Short Term Rental, Long Term Wealth with Avery Carl: An EOFire Classic from 2022

0:01John Lee Dumas:Boom, shake the room, Fire Nation, JLD here, and welcome to Entrepreneurs on Fire, brought to you by High Level, the all-in-one sales and marketing platform. On today's classic episode, we'll be breaking down short-term rental, long-term wealth. And to drop these via bonds, I brought to Avery Carl and the EO Fire Studios. Avery is the author of Short-Term Rental, Long-Term Wealth and host of the Short-Term Show podcast. She is the CEO of the nation's top STR real estate brokerage slash team, The Short-Term Shop. And today we talk about how you learn by doing, not by overanalyzing, how you can self-manage a short-term rental without property management company, and how you can scale with short-term rentals.

0:37John Lee Dumas:But keep in mind that there's also a lot of value in a diverse portfolio and oh, so much more. And a big thank you for sponsoring today's episode goes to Avery and our sponsors. Stop duct taping your business together. High Level runs your website, your funnels, email, automation, scheduling, payments, and memberships all in one place. And when you sign up at highlevelfire.com, You get a 30-day free trial, plus my exclusive bonus stack that includes weekly office hours with me and much more. Visit highlevelfire.com, highlevelfire.com. Fire Nation, are you ready to build something special in the next 50 days?

1:15John Lee Dumas:Check out my free YouTube series, 50 Days to Something, short and strategic step-by-step videos by me, JLD. On day 50, you'll have a valuable asset, and the best part is it's completely free. Visit eofire.com slash YouTube and start day one today. Avery, say what's up to Fire Nation and share something that you believe about becoming successful that most people disagree with. Hey, thanks so much for having me. I think a lot of people will disagree with this, but you learn by doing, not by analyzing or over-analyzing, so analysis paralysis. So I would say learning by getting in there and doing things is the way to be successful.

2:02John Lee Dumas:Take an action, Fire Nation. And that's going to be kind of a theme throughout this episode. As we talk about short-term rental, long-term wealth. And I think time is what holds a lot of people back, Avery, from really diving into this space. Can we really self-manage a short-term rental without a property management company involved? Yes, absolutely. So I kind of figured this out years ago because I had time a little bit, but I didn't have money and I needed to be able to scale more quickly. And the average split with a property manager at the time that I bought my short-term rentals in the market we were in was 40%.

2:43And that was not something that I was willing to sacrifice in terms of building my real estate portfolio. So nowadays, there are a lot of really cool tools and apps to streamline the process to make short-term rental self-management remotely from anywhere possible for basically anyone.

3:00John Lee Dumas:So let's give maybe an example of what that looked like for you at the beginning of your journey. Because I think a lot of people will say, hey, Avery's crushing it now. I see where she is now. But what about earlier days? What did it look like for you maybe figuring this out in your first or second, or maybe it was even your third go-around at this? Well, for me, I was making$37 ,000 a year working in the music business in Nashville. Well, so newsflash, if that's your dream, be prepared to get paid nothing because there's always an intern that'll do it for free. So I had the drive and the want and the heart to be able to want to be able to get out of being stuck in that job forever.

3:41And so for me, it was just that... So we started with a long-term rental, actually. And that's where we thought, well, hey, we really want to scale this and have a lot of these and make a business out of it. So we kind of fell into short-term rentals because we were like, well, what can we buy that will make us the most amount of money the fastest so that we can scale faster? And for us, it was really being able to find something that was pretty much ready to go because we did not have the extra money to be furnishing properties or doing a lot of rehab. So choosing your market is going to be really, really integral when it comes to the least amount out of pocket.

4:23So if you're buying a short-term rental in a mature vacation rental market like Destin, Florida, or the Smoky Mountains in Tennessee, where short-term rentals have been around for decades and decades and decades, most of those properties are going to come furnished. You're able to knock that really big. Typically, it's a really big line item of your expenses, furnishing a property. So choosing your market in terms of price point and things coming furnished is going to be a really big part of it.

4:48John Lee Dumas:So if we're just clueless about where to start, How can we identify the best market to invest our first short-term rental dollars into? There's no wrong way to do it. So there are going to be people out there that have done exactly the opposite of what I'm saying that I'm doing. But in my opinion, you want to choose a regional, drivable, mature vacation rental market. So think of areas maybe that you went with your parents when you were a kid, where you drove there and you stayed in a condo, cabin, single family home, something other than a hotel. So these are areas like the ones that I just mentioned, some other ones would be like Panama City Beach, Florida, Myrtle Beach, areas like this where there's not a lot of hotel presence.

5:34Most of the tourism coming in, they're very tourism dependent areas, but most of the tourists coming in are not flying, they're driving. And these are areas where short term rentals have been around forever. So it's not a situation where everybody up until 10, 15 years ago was staying in a hotel and then short-term rental investing and Airbnb kind of became a thing. And then everybody switched over to Airbnbs. You want to choose an area where short-term rentals have been the thing since well before Airbnb existed, even before the internet existed in some cases. And they're pretty easy to figure out, to find.

6:09John Lee Dumas:Now, why is drivable such a key factor for all of this? So for me, and I'm certainly not an economist, so this is just my opinion as a real estate investor, but they're a little more insulated from major economic changes or recessions. So in a recession where money is the factor, like in 2008, well, maybe people weren't flying to Tulum to go to the beach, but they could, depending on where they live in the country, maybe you're driving to Panama City, Florida, you're driving to the Outer Banks. So you're taking a little bit of a cut on what you're spending, but you're still going to the beach.

6:48And then same thing, but slightly different with COVID. People were dying to get out of their houses, but they didn't want to get on planes and be in confined spaces with people. So they were taking these drive trips to places they could drive to. So, you know, no matter what, whether it's a health-driven economic factor or whether it's financial, maybe you're not flying to Aspen this year, but you might be driving to the Poconos or the Smoky Mountain.

7:14John Lee Dumas:So, Fire Nation, I hope you're really absorbing everything that Avery's sharing here. Regional, drivable, mature, vacation market, a lot of cool factors here. And we're going to be talking about a lot more factors and characteristics when we get back from thanking our sponsors. Fire Nation, ideas are exciting, but systems will allow you to create freedom. That is where High Level comes in. High Level allows you to build and run your entire business from one platform. Website builder and hosting, funnel and landing pages, email marketing, automation and workflows, calendar booking, payments and subscriptions, even course and membership hosting.

7:49John Lee Dumas:Everything works together seamlessly. Plus, award-winning 24-7 support, so you are never stuck. And when you go through my link at highlevelfire.com, you unlock my full bonus stack, a 30-day free trial of High Level with full access, a private 50-minute coaching call with me, weekly live office hours with me, a digital copy of my book, The Common Path to Uncommon Success, my 50 Days to Something execution roadmap, and more. Stop piecing tools together. Start building momentum. Visit highlevelfire.com and start building your something today. Fire Nation, are you ready to create something special in just 50 days?

8:29John Lee Dumas:If you just thought yes, then check out my free YouTube series, 50 Days to Something. Every video is short, clear, and built to move you forward one intentional step at a time. Clarity, offer, validation systems, momentum. By day 50, you are not working on something. You have built something. Something to be proud of. And this is completely free on my YouTube channel right now. If you're done letting weeks just drift on by, visit eofire.com slash YouTube. That's eofire.com slash YouTube and press play on day one. 50 days will pass in the blink of an eye. The only question is whether you'll still be thinking or finally building something special.

9:14John Lee Dumas:So Avery, before the break, I kind of teased that we're going to be talking about some more characteristics that will really help us know and understand if a property is actually going to make a good short-term rental. Now, we went into a bunch of things, the regional, the drivable, the mature, the vacation market, but let's go even deeper into the weeds here. What are some things that you really start to look at when you've identified a location in an area, but now you're saying, okay, so I'm going to take the next step and really shake these properties up a little bit? Well, you want to look at data.

9:44A lot of times, people can get hung up on the rental history of a property because a lot of times these things have been short term rentals already in these areas. So there will be some type of history that goes along with it. For me, this is going to sound crazy to some people, that rental history means almost nothing to me because it is one random data point. It's what one random person or host or manager has been able to do with one random property. So you want to look at market wide data like from AirDNA or Rabu or ABBU, because that's a market-wide data scrape. So you're able to see what all of the properties are doing.

10:20And in conjunction with looking at data, there are some things that data can't tell you, right? Like data can't tell you the condition of the property. It can tell you how it performed, but it can't really tell you why. So at the short-term shop, we use something that we call the enemy method, where you're zooming in on the neighborhood that you're planning to buy. And you're looking at your neighbors or your enemies. It's way more fun to say enemy than neighbor. So you're looking at your enemies and you're seeing where you might fall on that data spectrum. For example, I had a client recently who was looking in Fort Walton Beach, and all of the tourism areas are on this little peninsula called Okaloosa Island.

10:59It's not actually an island. And they're a little bit more expensive. They're condos, beach houses, things like that. Well, he was looking on the other side of the bay where tourists don't really go. There's nothing over there. its way inland. And the numbers looked amazing on these cheaper properties that were just like, you know, 70s brick ranch homes, but not really anything that the tourists were going to rent because it's in a weird place. So that's where the enemy method comes in because data, you can trick yourself with data by just finding the cheapest property, but it might not necessarily be a property that people are going to rent.

11:36So you also want to make sure that you're buying things that are what the tourists have come to expect. And I know that sounds a little difficult, but it's really not. So, you know, if you're buying in a mountain market, typically cabins or cabiny style properties where you're buying in a beach market, you know, beach condos, beach houses, you know, the bright colors, or I guess white is really the new color of beach houses. So, you know, you want to stay away from the things that are a little bit different in terms of, you know, like brick ranch houses, for example, probably not going to come to a huge beach tourism market and rent a brick ranch house three miles from the beach.

12:11So it's a lot of common sense that you wouldn't kind of think because a lot of people get really, really bogged down with numbers, but it is just as simple as saying, is this something that I wouldn't want to rent? If yes, well, keep going and dig into the numbers.

12:25John Lee Dumas:Fire Nation, the enemy method. And you are right, Avery, talking to a army veteran. I kind of like that kind of mentality there of like you're infiltrating, you're kind of spying, you're kind of seeing what's going on and then you're going in for the kill. And, you know, of course, a financial way and an economic way here. Now, if we wanted to have some kind of an idea of what the revenue would look like before we actually pull the trigger, so to speak, how do we calculate what a short-term rental might make? So you would use a combination of that data and the enemy method to kind of figure out where you might fall on that spectrum.

13:01But with short-term rental investing, and I want to also set this expectation with you guys too. So I don't only buy short-term rentals. I've got 205 doors right now. Eight of them are short-terms. The rest are more traditional, long-term single families and multifamilies. So with multifamilies and long-terms, the numbers fit really, really nicely into a spreadsheet because the rent is what it is. And it's going to be that every single month until that tenant moves out and you rehab the property and raise the rent. With short terms, it's never going to fit super nice into a spreadsheet because the rent is going to be different on 4th of July weekend than it is on a random Wednesday in January.

13:40So it's always going to be a little bit of a range and you have to have some comfort there and an ability to go with the flow and know that, okay, I'm comfortable with the bottom level of this range. So I'm going to go ahead and pull the trigger because it's just not going to fit really, really nicely into a spreadsheet like long-term and multi will.

14:00John Lee Dumas:Tell us the story of, to date, your personal favorite short-term rental that you scored. Take us to the scouting it initially out, the enemy method usage, and then actually purchasing it. And of course, seeing the results of it being cashflow positive and really a great short term rental for you that you consider the gem of your entire portfolio. I'm going to go with my most profitable one. So that was our seventh short term rental. It is a four bedroom with a pool a few blocks off the beach in Destin, Florida. And this was several years ago. It's in 2019 that we got it. So not too far in the past.

14:39And it is really, really cool on the outside. Beautiful beach house. It's bright blue. It's a little bit different looking than it's just like a lot of the straight up and down, tall, skinny beach houses around here. And it had been on the market for a year. And before that, it had been foreclosed on twice. So I've been foreclosed on twice and was on the market with an REO agent for almost a year. Super cute on the outside, but the pictures on the inside were terrible. There were only pictures of the really, really terrible looking kitchen where the granite was like the color of dog throw up. And there was black, just junk all over the carpet.

15:16And we decided to go see it because it was a good price. And it really, when we got in there, all it needed was cosmetic stuff. So we paid$6.50 for that. And keep in mind, that's having been foreclosed on twice. So that is not market value. Paid$650 for it, put 15 % down. And then we put another$50 into just cosmetic upgrades. And that property made us, that grossed$162 ,000 last year.

15:45John Lee Dumas:That's fun, Fire Nation. That is using the infiltration enemy method. So let's end with a bang, Avery. Take the microphone. You've shared a lot of great stuff today. I mean, we've been talking all about short-term rental, long-term wealth. What do you really want to make sure Fire Nation gets from our entire conversation today? What's that key thing you want us to walk away with? So the key thing is, yes, I used short-term rentals to build my portfolio. So I was able to go from zero to 205 doors over the course of about five years because five of my first six investments were short-term rentals.

16:21But there's a lot of education going on in short-term rentals. place right now where everybody's like short-term rentals are the right and only way. I disagree with that. I think that there's a lot of value in a diverse portfolio. You need to have lots of different types of real estate in your portfolio, not just short-term rentals. But short-term rentals are, in my opinion, the best way to get started because they can really generate that cash flow quicker. You can get to the point of scaling. And maybe you want to have all short-term rentals and that's fine. But for me, I really love my multifamilies and my single family long terms too.

16:57So that no matter what happens in the economy or anything, we're covered. If something happens with the short terms, we're covered with our long terms. And like when COVID came around, we thought, oh, crap, there go the short terms. Good thing we have the long terms. But actually, it was the opposite. The short terms boomed, but we had to worry about eviction moratoriums with the long term. So no matter which way the pendulum is swinging, it's really good to have a diverse portfolio. So it's not just short terms, but they are a really great way to turbocharge your cash flow to get that portfolio where you want it to be faster.

17:30John Lee Dumas:Avery, how can Fire Nation connect with you, learn more from what you have going on, any call to action you have, and then we'll say goodbye. Yeah, absolutely. So we have a team of real estate agents called The Short Term Shop. We're in 11 of the top short-term rental markets in the country. And if you buy a property with us, will teach you how to manage it for free. So that's everything from teaching you how to set up your Airbnb and VRBO listings, how to set up all that property management software. So you're really only having to spend like 30 minutes a week on these things, all the way down to helping you find your local boots on the ground, like cleaners, handymen, et cetera.

18:04So hit us at theshorttermshop.com and click schedule a consultation if you would like to learn more.

18:10John Lee Dumas:Fire Nation, you're the average. Of the five people you spend the most time with, and you've been hanging out with AC and JLD today, So keep up that heat. Head over to eofire.com, type Avery, A-V-E-R-Y in the search bar. Her show notes page will pop up with everything we've talked about here today. And Avery, thank you for sharing your truth, your knowledge, your value with Fire Nation today. For that, we salute you and we'll catch you on the flip side. Thanks so much for having me. Hey, Fire Nation. Today's value bomb content was brought to you by Avery and Fire Nation. Over the last decade, I've interviewed more than 3 ,000 of the world's most successful entrepreneurs, and I've created a revolutionary 17-step roadmap to your financial freedom and fulfillment.

18:52John Lee Dumas:I put it all into my first traditionally published book, The Common Path to Uncommon Success, personally endorsed by Seth Godin and Gary Vaynerchuk. The Common Path to Uncommon Success is the step-by-step guidance that you need to achieve the lifestyle of your dreams. Visit UncommonSuccessBook.com, and I'll catch you there. or I'll catch you on the flip side. Stop duct taping your business together. High Level runs your website, your funnels, email, automation, scheduling, payments, and memberships all in one place. And when you sign up at highlevelfire.com, you get a 30-day free trial, plus my exclusive bonus stack that includes weekly office hours with me and much more.

19:31John Lee Dumas:Visit highlevelfire.com. Highlevelfire.com. Fire Nation, are you ready to build something special in the next 50 days? Check out my free YouTube series, 50 Days to Something. Short and strategic step-by-step videos by me, JLD. On day 50, you'll have a valuable asset. And the best part is it's completely free. Visit eofire.com slash YouTube and start day one today.