Episode 008 - Different Types of Short Term Rentals: What Are They?Oct 05, 2018
Here are the books Michelle referenced in today's podcast. Note, these are Affiliate Links.
[00:00] Over the last two centuries, nearly 90 percent of the world's millionaires have created their wealth through real estate. Here to tell you how you can ride this wave with less risk and less capital, while creating greater income, is your host, best selling author and Speaker, Michelle Russell.
[00:22] Hi, this is Michelle and I'm here with a short term rental revenue podcast and today we're going to talk about the types of short term rentals that you can have. Most people, when I'm talking, I'm thinking of one type of rental and then somebody said something in a comment and I was like, oh my goodness, I have not touched on this very well. Have I? So today, I wanted to make sure I clarified. There are so many types of short term rentals. Now when I'm talking about short term rentals, I'm usually talking about an entire property. Every single one of my short term rentals are a separate piece of real estate that somebody can rent the entire place. Okay? But that's not necessarily the only type of short term rental that is out there. So I wrote down all of the different types and I spoke to a bunch of my friends, because my friends have either had those types of short term rentals or they've actually even rented some of those types of short term rentals.
[01:35] So I'm going to give you just a little touched variety on them and then I decided to do an episode on each and every one and the benefits and the drawbacks from each and every one. And I'm, like I said, I'll probably highlight both of those, the benefits and the drawbacks of each and every one. But... So here they are: the types of short term rentals that you can own and/or manage. Okay. So, um, first of all, like I said, the ones that I have are an entire house, an entire property, and that could be sometimes inside of a condominium or an apartment or a free standing home. So it can be either but it's... Or maybe even a guest house, right? But it's the entire property within that. Alright. So let's start with what YOU might want to start with.
[02:31] Let's start with a room that you could rent out of your home. So let's say your kids have left the nest and now you, you know, you have a three or four bedroom house and you're not using one of those bedrooms. If, if that bedroom has its own bathroom, I would definitely think about renting that room out. It would be an amazing source of income for you as long as your HOA allows it, right? You want to make sure that you're not going against any CC&Rs of the place that you live, but check your city and county ordinances and your state and your HOAs. That's a great place to start out. So you take this bedroom, you, if you had a bedroom of your own, let's see, that you're renting out...one of the first things that you would have to do is get a cover for the mattress so that you don't have... you're protecting it against bed bugs and you're protecting the new guests that are going to be staying there.
[03:30] You clean out all the stuff so that there's no personal stuff in there, but you can leave all the knickknacks. Um, you make sure the bathroom has, you know, the regular stocked items that you have. So you have toilet paper and towels and everything, all the clean linens and everything, um, soaps and shampoos. But it's actually a really easy place to start and you'll clean it out and you might want to put an... I'm like one of those electronic lock freaks - I love having the electronic locks because that way people can get in and out of a property, but I am not one for letting people stay in my home and having access to my home. Um, I would only do it if there was an outside entrance and it was like a Casita that had its own private entryway, regardless of whether it was attached to my home or detached.
[04:28] I would want it, you know, where people weren't inside. But guess what? A Lot of people love having a room for rent inside their home. They love having the guests. So they like do little bed and breakfast and they are like, oh, every morning we have muffins, you know, from 7:00 AM till 9:00 AM. And we do a little breakfast for all our guests and they have like little cocktail parties for them and they do all these things. It really is a unique business because it's totally up to you how you want to host. Do you want to see the people that are renting your room from you or do you not? I mean, you can literally make it where you don't see anybody. Because, with my electronic locks, I set a code from the Internet, from my phone, a unique code that starts at 3:00 when they check in and that ends at 11:00 AM when they check out - on the day that they check out.
[05:22] So I don't even have to see people. They don't even have to see me. Uh, you know, unless they want something and then I have to have it delivered. But I, I don't necessarily have to do it myself. I kind of leave people alone because that's the kind of person I am. I like to be left alone. But I have friends who love entertaining and if you love entertaining and you have a room inside your home that you want to share with other people, it's a great way to meet people from all over the world because they'll come and they'll stay with you. So you can be that kind of host. And there are a ton of people who love those types of hosts. They're like, oh, we got to learn about this and that because they'll sit and they'll chat all night long with you and, you know, share a bottle of wine or something.
[06:06] And everybody gets all crazy and personal. And (LOL) my, my friend is laughing at me because I like, I'll get crazy and personal with my personal friends. It takes me a while to warm up to people. I'm not the most trusting soul. So you have to, you have to like, I don't mind meeting people, I love people. But, uh, it takes me a while to warm up to you. I just got to know you and know who you are before I might go. Yeah, let me, I, you know, I'm like one of those people I kind of read your first just kinda like with one eye open, I don't know, but people love that I have stayed at um, B&B like that when we went to the red rock in Colorado last time for our concert and we stayed in a B&B and it was a wonderful B&B
[06:57] I'm in a really nice area and they had several rooms in their house that they rented out like that and we got in late so they had a code for the back door that we got in and were able to let ourselves into our own room and get ourselves situation situated. And in the morning I got downstairs and everybody was having breakfast, all the different guests that were there. And it was really fun. It was a lot of fun. I did not mind that at all. It was, it was, it was something new and different for me. Most of the time though, I want to rent a place where I can be alone because I'm a writer and when I'm alone, I'm blogging, I'm writing, I'm doing like right now I'm doing my podcast and stuff. I just, you know, when I'm alone, I can do a lot more things and get a lot more done.
[07:46] And um, I'm also one of those people have to get into the mode of I'm company, a company mode when I'm going to be with people because most of the time I'm used to being with my self. So, um, have you ever read the "Happiness Advantage"? It's a great book, but in there it's, it's kind of funny because it'll talk about how this scientists found that people who were lawyers, we're constantly thinking of their family time, um, in terms of the 15 minute intervals that are billable so that, you know, if they spent an hour, you know, going out to dinner or two hours going out to dinner with their wives, they in their head. We're seeing those two billable hours as hundreds of dollars of wasted time because it's hard to get our mind out of what we're used to. Well, I have that same challenge, so I literally have to get myself out of the work mind because anytime I used to be really bad, anytime I was doing something that was off the course of, you know, what my next goal was, would see it as, oh, this is taking away my time, this is wasting my time.
[09:00] I'm wasting valuable time right here. I should be doing this and this should be doing that. So now I allotted time for different things. So a lot time for my family and my friends and my colleagues and my work. So, um, once I read that book, it really helped me see that, you know, I wasn't really taking any time away from anything except for, in my head. It was my own head that created that, that stress that I was, I just created that stress all myself. So when I went and did that, um, B&B, I saw the advantage of relaxing and chatting with people that I didn't know. I mean, that's a lot of fun. Um, when I traveled to different countries, I think it's a little more easy for me to slide into that because I'm, I'm already in the travel mode and I'm already going somewhere.
[09:51] So I always, I already am in that. But when I'm at home, it's much more difficult place for me to get away from the work thing because I'm like, oh, I've got to get this done, this done this done and my office is inside my home. So it's harder. But anyways, um, you can rent the whole room and it's nicer with a private bath, but it doesn't have to be a private bath. It can be a shared path that they use. Um, but imagine then the problems and challenges of a shared bathroom. So if you have two guests in there or if you have, let's say a teenage son who sharing a bathroom with somebody, you know, what problems could arrive if you had somebody sharing a bathroom. So just kind of think things through, a lot of times it's just thinking it all the way through what could possibly go wrong here and just make the rules and regulations, your house rules and regulations to avoid those possible pitfalls, right.
[10:51] Just make them like that. So you can do the same with the Casita or a guest house. A guest house can be attached to your house and have its entry from within your house or it can have an entry from the outside of your house and or both. And you can shut that off, right. And um, it could be maybe just a bedroom or a bedroom with a bathroom or bedroom with a bathroom and a little mini kitchen or a bedroom and bathroom, a big kitchen or on that big, but you know, a mini kitchen have a miniature size kitchen as opposed to like a, you know, just maybe, uh, have you ever seen those setups inside the hotels where they put a microwave and a mini fridge, they call that a mini kitchen. I think of a mini kitchen as a tiny little stove and maybe a microwave.
[11:46] And a sink and a little, a little or fridge but not a mini fridge. So it just depends. I mean there's as many different houses as there are, are pretty much as many different B&B types and styles that you can have. But um, it can also be like the Casita that um, we have as our example for our business is a Casita if has its own living room, a little kitchen, its own little bedroom and a bathroom. And so it's like a mini one bedroom apartment in. It's just a Casita or you can have an entire house. And a lot of our places in Florida, that's what those are. There are two bedroom, two bath or three bedroom, three bath places we'd like to have in our rentals, we like to have as many bathrooms as there are bedrooms if at all possible only because in the living room area there's a pullout already on most of the.
[12:45] The couches have a pull out bed. So if you have a two bed, two bath, there's a pull- out there that actually makes it almost like a three bedroom, two bath anyway. So we like to have as many bathrooms as you possibly can because think about this, if you went to on vacation, you went to Florida or you went to Disney or universal or something with your whole entire family and everybody got their own bedroom, wouldn't you? Everybody want their own bathroom as well. You don't want to be sharing a bathroom with, you know, your cousin who had an allergic reaction to the Mexican food that they ate last night. So you want your own bathrooms. And so we'd like to have properties that have as many baths as we have bedrooms, but you don't have to do that. I mean you can do work with what you have, you know, just work with what you have.
[13:35] And I just personally liked that. And so since I like it, that's what I look for. And you know, since uh, I had five kids. I know what it's like to have a lot of kids. So I know what I look for. I look for a master bedroom that is separate from the other bedrooms on the separate side of the house. And so those are things that I like and those are things that I look for and qualities that I admire in a home and therefore there's just things I look for and I think that other patrons would, you know, like too. So I look for those things. And when you have an entire house, the you can do, you can actually rent out rooms. Okay. So like I said about that property that we went to in Colorado, those people had a big house and I think they had three or four bedrooms that they rented out separately.
[14:28] So it was just the husband and the wife in this big house. And they put electronic doorknobs on all of the other bedrooms and every guest got their own room with their own bath. Right. So here's the deal, you get your own bedroom, your own bath, and you're inside a house and they're giving you breakfast and access to their entire home. So it depends on how you feel about that. It also, there are people who don't live in houses who do that. They rent out entire houses. And I was talking to my friend and she has stayed in those houses. Um, she lived down in Texas and there was a flood and she had to stay at a B&B and she rented it for several months. One Room. Okay. So she had to share a bathroom with somebody else and she was telling me about the challenges of sharing a bathroom, but no one in that house lived in that house permanently or own that house.
[15:25] So the challenges that come along with that are people using the kitchen, not cleaning up after themselves, you know, not doing the dishes as well as other people do the dishes. I mean those are challenges that come up, but people do it all the time. And there are a lot of people who make a lot of money doing that. Just renting out each individual room have a place. Now imagine if you will, if you aren't in a place like Tucson or Tempe where there's a university, right? Yeah. See, because you own that house, you can rent out each individual room and maybe it's for college kids, which there's a lot of people who do that and they make a lot of money doing that, you know, six or $700 a month on a bedroom. But again, the more you know, you do those things, the more rules and regulations you're going to have to put forth at the beginning so that everybody knows, well, you know what, if you put, you know you've got a community kitchen there.
[16:28] If Joe puts his stuff there that he bought from the store, how are you going to make sure that, you know, nobody goes into, you know, makes his macaroni and cheese or whatever, right? Or Sally's not really good at doing dishes. So she does a half butt job every time she does the dishes and they're not done as well as when you know Jane does the dishes, Jane does them really well because she's super clean and every time she pulls out a bowl she's mad because there's cereal stuck on the bowl even though it was put in with a clean dishes. So you have to just be really clear about the challenges that could come up with whatever type of property you decide you, but here that there's the deal. So let's say a five bedroom house where you're pulling in $700 per room, that's $3,500 a month on a property with a five bedroom house that you might be paid only $2,000 a month on and a mortgage payment with all the utilities and everything.
[17:25] So you could be cash flowing a lot of money on that property. But like I said, make the rules, just think things through what, what would happen if, and try to make the house rules like that. Or maybe you have somebody who you put in there and they stay in one room, they get a little bit of a discount because they're going to be like a house mother or a house manager. There are to be the one who enforces the rules. Um, and that would work out really well. You know what I mean? There's all, anytime you come up with something you can come up with an idea that's going to fix or you know, amend whatever kind of challenged that you have, but so you've got an entire houses and the guest houses attached or detached, right. All the different types of room in your house with his own bathroom or with a shared bathroom.
[18:16] And I'm a, you know, a guest house with those same things. Right. So an entire house. Those are the ones that we do because I just choose to do an entire house. I like renting out. I don't, I don't want to share rooms with anybody and even when I know my kids aren't coming for another couple of weeks, like when I came here this month on my son came for two weeks and on another daughter and her boyfriend, they came for one week but they weren't all on top of each other. The first week we were here we had an extra bedroom and I would just rather keep the whole three bedroom property for the whole time I was here. So I just rented one of my three bedrooms. And just, you know, had the extra bedroom, but um, you can, you can choose the size according to how many guests are coming and for how long those guests are staying.
[19:14] And that's kind of Nice. I like that too. So, um, but I just like having the entire property to myself. So I, you know, it's just mine. It's just I don't have to worry about anybody coming in or going out or having, you know, my stuff laying out or my sons, you know, because he's got his playstation laying out and you know, this literally becomes our home again every time we come. Oh. And that's another thing that we touched on in a previous episode, but now most of your properties have a maid's closet. But out here in Florida we have something called an owner's closet and I don't, I've touched on it but I haven't really gone into it. And somebody asked a question about it. An owner's closet is a closet that locks that only you have access to as the owner. So ours is in the master bedroom and it's a big closet.
[20:13] The master bedroom has um, two closets, a his and hers and so one closet we leave open for our guests and the other closet is our owner's closet and in that closet we keep all of our personal things that we use every time we come to Florida because we come so often. It is just our things. So it's not the same as a maid's closet. It's not the cleaning supplies and the maids don't have access to it only we have access to it. So most of the time there's like some clothes that we keep in there. Um, you know, universal shirts, Harry Potter shirts or whatever, Disney shirts, things like that. We also keep movies. I'm just, they things that are our personal items that, you know, I'm a computer, I have a computer that is in there, but I also bring another computer with me.
[21:08] But things that I don't want to take back and forth to Arizona because I do drive to Arizona, but I don't like to take everything with me every time. So it's just going to be your personal items that you don't want to move and that you only need when you're here, you know. So, um, owners closets are a lot of fun. You can also put, um, you know, high chairs and things like that in there if you have like a grandchild who, you know, um, comes with you sometimes. But here's the deal, if you've got a high chair or a foldaway crib, I would put those in the regular closet and let the guests have access to those kind of items. The items that are in my owners closets are items that I don't want anybody to touch, but my myself or my family. So those are the things that go in there.
[22:00] That's what an owner's closet is. Um, maybe even, sometimes some people have a lot of food. So my favorite coffee or my, um, my vegetable, um, because I have a juicer thing. So those are things that somebody else might break that. So you know, obviously we leave the blender out and we'd leave the coffeemaker out, but not the juicer because the juicers are expensive and they're not easy to clean and they're not easy to use so you know, we and they're expensive to replace and they don't, you don't need them when you go on vacation. But I like to have it when I come. So things that only you are going to use, that's what goes in an owner's closet and the maid's closet is something completely different. Your maid's closet is going to be full of supplies, cleaning supplies and, and consumable supplies that are going to be used every time they come in and clean your property.
[23:00] And so my, my maid's closet has a broom and a vacuum. I also leave a broom and a vacuum out in the regular closet for the guest to use to have them because most of my properties I rent for a week at a time and they're not allowed to rent it for only a few days. They have to rent it week to week. So, um, I leave them access to the broom and the vacuum cleaner, but it'll have, you know, the soaps, the shampoos, conditioners, the body washes, the toilet paper, the paper towels, the garbage bags, the, um, I've got a whole entire list. So I'll put that list on a pdf underneath this episode so you can see what goes our maid's closet. Now obviously I'm not going to put what goes in the owner's closet because that's my stuff. And you're going to put your stuff in there. So it's just stuff you don't want to take every time you go from state to state.
[23:58] That's all that goes in an owner's closet. So that question, I forgot who asked that. I did write the question down, but I forgot to write the names. So I'm sorry, I forgot to write your name. I'll, I'll try to find it and then put you on another episode because I love to do shout outs for the people who write questions because I think it's a brave thing always to write, you know, to write in a question because you always feel silly. Like, oh, this is probably a really silly question. They probably don't even want to answer it, but honestly, it's never a silly question because I never touched on it heavy enough that you didn't know what it was and so now you do so don't ever think that those questions are silly. So let's see. Again, we've got all the different types of B&B and this is much shorter episode because there aren't a whole lot, but they can be anywhere to.
[24:48] Your B&B could be, you know, a destination in itself. It can be out in the mountains, up in the mountain somewhere or it could be out by lake or it could be out in the country because people want to stay in a variety of places. Not everybody wants to stay in a place like Orlando. You know, there's a lot of people who come out here and they want to go to the beach or they want to go down to the keys or they want to go just away. Right? So sometimes just being away in a new place is, is great enough. I mean, it doesn't always have to be in a place where there's a lot of things going on. It can sometimes be some other place and we see more and more B&B in the weirdest, strangest locations that are really pretty cool.
[25:34] So make your place a destination of it's own, you know, just make yours unique enough and make it the way you like it. You know, if you want to be there and you want to chat with people at night, that's a lot of fun. If you love to cook and bake, then by all means, like every morning, get up and bake your little heart out and make the best everybody's gonna, you know, just picture in your mind all the great reviews going, oh my gosh, Betty's biscuits were amazing and she made this biscuits and gravy every single morning and, and blueberry muffins and blah, blah, blah. I mean, yeah, do, what do what you love, you know, do it, is that floats your boat and what makes you happy and be that kind of hose because you are unique, your property is unique and you want it to be unique.
[26:24] You want to serve, you know, people in your way and believe me, people will love you and they'll come back for you and for your property just to be near you and your property. So anyways, that's all I have to say about all the different types of B&B's There's, I mean honestly, there could be more. I mean people have B&B's inside yurts and we do yurts in Hawaii, so you can do little tiny houses. I know people do those two. I mean there's people who like tiny places like big places, so whatever floats your boat, if you want to do it in a tent and you want to have that glamping thing going on, go for it. Whatever really makes you happy that you can't do something strange enough because I bet you it's. I can pretty much guarantee it's already been done. Somebody's already done it, you know, I've seen B&B's down in, you know, those, those missiles, shafts and stuff.
[27:20] So I mean there's some really strange locations. So what you've done, somebody who's probably already done it, but go ahead treehouses do it, whatever. Okay, so that's our episode for today. If you have any questions, please go again to our Facebook page and find it there. Leave me a private message or a message underneath one of our Q&A memes. If you want to, you can go to, um, [email protected] and you can email us questions, their prosperity processes, my company that owns the short term rental revenue podcast and the short term rental revenue.com. They also own STR revenue.com. So you can go to either one of those and visit us and please subscribe like us. Share us, leave comments. We've loved them and we are so grateful for you being a listener. Thanks so much. Have a great day. God Bless and Go and Grow.