How to Get BIG Cash Flow

David:
This is the BiggerPockets Podcast Show 679.

Zeona:
For people that are trying out this strategy coming from the long-term rental side, one thing that we say is like, “Yeah, maybe you don’t want to spend the money to invest in furniture and ones you already own, but if you’re going out and buying new places now, it’s really hard to find long term rentals that’ll cash flow.” And so this is a great strategy for that because now even with the high prices, even with the high interest rates, you can still get cash flow and medium term.

David:
What’s going on everyone? This is David Greene, your host of the BiggerPockets Real Estate podcast here today with my co-host, Rob Abasolo, where we are bringing you another fantastic show today focused on medium term rentals. You may be aware of short term rentals. You’re definitely aware of traditional or long term rentals, but in today’s show, we talk about the new emerging market, a medium term rentals. Typically, these are properties that are rented to traveling professionals, often travel nurses, but not only travel nurses, and we get into some really good stuff. We talk about how to find the right type of property that will work for this, what location to look for, how to furnish them, how to manage them, and how to maximize their efficiency, as well as how to mitigate your risk when you are a short term rental investor. Rob, what were some of your favorite parts to today’s show?

Rob:
Honestly, it was just really nice to talk to a couple pros. Sarah and Zeona just have this mastered so well. I am obviously more of a short term rental guy, but I have a couple of medium term rentals and yeah, I just walked into my medium term rental after someone checked out and it was like that scene from Daddy Day Care where Eddie Murphy walks into the bathroom and he’s like, “Oh, Oh.” And it just kept revealing that it was just worse and worse. That’s how I felt. It was nice to talk to them and talk about their strategies, their processes, and the systems they’ve put in place to run a very successful medium term rental. This is going to be a fun one to get into.

David:
Wonderful. Before we get into the show, today’s quick tip is check out Sarah and Zeona’s book 30-Day Stay. If you pre-order it now, you can get some special perks, bonuses, if you will, a coaching call with them, a free webinar, as well as other bonuses. You can find it by going to Biggerpockets.com/pod30 and use any of the names from today’s podcast to get 10% off that book. It’s very well written. It is a very relevant asset class, and I believe that these two are the front runners for sort of sharing information of how you can make money in this space. I have bought these properties myself. Rob has transitioned a couple of his short term rentals into medium term rentals, and you can do the same. So go grab the book. Rob, any last words before we get to the guest?

Rob:
Yeah, Just quick clarification on the promo code. You can use promo code, Rob, you can use promo code, David, Sarah, or Zeona for 10% off. You said any of the names from today’s podcast, right?

David:
Yes. And you just gave the names, so thank you technical Tina for correcting my general error.

Rob:
Listen, while we’re here, the one that’s going to give you the best 10% discount will be Rob. Don’t ask me why. Just use Rob.

David:
That’s really good. I have no counter to that. All right, let’s get to the show. Sarah and Zeona, welcome to the BiggerPockets podcast. How are you two today?

Zeona:
So good. Thanks for having us.

Sarah:
We’re excited to be here.

David:
Yeah, so I believe we just got to see each other at BPCON in San Diego. Zeona, you were there as well, right?

Zeona:
Yep. You were on my floor. We shared a couple elevators.

David:
Oh, and you didn’t say anything the whole time. Nicely played.

Zeona:
Not true. It’s cool though. It’s cool.

Rob:
She told you about her childhood, David, come on.

David:
She’s honest. I was trying to give you the cool factor. Oh, it’s an elevator with David Greene. I didn’t even care. I made him talk to you.

Zeona:
Oh my God. Well, the first time there was a crowd and I was like, I’m not doing that. Everybody’s like, oh my God, it’s David. No, I don’t care that much.

David:
That’s so funny that you get that a lot when you’re in our position. These people will say, you know what? I know I’m not impressed by people that are a big deal. We hear that all the time. And I’m like, well then, why did I work so hard to become a big deal? That’d be like if some guy was to say, I’m not really impressed by beautiful women, so don’t think it matters. And you guys would be like, well then, what was the point? It’s always a funny thing that I noticed that pops up, but no, you did not fan girl at all, Zeona. I would’ve remembered, and it’s probably a good thing that you avoided that big crowd because I’m sure one of those people is the one that gave me this cold that I’m now suffering from post BPCON. That was a large exposure to a lot of people with very little sleep, which is a recipe for getting sick. I trust all of you are in good health.

Zeona:
So far so good.

Rob:
And let me just say you are a big deal to me. I look at your photo and then I go to sleep every night and so when I got to see you again in person, I was like my man.

David:
That’s the joke at BiggerPockets is I have a huge fan base of males. I’m very popular with the male crowd. I’m like, every guy wants my life, which is very funny. So I appreciate that. Thank you guys for the support. I had a blast at BPCON, and I believe you two are now in the exclusive club of BiggerPockets authors. So we were on the same floor also when we were doing our book signing events. How does that feel to be a BiggerPockets published author?

Sarah:
Feels really good.

Zeona:
It’s kind of surreal. I feel like you work on this, I don’t know, idea for a while, and then when you actually hold it in your hands, it was the first time we were at BPCON, it was like, whoa, this is not just our secret, it’s out and people have it now. It’s pretty awesome.

David:
There’s certain moments that are like that. The first time you hear your voice on the podcast that you love, you’re like, whoa, that’s me On the BiggerPockets podcast. Or for me, when I walk by a Barnes & Noble and I see the book at the Barnes & Noble, I get that surreal moment you’re talking about like, that’s my book that’s right there. It definitely is very cool. And I believe Sarah, you and I were also on a panel together teaching real estate agents how to sell more houses. We should definitely get into that today as well. You’re a bit of a multi-talented personality. Before we get into all the stuff you guys have to offer, if you don’t mind, Zeona, we’ll start with you. What’s your story? How did you get interested in real estate investing and get into your first property?

Zeona:
Yeah, so I was on the BiggerPockets podcast 229 and 300, so way back before you were here, David. If people want to go back and get the deep dive, I used to be big in short term rentals, so just trying to be like Rob. But yeah, I did that since 2012 and I built a big co-hosting business around it where I was managing rentals in five countries. But after COVID, I realized that I had to make a switch. And so I got really excited about the medium term strategy and that’s why we wanted to bring it to everybody. It was really during that period of time that I had to do something different.

David:
Awesome. Sarah, what about you? How did you get introduced into this world?

Sarah:
Yeah, so I started out as an agent, and that’s why you and I shared a panel at BPCON. I coach real estate agents now on how to invest in real estate themselves or build an investor-friendly business. And so started out as an agent and similar to Zeona, just have an absolute love of travel. And so realized really quickly that I wanted to be location independent and build wealth through investing. And so now, I own 19 units in four states and I manage all of them remotely. Half of them are medium term rentals, which is why Zeona and I write the book.

David:
Well, this is amazing because full transparency, I have three medium term rentals that are all under rehab right now and I have zero idea how to manage them.

Sarah:
Great.

David:
I’m going to ask you a lot of questions to try to prepare for this because I don’t know what I’ve gotten myself into, but I’m pretty heavily invested. Those three properties are probably worth around five to $6 million, so I got to figure this thing out and what better way than to do it live in front of everybody on the podcast. Now, Rob, have you got into the medium term space or are you pure short term?

Rob:
Yeah, I actually have a couple of medium term rentals, David. I have a couple of short term rentals that I converted into medium term rentals back about a year, year and a half ago. Really, at the beginning of COVID, I’d say. I was really thriving in the short term rental model, but there was a couple regulations in LA that made it a little bit more prohibitive. And so medium term rentals typically, especially in the LA side of things, is 30 days or more. Anything under 30 days is considered a short term rental in Los Angeles specifically. I converted that and I still rent my tiny home and what used to be my primary residence on Airbnb for anywhere from 30 to 90 days and there’s definitely some learnings that I’ve taken away over the past couple of years that I’m excited to dive into.

David:
Learnings, you’re literally making up words on this podcast.

Rob:
No, that is a word. Look it up.

David:
Learnings.

Rob:
Google it.

David:
No, this is what Brandon Turner did too. He just became rich because he could do it so well. He’s like, “Yeah, let’s just call it BRRR. Let’s just call it house hacking.” Then everybody started saying it. Now, we’re all going to hear everyone with a corn cob pipe and a monocle that are all going to start saying things like learnings.

Rob:
It’s a word forward.

David:
Yes. All right. I am fascinated by the why behind what causes people to switch their investing strategy. Zeona, if you could, what was it about short term rentals that you didn’t like? Or was there an opportunity you saw in medium term rentals that you did? What motivated you to switch out of what was probably very lucrative space into something different?

Zeona:
Yeah, so right when COVID was happening, I think it was even March 8th, it was from one day to the next, we had all the bookings looking like it was going to be a really strong summer kind of building up to that and then the next day all of the bookings got canceled. They just literally evaporated off the calendar. And so I knew I’m not just going to have these places vacant, I’ve got to be an investor, I’ve got to put my thinking cap on and be creative and figure out something else. And right at that time I started seeing longer requests coming in.
People needed to quarantine coming home. There were emergency workers coming into town, people needed more space because they’re working from home or they had their kids at home now educating. And so all of those things made me go, I wonder if I could do this medium term thing for longer stays and make that still work. And the thing I was worried most about was trying to get people in for tours. But I realized later that a lot of these people book site unseen just like a short-term rental, and so it ended up being fine.

David:
Cool. It was the vacancy problem that you’re like, “Ugh, I got to figure out some way to keep these things occupied?”

Zeona:
Yeah, definitely. Then like what Rob said, there’s a lot of transitioning in markets where I might have owned in that market for five years and before you could short term rental with no problem. Then now they’re getting stricter and stricter and so it’s just a little bit easier if you can transition to the medium term space.

David:
How about you, Sarah, what was it that was the switch that you sort of zigged when everybody else was zagging?

Sarah:
I actually went straight from long term to medium term. I bought a fourplex and furnished two of the units and discovered that I could actually net more if I rented to traveling nurses. There’s a big hospital complex in that area. This is in Omaha, Nebraska. The Airbnb hotspot location doesn’t quite apply to this property. And so while I could get fully booked on weekends, I had all this vacancy in the middle of the week. I almost immediately switched to the medium term rental strategy to increase my cash flow.

David:
Okay. First selfish question coming up, Sarah, is it as simple as just buying a property near a hospital or are certain hospitals more likely to be bringing in traveling nurses and other ones are not? Like how much nuance do you have to put in to figuring out where to buy?

Sarah:
I like buying near hospital complexes so that there’s multiple hospitals in the area. For example, my four of my seven units in Omaha are a 100% occupied because the nurses just keep extending their contract. That’s one of the many benefits of having the traveling nurse versus any other MTR tenant is that they likely are going to extend their contract, and then you have six months of occupancy with no turnover.

David:
But would some hospitals not be bringing in traveling nurses or is it pretty much every hospital right now is having nurses travel to work there?

Sarah:
What’s really nice is, well, it’s not nice for society, but it’s nice for people that own MTRs is there’s 300,000 vacancies across the country for nurses right now. If you ask any healthcare professionals, 75% of them will say, I don’t see myself in the healthcare profession in the next two years. And so the need for traveling nurses is higher than ever and I see that as a continued trend. While I can’t say that every hospital across the United States is going to have a traveling nurse, I’m really confident that if you buy a rental near a hospital complex, you’re going to have someone who’s willing to stay there.

David:
I’ve noticed several people in the BP community, some of them are in my mastermind and other ones have come on the lives and they’re all making incredibly good money as traveling nurses. This is literally the strategy some people are using to save up money for their down payment is they’re making twice what they would make at a different location and they’re getting their housing paid for by the hospital. That’s one of the things that got me really interested is that they’re getting their rent paid by the hospital so you can charge more for rent and they don’t necessarily fight about it, the person who’s making their own rent payment and they’re going to fight you over $20. Zeona, same question to you, what’s your strategy when you’re picking the location for where you want to put your medium term rental?

Zeona:
Yes, so we look for hospital complexes, we try to be within five miles of two hospitals if you can. That’s the number one thing and the reason for that is that nurses are probably not going to travel more than 20 minutes. Beyond that, a university can bring in a lot of people, it can be students, it can be teachers coming into town. I like being near universities. Then there’s also tech centers. Where I live in Boulder, we’ve got a Google campus and a couple other kind of tech hubs and those actually end up bringing in a lot of people when they’re trying out for a job and they don’t want to buy something yet. They might stay in a medium term rental for a bit. Then you’ve got kind of business professionals that will come in for a month or two, go to the main office, but they normally work from a different office. Yeah, there’s just a lot of different people using MTRs now.

David:
Take someone who owns traditional, what we call long term rentals right now, who in that asset class should be considering switching over to a medium term rental? Sarah, I’ll ask. I’ll start with you.

Sarah:
Everyone buy our book. No, I really think that the MTR strategy works for so many different property types. We’re seeing, I have clients who have, even in our book case studies where they own in urban areas and rural areas. There’s MTRs for four bedrooms, single family houses, there’s one bedroom, one bath MTRs, and so I truly believe that almost any location can support an MTR. Would I go and buy 30 houses in a small town and turn them all into MTR?

David:
If you were David, you would and you would definitely regret it. We just talked about that.

Sarah:
Yeah, I don’t think that’s the best strategy, but I think it’s so interesting. I get this question a lot of what if, what if, what if, and the reality is you only need four tenants a year, so you don’t need to stress as much about like, is this a good strategy? If you’re just going to turn one of your long term rentals into a medium term rental, you obviously have to furnish it and that’s going to take time, money, and energy. But aside from that, it really isn’t that stressful of a transition to go from a long-term to a medium term.

David:
Nice. Zeona, what advice do you have for people that already own some assets that could easily be converted rather than just having to go buy a new one?

Zeona:
Yeah, so I would want to make sure that the location was good for it. I would say you want to probably be more in an urban market. As opposed to short-term rentals where they’re more on vacation areas that might not be as urban or rural stays that might be outside of town, urban’s going to work best for this, you just have more options for tenants. Then the second thing is size. With short term rentals, you’re seeing a lot of people going bigger is better, four, five bedrooms trying to get in to families heads and beds. That’s kind of the name of the game. With the medium term rentals, I really like to do one or two bedrooms. It can work with bigger ones that I’ve heard about people doing rent by the room strategy with medium term rental. But it seems like such a headache that I’ve generally found that people travel either by themselves with another nurse or with a family member, and so they’re really not needing that much space.

David:
You’re saying there’s not a huge demand for traveling ranch hands that are going into these rural areas?

Zeona:
Maybe not, I mean, maybe in Ocala, Florida or something like that where it’s like horse capital of the world, but other than that, maybe not.

David:
All right. That’s funny. Also, Zeona, perhaps I’m saying the word rural correctly. If you guys would like a master class on how to struggle with that word, go back to the time when Zeona was interviewed on the BiggerPockets podcast before me with Brandon and Josh and watch Brandon struggle to say rural for 200 episodes. It is hilarious.

Rob:
I can’t say it either rural.

David:
That wasn’t bad. You could tell you’ve been practicing. That was part of the auditions when Rob was trying to get this co-host position is we were like say rural and we all sat there with a scorecard and gave him a score of zero to 10 on how well they did.

Rob:
Very traumatizing.

David:
All right, Rob, you’ve got a decently healthy portfolio yourself, what would you do? What would it take for you to transition some of these into medium term rentals?

Rob:
Totally, man. I mean, there’s kind of a few schools of thoughts and I think if you’re a long term rental investor, a lot of the times, you’re going to be handing off that property to a property management company. I mean, you might do the self-management thing, but I know a lot of long term rentals do that. Then with short-term rentals, it’s so heavy into the self-management for me and then for a lot of the people that I work with and a lot of my peers in this space. It is definitely a lot more work than obviously handing it off to a property management company. Midterm rentals are kind of a really unique spot in between for both, and so I think it’s pretty low stakes to test out this approach for the medium term rental side of things, when you’re already a short-term rental host. I mean, it’s a little bit tougher going from LTR to MTR because you got to spend money on the furnishings and that’s a big investment and it’s time to set it up and everything like that.
But if you’re a short-term rental host, you’ve already got it furnished no matter what, you’re going to be running it as a short-term rental. It’s pretty low stakes for you to give it a shot and the way that I’ve done this is I’ll pick the price that I want for my short term rentals and then I’ll just apply a really big discount for anyone that books my place for 30 days at a time or more. If a typical property is going to bring in, we’ll call it $7,000 a month on the short term rental side, and I’m fine with having it as a midterm rental, I might offer anywhere from a 30 to 50% discount. Now, for me, typically medium term rentals have brought in less money than short term rentals, but they’re a lot more hands off. I find that whenever people are staying at my place for 30 to 90 days, they don’t really bother me as much for little things.
I feel like they sort of feel the empowerment of, “Hey, I can go buy my own toilet paper, or hey, they don’t have a garlic press, I’ll just go do that. I don’t want to bother them for that.” Whenever people feel like they live there, they don’t really bother me as much unless it’s an actual maintenance problem that I have. I think if you want to try it as a short term rental host, it’s a lot easier of a decision because all it takes is for you to just apply a discount and let people book you. But I’m curious, Sarah and Zeona, when you guys are doing medium term rental as opposed to short term rentals, how much of maintenance like property management maintenance with guests do you feel? Not actual physical fixing thing, but I just mean how high maintenance are your medium term rental guests? Sarah, we can start with you.

Sarah:
I find the same thing. They take ownership of the unit and sometimes they’re even leaving really wonderful things. I had one even improve the closet and say she added shelving because she was there for three months. And so not only are they less maintenance, but they’re actually improving the property along the way and they may need your help getting into the unit or have a question in the first three to five days, but then they fall silent. If they’re saying 90 days to 180 days, that’s like 80 days of peace where you’re not having to, this is how you use a cure egg, this is how you get into the unit and that’s what I like about MTR versus STR.
I just want to touch on, I think it’s really important of what you said, that you are making less money as an MTR because you bought in places that are really stellar STR markets. But some of Zeona and I’s units are in places where short term rental doesn’t really work. And so therefore, MTR is not only more because your occupancy’s higher, but it’s significantly more than it would if I was a long term rental.

Rob:
Yeah, that makes sense.

Zeona:
Yeah. And I just wanted to say because you were talking a little bit earlier about should I change my short term to medium term? It doesn’t have to be as dramatic as that because you can just utilize the strategy for your slow times. That’s what we do at a few of our places that are sometimes short-term rentals is that you’re just going, “Okay, it’s going to be winter season, that’s our slow period, let’s get someone in for three or six months just to abate some of that.” That would otherwise be only weekends, right? I like it for that. Then for people that are trying out this strategy coming from the long term rental side, one thing that we say is like, “Yeah, maybe you don’t want to spend the money to invest in furniture and ones you already own, but if you’re going out and buying new places now, it’s really hard to find long term rentals that’ll cash flow.” And so this is a great strategy for that because now even with the high prices, even with the high interest rates, you can still get cash flow in medium term.

David:
I like that it’s a hybrid. You don’t have to choose long term or short term. That’s actually brilliant during the slow seasons. You can put it on Furnished Finder or we’ll ask you guys later some of the better places where you advertise these. And when you don’t need to, just get more income, putting it on the short-term rental vacation sites, that actually makes a ton of sense. You don’t have to change anything about the property. It’s already set up to be doing both. What are some of the key considerations that people should take into consideration when they’re going to go the medium term rental route as far as being an asset manager?

Sarah:
Yeah, I love talking about asset management because I don’t think it gets some of the shiny headlines that other topics do. And I think as an investor, you have to be an investor. And so one of the things you need to keep in mind if you’re going to switch to medium term rental is that you need to have systems in place. And so if you’ve never run a short-term rental before or any furnish rental, you’re going to need a great cleaner, you’re going to need multiple handymen because these guests do expect things to be fixed. It’s probably a little quicker than you would on your long term rental. I call it my vendor list. And my vendor list doesn’t have one plumber, it has five plumbers. And so if you’re thinking about having a medium term rental, you want to build your on the ground team.

David:
That is very wise. I have the same thing because I have rental properties all across the country. Every time we get a new one or anytime we have a problem with one that exists, we add that vendor to our vendor list. Every state, I have a property, every city I have a property, I’ve got every plumber that we’ve used in the past, every handyman, the person that can hang a door because you don’t want to be going online and looking for a new person every time you need something because you didn’t take five seconds to throw them on your spreadsheet when you had them. That is a very, very good little quick tip there to mention. Zeona, what about you? What do you think when it comes to being an asset manager? What’s some advice that you can give our listeners?

Zeona:
Yeah, so when we were at BPCON, this was great. A person in the audience came and talked to us later and she was saying that they own an 8-plex and that most of the units were two bedrooms, but they had a couple that were one bedrooms and the two bedroom units would rent really fast long term. They had no problem with that, but then these one bedrooms would be hard to rent. They couldn’t really get tenants for it and they were struggling and they looked at each other and they were like, oh my god, this MTR deal now there’s going to be so much demand for these one bedroom units because they’re perfect for this strategy. There’s so many nurses that want to just live alone or a digital nomad or somebody that’s doing a renovation in their house or whatever. It can be great for a couple or just a single person.

Rob:
Yeah, I’ve had every single one of those at my medium term rentals. I’ve had families that were wanting to move to that specific neighborhood. A lot of people, especially in LA, I mean it’s expensive to buy a house out there, right? A starter home out there could easily cost six, $700,000 up to a million dollars just to get into something. It’s a lot of money. And so a lot of people want to go and stay in the neighborhood and feel like, okay, hey, do I like it here? Do I actually want to spend the money in a neighborhood like this? I’ve also had people that were traveling nurses, I’ve had groups of traveling nurses stay at my place. I’ve had people that were remodeling their kitchen for an HGTV show that they were like couldn’t really tell me too much about, but they’re like, “It’s a famous show, I’m not allowed to say anything.” And I was like, well, I gotcha. I got blackmail on you because you just told me but…

Sarah:
Was it in Denver? Because there’s a series about build my sex room and I feel like that’s what they were actually talking about.

Rob:
You know what? Let ask some of the…

Zeona:
Wow, David’s face was priceless. He was not expecting that.

Rob:
Cut back to that.

David:
That sounds like…

Zeona:
Build my dungeon. [inaudible 00:26:10].

Rob:
I’ve had a lot of different people stay at my place. Formerly, I thought that families were my favorite people to host in medium term rentals. I would say that perception has been crushed by my last set of guests that were families that stayed there for a long time. I will say in my experience, medium term rentals have brought a little bit more wear and tear than a typical short term rental. Can you guys talk about that, Sarah? Have you ever had anyone in your guest that was… Sorry, have you ever had anyone in your house that was a little bit harder on your home in a 30 day stay than you would’ve with five sets of guests in the short term rental side?

Sarah:
I think that when you allow pets for your medium term tenants, you’re opening yourself up to more damage. I definitely have replaced a couch and a rug because of pets and so that’s a consideration you have to make. I know that Zeona has made the decision to have no pets, which is brilliant. Then I just have found a way to have a great pet fee, a pet deposit as well as a security deposit, and so that’s the money that covered the cost of replacing those items.

Rob:
Yeah. What about you, Zeona?

Zeona:
I actually think short-term rentals are harder on the home just because people are kind of turning in and out so much and they’re more like vacation vibes and they don’t care as much and there’s a little bit of that hotel, oh, it’s not my place. I think when people are there a while, they have a little bit more pride of rentership. They like having their home a certain way, they might actually take care of it a little bit better and we don’t have as much damage because they’re not moving furniture in and out like they do in long term rentals. One thing I wanted to mention as an agent myself, I figured David would like this, is that I’ve had so many people moving to the area and then being able to either refer them to an agent in that area or take them on as a client myself when it’s local. I actually think it’s like a secret sauce for agents.

David:
Yeah, I like the point you made. If I was to ask Rob what his biggest complaint was with short term rentals or the biggest detriment to the business, my guess is it would be the freaking partying. The people that come in, they book it for six people and they bring 20 and they throw a huge party on the last day there, they trash the house because they don’t live in their own filth and then you got to go clean it up. But that’s not going to happen in a medium term rental because they got to live in their own filth if they try to do that. No one throws a party at their house, they throw it at somebody else’s house. By making it a medium term rental and making someone live there by nature, they’re going to take more care of the property. And that’s one of the reasons I’m getting into that space because I think you’re eliminating one of the biggest complaints that you’re going to get from short-term rental operators is the parties.
The other is going to be the fact they get held hostage by the guest. Oh, the coffee machine didn’t work, the thing didn’t happen, I need a big discount. You’re not as likely to do that if you’re staying there for three months of your life, it’s awkward. You don’t want to get a bad relationship with your landlord. You’re willing to get a bad relationship with your hotel host that you’re only staying somewhere for three days. I love that you’re not really losing a ton of revenue, but you are eliminating a huge part of the headache of the short term rental space. I wanted to switch gears up. Actually, do either of you have a comment you want to make on that point before I ask the next question? I saw you nodding your heads.

Sarah:
I think of one of the things that I like about this strategy is its less barrier to entry for a lot of investors. So investors out there that have been nervous about short-term rental regulations or just the constant turnover and cleaning and coordination of guests. This strategy is really great for that type of investor. If you’re looking to make more cash flow from your units that you already own or units that you’re about to acquire, this is a really great strategy that isn’t as much work as a short term rental.

Zeona:
I’d like to say that they just do stuff that other guests won’t, like short term rental guests, they won’t change a light bulb, they won’t go get batteries for the remote. There’s things where they’re like, yeah, …

David:
There it is, the batteries.

Zeona:
… we’re a team. We’re living in this home. They’re happy to contribute a little bit more and we save a lot on supplies because they leave a lot of stuff. They might leave really nice shampoos and conditioners or they buy extra of things, and so we’re not having to replace as much in the supplies department.

David:
Thank you. All right. I’ve been dying to ask this question the whole time. I’m sure somebody else is thinking the same thing. When I’m converting something into a medium term rental, how many bedrooms ideally do I want to go for and how do I know if more is better? If I have the opportunity to take a property and turn it into three one bedrooms or two units and one of them has one bedroom, one of them has two bedrooms, what are some factors you would take into consideration when determining if you want a three bedroom medium term rental or a one bedroom medium term rental?

Sarah:
My units are all two bedroom and one bedrooms. I like the smaller units. I find that they’re actually, at the beginning I found that they were less attractive to other buyers. Most people are wanting a bigger unit. If you’re buying a duplex, they’d love a three, two on each side or a two one on each side. I was able to pick up these multi-family properties that are all one bedroom, one bath, and then the cash flow from them are amazing. Does that mean that a three bedroom doesn’t work as a medium term rental? Not necessarily. I just am targeting two bedrooms and one bedroom units.

David:
And so before we move on to Zeona, what is it about the two bedroom that like who’s going to be renting that out? What’s the avatar of tenant?

Sarah:
Yeah, so it’s really interesting. While most of my tenants are traveling nurses, you’re going to see a lot of different tenants. I have a friend Sylvia, who’s investing in Waco and she only has rented to construction workers. Then I have a friend near an Amazon facility and they’re all housing seasonal Amazon workers. And so there’s a lot of other tenants out there that aren’t traveling nurses. In addition, I’ve also housed people going through a divorce or doing a kitchen remodel. And so while most of my tenants are traveling nurses and that gives people a feel for, you should buy an MTR near a hospital, know that their MTR tenants of all shapes and sizes.

Rob:
Yeah, I wanted to say that I actually put my parents home on Airbnb a couple years ago and they were like, basically, my mom got relocated to San Antonio and so my parents’ house, she would basically go back and forth every two weeks or every three weeks because of how the job worked out. And so my dad would go there with her because he’s a romantic, and so their house would be very empty. And so I was like, “Hey, let’s put it on Airbnb.” And it’s in a town called Pasadena in Texas, which is not necessarily a touristy place. It’s actually where a lot of refineries and oil rigs are. Like if you drive to Pasadena, Texas, it’s miles and miles and miles of giant tubes coming out of the ground with smoke, and so it’s not really a tourist destination per se. And so when I told my parents, I was like, “Let’s just do it. I think it’s going to work.”
And they’re like, “Why would anyone stay here?” And I’m like, “Well, let’s just see.” We actually ended up getting so many month long bookings from refinery workers, from refinery workers that were coming in from all over Texas and the company was paying a housing allowance, so they would just split the place, and my parents were making two, three, $4,000 depending on the month on these medium term rentals. It was a lot of money. That’s a lot of money for that specific house because they paid it off, and I think they bought it for a hundred grand or something like that.

Sarah:
If I can, I just want to add that if you’re listening to this and you’re thinking, could my property be a medium term rental? You can list it on Furnished Finder for $99. It’s not a booking site, so no one has the ability to book it and you can just put feelers out there. You can put in the listing description that these are unfurnished photos, but the property will be furnished or you can even use stock images. Just make sure that you’re honest in the description that furnish photos are to come and you can start to get feelers out there and what a cheap way to get a feel for your market and do some research.

Rob:
That’s a great tip. That’s a really great tip. A lot of people stumble on that one too because they’re making this multi hundred thousand dollars investment, 2, 3, 4, $500,000 for a house and like, “Oh, I don’t know. Am I going to make money? Am I not?” Then it’s like, hey, spend 99 bucks on Furnished Finder and they’re like, oh, yeah, I don’t know, 99 bucks. Don’t know if I can swing that, and it’s like, come on. Just it’s like it’s fine because I had the same struggle I find with people that don’t want to buy rental house on AirDNA or whatever. Sorry Zeona, I didn’t mean to cut you off.

Zeona:
[inaudible 00:34:47].

David:
Well, now that Zeona has had Sarah answer very thoroughly and Rob answer very thoroughly, now you have to try to find the crumbs that might’ve been missed and you’re like, okay, where can I contribute here? So don’t feel bad if they’ve already taken your answer, but what’s your feedback on how many bedrooms someone should be looking for in one of these units?

Zeona:
I also really like one bedrooms and it’s for a similar reason as Sarah, Sarah’s bought in a multi-unit, so she’s got a quad and duplex. But for me, I’ve bought a lot of condos and so the one bedroom condo is just a less popular product. People if they’re going to go out and finally buy a property, they want two bedrooms or more. I found that you can get a lot of discounts, it’s great opportunity to get in there. I actually really love that. A lot of investors hate condos, so it’s kind of nice to just have a different avenue if you’re looking at it differently, you’ve got a different lens. Then I was going to say that digital nomads are people that I see a lot in the two bedrooms. My partner and I are digital nomads and it’s always like, okay, where are you going to work? Where am I going to work? Because we’ve got to have some separation when we’re on calls or podcasts or anything like that. And so it is nice to have two bedrooms when you’ve got that kind of situation.

David:
I think that’s a brilliant strategy, especially in a hot seller’s market when you’re just like, I can’t get anything. You guys are both agents, so you’ve seen what that’s like when we’re in a bit of a nice little pause right now, thank God, where you can actually, buyers have an opportunity to get something for the last eight years. You’re like, oh, I have 70 buyer clients and I put one in contract every month. It’s terrible. But in this strategy, like you said, Zeona, it’s a condo, people don’t want them as much. It’s a one bedroom condo. People don’t want those as much. You actually can make that work and you can go after a motivated seller when everybody else is having a hard time getting a property at all. So I love that, especially in that situation.

Rob:
Yeah, this is very enlightening to me because as a short-term rental investor, one bedrooms are very rarely on the docket for me. I mean, it’s just a non starter for me, all I really want these days are 3, 4, 5 bedroom pluses. I mean, I own one bedrooms if it’s a tiny home and that’s the specific gimmick or the marketing niche that I’m going for, no problem. But a one bedroom condo is something that I wouldn’t even look at no matter how cool it is because the way I think about it is partially beds and heads, but also how much can I actually gross on a one bedroom place?
I am curious, I think you guys mentioned that you book for, you said you only need four every year and you’re doing three month bookings at a time. Is there a specific strategy that you employ whenever you’re trying to get a three month booking? Because for me, a lot of my midterm stays usually start as 30 days stays. Shout out to your book, but they will typically transform to 60 or 90, sometimes 120 days. Is there anything that you do to get longer bookings? Sarah, we can start with you.

Sarah:
Not necessarily. I have it listed on Furnished Finder and like I mentioned, I’m near a large hospital complex, so a majority of my tenant base are traveling nurses and their contracts are 13 weeks. That’s my clientele. I don’t think there’s anything that I’m doing on Furnished Finder in particular to attract them. But I know that Zeona, you have a different strategy when you’re listing on Airbnb as far as the timeframe that you have open.

Zeona:
Yeah, so when I have medium term only places, so there’s some places that I have that can be short term, but then there’s some cities like Denver and Boulder where you can’t do anything less than 30 days. If I’m doing something like that, then I only open my calendar five weeks out. And the reason for that is that I am fine attracting just one month stays, but I don’t want a lot of vacancy in there. I don’t want somebody to be able to book with a three week gap that I won’t be able to fill.
You have to be a little bit strategic about it. And I don’t let people instant book, I have them make a request because what I’ve found is a lot of these people are driving, they might be going to Austin next or whatever and they have their car with them. And so they might come out two days early or two days later. And so you can massage those dates so that you don’t have as much vacancy. I thought it might be interesting to go into the numbers of a one bedroom condo I have. Would that be helpful?

Rob:
Yeah, definitely, because I wanted to ask about analyzing these things.

Zeona:
Yeah, so last year, so it was March 2021, which was super high time. It was really hard to get anything not over asking and everything. It was just very competitive. I had a friend who just was breaking up with her partner and she was like, I’m thinking I might go look for a one bedroom apartment, I’m not sure. And so I thought, okay, let me just take a look at what’s here in Boulder, and I found this great little one bedroom that just totally renovated and she wasn’t interested in it. And so I was like, okay, maybe I’ll just buy this and maybe I can have her rent it from me or something like that.
And so I bought it for 255 and my PITI, it’s 1250. And so with that, I could probably rent it long term for about 1,250 to 1,400, something like that. But with a medium term, I can get 2,400 and that’s kind of the normal price. But because it’s also seasonal, a short term rental in June, I can get 3,000, in July, I can actually get 4,000. And so I’m actually okay with these one month stays that they can actually make us a lot more money.

Rob:
Yeah, that’s awesome. Generally speaking, I believe it, I mean, for the most part in my mind, they’ve always outperformed long term rentals. And like I said, they really aren’t even in some of the areas that I’ve seen them or done them not terribly far from the short-term rental income either, but I have a very specific formula for how I analyze short-term rentals. Zeona, when you’re actually in the throws of analyzing your medium term rental, is there any kind of formula or process that you take to do so?

Zeona:
We both talk about analyzing them like you would a long-term rental actually. You only have to add in a couple more lines because there’s just not as many expenses as the short term rental. You’re including utilities, you’re going to have to budget for furnishing, but it’s really not that different.

Rob:
What about you, Sarah?

Sarah:
Yeah, that’s the exact same. There’s three things that increase your upfront renovation costs, includes furniture, your utilities increase, and then the best thing is your rent increases.

Rob:
Yeah, I had a student who has a place out in Anaheim and like you were saying, Zeona, it’s like they have the regulations out there too, so she does it 30 days at a time. And she says that when she’s buying her property, she’s typically doubling what a long-term rental is and she’s starting there. Obviously, that projection is like a long-term rental, medium-term rental, short-term rental. I think she said on a long-term rental, she was making, or I wanted to say it was like 2,500 to 3,000. She was budgeting for a medium term to be anywhere from five to 6,000. Then if the regulations allowed it, a short term rental would probably be like eight to $10,000.
And so she says anytime she doubles what the long term rental is, and that’s just a quick rule of thumb, obviously, it’s not going to apply across the board, but she’s been getting that pretty consistently and she starts with doubling it and then she’ll go and basically just run comps on the market and stuff like that. But curious if there are, when you’re doing any kind of tools or anything like that, is it AirDNA or All The Rooms or Mashvisor? Are any of these big platforms for short term rentals usable when you go into the strategy? Or are you just going straight long term analyzation strategy?

Sarah:
There is a resource for medium term rentals, it’s called Furnished Finder. It’s the same place that we list our units and it’s where a lot of traveling nurses look, but they actually have a really robust statistics page. It’s Furnishedfinder.com/stats, S-T-A-T-S, and you’re going to get a lot of that information there. What happens then is then I have clients that come to me and they’re like, “Okay. Yeah, but what do I do with this information?” And so that’s when you really have to put your thinking cap on and you have to think, okay, what’s my population in my market? Like 30 inquiries this year for a two bedroom, one bath in my zip code, is that enough for my unit to stay vacant or so I stay occupied or is that not enough? And so I can’t give a number that works for every market across the country. That’s where investors really need to put their thinking cap on. But I really like that resource because that’s where you’re going to get your tenants.

David:
That is an incredible resource. I just typed it in when you said that, and I typed in the city of one of the houses where I’m looking to put one and it shows in the last 12 months that they have had 127,000 searches for housing requests in that area and map and property listing page views of 730,000. I would imagine those are pretty solid numbers. That’s a lot of people looking for a house. Probably all I need to know is say yes, let’s move forward with putting an offer on that property.

Sarah:
Then look at your competition in that area, and you’ll see that, I mean, I don’t want to PAFO on anyone, however, there’re really ugly units on Furnished Finder. And so you don’t have to be as beautiful a STR as what Rob does. You just have to beat out your competition. I like to use the analogy, if a bear is chasing, you don’t need to be faster than the bear. You just need to be faster than your friend. And so when you’re looking at Furnished Finder, you don’t have to be the most beautiful unit on Airbnb. It’s a lot easier to be the most beautifully decorated unit on Furnished Finder.

David:
It shows you how many total rooms are available for rent. It shows you how many houses are available for rent. It tells me that this city ranks 148 in the entire state of California. This is very, very good information.

Rob:
David just became the ambassador for Furnishedfinder.com.

David:
Well, you don’t only have to pay for it just showed up right there, but that’s that. When you’re an agent and you’re working with a client who’s trying to figure out, should I buy this property? They have all this what if going through their head, that’s a very solid security blanket that you’re getting that this is how many people are looking to rent a space where you’re at. I mean, it’s pretty cool that it’s easy to find that information that it’s not behind a bunch of paywalls or that it’s not accurate.

Zeona:
The other thing about Furnished Finder is like if you search it as a client, so you just put in whatever city you’re in and then the number of bedrooms that you’re looking for, it just pulls it up on the map and you can search right around there what people are actually charging per month because they have static rents listed there. It’s not like Airbnb where you’re seeing a nightly rate, but every night could be a different price and it’s hard to understand that data. I find it really useful that sometimes I just get curious and I’m like, “Okay, what does San Antonio look like versus Omaha or something like that?” And you’ll find that certain states just don’t have really high medium term rental rents yet and their pricing is still too high. You’ve got to find ones that have the right margin, but you can do a search around the US really quickly.

Rob:
Yeah. We’re going to hit the deal deep dive here in a second, but I have a couple of selfish questions before we move on because I know a lot of people probably are wondering this at home. And so when you go to the medium term avenue, I’m curious, you’re going over 30 days a lot of the time. So that sort of takes you out of the short term rental laws and regulations that might protect you in that aspect. When you’re renting to people 30 days at a time, does that require a lease? Is a lease a standard operating procedure for both of your businesses? Sarah, we can start with you.

Sarah:
If they are booking outside of Airbnb, then I am setting them up with a lease.

Rob:
Within Airbnb, you’re not simply because Airbnb has a trust and safety team that can have your back?

Sarah:
And they don’t really like it when we move guests off the platform.

Rob:
Oh no. I mean, if you have a guest that books on Airbnb, let’s say for 90 days, is it fair to ask them to sign a lease in addition to that reservation on Airbnb?

Sarah:
Oh yeah, great question. I have not done that. I find that the protections within Airbnb keep me protected. But if they’re finding me on Furnished Finder, then I’m setting them up with a lease.

Rob:
What about you, Zeona?

Zeona:
Yeah, so I also don’t do it, but I’ve heard people in California specifically being worried about squatters and evictions, so you could. If you’re worried about it, just add that extra layer of safety. I know that Airbnb is trending more towards these longer stays, so they’ll probably be putting in more automations. I’m hoping to see that coming forward where they’ll have, this is the guest name, let’s just put it in this pre-made lease, and then it’s just electronically signed. I think that it’s like the old days of short-term rentals that there just wasn’t any software before and you had to do it all yourself, and then now there’s so many companies that you can pay for all these automations. I think we’re just a little bit behind still for the MTRs.

Rob:
That makes sense. I don’t do it when I do it on, I really primarily do the medium term rentals on Airbnb and I’ve always felt the same way, Sarah, like the trust and safety team there, for the most part would probably have my back on those types of issues. But I am starting to lean more towards just adding that extra step of having a lease sign that sort of has basic protections like, “Hey, if you damage this or this or this, this is what we would charge.”
But I guess the other thing for me, like I said, the wear and tear has been a little tougher, and Zeona, I know you said that, you think the short term rental wear and tear is a little bit tougher. Honestly wondering, do you have any other cleaning procedures that you do on a property? Because one of the things that I’ve been working towards as of this last stay is that I actually want to have a cleaner come in every single month that a guest is there, do either of you have any beefed up cleaning procedure for your medium term rentals?

Zeona:
I try to have a day in between. As much as I hate vacancy, you can, there’s enough demand to have people check out at 10:00 AM check back in at 3:00 PM and just have a whole new guest. But I’ve just found that when it’s been six months, you don’t know what you’re walking into. And this is part of the reason why I stopped using or allowing pets is that we just say, “Hey, let’s just do a day in between.” And that gives them enough time to assess anything, maybe get the handyman over if we need any of that, and then just do a deeper clean.
One thing that we do, I have Hospitable, I don’t know if you use that for auto messaging, but we can use it in our medium terms as well. And one of the messages that goes out like day three has the cleaners information in it. I’m not currently requiring it because I just don’t want to have to pay that. Even though you’re passing it on, it’s money that you couldn’t charge for rent. If it’s an extra 200 bucks a month, I want to get that as rent. And so what I do offer is the cleaners name, what their rate is and their phone number and they can reach out to them if that’s something they want.

Rob:
Yeah, that’s a great system. I actually think, I’ve had people ask for my cleaner and they’ve used them in the past.

Zeona:
Totally.

Rob:
But I think just after this last guest, I’m telling you, man, they were really, it was a family and look, I’m a family… I got kids, I know what kids do in the house and I’m like, right, I get it.

Zeona:
It’s hard.

Rob:
Yeah, I show some grace to families, but they really stained all of my carpet and I had to get something to come and steam clean all my accent chairs and it was like a whole thing. One of the systems I’m putting in place is just asking for it like, “Hey, happy to book you for more than 30 days. Just note that every 30 days, there will be a new cleaning fee.” And from the people that I know that are in the medium term space that have been doing it, they said that they haven’t had any pushback on that.
I’m going to start doing that simply because honestly, I stayed at my place immediately after that family. Thank goodness I did, I mean, my cleaner did not relay what they were supposed to. I actually had to let them go because of the condition that the house was in. But had I not stayed there, I would not have caught all of the different things that I had to fix. It was supposed to be a 14 day vacation, actually ended up being more like a 12 day vacation, because the last two days were just us touching up magic, erasing the walls, hanging things up again, putting a new baseball. It was like a whole thing. But Sarah, do you have any cleaning procedures or anything like that on the medium term side?

Sarah:
One tip I got from another investor that I now implement is I have my listing photos printed out and laminated and those are given to the cleaner or put in a utility closet. That’s why they’re laminated. If there is a utility closet, it goes in there. Otherwise, they’re just emailed to the cleaner. Because one of the things that’s kind of my pet peeve is that I worked so hard to decorate the units really beautifully. I own a company that does this for a living, and yet during the cleaning turnovers, they’d put the throw pillows in the wrong room or the chair is a weird way. And so to make things easier, I give my listing photos as well as pretty explicit instructions to the cleaner on what to do.

Rob:
That’s good. Yeah, the laminated photos is probably really helpful because theoretically, you would think, oh, they can just look at the listings or the photos on the listing on the phone, and I’m like, they probably don’t do that. I actually also, I didn’t do that, but I just created a whole new checklist specific for medium term rentals when it comes to cleaning, because I found that not only with the medium term rental, you’re not just up keeping the inside of the house, but it’s also the outside of the house. I was walking around my home and everything is dusty, there’s dead leaves everywhere and it’s just a little bit tougher to maintain that.
Usually, in short term rental guests, we come in, we can clean that stuff up, we spot it a lot faster. But when a cleaner is there for a medium term guests, they’re really focused on the inside. Now, I think we’re just going to turn it into a deep clean for every single guest and basically make it a two day thing just because when I have families in there for 60 to 90 days, obviously, it’s pretty tough on everything. That’s it for my selfish questions. David, do you have any other selfish questions before we move on?

David:
No, I think that they’ve done a very good job being gracious guests, answering all of the selfish questions that I have. I guess maybe my last one would be outside of Furnished Finder, which was very helpful, are there other resources that you would recommend that a medium term rental investor should be familiar with?

Rob:
That’s a softball right there.

Zeona:
Our book.

Sarah:
Well, thanks for asking David. We recently wrote a book called 30-Day Stay: A Real Estate Investor’s Guide to Mastering the Medium Term Rental. And I know that you would like an online resource, which we’re really excited because our book really walks through every single piece of buying an MTR. So someone could pick up, hear about real estate investing, know nothing about cash on cash return, and then pick up our book. All thanks, Rob.

Zeona:
You got it.

Rob:
Yeah, I just got this in the mail yesterday. I was legitimately stoked. Mark my words, everyone at home listening, this is the next book I’m going to read.

Zeona:
I love that. Well, we’ll check back in because that has a lot of our personal stories in it. We just wanted to make it a little more fun and so we’re going to quiz you later. We’re going to be like, “What do you know about Philippines?”

Rob:
Please do. Please. I want you to. I want you to check in on me in two weeks. I don’t know if I’ll be through it in two weeks, but I’m going to work my way starting tomorrow. I’m going to [inaudible 00:54:25]. I am.

David:
Yeah. Rob’s list of books he’s going to read is like Leonardo DiCaprio’s list of ex-girlfriends. There’s always a new one that he’s like, ah, this is the next one I’m going to read. They just get cycled through, don’t they Rob?

Rob:
That’s true. But I never say which book I’m going to read. I just say I have a list of books. But this one I got it and then I also got Real Estate by the Numbers, so I’m trying to…

David:
This girlfriend is special.

Rob:
Yeah, well, I’m telling you these 30 day guests that I just had or these 90 day guests, they really put some bruises on old Rob here. I’m like, all right, I need to really step up my systems game on the medium term rentals I think. I’m working through that right now simply just for the sake of educating people and how to do it correctly.

David:
Well, I’m glad to hear that, and I also want to publicly tell you thank you for all of the bruises you take for us on that Scottsdale property. You’re my offensive line and you absorb all of that so it doesn’t get to me letting me sit back here in the pocket like Tom Brady and make my throw, so thank you for that, Robbie.

Rob:
Amen, I’m here to make you shine my friend.

David:
Ladies, I know we’re going to talk about it later, but where can people go if they want to get a copy of that book? Does BiggerPockets have a landing page set up specifically for it?

Zeona:
They do. It is Biggerpockets.com/pod30. And if you use Sarah or my name, you can get 10% off and Sarah’s with an H and my name is Z-E-O-N-A. You’ll see it in the show notes.

David:
While you’re there, you might see another book that you like because BiggerPockets dominates the publishing world in the space of real estate, which means that Sarah and Zeona have basically entered into the hall of fame before they’ve even sold a copy. If you use the name David or Rob, you can also get 10% off any other book in that entire bookstore. Here’s my recommendation, buy all of them, put them on a bookshelf and then tell everyone you know, this is the next book that I am going to read and never read it, and you can be as cool as Rob Abasolo.

Rob:
Here’s my recommendation, use promo code Rob, not promo code David.

David:
Yes, I will give you that home field advantage. All right, we’re going to move on to the next segment of our show. This is the world famous Deal Deep Dive. In this segment of the show, we dive deep into a particular deal that our guests have done. Sarah, we’re going to start with you. Do you have a deal in mind that we can ask you questions about?

Sarah:
Yes. I have never talked about this deal on a podcast, so you’re hearing it here first.

David:
Ooh, behind the scenes look. We’ll ask you the question so you won’t have to go through the whole thing here.

Sarah:
Okay, cool.

David:
First question, what kind of property is it?

Sarah:
Duplex, a side by side duplex.

Rob:
Nice. Question number two, how’d you find it?

Sarah:
My investor-friendly real estate agent.

David:
There you are. Question three, how much was it?

Sarah:
210,000.

Rob:
Question four, how did you negotiate it?

Sarah:
Not well, no, I’m just kidding.

David:
That’s funny.

Sarah:
They asked for 210 and I wrote a check. No, I did get, what did I get? I got brand new roof, I got a brand new roof, brand new windows and some closing cost.

David:
I said they were an investor friendly agent, not a negotiation friendly agent, David.

Sarah:
Yeah. No, just kidding. But yeah, no, new roof, new windows throughout. I was very excited about that.

David:
That’s pretty good, especially with the way that insurance is working these days. Sometimes having those amenities can keep your insurance low because if you’re investing, this is not related to your thing, but just as a public announcement here. If you’re buying anywhere that bad weather is, insurance is insane right now. I recently bought a house to South Florida. The insurance quote was $26,000 a year for insurance on a short term rental. Making sure it has a new roof and new windows can significantly decrease your expenses. Thank you for sharing that.

Rob:
Wow. Wow.

David:
All right. How did you fund this deal?

Sarah:
I had an equity partner and they got a conventional loan.

Rob:
Awesome. And what did you do with it? Was it a flip, BRRR medium term rental?

Sarah:
The inherited tenant on one side, he is still there and kicking and he’s a long term tenant. Then the vacant unit, I did some renovation and furnished it and it is a medium term rental.

David:
All right. What was the outcome of this deal?

Sarah:
The inherited tenant is under market paying 625. Market value is about 900. If I didn’t do anything to his unit, but if I improve his unit, I could probably get 1,200, 1,250. And then for my medium term side, without doing much update to the kitchen, I am getting 1,900 a month.

Rob:
Yeah, I saw that coming. I was like, I know it’s going to be more than that. That’s awesome. Congratulations. I assume once the inherited tenant leaves, will you want to do some work and then turn that into a medium term?

Sarah:
I will. Normally, I’m really liking this kind of hybrid model. A few of my duplexes are medium term on one side and long term on the other. It provides some stability. For those more risk adverse investors out there, that’s a really good way to sleep well at night knowing that you have a long term tenant on one side and also get me through the winter. Frankly, I just didn’t have bandwidth this summer to do a big renovation, and now that it’s winter in Iowa, I’m not going to mess with vacancies and renovations, so I’m going to wait until the spring.

Rob:
Yeah, that’s cool. My house in LA was the trifecta. I had a studio underneath with the long-term tenant. My tiny house was short-term rentals and my main home was a medium term rental.

David:
Wow. You hit for the cycle.

Rob:
I’ve done it all. What lessons did you learn from this deal?

Sarah:
Yeah, lessons I learned are, spend money while it’s vacant. There were some repairs that I was like, oh no, I’ll wait until that thing breaks. Then of course, four weeks later, it broke in the middle of a medium term tenant being there. And so if you have the time, money, and energy, just go ahead and improve some of the systems when it’s vacant.

David:
All right. On this deal, who was your hero?

Sarah:
The investor friendly real estate agent. He sends me great deals. I send him a text message exactly what I’m looking for, letting him know I’m a 100% committed to buying, and then within days, he sends me a deal.

David:
All right. I’m going to send him a copy of my book Skill, which he can find at Biggerpockets.com/skill so he can learn how to negotiate better for you and get a better review the next time you do a Deal Deep Dive and more clients, but good job [inaudible 01:00:56].

Rob:
And if he uses promo code Rob, he can get 10% off as well.

David:
Yes. Please make sure he knows that. We need to figure out some way to get Rob some value to be given in this situation. That’s 10% Rob, right there. All right, Zeona, same question. Do you have a deal that you’d like to go over with us?

Zeona:
Sure. I already went through one, but I’m happy to do another. Let’s go for it.

David:
We’ll go through the questions quick and you can just repeat the stuff that you already said and if there’s new stuff then we’ll expand on that. Question number one, what kind of property is it?

Zeona:
It’s condo.

Rob:
How did you find it?

Zeona:
Well, I found it myself on the MLS after that girl got out of her relationship. It’s perfect.

David:
You are an investor-friendly agent yourself.

Zeona:
I am.

David:
I suppose you used a stellar investor-friendly agent to find your own deal, right?

Zeona:
Yes, myself.

David:
There’s a line in Braveheart where the guy says something like in order to converse with his equal and Irishman is forced to talk to the God Almighty or something like that. That’s what it reminds me of. In order to get an agent worthy of my level, I had to use myself to find my own deal. All right. How much was this deal?

Zeona:
It was 255, but it was listed for 265 and I still got it under asking. Then when you’re a real estate agent, you actually get their commission back, so it was even less than that. Yeah, I would think I got 7,000 back at closing.

Rob:
Very cool. And how’d you fund it?

Zeona:
I just got a regular loan. This one actually was sitting on the market for two weeks because it was a non warrantable condo, which just means that there’s not enough owner occupants in the building, which really common in Boulder. And so nobody could get a loan on it, and so it would have to be a cash only deal. I just jumped on the phone and called everybody I knew until I found one that would say yes. Sometimes you just have to be persistent.

David:
That’s right. And what did you do with it?

Zeona:
Furnished it right away. I was lucky enough that I was selling another condo that was a three bedroom Airbnb and she needed to get rid of all of her furniture really fast. I sent my friend over and she picked through the furniture and then got everything we needed for the one bedroom.

Rob:
Very cool. And what was the outcome?

Zeona:
Yeah, it’s a great rental. I had somebody move in that was renting. I owned the unit two doors down, so she was renting it from Airbnb and was like, “Hey, I’m going to extend.” I moved her over to this unit and she stayed in it almost a year and it was at a 16% cash on cash return. I was feeling really happy about that, and then she bought a property from me. So win, win, win all around.

David:
That’s exactly right.

Zeona:
Chicken dinner.

David:
When you make your living within real estate, you get those multiple wins out of the same deal. I live with that.

Zeona:
It’s good. Yeah.

David:
All right. And who was your hero on this deal?

Zeona:
Okay, so the whole time I was doing this deal, I was in Maui, and so this deal was in Boulder, Colorado. And I had to have an agent on my team go, check out all the furniture, moved it all in, staged the whole place, get it ready for my tenant. All of that happened from Amy, so she’s amazing.

David:
All right. Thank you very much for sharing your information on your Deal Deep Dives. Those are incredibly helpful. And remember everyone listening, you two can do more deals with the help of BiggerPockets. Simply click on resources and you can find agents that can help you find properties and other vendors that can be the hero on your deal.

Speaker 5:
Famous Four.

David:
All right, moving on to the last segment of the show. This is the world famous, Famous Four. In order to avoid the confusion that I have frequently brought on YouTube, we will start by having Sarah answer and then Zeona answer each of these questions because I can see how this could get out of hand. Question number one, what is your favorite real estate book?

Sarah:
My favorite real estate book is Raising Private Capital by Matt Faircloth.

David:
Lovely book. Matt is also a lovely man. We just got to see him as San Diego. Zeona?

Zeona:
My favorite real estate book lately is Profit Like the Pros. Ken Corsini wrote that one for BiggerPockets and I think it’s really fun for people that are new and want to learn about a bunch of different strategies to figure out which one is theirs. It’s such a fun read where you’re just like, “Oh my God, I want to do that. Oh my god, I’m so inspired by this.” It’s a lot of cool case studies.

Rob:
Awesome. I mean, if you use promo code, Rob, then you get 10% off, which is awesome. Great. Favorite business book, we’ll start with Zeona this time.

Zeona:
Gosh, I always get the same one, so I’m not going to do that this time. I think Traction is a really good business book. Yeah, let’s go with that one, Traction.

Rob:
Sarah?

Sarah:
I like Made To Stick, which is under by Dan and Chip Heath. It’s why some ideas survive and others die.

Rob:
Oh, all right.

Sarah:
It’s really good.

Rob:
Okay, question number three. Sarah, whenever you’re not out there dominating the medium term game, what are some of your hobbies?

Sarah:
I travel full time. I’m actually calling in from Bangkok, so I think it’s four in the morning in the future. And I own an events’ company, so now I actually get paid to travel, which is dream job.

Rob:
Very cool. What about you, Zeona?

Zeona:
I love water sports, so I grew up in Maui and I’m actually in Maui right now. And so I love surfing, paddle boarding, anything in the water, snorkeling, all of it.

David:
Are you anywhere near Kihei?

Zeona:
I am in Kihei as we speak.

David:
Really?

Zeona:
The other day I actually paddled out and Brandon and Josh were there. So guys, if you want to stalk the BP guys, just come out here and start surfing.

David:
Yeah, that’s where I have a couple condos out there. Not too far away from where Brandon lives.

Zeona:
There you go.

Rob:
Batman themed condos.

David:
Are the whales out there right now?

Zeona:
Not yet. They come in a few weeks. By the time this airs, it will be whale time.

David:
It’s super cool when they come, you could just look out there and they’re just everywhere jumping out of the water. Very awesome. All right, my last question. What sets apart successful investors from those who give up, fail or never get started, Sarah?

Sarah:
Being coachable. I think when you are stuck in your own ways and unwilling to change, especially with the changing market or Rob in your case, like changing tenants and tenant demands, you are not going to succeed. So you have to be coachable, trainable, and flexible.

Zeona:
I think it’s important to be uncomfortable and be okay with that because it means that you’re growing. And so it’s like being in new groups, putting yourself out there, just like trying new things. Being scared a lot. I like to say that I’m scared of everything and I’m just constantly trying and doing it anyway. And so I think that’s important to be uncomfortable, get used to it.

David:
It’s uncomfortable or comfortable paddle boarding around whales, but that is something that is also very cool.

Zeona:
It’s scary actually, but beautiful. They’re huge.

David:
They are. Yes. I mean, everyone knows whales are big, but when you actually see one when you’re in the water, it’s bigger than you can picture.

Zeona:
Like under your board.

David:
Yeah.

Zeona:
You’re just like, holy man.

Rob:
Awesome. Well, lastly, can you tell us where people can find out more about you on the internet? And just a friendly reminder to everyone at home to go back and listen to episodes 553 and 563 for more interviews with our awesome, awesome guests today.

Zeona:
I can be found at Zeona McIntyre, Instagram’s probably the best place and you can DM me there and I respond to all my DMs.

David:
Can you spell that for us, Zeona?

Zeona:
Z-E-O-N-A, McIntyre’s M-C-I-N-T-Y-R-E.

David:
And if you think that ZMac would be a cool name for Zeona, please DM her.

Zeona:
Everybody wants to give me a nickname.

David:
ZMac. I just feel like it’s such an opportunity that like God blessed you with. And if that was me, I would insist that everybody had to call me ZMac. [inaudible 01:08:38].

Sarah:
David, what’s your nickname?

David:
I don’t have one. I have such a basic boring name. How do you make something cool out of David Greene? Right?

Sarah:
Hi, I’m Sarah Weaver. There’s not a lot of nicknames there.

David:
Zeona doesn’t realize what she’s got, right? We’ve craved our whole life to have a cool name like that, and I’m just like a white bread.

Rob:
My parents had the foresight to name me Robuilt, so this is not an issue for me.

David:
Very, very nice. If my name was a spice, it would be flower. That’s how boring it is. All right, Sarah, where can people find out more about you?

Sarah:
My website Sarahdweaver and my Instagram is the same thing, Sarahdweaver.

David:
And can you spell it for us?

Sarah:
S-A-R-A-H, D as in David, Weaver, W-E-A-V-E-R.

David:
Thank you very much for that. And Robuilt, if people want to find out more about you, where can they?

Rob:
Oh, they can find me on YouTube at Robuilt, on an Instagram at Robuilt and on my birth certificate at Robuilt.

David:
Not Robuilt underscore, not Rob.built, not underscore Robuilt. Please be very careful, everybody is getting hacked these days and stealing money, so do not send any of us that’s on this show money. The jerks that are out there that are doing this are probably watching this episode. They’re probably making fake profiles for Sarah and Zeona as we speak and they’re going to be hitting you up asking if you want to donate money to their cause. Please don’t do that. You can find me at Davidgreene24 and message me there. You can also miss me on the BiggerPockets platform or YouTube at David Green Real Estate.
All right, this has been an amazing episode and I appreciate you guys for sharing such useful information. A lot of the time people want to just kind of say, ah, here’s the gist of it, buy the book to get the rest. You didn’t do that. You gave us very good stuff. If you’ve shared this much on the podcast, I can only imagine how much good stuff is actually in that book. So head over to Biggerpockets.com/pod30, use the name David to get 10% off and forget that Rob’s name even exists. Zeona, any last words before we let you get out of here?

Zeona:
I just really appreciate being here. Thank you guys. We’re excited to get this info into people’s hands because we do really think it’ll help them.

David:
Sweet. Sarah?

Sarah:
Reach out if you need anything. We love hearing from people. It really means a lot. As Zeona said, we read all of our DMs and we love it when you guys reach out. So reach out to us on Instagram.

David:
And Rob?

Rob:
Oh, go buy the book. Go buy the book. I’m excited. Beat me to reading it. I don’t know if you can. I’m starting tomorrow. Tomorrow’s the day, my book diet.

David:
Beat Rob to reading a book’s the lowest bar ever set…

Rob:
That’s very true.

David:
… in history of bad kind. All right, thank you very much ladies. We appreciate you. We’ll let you get out of here. This is David Greene. For Rob, definitely not a library Abasolo signing off.