637: Renting Homes Out for $2,500 a Day – Part 2

SHOW NOTES FOR EPISODE 637: RENTING HOMES OUT FOR $2,500 A DAY – PART 2

Do you know how to make 15X return on short-term rentals over long-term rentals?  If not, then you won’t want to miss this second part of a two-part podcast series!  Today’s show features healthcare professional, real estate investor, wife, mother and real estate coach Dr. Rachel Gainsbrugh who will continue sharing how she is able rent out her single family homes for as high as $2,500 A DAY!

What You Will Learn

• What is Modern Short-Term Luxury Service
• How do you find the best Modern Luxury Short-Term markets?
• Can you convert a regular rental into a Modern Luxury Short-Term rental?
• Online tech services you can use to find the best markets
• How to “virtually cruise” neighborhoods online for the best deals
• What things you need to do to create a Modern Luxury Short-Term rental
• Why more people aren’t creating luxury rentals

About Our Guest

Rachel Gainsbrugh

Rachel was born in Haiti with a drive to make a difference and not take her parents’ sacrifices for granted.  She was raised in Miami, worked hard, became a doctor, and was left with over $500K in student loans.

So, she grinded hard to pay off her loans.  When she discovered AirBNB investing, it became a game-changer for her as she was able to make 15X on short-term rentals over long-term rentals.

Now, she’s a healthcare professional by day and a rental investor by night.  She’s the owner and manager of 18 luxury short-term rentals with a lucrative cash-flowing rental portfolio.  She’s also a mom, wife, and real estate coach that was recently featured on a Netflix TV show showcasing one of her luxury rentals.

Rachel is passionate about helping professionals create a life they don’t need a vacation from through AirBNB investing.

Continuing Her Story…

What is a Luxury Short-Term Rental?

• A lot of people think it involves millions and millions of dollars
• But it actually depends on where the home is located
• For example…
  • A large home in an area where the cost of living is a little lower, such as Georgia, it wouldn’t take millions of dollars to invest in the creation of a “luxury stay”
  • If you wanted a luxury stay in Paris, more than likely, the house would cost over a million and may cost $20,000 a week
  • In the Poconos, Rachel was able to purchase a 5-bedroom, 3 bathroom (her rule is 3 persons per bathroom) house for $180,000 3 years ago
    • It was very spacious
    • Pool
    • Hot tub
    • She put in $50,000 in renovations and upgrades
    • Today, it generates $900 to $1,600 a night, depending on the season
    • The same house would go for $600,000 today

Modern Short-Term Luxury Service

• Modern Short-Term Luxury service is not so much about the accumulation of stuff (golden door knobs and golden toilets)
• It’s more about the accumulation of experiences
• The modern luxury traveler is looking more for the experience
• The photos of the property on AirBNB, VRBO, etc.  have to tell the story that “this is a luxury stay”
• Next, the traveler will look at the description/copywriting where you can highlight the luxury items there
  • You can curate and plant the seed in their mind that the place has the potential to be a luxury stay
• When they make the inquiry and the inquiry is responded to professionally and engaging, that helps support a luxury stay
  • Good, clear communication is key
  • Demonstrate attentiveness to their needs
• Visiting for a vacation, wedding or funeral, it means a lot if you are accommodating and attentive
  • This tells them it is going to be a great stay
• From a tactical and tangible perspective, her properties have…
  • Natural fiber linens
  • Anything that touches her guests’ skin is going to be nice and soft
  • She always has a king-size bed
  • Super fast WiFi
  • (See her BiggerPockets article entitled: “15 Luxury Short Term Rental Tips That Won’t Break the Bank“)
  • A sleek design
  • Are minimalistic
  • No clutter
  • Clean lines
  • Open spaces
  • A space that will meet the needs of each guest
  • Maybe a game room with a foosball table
• You can take an existing rental and convert it to a luxury short-term rental but there is one caveat:
  • If it’s in an area with no curb appeal or the neighborhood does not look that great, it may not work

Her Properties

• She currently has 8 properties of her and she manages 8 properties for other investors and has 2 arbitrage properties
  • She owns 4 short-term rental homes near her personal home
  • She also has a portfolio in the Poconos, the Smokies, and 2 new constructions in Florida on the panhandle
• 60% of her properties are in resort areas
• 40% are in suburban neighborhoods
• She is content with her existing properties but is interested in repositioning where she can
• She prefers newer properties that require less upgrades

Researching New Markets

• She enjoys creating spreadsheets of various markets
• She’ll download data from different platforms
• Or she’ll request data from different data scrapers such as AirDNA
• Then she’ll go through that data and highlight the markets that look good
• Next, she’ll do research to see if she can get good “boots on the ground”
  • Other short-term operators
  • Realtors
  • Lenders
• This is how she found Crystal Beach/Bolivar Peninsula (near Galveston, on the beach) for a person in her Mastermind
  • She purchased a tier-two property
    • Not on the water front but right behind the water front
    • She paid $610,000 in March of this year (2022)
• She is always looking for a great property that can house her “ideal guest”
  • It could be…
    • Lake front
    • On a beach
    • Near an amusement park (i.e. Disneyland or Disneyworld)
• If she finds a promising property on Zillow or Realtor.com
  • She’ll go on Google Maps and “cruise” up and down the streets to check-out the neighborhood

Providing Luxury Service

• She realized that building the right team was crucial to providing the high level luxury service she needed
• So, she set up her Standard Operating Procedure (SOP)
  • She used a tool called Loom – a screen recording tool
  • She would just record her screen and talk at the screen
  • For example, she would say… “This is ‘How to Set-Up XYZ'”
  • All of the screenings became her SOP library
  • Once she completed the library, she realized that it was something she had to hand off to someone else
• Then, she needed to determine who would be the best employee and she determined that it had to be an AirBNB ex-employee
• She sourced a team of ex-AirBNB employees
  • They are now crushing it!
  • They can resolve problems quicker than Rachel can
  • She has a “case manager” on her team
    • If there is an issue…
      • They know the terminology
      • They know what type of attachments to add to resolutions file to get them approved
  • She also has a Guest Communications or Concierge Team
    • 3 people
      • 2 are full-time
      • 1 is part-time
    • They have coverage from 8am to 9pm locally
    • They have an emergency number on off-hours
  • She also has cleaning teams
    • Rachel oversees the cleaning teams using an app called TurnoverBNB
    • But she also has a cleaning manager (who’s also in charge of quality assurance) that oversees the team in the Poconos because it’s more remote and there’s a bit of a labor shortage there
• She has weekly staff meetings where Rachel shares:
  • Current matrix
  • What’s going on
  • Future changes
  • And where employees can bring up issues
• Rachel uses the Slack app which helps her stay on top of communications with her team
  • The app has channels
    • After the team cleans, they post a photo of, for example, of the hot tub where she can verify that things look good
      • Is the water nice and clear
      • She can see the hot tub panel to make sure the settings are right
      • Water level

Mentorships

• When she first started out, she found mentors that helped her with real estate investing
• She also joined a Master mind
• She also felt she was mentored by the thousands of hours of podcasts she listened to as well

Biggest Mistakes

• She needed help and didn’t vet people very well
• She didn’t examine if…
  • they were the most qualified
  • they are an expert in the areas where you really need help
• She found herself beating her head against the wall by creating a whole new job for herself
  • She became an HR person
  • Trainer
  • Correcting and correcting again
  • Revisions and more revisions
• She’s extremely intentional
• She realized, as she was building her team, that her next new hire could literally build her company on your behalf – it he/she is right person!
• So, she went from hiring an “assistant” to hiring a “short-term rental expert”
• When you hire the right “Who,” they have the potential of doing a better job than yourself
• She also considers not starting early enough with luxury short-term rentals as one of her biggest mistakes

Biggest Success

• When she added the dynamic pricing tool to her first short-term rental property, it was a game changer
• She was expecting a high monthly rate of $7-8,000 but when she turned it on, it said $28,000
• She thought the tool made a mistake and, before she could “fix it,” someone had already booked the month at the $28,000 rate!
• And the rate stayed up from that day forward
• The mortgage on that home was only $2,500 a month
• She also sees the “channel manager” she uses as another valuable tool that helped with her success

Advice for Old Dawgs Looking at Real Estate Investing to Help Them in Their Retirement Years

• Take a look at short-term rentals
• Don’t give up on it because it is active – however, you don’t have to do it on your own
• If you can partner with a co-host, who takes care of all the guest communication and you can employ some great tools, it will take that weight off of you
• And you don’t need a lot of houses to make a great profit
• All you need is just one or two houses to make great cash flow and change the trajectory of your life
• Less can be more!
• He mantra is, “How do I own and operate the fewest number of properties that generates the highest profitability?”
• Picking the right location is key
  • She has one client that, with a 2-bedroom home in the Atlanta area, is making $52,000 a year
    • Her mortgage is only $700 a month or $8,400 a year
    • Her daily rental rate ranges from $189 to $267

Current Business

• Rachel feels the future is bright for short-term rentals
• She’s excited about creating a platform where busy health care professionals, who are dealing with burn-out, can get off of the “struggle bus” and enjoy life a little bit
• All you need is just one or two houses to make great cash flow and change the trajectory of your life
• She also takes people through the whole process – teaching them to buy, fund, set-up, design and launch a short-term rental business
  • She has digital training course and coaching which takes people through the entire process
  • She has her designer, revenue manager on-staff as coaches
  • If people have difficulty setting up their rates, she has a great team to troubleshoot any challenges her students/clients might have

Rap-It-Up

• Favorite real estate book: The Book on Rental Property Investing by Brandon Turner
• Favorite business book: The Gap and the Gain by Dan Sullivan
• Most valuable web site for success (other than your own): BiggerPockets.com
• Favorite app: Podcasts, PropStream, AirDNA, Data Rabbu, PriceLabs
• Favorite quote: “If you don’t find a way to make money while you sleep, you will work until you die.” – Warren Buffet
• If you lost everything – all your assets – and had to start all over, knowing what you already know, and you only had $1,000, what would you do to re-launch your real estate investing business? There are memberships out there, like REIA, that costs $40 per month.  I would join to not only educate myself and troubleshoot why I lost everything, but I would network with other investors and find someone I could work for and with to find a good deal to start rebuilding.  

How to Reach Rachel

• Get her free list of the 75 Top U.S. Cities With the Highest Profitability for Short Term Rental Investing
  at 75Gems.com
  • This is the list she uses to find the best markets to invest for short-term luxury rentals
  • This will also get you on her newsletter list where she can connect with you and you can connect with her

DISCLAIMER:  Many of the above strategies take knowledge and have a higher degree of risk.  You need to do your research and/or work with someone who is experienced to reduce your risk.

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Additional Episode Sponsor: Meno Studio – menostudio777@gmail.com