're doing a great job for us, you know. Fed is over there rocking it from Buenos Aires, and um, I'm doing what I can do here, and and people are are liking our you know, the money we're bringing them, first of all, it's been good. And then um the five-star reviews. So it's just it's just word of mouth. You go, Oh, I got I know so and so that uh has a unit that wants to switch you know management and wants you guys to do it, and I know so and so, you know, it's just it's just spreading like we didn't we don't advertise, we don't we don't we don't buy you know Google ads, Facebook ads, or nothing, but it's just word of mouth, and it's almost it's getting to the point where it's uh we talked about it today, Federico. It's like growing like it's too fast, like crap. You know, we need to we need to start uh having another power. How you know who we're gonna hire to help us because it's it's just uh and that's just from word of mouth, and we haven't even tried to really advertise it yet.

SPEAKER_01 7:01

No, we did a website, uh, which is really nice. Um, we have the Instagram now. Um that that part is growing slowly, but uh we we discuss like okay, how we're gonna reach people, right? How we're gonna reach people to find our services, but again, it's coming word to mouth.

SPEAKER_03 7:18

So yeah, yeah, word of mouth is huge, especially if you're doing that arbitrage model, or not arbitrage, but co-host model. You know, one person makes money and they see it in their account. Hell, they're gonna go tell their friend to own property, you know. So yeah, it ain't that that ain't bad at all, man.

SPEAKER_01 7:33

It's funny because even even one of our cleaners, she's like, Okay guys, whenever you have you have a an a place available, I want to hop in and do my arbitrage. So she's like on the list. So a lot of people that are waiting to get uh to get a property, and so we're we're looking for places.

SPEAKER_03 7:49

Oh, so that's the thing. So see, and that's a good thing with the co-host model. Are y'all like looking for getting people places or are y'all just finding people who already have the places?

SPEAKER_01 8:01

So that that that that's a challenging part because we're doing both. So we're doing many of the clients that we get there

Buying power strategy: grouping investors for multi-door deals

SPEAKER_01 8:08

that we're currently managing, they already have their places and they're looking for more places, and they know people who want to get started in the Airbnb and the and the rentals, uh, and are looking for places and they don't know where to start, right? So that's when we when we where we're trying to hook them into um getting if we get if we this is what I've been telling Steve with so many people interested, we're growing our buying power because we can go to a place and get many doors at the same time. Because we have people who are ready to are already doing the MB thing and the rentals, and they already want to get more places. We have all these people that want to get started, so we're getting that buying power.

SPEAKER_06 8:48

That's what's up, man. Here's one thing too that I know I know um you would uh you could probably sympathize with Micah because that's for example, okay. We you know, we did we started our first unit and we did it, we got another one together, and then all of a sudden, you know, we started managing for people. Real quickly, you got like five or six units. We're like, okay, cool. We're managing them, we're doing, you know, doing

Systems breakdown: the million-picture documentation process

SPEAKER_06 9:12

our thing, and then all of a sudden, you know, we got a couple more and a couple more, and it's like and it's like we're we're learning how to how to do it, you know, and we've learned a lot from our own show, you know, because all these guests and stuff like that. You I mean, every time a guest comes on that does co-hosting or arbitrage, I I ask a million questions about it, about growth and scaling. But like what I noticed was okay, we got we kind of got our systems in place while we're we're small, you know. We're like, okay, we know we're doing this, doing that, but then it's starting to grow real fast, and we're like, oh crap, you know, we gotta go back to those same units and really, really create systems and really take a picture. And Federico was sending out to go take like take a million pictures of the place, every cupboard, every door open, and then do a video walkthrough and do a video walkthrough from the car to the front gate and the front gate to the back gate, you know, into the pool. And he wants and it makes sense, and it's easier to do when it's a brand new unit because now we're going back to the old units and doing that, but with a brand new unit, and you'll learn it, and people will learn as they go. But like you want to do all that stuff at first while you're setting it up, while you're you know, and then you get it all done, and then give it to your guy, and then he can run it and he can hand it off to a VA, and it'll have every single question that a guest will have to answer. That way he don't have to call me at midnight. Hey dude, how do they get to the to the gym with or where's the gym key? You know, he don't have to ask me nothing, and we weren't set we weren't set up for that yet, but we started growing so fast, we're like, oh crap, we're getting them all the questions. Went from 10 questions to 100 questions a day, you know. So we have to go back and and and and you know, it's just part of growth, though. Yeah, we didn't try to grow fast, but it just started spiraling and and growing really fast, and we and so now we're like we're not even trying to advertise, and really because we don't. I mean, why would we advertise if we can even we're like you know getting a lot of work right now, and we're now we have to go back and then now we know what to do for the new one. Yeah, it's easy, but the old ones we have to go, oh shit, we didn't do this, we didn't do this, we did this. We gotta go back and set up all the systems, take all the pictures, get all the information.

SPEAKER_03 11:13

You know, you brought up a point that me and my mastermind group just talked about. Um, basically how you just said you gotta do the walkthrough

Moving away from apartment complexes to houses

SPEAKER_03 11:22

to the pool to the complex. That is why we are getting away from apartment complexes. There is too much freaking red tape, too much crap, people getting lost, people getting towed. I mean, people don't people don't read, right? So are y'all starting to go the house route? Because I know markets are getting saturated. Um, you know, it's a lot of I don't know if you guys saw my big rant that got a bunch of views that I was talking about, the um arbitrage model getting kind of dirty, you know, people doing it in a dirty way, you know. So I'm kind of moving away from the apartments. Are are y'all seeing traction moving away from the apartments, or have y'all moved tried to move the houses yet?

SPEAKER_01 12:03

It's something we're we're looking into into getting to houses. Um, I mean, to tell you the truth, it's been working in the apartments and the apartment complexes. We have some of those situations where you know the gate, you know, the gate is not working and it's a complex issue. So we had that today, and we had it at another place. Um, what do we do? Um, and people and usually that happens, you know, it's not the people checking in at 4 p.m., it's people checking that at 1 a.m. that it's not working. Um two hours ahead, so it's 3 a.m. for me. Um, so that that's something that that happens. Um, but yeah, we've been talking about getting houses for sure. That's something we we are looking into. Uh we're just trying to figure out, okay, we know how to set up an apartment, a one-bed, one bath. Okay, how do we set up a house? How do if we're looking for that buying power, like are we gonna distribute and do it with with with a group of people? Are we gonna do it by by ourselves or just for one client that has that um amount to invest into into getting to a house? So that's something that and what do we do? The other thing that we discuss all the time is okay, what do we do if, for example, regulations change and we need to move all the furniture to another place? And what do we do with that house? Do we go? Is it is it um profitable if we do a house for total nurses, right?

SPEAKER_03 13:20

And I would say if so we just started one. This is the thing I love about houses.

The $10k monthly house model versus apartment logistics

SPEAKER_03 13:25

One, less logistics, two, triple to quadruple the cash flow. Like our unit that we just set up, our our our intended goal is to gross 10,000 a month on it, uh, and then move up to like 1520k. That's just our first initial goal. The reason why I like that model is because it's way less logistics, and also we're going to places where you know the cities partner with Airbnb. So then we're covered on the Airbnb side. Then we also have our corporate side, we have our peer space side, you know, so we can go into oh man, my bad, go in a bunch of different avenues, and that's the reason I was liking the house model, and also, you know, the eviction moratorium got pushed back. Well, it ended and then it got renewed like two days later. So, you know, and I'm looking at ways to acquire through that as well. Like, because I know a lot of owners they're about to be kind of desperate, so I'm like, man, I want to get in on that too. So I think um going to where places where it's already legal and in writing that it's legal and you just need permitting or whatever is I think the way to go. But it's just man, that red tape in apartment complexes and condos, it's just starting to get a pain. But I don't know, I was seeing if you guys seeing the same thing. My mastermind was talking about the same thing, it's just starting to be a pain out there, man.

SPEAKER_01 14:42

Yeah, I mean you then it's profitable for us, so so we're gonna try to keep it keep going. Uh and we we enjoy doing it. Uh I I think that that's if you had your systems in place, you can do it, but as you say, you have way more logistics. Because what what I was what I was explaining Steve, and this is for anyone who has someone working remotely, because you know, for me it's the same if you have someone in the Philippines or someone else somewhere else that never been to the apartment. This is a problem if you put if you are if you want to put some the on the other person's shoes, uh, your employee, for example,

Canned responses and solving the remote-worker knowledge gap

SPEAKER_01 15:17

is that if you get a question about where's the thermostat, a stupid question I probably know. If you've never been there, you don't know what to answer. You you get you know this feeling is like, ah, what do what do I answer? I cannot say I don't know, right? No professional, especially especially if you are speaking on behalf of the owner. So that's why you had to have all these recording uh all the details. And what I did is I I had in I I we use smart BMBA, but you can do this probably in any any of the uh property management systems. I have a CAN responses, right? So for any kind of question, you should search and you have all the answers already set up. And for any new question that I get, I don't know the answer, I find that answer for every single property. I already have set it up. So that's a system that we use for the um complexes. But yeah, I mean the problems with the neighbors, with the managers, they they come up. They do.

SPEAKER_03 16:09

Yeah, they do come up, man. Yeah, and I've been using uh, you know, and you know, uh yeah, you do have the neighbor issue. Um, but yeah, mine's just been like just people just not reading because it's but and at the same time, I kind of put it all out on me. I'm like, man, if I didn't really have this apartment complex, if this is just the house they were pulling up to, I wouldn't have to deal with this. It'd be simple. Hey, how do I get to the apartment? Well, how do I get to the house? I mean, damn, Google, you know, I'm saying you ain't gonna ever get that question on the house. So that's what I was wondering as well. And then um, I'm still trying to get I finally got my cleaner situation down down in Dallas, man. Dallas cleaners suck. Uh like turnover, bro. Like, if you're on turnover, bro, like turnover for Dallas is trash. Uh, be honest with you, man. Like, it's trash. Go ahead, don't watch it.

SPEAKER_01 16:59

That's that's that I we had a real headache,

The $3,000 cleaner month and Dallas turnover nightmares

SPEAKER_01 17:04

you know, it's still a few weeks ago. I would say like a month ago, I have like a burnt. I I was having a burnt down. I was like going crazy. Like, what do we do? Like we have we're we're having more and more turnovers, and these people are not helping us to know. We don't know where our sheets are. Uh, and that that's the other problem. As we were growing, we didn't we never realized, okay, we have to have a really strict inventory on what we have in each apartment. We grew too fast, and then we were like, okay, so let's let's write to this cleaner that she did this apartment two months ago. Hey, do you have our sheets from this place? Oh, yeah, I do.

SPEAKER_06 17:38

And it turns out they have like you know, bags and bags of shits from three full trash bags and like a big old bin. Hold on, who is this? Who did this? Who no, we ain't saying no names, we just made a cleaner.

SPEAKER_03 17:50

Shoot me, shoot me a text. Yeah, I just had to fire some cleaners, bro. I just fired some cleaners. They were taking all the fucking lot the laundry, putting it in a bag, right? They were putting it in the damn bag, they weren't even washing it, like you're supposed to wash it, you know, wash it and then get ready for the next. Yes, they would take the shit off, put it in a bag. Oh, and I'm gonna I'm gonna tell who it is. Fuck that. Uh these people need to be shouted out. Uh once I get their damn company name, yeah. I'm shouting they out. They shit, don't use them. Uh, they would take your shit, put it in a bag. Me and Mahogany were pissed. Put put it in a bag, they wouldn't wash it, and then uh go get other shit, put and then like they would take the new stuff out, then they'd put that out, but then they wouldn't wash the stuff that was already dirty. So then next time it's to turn over, they ain't ready. And then sometimes they wouldn't even show up. Matter of fact, y'all go ahead and talk because I'm about to blast this shitty ass company.

SPEAKER_06 18:44

Oh man. Um, ask me first who that shitty ass company is first because we uh oh damn shit. We might still we might still be using them, so I don't want to you know it's Slim Pickens in Dallas, dude. I mean, you know, we gotta do what you gotta do.

SPEAKER_01 19:04

They don't understand a business. That's your problem. Uh, they if they do, that's mean, but but I I try to when I speak with them, I try to understand what's important for us, right? Like we're gonna get about review if this happens. We're gonna lose a booking, we're gonna lose, you know, then that they don't they don't see that. Many of them, I don't I don't mean everyone, right?

SPEAKER_03 19:26

Yeah, this this company, they they were like so they would they would see on turnover that there would be wouldn't that wasn't a check-in that day. So you know, it doesn't mean anything if there's not a check over turnover, a check-in that day. They'll come and say, Hey, can we just come clean the next time there's a check-in? I'm like, bro, that's a week out. The fuck? Yeah, bro. Let me I'm I'm about to find this company.

SPEAKER_06 19:46

That's happened to me before. Yeah, that's before, man.

SPEAKER_01 19:49

That's what you're not in Houston.

SPEAKER_03 19:51

Yeah.

SPEAKER_01 19:52

So so this is what they say. Uh this is what happened to us. We had a last-minute book in, and it was already out, uh, I think it was 12 p.m. And I I was I was texting the cleaner. I was like, hey, where are you? Are you coming? Is it gonna be ready but before 4 p.m.? And she was like, Well, I saw in turn BMB there was no no checking in. So I what when that happens, I go the next day, the next morning.

SPEAKER_06 20:14

Yeah, we looked at the cameras. I don't think they I don't think anyone went and cleaned, right? We looked at the camera.

SPEAKER_01 20:19

No, well, that's when we had to find a new person to brush and get it done.

SPEAKER_06 20:25

Yeah, so she said because y'all didn't have a turnout, y'all didn't have a booking the next day. I went ahead and just I'll just do it the next day.

SPEAKER_03 20:32

I was like, This cleaner's name was Chiquita. Don't ever use them based on a fucking Plano.

SPEAKER_06 20:38

Okay, we didn't know we don't use that. Trust me, it would have been like fuck this. Sorry, Friday show. Are you writing them down over there? Yeah, yeah, I'm writing that down, man.

SPEAKER_02 20:56

Man, dude, like I finally got my old cleaners back, and man, it's been easy ever since then. But yeah, they were taking my shit, putting it in trash bags, bro, and putting it in the closet, not even watching. I was like, Yeah, even watch it.

SPEAKER_06 21:09

It's just this company, bro.

SPEAKER_03 21:12

You see them on turnover B run. Honestly, though, this is turnover's problem, though, bro. Like, but what we have been doing to let the cleaners know they do a shitty job. We turned on that checkout B and B thing that they have. So whenever the current guest checks out, uh we have an automated message go to them, say, hey, when you check out, use this code, and then you can leave a cleaning review. And they can leave leave a cleaning review right then and there, and then it goes to the cleaner, like, hey, this this guest left you a four star review when you're clean, you know what I mean? Um, and that's been helping a lot. You know, that's been helping a lot. So then they know, so then you know, because turnover's problem is they don't have a system to where the cleaner is rated every single time. Right. That's the problem. So when you see that super cleaner shit, that don't mean a damn. That don't mean a damn thing. I mean they probably got four minutes. They gave them a five-star review, and they ain't done shit since. Go ahead.

SPEAKER_06 22:09

They do that. Yeah, they do the badass cleaning.

Cleaners who don't bring vacuums and the inventory crisis

SPEAKER_06 22:11

The very first cleaner for you, like, ah dang, this person is badass. And then after that, then they start slipping.

SPEAKER_03 22:16

These cleaners in Dallas, bro.

SPEAKER_06 22:18

Like man.

SPEAKER_03 22:20

So the one oh, go ahead.

SPEAKER_01 22:22

The ones that we have, they they don't bring a vacuum with them because it says it's just too heavy. So if we don't have a vacuum in in our places, then they don't vacuum. I'm like, are you serious? Like when we found out, I was like, that's why people are complaining that they found they find um you know dog hair in the in the in the um in the floor. That's crazy.

SPEAKER_03 22:44

Dude, we we had the same issue because right now I gotta get a vacuum delivered over to one of my units um because of that issue in the with like I didn't know they didn't have a vacuum cleaner because I think we forgot it because we were setting up five units at one time at this place. So my new cleaner, she came in and goes, Hey, this unit, she and she took inventory. Another thing is have them take inventory, and we use Google Sheets and just have them in Google Sheets. We take them inventory. Um, and then so every single cleaner can see. So what she did was she just told us, she was like, Hey, there's no vacuum cleaner in this unit. Did you know that? And I was like, No, and then now I can get one shipped out, or she can pick one up for me and take it, and then I'll reimburse her. But yeah, dude, it's been bad. And you I noticed she said hair. Are you you are you guys accepting pets?

SPEAKER_01 23:25

Yeah, depending on the unit, but for some, it's it's it's a really good deal because we get a lot of requests for others. Like this new unit we got in Dallas in um near the hospitals. So first um stays we had um emotional support pets. And you know, we we we the complex they had a lot of restriction. It's maximum two pets, two dogs, up to I think it's like 20 or 30 pounds. Both of them came with these huge dogs, lavradors, and you know, and German shepherds and walking everywhere, I know, and they're walking the dogs in the complex, and these huge dogs, and you're not supposed to have dogs. And it's like how do I explain this this is only you know emotional support for for a five-day stay, or this it was a 12-day stay.

SPEAKER_03 24:22

Crazy, man. Hello.

SPEAKER_06 24:25

All right, so cheers, it's gonna be one of them shows, y'all.

SPEAKER_03 24:30

So, yeah, so like okay, so and I know it's like a uh a location issue because my cleaners in Houston, on top of it, Dallas, man, it's just like bro, it's just what the hell?

SPEAKER_01 24:44

Even our people in in Fuller are amazing. That and this is what it tells people all the time is like how do you find the perfect cleaner? What do they need to have, right? Because okay, they have to do uh good cleaning in a short period of time, of course. Uh, and then you have to have them keep inventory, keep uh being accountable for the sheets and things that they take. I mean reliable, but they're gonna make it to the cleaning. So so I think those are the three things that we we're looking for. No, deep cleaning, I mean good cleaning, reliable, um taking accountability of the things that they take. Now, for example, we have some we have these amazing cleaners in Fort Word, they're they're the best. But um it's difficult to schedule them because it has so much work that um sometimes they say, you know what, we cannot do it uh until this time, but that's after taking time. And we struggled a lot, and we tried to help them to get some other people to work with them and you know trade them, uh train them, and it didn't work. Uh so I hate it because I'll use them for so many units, and so right now we do it for two units, and not even all the turnovers, and that's when you start to clean mix cleaners, that's a mess because you don't know who has who's taking the shit.

SPEAKER_03 25:58

See, this is what I've been doing, and this is what I'm telling people. How much now? This is okay. Here's a question for you how much are you paying them?

SPEAKER_01 26:06

Okay, we're ranging between 55 and 65.

Paying cleaners more to get better results

SPEAKER_01 26:11

Okay, it's a one bed, one bath.

SPEAKER_03 26:12

Right on 55 and 65, yeah, to get the good cleaner, you have to know how to speak some español. If you if you're going that route, you know what I mean? Being honest, so my my cleaners who I charge who I charge 85, they do a damn good job, but the problem is certain things they don't commute communicate to me. Like, hey, this uh like they've gotten better at it since I've been communicating with them, but you know, certain things now. I have a higher end cleaner who I pay 120, but they do a really good job, they communicate everything, and they're willing to do everything that's on the list because I'm paying them a higher rate. And what you can do is if you start paying people a higher rate, they'll do a better job. I noticed that. Yeah, if you pay, if you're if you're able to, you know what I mean. Um, if you're like what I did with all my other units, I raised my cleaning fees to like 150, and I'm paying the cleaners like between 100 and 120, and I'm starting to get better results.

SPEAKER_06 27:11

But one better than one bath.

SPEAKER_03 27:13

No, I don't even have any. Do I have one better? Yeah, I do. Oh, well, my one bedroom and baths are all in Houston with a good cleaner.

SPEAKER_06 27:21

Oh, okay.

SPEAKER_03 27:22

So, and then so those I don't have to worry about, but the ones here in Arkansas, the ones in Arkansas is straight streamlined, good, good, good all the time. But I even I without even them asking or anything, I just went ahead and bumped their prep pay. So then to keep those cleans coming in, uh, same with Dallas. I just I'm paying somebody 120.

SPEAKER_01 27:42

But I'm that that's something we did. I mean, uh with with the two cleaners we have in Fort War, for one of them, the ones that they do an amazing job every time or had a problem with scheduling uh them. We did raise at some point because we were in Turnover BNB, then you know, Turnover was taking like 5% or whatever. I say, okay, let's raise it to this to this level, then we're fine with that because you're doing a great job. To the other one, first of all, she was used to she's from El Salvador, so she speaks Spanish, I speak Spanish, so communication is great. I mean, we became best friends, we're talking all the phone all the time, and she's doing great favors for us because uh which that's another issue we have, and we can dive into later, is like you know, solving things last minute. So she's willing to do a lot of things for you know a tip, $15, and she's gonna run and get get us you know supplies if we have to last minute, uh get us shit, get us. I even told her, listen, if it happens, it's I don't know, 10 p.m., 12 p.m. 12 a.m. midnight, um and we have someone stuck and cannot can open can't open the door or something like that. Can you run to an apartment and and help them? And she was like, Yeah, sure, I can charge you, you know, and just a couple of bucks. But having that backup is great because I know she she's on call. Um and just the fact that we're willing to help help her and pay her to do those extra things makes her go the long way, and she's super happy to help.

SPEAKER_03 29:09

Facts, man. Yeah, you gotta find ways to pretty much incentivize a good clean, man, and you know, and try to find a way to you know use them for more being having them be like a mini co-host, like hey, if something stock, you gotta stock, send me the receipt. And that's what I do with my cleaners as well. Go ahead.

SPEAKER_06 29:24

It's funny because last month, you know, it's July, it's been a killer month for all of our units, and she ended up making over three stacks, man. And she was so happy, she was over the moon. She's like, Whatever y'all need me to do. And this is I mean, she's doing a lot of cleanings, first of all.

SPEAKER_03 29:42

I mean, how many? Hold on, man. We gotta go back.

SPEAKER_02 29:46

Three stacks, man. Time out. Let's let's let's let's rewind.

SPEAKER_01 29:51

We're going to clean it. We're not doing a remote man anymore. No, shouldn't we?

SPEAKER_02 29:54

How big is y'all operation?

SPEAKER_06 29:57

Well, right right now, we just picked up

Raising cleaning fees to eliminate one-night stays

SPEAKER_06 29:59

our 19th unit.

SPEAKER_03 30:00

So y'all are at 19 and y'all doing 3,000 a month in cleaning?

SPEAKER_01 30:05

We were having a lot of one night uh stays. Oh we had a whole lot of like there was uh raise your cleaning fee.

SPEAKER_03 30:14

Your cleaning fee's too low.

SPEAKER_01 30:15

Yeah, I was trying to get, you know, this is the thing. Uh we picked up some units that were already partially booked for management. The problem is that you know, they were just letting people flat price, uh book, you know, one night stay on a weekend. So they were getting Saturdays booked at a flat rate, and then these orphan nights from Sunday to Friday, basically. Those were the orphan nights. Uh of course, once I picked that up, I started you know applying everything I learned, everything we discussed, and you know, we did uh we purchased uh Sean's pricing training, which is great, and we learned so much. Man, they end up everything most of them with a hundred percent uh uh occupancy. So it did great, but we were getting a lot, and listen, we're doing higher rates for one night stays, but people weren't booking.

SPEAKER_03 31:09

Yeah, what what I noticed is if you raise that cleaning fee up really high, and then that is another way, the great way to incentivize a long-term stay, especially on Airbnb, have a really high cleaning fee. Because what it doesn't so like if if your cleaning fee is like 120, right? And then it costs, let's just say it costs $95 to stay there. Is it really worth the stay one night? You ain't staying there, you might choose a motel six over this shit. You ain't about to stay, you know what I'm saying? So, like I noticed my my one night stays have declined. I don't even have one night stays, and you can book a one night stay Monday through Thursday, but I don't even have them anymore. I just up the cleaning fee, and then I was like, Oh, but now I get long-term stays. Like, I got people booking my houses for like four thousand a month in Arkansas off Airbnb. I'm like, damn, you know, but they've been doing it.

SPEAKER_06 31:59

So, you know, that's like a different philosophy because because when Federico came up with this idea, and it really helped us to get you know, you know, up close to 100% occupancy, was um to lower the cleaning fee, even though we're still gonna pay our cleaner, you know, the same amount, 65 bucks or whatever, we'd lower it, he'd lower it to like 50 bucks or whatever, and then um just uh get and then raise the price of the of the night. You know, he he'd mess around with that stuff, lowering the cleaning fee, but you're over here raising the cleaning fee to get a different kind of effect, you know. This is there's so many ways you can skin the cat, you know, it's it's insane.

SPEAKER_03 32:32

See, also when you guys are saying 100% occupancy, are you getting 100% occupancy with max revenue, or are you leaving money on the table?

SPEAKER_01 32:41

That's where you gotta look at it. We're not leaving money on the table, that that's for sure. I mean, that's good because that what what we're getting the feedback we got back is not only the occupancy, but actually the revenue was on the highest that that our clients got so far. Um all of our clients, man.

SPEAKER_06 32:56

They're the most.

SPEAKER_01 33:03

Especially after COVID, you know, a lot of people were like, Yeah, we need to get get out and travel. So there were a lot of opportunities, but um no, definitely we're we're looking into getting longer stays. My my my ideal stay for me is at least five nights or or a week. That's what I like to see. I don't like to see two, three, usually two, three nights. One night is gonna be a problem. So if it goes that's something I learned the hard way, right? The hard way, right? That's that's how we learn. But you know, if it's a weekend, one night, two nights, lower rate, it's gonna be a mess. Yeah. Last minute, it's gonna be a mess. So I had I had um I had this video that I show show my friends and then they're still laughing uh of me yelling through the uh um ring camera to a guy that was smoking on the hallway in one of the buildings. I'm like, you cannot smoke there, yeah. I'm gonna call the authorities, get out of the He scared the kid, man.

SPEAKER_06 33:54

He was vaping in the hallway.

SPEAKER_01 33:56

Yeah, he got scared. Um and that that that was a problem. It was a booking from a person that had five stars, a lot of reviews, it was great. He booked instantly because we do have you know requirements to book instant instantly. Uh but he said, Okay, it's gonna be my friend that's gonna be staying over there. Is that okay? I say, okay, is it one guest? Yes. Can you send me uh an ID, a picture of the ID? Yeah. So he sent it. And then I don't know what happened, but apparently the girl was bringing her cousin and her cousin's boyfriend, but it turns out that it was her boy, and the person who booked was probably her boyfriend. So there was something, you know, something going on in there, so it was a mess. Uh I mean they left the place in good conditions, but uh it was a stressful weekend.

SPEAKER_06 34:44

And then and in that and our clients, you know, saw that like Federico right there on the ring doorbell and one in the morning saying, Hey, you can't smoke here, and he was like, he's like looking for you, like he's like, I'm sorry, I'm sorry. No, I'm gonna call authorities. You can take that outside, and like you took off, man. He's like, I'm sorry, I'm sorry. See, and then there's another thing, man. Those rings. How are y'all liking the rings? I love I love the ring myself. Um you have to charge him,

Ring doorbell charging wars and finding trust

SPEAKER_06 35:10

yeah. Oh, I'll check this out. Yeah, that's the hold on. See all these motherfuckers.

SPEAKER_03 35:19

Yes, see that's why I hate the rings.

SPEAKER_01 35:23

Yeah, I hate them.

SPEAKER_02 35:28

See, with the house, get a vivid system, you ain't ever got to touch it.

SPEAKER_03 35:32

They got the doorbell always works.

SPEAKER_06 35:34

See, see, just the house. You can hook up the ring to a house doorbell too. I mean, and then you don't have to ever change the doorbell out.

SPEAKER_03 35:41

No, but I'm saying, like, there's never a charging, you don't ever have to charge it, it's all in one app. That's why I like the vivid system because I mean, but the my my uh oh, why are you why don't your cleaner doesn't charge them?

SPEAKER_01 35:54

That's um yeah, we have we have different cleaners and they they don't stay for long.

SPEAKER_03 36:01

You don't have it, you don't have it on a checklist.

SPEAKER_01 36:05

We do, but but here's the thing with the different cleaners that we have, the logistics are a mess. Uh yeah. We tried, I mean we tried, uh we tried, but uh we just want them, you know, we don't we just want them to go there and focus on having the place as clean as possible for now because we run into so many problems otherwise when we start adding more duties. Of course, we we should get into that. That's one of one of the things are the the you know uh we're gonna stack. But for now we're just you know just go there, clean, make sure we have beds, uh and sheets and towels for everyone. Because that's the other problem, you know. Sometimes they think they don't leave because they think it's gonna be a couple, and maybe they're gonna use the the food on they don't leave uh towels or sheets for everyone. So we need to become again how many guests which which they should look into that in. I think in turnover BNB's it's in there, right? Um so again, if we keep I don't want to keep adding for now more duties because it gets more messy.

SPEAKER_03 37:08

So you got Steve being the charger guy.

SPEAKER_06 37:10

I'm the charger, man.

SPEAKER_01 37:12

But it's once a month, right?

SPEAKER_06 37:15

Now, yeah, now that I got all these batteries right here, and that's a that's a hot tip for y'all out there. I don't know if you can find the older generation ring doorbells, you can swap out the batteries. The newer ones, it's all one piece, so that sucks. You gotta take the whole thing off the wall and plug it in somewhere, wait for 10 hours because it takes 10 hours to get a good charge, and then go back and put it on there. Whereas this, you just while I can just go, I can knock out Dallas, you know, in half an hour, just boom, boom, boom, swap them all out, and then I'm done, and that'll last me a month. But yeah, like so. If you could get your hands on some of the yeah, I don't I hate giving out that secret because then they're gonna snap up all the older generations, but um then you could just have yeah, I just have all these charged ring batteries here, and I can do it all in one.

SPEAKER_03 37:57

I'll just leave the little this thing, this bad boy right here, leave this in all the units, and this soon the first task when they come in is to take that ring off, put it on the charger, go clean. That's what I do. But yeah, if you don't have the logistics for it, yeah, uh, but that goes with paying them more money, they'll do stuff like that. Yeah, that's all I was noticing. I I noticed when I start and someone told me that he was like, uh yeah, just pay them a little bit more money. I guarantee you get a better cleaner because that's money they ain't making somewhere else.

SPEAKER_01 38:24

So then when I start doing it, oh that's the best incentive you can give anyone. I mean, pay more money, you know.

SPEAKER_03 38:30

And then if and then what happens is if you if you pay them more money, you can hold them to a higher standard of accountability. So then they're like, Oh shit, well, they are paying me a hundred bucks, you know what I mean? And then uh, but yeah, that because yeah, that that ring thing that was one that was giving me a pain, and I'm like, me and Mahogany were like, we should just make the cleaner do it, and then we start doing it, and they've been doing it ever since.

SPEAKER_06 38:50

Um, how how do you um have you ever tried like with speaking of incentives, you know, giving them like a bonus if they get a five-star review? Have you done that?

SPEAKER_03 39:00

And that's that's what I've been doing. That's why I turned on that checkout BNB thing on turnover BNB. So if they get like a constant series of five-star reviews, I'll just like send them a $20 cash app or something. Yeah, I've been doing that. That that that always always man. Like my cleaners in Houston, they love me because I'm gonna pay them one time, I'll give them incentives. Uh, she restocks it. You know, she charges me to restock, but like she knows gonna be clockwork, do big good business. Um, but yeah, man. So y'all up to 19. Congratulations on that. What where do y'all what what's y'all gold number?

SPEAKER_06 39:35

What you asked me that question in the beginning of the year, right? Yeah, and and I I either said 40 or 50, right?

SPEAKER_01 39:42

Yeah, you said 50, and I I I I've been hating you for that because we're getting there.

SPEAKER_06 39:46

We're getting there.

SPEAKER_01 39:48

I've actually text him today. I say, you asshole, you say 50 is is is becoming reality. So I wouldn't.

SPEAKER_06 39:57

Yeah, you put it out there, and and that's the thing, and it's just a word of mouth thing, and um, and we've already and we've got like 10 or 12 people that want more units and multiple units, so we have that in the pipeline. So um that's that's where I'm trying to transition. I'm trying, you know, because I like to go, I like to find, you know, find units and talk to owners and talk to um and talk to complexes, talk to whoever to try to get more units. And and if I the thing is, we're like I said, we're stuck in between, we're in that middle phase where you we're still gotta get our systems down. I do want I love the growth part. I love going out there and finding units, that's the fun part for me, and then scoring, hey Federico, I got two more in the pipeline, you know, get them ready. Boom, boom, boom. I love that part the most, but we still gotta figure out the best, most efficient way to do everything before we can just keep growing and growing, you know.

SPEAKER_03 40:49

Yeah, definitely.

SPEAKER_01 40:51

But I think then that there's one more thing to this, and let me ask you what you think about this still, and we're we're having an open conversation here between business partners. But I think something that also is scary for both of us is taking the big step to go to higher bigger units.

The fear of jumping to bigger units and houses

SPEAKER_01 41:09

Because we are doing one bad, one bad, and it's we we kind of know the trick, know the game so far, and we can handle it uh very well. But how's it gonna be when we get a house? We have more bedrooms, more bedrooms.

SPEAKER_03 41:22

Houses are easier, dude.

SPEAKER_01 41:24

Is it yeah, they're easier? And and the other thing, it's that the the commitment part, the commitment on you know the investment. Uh so I here's the thing, it's just it's new.

SPEAKER_03 41:34

See, this is and this is where we all gotta start. I don't know if y'all listened to that episode with Andrew LeBaron, but he pretty much broke down how to become a millionaire instantaneously. If everyone was catching the shit he was talking about, I was like, bam. So basically, man, you're it your your goal with houses is to get is it get is to get in at the cheapest cost, and you can do that. Remember, I always tell people owning's cheaper, arbitraging's faster. So if you're gonna own even arbitraging a house, it it's less it's less work because I mean everything's there on site, you don't have the logistics, they have the washer, the dryer, everything there to wash, dry. Also, with the washer and dryer, like when people ain't washing shit. One thing you can do when you pay them a little bit more, you tell them, Hey, I need everything washed on site. We we have backups already in the closet, so all you're doing is washing while that stuff's washing, you can be cleaning everything else while the ring charges. But if it's a house, you have a vivid system, so nothing needs to be charged. Um, but yeah, houses are are are a lot easier in that perspective because everything you have your security system there, nothing needs to be charged. All they're doing is going in, doing laundry, uh, letting you know what needs to be restocked. Um, and what I also do is um on the restock side, if you have a really good cleaner, have an Amazon Business Prime account, and then you can make them a member under it, and then they can send an order and you have to approve it. Or if you get really, really good with it and you trust them and they're your cleaner, they can send the order themselves, and then they just use the the Amazon Business Prime, they're just a member under your account, so it's it's multiple. Man, I love houses, dude. Like, I like I was talking to Rachel, I don't know if uh Rachel was on the podcast, Rachel Gainsborough, and she said, You mess up in this business when you go against your brand. And I realized my brand is houses, that's where I'm the best and most efficient. That's when all this shit started coming up because I went against my brand.

SPEAKER_06 43:30

You know, it's funny. A long time ago, uh, you you you had you were dipping your toe in the in the arbitrage market in in Dallas, and you were doing, you know, had some cool places, and then but you just you hated it, and you said you you you went and got the houses, right? You started kicking butt. You loved the houses, and I thought you were done. You said I'm done with the arbitrage, this and that, but then it just you do you went back to it again, you know. I'm saying, yeah, man.

SPEAKER_03 43:53

Opportunities, man. Fear of missing out, dude. Like that opportunity came. I'm like, oh shit. Shit, man. But what I'm gonna do now is I'm I might get more apartment complexes, but I have to be it's gonna be really strict to what has to be, you know, it's gonna be really, really tight knit. But man, right now I'm focusing on houses. Like right now, I have four more houses coming up. Um, two of them were buying, and then two more, one we're launching on Wednesday, and the other one's gonna be a part another JV deal on a house. Um, and it's gonna be easy to set it up. Once it's set up, you you know, everything's in there, you get your security system, your internet, you're good to go. Uh, but yeah, uh houses that's my brand. That's what I'm good at. That's what I know how to set up, automate really quick. I have a team for it. And how you were saying about growing, you like growing, but then it's like, oh shit, I gotta add these systems. That's how it was when I came to Dallas. I didn't have my systems like I used to have, you know. So, my in Arkansas, I can go set up 10 units right now. We have the systems to run it, you know. But if you ain't got them systems, man, that shit's a bitch, bro.

SPEAKER_06 44:55

It's uh it's the hardest part, yeah. It's the hard systems.

Sharpening the blade: systems before growth

SPEAKER_03 45:00

We we talked about it before, Steve. I think me, you and Alvin Cavalier talked about it. We're like, dude, don't outgrow your systems.

SPEAKER_06 45:06

Well, what is uh the famous Abraham Lincoln quote? He goes, If he had four hours to chop down a tree, he'd spend the first three hours sharpening the blade. It's the that's the hard, the painstaking. I'm I'm hating Federico for having me out there and 100 degrees doing this shit. But I know, you know, and we don't talk to each other for a day, but then I know it's the most important part. We gotta do it.

SPEAKER_02 45:30

Yeah, hell no, man. Y'all better tell the cleaners to charge them damn batteries, bro.

SPEAKER_01 45:36

I'm talking about setting up the units, like you know, I mean I've been asking, uh, I mean I've been asking the cleaners to do the videos as well when they get in uh and you know, record everything. So I try to gather as much data as possible. So what I'm doing is I'm putting all of these pictures, videos of the units in a Google Drive, so anyone that is asking questions, they can go there and you know, it's like it's kind of creating my own virtual um tour so anyone can see. And like, you know, open every every door, everything everything that can be open, open and take a picture of that. So it's still it's still like that. In the last unit we got, it was like, you know, open, you know, go under the bed. If you had to go under the bed, I want to see what's under the bed. And you're gonna know because that's one that's the tough questions, you know. That that those are the tough questions that you know what to answer.

SPEAKER_03 46:24

Steve just made a really good point on one side that I've been that that every single person I talked to said they have a trouble doing setting up the unit without being there. That that's been the one that everyone's saying, like, oh shit, man, I don't know how to. That's one where I did pretty good on the units in Dallas. Um, you know, I use B attack design. Hope I'm saying that right. Uh, they did it pretty good, but they did have issues hiring people to do certain things, people wouldn't show the fuck up. I think it's just a Dallas thing, I don't know. Um, you know, but yeah, that that is one. Um, I did find a cleaner who was straight told me, like, hey, if you're ever setting up units, I'll come set it up for you, be your cleaner, and then I already know what's in there. So if you can find a cleaner, hire them on, and then they set up units for you, it's really good because now they have an inventory of what's in there as well. That's another thing you can do.

SPEAKER_06 47:11

That you know, that that's cool how we should, you know. I don't know. I'm kind of torn on that. Like having having someone do one person do different hats, wear different hats, do different things because they're not because let's say you have a badass cleaner. I'm cool with her just being my badass cleaner. I don't want to make her um manage the place, or I don't want to make her, I don't know. It's and some people do it and they're successful, but I'm like, if she's good at that one thing, and why do I want to you know have her um you know fix a sink or fix a toilet? You know what I'm saying? But people do that, they try to use the cleaner for all kinds of stuff. But here's here's here's my argument. Here's my not my argument, but here's my point. Um, and it's and this brings up how small a world this uh short-term rental space is. It's starting to grow, but it's still it's still a small world, and because like for example, you you and Mike, Mikey B, Mike Brown, what's up, Mike Brown? He y'all set up uh y'all's your house together, right? And and he had told me before he was gonna do a house and this and that. So that's cool. And um he got Sarah to design it, right? Which Sarah he met from the show from Eric from Live Let Thrive. And and he it's funny because my my my one of my best friends over here, you know. Uh shout out to David Law. I'm mentioning his name because he's gonna get a lot of business coming his way.

SPEAKER_03 48:26

I just paid him some money. David Law, yeah.

SPEAKER_06 48:29

David Law, that's my buddy, man. I've known him forever, and I'm the one that got him in touch with Sarah. And I said she needs, you know, and and he's in between jobs right now, you know, one of those things. And he's and he's so he um he he he got with Sarah, and Sarah had him do a uh like a set a couple setups already, and then all of a sudden he said, Man, I didn't know y'all had places all the way in or in Plano or something like that. I was like, Plano, we don't got none of Plano. He's like, Yeah, that's not your house that I just set up for Sarah. He's like, No, who's he's yeah, you and Mike Brown? I was like, Mike Brown, that it's like you know Mike Brown, yeah, he's a cool dude, man. I met him, he's a real cool guy. And I went and set up a three-bedroom house for him over there. I was like, No shit, man. And he did, and he said, and especially he loves to paint, and he made you know, he he he don't there's no lines showing or nothing, but he so he painted some walls, set up the furniture, did all that. I was like, and he said, Yeah, I can knock that out, and you know, a couple days I can do some stuff like that. And he goes, Decent money. I was like, Well, if that's what you if you think you're you know good at that or that whatever, we're gonna have in endless, endless work for you because there's really I know there's a lot like like this is Sarah, for example, she used to do all the work herself, but now she's gonna go into remote, and there's a lot of remote designers out there, but they still need someone to put it all together for them, right?

SPEAKER_03 49:45

I think what you're referring to is um it's not them wearing more than one hat, it's them doing it for more than one person. That's that's the thing. Like, you don't really want to just give your cleaner out because now she has five other units outside of yours to clean. I think that's are is that more or less what you're referring to? Because I agree with that.

SPEAKER_06 50:05

Well, because you you just mentioned that you know the the cleaner mentioned setting up the your unit for you, and then she'll know where everything's at. Okay, it sounds good on paper, but when you're sitting there at at 1 a.m. trying to finish an IKEA dresser, you know what I'm saying, and all these screws everywhere laid out on the ground, and she's she's a cleaner. She's like, what the hell am I doing this for? You know, it that's those moments are real. Yeah, you're getting paid, but I'm just saying she's a cleaner. Um she might not be that much. I don't know.

SPEAKER_01 50:31

I that that that's something that happened to me when you mentioned you brought up uh you know Julie George um model where she says she gets um cleaners to go host a money. Now I uh for me I didn't see that as a something you can replicate maybe in the States. I don't know. I don't know what's the background of uh the cleaners in Australia.

The cleaner-as-co-host model from Julie George

SPEAKER_01 50:57

I don't know who are the cleaners in Australia. I don't know if the cleaners in in America are follicles or uh, you know, but if they have you know the background of what whatever they need to do to do that job of co-hosting, maybe that's something that they don't want to do. And that's what I did in Arkansas.

SPEAKER_03 51:14

As soon as she told me that, I said I did in Arkansas. I was like, hold on, make the cleaner of any co-host, they handle all the shit. It's perfect. It works it works, yeah. Oh, yeah, it works, it's perfect. People may you have to realize this at this point in America, we just got out of the pandemic. So, what do you want people want? Pay, but they want their time as well. So, this is the great thing about the share economy. You can get your time and you also get paid at a rate that you want. So, the the having the cleaner be your setup team is almost hand in hand perfect because she knows where everything's at, she knows who your supply is, she knows what everything is. Now, if you're asking her to fix a sink, yeah, that ain't that ain't that's way out of the job scope.

SPEAKER_06 52:01

Yeah, that makes an example, and and and what I was gonna say was sorry.

SPEAKER_03 52:06

Oh, no, what I was gonna finish was one thing that I've been working on is bridging that gap. After we talked to men B, me and Steve had a conversation afterwards like, hey, is this really worth it? So one thing I did with all my houses, I went and set up that $125 call fee for uh what's it called? Uh home shield for home shield on all my properties, but I'm only paying so I pay a high call fee, but I pay a very low monthly rate. But what it is is now I can just have pretty much what you want to do with houses is everything that that the conveniences of apartment, you need to see if you can put that on a house. So the convenience of an apartment is hey, I can just call the maintenance team and they go out there. Well, have a home warranty team that can go out there real quick. So it's people wear different hats, but just make sure the hat that you give them is in line with what they're doing. Like, I wouldn't mind a cleaner being on the setup team because if they could set it up, you know what I mean, and then they're over who they hire.

SPEAKER_06 53:06

That's that's it. That's that's the beauty of how Julie George kind of was setting it up because she and to say just it was a cleaner, it was okay. So so the cleaners, yeah, they got to they got to work her units, whatever, got familiar, intimate with her units, and this and and he, yeah, she helped make them co-host. She she taught him how to greet guests and bring them in and show them everything. And okay, it worked out great. And a lot of them got their own units after that, and then they managed them, and she still got her 10% cut off everything that they got. It's beautiful, you know. That's how she was able to scale so fast. And um, so I what I can actually see it with one of our cleaners, was we we talk about her all the time. Uh you know, our Janet, she's she's amazing, and she's the one that wants she wants to get a unit of her own, right? I can see that working, I can see that working, and she wants us to manage it and this and that. But um, but so she'll, like you said, set it up, she knows everything is, and she'll be the cleaner. So I could see it working with certain cleaners, not all the cleaners that we have.

SPEAKER_01 54:04

Yeah, no, that and that that that's the point. For example, we have some cleaners that we know they're great at cleaning, they're the best, they do the most amazing job when they go to a place and they live the place amazingly clean. But uh, I see them struggling with other parts of you know, scheduling, as I told you, and you know, hiring people and communicating that that part, so it may not be for everyone, but if you have find a person that is willing and also y'all at 19 doors, right?

SPEAKER_03 54:32

Yeah, between Dallas and Fort Worth. I don't think y'all need cleaners, y'all need a cleaning company.

SPEAKER_06 54:40

We try we tried that route too. That's yeah, we've tried that route too. And you know what a cleaning company is in Dallas, pretty much that we've discovered. I don't know about Fort Worth, and I'm not talking the you know, $500 handymade or whatever the hell they're called. I'm talking about like a cleaner company has a decent looking website, has a phone number you could talk to the person, has an email, has everything looks legit, yeah. And they have their prices on there and whatever, and Yelp reviews okay. This is like a legit company. I'm calling we we've done that, we've talked to a few dudes, they send out it's still the same thing. He has his website, he sends out whoever, and it's still one of the Dallas cleaners that goes and Fs it up, you know. I'm saying, and Fs it up bad. And I'm like, Y'all they're a professional company. What's going on? Oh man, what's your interview process like? I call him up and then we do a and then I talk to him first, and then we do a zoom interview and we and we ask him a million questions.

SPEAKER_03 55:31

What's their question? What are your questions? Uh we have it.

SPEAKER_01 55:35

Oh we had a it was not with that company actually though they they came. It was at this time I was telling you that I was going crazy with the cleaning, and this is what happened actually. Some of the people that we had, uh we had a cancellation from BRBO because the place was not very it was not deeply clean. Well, it was dirty, it was not acceptable. So we had to refund a five-day stay with a good rate. Okay, so I was like, let's find someone else. I I went to turnover BNB. I opened a search, I got this guy, he he's um super super cleaner, whatever they call him in turnover BNB. I said, okay, I see you have a company, you look professional, let's do a Zoom call to see if you can take over our units. And that was that was the biggest mistake. I handed over everything because I was so pleased with the other cleaners. I was like, okay, you're fired, you're not doing our units anymore, you're taking over all of our all for operation. So the guy uh we had I mean the first day uh he came to one of the units. Uh he he didn't have a check in, but he came like three hours late late. Uh remember he came in the in the evening uh because he said, Okay, well, I left it for the last because I some other jobs came up. And then for three times in a row, he forgot to check the dishwasher. So he left it three times in a row, even uh, or like, you know, you're you're leaving the dishwasher with things and you you gotta make sure you that doesn't happen anymore. And the problem with the guy, he said that we thought we were bullshitting uh because we really didn't have them those many units. So he thought that we were not real. Yeah, his kids it was like he didn't thought we were for real, so he took other jobs because we wouldn't give him so much work. Um and the guy's unprofessional, we had like a long conversation, but I made those mistakes.

SPEAKER_03 57:39

Did you ask him how many cleaners he had under him?

SPEAKER_01 57:43

Yeah, we did, and he lied because he said that he had he he said that he was hiring too, but uh no, he wouldn't he will hire if we really had those units, and then he thought he he thought we were for real, and then he was calling us and trying to get our business back, and uh this was a shitty company.

SPEAKER_03 57:59

So, what we have to do, I think I know the company you're talking about too.

Interview process failures and the super cleaner who lied

SPEAKER_03 58:03

Uh uh, yeah, I think I know the company, but uh because I almost almost called them. But what I was gonna ask you is like um what we gotta do, like even all of us together, is have a system to where we're asking these people, okay, have you ever done a short-term rental clean? Do you understand the process? Here's our checklist. Is this checklist doable for you and your team? And just be straight up like don't bullshit me if you can't do it, just be honest so we can move on, you know. Um, and then just how many people up under you? Um, those people up under you are they're competent. Do you have reviews? Like you, I know you guys check the Yelp reviews, and that's the best thing to do. But what I learned from uh Andrew and C Serena, they said the best because they said, Man, you have to have a deep, deep uh hiring and an interview process because that's really what it comes down to, man, with these cleaners.

SPEAKER_01 59:00

Yeah, and and and and the the point with this guy, so it was two companies. One is the the cleaning company, the other one was this guy that he supposedly had a clean company. So I did prepare, remember Steve? I set up like all these questions and send it to you and say, okay, we've got to go through all these details, make sure the guy understands the the the short-term rental business, like you know, how important reviews are, because we have this problem. If we have to cancel and give a refund, that's gonna hurt the business real bad. Even you know, gone into other things that I want to get with you, which is analytical requests, like how how he handles that. So I I I tried to cover everything. I was so excited when we finished because I said this is the perfect guy. He's gonna solve solve all of our problems. I mean, he's gonna take care of every single unit and everything. And he was saying, he was saying that he was taking some cleanings in in Houston, not in Houston, in Austin. Remember, still? So he was full of BS.

SPEAKER_03 59:56

I'm like, look, man. Hey, do this. Hey, do do this. Remember, like, hey man, can I talk to some of the people you clean for?

SPEAKER_06 1:00:03

Yeah, yeah.

SPEAKER_03 1:00:04

You really know because yeah, these man, I ain't gonna lie, Dallas has been the hardest place ever for cleaners, bro. Like, I'm like, yo, this easy everywhere else.

SPEAKER_02 1:00:12

Like, Houston is easy, Arkansas is easy, Dallas. Man, cleaner won't show the fuck up.

SPEAKER_06 1:00:18

Like, what the where the Mexican cleaners at? I can't find any, man. I got some.

SPEAKER_03 1:00:24

You won't share them though. No, because they're a small operation. If they were a bigger operation, I'd share them.

SPEAKER_06 1:00:32

Yeah, that's the problem. They don't know how to scale, they don't know how to grow. That they get overwhelmed.

SPEAKER_02 1:00:36

See, I got one in Houston, man. She got like 20 cleaners under, so it's like that's you know, some people got that, man.

SPEAKER_06 1:00:43

Some people got that, yeah.

SPEAKER_03 1:00:44

See, and that that's really why I'm like, man, you gotta really hire a business, man. Cause like here, yeah, you're right, they don't know how to scale their cleaning business. So it's just like, damn, bro. But like everywhere else, man, that shit's easy, dude.

SPEAKER_01 1:00:55

But I was I was even that's yeah, no, sorry, but that's what what I was telling the some of the cleaners in Fort Word that they're really good at cleaning. I was like, okay, how do we help you to scale? So to one of them, we say, we're gonna translate your job application. So we you know, we have my wife to translate, you know, the their their job um posting application in yeah, posting in in in Spanish. Um how how do we and we we we reach out to them? How do we help you to scale your business? Because we want to work with you, but again, some people are just good at cleaning, not at the part of the business, and that's the tricky part.

SPEAKER_03 1:01:33

You can't you can't that's really hard. Yeah, I only reason I'm against that is because I know for a fact most people ain't business savvy. That that's something that has to be in you. If that ain't in you, you business savvyness has to already be naturally in you. If that ain't in you, yeah, yeah, they they just they're workers, they're worker bees, you know.

SPEAKER_06 1:01:51

So here's the here's the thing that happened, especially when COVID in the thick of COVID, you know what I'm saying? They this husband and wife duo that we love, you know, as our cleaners in Fort Worth, they were trying to scale because they were getting a lot of business, too much business, right? Too much, they're barely can handle Fort Worth, and they're they're trying to do Dallas too for us. And then they um the thing is, they sit. I mean, the the guy told me, he's like, Man, nobody wants to work because they want to sit home and catch get they getting paid unemployment plus 600 on top of it. They don't want to come to work and scrub toilets, man. Because we can't hire anybody, no one wants to come and work. I mean, may under the table, maybe you can you still get your government money and do some under the table.

SPEAKER_03 1:02:32

That's really seeing people say that, but that ain't really what that is. Like, it ain't the government. They see, and that's be telling I'd be knowing how people's mind thinks because I was talking about this people I work with. I'm like, like, because we have a position where they're trying to hire for, and they're saying, Hey, it's because everyone wants the government money. I said, Clearly, you weren't paying attention during COVID. No, they want to work from home. That's what people want. They don't give a shit about leaving their house, go drive here, get paid. They want to work from home and they can do it.

SPEAKER_06 1:03:00

That's a big part of it.

SPEAKER_03 1:03:01

Yeah, that's a huge part of it. Like, look at all the if you get on LinkedIn, it's just articles on top of articles. Hey, you want to work from home, remote work position, or and those like if you go on LinkedIn and look at the applicants they get, they probably get 50 applicants after an hour of a job posting. Post a job where you have to go somewhere in an hour, two applicants.

SPEAKER_02 1:03:21

It's they don't ain't nobody trying to go to no damn McDonald's and slaying no fries, man. Hell no. If I can go if I can work at Wayfair and take calls from home, and Federico has made a good point about that.

SPEAKER_06 1:03:35

What did you say about that? Everybody wants to be a remote worker now.

SPEAKER_01 1:03:38

Yeah, I mean, everyone wants to do that, right? Uh I I I'm enjoying being a remote worker for for for my job. Uh, but here's the thing what's the difference on hiring someone in the States and hiring someone in India on the Philippines if you're doing remote? Because there's a uh an added value of having people go into the building to the office. And if you're still starting to take it home, okay, you gotta outprove yourself that you're more uh worth you're worth more than someone from abroad, which is something that already happened in the history of you know economy and the states.

SPEAKER_03 1:04:11

And the thing with I would say about people that's true, because that is something you think about, but at the same time, a lot of these people some people don't want to put things overseas because of that language barrier that they get, and then you know, you get that whole people getting pissed off, you know, like hell, you know, yeah, hell tech companies, you know, the tech companies back in the day, man. You know, you know, Raj answers the phone and people got pissed off.

SPEAKER_02 1:04:41

So they had to gotta bring it, they kind of had to bring everything back over here.

SPEAKER_06 1:04:47

You can't even tell you don't hear no hardly a bit of accent. Now the cheap cheap ones, you can tell, yeah, there's a thick accent, you know. But the ones that are you paying these, all right, money too. You you talk like you and me. You're like, Are you Filipino?

SPEAKER_03 1:05:00

Yeah, you could yeah, you can hire a somebody in the Philippines five dollars an hour, speak perfectly good English. You can't even tell. You you think you're talking to a damn American.

SPEAKER_01 1:05:07

Yeah, but here's the thing because we're talking about customer service jobs, right? Before being being outsourced abroad overseas, but now we're talking about all the different jobs that were you know usually done in a building, in an office that that they're not required to speak with clients all the time, then now you're trying to take home, and again, and that that's the point, okay. But if you're gonna do it home, if you if I'm not gonna have someone here, so I don't know. That that's not that tough. I see sometimes people you know digging their own grave, and I don't know if people have realizing of that. It's just a thought. I'm not sure if that's something that's gonna happen. I'm not saying that all jobs are gonna be outsourced overseas, but uh I do uh at the same time, companies, you know, it it's a good deal that you're gonna save in in you know, running a building and whatever you need, all the expenses. And that's good for us because we're gonna have people working for Home, they're gonna travel around and gonna stay for longer with us.

SPEAKER_03 1:06:03

See, and another thing, like when we talk about these cleaners, it's kind of like the trucking industry, right? Well, what a dude who owns a bunch of trucks, what's his biggest fear? That this dude who drives from here for for him is not gonna have a light bulb go off and be like, I'd make more money if I had my own truck. You know what I mean? So a lot of these and what the share economy has created is a bunch of entrepreneurial minds. Some of them aren't really business savvy to scale a business, but it makes them independent-minded to want to work for themselves. So the dude who's sitting here saying, Hey, I want to scale this business and get workers, and they're saying, Hey, I can't find no workers, the people might want to work for themselves because my my job's having the same issue finding somebody. And this job is pretty remote that the the person's gonna be doing it, they can't find nobody, man. And I'm just like, dude, I think I think I think covet changed the world, and I think people see it in that light now. So yeah, you you really I think cleaning is really about networking and finding somebody you know, you trust who like wants to see you grow, and it has to be more of an intimate relationship.

SPEAKER_06 1:07:12

No, no, I consider you business savvy, Micah. And and I what I want to know is because you you always talk about man, I just outsource it, outsource it. You know, you that was your big thing. You want to outsource everything. What do you how okay? Could you a short-term rental company? What are you gonna outsource? What are you gonna and what are you gonna focus all your energies on to make your to make your business grow? Like if you could high chart, like percentages or whatever, I don't know. What what would you what would you do?

SPEAKER_03 1:07:42

Uh well, right now I'm focusing on the profit first side right now. That's like been my biggest excitement learning that and putting in the pieces there. Uh, first off, find what you like to do in the business. Uh, I like to do the profit first and I like to do the system side. So automations, uh uh automation such as like the minute

Profit First accounting: five accounts, quarterly payouts

SPEAKER_03 1:08:02

system, the stafy system, the marketing systems. I like to do system stuff that's that I can automate, and then that part's done. And then what I like, what I'm trying to outsource now, because uh Feddy's taking over the whole timeshare thing. What I'm trying to outsource now is the communication with all my other units. Once I have that down, I'll be straight. But other than that, yeah, I just find what you like to do in the business. I like to go find deals. I got to go, I like to go look at real estate. Like two weeks ago, we were looking at Arkansas. We put in an offer on two houses. We got them. And I like to go look at the houses, see what they're worth, you know, run numbers, you know. Because at the end of the day, I really found out I love real estate. I love the idea of real estate, I love the creativity of real estate, I love running the deals, seeing the numbers, like, oh, this is gonna work, and then kind of seeing how you creative you can get. But yeah, I'm all about outsourcing. Outsource what you don't want to do. You know, if you don't want to charge the batteries, man, outsource that shit.

SPEAKER_06 1:08:58

Yeah, no, you're right, you're right, you're right. And I guess that's what we're we're like kind of stuck in the middle of, and um it'll come up, yeah.

SPEAKER_01 1:09:06

I I see two things that that that that holds us back a little bit. It's like the same way we grew too fast, the profits are growing too fast. Sorry, my dog is going around. Um, and now we can afford to outsource certain things at the beginning. Like, no, we're not gonna pay $20 to for someone to do something we can do, right? And now we're getting to the point that we say, okay, we can do this. So we're trying to automate. And that's a part. Um, I want still to be focused on go get more units. I hate to have him to go to record the units as he says under 100 degrees. Uh, but I mean, we need him right now. I'm trying to find a way to do it, not to have him to go to units. So I'm actually working into that and getting people to help us to do those things. My part, what what I like to do, I like to do the communication, I like the customer service. That's what that's what I've been doing for many years. I like training people. And that's the the part that I still struggle with is you know, letting go, letting go of the control and everything. You know, not looking at it, okay, is the check out the schedule, is is is is do how the cleaner is the person you know that they already know the everything. That's a part of that stressing.

SPEAKER_03 1:10:16

You know, I I I I've been there. Um, I don't even check my messages, man. I'm gonna be honest with you. I don't check the messages, I don't check the reviews. The only time I really look at the reviews, I need to get a VA to do this, um, is to really just to leave the little reply to it. Um, I don't really look at the reviews, you know. You know, certain things I'm just not worried about anymore if I know if it's automated. Um, the only time I'll do something on a review is if I know they're a bad bad guest, and I'll say, hey, I'll leave Mike myself a note. Hey, leave this guy a bad review. Um, but other than that, man, it's about finding what you love to do. If you love the training part, then don't outsource. You know, um, yeah, don't outsource it if you love to do it. Like, hey, I love to do training. Don't outsource that, you know. If like what Steve, whatever Steve finds he likes to do, don't outsource that. I mean, you're getting you you're like to do this and you get paid for it. Ain't nothing wrong with that. Now, I have a question for y'all are y'all using profit first?

SPEAKER_06 1:11:14

I I've heard of it, and no, I'm not we're not using that yet.

SPEAKER_03 1:11:18

Yeah, and the jet one is life-changing shit.

SPEAKER_06 1:11:22

Go ahead and do like a breakdown for what it is.

SPEAKER_03 1:11:26

So basically, it is you you you you create five accounts for your business: uh income account, operating expense account, uh, profit account, tax account, and an owner's pay account. And basically, you have these five accounts. Me and Mike just did it with our new joint venture business we just did, and I was like, man, trust me, we're gonna in a year from now, we can go pick up 10 units doing this. So basically, you need to figure out how much of the money that comes in is part of your operating expenses, meaning this money has to be in the operating expense. So let's say it's 90%. So every dollar that comes into your income account, um 90% of it goes to your uh to your operating expense. Let's say 3% goes to taxes, another three goes to owner's pay, and another three goes to profit, and you just divvy it up every month, and then you have a target allocation. So your goal is to get that 90 all the way down to 70. So when you get to and you you just decrease it every month, and then what you're doing is you're looking at your expenses and seeing what you can cut. And once you get that down to 70, you can start paying yourself more profit, paying yourself more owners' pay. So, what we do is every two weeks in our business, we do our distribution. We do a distribution from PayPal. So, what we do is we have everything coming into PayPal, and then we shoot everything from PayPal to our income account. So then we have a business relationship with PayPal and a business relationship with a bank. And so once everything's in, you distribute it every two weeks. So you get paid every two weeks, just like a job. Because you get your five percent of your owner's pay goes straight to you, and then your profit account sits, and your profit account sits till the end of every quarter. And at the end of the quarter, you take half of everything that's in the profit account, you distribute it between your owners. So it would be you and uh Federico. But if you're in debt, if your business is in debt, 99% of that goes to the debt, and you split one percent. So, what it does, it gets you out of debt, and then it gets you prepared to where you get a fifteen thousand dollar check split between the both these 7,500, you go splurge out. You run it like a he he pretty much teaches you how to run a small business just like a Fortune 500 huge multi-billion dollar business from day one.

SPEAKER_01 1:13:36

Wow, and that's and that's uh uh uh one of the parts uh we always talk about is like okay, we need to get our numbers you know straight. Um, sorry about my dog, his he also be on the podcast. Um but but the thing is that we we also say, okay, where's our money going? Are we making sure we're not losing money?

SPEAKER_03 1:13:57

Like see, that that that that's where I was at for a while. And the reason I'm gonna assume y'all do this. Y'all have all y'all money coming to one big account and it's just sitting in one big pot and you're just looking at, oh shit, here goes here go 60 grand. Yeah, you're looking at 60 grand, but you probably ain't paying yourself from that 60 grand. You don't know what's going where. That's why that profit first is so important. So if you got 60 grand and you know 80% of it goes to operating expenses, you shoot it over there. You know, you're you're paying yourself five percent, you shoot it over to your uh owner's pay account, man. Dude, it it changes your mind on how you can really make money, especially on the arbitrage side. Uh on the arbitraging houses side, arbitraging houses that you own side, because now that house is making you three paychecks a month. You're paying yourself twice, and then they pay you rent every month. So, man, it yeah, if you Profit First, shout out to Jay Massey. That was the most life-changing book I've read this year. That was the most you've noticed, I've started ramping up on units since I've been using it because I understand how to use how to divvy up my money.

SPEAKER_06 1:15:07

That's great, and that that brings me to a question I was gonna ask you because and we were and we were and speaking of batteries and freaking you know, sheets missing, all that all that nightmare crazy takes forever time stuff. I was I I was just asked, you know, texting back and forth with Federico about because he's like, Man, because something happened today, we're like, we're like someone, you know, Sarah sent us uh another thing where this guy is probably probably gonna give us four of his units, and we're like, and he and Federico asked jokingly, are we ready to grow more? You know, and but I think he really meant it too. And I was like, Well, shit, I don't know. I was like, we have to, I mean, we always figure it out. But my question was, Well, we got to really think of hiring someone, you know, because we're growing fast, and the way that we're doing things now is not sustainable if we keep growing the way we are. And so I even mentioned it, I brought it up. I was like, Well, how about hiring so and so? Paying them, I don't know, 500 bucks a week to just to go out and check everything and check the you know, do the quality control and the clean-ins, swap out sheets, swap out battery, do these things like that. I know, and 500 bucks a week ain't a lot here for our business. It sounds like a lot because we only pay ourselves out a certain amount. I was like, Well, this I was thinking in my head, this person will be getting a bigger payout than us, but when you put it like you said, like 90% is operating expense, that would just plug into the operating expense, it would make it would make it less, it would make it easier pill to swallow, you know. Exactly.

SPEAKER_01 1:16:35

And another thing that we need to think of is okay, how how much money we're gonna save for not having to be solving things last minute? Because at the end of the day, we get this issue when we get a guest taken in, we need to buy an Amazon, you know, some towels and things and sell it last minute to get it there, and we're you know, over purchasing sheets and towels because we don't know what they are, so actually it's an investment.

SPEAKER_03 1:17:01

See, see, and you just said how much money you're gonna save. See, what you're now gonna do if you're having that type of issue where stuff's missing, and if you could hire somebody, honestly, you could use something like Favor if you really wanted to. I had some stuff missing, and I used Favor and they dropped it off in 20 minutes at one of my units. But uh, what you now is not only saving money, you're saving time. Well, that's the greatest.

SPEAKER_06 1:17:22

What's it called?

SPEAKER_03 1:17:23

Favor. Yeah, so like that was FAV OR. Oh, yeah, they'll just drop off anything you need. Like if there's missing trash bags, they'll take a put in a favor.

SPEAKER_01 1:17:34

Yeah, that's something we need.

SPEAKER_03 1:17:35

Yeah.

SPEAKER_01 1:17:36

Yeah. I mean, and I think though the objective is always, you know, try to use it the last possible, but again, things happen.

SPEAKER_04 1:17:44

Right.

SPEAKER_01 1:17:45

And you you need to solve last minute. I haven't told still at some point. I said, listen, if it costs less than $30, I'm just gonna solve it like this, you know. I'm just gonna authorize and and you know, and and this is something I was reading from um the four-hour work week, right? And this is something to say is like if if it costs, you know, if if if if it's something that needs to be solved and you want to to outsource it, you can authorize a certain amount that you know, you don't need to ask for an authorization if it's at the beginning thirty dollars, then fifty, then a hundred. Uh and that's something that's brilliant, right? Because you're having time and a headache.

SPEAKER_03 1:18:19

Yeah, yeah, man. Four-hour work week. That's a tough one. You see that orange book back there. Love that four-hour work week. Um, but yeah, man, it it's so many ways that you have to, you know, find your bread and butter. You know, that's one thing. Find your bread and butter in this business and go, you know, is it you know, and mine I found mine was houses, man, and I'm about to stick to it, man. That's why this one with Mike, man, it's been exciting. Like, oh shit, you know, we got a pretty big one. So I'm I'm thinking about going to get another one.

Management versus arbitrage: the 20% question

SPEAKER_06 1:18:47

It's a beautiful house, man. It's a beautiful house. Yeah, Sarah did a great job. Um, David did a great job. So it's yeah, it's nice.

SPEAKER_03 1:18:55

Yeah, you know, and and you know, the systems, it'll come. You just have to focus on it, know what you need to outsource. Like right now, there's some things I need to outsource, like my marketing. I definitely have to outsource, like the going through Furnish Finder every day, you know, getting those people. Um, because the furniture finder side is pretty easy. You just go in there, find them, shoot them to the website. That's basically what we've been doing. We'd be getting a lot of direct hits off that too. So, yeah, it's just a lot of few things I need I know I need to outsource.

SPEAKER_01 1:19:23

Yeah, uh and we do like management. I I think we both enjoy that part of the communication with the clients, seeing that the get the clients are happy. I love the part about you know the the relationship with guests. I love getting the five-star reviews, I love that part as well. So, so we're enjoying what we're doing. It's just you know, we have a certain part of the systems already set up. I think it's the operating the day-to-day that gets really tricky.

SPEAKER_03 1:19:48

Yeah, you just probably need a cleaner or somebody you can trust and just run it. It's yeah, because the the the definitely the communication, if you know you love doing that, stick to it, you know. But it might hold you back in the future if you want to, you know, like you said, if you want to get to those 50 units, yeah, you're gonna have to train somebody to do to do that. You know, you can't be sitting there answering calls, you know. But yeah, man, it's just it's it's it's it's fun, it's a journey, you know. It's a journey, it's a learning journey. Yeah, it's been a good podcast, been a great podcast, yeah. But yeah, man, it's good to see y'all growing. Y'all up to 19 door to 19 doors, man. That's what's up. Are you are they arbitrage? How many arbitrages and how many are managed?

SPEAKER_06 1:20:30

Ours, we have six of our own arbitrages, and the rest is managed.

SPEAKER_03 1:20:34

So you got 13 under management, danger.

SPEAKER_01 1:20:36

Yeah, and what two are yours that we are managing?

SPEAKER_03 1:20:40

I've uh what did you say?

SPEAKER_01 1:20:42

So so there are two units that belong to Steve before we started, but we're managing now.

SPEAKER_03 1:20:46

But now I have a question for y'all because this is me and my two partners were talking about this. Is the management model worth it? I I believe so.

SPEAKER_06 1:20:57

Yeah, I believe so.

SPEAKER_01 1:20:59

I again if you find the systems it's totally doable. For I mean, if you if you get longer stays, and that's that's the other part. If you get longer stays, all these issues, all these problems, then not that frequent, and it's easier to schedule everything. If you get all of one day stays, that's when it becomes like a headache, a total madness.

SPEAKER_03 1:21:19

How much is our charging for your management?

SPEAKER_01 1:21:23

So we're uh on 20%.

SPEAKER_06 1:21:28

Now check this out, and speaking of that percentage, right? And we did something kind of kind of clever when we do the our our PowerPoint presentation or whatever, we're talking to someone on Zoom about you know signing up with us. And this this is directly inspired from Julie George, and she said put everything under she goes, everybody that came in, you know, to to get it a some uh place of their own, it was under under my company, and so we want to encourage people to get under under Argist, right? Their Airbnb is Argist Airbnb, you know, and then so we get all the pay, all the all the money comes through us, and then we pay them out at the end of the month. It's just nicer, easier, cleaner. We can call up Airbnb because we own we own that property, you know, it makes everything a lot smoother, and that's what Julie George, you know, taught us. And and um, so we have two different prices. We'll say, okay, if you if you do it this way, you know, where you put it under Argus, you're you're a super host day one, you know, you're you're automatically a super host, your unit's gonna be ranked higher than everybody else's, and you know, you're gonna everything's you don't have to do anything. We solve every issue right away. We handle, we pay out the cleaners, we pay out everything at the end of the month. You just get your money, or if you if you're in love with your Airbnb that you made from your own two hands and took the pictures yourself with your iPhone, you want to keep it, that's fine, but we're gonna charge you a 25% management fee because it it is harder for us, it is more work for us to manage for you. And we give them the choice. You always give people the choice in negotiations, right? And all of them pick the 20%. Now, there are some that we kind of grandfathered in that kept their own. Okay, it's a little bit more, you know, a little bit more work, but we're you know, we're we're these people are are are bringing us a lot of business, so we're allowing it, right? But um, all the future, all of our future ones we find in sign, we we want them to be under the artist umbrella. It just makes everything smoother, cleaner, and and and it's it's easier for us.

SPEAKER_03 1:23:18

So the reason I ask about the management side is because you know, there's always that big thing, management or arbitrage, right? So, like I have a goal of getting off my job here soon, and I was thinking about taking on a few management ones, but I'm like, would I move faster having managed units, or would I move faster having arbitrages?

SPEAKER_06 1:23:40

I think it depends on your personality too. I don't I don't see you as wanting to manage other people's shit. I don't just from your personality, that's not a knock. I think I like I know you like to have the stuff, and you'd rather outsource the management. You like you think of it differently, and that's that's a great way to do it too, right? So you can make the most money, you'll be making 80%, right? And then the whoever's managing it for you makes 20%, so you can just keep scaling and growing, and that's a great way to look at it, too, right? As far as you doing all the work for someone else and then only taking a 20% cut, I don't see that in in your personality. That's just that's just what I see. So it it depends, it is not a clear cut extract.

SPEAKER_03 1:24:18

Even a personality thing, I would I would outsource most of it anyway, but I mean, like just from a profit point of view, like is it worth it to because it sounds like y'all pick up managed units faster than arbitrages? So would it be worth it to pick up? Hey, let me go pick up 10 managed units. Would that put me at a goal where I could just be like, oh, well, I got 10 managed units, I'm out. You know what I mean? Or would you need or would 10 arbitrages be the better play?

SPEAKER_06 1:24:50

Uh we kind of do a mix of both. We we're not one or the other.

SPEAKER_01 1:24:53

And the reason why we do a mix uh is because we had assistance and we also were leveraging on on the dev part. Um because we're and and that and I think that's the key part of this. If you're comfortable with getting dev and you know jumping to getting more units and you know getting the depth of of setting up the arbitrage, you're gonna you're gonna make where way more money is the depth and getting the units, managing is not your risk, and uh is not the it's yeah, that that's the thing, it's not your risk. Yeah, sometimes if someone already has a unit set up.

SPEAKER_03 1:25:32

Hey, here goes a uh played to not have any money into it into an arbitrage. You want to know it?

SPEAKER_06 1:25:37

Yeah, yeah, yeah.

SPEAKER_03 1:25:38

Rent the furniture.

SPEAKER_06 1:25:40

Okay, I heard I've heard of that before.

SPEAKER_03 1:25:41

If you rent the furniture, see in my next unit, my next house up in Plano or wherever it's gonna be more likely Plano, I'm gonna rent all the furniture, make it a hundred percent arbitrage, everything's just an operating expense, and then I'll just whatever we take, we take and then let it operate off that. That's what I've been thinking about doing. Okay, use a thing like court, but even at that, I still haven't done that to run the numbers because what if those numbers come out just to be the same as a management? You know what I mean? So it that's really what I want to see. Like it is where is the the sweet spot? Because I know for a fact I've been learning this using profit first. If you're gonna have a bunch of arbitraged, you know, two bedrooms, uh, one bedroom uh apartments, you need a bunch,

Staying debt-free and stockpiling cash for growth

SPEAKER_03 1:26:28

you need a few houses back there to kind of have a strong cash flow coming in. Because I've been noticing on these one bedrooms, one baths, most people in the DFW, their cash flow is probably 500 to a thousand on a one-bed, one bath, but on a house, you now up it to three, four thousand, and it's a little bit more of a cash-heavy play, you know. But arbitraging is always faster, is what I tell people. Oh, yeah, big time.

SPEAKER_06 1:26:58

Yeah. And and that's the thing, like uh Federico mentioned the debt. And I told him from the beginning, I I I want to stay out of debt as much as we can. Yes, you can use it some, you know, we can utilize it sometimes, and we did with our first unit, but I'd like to try to keep our company as as out of debt as possible because I just think it's gonna, it's we're gonna grow well that way. And there's arguments for both sides, and but so but so this is what this is how we kind of saw it. You know, we okay, we started managing people and our cash flow, our you know, our bank accounts started swelling, getting big, and like, okay, now if we see a good arbitrage deal come up, we can grab it and use our stockpile of cash. We're not gonna have any debt, we don't have to pay any interest or nothing. We just buy what we gotta buy. I mean, we still we still run it through a credit card to get all the points and all that shit, and then we pay off the credit card every month. But but that way I see we can we every you know every month we can get another arbitrage, and then that's gonna feed us more money. We're gonna make more profit off of an arbitrage. That's gonna make our stack grow too, pay it off, whatever make our stack. Grow plus getting the money from the other people, then maybe in an another month we can get two arbitrages because we have a bigger pile of cash and we're not using any debt, you know. And that's just that's just how I think that's how we were structuring our business.

SPEAKER_03 1:28:12

I fully agree with you on that because I got into business debt, which it's business debt, so I'm really too oh shit fearful about it. But yeah, that's an and that's what I also start noticing getting creative out here, especially with this eviction moratorium coming up any day now. If you can start getting houses with no money out of your pocket, that's about to be the major play right now. Real estate creativity is about to start hitting a high when this eviction moratorium is up. So that's why I've been that's why I love the buying side. Like right now, these two houses I'm gonna be, I'm probably gonna spend no money out of my pocket after we finish refinancing it. So I'm like, you can't beat that, you know what I mean? So I love to stand out of debt play, I'm all for it. That's and that's why I'm still on the fence, like arbitraging apartments that really ain't really worth it to me unless you have like how you're doing it, get the stockpile of cash, then do it, or get it where it's a hundred percent rental, where you're just renting the furniture every month and your startup cost is probably 1500.

SPEAKER_06 1:29:15

Yeah, you know, it's funny. We kind of we kind of did that model a little bit in this way because an opportunity came up. Uh, buddy of mine um that was managed by the same company I used to be with, whatever he wanted, he just wanted he was done. He's like, Man, I just want to hop out. I want to hop out of my lease, you want to buy my my unit, you know. It's right right across the hall from mine, right? And so over at over in Dallas, and I was like, let's

The $3,000 furniture buyout on a payment plan

SPEAKER_06 1:29:37

look at the numbers. And at first he was like, you know, you know, eight, I sell it to you for eight thousand dollars. And we was like, wait a minute, let's see what's going on here. Uh that furniture ain't worth eight thousand dollars, you know, kind of thing. And so, um, anyways, he we the way we were we were able, he was able to get out of his lead. We talked to the complex, he was able to get out of his lease. We had to sign like a brand new contract day one. He was gonna leave everything in there, and it and it looked nice, it was a sero design, so it looked nice, and it was already ready to go making profit day one, you know. And and and so we we went back and forth and we agreed on a price like three grand. And Federico had the genius idea. Hey, tell him we'll pay him the three grand he wants, but give us three months to pay it. And I was like, that's freaking genius, man. So we don't even feel the brunt of it right away, and so hopefully we won't even, you know, we'll we'll cut we'll make more money than the actual grand. So his furniture is gonna make us more money than we're gonna pay for it, you know. I'm saying, yeah. So I thought that that was a that's kind of like a hybrid of what you're talking about, renting it, but it was kind of a rent-to-own model, yeah.

SPEAKER_03 1:30:35

See, see, and a lot of those, like these court furniture who have high-end furniture for rent, they'll let you rent it, and after a year, you could just buy it outright from, but they might not even charge you to hack to keep it. That's what happened to a friend, uh Tiana. She she she was like, I she just called them after the year, like, hey, mind if I keep it? Like, cool, you know, because they had all this new shit, they probably had a bunch of new shit come in, you know. They're like, pick up that old ass furniture, you know what I mean?

SPEAKER_04 1:31:00

Yeah, it's right.

SPEAKER_03 1:31:02

Yeah, so now you own the furniture outright, now your expenses go down. So, right now, like when you do the arbitrage money and you do it on credit, you got to build that back up so you can get the credit paid off, you know. But y'all have been using the profit first model to do it, which has been great. But I'm like, man, I understand it now. If you keep man, I love y'all's business model. If you can stay out of debt, stay out of debt. And if you do it, make sure it's business debt.

SPEAKER_01 1:31:24

It's funny because now we're talking about this. I I'm remembering we were setting up some of the first units, and we're like going to Goodwill, you know, looking into shit. Like, yeah, this is three dollars and it's gonna look nice. And now we can blurge a little bit more. Um, but yeah, that's the way we grow, right? Um, I mean, this cash flow is allowing us to do that to say, okay, we can set up a new place. And right now we're still like one of the last places that we have still over there, you know, setting up IKEA furniture. The the goal is the next time we he doesn't even have to go there.

SPEAKER_03 1:31:58

Yeah, see, and that's the beautiful part about renting the furniture too. They'll come set the shit up. You just like I was talking to my friends, just oh I just point and tell them where to put the shit and they'll set it up and put it in there. If something breaks, they'll come and replace it. I was like, damn, yeah, and you can just put a little charge in on Airbnb that this is broken, you get paid for it. You know, that's what you want to

PayPal flow, $2,000 payouts, and wrap-up

SPEAKER_03 1:32:21

do, you know. But yeah, man, stand debt free. That's the way to go. I agree with that. Tiana's a cold-blooded assassin.

SPEAKER_06 1:32:30

Yeah, teaser. We're using the the the through running everything through PayPal, also, because she told us about it.

SPEAKER_01 1:32:36

Yeah, she's just around. I love her episode, yeah.

SPEAKER_03 1:32:39

Yeah, she she dropped some bombs on there, bro. Like, yeah, that that running everything through PayPal, that was a whole nother game. That's been a game changer, especially with Profit First, man. That's a game changer doing that. So yeah.

SPEAKER_01 1:32:52

And that's funny that that's a thing that we were talking with Steve uh yesterday. It came up today. Like every day we every time we have a stressful day, then we see this two thousand dollar payout hitter account, you know, on the email, and that's okay, it's worth it.

SPEAKER_06 1:33:08

I'm telling him, every time something crazy happens, and we're like, ah, screw all this shit, and then all of a sudden, yeah, we see that 2000, another 2000 hits. We'll keep going. We're like an abused lover, you know.

SPEAKER_02 1:33:24

That's the best part about it.

SPEAKER_03 1:33:25

We sit there, we learn every day, dude. Oh man, but yeah, this is good Friday, yep, man. Good Friday, up, good drinks, good shit talking. We might have to tell people, we might have to start warning people on uh on the like, hey, this is a Friday episode, man. But yeah, man, it's been good, man. It's been a while since we all hopped on, so been a good podcast, man.

SPEAKER_06 1:33:49

Yeah, we need to get Federico back on again in the future, man.

SPEAKER_03 1:33:52

For sure, man. This has been good, man. Talking about systems, this is good stuff.

SPEAKER_06 1:33:56

Well, cool. Where can folks find you, Federico?

SPEAKER_01 1:33:59

Oh, find me. Well, I'm not big in social media myself, but they can find Arjust Rentals on Instagram, uh, Facebook, and also gonna give a shout-out to my wife and the work she does. Um, so she does prints um that you can buy on Etsy. Like those behind me. She's an illustrator, so she does prints. I think she actually has some bundles for Airbnb. Uh, we can probably create a discount code for her friends that live that drive. So I'm gonna get that set up. I'm gonna send it to you, and you can uh shut it out there.

SPEAKER_06 1:34:32

Yeah, so don't don't handwrite the Wi-Fi thing, she'll make a nice pretty one, put it in a frame. Yeah, she she does some cool stuff, man.

SPEAKER_03 1:34:38

Oh, I look into that then, man.

SPEAKER_06 1:34:40

Yeah, I'll send it to you.

SPEAKER_03 1:34:42

Shout out to my wife, too. She's been doing good at handling the communication. I don't like talking to people. Your wife's retired, right? She's retired. No, no, heck no, but no, we're uh after baby number two, we're out. She's out.

SPEAKER_06 1:34:56

Oh, okay. I thought she was gonna retire from her job already.

SPEAKER_03 1:34:59

No, we're we're pregnant with number two. Once we have our little girl, we're she's gonna be out of there.

SPEAKER_06 1:35:04

Oh, she you gotta get those free three months of pay, right?

SPEAKER_03 1:35:07

Free three months of pay and that insurance, bro. Oh man, I hope none of my hope her employer doesn't watch this, but yeah. Yeah, man. But yeah, man, it's been awesome. Uh, you can find us at live the thrive at gmail.com. Follow me, Steve Federico. We're all on Instagram. Uh, but yeah, it's been an honor. Thank y'all for continuing to listen, man. It's uh we always like to have some fun, keep it real, and uh yeah. What else you got, Steve?

SPEAKER_06 1:35:39

Cheers, keep keep living, letting, and thriving.

SPEAKER_02 1:35:43

Hey, and shout out to everybody that's been using that hashtag on uh Instagram. I went through it today. I was like, holy shit, man, people really be tagging hashtag live lit thrive podcast. So shout out to all those people.

SPEAKER_06 1:35:54

It's edutainment, as you say.

SPEAKER_03 1:35:55

For real, man. People talking about Turo tagging our podcast. I was like, oh damn. So people do listen to us, okay. So yeah, man. Thank y'all.

SPEAKER_06 1:36:02

Shout out to Romy Rome, uh uh Jerome in the house. Oh, yeah, Romy Rome! Yeah, he keeps he keeping. He always texts me. He's like, Oh man, that show was great, man. Listen that.

SPEAKER_03 1:36:11

So he's he's still listening, still uh that's good, that's good, man. But yeah, thank y'all, and we are out later.

SPEAKER_02 1:36:19

Peace.

SPEAKER_00 1:36:21

Thank you for tuning in to this week's episode of Live Let Drive. Be sure to tune in next week for all the latest in the world of Airbnb and all that entails. Bye bye.