Episode 085 - Property Intention & Strategies: Buying for Long Term Renters VS Short
Apr 20, 2020
SHOW NOTES & LESSONS
Today, Chris Villela is teaching us some of what she has experienced as a long term rental investor. We talk about Exit Strategies, Holding Strategies, making your money on the "buy," and so much more. Enjoy this episode and the interview.
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[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 episode,
we're going to be talking with my very good friend Christine Viele. That is, actually yes, it's Amado's wife, and Chris and I have been friends for decades Now. Chris and her father owned probably up to 480 close to 500 units in the Tucson area, and they specialize in long term rentals. So what I wanted to do was bring her on and kind of talk about the differences, how we handle short term rentals compared to long term rentals. Remember when we buy, we always buy looking at the long term value, so actually Chris and I just partnered on a place Christian, Tomato and Kevin and I partner dot in place down in Tucson that we will be using for a short term rental. This will be her first short term rental, and we're kind of butting heads. Let's just say on how things should be done, how fix up they should be. And so it's kind of difficult to let her know because she always wants these numbers right. She wants the exact numbers that you'll get because she can tell if she fixes up a property, that she's going to make X amount of dollars every single month Mawr in a rent, fixing it up or putting this much more into it so she can look at the r O. I on it until right away if she's going to get our money's worth out of it. But it's much more difficult to do that in a short term rental we don't have. Those numbers were like it'll be between this and this. How much occupancy will it bring it up? Probably around this to this, and she said she's looking for exact numbers were like, Yeah, can't give you exact numbers, but I can give you kind of variables, and it's probably making her crazy because her life is about definite numbers she can pull in, but we're going to talk about that also, I wanted to bring up the fact that obviously today our program has always brought to you by audible. You can get your first audiobook for free by going toe audible trial dot com forward slash S t r revenue That's audible trial dot com forward slash S t R revenue, which is short term rental revenue. But today's book I wanted to recommend is a new one that I've been reading. The book is titled by Rehab, Rent, Refinance and Repeat. It's the Berm Method, and It's by David Greene. David had another book that was really good about long distance real estate investing, and that was a really good book. I thought, Well, listen to his new one. I'm not exactly sure, but I think it came out last year in this summer, and I thought I would take a listen to it. I love listening to his stories, and you're going to love this book. You can get it on audible. Just look for by rehab, Rent Refinance by David Green. I'm going to recommend that book inside the berm method, and that's pretty much the method that Kiss sake has been recommending for a long time. There are different ways to invest, and we talk about this constantly. A lot of people like paying cash for everything. That's pretty much the way Susie Orman and Dave Ramsey do everything they want to pay cash for it. But if you were educated by someone like Robert Kiss sake, it's all about using and leveraging other people's money. That's the method I would rather use now. That doesn't mean I take a lot more risk right now, and we've been talking about this in several episodes. Guiza's When you purchase a rental property, you always purchase it, looking at all your exit strategies and the long term rental value. Why? Because we talked about it. We said she could hit the fan. Things could happen, right? The market could drop out. People stopped traveling when something big happens and something big has just happened. So every single one of our properties and if you've been listening and you've been following the advice that we've given you, every single one of our properties was able to rent out at the long term rental value, which is a lot less so. Even if you were doing rental arbitrage and let's say you're a renting an apartment for $1000 a month, that is the going rate. You could sub let that apartment $4000 a month and you won't be losing anything. Okay, you have to act fast on these things. You have to decide. Am I going to switch over to traveling nurses or am I going to just freak the F out go right into long term rentals? Whatever you do, decide to do it and do it quickly, because the market is going to change when people continue to lose money in their markets. And not everybody is. We're not at 100% capacity or anything, but we're definitely making our money. And if you aren't you're doing something wrong. You can fix it and you can switch over. Make sure you start looking and marketing to traveling. Nurses pick
group and then go there right or long term rentals. If you do long term rentals, that means for the next six months or a year, depending on how long you allow somebody to sign a lease, you're not going to have the monthly income from a short term rental. So I wouldn't do that in mind Market because I know my market is going to recover. People love Arizona plus Arizona right now is still a wonderful spot here. We are close to the end of April, and we've only had less than what is it? 160 deaths? It's not a lot. The reason why is this virus does not do well in the heat. And so we've had a couple 1000 cases, but the majority of people recover, recover fully, and we've only had less than 200 deaths. So this is going to be a place where people are gonna want to go. And we are a hot spot for what we call snowbirds. Arizona gets snowbirds. Florida gets snowbirds. That means people come from the north and come down not usually in the summer time. But I have a feeling that this summer is going to be Ah, wonderful, wonderful place to be in the desert because people are noticing we're not crazy out here. Not yet, anyway. Not not so much for the most part. I mean, this virus is going to be around a long time. We're gonna have to learn to live with it. So are we gonna change everything about our life? I doubt it. I really doubt it. I mean, we're going to change a few things will be a lot more careful will be much better about social distancing. But I believe will still shake hands and still meet people for lunch and still gather in restaurants and parks and stuff. So I don't think that things will change that drastically. Here in Arizona, I'm looking forward to recovering. So the berm method rental property, investment strategies, such a great weight to invest. And we used to do this a lot to before we get started with the interview with Chris. I just wanted to go over one of my favorite ways to buy rehab and then turn a property into a long term rental or a short term rental. This worked fantastic in Florida. So let's say you buy a property, you have to have some cash or some investors. Right? But let's say you Dio. Let's say you have some pocket investors and they're there for you. Any time you need them, you can purchase a house and fix it up. Always buying under market, fix it up, make it nice, and then you're gonna put long term renters in there or maybe even a short term rental business. Now, if you've got other short term rental businesses in the area, you can use the seasoning from those other properties. So let'ssay, for instance, you're looking for a bank loan. They want something called seasoning on a property. They want to see how much income that property has generated in last year or two, right, and that's called seasoning. They don't want to give you any kind of loan unless they can see that that property is going to be making money. So if you
property in the area with a long term renter in it, or if you have a property in the area with short term rentals in it, they will allow you as long as it's in the very same area has to be very close and very similar properties. They will allow you to use those numbers when you're getting a bank loan, if you want a traditional bank loan, or you can use it when you're looking for private money lenders. So private money lenders are really great, too, because there's a lot of people right now. They're not getting enough money from the banks and enough interest on CDs or just having their money in a money market account anymore. Their older people and they like to invest a little a little more carefully. So these of the private money lenders you're going to look for and you can pay them a low mortgage rate and take that and pay off your mortgage. So let's do it. For instance. Let's say, for instance, you buy property, and I'm going to use some numbers of a property that we fixed up in Florida about five years back. We picked up this property on auction for less than $50,000 we put about 25 to $30,000 in it. Okay, we have $75,000 into that property, and now it's all fixed up, right? We got it. We rehabbed it. Now we have $75,000 all cash in the 50. We bought it for the 25 we fixed it up for. And then we go and we look for private money lenders or maybe even a traditional bank to give us alone on that property. Right. So if we have seasoning, we can do it with a regular bank. Or maybe we got a bridge loan and we can do a refinance. I can explain that later in a different episode. But whatever it is, let's say it's a private money lender and they're going to give us the words. Most of the time they're gonna want a 75% LTV, which is a loan to value, meaning the property will have to appraise for $100,000 they'll give us 75% of that. That means they want 25% equity in that property. Well, it's so turns out that that property actually appraised for like, $125,000. So what we did was pull out even more money. Okay, so if you look at that than 75% of the LTV on that property would be $93,750. So if we took out 75% of the value of that house as alone, and we were paying the mortgage on $93,750 right? We were able to do that with our rental property, and absolutely we could that property. I think the rentals in the area where about 1200 bucks so easily we could make that mortgage and then some with a long term renter. But if we took that money out and we paid ourselves back the 50,000 that we put into it and back the 25,000 that we rehabbed it with, So if we took that 75,000 back out, we would have $18,750 in our pocket. And what is that money? That money is completely tax free. Why the money is tax free because it's alone. It's alone. It's a mortgage on that property. So not only would you get the whole complete 75,000 that you put into that property back to put into your pocket, right? So you made that money back, but you would have an extra almost $20,000 tax free to invest in other properties. So we've done that over and over and over again with a lot of properties. He will talk about that later on in the book, but it's one of the best ways to invest, and what it does is it makes your r a Y infinite wise. Your are oi! Infinite, because you don't have a penny in these properties at the end. Now that 18,000 for us is really great, because each one of those properties, we could take that 18,000 and it's tax free money, right, because its mortgage and we could buy the furniture for that property and decorate it and get it all up and running basically for free. But you have to buy smart. You have to buy it the right numbers. You have to fix it up and make it look great. Now it will work with a short term rental. It will work with a long term rental. The reason why that's such a great way to do it is because it gives you a way of holding the property and allowing the renters, whether they're short term renters or long term renters to pay that property down you will have no money out of your pocket, Okay? But you have to have the money up from first. So that's one of the ways. But remember, there was a time we knew that the market would be shifting and changing, so we sold a lot of our holds. Chris and her dad right now are selling a lot of their holding properties. They actually just did a big package. I believe they had over 40 properties in that package and sold that for a nice little 18 million. I think it was down in Tucson. So you're seeing a lot of long time investors selling properties, but they're picking up other types of properties. Why? Because as we get older, we want to do different things with our life, right? Nobody wants to be fixing flipping properties one here in your fifties sixties and seventies, and it's not just because of physically, but because of time wise to. So as you get older, you're gonna want properties that are bringing ume or oven income in. Now, when you do this, you're not gonna have the same amount of income. Why? Because these properties air pain for themselves so you're going to have a mortgage, so you could just as easily take that 75,000. Leave it in there and then whatever you make on that property goes right into your pocket every single month as income. And then you're taking all your deductions throughout the rest of the year, so there's a different way to do everything and a different reason, just depending on your age and the purpose of doing real estate. Why are you doing it? Are you doing it for cash flow? Are you doing it for long term investments? Are you doing it to create wealth later on and maybe a legacy for your family? Why are you doing it? You have to know every time you go into a property. When you pick out a property, every property is different. Every single one, every price is going to be different. Every negotiation is going to be different. It's going to be handled different. So when you go into a property and you take a look at it, you're going to do exactly what Chris does. You kind of look at it and go, What am I going to do with this? AM I gonna fix it and flip it? Um, I'm gonna hold salad. I mean, what am I going to do with it? You're going to start to know after you've done a few. But the thing is, you got to do if you so today, we're going to be talking about the differences between long term, short term. We're gonna let Chris just tell us more about what she does, and you guys probably know what I do. I might chime in once or twice, but this is going to air on 4 20 Monday's for 20. So happy for 20 to all of you guys who are for 20 years. I am way too old to for 20 and also in the state of Arizona. If you for 20 you don't get to keep your guns. So I would much rather have my guns than a little herb Aiken. Always drink a glass of wine if I feel like it. Take a listen to Chris Viele and I speaking about the differences between long term rentals and short term rentals. Enjoy.
So you're gonna terrorize me?
No. What I wanted to do, most people have like, an idea when they go in, they see all those H g TV shows, and they're like,
I'm going to pick up this property. I'm gonna get it for, like, a
most excellent price. I'm going to choose what color tile
and I'm gonna like every different one is gonna look different, and they just they have no clue what the reality is. Uh, so I was like, OK, well, let's talk about the realities of when you buy a home, do with it And what? Why? Your intentions of what you're going to do with it makes such a difference from what you do,
right? Because I have done zero mental prep for this, but I've done it for 20 something years. So that's all I've got. There you go. Well, here's the deal. I figure
with you know, the few 100 units you have under your
belt. All right, well, here for you. So, Chris, we
are super lucky and blessed because we just bought a property together. And I'm driving you crazy because I'm going. I'm going against your grain because you have bought and purchased with your your family and your business. Tons of units of property and the majority of your properties. You you hold, correct, correct. And then you put long term rentals in there. You know, most of your most year guys are students, right?
No. I mean, we have a good volume of students, and then we also have some multi family and a little bit of commercial. But I've got a good mix of month, month and year leases.
Well, that's good, because it's different than what we do now. So when we got into real estate investing way back in the day before the crash, the majority of ours were long term. The majority of the ones that we held were in Mesa, Tempe. They were students, doctors, nurses because we're always by the universities in the hospitals. Because that's what Robert had taught us, right? And so he kept those. And when I got back into real estate after the crash, then I started with long term renters again. But because I knew that another thing was coming, I started selling those properties. And when I did, I missed the cash flow. Because what do you miss when you sell your
property? Like if you have property, you're like OK, now the cash loans isn't very, and that was the really nice part. So what I figured I could do
was rent. So I started renting and turning those into short term renters. We had the properties that I got from my mom and dad in Florida, and so we're like, Oh, short term rentals. I mean, they make a lot more money, especially in Florida. They did. But there's differences. There is a difference when you buy a property and you're going to turn it into a long term rather than short term. So I wanted to talk about those differences because it is different. I mean, it's just most people don't realize what the you know. Like I said, they just don't realize what they're going to do with it. So when
buy properties, do you buy properties that are already fixed up? What condition are those properties usually in when you first picked them up?
There's multiple different ways I could talk about it because over 25 years of doing this, there's, you know, multiple different avenues. But I can talk about what we're doing right now. Yeah, but you're always you're always looking at you hear, lots of people say, What's your exit strategy? What? What are you when you're going to be exiting out of this problem? Pretty. And if that exit strategy is when I die, you know that you plan on buying it and holding it, and it's going to go to your kids. That's an exit strategy. So, you know, right now, we just sold a couple of properties and so were out taking that money for the properties that we sold. And we're out there changing those multi family ones into SFR. So house of this? Yep. And, you know, 50% because we need something and 50% because we like it. You know, it's fun for us. You know, You gotta wanna wake up every morning and and do something fun. So generally, if we're looking for something, we're buying, you know, a mid century older house, you know, 40 50 60 years old. And it needs some work. We like doing the work we like whatever we need to do it, whatever bones it's at and and fix it up and make it a rental, Right, cause you're
when you pick up a property, do you believe, just like he is Lucky said, Do you believe that you make your money on the by?
Oh, absolutely. Yeah. I mean, so you know, the properties that I own? Leona's a family. So it's my dad, my brother and me. And we have lots of discussion about, you know, when you buy it. What's the purchase? You know, what's the value of that property? Yeah, your dad
will just pick it up. He's like, I like it. Let's get
I can't So you have that discussion and you have to and it's okay to be really about that discussion, to say, you know, everything that I've done, we can talk about how you come up with that price and comparables and condition and costs that you have to go into it. But if you say that property is worth picking a number 1 50 but you're like but I'm willing to go toe 1 65 that's okay. Just have to know that that 15,000 more is the emotional amount that you have for wanting something. Paying that extra could be for a lot of different reasons. You just have to identify that you are paying more for it. You can't sugar coat it with lots of fancy things like, Well, when we fix it up, we're gonna build so much equity into it or well, we'll make it back in the year. Or I'm saving so much money or this is a really hot market or
or your 10. 31 in because you just sold all those properties here like, Well,
to pay a little bit more.
OK, that's a little bit different situation. We can come back to weaken 10. 31 exchanges, but or, you know, in my world, you know, because we have so many properties, we have maintenance guys. Yeah, and so you can sort of lie to yourself and say, Well, my name is guys aren't busy, so I need to buy a house now to keep them busy and then pay too much for it. That doesn't make sense. Um, but it's OK if you make that decision and you consciously note when you go into it Well, I've
seen you. You're like, you're like one of those savants when it comes to running and crushing numbers
to me. Yeah, You know, your
market. You know what things are worth. You can walk in and you're really good at saying this is what this property is going to need. And this is what it's worth to me, right? Because I know what what I can get for it. I know what the rents are, and I know where they can get for it. And I know what has to be put in there and what needs to be fixed. So there are things when you're when you are doing a property that you know, the basic nous. Let's talk about the when you're renting it. Long term, you pretty much just do the basics and you want it nice and liveable. But it doesn't have to be upgraded in any way, shape or form. Correct?
No, not really. But here's kind of the difference is I mean, you can do upgrades. Um, you know, everything doesn't have to be vanilla per se, right? But you're not looking at. It's best to explain in comparisons, and mine in my mind is when you're doing a fix and flip, you're really trying to put flashy things. It'll really identify with somebody or you're really designing it and putting in the materials at that moment that will really speak to a buyer A that moment that are almost, you could say trendy, right? You know, you're gonna find what's really desirable for buyers because you want to sell your house rentals air different. You don't want them to feel out of date, but for that same reason, you don't want him to feel out of date. So you're not gonna remodeled the house heavy on a trend Because in three years, people are gonna say, Feel like your house is out of date. You want whatever work you put in it to it, to feel nice and current, but maintainable, You know, You know, if you put in white shaker cabinets because you'd like white shape or K up cabinets, then you know, put in a little more of, ah, basic countertop, and maybe you go for granted. Or maybe you decide on your market that it's it's going to still be for Micah because of the type of tenant that you're gonna have. And that's gonna be how you can make in it best exactly when you're when you're flipping
a house. When we were buying him flipping down in Florida. We would look at all the sales in that neighborhood before we fixed it and see what they were selling. So I'm absolutely Yeah. So if everything in everybody else's house that was selling was granted, then we went with granite. But if it wasn't, then why would you go with granite? You know,
and the other thing that you know, when you're looking and you're putting stuff into, um, a unit, you kind of wanna go with whatever is kind of the 80% around you. You don't want to be that unique house by any means. Um and that goes for the materials on the house. When you pick your cabinets, you want him to be something that you can get parts for 2348 10 15 years down the road you want you know your tile to be kind of generic. You know, don't pick a weird size that that when a tenant breaks some tiles or the fish tank explodes in the living room or whatever happens, and you've got to replace some tiles that you can do a good job of that because the last thing you want to do in every house you own is saved. Two boxes of tile for every house way were clipping. It was the same
color paint, the same tile of the same cabinets. I mean, it was pretty much the same, basically, for all the houses, it did go from beiges to graze, you know, with the as it trended out. But we never went with barn doors yet we never
Yeah, you know, like they're doing barn doors were like, Okay, that it was a good example. I mean, a barn door, you know, is okay, but it really is a very trendy kind of item. And I would never put that into a rental. It's it just it's easy to get broke. How are you going to replace it if you have to replace it? It's just a expensive cost to now. Put it in a door. And now you know, it's just a lot of work, and you want to just make things easy for you Is a landlord to maintain and attendance to maintain,
It's like, especially if you have college kids. They're pretty like holy cow. I mean, you
don't know what I mean? I guess Yes and no. It depends on the kind of kids and how well you you monitor their been such. But you know, doesn't matter really where it's at 2030 40% of your tests and its are just gonna be hard on it, and the others aren't. Yeah, it's really hard if you only have one because your 1st 2 tenants could be the ones that are really hard on it. Trying average it out over 10 tenants, not over 10 houses or 100 house. I think the first houses that I
had in Queen Creek were like that for about three houses in a row. And every time someone moved out, whether it was a year to 33 down the line is in that I had to put another five grand into the place toe, you know, get everything back into shape to rent it out to make, you know, a few $100 a month and it was
like just doesn't seem this seems like two steps forward. Three sets back every time. Yeah, it ISS. It's hard. Uhm, way just bought a house and we're almost done with it. But, you know, we have our own way of doing inspections, which doesn't work for an everybody. But we walked through the whole house on, and we pretty much do our inspection on the house within, like, 15 minutes. Just four of us walk around. We kind of take notes. We just look at the basics, right? And then we're done. We kind of know a rough estimate of what we're going to be in a price voice. So on this house, we found that there was a crack in the bathtub. We're like, Oh, great. The bathtubs gonna have to be redone. It was a Jacuzzi tub. They did some funky tile to put in this fancy Jacuzzi tub because it was really important to the homeowner at that time, right? So we knew we had to take it out. We also knew we're gonna have to redo the tile in the bathroom because of taking it out. But then you get into it, and then you figure out once the tenants move out because you buy it with tenants. It we bought it with tenants in it. Well, the tub had a crack in it, so they ran the tub, of course. Which leaves on any of the lab which damage the wood flooring, which they had a rug on top of, you know? So now you're at OK, now we gotta rip up the floor, All this with flooring in the bedroom and redo that. And then you rip out the tub and you figure out they did a bad job of it. So now you're spending even more money to refurbish something, and it looks great at the end, but it's just a point of it. Always costs more than you think it will. Yeah, absolutely. I like that. Is that the one with the pool where the kids are going to jump off the roof? My choice. Not not my. Yeah, I know. I have five kids. I
remember once everyone where you had Ah, the kids took the trampoline and dragged it over to the pool so that they could jump
triple. It's a full on your like, My God, do you know this is not a dive pull? Somebody is going to die or Well, that's one thing. Just remember, if you're a landlord and there's a pool in it, 100% of the time, not 90% not 95%. 100% of time. If there's a diving board, take it out. Oh, yeah, Yeah. Okay. So when you go in there, you know
what you have to do. You like you said, You guys walk in, you see what needs to be fixed. What needs to be done. But you don't go overboard. Um, no, no. When Now the difference is in different neighborhoods. I think you would do different things to Wouldn't you like if
in Okay, Lets go up because we just drove through there yesterday. That Oro Valley you were renting there you would have higher end rentals. And if you have a higher end rental, you're probably going to do You're gonna make sure that it's the same as the neighborhood, right?
Yeah. I mean similar. And sometimes that doesn't really change what kind of cabinets it may be like. Let's say you really find a cabinet that you like, and it's a good value. Um, sometimes it's not really the quality of the materials you put in. It just kind of ends up in that There's just more so as you go into a little bit more affluent area, you know, a little bit higher price point houses. They're also bigger. And so, you know, right now we're putting in a kitchen and the cabinets or $1500 just for the cabinets. I mean that my double. So you know, you want to be careful that you don't say. Well, I'm going into a nicer neighborhood. I have to buy a nicer cabinet. Well, you're gonna buy twice as many cabinets. Your bill's gonna double Yemen, upgrade the cabinets, and now the bill doubles again and you're just blowing money.
And especially for rental properties.
Yeah, you You don't have Teoh
always spend a whole lot to make something look good, either.
No. And so I think as you start to get into more of an affluent neighborhood in general, you're going to get a little bit more established families. They tend to care a little bit more, And so maybe you start to do a little bit more in terms, uh, amenities that you wouldn't necessarily doing a rental that might turn over more often. So maybe you do accent wall painting. Maybe you do Ah, higher quality carpet, or, um, you do a little bit more with the landscaping because you know that they'll take care of it. Um, you might provide something that might be amenities, so you might provide outdoor seeding or something. You know it? Yeah, We had a
rental when we sold the house. We were in a rental, and they did the pool service force and the landscaping. Right. And it was It was a lot more, you know, obviously than a regular rental. I mean, we were up there in their price range, but the thing was, it was in an affluent neighborhood. Looks great. And you obviously wanted it done that way. You know what I mean? So yeah. Yeah. So you can include that in the price of the rent. So it's like,
OK, yeah. So, like, even when it comes with, you know, you have to look it specifically what your market is then, too. So, like I do have a lot of student rental properties, and in my world, they rent the whole house, but I provide other services that are valuable to them. So I allow them to pay individually. I allow them to see their accounting individually. You know, I have amenities in the house that are important to them as students, and it's designed in a way that's that's more comfortable for them. You know, it just works for their lifestyle. So that's kind of what you know. Every market has things you want to kind of that you can do that aren't necessarily cost more, but then target more to your audience. Yeah, that's great.
Honestly, a great thing, because I remember when we were college students, we had Teoh get everybody, and then one person had to be the one who was in charge on the lease. We paid that person, and then if that person wasn't trustworthy, then sometimes you would pay them and they wouldn't pay the rent and your
life. But we gave them our money. Yeah, yeah, that's pretty cool. So I'm just sitting here thinking so like one thing that seems sort of small, But let's say you're completely regarding your gutting a house and redoing it for a rental is closets. And I'm just thinking like my daughter just bought a house. It's just got this huge master closet, right, and it literally has one rod all the way around the closet onto else. That's it. I'm like it is the most worthless closet over. Yeah, but it's so it doesn't really cost that much money to really make a closet cool. And so if you spend just a little bit money, let's say in the closet adding extra rods, maybe in a kid's room, which would be, you know, like the kid's rooms adding some more shelf space in their versus just all rods doing spending the extra 100 bucks or harm 50 bucks to do would shelving versus Well, I hate the wire shelving. Personally, I just can't Nobody can put their shoes on it, you know thing. And, um, so doing that, then when you goto rent the property, point that out? Yeah, you know, So what? You don't have anything. Your kitchen cabinets look just like someone else's, and you've got a brand new refrigerator, and that's great. But show them all. Look at really nice closets for you, you know, maybe that's where you spend a little extra money, you know, um, that's so And we do that on her college kids so they always have extra rods. More shelves, lots of storage space everywhere I could when I designed the houses. Lots of storage room because you got five individual. You know, my house is early were from two bedrooms, 2 11 bedrooms. And so you have just have a lot of individuals that have things. And so we try to get him, watch the storage.
That's awesome. That's perfect. So when
now you're moving in. What have
you done? Any short sermons? I forgot
gonna be your first short term? It's our 1st 0 wow. OK, so what's the
scariest thing for you when you're going into this? We were talking about when
close. It was kind of fun because ah model called me. I forget if it was the week before and he started to panic because suddenly the pandemic came up. And
we're like, you know, you were about to close on the house or like, Well, the
travel industry just went in the
shitter like, OK, do you shell Michelle? What travel industry, exactly non existent right now. But we kind of looked at each other and we said Okay, but what what was our
exit strategies. We had a bunch of them, right? So we knew if something were to happen, we could go to a long term. And we're like, What's what's the long term runs? It's gonna be this much. And that is like, What's the mortgage? What? We paid cash for the house, so we had no mortgage. So we're like, Oh, okay, so
we're gonna be OK. Like we're gonna be OK, you know? So it was kind of funny,
because we, you know, you always get scared before you do something, but right before you do something and there's a lot of times you get that scared that that you know, that fear comes up like
you get married. You know, like the night before somebody gets married, they go. Holy cow. I'm gonna be with this person forever. And they get that that anxiety for you. Was there any anxiety before you did the short term rental? Like
what? What things are you coming? What things? Air coming
up for you that that don't usually come up
for you because you've been doing that. You've been doing what you've
been doing for more than two decades and I know you're only like you're probably only, like, 30 right now, but you know that the whole thing is you've been
doing it pretty much your whole life. I started in the womb, so yeah, I mean, I can tell you most of what I've done has been with my family. So it's always it always feels more comfortable to do it when you have a group of you to support, which has been nice to do it with you because we can all sort of support through our fears and and, uh, you know, and cheer each other on the push forward, you know? Yeah. Um, so you know, this is one that we've done with you. So it's my own money versus, you know, this. Oh, yeah. Family money. So, like you said, when you're getting going again, it's It's like, Ah, what? And that's why for me, I'm glad you talked about that. I do best with, like, what's the worst that could happen? Or, you know, and and I mean, you could say, Well, it could burn down. Okay, I have insurance for that. No, but that hasn't happened in the last 60 years. At this building, so that probably won't the up. Um, I could have to sell it again. Well, it's pretty much worth mostly what I bought it. Or so I might lose a little little little bit of money, But yeah, that were actually improving it already. Yeah, exactly. So you know, that could be a on a positive and negative been general. Let's just say it's an even Yeah, no, I was OK, that part for me, the thing is, just I've never done a short term rental, so it's that's hard. What? The logistics of all of it. I kind of just sort of let ahmad it it because I deal with this all day. It's sort of like you know, you you work in a restaurant all day long, lasting one does come home and cook. You know, I do grill stinks of all day long. The last thing I want to do is do it again, and the numbers
for you are always that. That was a thing Kevin and I were talking about today because I said, you know, I've got Chris and I are gonna come on and talk about stuff, and he said, you know, Um, someone like Chris. He said
her numbers so well. She could look at a property and say, each of these units is gonna bring me in $700 a unit or 7 50 or whatever. It is perfect. And I go,
model and I and says if we
do this, how much more can we get more like anywhere between this and this? How much more occupancy will bring in? It's like anyone know the numbers, and we're like a single improvement. Every dime that you put in. What is your rate of return? What is your rate of return? And I said, she she's We're making her crazy because everything we
do in a short term rental is stipulation. I mean, everything depends on you know, the market in the weather, and you know, the virus or not the virus. Or, you know, if you're up in Tempe, it's like the Cubbies coming in for spring break at the time of the year. Like how many more rentals are out there? How many new ones air coming in, what their rates are? There's so many variables and all
right, right And so you have for me. It's the thing that makes me the most nervous is I, um I don't wanna have the Sunday The person's moving out of the unit, and I don't have anybody to clean it. And it 11 I've gotta be over there to clean the unit. Like do that.
That or fix a bed or change a battery in a smoke detector. Exactly. That's the hardest part you've got. Well, you
said you've got with your guys. You've got your maintenance guys. Yeah, So, I mean, that's where planning comes in Because
properties that we have in Florida as matter of fact, all the properties now we have them run by by companies, property management companies, or they're run by, you know, like Wyndham or whoever is running that entire unit. Oh, they're basically turnkey where we don't have to do anything. We just get a check, and the check isn't. Obviously, when you have something like that, your check isn't nearly as big is our check is when you're running it yourself. But there's a lot less work to dio. Yeah, So that's probably would you rather have
you rather have a motto and I playing with it
like I'm looking at the playing part, So it's just work out, you know, like the logistics. You know, just all of that. I don't know how it works, and it's not that our arrangement is I need to know how it works. But I'm definitely more of a control free. And so I either have to be in control or completely disassociate this'll like I don't know. I just have to trust that it will happen. And if you need me, let me know. But I'm just trusting it will happen. I've been trusting the process so cool that you're doing that, though, because it's I told a Lego that's gotta feed so freaky for, because everything for her I mean, when you sign a
12 month lease, you know specifically that you're getting so much per month. I mean, there's no question about it. You might not know exactly if they're going to pay her when, but you know that if they don't that, you know, here's the process for that, or here's what we're going to charge for a late fee
know what this is gonna be? It's not. There's not a lot of variables. There's so many variables and what we dio, you know, like
also you also know that, you know, when they rented it, that's what they're gonna get. And things things don't change in the middle. Um, and so, you know, someone you might need to make a repair, But that's gonna happen anyways, right? But they don't get into the middle of the house. You know, the rental for four months and go, You know, I mean, we just can't seem to lease it well enough with this stove. We need to buy a new stove, you know. No, You got the stove in there. You're done it. So have you People don't like that. So that's kind of you know where we're at with this unit? You're like, OK, I have appliances. Are those appliances gonna work? Yeah, Sorry. Or do do we need new ones, or can we find a used one? And so you know, when you're up and running, But that's the other part on this is we've talked about what is going to make this short term rental. Get us the most money and what has got the most bang for the buck. We've talked about artwork. We've talked about furniture. We exactly about just the location alone to location. I mean, we've already picked the location. So you know what's what's the little amenities that you you do for people when they're there? And how do each of those fell into five star ratings, you know, and people recommending it?
Exactly. Exactly. The service is the main thing, and it's
different thing. I mean, when kids and families, even when I know when we sold our place and we had to find a rental property, we were looking at so many places like I went through so many places and you have an agenda. You know, if you are a lifetime renter, if it's something you do, you're looking for one thing. If you're ready to buy another house, you're looking for another thing. You might be looking for location. You might be looking for a lot of storage. There's reasons people renting and what they're looking for, but when they
go on vacation, I mean, well, I'm might
differ a little bit between somebody who's a nurse or traveling nurse, and they're looking for a place to be comfortable for a month or two. But if
for vacation, they're basically looking like, Is this close to these places that I'm going to be visiting? Or, you know, is it close to the hike in? Is it close? Is there something that I can do while I'm there? So we're just trying to make it. You know, the best thing that they can when they open it up and they look at the property that they go. Holy cow. I could feel it home here for many days in Arizona. I mean, this makes me feel like I'm visiting Arizona. This pool makes me. I know it's even if it's 115 outside that, I'm gonna be ableto slip into my little bikini and go sit by the pool, and I'm gonna feel great, you know? And I'm just steps away from it. So I mean, those are the things we're looking for, but we we have to transfer that feeling to them. It's more when people are traveling. It's more of a feeling, you know, right Yeah, you're
years. Well, they're they're going on vacation, and they want to be entertained and transported to someplace other than where they live. Exactly. But when you're renting monthly, they want to feel like that's where they live. E live. That much stuff is here, and there's room for kids. My dog. Exactly. He my Cheerios? Yeah. Oh,
yes. Where this place is so adorable that we're doing together. I'm so excited about it. And
it feels kind of like 19 fifties Palm Springs it Oh, my gosh.
I give telling Kevin I go. I love the era that it's just it's got this feel to it.
said so. You know, as we're doing all the painting and everything is going into it. I just look at it and I got this place. Feels good. It has a really good vibe to it. Yeah. Then the area has agreed vibe to it. That whole area I love that area. The mountains are spectacular. You can see the Catalina's and everything. Oh, what a great area.
Yeah. Yeah. And your house
is right over by there too. So that's nice.
Yeah, that part's that's another thing is I mean, and that's more about how I've been brought up with my business. I definitely have a comfort level of owning in Tucson. Yeah, or at least knowing that things were close to where you can take care of things. Could I buy a house somewhere else and have it long term rental? Sure. But why? I wanted to, like, start buying real estate another city, so I could go vacation there something and write it off or say I guess so. But that's just not how I live my life. Yeah. You know, I don't want to just go from here to Branson, Missouri, or from here, and that's kind of funny, because that's
one of the other places that my parents time show they had a timeshare in Branson. They had
time. Sure, here is you know how? Yes, You know, our parents generation traveled. You just like it. You get to sun and you did summers in San Diego or you wherever you that you went to the lake for the summer. And then you went to the same place year every year after years. You know that That's not how I live my life. So for me. It just works to have everything very centralized in Tucson. And I can manage, you know, maintenance and management and all of that with one team. And that's just much more cost effective and trying to spread it out over multiple places. Well, you'll be
excited to know that there are a bunch of exchange places that you can. You can put your unit out there and then rent somebody else and you give them a week at yours and you take a week. It there's so if you ever want
no, I'm just saying in terms of my kind of rentals. Now, exactly this will be interesting to get into short term rentals and because so much of the management is done by somebody else, so it jammy very, very different. And it's so much of
his automated and automate herbal. So even the messaging, like 90% I would say more than 90. I'd say 95% of our messaging is just a baht. I mean, it's literally a robot. Everything is we just have these pre written grips and messages that we have in there, and when somebody you know investigates it, it goes to this and I mean, it's It's just so automated that we rarely get any messaging unless it's out of the ordinary and the book in same thing. And then the cleanings week. We set that up the same way, like everything is just it's just quickly click you set it up, and then once you set it up, it just automates itself. There's very
with it. It's it's kind of fun. But at the same time, like you said, it is scary because if any system fails, you've got your plan B. But then sometimes claim be will fail and then plan C and you're like, you better be on it, you
know? I mean, I definitely for me doing this. I mean, I feel comfortable cause I know you've done a lot of them, and I feel comfortable because I can just blame you. No, because Chris is super. The response I love Chris is
E told my husband. I do. You guys air
so analytical, though, like you know your numbers, you know your business and you are on ends. But honestly, we couldn't live without the perfectionism that you guys have. I mean, you guys were just You are You are the ying to be hang. You know, like I always say, like
I could I've just swing by my my pants. You know, sometimes I look like I have my shit together, but most of the time, I'm just like, yeah, you know, this is you're freaking It is like, when that when I went Teoh Australia with the kids. Kevin's like, you know? So what hotel are you or which place are you seeing this night And that night. I'm like, I don't know. I just think you're not Get there and drive. You know what he's like. You don't have a plan. He's like one of those people. He has a good plan for, like, every single night for every minute you're there. And some years, like I tried to get better at that. Um oh, and and as I've become less less, kid, you know? Yeah, Our kids are growing up. You know, when you have little could you do have to plan. It just makes life so much easier that when you get there, you actually food. Oh, yeah. rooms, bathrooms, You know, I rented the
campers, so I had the beds and the
food in the back. Yeah. Yeah. So But, you know, you have to plan for other people's needs other than your own. Yeah, I remember once we got rid of all the kids and my husband and I went to the San Diego. Then I called my brother, who was there vacationing with his four kids, right? And he's like, Oh, where you staying? The night we're in San Diego in the summer, right? I was like, I don't know, we haven't found anywhere yet, but I was just, you know, this is three o'clock in the afternoon. I was like, No, no, no. I mean, I think there's like, a holiday and down by Mission Bay by the the, um the sea world being the amusement park thinking maybe will stay there. And he's like, You don't have a room. Are you insane? In San Diego in the summer of like there's lots of rooms, I'll find something blew his mind like, you have no idea. And I'm just like a kind of romance that Kevin that's good. But then, But the weirdest thing is like a motto
is like me. So he's like my little brother or something. And we get together
and we just sit there giving goes he goes, that the fact that you guys get anything done just amazes. May Yeah. Uh, I do. Better to see. Oh, look, it is I got this done. Can I just tell you, though, that conversation with my brother So this it goes back to whom I am at my inner core of the eight blase attitude about the the hotel room? Yeah, but that's only because for the two weeks prior, I checked almost every other day online to see if there were still rooms where they were, how much they cost. So I kind of knew where I was going to go. There you go. It wasn't gonna book it till the last minute in case this trip canceled. Well, they didn't want to blow the money. There's maybe actually responsible. That's Kevin, too. Yeah, but so, so
fiscally responsible with everything.
Research enough to allow myself some spontaneity, Ugo. Yeah, not a lot, but I'm I'm
super excited about this property, and I'm really glad that you're letting us. You know, Just fix it up a little bit nicer than you would normally would Let us go. I love that. So we're gonna fix this up, We're gonna make a little uncomfortable. But then eventually, she'll she'll comment should go. So
how do you guys do that? And
then we'll show her. I can't wait to do more of these because I have a feeling. Once we get these going, then we especially once you get the short term rentals running, you've got that history. So we call that seasoning. You call it seasoning in your business to. So once you get a history of income than you can refinance this and we could pull a lot of this money back out and then reinvested again and do it again and do it again and do it again. That's literally what you want to do. I mean, eventually, you want these to pay themselves off. You don't keep worrying against the equity if you want it paid off. So I figure I don't want to do this the rest of my life, you know? But definitely I like having the incoming so
much younger than you. I don't because you've been doing all that since you were in the womb. I didn't start until much later. So much younger than you and 53 love. You know what? This and that makes a difference. That's these wrinkles right here in the last two year. Yeah. Don't get me started. We won't talk about wrinkles,
but when word we're doing this, we're just making it look nice or painting in all the way. I mean, sometimes when you have a rental property, you don't have to do all the painting. Just, you know, some of it. You
cares my thought. Unless you happen to buy a house where someone with through fixed everything, the paint always looks better when you're walking through and buying it. Especially if they have all of their own stuff in it. I mean, our house was empty, so we knew the paint look bad, but it always looks better than you think. Until you get in there and you start fixing other things. Oh, yeah? Then notice how much of the paint needs to be touched up or dealt with, and it looks it's seven. Just so anybody see plan on painting the whole house twit picks, it makes it look. I mean, even Amato
said, because we put flat on the ceilings so that somebody put semigloss up there and we were like, You know, if you put a flat on their you're not gonna see all those imperfections as much. And then a model put a picture I saw on his Facebook page of the
flat, and it's huge difference. It's a huge difference, and it makes it look
so much nicer. And it and it brings down the brightness of it because I feel much more, you know, coz Ozy mean yeah, So it's such an awesome feeling when you're in there. So I love the tall ceilings to those tall ceilings. Oh, spectacular.
So I would say, if someone's buying a place just in your mind, always plan on painting seem even if it is the same color, unless you absolutely no, there's a fresh coat of paint everywhere. It's just gonna look dirty. And gross compared toa all the new stuff you're gonna be putting into it.
You have Absolutely. But that's cool.
All right, Well, cool. I just thought we would get in
here and kind of just tell him there's a difference.
still work with all those differences. So
scenario, we said, if you know, if everything hit the fan,
a property that's worth a lot. So if we we had to put a long term renter in there, we would all be OK.
And it wouldn't be too bad. And we could actually get because we upgrade the Florian and painting that painted it and stuff. We could get a little bit higher rent than we did when we walked in.
So so it wouldn't be so bad. So always have those different exit strategies whether you're gonna hold it, how long you're gonna hold it?
change your mind. You can totally change your mind later on the
well, you know, that's what life issue have to make a decision like. This is how I'm going to go forward. You can get sick and have to decide you have to sell your properties. You could win the lottery and decide you're going to buy more and move to a different town. You know those positives and negatives in life that can change your trajectory. But if you don't at least make a decision at the beginning, then you consciously decided to make none. Exactly. I mean, we've had plenty of times where we bought a unit as a rental, and it was a great rental. We moved people in. And then, um you know, we had long term tenants in there, and it was a good rental, but we just looked at the portfolio and and where we were at that time, how we felt the market was gonna be and and, you know, you're always reevaluating. It were like, you know, this was purchases to buy and hold, but right now I can sell it for so much more. I would never buy it for this price. Yeah, if I if I view today that I could buy that the price I bought it for and fix and flip it, I would do that. And so, you know, you re evaluate you change And that three If our condo suddenly decided to double in price, we would sell it. Yes, exactly. Because we would have to rent it for twice a ZMA much to be able to make. Absolutely So our exit different change. But we decide at this moment what we're gonna dio and then you you don't just put your head in the sand and say, Well, that's what I always decided I'm stuck with it. Uh, your life changes. Look at it in two years, looking at every five years something,
Yeah, Look at the money. You're making stuff.
Don't look at it every two weeks. It's like
when you buy gold or silver here,
like the prices up the braces down the places up. Now that's a buying
holds, and you just leave it there and then don't look
for Does that Forward is down. The pieces are open, the visas air glow. I'm watching that. I'm like, I'm not even looking at this anymore. You can't can t o e have any more weekends off that I can't go to California. I know way gas prices like the lowest. You're like, I want to take a road trip so bad with down like a buck 50 like six and two. Son, you it's so low there. What have wonderful. Honestly, this has
been for us. And we were talking about it, you know, talking with the kids on the phone and everybody's home and everybody's talking to each other. And I'm like
a great thing that's happened for families. I think a lot of families air closer than they have. They had more time to communicate with each other and and, you know, like then then before in a long time. So I
think it might make you sick coincidentally, which is nice. A good time of year for it to happen. Spring is a nice I mean, forget the stuff about school or whatever, but at least it's generally and most please. It's nice weather where you could be out in the yard with your family. Yeah, start doing, planting and, you know, spring cleaning. And there's just projects you can do versus like If it was January. Exactly. You're like, great clean up our Christmas take down The light is so stiff it every muds pretty. But oh, it's snowing again. Um, it's gorgeous
here, and everybody's out on their bikes and out on the trails on the stuff. And yeah, I love it. You just see more and more families out now all together, which is really rare. The seat, like you see the mom and the dad and the kids on the bikes, and you're just, like,
look, the whole I mean, this is so cool. I don't get I
go Honestly, it's the coolest spring I can remember. Seeing all these families out there together has been It's been really great for us here in Arizona, so we are totally blessed. I really believe that we are blessed. We got a great deal on that place, and those were your numbers. We used Christmas numbers to do it because Chris, like I said, she is amazing. She
knew she knows her long term. Wren's something about it. Michelle, be honest. I kept telling you, Go lower, go. You're like No, no, no, we can't. We'll lose it. I your next 3000 to make yourself feel better. I made the first offer pretty low. I did. You guys like I low
balled the heck out of that one, but
they have. You wanted Teoh back, and that was
That was the number we decided I was like, Oh, let's not lose it. Let's just
take it because this is a number that we we said This is ours. We'll
go, and this is what they came
back with. And I was like, Take it it,
Let's not lose it. Let's not lose it.
But it was not worth what they had it listed for. And they knew that, too. They came down.
Oh, yeah, they did. They absolutely did. But it's definitely worth it now because, I mean, it's it's looking grades.
can't wait to see with all the stuff in the little cactus, and all the little decorations will have to post pictures of it.
All right, well, thank you so much for coming on
and helping people understand. I mean, there's there's a budget that, you know when you walk in. It's definitely not like the shows on H G. T. V. You know, it's not like we're gonna by and replace every every inch of it. And
now life is life is not buying a $300,000 house in California and putting 100 grand into it to sell it for 500. Those notes numbers only exist in California. Yes, the sister else. You love you too. All right. Talk to more questions. You call me? Absolutely. All right. take care, Chris, but my
Okay, I hope you enjoyed that. That was Chris Viele and I speaking about the differences between short term and long term rentals. We just picked up our new property down into something. We're super excited about fixing it up. I'm going to make Chris crazy because I'm keep fixing things that she wants to stay and things that she likes. She really likes white appliances, and I don't know why. Because I really don't like white appliances. I would rather have black over white and seamless steel still over black. Um, black just leaves fingerprints. And I don't like anything black asked my husband. I don't like any black sinks or black countertops black just in a house. It just makes me cringe. Although I love black furniture, I don't mind black furniture, but it's kind of weird. I just don't like black countertops. They just seem dirty to me. Don't like anything that makes it look dirty. But Chris is going to be a lot of fun. We're gonna do a few more down there with her and her husband, Amato and Kevin and I are very, very excited and very, very blessed that we have friends in our life, like Christina Motto. So thanks so much for listening to today's episode. I hope you are stains safe. I hope you are enjoying your for 20. And I really, really appreciate you listening. Hey, if you get a moment, please go to iTunes or wherever you can leave a review and leave a review for our podcast. Thanks so much for listening. Have a great day. God bless you guys. Stay safe, Go and grow.