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If you look at the trends,
especially in the last year, the rural

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markets are doing better than a lot
of a lot of the metro markets.

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A lot of that goes into regulation
of just cities banning short term oils completely.

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The rural markets are rural mountain markets
are doing really, really, really

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well right now and I see that
continuing in the next five years. You

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00:00:19,359 --> 00:00:24,600
are listening to Carrie Letts's Financial Survival
Network, where you get valuable information you

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00:00:24,719 --> 00:00:30,039
just can't find anywhere else to thrive
in today's trying times. You need the

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00:00:30,079 --> 00:00:36,119
Financial Survival Network now more than ever. Go to Financial Survival and Network dot

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00:00:36,119 --> 00:00:42,880
com and get your free newsletter and
gift. Financial Survival Network now more than

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00:00:42,960 --> 00:00:50,960
ever, And welcome. You are
listening to watching the Financial Survival Network.

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I'm your host Carrie Lutz. Hey
who are in the first week of September.

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Are to believe time flying by rates
keep going up? Will they keep

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going higher or will they fit capitulate
that? Eli's is the question. When

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you're talking about higher rates, You've
got to look at the real estate market.

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Is that going to cause a crash? Is it going to cause a

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correction? Maybe not a crash,
but softness in the market, even in

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places like Florida where the market is
still really strong. I mean, my

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neighbor's houses going in three days still, but nonetheless sales are down, but

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inventories down. With us expert on
the topic, Alex Jarba. Alex,

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you've been doing short term vacation rentals
for seven years now, so probably what's

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going on in the marketplace isn't a
surprise to you. How many units you're

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currently running out there. Yeah,
so we have sixteen luxury units and then

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we're in the process of purchasing a
twenty million dollars I call it like a

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micro resort essentially here as well.
Yeah, oh very cool. Hey,

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so what do you see as the
pitfalls, especially with higher rates? I

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mean, in theory, as long
as the demand is still there, you're

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still getting RRS thirty forty percent,
right, So so we just we just

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underrote a deal on that. Yeah, we're just underwriting a deal yesterday with

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a partner. I was like,
those numbers don't look real, like people

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aren't going to believe them and whatnot. Yeah, but but hey, but

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you have to understand, it's not
like you know the audience you you out

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there, our community. You have
to understand that running a luxury rental vacation

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rental is not like renting out a
home or a condo on an annual basis.

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There's a lot of active management that
takes place. There's cleaning required,

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there's restocking because your towels, you
know, your glassware, your stiverware disappears

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over time, all these things and
keeping it at the right standard because right,

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Alex, you're a luxury vacation told
people don't expect a ring around the

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bathtub, do the right. So
so really to get an RR it's more

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akin to what you might in a
small business as opposed to real estate.

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But the vacation short term vacation rental
market is rumored to be hitting saturation.

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What's your experience with that? Yeah, so that the Airbnb bust thing,

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that's sort of that became popular.
That term hashtag Airbnb bust had become popular

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in the last like six to eight
months. I'm a writer for I'm the

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main short term rental vacation rental writer
for Bigger Pockets, and I'm pretty sure

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that came from one of my peers, and I for Forbes had picked it

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up and then it just it just
went crazy. And it's exactly what you

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just said. It's it's more like
a business. And that's what I've coached

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over five thousand students in vacation rentals
in the last couple of years, just

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through group coaching settings and whatnot,
and the exactly what you said that you

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have to treat it like a business. The people that it's like a combination

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of like people are saying it's saturated, but those are the same people that

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sort of got into short term rentals. When they got into they call them

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Airbnb's, they just they bought a
property because the rates were low, they

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threw it on Airbnb and they're like, okay, I'm good to go,

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like I'm done. And what's evolved
in the last I would say six months

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is and it started to happen before
there. But it's the people who are

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utilizing the strategies that I'm going to
be talking about now now is are doing

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way better than the people that are
just like thrown up a property on Airbnb.

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The biggest thing is just going multi
platform. So like when someone tells

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you I'm in Airbnb's that that's not
necessarily the right thing to say. I

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like to think that I'm in hospitality
exactly what you said. It's like I'm

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in vacation rentals for sure, But
like when I first started, there were

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no vacation rental Airbnb books out there. I lean very heavily on like hospitality

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textbooks that were like taught in universities
and whatnot that I would just purchase on

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Amazon. And just like any other
business, you're building an email list,

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but you're also going multi platforms.
So Airbnb, Vrbo, Booking, dot

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Comic, Spedia and there's like two
three. Expedia owns two hundred channels under

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them, and I look at those
as more of marketing arms to my business

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compared to just where my properties live
at. Those platforms are always going to

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be a part of my business,
but the eventual goal is to get the

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guests as contact info. And the
way we do that is we use a

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service called stai Fi, which is
a little disk that plugs into the back

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of your router and it creates a
landing page for your Internet. And just

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like you're on a Starbucks you're going
into the airport, you have to put

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your email address into get access to
the Internet. Same idea, accept it's

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branded to your company and then we
collect everyone. So so like we have

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luxury rentals that can sleep up to
sixteen eighteen people. Outside of just getting

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the guests email address, we get
everyone that's staying with us, and then

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we remarket to them through a direct
booking site. Direct bookings is sort of

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where the feature of short term is
going anywhere. And it's interesting because it's

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practically going full circle because back in
the day before Airbnb v RBO existed,

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you had to pick up a phone
to book a vacation rentals, so it's

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gone full circle. Yeah, gotcha, all right, So obtaining your clients

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info very important because when you use
the platforms, whether it's Airbnb or vrbo

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or what are the clones out there, you don't get that. It's kind

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of like the same thing putting your
your podcast up on YouTube. You know

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people are watching it listening to it, but you don't know who they are

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because YouTube, the RBO, Airbnb
consider them to be their clients, not

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yours. So you manage to get
it by various means, and then you

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create a mailing list and then I
guess, if if it's a little quiet,

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you do a special right different times
of the you know, we send

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season all emails leading into high season
and whatnot, or what if in the

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summer is coming up, sending emails
a month or two before and whatnot.

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Just the same top of mind.
Yep. But like the person renting and

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doing the short term rental, there's
a certain measure of protection that they feel

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they get from Airbnb and v orbo. If they're not satisfied, how do

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you bypass their concerns there? How
do you overcome them? Yeah, by

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by taking them off of the platform. So like they're all the guests that

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we have stayed with us initially have
come from the platform. So that's the

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key there, is to make sure
that they have a good experience with us

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when they're coming from and say,
if it's an Airbnb guest, there's nothing

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against another like people have said,
like I've said that before about like taking

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them off the platforms, there's nothing
against terms of service of capturing their info

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and remarketing to them after they've stayed
with you, it's against their it's against

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terms of service. If they're trying
to book with you initially and you're like,

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hey, here's my direct booking,
just do with that, that's an

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no. But most of the people
that are staying. All the people that

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are staying with us have had a
good experience. Who are booking with us

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again have already stayed with us through
one of the OTAs, the online travel

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agencies, and they've already had a
good experience with us. So it's it's

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a very easy sell, especially send
an a seasonal email out that's like,

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hey, you can save on your
service fees or at least partially save on

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your service fees if you book directly
with us. And like I said,

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they've already had a good experience with
us. Hopefully they've had a good experience

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or it's a it's a pretty easy
transition to get them the book with us,

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Okay, So I can see that
and been you're totally compliant, which

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is important, all right, So
going direct, going the different platforms,

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so you're on every platform out there
that exists for short term rentals, yeah,

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and I mean beyond short term rentals, like and that's the other trend

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that's happened as well. I said, like you're in hospitality because Marriott has

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their own platform now four like villas, they're on the luxury side. Booking

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dot Com obviously got into the business. I forgot when, but they really

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ramped up their platform on the vacation
rental side. Same thing with Expedia.

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I mean Expedia was never in it. So all these bigger players are getting

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into it, especially seeing Marriott Marryott
was like sort of the Ahama went for

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me a couple of years back,
and just the amount of work that they've

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put behind that. Yeah, it's
just it's it's really interesting to see that

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evolve. Okay, so so you
got choices, you're not just locked in,

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but how to how to customer complaints
get handled to here Alex in terms

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of on the direct booking side or
just when you directly booked them yourself.

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Yeah, right, So the biggest
thing is the insurance pieces Like Airbnb vrbo,

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the online traveling chiefs they cover,
they have a blanket insurance policy.

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And there are companies out there.
I mean I can plug a couple right

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now, like Safely and superhug that
essentially offer not essentially they offer the exact

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insurance that Airbnb vrbo uses. So
that's number one. Other customer complaints.

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I mean it just goes directly through
the platform. So like we use a

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property manager software called host Away.
There's twenty thirty different softwares out there,

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just like any other if your multifamily
or whatever, the snow manager, emailager

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softwares. Yeah, all all of
those complaints are all those things are fed

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through either through a phone number or
through the direct booking site or through email,

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and then it's fed through our property
manager of software, which is then

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handled with our team. Gotcha all
right? Well it sounds interesting, So

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hey, we're the best markets to
be buying now. I like to invest

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in mountain markets that aren't ski resorts
like Ski Resort area, so they mountain

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markets tend to be a little bit
less seasonal. You're looking at the Blue

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Ridge Mountains, the Spokey Mountains.
I want to do something on the West

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coast next year, or at least
a larger project on the West coast,

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but right now I'm tied to like
the mountain markets where they're not historically known

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as like ski resorts, because they
tend to be a little bit less seasonal.

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Cabin in the woods in the winter
is pretty picturesque, but you also

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have your high season in summer in
full. So I love mountain markets.

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And there's hundreds of these pocket markets
throughout the whole country. It's like a

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lot of times there's smaller towns,
they're a little bit more rural. If

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you look at the trends, especially
in the last year, the rural markets

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are doing better than a lot of
a lot of the metro markets. A

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lot of that it goes into regulation, like of just cities banning short terminals

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completely. The rural markets are rural
mountain markets are doing really, really really

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well right now, and I see
that continuing in the next five years and

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whatnot. So a unit in a
rural market, how much would it cost

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to acquire and what kind of what
kind of cash flow can you get on

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it? Yeah, so let's talk
about my first one. So my very

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first real estate project slash own like
own. I mean, I'm I'm a

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licensed real estate agent here, I
don't practice anymore. But my very first

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real estate property that I own was
an eight hundred square foot a frame that

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was a ground up development from nothing, which apparently is not normal to have

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your first investment be a ground up
development. But that very that very first

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one that we built, uh six
seven years ago. Now that one cash

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flows after death service and everything.
Last year at cash flow of fifty four

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thousand dollars. So that's just one
and then we ended up building multiple ones

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of like almost practically the same house. So, I mean, the cash

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flows are absolutely ridiculous. How much
there to cost? How much did that

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cost to buy? Or how much
we yeah goodbye? Now, prior to

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COVID the construction costs, so I
attack like thirty to forty percent to the

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numbers that I'm about to say right
now, all in land cost. We

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did get a second home construction loan
to build that that was only ten percent

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down out of pocket. It was
about forty forty five grand out of pocket.

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Total it was about two hundred and
fifty grand with furnishing, land and

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everything to build that first one.
Wow. So technically my cash on cash

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if you if you look at the
money ironed tested, has been one hundred

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percent I mean technically infinite at this
point, but it's over one hundred percent

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every after that first year. Yeah, very cool, all right, Yet,

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how do you find management to keep
these places clean in the clean and

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shining. Yeah. So the biggest
thing was I had the management company for

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the first seven years. I did
this so up until very recently, and

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the most important piece to that is
finding a vacation rental cleaning company that you

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can grow with a company that specifically
specializes in vacation rentals, not just like

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cleaning someone's house, because they need
to be there at a specific time and

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be out in a specific time,
so that that step number one is that

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because that the cleaning company can also
handle your maintenance or not your maintenance,

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your inventory and whatnot, which which
they did for me, and then having

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like a just a maintenance person and
just making sure that those people can talk

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to each other just through their system. So an other side to that is

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also have virtual assistance, like overseas
assistance that are ex. Marriott, Airbnb

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employees that are used to dealing with
guests on a regular basis, and if

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I can't answer a question or whatnot, like I'm not in the day to

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day when it comes to the management, but the virtual assistants handle all the

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messaging if there's something damaged. Usually
the cleaners are the first boots on the

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ground to see if something has damaged
that they're either reaching out to the maintenance

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person or they're reaching out to the
virtual assistant. If it's something like really

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serious, Yeah, okay, that's
the biggest concern often is the management and

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the cleaning services. That's what my
friends have said they've had us, so

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yeah, cleaning servisus it. Like
I said, a cleaning service that you

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can grow with that that's very important, right yeah, all right, Hey,

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well I think we got some good
insight here. We'll have you back

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on again to go more in depth. Maybe show us a couple of year

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units and show us some spreadsheets because
we love numbers on this show. You

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got a question for Alex or myself, shoot me an email kl at Carey

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Leutz dot com. The link to
Alex's site is in the show notes to

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Financial Survival Network dot com. Just
tell us your site, Alex so people,

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Yeah it's all yeah, it's open
Atlas dot Investments. No dot com

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just open outless dot investments. Yeah, that's our current offering right now.

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Great, all right, link is
in the show notes. Like I said,

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on Financial Survival Network dot com,
make sure you sign up a fear

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00:15:30,200 --> 00:15:33,320
free newsletter. Alex's been a pleasure. We'll look forward to speaking with you

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again, and good luck through this
tough environment. I appreciate you. Sorry,

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thanks for listening to carry Lets's Financial
Survival Network. Your solution to today's

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trying times For the latest, go
to Financial Survival Network dot com. Financial

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Survival Network now more than ever