Here are the stories and the takeaways...
Story One: Having your STR guests steal your furniture and electronics from you. Yikes! Imagine walking in and finding your place empty. How long before your unit is up and running again?
Takeaway: Only accept Guests with Government IDs and Good Reviews. Even then, there's always a chance this can happen, so make sure you have umbrella coverage to fill the gaps from Airbnb and Business Income Insurance to cover your lost revenue.
Story Two: You move into a place with really scary neighbors.
Takeaway: Real Estate Investors often talk to the neighbors before buying a property - at least two. You want to know what they know about the property AND the neighborhood. They'll tell you things that the Seller and the Agent won't.
Story Three: Troubled Young Man gets stoned and poops on your bed... gross!
Takeaway: Run a background check and take extra security measures for anyone staying in your home. It's not unreasonable to require personal references for long stays. Also, have detailed House Rules with crystal clear consequences for breaking the rules. Also, insurance, insurance, insurance.
Story Four: You're overly generous with food, unlocked supplies, and then a volcano erupts and takes your home.
Takeaway: You want to give your guests enough but not too much. Make sure your staff can keep track of your generosity. Also, don't leave food, especially opened food, for your guests. If anyone becomes ill, you could be held liable. And the biggest takeaway of all - insurance, insurance, insurance.
WHAT BOOKS, PRODUCTS, SERVICES, OR LINKS WERE MENTIONED...
Michelle says you've got to read SCRUM. She can't stop talking about it AND She says it's her new favorite business book.
You can choose to use Costco- sized shampoos & conditioners OR you can buy Hotel Sized from a variety of places online. Amazon is pretty inexpensive. Want something more "boutique-like"? Google "hotel-motel supplies" or "hotel sized shampoos" and you'll find an abundance of companies out there.
Sorry, Melanie Griffith. I thought you were Meg Ryan. But here's the movie I was talking about. Classic scares in Pacific Heights. This movie most likely scared a lot of potential landlords away from the business.
I found an alternate seller who has one for $14.95. Please use our affiliate links when you can. They help support the show. Thank you.
Get our Show Notes in a pdf form...
Here are the audiobook and movie that Michelle referenced in today's podcast, as well as the Hotel Sized Toiletries.
You're getting a free audiobook! Click to try Audible Free for 30 Days and discover the power behind reading a book a month (or more!). With audible, it's easy! Try Audible now, using our affiliate link, and you will get your first book right now for free! After that, you can pay by credit or purchase a membership. With a membership, you get 1 audiobook and 2 Audible Originals each month for only $14.95 per month. Michelle has been a member of Audible since 2006 and says it's her secret for reading so many books.
[00:01] 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.
[00:21] Hi, this is Michelle, the master of money mindset, and you are listening to the short term rental revenue podcast and in today's podcast, we're going to be talking about real life horror stories.
[00:37] Yes. These are the stories, real-life stories of people who have F- ed up. No, not always. You can't say that somebody messed up and that these things happened to them, but honestly a lot of these things could have been prevented and you'll see how so when I tell you the real-life horror stories, these are horror stories that I've either read about and I'll tell you which ones, but some are like real like friends of mine that they've happened to some art, like I've had rental horror stories that would knock your socks off and maybe I'll even tell you one of those stories, but the thing is these stories, these things happen and sometimes you can prevent them and sometimes you can't, but you can always protect yourself from them. So they're actually lessons we should say instead of real-life horror stories. These are real-life lessons and it's always better to learn from someone else's lessons than from your own.
[01:33] Right. Like it's always better to like watch a movie and go, yeah, I'm not going to do that. Have you ever seen? There's a movie called, I believe it was called Pacific Heights and it was this movie with Michael Keaton and I think I had Meg Ryan. It's an older movie, but it was about this couple who rented to this guy, the seemingly nice guy who kinda cut, moved in real fast without going through all the rental processes and then just made these people's life hell and eventually took their entire home in San Francisco. So like you rent out to a renter and or you've got a big,... I think they had a big Brownstone like we hadn't Chicago and they rented the upstairs apartment to him and they had the downstairs. I'm trying to remember this movie's old people. Anyways, if they rented the upstairs to this guy and he just started doing all this stuff and eventually was able to sue them and own the entire property and it was in San Francisco.
[02:32] So you know, it was probably a lot, a lot of money that they, that they got. But this stuff happens. This is real life stuff. So if you watch that movie, instead of being afraid of being a landlord, it should say I need to take all these precautions so that this stuff doesn't happen. Right? So these stories are here for you to learn what to do and what not to do and to prevent them from happening if you can. Okay. But really quick, before I go into that, I wanted to talk about Jasper Lee Seventeen, you are our big winner. The big winner of the Cloud Cam and Karen has been sick. This has been killing me. Like do you ever have somebody who works for you that you don't even realize how much stuff they do for you until they're gone? That's what's going on here.
[03:26] I've got my office manager has been out because she hurt her back. She's got these back challenges and she's been going through some therapy and stuff. So she's not here. So like nothing is getting done. It's like all this stuff that she does, you don't even realize. You're like, why isn't that podcast episode up on the, on the website will. Karen hasn't okayed it. She's the one who did this and this and this and you're like, wait, seriously? Like we can't, like nothing is getting done because Karen isn't here and we're all like, oh my God, so we miss you, Karen, come back, come back if you guys can go and send her like all kinds of loving vibrations and prayers and stuff so that she gets better and she gets her ass back here to work. Get your ass back here. Come back to work because we need you.
[04:16] But anyway, Jasper Lee, she's going to be looking you up. But if you could make it easier and like message us on facebook because that way, because she knows how to do all that stuff. I don't know. So if you message me while she's still out, I'll get it to you. But Karen, I think she's going to be back in work by the end of this week. She said she's gonna come in on Saturday. I just wanted to give a quick shout out to bluO2ss for leaving a great five-star review. He said, being a real estate guy myself and having interest in short term rentals and learning this model, I was pleasantly surprised when I came across the show. Thank you, Michelle, for providing some insight into the STR model. I'll continue to listen and know you'll be providing even more value in the future episodes.
[05:04] Thank you. Blu, Blu, My, My Guy Blu. Every time I hear the word blue, I always think of the. What was that old school movie? Blue. Blue. I love that. Love that movie. It would correct me on but Blu. Thank you. I got your back, man. Whatever you need to know about, just private message us inside the Facebook group or go to support @theprosperityprocess.com or even email me. You guys email me personally if you want. Like if, If there's something that you want me to know, email it to Michelle @theprosperityprocess.com and I will get to your emails. We will do whatever episodes, interest you guys, what you want to learn about. We want to deliver to you, so please, please give us all the feedback that you possibly can. Okay. We're going to start off these stories with these guys who do this rental arbitrage out of Arizona.
[05:58] They do it out of Phoenix and they are, they're really funny guys. I watch him on Facebook all the time. They probably don't know that I watch them, but they're really funny guys. And um, rental arbitrage. If you don't know what that is, there are a bunch of guys who rent out houses and sometimes you can do it as a job, like a property management company where you do it for someone or you can do it yourself and you rent out properties and then turn them into BnB's. But these guys a few weeks back, I, I, I think it was right before Christmas or something. I'm watching on my Facebook and my feed comes a live video from them. They're at their property in Mesa, Tempe or someplace and they walk into the apartment and the guy is like, check this out. See this dance floor.
[06:45] So you just see this big empty room. He was like, see this dance floor? This used to have living room furniture. There was a TV there and furniture and blah, blah, blah. So you like start going through the whole thing and tada. They've been ripped off. Somebody came in and stole furniture. They stole the televisions, electronics, all kinds of stuff. They totally and completely wiped them out like everything was gone. So imagine that one day you walk into your short term rental and you're like, oh, I had all this lovely artwork and I had these, you know, this, this antique table from my aunt Sarah. And I had, you know, no, it's everything that meant anything was gone except for. The really funny thing was they went into the kitchen and the Keurig coffee maker was still there and now if you guys know Keurig is usually a couple hundred dollars.
[07:40] I was so stoked because a couple of weeks ago some lady on Facebook was out in Queen Creek and she had a whole bunch that she was trying to get rid of it because she got a new one for Christmas and I picked up a couple of Keurig's for only like 20 bucks each and they're in amazing shape and I put them in a couple of our rentals and so. But Keurigs, like if you have to go buy a character, a couple of hundred dollars easy, but people love them because especially in tiny properties, only have them in tiny properties or the reason why is they only do one cup at a time. Imagine you put a Keurig in a large property and you have three couples waking up in the morning and all six of them want a cup of coffee and you're waiting for somebody else's coffee to brew, and somebody else's coffee to brew, and somebody else's coffee to brew and you're like, oh my God.
[08:30] Just give me my coffee. I'm going to kill someone. So you don't want to do it in a large property. You don't want to have a Keurig in a large property, but they're super bomb and a place where you can have only a couple of people. Right In a large property. Make sure you don't tick everybody off by having just one little Keurig because that won't fly if you got a bunch of coffee drinkers, but Keurigs are amazing and they left the Keurig in the kitchen. They walked into the kitchen and they're like, the Keurig is still here. They didn't, they didn't take the Keurig. Apparently, that's not what they were after. And they didn't know the value of it, so they did not take it and they weren't coffee drinkers because if you were a thief and a coffee drinker, the Keurig would be gone, man. It was like, it would be gone.
[09:15] So anyway, what is the lesson here? The lesson is insurance. Okay. And the lesson is background checks. So when you're on Airbnb, and I'm going to use Airbnb for all of these, but you can insert, you know, site of your choice if you're using VRBO great. If you're using HomeAway, great. But what you want to do is you want to take advantage of those background checks. I know that part of you goes, Oh, if I forced them to have their government ids and all this other stuff that it's probably going to cut down on the number of people who see it or the number of reservations that you get. But guys, do you want just any reservation? No, you don't. You want people in there who are really on vacation and who really aren't going to rip you off. Now there's another clue here too.
[10:10] When a red flag goes up to us, whenever we see somebody staying who or who wants to stay in our rentals that live in that area. So let's say you're an Austin and you've got your rental there and you get a request from somebody who lives right there in Austin. Why are they gonna stay with you? You're like, why do you want to stay with me? Now if they say we just had a flood or a recent fire, or blah blah, blah, you know, that makes sense. Okay, but here's the deal. If we see that and they don't have a lot of reviews and the reviews don't seem legit, now there's. I've seen profiles with legit reviews. I think they said that this guy had like one or maybe even two reviews, but they weren't legit reviews and you're like, oh, you're seeing that more and more of the deal is you check the background of people.
[11:00] You make sure that they have their government IDs and I always send that little email. I'm not sure if you listened to any of the other podcasts, but I send a little email when somebody signs up, especially if they're asking to stay at a place and they haven't been verified yet. I'll send a little email that says, hey, do me a favor. I'd love to verify you but quickly add your government id. That way they can match your government id to your payment form and we'll know more about who you are and I don't think that's true anymore. It used to be true, but I don't think they matched the ids, but who cares? I put it in there anyway, I put it in there anyway because it's going to deter people from doing something and a lot of times you wouldn't believe. I bet you about 40 percent of the time I don't get a reply back and I reply fast.
[11:51] My, my team replies fast. They we've got a really fast return time, right? That's me clicking. We've got to make it fast so you will always want to reply quickly and we reply you super fast and these guys will not even answer us. Meaning they did not have the best of intentions or they found something even better, faster, so I just would prefer to be safe than sorry. Make sure that people have their government IDs in there. Make sure that they have other reviews in there. Don't take them if they're in the same city with you. Those are the lessons. And then also. Hello? Yes, that property is most likely going to be covered by Airbnb or whatever platform they had it covered by, but remember what we said in the insurance episode. Go back and listen to that episode because honestly, you have to have extra insurance.
[12:43] You have to make sure that all that stuff is covered because not only are they losing those items, people. What else are they losing? Yeah, they're losing their income. They're losing their income for all the days that it takes them to replace and fix all the repair on the doors and the hallways and the stuff that they scratched and get the furniture in there that's not going to go. What if they hadn't? That was supposed to be turned over tonight. Right? What if they're cleaning crew had gone in there and they were like, shoot, we've got a 3:00, you know, coming in and it was a mess. What would happen? They now, they had to cancel right. Now they lose the income from that and they've got all that time wasted too. So there's a lot of stuff that happens when something bad happens. So your insurance is gonna cover your cost of all your supplies, all the things that you have to replace the TVs and the furniture and everything that they stole will be replaced, but their income, that's going to be the most important thing and the fact that you know, what if they had went down in their rankings or something because of those cancellations and moving those things over, so it's going to cover all of that stuff and that's what you want to have.
[13:55] So that was the big lesson there. Honestly, if I can find that video, I'll put it on our facebook page so you guys can see it because it wasn't funny. Funny. But after this stuff happens to you. While I know this sounds really weird, right? Like we lost our house to a fire in 2005 and I see all these people in the fires in California and you know, they're devastated. We lost everything, but they're alive. Right? And I'm like guys, your alive. The most important thing is your life. This stuff is just stuff. I think you have to go through that before you realize it's just stuff. It's just stuff, man. It can be replaced. You can't be replaced. Your family can't be replaced, your dog can't be replaced, but your stuff can always be replaced and everybody goes, well, it had memories. That's not true.
[14:43] If I pick up a picture or a vase inside of a store, that vase doesn't have any memories. The memories are actually all inside of you. You just used the vase to trigger that memory. All the feelings and all of the stuff that you harbor with every item that you're holding onto. Guys, it's, it's not the memories and the feelings and stuff aren't in those items. They're actually inside of you, so you've got all that stuff. This is just stuff. It can all be replaced, but you want to make sure you have the right insurance and that that is imperative. So I'll try to put that video on there so you could see the guys because after a while you just start to giggle. You're like, oh my God, and it's always easier to laugh what it's not you or laugh later on because you're like, remember that time I can like there's times where we go back and we were like, oh my God, I remember how you know the feeling like when you're driving and a police officer pulls up behind you and you knew you were speeding, that your stomach just falls to your knees and you're like, oh shit.
[15:48] That's the feeling that you get when any of that stuff happens. You walk in, but then once it gets all fixed and replaced, you're like, ah. It wasn't as bad as I thought it was. It was a lesson I was covered. Things do happen and most likely it will never happen again because what are the likelihoods of that? Right? It's like, what are the likelihoods that your house will burn down twice? Probably very, very rare, so I'm like, okay, I'm glad I got that out of the way back then. Don't want to go through that again. It's like, this guy's probably going, okay, we got the house stolen. Probably will never happen to any other of our properties, so there the likelihood of that ever happening again will be none because they're going to be a lot more careful to. Okay, now. Okay. Story number two.
[16:35] Now this. This story is a real life story that happened to a friend of ours. She moved to a house thinking that she was going to live in this house. She later turned it into a BnB and you're going to see why that was a challenge probably right from the get go. Okay, so she bought this house for herself, moved into this house. The bottom area had a little room, like a little Casida. We call them Casida's here in Arizona and Hawaii they're called. Ohana there. They're basically like a guest house, but sometimes they're attached to your house. Sometimes they're separate. This one was attached to the house. It had a little kitchenette, an area that she could lock out and rent out. So she thought that was gonna help her with the mortgage and everything and it. And it probably was. And um
[17:23] So she moved into this house and she was going to do some renovations. She was super happy. It was a beautiful area, beautiful neighborhood. And it turned into a nightmare because of the neighbors. The neighbors were like crazy, like cray cray, you know, like really bad. So she started to notice like there was a lot of fighting going on and really loud voices and she was constantly hearing bickering. They were drinkers. Later she found out they were heavy drug users. There was a lot of abuse going on. So one, you know, at this had been building up. She had not been there too long when she had somebody come in the middle of the night, the neighbor lady came over and she was like, oh, you gotta help me. You gotta help me. He's gonna kill me. And she's like, oh my God, you know, come on in and she's will call.
[18:13] The police will get. So, oh no, you can't call the police can't call the police well it turns out, you know, this guy's father worked for the police. Um, the girl was girlfriend, like there was just bad stuff going on. Like it was just, it was just a mess. It was like something you would see on Jerry Springer. It was just really, really a bad situation. But what turned even worse was when she had called the police, right? So she had called the police and when the police came over, it turned into a nightmare for them. Now the police turned against them and every time they drove through the neighborhoods they were being pulled over. They were being harassed. It turned really ugly. Like the neighbors didn't want them there. The police, the neighborhood, like it turned, it turned really bad. So finally she decided to move, like literally move out of town.
[19:03] So she moved out of town and turned it into a, BnB and started renting it out. And she was making a lot of money too. Like she was totally clearing her mortgage and then some. But what do you think happened? Hello? That domestic violence and that all this stuff that was going on next door wasn't going to stop because she moved, that shit was going on before she got there. And I mean that whole drama, that whole escapade was a, an ongoing thing in those people's lives. I mean the drugs, the alcohol, the abuse, all that stuff was going to continue to happen. So now it was happening while she had people in her house, guests in her house and that is not good because you know, who wants to be on vacation in this lovely house and hear people in the middle of the night or very late at night screaming and yelling and arguing and slamming doors.
[19:57] And I mean, it just, it turned into a really, really bad situation. So what is the lesson here? The lesson here is to check out the neighbors guys. And like I said, we did real estate investing before we did short term rentals. Okay. So the short term rental portfolio actually started in addition to our real estate ventures. But in real estate when you're doing real estate investing, you know, to ask the neighbors about everything, neighbors know everything. And if you had walked around that neighborhood, everyone in that neighborhood knew about that family knew about that couple. So it was really funny. She didn't find out until she moved in, but if she had talked to a few neighbors when she was looking at the house and said, hey, I'm thinking of making an offer on this house now, what if she had gone to the crazy neighbors first?
[20:48] We're just going to call them crazy. I'm just assuming they're nuts, but maybe they're okay and it's just the alcohol. Okay, but we're just going to call them the crazy neighbor so we can label them, label them, label them the crazy neighbors, because in this example, that's what they're going to be. So you're going to be avoiding them, right? We don't know who they are. We're not going to tell you where it was. Okay? So let's say you went to the crazy neighbors first and you started talking to them. Chances are you would get a little hint about how crazy these mofos where and if you went to them second, because you're going to go to at least two neighbors. You're going to get one neighbor who says, oh my God, you know who? You're next to your next, those crazy mofos and they're going to tell you, you might not want to do that.
[21:33] These people, blah, blah, blah, I mean they'll tell you everything. So when we were doing real estate investing and there were properties that were going up on foreclosures and things like that, we always went and talked to neighbors. We knocked on doors all the time. Neighbors know everything. They really, really do. You want to say that? Well, I live in the neighborhood and nobody talks to each other. Yeah. They might not talk to each other, but they know what's going on and they talked to somebody else in that neighborhood. Maybe not you, but they know what's going on. So it's always a good idea to talk to the neighbors around your immediate property and behind it so that you know, before you make an offer on something before you do something that you know what's going on and that would have avoided this situation. Twofold.
[22:20] She wouldn't have had to, you know, go through the whole process of buying the house, turning it into a BnB and then having her BNB have terrible reviews because of the neighbors and there's, you know, there's literally nothing she can do about that, right? Nothing. There's nothing you can do about crazy people living next to you. I mean, you can. It's like when you, uh, We I mean, we have this a lot in Arizona because of our zoning laws being so different. So you'll have a million dollar property, especially out in Apache junction, Gold Canyon where we have our big house, you'll have big houses now, maybe not mansions but big, big houses next to trailer homes. And some trailer homes are really nice and the people are taking care of them and some places look like junk yards. I mean they've got like 18 dead cars out there and people literally pay people to, can I please clean up your yard so that I can sell my house?
[23:14] Because what the neighbor's yard and what those properties look like next door to you make a difference about the value of your home and it's going to make a difference when the guests come to look at your property, they're going to look at the neighbors' homes and they're going to judge your home by what the neighbors look like. Even if you had like picture it picture you having this beautiful pristine house and all around you. It's a junk yard. It's terrible and people are going to be like, I don't feel safe here because of the junk yard. Right? They don't feel safe. Now some towns might look like that. There are some towns that are a little bit less appealing to others, let's just say than other towns. There are some towns that look really nice and sometimes that look bad. Chances are if they're going to the town and they know they want to stay there because you know they're staying for family are the same for some other reason.
[24:08] They know that the town looks like that. There's nothing you can do about an entire town, but there's definitely a lot you can do about renting or purchasing a home in an area that is not so appealing. You can fix it up. You don't want to be. You never want to be the nicest home in a neighborhood because you, your home will not hold its value. You are better off being the crappiest home in a good neighborhood because you get it for a good price and you can fix it up and bring the value up. Right? So, lesson learned, lesson learned, talk to the neighbors. Okay. Now this story, story number three, it happened in Washington DC. And I read about this one. I don't know the person that it happened to you and it was actually when I read it, it was in a magazine and it was almost like they thought it was a hate crime that it was racially, um, pointed at her.
[24:59] But I honestly don't believe that. And you, you can make your own decision when you hear the story. I think there's just some crazy people out there sometimes. And if somebody didn't like living with you because of your religion or your race, they, they wouldn't be there, like they really wouldn't be there and they would have probably reaked havick with you or had a lot of arguments with you beforehand or you know, you would have had some kind of clue. So anyways, this woman lived in Washington DC and DC has, if you, if you're not familiar, DC has some of the most expensive real estate in America. Not Expensive like San Francisco expensive or LA or New York, but definitely expensive real estate. So she owned a property with several bedrooms and she rented out per bedroom. So remember there's a lot of ways to do your short term rentals.
[25:49] You can rent out rooms in your houses, you can rent out entire homes, you can rent out guest houses, you can rent out boats, right? There's a lot of different ways you can do your short term rental. Well she was renting out her rooms, you know, to help her pay the mortgage. So let's say your mortgage is a few thousand dollars a month, you can find somebody to rent the room, put your a room in a short term rental ad and you could probably make a thousand dollars a month or more per room and that will help you with your mortgage. So that's what this woman was doing. She was renting it out and she happened to rent it out to two different gentlemen. They didn't know each other. There were two separate reservations. One happened to be from one place, I can't remember the exact place, but they, they were not.
[26:36] One was not an American, but he was there for some kind of reason for an extended stay. So both of them were there for awhile and she had several rules setup. Now you have to have rules when you're sharing your home. But she locked her bedroom doors and she made sure that areas that were not common meaning shared with the renters that she did, that she locked him up and she said, this is, you know, obviously my bedroom and my bathroom. Those are off limits to you. I keep it locked. It just locked automatically every time she left a room and she happened to go out of town and when she returned she found that her door had been broken open in her bedroom and she was like, okay, what the heck? The door's open. She kind of looks and it's been pried open and inside the room was in disarray and she found all this stuff on there and get this.
[27:30] There was actually human feces on her bedspread and on a chair in front of one of her dressers and like human feces, yes. Can you imagine? And she went and the first door she knocked on was, you know, one guy and he, he, she starts yelling like, what the heck, you know, were you in my. He goes, look, I saw your door open. I just assumed you were home. And she said, you know, okay, so it's not this guy. So she goes down to the next guy and he was a student. I think his parents were paying for stuff and he, he was like, Oh man, it happened again. I don't remember. I blacked out. Yeah, I think I did that like he,
[28:13] but can you imagine like he didn't even leave or
[28:17] like his defense was? I think I blacked out, but I'm pretty sure it was me. So like he, he's admitting, he admitted that he got high, got super stoned when up in her room, broke into her room and then proceeded to defecate in her room and then not
[28:36] cleaned it up. Not even attempt
[28:38] to try to clean it up afterwards, just like go around, you know, nonchalantly like, well what the hell man, that shit happens. Right? Like literally. Right. So that is, I mean it was a nightmare. Now she was a black woman so she took it as a racial slur, but I don't think it had anything to do with race. I think this kid was just a crazy kid, like he had mental challenges, but turns out that this had happened. I don't know if it had, if he had, you know, defecated on somebobody elses a house, but it didn't happen before. He had been kicked out of properties before. So a simple background check could have prevented this from happening. A more strict background check can can really help you out, especially when somebody is going to stay longer than a week. If you've got people staying in your property for weeks at a time because you know they live in the area.
[29:33] Again, ca-ching he was already in the area. Why wasn't he living with his parents? Why wasn't he living? Because this kid had mental problems. He had challenges. He had drug problems and obviously, but the thing was nobody was sticking up for this woman. The police thought it was hilarious, which that's really sad too because honestly and they said there was nothing they could do and she had called Airbnb. They were having challenges with it. Nobody knew how to deal with it and I'm like, well, how I would have dealt with it would have been much different than how she did, but she took it as a racial slur and I really don't think it was. I don't think, It was drugs, no colors and that's just how I am. There's drug addicts or alcoholics, people who have problems and challenges like that. Believe me, I'm very familiar.
[30:22] My father was an alcoholic and we have a child who has, um, drug challenges and so living with an addict and going to all the meetings and stuff, you hear like a million stories from really great parents who have kids who do crazy, crazy stuff when they're on drugs, when people are on drugs, they're not themselves anymore. They really aren't. And so I don't think it had anything to do with her race. I think it had more to do with the drugs, which is really sad because drugs are really, ugh, you don't want to get me started on that because living in Arizona close to the border and having a lot of drugs come over our borders and turn our teenagers into addicts instantaneously is not something you want to hear me talk about. I'm actually very opinionated about it. And um, a lot of the parents, probably all the parents in our pals group are very opinionated about it.
[31:20] So anyways, that can be prevented. What did we learn? We learn more about background checks. We also learned more about what? Insurance, her insurance, the insurance she had should have covered that. It should have covered the cleaning, should have covered the door, right, and also we learned that her rules, if you read the entire story and how she dealt with it and why everybody had a challenge with it is because she had no clear cut rules about what happens. What are the consequences of somebody breaking those house rules. If somebody is living in your home and they break your house rules, you need to have it set in stone and very clearly written that they will be evicted immediately with no refund and there won't be any second chances. That kid should have been evicted immediately with no refund and no second chances, but you need to state those things clearly in your house rules book in your policies.
[32:24] Okay, so prevent yourself from being harmed over and over again because I think, I'm not sure how it all worked out in the end, but being forced to allow that kid to stay there, that would not have been an option for me. No, like honestly and I'm not going to pay for him to get another place either. That's not an option for me either. This kid just, you know, damaged my property, broke in that, you know, and they said, well, you invited him into your house. Now think about those things. You've already allowed them inside your property. You gave them permission. So what they're doing is not breaking and entering. Right? Because they're already in there. You invited them in. So you need to, I would definitely, if I were having someone stay inside my home with me, I would talk to my attorney and Carolita
[33:13] and say, Carolita,what can I do that clearly states that if they break into a room which they know they are not allowed to enter that, that is actually not just against the rules, but it's illegal because that is breaking and entering, but according to the law, according to those police officers, it wasn't because he was invited into the home. So there are going to be ways and things that you can do and restrictions and when people, when the people say yes to renting out your place, they actually, if you look on there, they agreed to your house rules and your house policies. And so if those are clearly stated inside your house rules that if you break into any area which you are not allowed, you will be immediately evicted with, you know, your stuff will be set outside and no refund will be given to you. And I don't care who or where you stay after that, I'm not going to make any arrangements for you. That's going to be up to you. You blew it one chance you're out. And so if that, if they agreed to that policy, they agreed to that policy. So you need to, you need to make sure that, you know, you kind of cover scenarios and you can do it in a nice way.
[34:22] I mean there's, there's things that I cover and I say, okay, look, we have a strict cancellation policy, right? But in our cancellation policy, even though we, we, you know, we cover it in our house rules, we say, hey look, we're a small business, we have this cancellation setup because if you cancel too close to the time that you're checking in, we'll probably be unable to fill it so we have this cancellation policy. But if you are at any time afraid that you're not going to be able to make it, hey, guess what, here's a link to travel guard and you can go and get yourself some travel insurance for pennies on the dollar. Like honestly, if they're staying in an Airbnb and they're only covering that portion, like if they're driving into town and not flying, it's going to be. It's going to be minimal to get travel insurance.
[35:09] But then I always say, look, that way I don't have to deny you your refund and you don't have to be denied and, and led down because I'm going to deny your refund. It basically states right there, I'm going to deny your refund. I'm not going to give you your money back. My cancellation policy is strict for a reason, but you can get your money back. If you buy travel insurance and you throw it back in their court, you want to travel insurance, get it. It'll cost you five, seven bucks. So what? What you know, maybe 16, depending on how much the room is and how long you're staying. It's so minimal. It's so minimal. My travel insurance, every time I I travel is if you're using an American Express or some credit cards actually have travel insurance built right into them. It's part of their promos and stuff, so it might even be inside of their credit card that you're.
[36:02] They're using. Let them know that use a travel card, a card that has travel guard, travel protection built in and they don't have to come back to you. They'll get their money back anyway, and that way you can say no and you can stick to those policies, but the lesson in that was, first of all, make sure that you've got insurance always right, and then it's covered and make sure your rules, your house rules, cover every scenario and the consequences of what happens when somebody goes against those. Okay? Because in that case, breaking into there, that's immediately getting evicted. Like you're out, you're out and your stuff is on the lawn and I don't care. That's, that's what that rule is. Now, if they accidentally put something in the fridge and you didn't want their things in the fridge, I don't think that's nearly as bad, you know, but you want them to know what they can and cannot do, right?
[36:57] And you want them to know that, you know, if you do anything like this, you will be immediately evicted if you break that. So make sure that your rules cover that. Okay? Now this story is a friend of ours and we actually have stayed at her BnB. It was beautiful. Okay. And I'm saying was in a past tense because she lived in vacation land in Hawaii, vacation land, if you know anything about Hawaii. There was a recent volcano at the beginning of last year and she lost her home and it was a property that you would just die to have. We, you know, we, we had this beautiful Lanai that opened up right to the ocean and you could hear the ocean waves at night. I mean it was, it was backed up and now it's. Now it is more than a mile of the property. The house is gone.
[37:49] But the property is more than a mile from where the ocean is. The from the beach now. Can you imagine? That's how much lava has gone, like I think a mile and a half past where the homes were, but all the homes and vacation land, we're lost. This was a beautiful, beautiful home and she had everything in there, like everything in there. And I'm going to cover a couple of things. I chose her property because she was a new, you know, short term rental owner and she did a lot of things that a lot of people do wrong and I'm gonna I'm just gonna cover a couple of things. When we walked in, you know, we, we told her the great job because fricking house was gorgeous and she had it stocked so many things. She had surf boards and a snorkel thing, you know, equipment and just a bunch of really cool stuff that most people would just die for.
[38:46] I mean, she just kept it. There was this beautiful a wading area out there that's now gone, The tide pools and stuff were out there and they were in these lava things and so amazingly beautiful. All of that is gone now, but one thing that she did that we told her she had to stop doing was she had everything in open closets, so she had a whole her toilet papers and paper towels and everything was out and left and it was unlocked. And that needs to be tucked away guys. So you need to have a maid's closet and all your supplies and everything should be in there. Your paper towels, your toilet paper, your Kleenex, your cleaning supplies, your bathroom stuff, you know, shampoos, conditioners, shower gels, soaps, those things all have to be in there. Now it's okay if you use the little one, use soaps and shampoos.
[39:41] Those are great. A lot of people like those. Why do they like them? It just seems cleaner to them and they like it, but in a lot of cases I see people now going to costco and they just buy these big things of shampoo and conditioner and you could do that too. It is totally up to you. I've actually taken and polled my guests and my guests, like the individual ones and we use the individual ones and so I can put a link to that on the page for you guys and you can get them on Amazon. You can get them. There's actually. There's a bunch of different places I'll, I'll, I'll put some links to some of the places where you can get your supplies, but those things don't matter. What matters was she had a lot of food in that kitchen. Now when people are renting, now I understand if you're living there and it's your house, obviously you're going to have food, but she didn't live there anymore.
[40:32] It was um, it was now a full time rental property and there was a lot of food in there. So she had, you know, rice and she had, I mean everything and the people were thrilled that she had this stuff. But I said, you are putting yourself self in so much danger with liability purposes. And let me tell you why. If somebody eats something there that makes them sick, you're liable for it. If you left eggs in there and those eggs get expired and they, you know, or, or they got very sick, get Salmonella, you're liable for that. You want the bare minimum is when it comes to food. Do you want that? You want those kitchen's cleaned out. Okay? Now obviously coffee, cream, sugar, blah blah, blah. You can totally have that stuff. But guys, liability, liability, liability, that's all I'm saying. You really want to have the lease liability that you possibly can have and you want your guests to come in and see a cleaned out refrigerator.
[41:34] Nobody wants to walk in there and see a bunch of food, you know, half use bottles of ketchup and worcestershire sauce and all this other. That is not cool. It's not. I mean if it's your family and friends, yes, but if you're sending it out, if you're sending guests into there, No, no, no, no. You don't want cabinets full of canned foods and you have no idea you're being held liable for anything they use in there. So pull that stuff out, lock your shit up. Okay. And you want minimum stuff too. It's really cool that, you know, we walked in and it was like walking into your grandma's kitchen because she had like every kind of appliance and a million different pots and pans and all this other stuff. You don't need all that stuff. You want them to have what they need but not too much.
[42:23] Not where it gets overwhelming. And let me let you think about that. Tell me why you think, why do you think that is? Because people steal stuff and it's going to take you an amazing amount of time to figure out who the hell took it? Who took it? It was like, oh, I had you know, two crock pots and a deep fryer and this. Your cleaning crew does inventory for you, but they can't and they won't. Even though they say they will do it every single time they go through, they're gonna miss obvious things. Coffeemaker is missing. It was sitting right here. Microwaves missing and it was sitting right here. But if you've got so much crap inside your cabinets, your cleaning crew, who is your number one link to what's going on in your world will not be able to tell that that was missing and you will not know which guests took it.
[43:12] You won't notice it maybe four months until you go and you go, hey, didn't we have a crock pot here? You know, so like not, not that I'm saying guess will steal stuff, but whatever you have there, you need to be able to do inventory on. So you want cool stuff, you know, you want the surf boards and the snorkel equipment if you're right next to the ocean and stuff like that, that's pretty cool. But it's going to be obvious to your cleaning crew when they walk in and go, Holy Shit, where's the snorkel gear? Right. They'll notice right away that it's missing. Like you want them to notice, you want to make it easy on your crew, you want to make it easy on your guests and you don't want to be liable for anybody getting sick. So make sure that you don't have all that stuff.
[43:56] Yes, go ahead and have salt and pepper and olive oil, you know, and things like that. I mean if you want to have that stuff out in some kind of decorative thing and coffees and creams and things like that, but you definitely don't want to have your, your pantry stocked with food items and you don't want your refrigerator stocked with items. Okay. Move along. Right? So we stayed at this beautiful, beautiful property and she had more than enough stuff and it was absolutely great. So those were the lessons that we gave her when we first walked in. Everything was perfect. She had a lot of electrical equipment too, so we told her to keep it minimal. You don't have to provide cable. These people are in Hawaii. I doubt that they're going to be spending all their time watching TV. They're probably going to be out hiking and doing some fun stuff.
[44:48] But you definitely want Internet. You can have a smart tv that you know, where somebody can sign into their Netflix account or their Amazon account or Hulu account. That's great. But you don't have to unless, I mean, unless you want to, unless you can cover it very easily. You don't have to have cable, you don't have to have HBO for everybody. It's a cool thing to have if you can. But she was, you know, she was just starting out. So she was making ends meet and so we were like, okay, here's some of the things that you can do. Now. What happened to it was when the, uh, when the volcanoes struck, she had to cancel a bunch of reservations because they closed down the roads that went into vacation land, well before the lava came to vacation land, the roads going out that way we're closed, so she had to cancel and Airbnb was really mean about it at first until they realize, because a lot of times what they see as bunch of cancellations and you can even put it in there, hey, canceled because of volcano, Kilauea
[45:54] It doesn't give a shit. So like, but once it was a human being behind it, at Airbnb, they were much more. They worked with her much easier and they were like, oh, now we see. Yeah, not much you can do. It's pretty much an act of God. So again, what type of insurance would have helped her? She would have obviously she had the right kind of homeowner's insurance and stuff too, but you have to have all those different types of insurance. The insurance that covers the AIrbnb part of the inside of the furniture, whether it's occupied or not. Now, I know that sounds weird, but honestly there, there are some insurances that cover the properties when it's an active property and if it's not being used, it's not going to be covered. So make sure you watch your coverage. You want everything covered. The outside of the home, the inside of the home, right.
[46:46] Especially if you own it. I mean if you don't own it, well even if you're renting it, honestly you do. It doesn't matter because we, we always pay for that for our home owners and our landlords because they don't know which kind to get and it's, you know, honestly a pain in the ass for them to do it anyway. We just cover it and it's one of the benefits that they get from renting to us. But the problem here is making sure you have all the right types of insurance, making sure that everything is covered and your income is covered. I can't stress this enough, especially when you start to make this your business your livelihood, right? Especially when you start to have several properties. This will become your livelihood. So imagine if you had a bunch of properties, because almost all of us who invest, we tend to buy in these little pods, these little circles and areas.
[47:45] We have a bunch of properties in one area and have brunch in another area, in a neighborhood. All our rentals are, you know, are close to Universities, are rental properties. We buy in the same areas because it's, it's easier, you know the area, you know what the rents are, you know what the rules are, you know all the zoning, you know everything about that area. So you specialize in it. So it's easier for you to have a bunch in that area too. So when your crew goes in there doing landscaping, boom, boom, boom, boom, they hit all your properties right? When your crew goes in, they do the pools, boom, boom, boom, boom. They hit all those in one afternoon and you can go and have somebody check on them to without driving all over town to make sure something was done, right? So there's a reason why we rent in these little pockets.
[48:31] So imagine your distress, if some kind of act of God, the force of nature comes and wipes you out. If you had a bunch of properties in that area that would have cut your income off completely. If you were up in Malibu and you had a few cabins up there and those fires came through, that would have knocked you off your game completely. So I just want to stress to you that no matter how cheap you feel you need to be, you really need to cover your assets. Always Cover your assets, Kiyosaki used to say it all the time, cover your ass - sets because that is your livelihood. That is your income. You should have insurance that covers your income. Guys, I know it sounds expensive. It's a business expense and you can write it off. It needs to be done. We can't stress it enough.
[49:26] So now she still owns the land, but it's just 15 feet under lava and a mile and a half from the ocean now. Right? But, and that was another thing, you know, they don't have like nobody has real lava volcano insurance. Her insurance was fire insurance, so those drones that they had, you know, flying around actually had pictures of her home burning before it was covered with lava and that's what covered her home. So make sure that if you're in an area, and that's another thing, you know, we, we were talking Maria and I and a bunch of us real estate investors, we're talking the other day and we were talking about flood insurance, about how many times that's happened to all of us and here's the deal. I think everybody should have flood insurance. I don't give a crap where you live unless you're living on top of mountain.
[50:14] But honestly flood insurance is important. Even when you think you're not in a flood zone. There's a lot of places, especially down in Texas and all these places where they're like, well, we haven't had a flood and 300 years or 200 years or whatever, guess what that stuff does happen. And, and the, the insurance on a property that hasn't had a flood in it in 200 years is a lot less than you think. So just having that extra bit of flood insurance and if something does happen you are covered and sometimes insurance companies are weird too, so they'll, they'll say like a leaky pipe causes a flood and there's a lot of flood damage. It's from the leaky pipe. So you know, it depends on the verbage of your coverage too. So always look at the verbiage of your coverage. But I would definitely get flood insurance.
[51:06] Everybody. We were all talking at the table and we all agreed as investors always get flood insurance. We're like, okay, maybe if you're up on a mountain you don't need it. But I have property up against the Superstition Mountains backed up right to the national forest. And guess what? We got floods all the time. We got flooded all the time. Every time it rained, boom, it will come down the mountain on the wash and those washes rearrange themselves every so often. And we. There was a couple of times where the water was coming right through our house, right through our house. Like we had the front door open and the water was rushing through. It was a little river. And that happened right when we, you know, before we built that little, we built like a little moat going around it. So that would never happen again.
[51:51] Yeah, you guys got to be careful. You got to be careful. You got to protect your property, you got to protect your assets and you do that by protecting your income and protecting your property with all kinds of things that you never think are going to happen. So that was the lesson. Those were the lessons. Okay. Now one last story. We're going to try to make this really quick because this episode is getting pretty long in my stories were. I thought they were going to be really short, but they weren't as strong as I thought they were going to be. So here we go. Last story, I'm just gonna mention it really quick, is zoning. We rent in well and we, we have bought properties to in Florida in different areas and more and more we see new zoning popping up everywhere saying that you can no longer have a short term rental.
[52:38] And I just want to stress, stress, stress to you all the terrible things that can happen if you buy or rent inside an area where the zoning says no short term rentals are allowed, and you get caught doing that. Now, I don't ever want you to do anything illegal, honestly. Never break the law. Never ever break the law. Just don't do it. Don't ever put yourself or your property or those things at risk, but I'm telling you to the fines that can come along with breaking those zoning regulations. You can lose those properties if you own them. And if you don't, they will still find a way to make your life hell. And you can, I mean you can owe thousands of dollars. You can lose your business, you can lose your properties. You can also be audited by the IRS if you're not, you know, if you're not doing the proper things, going through the proper channels and purchasing the proper permits and you know, going through what you should do before you buy or rent a property.
[53:41] This is all due diligence that you can protect yourself from just by doing the work beforehand. Always do the work beforehand. Always go in, check out the news, ask around, right? Realtors will not tell you, and if you are depending on a realtor, when you walk in and you're like, Hey, oh, this property is great. Yeah, I'm going to use this for BnB. Oh, it's right on the water. This is awesome. And they go, oh yeah, that would be really nice. Inside they're going, Holy Shit. I wonder if they know that they're changing the zoning here. Um, I'm going to sell this property and I'm going to make a shitload of money and I'm just going to walk the f away and this sucker is going to be stuck with a property that they can't use. That's what they're thinking because they're covering their assets, right?
[54:27] They just want to make a buck and sometimes they don't know. Maybe they don't know what's going on, but the fact is if you are buying a property or you are renting a property, it's your job to know it's your job to find out it's your job to google that shit. It doesn't take but a few seconds to go online and Google what's going on in a city or a neighborhood, right? It doesn't take but a few minutes that could save you thousands and thousands of dollars and hours and hours of your time and trouble and money to walk into a city hall and say, Hey, I'm looking at buying property on x street and for x amount of dollars and I want to turn it into a BnB, a short term rental. Where can I get the permits? Do I need a permit for that? And they will point you in the right direction.
[55:15] Or they'll say, you know, we're putting a new zoning law and that's probably going to be in an enacted in 2020. You have a year to use that property and then it will be worthless to you. Right? So they will tell you, they will tell you what's going on, but the whole thing is most of these horror stories that happen are because of, you know, no due diligence or just simple ignorance to all the terrible things that could happen. Now obviously our friend in Hawaii had no clue that the, you know, the lava was going to cover her house or her property. It was a beautiful place and there were hundreds of homes there. And for, for years and years, I mean that, that place had been that way for, I think since the 19 fifties or sixties where most of those houses were built. So you're talking 67 years.
[56:05] People had been living in that area. I mean the trees, it was gorgeous. It was a gorgeous, gorgeous area. So nobody thought that was gonna happen, but she didn't know about the liabilities that could happen with the food and stuff. Right? So just think things through, what's my liability with this and how easy am I making it for my cleaning crew and the people who work for me. And what if my income gets shut off. Especially if you put a lot of money into something guys, if you're the one furnishing these houses or these apartments or guest houses or rooms that that's money that's out of your pocket, that you are turning into an income, right? You're turning it into revenue and you have to make sure that you are covered. That is the main, main focus of the horror story episode. Right? So that's our episode for this week.
[56:58] And I want to thank you again for listening, but really quick. I wanted to say go to our website. We are redoing everything. We've got a person that we hired to do our show notes, show notes, real show notes. I'm like, show notes are amazing because it's going to go through this. You don't have to read the whole transcript of every single thing I said, but it's going to have all touched on all the highlights, all the points of everything. And it's also going to have very clear links to any of the downloads that we have. Any PDFs, any other articles that we're sending you out that are relevant to this and you know, maybe links to products, services, any, anything, it's all going to be really nice and clear and clean. Cut in there. We're gonna. Start with the this week's episode with a new show notes, but then we're going to move backwards so every week I think they're going to do one or two or three or whatever they can do and they'll eventually go back and clean everything up and then it will be in this nice new layout that super clean, super easy to understand for everybody, which I absolutely love and I want to thank you guys again for listening.
[58:00] I want to thank you for the five star reviews that are out there. I'm going to get two readings. Some of these. The reviews are amazing and I really want to say that I am here to help you. Please reach out to me at [email protected] or go to our website, @www.shorttermrentalrevenue.com. Or you can even go to STRRevenue.com and it'll send you back over to the right place. But go to our resources. We've got a lot of articles. We've got a lot of freebies for you, a lot of gifts, and you know, we just want to make everything easier for you as a short term rental host and a short term rental business owner, right? This is, this is our job, this is what we do. We want to be the best at it and we also want to be safe and secure for our family because why do we do anything? We work for our family. We worked to earn a living and to serve others, right? But we have to protect ourselves because we are our family source of income, right? We have to protect them. All right? Love you guys. Have a great day. God bless. Go and grow.
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