Tony Robinson (04:06):

But where we do invest, we’re looking in Branson, Missouri, we’re in Pigeon Forge, Tennessee or in Joshua Tree in the Smoky Mountains, we’re looking near Zion National Park. We’re trying to find these places where the main economic driver is vacation and tourism because if that’s the case, then they have a vested interest in making sure that they protect to some extent the short-term rentals that are in that market. So, anyway, that’s the first thing I look for is to make sure that the policy support short-term rentals.

Tony Robinson (04:33):

Now, when it comes to the actual property, when it comes to the actual property that I’m looking at, I think what I look for is going to vary from market to market, but ultimately, the only thing that’s really important to me is that I’m able to get the return that I’m looking for, and everyone’s going to have a different level of cash on cash return that they want. Some people are going to be fine with 10 to 15%, some people want 30%, but whatever that number is to you, I would let that dictate my decision on whether or not to buy a property. In Joshua Tree, we have a ton of properties that are relatively small. We have a bunch of studios and tiny houses in Joshua Tree. In other markets, we have four and five bedroom properties because that’s where the return was better. So, every market is going to kind of have a sweet spot in terms of size of property that allows you to maximize your return.

Tony Robinson (05:20):

Now, once we actually own the property, we’re going to do whatever we can to make sure that it’s profitable so we’re going to focus on the design, we’re going to focus on the amenities, we’re going to operate it to the best of our ability. But when actually evaluating a property, the only thing I’m really looking at is what kind of return can I get back for that property.

Robert Leonard (05:36):

Do you find that it has any correlation to bedrooms, bathrooms, anything like that, or any specific amenities?

Tony Robinson (05:43):

Again, it’s going to vary. When we first started investing in short-term rentals, Tennessee’s Smoky Mountains region was where we started investing, and we did a lot of research, we analyzed a bunch of different properties, and what we found was that in that market at the time, the sweet spot for buying properties was that four and five bedroom count because you were able to maximize your revenue, but the price points weren’t nearly as high as like a six, seven or eight bedroom. Right? So, it’s like you got this maximized revenue where if you bought a four or five bedroom, you can do 50 to 75% more than a two or three bedroom, but you’re not paying 50 to 75% more for the property. And once you get into like the six and eight bedrooms, you’re paying double the price of the four bedroom, but it’s not going to do double the revenue if that makes sense. The sweet spot in that market was the kind of four to five bedroom count.

Tony Robinson (06:31):

Conversely, in Joshua Tree, what we found is that there’s a large number of folks that travel in small groups in Joshua Tree. Right? We get a lot of couples who just want to go hike the park together and things like that. So, the smaller properties have kind of been our sweet spot in that market. The way that I would analyze this is whatever market it is that you’ve decided on investing in, take a little bit of time to analyze properties at each bedroom count, and what you’re going to start seeing is if you analyze three one-bedrooms, three two-bedrooms, three three-bedrooms, three four-bedrooms, three five-bedrooms, eventually you’re going to see some trends in terms of what kind of returns you can get, and that should kind of help you at least make the decision of which size is the kind of prime size for that market.

Robert Leonard (07:11):

How are you determining if it’s illegal in that area, and not necessarily just legal or not, like yes or no, but also kind of the laws and regulations? I know I’ve tried to look into that a little bit myself, and it’s kind of been a nightmare, to be honest. I had a hard time finding it. So, I’m curious, how do you do that process?

Tony Robinson (07:27):

If you’re close enough, I would drive into city hall, whatever government body is in charge of regulating the short-term rentals, and I would ask to speak to the person in charge of that and just ask them, “Hey, I’m looking at buying a short-term rental. What do I need to know?” And more often than not, they’re going to be able to share pretty much all the information you need. So, that’s my favorite way is just going into the place where it’s happening, talking to someone in person, and getting that information firsthand.

Tony Robinson (07:52):

We’re looking at buying a hotel in Big Bear Lake. It’s a lake town here in California, and as soon as we were kind of looking at some properties out there, literally the first property that we went to, as soon as I left, my next stop was city hall up there to tell them, “Hey, we’re looking at buying this property. Help me understand what we need to know if we are to purchase on that.” And a lot of times, the folks at city hall are appreciative of the investors that want to do right. So, more likely than not, they’re willing to share.

Tony Robinson (08:18):

Now, if you’re not close enough to drive, most of the times, if you type in city name plus short-term rental permit or short-term rental ordinance, you can find a lot of good information on their websites as well, especially if it’s a more mature vacation rental market. If you’re going maybe into the sticks somewhere, or a place that’s a little bit more rural, or doesn’t have a lot of short-term rental activity, might be a little bit harder to find that information online, but most kind of mature vacation markets have that stuff laid out pretty clearly. And if you can’t go in, in person, you can’t find it online, pick up the phone and give them a call, and hopefully you can get in touch with someone that way.

Robert Leonard (08:51):

You don’t have any problems investing in California? You’re okay with kind of the laws and regulations and just general real estate environment there?

Tony Robinson (08:59):

California gets a bad rap, but I think that’s more so on the long-term rental side. It’s a very tenant-friendly state, but the folks that stay in my place are only there for 24 to 48 hours on average. The average stay duration across our entire Joshua Tree portfolio is like 1.8 days. Right? So, they’re in and they’re out, and we’ve had instances where we’ve had to escort guests off the property, and all we have to do is call the sheriffs and say, “We own this property. This guest is a short-term rental guest. They’re refusing to leave. I need your help to get them out.” And cool, “We’ll dispatch somebody to get them off the premises.”

Tony Robinson (09:33):

A lot of those issues that you get California with the long-term rentals don’t necessarily apply to the short-term rentals because those tenant-landlord laws haven’t taken effect because the stays are so short, but I mean, from a vacation and hospitality perspective, California has a lot to offer. Right? California has a lot to offer. I think that there’s still a big opportunity and a lot of the markets in California from a short-term rental standpoint to buy properties at a decent value and get a pretty strong return.

Robert Leonard (10:00):

How do you think about seasonal areas? Are those areas completely off limits to you? Do you need something that can go year-round, or are you okay with seasonal as long as the numbers pencil out?

Tony Robinson (10:09):

When it comes to seasonality, I think my preference is markets that have kind of a, I guess, less swing of seasonality. Most of the markets we invest in, they never go vacant for like months at a time. Even in Joshua Tree which is a desert region, it gets triple digits daily during the summer, we’re still not empty during the summer months. Right? People are still coming to our properties and booking nights. We’re just charging significantly less than we do during peak season. I mean, I haven’t quite experienced… For example, I know some short-term rental operators that literally shut down their short-term rentals for four to five months out of the year when it’s off season, and then they turn it on for six months and that’s where they make all of their money.

Tony Robinson (10:50):

I don’t think that’s quite the approach that we’ll take. I think we’ll always want to operate in a market that has some level of year-round draw, an attraction, just to make sure that we’re best protecting our cash flow for those properties. But hey, I know some people that open up their properties for six months and make a killing, right, and they’re only working half the year and that’s what they want. But for me, I do like a little bit more steadiness of the income.

Robert Leonard (11:12):

How’d you get comfortable with buying out of state? You mentioned you live in California. How’d you get comfortable with buying your first property out of state?

Tony Robinson (11:20):

I got comfortable buying my first property long distance because I was forced to. When I got my very first investment property, this was back in 2019, I was working a full-time job. I had limited capital. I knew I couldn’t invest in California because at the time I was trying to buy long-term rentals and everything in California didn’t pencil out. So, I knew I needed to go somewhere outside of where I lived, and I ended up landing in Louisiana. I was like, I don’t know, two, 3000 miles away from where I lived, and through that process, it forced me to build a team and implement certain checkpoints into my business that allowed me to operate remotely.

Tony Robinson (11:57):

I BRRRRed a property. My very first investment property was a BRRRR. So, I had to buy it, rehab it, place tenants from a distance, and when that distance is there between you and your property, it really forces you to build the right team around yourselves. I found a contractor that came highly recommended from my lender. I would literally FaceTime him or someone on his team every Friday that would walk me through the property. I found a really good property manager. I flew out there, interviewed like three to four different property managers in person, found one that I liked, and I did this before I even closed on the property. I was really trying to build my team so that way I knew I’d be able to manage it remotely. So, for me, it’s the people and it’s your processes that should give you the confidence to be able to manage remotely.

Tony Robinson (12:40):

Now, unless you’re planning to self-perform the work, especially in the world of short-term rentals, right, if you’re going to be the person cleaning your unit, if you’re going to handle most of the maintenance requests, then yeah, maybe it makes sense for you to buy a property that’s close to you. But if you’re looking to do this at scale, right, and you want to have a relatively large portfolio, you’re not going to be able to do those things to yourself so you’re going to have to hire a team anyway. What difference does it really make if the property is 30 minutes away, or three hours away, or 3000 miles away? If you build the right team, you build the right systems and right processes, that’s what’s going to allow you to build an actual business and manage remotely.

Robert Leonard (13:15):

Do you go to the properties before you purchase them? And then once you purchase them, do you go to them frequently?

Tony Robinson (13:21):

If it’s a turnkey property, we typically do not go to them before we buy them. The only properties that we’ll try and get eyes on beforehand are rehabs. So, we’ve been rehabbing a lot of properties just because of where the market’s at, that’s kind of where the better deals are. Those, we’ll get them under contract, but before we close on those, I’ll typically want to see them and kind of walk it with my team to make sure that we’ve got a good idea of what the rehab’s going to cost us.

Tony Robinson (13:44):

But if it’s a turnkey property and we don’t need to rehab it, I can do all pretty much everything I need to do virtually. Right? So, I’m going to send my agents. I’m going to send a property inspector. Maybe I’ll send my handyman. I’m going to have them do all the little nitty-gritty things with making sure that it’s a good property to buy, and then all I have to do is take that data back, run it through my analysis, make sure the numbers still work, and then I’m ready to move forward with it. It’s just the rehabs that we typically really want to kind of see to make sure that we can execute the business plan we want to execute with it.

Robert Leonard (14:12):

Do you go to the properties frequently once you own them?

Tony Robinson (14:15):

Very rarely. We do try and hit our Tennessee properties at least once a year. So, each property we’ll try and spend a little bit of time at, and we have some properties where we have the second home loan in our own name, and those ones are supposed to get about 14 days a year personal use. So, we try and hit the ones like that. But outside of that, very rarely do we step foot inside of the properties once they’re up and running because we don’t have to. Any issues, our cleaners are pretty good about notifying us of those issues, and anything they miss, your guests might let you know. Right? Very rarely do we actually have to step foot inside the properties.

Robert Leonard (14:47):

So, you’ve determined which type of properties you’re looking for and where you want to buy them. How do you analyze a short-term rental? What is your deal analysis process?

Tony Robinson (14:57):

When you’re analyzing a short-term rental, there’s really two pieces of information that you need, right, as with any type of property that you’re analyzing, but you need to know your projected income and you need to know your projected expenses. On the projected income for a short-term rental, there’s three pieces of data that kind of make up that property’s income. I guess four if you want to get fancy with it, but three at a basic level. So, the three basics are your average daily rate, your occupancy, and your income from cleaning fees. Your average daily rate is on average what you can expect to charge a guest over a 12-month period. Your occupancy is over a 12-month period what percentage of the time do you expect your property to actually be booked, and then your cleaning fee income is again over a monthly or a 12-month period how much revenue do you expect to generate from your cleaning fees?.

Tony Robinson (15:45):

I include the cleaning fees as income because on platforms like Airbnb and Vrbo, you actually do charge your guest a cleaning fee, and that money is included in the payout that you receive from those platforms, along with what your guests paid for their nightly stay. So, cleaning fee is recognized as income.

Tony Robinson (16:02):

And then a fourth thing, I know some hosts that they’ll have snacks, additional snacks, and waters and other amenities in their properties, and they’ll charge guests additionally for using those. Some hosts have, I don’t know, like in Joshua Tree, maybe you have like a Jeep at your house and they can rent the Jeep or whatever it is. If you have any ancillary services you offer, that’ll be a fourth thing, but the main three, ADR, occupancy and your cleaning fee income.

Tony Robinson (16:25):

And then on the expenses side, it’s the same thing with any rental really. Right? Your utilities, insurance, your principle interest, taxes, and principal taxes and insurance payments, your cleaning fees because you do have to pay your cleaners from that money that you collect from the guests, and then any repairs and maintenance. Those are the things that I’m typically looking at when I’m analyzing a property. You boil all that down to get some sort of cash on cash return for that property.

Robert Leonard (16:50):

How do you estimate what that average daily rate is going to be, and then also, how do you estimate your vacancy? If you don’t own a property in that area, you’re going there, what are you using to get comfortable with those numbers?

Tony Robinson (17:02):

There is software out there that can speed this process up for you. Probably those, some of the two biggest players in this space are PriceLabs and AirDNA, and both of those platforms allow you to essentially punch in an address and it’ll give you a bunch of comparable listings around that property that you can then use to gauge what your potential ADR and occupancy might be for a property. So, that’s the easiest, that’s the fastest way. Another way to do it is to just literally open up Airbnb and say that I’m trying to buy, I don’t know, like a two-bedroom property in wherever, like Winston-Salem, North Carolina, and I would go into Airbnb ,and I would plug in two-bedroom, and I’m going to look on the map around where this property is that I’m looking to buy, and I just want to try and find other comparable properties and see what their ADRs look like over the next 30, 60, 90 days, and that’ll kind of help give me a better idea of what my property might be able to charge as well.

Tony Robinson (17:59):

There’s the paid kind of quick and easy way, and not necessarily quick and easy, but the paid way that kind of aggregates that data for you, or the manual way that’s free where you can kind of go and start pulling some of that data yourself directly from the platforms.

Robert Leonard (18:12):

What do you see for average vacancy rates across your portfolio? Are you upwards of 75, 80, 90%? Where are you on each property, and then maybe as a portfolio whole?

Tony Robinson (18:24):

You know, actually, I don’t know across the entire portfolio. I don’t often look at the data that way. We usually look on a per property level, but I can tell you in Joshua Tree with especially our smaller properties, we can oftentimes maintain a 90-plus percent occupancy. With our larger properties in Joshua Tree, we have some three-bedrooms, those ones are averaging around like the mid-seventies so far. Same thing for Tennessee. If you look on an annual basis, most of our properties out there are a little bit bigger, we’re similar around like the mid-seventies.

Tony Robinson (18:55):

Every market’s going to be different. Every operator’s going to be different. I know some people who will sacrifice their occupancy because they don’t want to charge below a certain price. They’re like, “Hey, I have this big property, I don’t want to charge below X,” whereas us, we’re a little bit more… I guess we have a higher risk tolerance in that sense where we’re willing to kind of drop the price last minute to make sure we can kind of drive our occupancy up. There is a balance between both of those things, but on average, smaller properties in JT, we’re pretty consistently hitting 90%. Bigger properties across the portfolio, I’d say around like the mid-seventies to maybe 80%.

Robert Leonard (19:31):

I’m really surprised to hear that the rates are that high, just given you said on average people stay 1.8 days. That just seems like a lot of turnover with such a high vacancy. If you told me that totally vacancy was like, what, 40, 50%, people were staying less than two days, I’d be, “Okay, that makes sense.” But less than two days and a 90% occupancy, I mean, that’s a lot of people coming and going in that property.

Tony Robinson (19:50):

Yeah, 14 to 15 people a month easy.

Robert Leonard (19:54):

That’s crazy. And to your point about the people that don’t really worry about the occupancy rate and more so about the daily night rate is kind of me with my RV because people have reached out to me, people book the RV pretty last minute, very frequently. A lot of people book it ahead of time too. But a lot of people book last minute and I have people, they’ll see that I have two or three days open and they’re between like a week-long rental on each end, and they’re like, “Hey, can I book in between?” And I always say no. I just don’t want to deal with like a two-night rental. It’s just not worth it to me. I have people that want to do it for a week and I’m like, “Okay. Yeah, I’ll do that.” And so, yeah, it hurts my occupancy rate. I guess if I were to book those two nights, my occupancy rate would be higher, but for me personally, it’s just not worth it in that situation. So, I definitely understand kind of that other perspective from the other Airbnb investors.

Robert Leonard (20:41):

What are you looking at for your return metrics? Is cash on cash kind of your golden metric that you look for? Is that your number one thing, or do you look at other stuff as well?

Tony Robinson (20:50):

Mostly just cash on cash return. Right now, we’re still trying to target deals that have around a 30% cash on cash return. They are getting obviously increasingly harder to find, not just because of where prices have moved in the last couple of years, but now that we have this upward pressure on interest rates as well, we are being a little bit more selective for the properties that we’re buying, but that’s kind of been our baseline is we want to hit at least about a 30%.

Robert Leonard (21:12):

All the locations you mentioned that you’re in, I was pretty familiar with, but Branson, Missouri, not super familiar. Is that near Lake of the Ozarks?

Tony Robinson (21:21):

It’s on the south end of Missouri, but it’s still technically part of the Lake of the Ozarks, but not like the Ozark you think of the TV show on Netflix. It’s a little bit closer to Arkansas, but Branson has a lot of the same attractions that Pigeon Forge has, and there’s a lot of similarity in terms of construction style and just traveler profile. We had a lot of investors that we knew in Pigeon Forge that were moving into Branson as the prices in Pigeon Forge started to rise, and we’re getting kind of similar returns as Pigeon Forge. We’re still waiting on our property to be done. We have new construction out there. We’ve got two new construction properties, but yeah, we’re excited to move into that market.

Robert Leonard (22:00):

Is there enough in that market to do for people to just go to Branson or are most people going there for the lakes?

Tony Robinson (22:06):

Oh, totally. No, dude, I like Branson more than Pigeon Forge. There’s a ton of attractions just like Pigeon Forge, but then there’s again, also the lake. Right? You can get out on the water. We were there a couple months ago with our agent, he just took us on a tour of the lakes, and dude, beautiful, beautiful scenery, beautiful everything. I actually like Branson as a traveler more than I liked Pigeon Forge.

Robert Leonard (22:30):

When you’re setting the actual nightly price for your properties, this is outside of the analysis, you’ve already determined the market, the property, you’ve done your analysis, you’ve bought it now, now you’re actually setting your nightly price, do you use the same process that you used in your analysis? Do you just kind of lean on the software to set the pricing for you?

Tony Robinson (22:48):

When I’m setting the actual pricing for the property, it is a somewhat similar process, but a little more nuanced, a little more detailed. Typically, what I’ll do is I will find, I don’t know, I’ll try and get into maybe like 10 or 15 listings that are very comparable to mine, and what I’ll do is I’ll try and track their pricing month over month, and essentially what I end up with is an average price across those comparable properties for January, February, March, April, May, June, July, August, September, and throughout the entire year, and within my pricing tool, I’m able to set a base price on a month by month basis. That’s kind of how I go through the process. So, I don’t have one flat price across the year. I set up a different base price inside of my pricing tool every single month.

Tony Robinson (23:34):

The base price, just to define that is… I guess, let me take a step back. The way that these pricing tools work, these dynamic pricing tools work is you give it your base price, which is like the baseline for how it’s going to price your property, and then the pricing tool takes in all this aggregate data from the market and then it makes adjustments and customizations to your base price. Sometimes it’s going to price it up. Sometimes it’s going to pull it down depending on your occupancy, the market demand, and all these other things. Very rarely is your base price actually what’s listed on your listing. There’s always some kind of customization happening on top of it. Anyway, the base price is a really important thing to get right when you’re setting your pricing strategy because all the customizations will be based off of that price.

Tony Robinson (24:15):

Now, my base price for a property in Joshua Tree in March when it’s springtime and it’s beautiful weather is going to be very different than my base price in the middle of August when it’s 115 degrees outside and people don’t want to leave between 8:00 AM and 6:00 PM from the property. So, I set different base prices for every single month, depending on how the market is kind of moving. That’s how we set up our pricing inside of the tools.

Robert Leonard (24:41):

When I first learned about that pricing software that they have for Airbnbs or short-term rentals, I was pretty impressed. I thought that was pretty cool. I’m hoping that comes to the RV space. RVs is very similar. Short-term rentals and RVs are very similar. I’s just kind of like a niche short-term rental in a sense, but RVs are lacking on that software side. There’s no AirDNA. There’s no dynamic pricing. There’s nothing like that. So, I’m hoping that that software makes its way over to the RV stuff.

Tony Robinson (25:10):

Dude, you should be the one, man. You should be the one to break it into the space.

Robert Leonard (25:16):

I know, I know. Some people have reached out to me. They’ve heard me talk about stuff like this on the podcast before, they’re like, “Hey, I’m a developer. I know you can’t code or do anything like that. So, let’s work together.” And the thing is, what I’ve noticed is somehow AirDNA has some sort of relationship in some fashion with Airbnb to get around their terms of service, their TOS to allow them to kind of scrape Airbnb’s data, whereas if you look at the kind of like Airbnb platforms of the RV world, it’s very against their terms of service to scrape their data. So, you kind of have to be black hat for a little while to offer that kind of service. I don’t know what the solution is. You might have to just kind of go get that relationship built with the major platforms.

Tony Robinson (25:55):

Yeah, possibly. You’re a smart guy, man. I’m sure you’ll figure it out.

Robert Leonard (25:59):

We’ll figure something out. But when it comes to Airbnbs and when I talk to people on the show, I’ve had a bunch of different Airbnb hosts on here, there seems to be two camps. One is diehard self-managers, and then there are diehard outsourcers. They’re like, “I’ll never be caught self-managing,” and then vice versa. Do you tend to prefer outsourcing property management to a company like Mi Casa, or do you like to manage the properties yourself?

Tony Robinson (26:26):

Before I answer for myself, I will say that everyone’s answer I think will be unique to their own situation. Right? If you’re a super busy working professional, you’ve got a lot of commitments to your family or to your community or whatever it is, maybe you don’t have the time to manage an Airbnb because it can be time-consuming, especially if you’re managing at scale. But for us, our goal from the beginning was to build this out as a business, and we wanted to become world class at managing and operating short-term rentals so we do all of our management in house.

Tony Robinson (26:55):

Now, our team has grown a little bit since we first started. We have three virtual assistants that handle the majority of the initial guest communication. We have one operations manager based here stateside that kind of manages the VAs and deal with any escalations or things like that. Now, a little bit more of our time is focused on continuing to build the business as opposed to the nitty-gritty of the communication. But our focus was always self-managing and getting really good at that, and then if anything, I think our goal eventually is to offer third-party property management at a reasonable price to other short-term rental hosts as well.

Robert Leonard (27:27):

I just recently had Isaac French on the show, and that was back on episode 135, and he shared some of his favorite… He’s the same as you. He likes to self-manage. So, he shared some of his favorite automation tools and some of his smart home devices that he really likes, and I know you have a few as well. Share with us what your top must-haves are for smart home devices and tools to automate your management.

Tony Robinson (27:52):

For the smart home devices, we’re not super complex when it comes to that, but we get the keyless entry pad like everyone else. Specifically, we use the Schlage Encode. We like that one the most, just because it integrates really well with our property management software. We use a Ring floodlight camera. Every single one of our properties, we have between one to two at each property, depending on how big it is. And then we also just recently purchased the Minut sound sensor. We never had those before, but we just, we want to make sure that our guests are behaving well, so that way we don’t get in hot water with the county, the cities, or whoever, or the neighbors, and having that Minut sound sensor is just another way to kind of enforce that. I’d say those are the three big smart home devices.

Tony Robinson (28:30):

I don’t know if I can plug this, Rob, but we have a free downloadable shopping list. Literally everything we buy for a short-term rental that’s not design-specific, you guys can get this download for free. So, if you just go to therealestaterobinsons.com/shoppinglist, it’s literally a downloadable Excel file that has links to Amazon for everything that we purchase to get a property setup, therealestaterobinsons.com/shopping list. So, those are kind of the devices that we purchase.

Tony Robinson (28:57):

On the automation side, our PMS and our dynamic pricing tool and our digital guidebook, those are the three like pieces of software that really allow us to reduce the amount of manual communication that we have to have with guests. Our dynamic pricing tool, we talked a lot about that already, but that’s going to automatically up adjust or down adust our price on a daily basis. I still go in on about a weekly basis, kind of see how things are going and make some small adjustments to the base prices. But for the most part, all that daily price adjusting is happening without my involvement. So, that’s a dynamic pricing tool.

Tony Robinson (29:30):

Then we have our property management software. We use Hospitable. There’s tons of property management softwares out there, but we love Hospitable because of, A, it’s easier to use. Some of the UIs I’ve seen are a little clunky or a little complex. We love Hospitable because it’s pretty clean and easy and that it has a high level of automation in terms of guest communication. So, our guest get a series of, I want to say, seven or eight messages from the time they book until the time that they check out, and all of that happens automatically without our involvement.

Tony Robinson (30:00):

So, they get their checking instructions. They get reminders of how to use different things around the property. They get check out instructions. They get just, hey, I’m checking in to see how things are going type messages. So, we love that functionality, and Hospitable also has this like AI engine that can read certain messages and then automatically apply the best response to them. We don’t get too crazy with it because it doesn’t always work the best. But for example, if someone asks, “Hey, what’s the wifi password?” it’ll automatically respond to that. Or if someone asks for a late checkout or an early check in, it’ll automatically respond to that. So, there’s some really cool functionality around its AI capabilities that we liked as well.

Tony Robinson (30:38):

And the last thing we love about it is that our cleaners integrate directly into Hospitable as well. So, they’re actually able to log into the app and see all of the turns they need to make to get the property ready for the next guest. So, we never have to communicate with our cleaners about which day or time or whenever that they need to go and turn the properties. The PMS is hugely helpful.

Tony Robinson (30:57):

And then the last piece of software is our digital guidebook, and the guidebook is essentially like a set of video and written instructions for the property. It tells guests things like here’s how to use the hot tub. Here’s how to take off the hydraulic lift cover that’s on top of the hot tub. We have a stereo system in one of our cabins. It’s like, hey, here’s how to use the stereo system. Pretty much all the questions that guests have, we try to preemptively answer inside of that guidebook. That way they don’t have to reach out to us to ask those questions, and a lot of times, if a guest ask a question that’s in the guidebook, we’ll say, “Hey, we’ve actually already answered this in a guidebook if you wouldn’t mind taking a look there.” Those are the three big pieces of software that allow us to automate our business.

Robert Leonard (31:37):

How do you put together the guidebook? Is this a specific software or are you just using like Google Doc and make it into PDF? How do you guys do that?

Tony Robinson (31:45):

I’ve seen it done tons of different ways. I know some folks use Canva. Right? You can create it on the cheap with Canva. I’ve seen some people that just kind of type it up and print it out for their guests. We use a company called Hostfully for their guidebooks, and it’s just like a digital guidebook. They get a link and it’s kind of interactive. We can make changes and updates on the fly. So, we use Hostfully for ours.

Robert Leonard (32:09):

I’ll have to check that out. I do something very similar for, again, the RVs. It’s kind of my version of short-term rentals. And so, I’ve been wanting to kind of improve my process though so I’ll have to check out that site. I’m glad you mentioned cleaners. That was my exact next question. I’ve heard from a lot of listeners of the show, I’ve even experienced it myself, that finding quality cleaners is difficult or just straight out not economical for the property. So, how have you been able to find, successfully find quality cleaners for your properties?

Tony Robinson (32:38):

Cleaners are the backbone of your business as a short-term rental operator, and not having a good cleaner is the fastest way to drive yourself crazy, drive your guests crazy, and just really make it difficult to be successful in this space. Couldn’t agree more, the cleaners are super important. Now, in terms of how to find those cleaners, there’s a couple ways you can go. First is getting referrals from operators, from short-term rental operators in the market that you’re investing in. If you invest in, I don’t know, whatever, like Montana, Bozeman, Montana, I would try and find other short-term rental host in Bozeman, Montana, that would be willing to share who their cleaners are.

Tony Robinson (33:19):

Now, not every operator will be willing to share that information. Okay, me right now, my cleaners are too busy. Right? They’re not going to take on any other host. Right? But some might have that bandwidth. We actually found our first cleaner as a recommendation from another host. We had a friend who bought in the Smokies. He was nice enough to give us his cleaner’s information. She was unfortunately fully booked. She couldn’t take on anymore clients, but she had a friend who had just started her own cleaning company. She had worked at a cleaning company for like 20 years, something like that, but she decided to start her own. She was actively looking for clients. We were one of her first clients to come on, and she’s been fantastic. Referrals from other cleaners is a great way to go.

Tony Robinson (33:57):

If you invest in a true vacation rental market, a lot of times, agents, your realtor will know cleaners in that market and they can make recommendations as well. And if you can’t find it from other investors or you can’t find it from your agents, I will go online and search for the local, either real estate Facebook group, or if there’s a short-term rental, vacation rental specific group for your area, go in there as well. A lot of times you’ll see cleaners posting for work there as well. Referrals, in person, online referrals work really well.

Tony Robinson (34:27):

Now, I’ll tell you what we’ve done recently, Robert, because our portfolio has been expanding relatively quickly, and even though we had a good set of cleaners, we needed more to be able to absorb that growth. I literally put up a job ad. So, we posted on Wise Hire hotel housekeeper, and I had my lead cleaner in that market, I had her interview all these other cleaners, and we’ve been able to add lik four solid cleaners to that team from that job ad. We’re getting creative with whatever way we can to kind of scale that team and find the right people.

Robert Leonard (34:59):

Have you had any luck with kind of the Uber platforms for cleaners? I know there’s Care.com and there’s some other, like Thumbtack maybe, and there’s another one. TurnBnB I think is another one I’ve seen.

Tony Robinson (35:12):

Yeah, TurnoverBnB.

Robert Leonard (35:13):

TurnoverBnB, yeah. Have you had any luck with any platforms like that?

Tony Robinson (35:16):

We haven’t used them. We haven’t even experimented with them. I know some folks have had success with it, but I think our approach that we’ve taken is worked pretty well for it so we haven’t had to go down that route, but I think if I’m ever in a pinch, I probably use it, but I can’t speak from experience on those platforms.

Robert Leonard (35:32):

How do you reach out to the other Airbnb hosts in the area? How do you get their contact information? I’m sure you just go to their listing, but then where do you go from there?

Tony Robinson (35:40):

I mean, so for me, if I’m trying to network, I usually start online. There’s big, massive Facebook groups, tens of thousands of people for the national scene, and then a lot of times, there are smaller, local Facebook groups for whatever markets you’re investing in. So, anytime we move into a new market, one of the first things we do is we try and find Facebook groups related to that market, and in there is where we kind of start building some of those relationships and trying to find folks that way. I’ve never reached out to a host through Airbnb to ask for that information, but it’s happened to us. More people have reached out to us through our listing, and they’ll say, “Hey, if you can give me a call,” or whatever it is. So, I mean, we’ve never done it, but people have done it to us.

Tony Robinson (36:20):

I personally don’t like that approach too much because Airbnb does track your inquiry to booking rate. So, as people reach out to you just to talk about something that’s not about booking your property, it actually hurts your metrics within the platform. I don’t know how much weight that gives to your rankings, but I don’t know. I try not to do it to a host if I don’t have to.

Robert Leonard (36:39):

Some listeners of the show have indicated interest to me and they wanted me to ask you about this strategy. They’re interested in utilizing a tiny house, and I know you mentioned you had some small properties, but this is an actual tiny house for a short-term rental. They mentioned maybe buying a piece of cheap land and then building a tiny house on it. What are your thoughts on a strategy like this for Airbnb?

Tony Robinson (37:01):

I think it’s fantastic. Right? I think it’s going to maybe vary by the market. Maybe there are some markets that the tiny house play won’t work, but definitely… Let me take a step back. Right? Airbnb updated their website, their whole user interface over the summer. Right? They called it The Summer ’22 Release. It was the biggest redesign they had done through the website since they launched in 2007. In that release, one of the things they introduced was the ability to search properties by category. So, now, if you go to Airbnb, you can search properties that are tiny homes. You can search for properties that are glamping tents. You can search properties that are treehouses, you can search properties that are… There’s even an islands section. Right? There’s all these different, crazy kind of unique structure categories that Airbnb is now trying to promote to its user base.

Tony Robinson (37:52):

Airbnb, they even just recently launched like a competition where they were giving away $10 million to I think a hundred different hosts, across a hundred different hosts to go out and build these unique structures that would then be featured on Airbnb’s platform. So, Airbnb is really trying to push the idea of the unique structure, both on the guests and on the host, and I think, I’ve never been in the boardroom meetings for Airbnb, but if I have to take my best guess, I would think the reason that they’re doing this is because they know, they understand that that’s their best way to compete with the traditional hotel and hospitality industry. Right? I was looking on Airbnb the other day, Robert, and there was literally a bunker in Roswell, New Mexico that you could book on Airbnb, an actual underground bunker. Do you watch Stranger Things?

Robert Leonard (38:40):

Yeah, I’ve seen some of it.

Tony Robinson (38:42):

Yeah. So, if anyone’s seen the last season of Stranger Things, there’s a good portion of that season takes a place in this underground bunker, and that’s exactly what it looked like on this listing in Roswell, New Mexico. I can’t go to Hilton and book an underground bunker. Right? I can’t go to Hilton and book a treehouse. So, I think Airbnb understands that this unique structure is going to be their way to continually differentiate themselves, while continuing to grow the platform. To get back to actually answering your question, I think any type of unique structure, if done right, is going to be successful in that platform because, A, Airbnb is pushing those, and, B, I think it’s the one thing that guests can’t get anywhere else.

Robert Leonard (39:23):

I personally, and again, this is total opinion, I personally a hundred percent agree. I think that’s the only way that Airbnb is going to really last long-term as a business because I think when they, and I could be wrong, but I believe when they first came out, they were cheaper than hotels so that kind of drove a lot of traffic to them, but that’s not the case anymore. Hotels are pretty cheap. I even see people talk about this on Twitter all the time. They’re like, “Hey, for all those people who don’t want to do X, Y, and Z at an Airbnb, there’s this thing called a hotel that you can just go stay at.” And for me, I never stay at Airbnbs. I think the hotels are just so convenient and I just think they’re pretty affordable. I just think it’s, for me, I like them better which is one of the reasons why I haven’t got into Airbnbs heavily myself as an investment. So, I think really one of the only ways that you’re really going to win is by being unique, like you said, with all those properties.

Robert Leonard (40:13):

Now, on the flip side, I a little bit worry about that from an investor perspective because one of the best ways to generate wealth through real estate is through the appreciation of the asset. You get really unique… What is that bunker going to really appreciate? Right? It’s going to be kind of… I don’t know, and versus if you buy like a 2, 3, 4, 5 bedroom house, you kind of have some sort of appreciation profile as to how those types of assets have appreciated over time. That’s a little bit of my concern kind of, I guess, with the unique structure from an investor perspective. Would you say that the update has hurt or helped your portfolio?

Tony Robinson (40:50):

I’ll answer that question, but I just want to comment on what you said about the lack of appreciation with the unique structures. I agree with that. Right? But the way that we in our business are trying to, not get around that, but the way that we’re going to kind of combine the ability to get appreciation with the ability to build unique structures is to build them multiple on one parcel so that it’s like a hotel. Right? It’s a commercial asset, and you can then sell it based on its cap rate or the NOI, and not necessarily like that one little treehouse or whatever it is. That’s kind of the route that we’re trying.

Robert Leonard (41:21):

You don’t have to worry about comps in that case.

Tony Robinson (41:24):

Exactly. Right now, they’re just looking at what your revenue, what your operating expense is, what your NOI, and that’s how the property will be valued. Now, you can’t do that with one. Right? You probably got to go out and build like five to 10 of these unique structures on one parcel. But that’s how you can still give guests the unique experience, while also still being to benefit from the appreciation that you’re able to create which is what you’re doing.

Robert Leonard (41:46):

Yeah. Isaac French who we had on the show, I had mentioned it a few times, he did that exact strategy. He bought a piece of land. He built like seven almost like cabins in a sense, but I mean, they’re really nice. So, they’re not like these little rundown cabins, but bought this piece of land with a little lake on it, little pond, and he built seven cabins around it, built volleyball courts. I mean, essentially to me, kind of sound like he was building almost like a campground, but with cabins really.

Tony Robinson (42:10):

Right. And then you’re starting to see more and more people kind of move into that space. I’m really curious to see like 10 years from now kind of what the total short-term rental space looks like because I mean, you’re getting some really smart people moving into this space with a very high level of creativity. So, it’s an exciting time, man, and that’s the thing, Robert. We’re still at the beginning. Even though Airbnb is this massive platform now, we are still… Think about how long Airbnb has been around. 2007. Right? Think about how long hotels have been around. Right? So, it’s like in the grand scheme of the hospitality industry, we’re this far into the journey when it comes to short-term rentals. I think even if you feel like you’ve maybe missed the train and everybody’s doing it, man, you still got a ton of time.

Tony Robinson (42:50):

To go back to your other question about if the changes impacted our listings, for the most part, no, a little bit actually in the Smoky Mountains, but it’s hard to know if the change in the Smoky Mountains was because summer ’20, ’21 was just so crazy because it was the first summer after COVID, or if it was because maybe our listings aren’t getting as much visibility, but I think honestly, it’s probably more of the latter. There was so much pent-up demand after COVID that summer ’20, ’21, everyone’s listings were going crazy. Right? I had a property that did, I don’t know, like 40 grand in two months last summer, and this year that property’s probably going to do like 30. Right? So, not a huge difference, but still not as big as it was last year, but I don’t think it’s necessarily the redesign. I think it’s more so just the demand aspect.

Tony Robinson (43:37):

In Joshua Tree, we actually do categorize our studios as tiny homes because they kind of are. Right? They’re 391 square feet, and they’re really cool, really modern. So, we categorize them all as tiny homes so they do get some love from that category as well. I wouldn’t say we’ve been too hurt by the redesign.

Robert Leonard (43:53):

To your point about some real smart people and big players coming into the space, I’ve seen some real estate funds, almost on a syndication model coming into the space to buy hundreds of millions of dollars of Airbnb which is interesting because up until relatively recently, it was just kind of smaller, individual, people like yourself. I mean, you raised capital, but you’re not doing these big syndication deals. You’re just buying one-off properties here and there, but I’ve seen some funds come about. There are hundreds of millions of dollars that are buying a lot of Airbnbs. It’s really interesting. I’m curious to see, like you said, how it plays out over the next decade or so.

Tony Robinson (44:27):

Yeah. But, Robert, honestly, man, that gets me excited because now I know, not that I know, but now I can hopefully, confidently say that if I build a relatively large short-term rental portfolio, I can find one or two or three institutional investors that’ll buy it all up. Right? And honestly, we had a meeting last year where we kind of planned out what the next decade looks like for us, and our goal is that by the end of 2032, so 10 years from now, we want a billion dollars in assets under management with a heavy skew towards the hospitality industry. So, short-term rentals, unique structures, et cetera, and at that point, we’ll be in a really good position to say, “Okay, do we sell this off and make several hundred million dollars and ride off into the sunset or what do we do?” I’m somewhat excited to see the institutional money coming in because now it gives us a really clear exit strategy a decade down the line from now.

Robert Leonard (45:20):

I think overall it’s good for the industry. Are you guys primarily getting most of your traffic through Airbnb for your portfolio, or do you have success with other platforms? I know you use Vrbo a little bit. Do you do any direct bookings or anything like that?

Tony Robinson (45:34):

Airbnb’s like 80% of our traffic. I’d say the other 20% is coming from Vrbo. We just recently started working on our direct booking website. So, our goal is to have that up and running by the end of the year. So, it’s there, it’s active. We just have to kind of work out the tweaks and then really start marketing it. So, the goal is that end of Q4, we have that really up and running to full steam. I do think that there’s a huge benefit to owning your own platform for guests to book on. Right? You understand marketing. Right? What a lot of people I think didn’t understand early on in the days of social media was that you couldn’t bank everything on Instagram or Twitter or Facebook or whatever platform it was because you didn’t have control over that. Right?

Tony Robinson (46:18):

What you do have control over is if you can get an email list, if you can get a phone number, if you can get an address, those are things that you can hold forever, and even if your Instagram profile goes down, you still have whatever, 15, 20, a hundred thousand people on this email list that you can go and communicate with. It’s the same thing for Airbnb and Vrbo. Right? At the end of the day, they control that platform, and if you do something to piss them off, or even if you don’t do something to piss them off and they just make a mistake, you could still end up with your listings being deactivated or your listing being suspended, and now your ability to generate revenue goes from this to zero. So, there’s obviously some risk in that as well. We recognize that, and as our portfolio has grown, we want to make sure that we’re adequately mitigating that risk. So, the goal is by the end of the year to have that direct booking platform up.

Robert Leonard (47:03):

Yeah, that’s a massive concern with me. For short-term rentals personally, as somebody who’s not really overly invested in the space, it’s just, I see it happen on social media or YouTube or just all these other platforms where you don’t own the audience. I see it happening. So, I’m just, it really worries me. Actually, I’ve seen it happen with some friends on Airbnb too. Thankfully, it was in their early stages, so it’s not like they had a built out platform or reliance on it yet, but still, in the early days, there was just kind of a… I don’t know exactly what happened, but his listing got shut down for spam or something like that when it wasn’t. Yeah, so it just kind of put a big pause on the business. Another Airbnb related strategy, I actually saw you talk about this recently on Instagram was Airbnb arbitrage. Break down and explain that strategy for us as well as the pros and cons.

Tony Robinson (47:54):

Airbnb arbitrage is where instead of going out and purchasing a property where you have a mortgage, you’re listed on the deed, you’re the actual owner, you instead go out and you rent a property from another landlord, but instead of you moving into that property, you turn around and you list that on Airbnb and Vrbo, and then you just get to keep the difference between what your rent expenses are and the income that you generate on those platforms. Now, I will say, if limited cash flow and scaling quickly is your focus, Airbnb arbitrage is a fantastic model. Right? I know people that are crushing it, making an absolute killing, doing a great job, but there are some pros and cons.

Tony Robinson (48:32):

The cons associated with Airbnb arbitrage are lack of control, lack of equity buildup, and lack of tax benefits. Lack of control, you’re signing the lease. At any point, once that lease is over, that landlord can then make the decision of whether or not to renew your release or allow you to continue operating, or that landlord could sell the property and maybe the new tenant or the new landlord isn’t obsessed with the idea of arbitrage, or maybe they want to do it themselves, and now you’ve lost your unit. I had a friend who has some arbitrage units, and he had a bunch of units in this one guy’s apartment complex. The owner saw how much money he was making. Once the lease was up, he tried to really hike up the rent because he knew that he could afford it. My friend had to walk away from those units because it wasn’t profitable anymore. So, there there’s a certain lack of control.

Tony Robinson (49:18):

Lack of equity buildup, in terms of building wealth, building long-term wealth, equity is a huge factor in that. I’ve built up over a million dollar net worth since we started investing in short-term rentals, and it’s because of the appreciation that we’ve seen in our properties, right, and the fact that we own that equity. When you arbitrage a unit, if the value of the property goes from $500,000 to $600,000, you see zero benefit in that. Right? You see zero benefit in that. It’s the owner that gets those advantages of the equity buildup, and obviously with equity, you can’t live off of equity. So, I’ll say that first. Right? If cash flow is great, you can’t live off of equity, but equity does give you options. If you want to tap into that equity, go and buy another property, if you want to sell those properties off to go out and buy something bigger, those are the options you have when you actually own and you can leverage that equity.

Tony Robinson (50:10):

And then the last thing is the tax benefits. Obviously, you can write off all the expenses associated with running the property, your rent payments and all the other things, but a 1031 exchange, we’ve used that in our business to go from one property… We sold the property that we bought in Joshua Tree, and we turned that into two cabins in the Smoky Mountains. Right? We wouldn’t have been able to do that if we were arbitraging that unit. Right? If the owner goes to sell, it’s the owner that’s going to 1031, not you.

Tony Robinson (50:35):

Those are kind of, for me, the big three reasons why I prefer to own my units over arbitraging. But again, last thing I’ll say, Robert, is that I think eventually we will probably introduce some level of arbitrage into our business. But if we do do arbitrage, it’ll most likely be in some of the more urban or metro markets where we’re catering to more of that business professional traveler and that kind of thing, and probably do it almost more as a medium term, like a mid-term rental type thing. We’ll see when we get to that point.

Robert Leonard (51:05):

I don’t personally love the Airbnb arbitrage model myself, but it can be interesting for somebody if you don’t have a lot of capital. Right? One of the things is you’re going to buy a five, $600,000 property, you need that down payment, whereas you’re looking at usually 10 to 25% down versus this arbitrage model, it’s first month’s and security maybe. It’s a lot more approachable for somebody who has less capital. Take the pros and the cons, I suppose, maybe it’s a good way to get started, get your feet wet, get some experience, and then maybe scale up from there.

Tony Robinson (51:31):

Scale up.

Robert Leonard (51:33):

Tony, as we wrap up the show, I want to give you a chance to share with the audience where the best places are to connect with you, social media, podcasts, everything else you got going on. I know you have a cool short-term rental retreat or experience kind of coming up soon. Tell everybody about what you got going on.

Tony Robinson (51:51):

My wife and I, we’re hosting a three-day short-term rental focused event in Newport Beach, California on September 11th through the 13th. So, if you guys want to get more information on that head over strsummit.com. I’m not sure when this comes out, but we still have early bird pricing available. So, as of today, it’s $300 off the final ticket price, but amazing speakers in the short-term rental space. You’ll learn about co-hosting, arbitrage, owned model like what we do, how to rehab a property that you want to turn into a short-term rental, how to design. We’ve got lenders coming out. Literally everything you need to know to start manage and scale your short-term rental portfolio, you will learn the basics of that at this conference. So, strsummit.com. And if you guys want to keep in touch with me afterwards, I’ve got my BiggerPockets Real Estate Rookie podcast. We talk about folks getting started in the real estate space. You guys can find me there. On YouTube, my wife and I have a channel about short-term rentals, The Real Estate Robinsons, and then on Instagram, I’m @tonyjrobinson.

Robert Leonard (52:48):

I will be sure to put a link to all of Tony’s various resources and all the other resources we talked about throughout the episode in the show notes below for anybody that is interested in checking them out. Tony, thanks again so much for joining me. I appreciate it.

Tony Robinson (53:00):

Hey, I appreciate you having me on, brother. Hope the listeners got some value from this, man. We’ll talk again soon.

Robert Leonard (53:05):

All right, guys. That’s all I had for this week’s episode of Real Estate Investing. I’ll see you again next week.

Outro (53:11):

Thank you for listening to TIP. Make sure to subscribe to We Study Billionaires by The Investor’s Podcast Network. Every Wednesday we teach you about Bitcoin, and every Saturday we study billionaires and the financial markets. To access our show notes, transcripts, or courses, go to theinvestorpodcast.com. This show is for entertainment purposes only. Before making any decision, consultant professional. This show is copyrighted by The Investor’s Podcast Network. Written permission must be granted before syndication or rebroadcasting.