187. Full-Time Doctor to Luxury STR Owner - Interview with Yash Bhatt

21:34Natalie Palmer:saturated markets sometimes because you have an abundance of like vendors and stuff so what how's it been that's probably how sedona is how has it been in in maine where maybe it's not as popular of a destination and you're like one of the first to bring like this caliber of property to the area yeah we we i enjoy saturated but i'm also again i like doing the passion projects so i think we want to do something like this because i didn't want to go straight to the saturated markets i wanted to pick some places where people hadn't done it to kind of prove an example that it works and then you can bring all that knowledge back and i'll be honest like these rural markets are not easy they are not for the faint of heart i would not go there for their first deal.

22:15It is incredibly hard to find a good team if you don't know how to vet people and don't know how to run an STR. And we've definitely struggled in this market with that. And I think that's, people underplay that when they're saying like, oh, just invest in this random market that I send you. But you really have to know what you're getting yourself into and know that if you are not able to build a good team, you will struggle and not be able to deliver your product. So maybe start small and then go into a full rural market. Or if you live nearby, that's helpful. We don't obviously live in Phoenix, but it is not a joke entering certain markets, I will say for sure.

22:51Natalie Palmer:With the main property, was this a new build or a gut reno? Like what was the, compared to the Sedona house that you had done, how much more work was this? Was this pretty comparable as a project? Yeah, it was actually a new build, but we wanted to add a pool and all these amenities that hadn't been done there yet. So did you just buy raw land and you built from the ground up? It was almost done. So the house was almost done. It was sent to us as a deal of like, this house is almost completed. So you can finalize things like before it's done and get the design process rolling. Ah, got it. Okay.

23:25And that was, and I want to talk about the case study because people sometimes have capital constraints. And I think you can do seller credits and all sorts of creative stuff to get deals on. This one, we had seller credits that paid for the pool and all the design. So we didn't even come out of pocket for that. And, you know, being a new build, you get a warranty in the beginning. so you have less maintenance. So there's definitely like, depending on your budget, there's always creative ways to make deals happen.

23:48Natalie Palmer:You had a partnership on this one too. What did that look like? Was that a 50-50 of putting capital in? Yeah, we did 50. They actually put more capital in, but I did all the work. Right, I was going to say, I actually hope it was not 50-50 with all the expertise you were bringing by this point. Yeah, yeah. We did the design. We launched it with a very specific target in mind and we did, you know, design that hadn't been done there. And the ritual, sorry, this was where our discussion started the ritual there was we did a karaoke bar and it wasn't just like here's a machine it was like there's a wall for it there's a light there's a machine there's a subscription to songs there's like cards that we hand out where it has like challenges we're able to do that are fun because sometimes people get there and they're like okay there's a machine but like what am I saying a song like what do I do and it's like okay but what about the cards like hey tell grandma to like rock out to those 80s metals music that you know she's into that she won't tell you about or have a competition with your friends for like who's the best singer for this song that no one can sing that's so fun it's like it's almost like a board game right you want to be guided to some degree yes and so we tried to set up like i just i like calling them rituals but like you know these things there in the house all over the house like for the outdoor space, indoor space where people are guided.

25:06Natalie Palmer:Hold on, hold on. So tell me, like, this whole house, is this whole house themed karaoke? Wait, like, what's the ethos and the brand behind this property? This is, like, your fun whimsical mountain house. Got it. Okay, so Sedona's very wellness and now you just wanted, like, 180 to do something. Okay, how fun. This is a reunion house where everyone gets together, has fun. So it works for, like, friends reunions. It works for family reunions because we have a pool. We have kid activities, adult activities. We want every generation to gather. They're playing video games in the video game lounge.

25:39They're singing karaoke together. They're watching a movie on the theater. They're in the pool outside. They're in the hot tub. And they're playing games next door. There's all these spaces we design. But they're all a little fun, a little whimsical. It's not like a boring house. The brand identity is definitely like, I wouldn't say snarky. It's like, what's the word? it's like a little bit like playful a little bit on edge cheeky cheeky cheeky is the right word

26:04Natalie Palmer:okay okay got it and so ashita did the design and then you had steph do all the branding who came up with the take me through like the order of how this all came together did you have certain amenities in your mind that you wanted and then it was like integrate this into the into the brand or the opposite like did steph identify an opportunity you know a gap in the market and then you said, okay, let's come up with amenities that work here. Like what was kind of the order for this to all come together? Yeah, we, we did it in the wrong order. And I'll tell people I would do branding first, then design.

26:39Natalie Palmer:Okay. And we, we started with design because the branding thing was still newer and we didn't really know too much about it. And then I came across, you know, Steph's work as we were finishing the design. And I told her, I really think this property deserves like this level of brand. Yeah. And so I would tell everyone listening, like do the branding, before you do the design. So you are basically creating your guest avatar and then making amenities for them. It worked out for us because we kind of did it through the design process, but it would have been a lot smoother if we did it other way around.

27:11Natalie Palmer:So in your case, you had a time constraint. You were buying a property that was almost finished. You probably had a short window to go in and make your final customizations. So looking back, back would you have basically the day you guys put the offer on the house like called a branding specialist and said like let's get this going I'm about to be in the final stretch of design and need the finishing touch like what to you would have been the ideal timeline looking back yeah 100 % I think clothes like like get the offer and get your branding going get design going kind of simultaneously good branding takes three to four weeks it's not always it's not a two-day process and I know people do it in a few days but I really think we went back and forth on identity and made this whole like guidebook for the house for the whole typography logos designs guest avatar our identity like what do we want the house to be all about i think that really helps align how you're going to do the design and how you're going to message people like when they call you and ask questions like what's your tone going to be what are you going to sound like you have to think of all these things and i think that's what i tell people like don't be scared to do that even with smaller properties because that really resonates well with guests like you know when you stay at Hilton what you're getting yourself into.

28:24And you know, if I book a four seasons, like it's going to be like this. And that's because they did the same thing. And we're trying to bring that to the STR space.

28:32Natalie Palmer:So one thing you mentioned is that you guys just actually completed, you did an internal case study of this property. I would love to hear like numbers on this. And you said you were one of the first in this market to try something like this. So when you bought it, how did you even like analyze the property and now based on your initial numbers, has the property outperformed? What is everything that you guys found from doing this study? Yeah, it was very eye-opening because it kind of blew all the expectations out of the water. And I think we kind of expected that, but not to this degree in year one.

29:05I mean, we bought it for$1.2 million and we negotiated$200 ,000 in seller credits. So basically that paid for a lot of the the pool the design and then we did a lot of stuff inside so we still came out of out of pocket but then the house was supposed to do and you know i i like you know for people listening who are newer like everyone has their number they want i like 20 gross roi which means the purchase price times 20 is what i wanted to do which is you know like 240 000 what technically we bought it for a million but 240 000 okay and we were projecting like you know year one 175 to 200k would be great.

29:46That's still a great...

29:47Natalie Palmer:So you're not, when you're calculating that, you're not putting in the price for design, for remodeling, furnishing, the amount you spent on branding. You're just looking at purchase price you wanted it to be. Yeah. That's like my quick and dirty. And then we do our pro forma with the cash on cash and do all the analysis. But I usually will not want to even look at it if it's not 20 % or more. Okay. Okay. And again, that's your initial threshold that it's even worth pursuing. Got it. Okay. So we already knew it was supposed to be like our projections from the people we hired to kind of look at the numbers was 175 to 200 based on the market.

30:23But, you know, people talk about this in this space. Like pro formas are great, but they're telling you what happened last year. They're not telling you what like your new amenities, what the new guest avatar, what the branding and all that will do. so don't be afraid to say that if you have a pro forma like find out what it's going to do next year based on all the changes you're doing and what's coming to the city and if you're new in this space like you're going to beat that number so our performers were 175 or 200 and you know we we're not quite done with year one but we should hit 300 000 in year one oh my gosh and your goal your goal was 240 right and so we're close to that and then of course that everyone says the numbers differently that includes you know whether it includes air dna includes cleaning fees and taxes and yeah all that so everyone reports it differently so just make sure when you read these

31:13Natalie Palmer:numbers that you know what they mean no this is incredible and this is you're you're telling us this when did you guys buy this property 20 in july of 25 so a year ago okay and then when did you launch? November. Oh my gosh. Quick. Cause you said it was almost done. You just came in. Okay. Okay. Got it. Do you know how long they had spent building it up to that point before you came in? Just for anyone that wants to do a new build, what's a more accurate timeline from start from totally start to finish? Oh, wow. I can, I can talk about this for days. So I love looking at new builds in other markets, like building from scratch.

31:52Cause I think you can do stuff that that no one else can do but you have to be patient new builds in sedona are two years new builds in maine are eight months and that's from breaking ground or including getting permits and working with an architect and all of that no the builder in maine he does eight to ten months

32:09Natalie Palmer:total like start to finish okay okay donna is start to finish to like yeah one and a half to two years so don't forget that like market why does it take so much longer why would it take so much longer to build their permits oh it's donna is brutal some cities are brutal for permits and if you've never done a remodel do not like do not go into this without knowing what the permitting situation is because if you have holding costs and they go three months over that could be 30 or 40 000 literally yes yes yes make sure you're including that and keep in mind like ask three or four builders in the market if you want to do a new build like what their times are because your builder might lie to you to be totally honest and they might say eight months but if four other people say two years it's not going to be eight months yeah yeah so we we know it takes that long in maine and so we knew the house was almost done so we actually did the pool like while the house was being finished and also remember for pools for anyone listening like pools in the west coast are gunite or concrete and they take you know three to four months fiberglass and in-ground pools that are vinyl take a week to install in some markets so there's also huge variances in installing pools above ground below ground all of that so just make sure you're like doing your due diligence because things do not apply across markets that well everyone has their own nuances Maine is a pretty seasonal market I imagine how have bookings checked out.

33:42Natalie Palmer:I know you're not even a full year out yet. You said November 2025 is when you launched and we're recording this in August of 26. So it's been about what, nine months. So what, what has seasonality been like? And that was a big thing. And in a lot of markets you look at, there's obviously like huge variances in seasonality, like even in Sedona and Maine, Maine is all, it's summer and winter basically is the peak. And I think if you do this design and branding thing, and we went into this, trying this out, just remember like you may not beat your comps in the peak season and that's okay because everyone's booked.

34:22But if you crush everyone in the shoulder seasons, like that's how you differentiate yourself in these markets. So I would almost tell people like if you have a seasonal market, find out why no one else is getting booked in the shoulder season. And if you can get booked, like you're done. You just got like an extra$40 ,000 or$50 ,000 in bookings. And now your numbers are very different. Because again, in January in a ski market, it's 100 % occupied. You're going to get booked, even if your rate is crazy. But are you going to get booked in May or June? If not, then how do you?

34:50Natalie Palmer:If you have a pool, you very well might. Yeah, yeah. So we got the pool. We heated the pool. So now we can say, okay, in September, we can still get booked with a pool. In May, we can still get booked with a pool. And no one else can. But then how do you target April? How do you target October? And it's like, that's where marketing and all that comes into. But just, yeah, when we're doing analyses, I think if you're looking at saturated markets or seasonal markets, there's always a way to win in every single market. It doesn't matter how hard it is. I am just shocked by these numbers. I cannot believe you're on track to hit 300K in the first year.

35:23Natalie Palmer:And this is, you know, so Airbnb reported that they actually had an increase in demand this year. But if you talk to a lot of hosts, they don't feel that. They feel that demand's been down. And what I think it is, is there was the bubble of like the World Cup effect. I think that when they're saying there was an increase in demand, it probably was localized to World Cup areas. But outside of those areas, I think a lot of people have noticed a dip in demand. There was no World Cup game in Maine. So like you outperformed your own expectations. This is just very, very encouraging for people to hear.

35:58Natalie Palmer:Like it is not too late. there's you know you found success in a saturated market also in an unsaturated the the Airbnb bubble has not burst you just really have to be at the top of your game right now and you cannot skimp the branding the design the amenities like it all has to be part of it if you're going to pursue this right now yeah don't don't do it unless you can do all those things and if you can't in a big market like find a smaller market where no one's done it before and yeah people will love you like if if your comps have Ikea furniture like how can you not beat them right like why and it's that's so scary for people sometimes when look at the air dna and they get obsessed with this number but like when you go on air dna like look at every single comp and don't just like click on them and look at the first photo look at their whole photo set and then read their top 20 reviews and read all the negative reviews i put all the negative reviews into claude and was like what is the pain point of every 20 property and it said okay all 20 properties are high performing all have these pain points like all of them had an issue with this, this, and this.

36:59If you fix that, suddenly you're like outperforming even the top 10. And I think that with AI now is all these tools, you can analyze bulk data so quickly. That's a hack that I think a lot of people can take advantage of.

37:12Natalie Palmer:In Maine before, how many people does this property sleep? 19. 19. In Maine before you purchased, I'm assuming you ran comps on other properties that sleep 19. What did AirDNA or whatever say that they were making? like there was one that was a seven bedroom and we're a six bedroom and it was doing like over 200 but it was unique it was huge it was like 5 000 square feet on a hill like no one was around it it had a hot tub that fit 25 people like it wasn't a real comp like we probably weren't going to target that but it was a good outlier to see like okay you can do this much like it's not like people aren't willing to pay okay so i think when you're looking at comms obviously look at your bedroom account but don't forget like look at top performance to see like what are people in this market even willing to pay like if there's a property doing 3 000 a night that means there are people coming who are willing to spend 3 000 yeah yeah like they're there what were the other 19 people properties doing like like layer like i saw the five and six bedrooms doing from like 100k to like 170k like somewhere at range okay and there was nice ones doing 100 and i think that's again when you look at these comms people try to find the top one and like oh this is how much I should make.

38:24But look at the range, right? Look at the lowest and highest and then see, like find the lowest one that you can beat easily and use that as your floor.

38:32Natalie Palmer:So was there any part of you that was nervous or doubting this project? Like if most of them were making between 100 to 170, your one outlier was making 200. And you know, you said your personal goal was 240. Was there any part of you that was like, I'm trying something that I don't even know if it can be done in this market or like did you just you were like no like it's gonna work like how did you know i think i live in a perpetual state of mild anxiety being a creative person who likes to take risks so i think i think if you don't feel that feeling you're not taking a risk okay like if you buy something that's so safe and i've heard other people say this i really love what they said is like if it feels so easy that anyone can underwrite it like that is not the right deal that's such a good not a deal that's such a good way to think about it like the safest deal might actually be the riskiest one because you have nothing differentiating yourself yeah obviously like you know write your worst case scenario make sure you're not gonna go bankrupt but like if we made 170 we were not gonna go bankrupt right yeah we were we'd break even at 150 so find your break even make sure like there's almost no chance of that like not happening and then feel a little uncomfortable and challenge yourself and say, I'm not going to be comfortable the whole time.

39:50I'm going to grow and I'm going to do well because I did something that no one else wants to do.

39:56Natalie Palmer:How did your partners feel through this process? You had already been through it. And so I think you were very much like trust the process. Were they like, yeah, what is happening here? How much money is being spent and invested? And yeah. Or were they fully trusting no they they were trusting but they saw the budget and we we in the design process we went like 50 000 over budget which i think happens to everyone but it was like yeah it was a kind of a trust trust the process and here's like why i'm doing this and i think at the end they're like we don't know but we're just gonna hope that this works yeah so again i think it was going back to the whole taking risk and doing hospitality and i wanted to maybe transition to the hospital yeah i Actually, that's what I was just going to say.

40:40Natalie Palmer:We've talked about design, amenities, branding, and that's what gets you booked. Hospitality is what's going to keep people coming back. That's what's going to get you the five-star review. How have you implemented hospitality in a project this big? It's hard. You even mentioned when you have so many amenities, things break, things go wrong. The more you put in, yes, it attracts the bookings, but it also leaves more room for error and for a dissatisfied guest. So how have you guys tackled all of that?

41:13Natalie Palmer:Hey guys, it's Natalie here. And I have to quickly interrupt this conversation to tell you about level up your listing summit. Do not skip this ad. Don't do it. Don't do it. Don't do it. If you are even slightly considering going to level up your listing for year five, returning back to Phoenix, Arizona, March 21st through 23rd, 2027. This is your final reminder that early bird tickets end today. As you're listening, this is the last day of early bird tickets. It is September 30th. As you hear this, prices go up October 1st. They are going up by $100. So if you are on the fence, this is your chance to make a move.

41:50Natalie Palmer:We are coming back. We are doing this bigger than we ever have. If you haven't heard the news, we are taking over a hotel this year. So it's not just like the regular venues that we've had in the past where we had to have a separate hotel block and then you had to walk or Uber over. No, everything this year is happening on site at one location. And the hotel that we booked is so sick. You guys, it's got a pool, it's got cabanas, it's got pickleball courts, it's got a golf simulator. It has a restaurant and bar on site, a huge grassy lawn. And we're going to be able to do so many morning wellness, Pilates workshops out there.

42:24Natalie Palmer:I want you to picture everything that you love about level up your listing, but more integrated picture checking in. And before the conference has even started, you're already running into people that you can network and connect with in the lobby, go to your room, get settled in. And when it's time for the welcome party, you're just walking downstairs on day two, you can start your day with breakfast downstairs, running into all these familiar faces you met the night before and keep the networking and connection going. You can go to the gym, you can hit the pool for an early morning swim sesh, or better yet, join us for one of our wellness workshops on the lawn and then kick off the conference.

43:00Natalie Palmer:And hey, if you need a minute to yourself and you're an introvert and you need a little break from everything, you just go right back to your room. Everything's going to be in one place. Once the conference ends, walk over to the hotel restaurant and bar, grab a cabana by the pool, go play a game of pickleball. Everything is happening in one spot. We're so excited to finally be able to have grown level up to the point where we can take over a hotel. The hotel is gorgeous. It's stunning. It's so beautiful. And we just could not be more grateful to have grown this conference to a point where we get to do really cool things like take over a freaking hotel.

43:35Natalie Palmer:All that to say, this is your final, final, final reminder. If you are on the fence about attending, prices go up tomorrow. You have until midnight tonight to secure$100 off. There's no coupon code or anything needed. those prices are already reflected so just head to levelupyourlistingsummit.com make sure you purchase your ticket today before prices go up tomorrow don't say I didn't warn you see you in March

44:02I want to start first by saying like this is a very humbling thing for most people like making this kind of money and I know like sometimes like I used to listen to these podcasts thinking like all these people like just doing all these big deals it must be so nice but it's i think there's a lot of humility here too like we're very lucky to be able to do this and very lucky that people are trusting you and paying such money to stay at your house i think if you think of it that way and don't let it get to your head it helps a lot with the hospitality like this is not some like oh i deserve them to pay this much like people are forking out tons of money to stay with you on a vacation and if you ruin their vacation sure things can go wrong but like that sucks for them right wow and and being like humble about that and knowing that if something goes wrong, it's not always their fault.

44:45And even if it is their fault, it still sucks. Like, even if they broke something accidentally, like, imagine if you were on a vacation and your state got ruined by something that was your fault. It still ruins your state and it ruins the whole trip sometimes.

44:58Natalie Palmer:Oh, truth be told, I would actually feel worse if it was my fault. Like, if I broke the karaoke machine or something, if it goes wrong, you know, there, it's, like, annoying. but like I would feel so bad. Like if, you know, if somebody had some like bad quality thing that hadn't been maintained and like I broke it, it would make me feel worse for sure. I think that goes back to like hospitality is very humbling. Like things are going to go wrong. People are going to sometimes complain about things that you have no control over, but it's how you make you, it's how they feel that matters more than anything.

45:34And if they feel taken care of and they feel like I broke a glass and the host wasn't like, oh, it's$5 for a glass. build build hospitality into your budget if that makes sense like assume that a certain amount of

45:47Natalie Palmer:things will break and you will not charge the guest for it assume assume that things will go wrong and and things people will misuse things and you're not going to blame them for it like you're always going to make them feel like i got this it's okay i want you to enjoy your trip and that goes into your messaging it goes into the checkout instructions like there was a whole thing right about like oh do all the dishes and strip all the beds and why would anyone want to do that and if you charge them more for cleaning and didn't make them do that they would actually be happier than if you gave them a discount and made them do the work so like build build this stuff into your cost and we have a saying and i think the reason hospitality was so important to us was in our culture we have a saying the saying is which basically translates to guest is god and it's a whole Indian culture thing.

46:36Like people come to your house and like you give them your food and you take care of them and you feed them even if they already ate. If anyone has any, you know, friends of an Indian aunt or uncle, like, you know, when you go to their house, like they will force you to eat and you have to eat.

46:47Natalie Palmer:It's not a choice. And we grew up with that ethos. So I think some of this came naturally of taking care of people is very important and making them feel happy and loved and cared for. I think you can do that even in a huge property, even when things go wrong. Like you can call them, call them don't be scared to pick up the phone and call and be like i'm so sorry this happened i we ran out of water at the house like full stop no well water and i got a five-star review from that guest because we called them and said we're gonna send someone there we'll give you a small discount this really sucks i'm so sorry and within two hours like we figured it out they left to go to dinner and came back and it was fixed they didn't say a thing and i know for a fact if i didn't call them they would have gone to airbnb immediately requested a refund gotten rehomed i lost like ten thousand dollars on that booking yeah i think it was a phone call just showing that like this sucks like like that's not okay that this happened and i think don't be scared to make the phone call we've walked many guests off of alleged you know a few times when things happened inevitably and they've almost never been upset after you called them because then they they feel like they're mad at you then, not at the property or at Airbnb or at a management company, right?

48:03Like they have a face and a voice and they just, they're just, they feel so much more cared for if you do that.

48:09Natalie Palmer:For situations like this, are you the one personally calling or do you use VAs for this? I feel like when it's this high, you know, intensive a situation, like sometimes you want to outsource and delegate as much as you can, but there's also pressure to like get involved when you're the representative it's your business at the end of the day so crazy story i ran this property for last year alone with zero help so i have no vas no assistants no helpers just a revenue manager but i basically run the entire property and i mean you have you're on the ground team right but what i mean is like i don't have a v like i work as a doctor yeah do this on the side have automatic automatic messages make all the phone calls and the reason i want to tell people like if you can do that is the amount you will learn from hosting for even six months yeah you cannot train that knowledge at all and being able to walk yourself off a ledge when things happen it's not easy and not everyone can do it i totally get that but if you can even do it for a month or two i would really urge people to just like suck it up and do it and not just go straight to a VA because they won't understand your property the way you do if you set it up.

49:23So we are going to get a VA, but right now I'm the one making all those calls and personally telling them like I'm the owner, like I'm calling you. It's not some representative. And if you have a VA, I would tell you definitely you should be the one making calls for escalation issues. I mean, it shouldn't even be an option. It should be you. You're the owner and you own up to it. You tell them and always open with like, this is horrible and I'm so sorry. I think that just speaks volumes if you're able to do that.

49:50Natalie Palmer:You mentioned that you don't do cleaning instructions for checkout. Do you have anything you require, like take trash out, anything at all? Or it's truly just like leave, lock the door behind you, and our cleaning team will handle it all? I wanted to do that. We had to put a few in because it's a rural mountain market and there's just a few nuances. But it's like as basic as possible. Just bring dirty dishes to the sink area at least. Keep beds there. You don't even say like put them in the dishwasher or start the dishwasher. So what we wrote was you get brownie points if you load them, but you totally don't have to.

50:25And everyone loads the dishwasher and no one complains.

50:28Natalie Palmer:Okay. It's funny when you will get a$50 fine if you don't. Yeah. You don't find people. You want people to do good things. You like incentivize them by like, I don't know, being nice and telling them not to do it. And then they suddenly want to do it because they feel like they want to take care of your house. I don't know. again it's a whole quick performative wellness it's like it's your but you have to like do all these tasks and like how dare you not do them that's just that just leaves such a bad taste i would love to write like don't do anything just leave the problem is like you know if the cleaners like if there's dishes in every single bedroom like that's super annoying yeah we've only had one guest out of 43 stays not do the dishwasher okay and we never tell them to load it we don't tell them to do bedding we tell them lock the door leave turn the lights off and if they don't oh well yeah they leave the acs on for two hours oh well oh well it's the cost of doing business like underwrite i don't know underwrite all that into your hospitality tell your cleaners tell your cleaners ahead of time that we're not going to give instructions you can charge a little more but you're going to have some cleans that are easy and some that are harder and i want to make sure like you're okay with that and surprisingly they were like no that's that's great and our job yeah the the bad cleans are outweighed by all the guests who actually do do everything yeah and so it kind of balances itself out one thing you said i really liked was oh i'm gonna paraphrase it you said you underwrite hospitality and dear cost of doing business how did you phrase it you said it better than me yeah you well i don't even remember how i said it now i ruined it like you you basically include you include hospitality in your costs like in your running costs.

52:06Like it's, it's part of the cost of doing business. It's not like, Oh, I had to replace a glass every year.

52:12Natalie Palmer:It was budgeted in. Yes. Yes. So with, with that, what's your philosophy on like, I don't know what, what would be the, what would determine if like you actually had to go after somebody for damages? Like, where would you draw that line? Cause there is bound to be, you know, somebody who seriously disrespects the property. Like at what point would you say like, no we need to charge for this we had a situation where this happened and we still didn't really do that so our sauna got burned down what yeah so someone went into the sauna they turned it on they did not remove the wood someone put a wood piece on the heater like the backrest and they turned the sauna on and the sauna lit on fire and they went in and turned it off and called me saying, oh, there's smoke coming out of your sauna, which is very vague.

53:05And so we found out, you know, after reviewing everything that they had turned it on accidentally and the whole sauna burned down, we had to buy a new sauna. And I think Airbnb just said like, oh, you know, you can go off with the guests. And we tried to go through insurance and end up not working. But I think that was a situation in which technically you could go off for a guest and we kind of tried to but it got very complicated with insurance and everything but i would say a situation where someone deliberately like did some damage that you can't stomach is the only time i would go after a guest if that makes sense so like your insurance won't cover it and you know i urge people to get damage waivers get like like wevo and all of them have these like three thousand five thousand dollars for like 50 bucks and we actually pay so we pay for the damage waiver and don't even tell the guest.

53:54So the guest has no deposit, no waiver. If anything breaks, they don't even hear from me. There is no like, can you pay me$50 for this? Like if it's up to $5 ,000, they will never know something happened. And that I think is important for hospitality. It was important to me that they are not part of the process. So I think put all those systems in place and you'll realize there might be like one incident or two a year where you go over that. And again, if they go over that, if it's a flood or some huge, your insurance might cover it. So So I feel like the chance of you going after a guest would have to be something that's over$5 ,000 but under like$20 ,000.

54:27Natalie Palmer:Okay. And I don't know how many things would fall in that realm other than someone like literally vandalizing your house. That is I think the only situation in which I would go after someone. Okay. I loved your take. I mean these are pretty big properties bringing in serious revenue. for somebody that's managing something that brings in like 70 ,000 a year, let's say, would you adjust these numbers? Or I don't know, what would your philosophy be on that? You know, a$5 ,000 damage for a property bringing in 300k is very different than one bringing in 70. Find, do like an audit of your, of the items in your house that are the most expensive and find out like, okay, if your couch is$10 ,000 and it could get damaged, I don't know, we tried to pick amenities based on their cost and say if one major amenity got damaged how much would that cost and I kind of based that number off of that okay and it was like one or two major ones because the chance of someone breaking three major amenities is astronomically low and you know what if that happens it's just bad luck to be honest yeah nothing you can do but we based it on that number and I would also tell people if you have smaller properties like don't forget that it's easy for big properties to offer all these huge welcome gifts and all this stuff and how all these costs of like, oh, we just comp this and comp that.

55:46But instead, just focus on the hospitality. And if they feel taken care of and the house is cheaper, they're not going to expect a$500 welcome gift. But they will expect you to take care of them no matter how much your property costs.

55:58Natalie Palmer:This is something I've actually found is very forgiving in the short-term rental space. If you look up hotels, a five-star hotel is a Ritz-Carlton, right? You know what a five-star hotel is a two star hotel is like we know what that is that's a budget you know some sort of holiday inn or something and I found that like hotels what the star rating is is very accurate with Airbnbs you can have a one bedroom in someone's house like a private room rental in someone's house that's a five star rating because the host was super friendly and amazing and you know, left a tray of snacks in the room and that's enough for five stars and you have a property like yours, that's five stars.

56:43Natalie Palmer:And I think that hosts should find it very encouraging. Like I think that guests do have as long as you're setting expectations correctly of what you're offering, you can be a budget, you know, smaller, not luxury listing. But if you set those expectations and you lead with hospitality, I think you can also be a five star listing. I agree. And I think in your description, just be very transparent. like don't sugarcoat things just just tell them like we have this we don't have this it's okay like it's okay to be very transparent people hate when you lie to them or exaggerate things like the listing photos and the like once they're there they expect that it'll be what you said and then it's too late to start not better right yeah so like maybe under promise a little and over deliver rather than like oh everything is ai edited and amazing and every photo looks like Like it's the most spectacular room and they get there and they're like, none of these photos look like this.

57:38This is not OK. And then they don't care how your hospitality is. They feel like their value. That's where your value score goes down. Although I will say my hack is like if your value score is 5.0, I feel like you're leaving money on the table to some degree.

57:51Natalie Palmer:That's a good way to look at it. Yeah. Yeah. For the value score. You're right. Someone's going to come to your house and feel like they overpaid a little and that's OK. Yeah. I think you have to balance that with the other categories, but the other ones should all be five or close to five if you can. But the value is hard because it's, unless you offer so much stuff that it's just impossible, you're probably going to have a couple fours in there where they feel like it was good, but it was definitely expensive. I remember actually, I think it was like two years ago, Airbnb's like fall release or something of updates is when they said they were now going to prioritize that the value category was the one that they would weigh the most heavily.

58:32Natalie Palmer:And I have a whole episode, you guys can go back and listen, where I absolutely like ranted on that because that is to me the most like subjective one, you know, like cleanliness, communication, like there are concrete things you can do. You cannot influence how somebody perceives value of something. But yeah, that is the way it is. But I like your perspective a lot. If your value is five stars, you're leaving money on the table. Well, we could charge a little more. Also for hospitality, if you look at our reviews, it's very fascinating. Like if you read the reviews, a lot of the reviews mention the hospitality and not even the house.

59:07Like 20, some of the reviews don't, they're like, oh, the house is great. But like, here's what the host did. And there's this whole, and it's like review after review. And it just shows you in a case study that when you invest in the hospitality, people will talk about that. And they might book your house because they're like, okay, maybe you don't have 75 amenities. But I don't want a host who's not like this, if that makes sense. Like I don't want the one where every category is perfect, but the host is like not that great. I just don't want to deal with that when I'm booking a vacation. Like if I text them, they might be weird or they might push back or be snarky.

59:41And no one wants it anymore. No one even wants to call, but no one wants a snarky text, right? Or a host that's not hospitable.

59:49Natalie Palmer:What are some examples of how you are displaying hospitality throughout this day? Obviously, there's an emergency. for a lot of hosts, that's the only time that they even like flex their hospitality skills is like picking up the phone when there's a problem. How can you show hospitality when there's no fires to put out? I think your stay starts when they book. So like the first message you send when they book six months ago, you're like setting up expectations for when they come in six months. So by the time they get to your house, they should already know like how excited they are, what they're going to be doing in your house.

1:00:22It's almost like you're hyping them up for six months in a healthy way. And they feel taken care of. You're not just like, oh, you booked it. I'll see you in six months. So we send messages along the way. We send messages like a month out, a week out. We ask questionnaires about things. We look at their message about what they booked it for. And then send specific things of like, okay, you're doing a birthday. Do you want a chef to come? Do you want a birthday cake? And I think we try to do that. And also just keep in touch with them as they ask questions. So that their experience is almost curated.

1:00:53When they get to your house, they're so excited already. That they walk in and they're like, it's going to be great because I already know it's going to be great. And it's almost like on Zillow, you look at photos, you go to the house. And if it doesn't like meet it, you're disappointed. It's kind of the same thing. So I think, you know, hyping up the stay, making sure you talk to your guests before they even come to your house. Because if they booked your house a year out, guess what? Like they can still cancel.

1:01:17Natalie Palmer:It's true. Every single guest, unless you have the grandfathered policy, like until a month before, they can just say, sorry, I was shopping around. and I don't want to stay here. They will not cancel if you call them, send them a video, send them a questionnaire. They're not going anywhere else. Like they're staying with you. Yeah. So your guest is not, your guest is a lead until they show up at your house. That's a really good way to look at it. So you said you had 43 reservations so far for the main house. You've had no VAs, no help. It's been all you. How much time are you spending on each guest?

1:01:50Natalie Palmer:Like calling them, sending. I'm sure you've automated a lot of these messages. Yeah. yeah what's like a realistic amount yeah most guests honestly if you automate your messages and write them not like ai like they should really sound somewhat genuine like you can do ai to write them and then edit them please edit them unless you're unless you're ai even one side hack you can go into claude have it interview you look at your past messages and say build my voice model oh my gosh that's so smart so i've done that and then when i plug in if someone says something i can say like make it sound like me and i don't like doing that i like talking from yeah but yes because now i'm always you know ai is a great starting point but then i have to go make it sound like me oh my gosh that's a gene natalie you could actually feed it your if you're comfortable like with some maybe pick 20 emails where you wrote something like that very much sounds like you and then maybe your messages to guests were like it was you typing yep maybe oh the best one is if you had meeting notes where you recorded the meeting notes feed those that's very you because you're just having a conversation you have my podcast transcripts correct yeah say like build my voice model and then it'll make a document and if you if you put that in to your you can make a project in claude upload that as instructions and then you can always like type a message to make it sound like me or write this email like me and it's pretty good it's not perfect but it's much better so good yeah you're already 90 of the way there instead of 20 yeah and you can put that into host buddy if you're using host buddy because then at least it'll it'll i don't know it'll put commas where you do and use those specific words you use and inflections that you like i love that i love that okay so anyway sorry yeah so back to that so about how much are you spending on kind of like on each guest in the pre pre-process yeah so we automated most messages and we've written them where it has most of these items.

1:03:39So unless the guests have questions, a lot of them don't message you that often. So I would say it's only probably a couple hours here and there. But during the week, probably like I've gotten it down to maybe five hours a week of actual time. And I strongly urge people like to hire a revenue manager unless you're really, really good at revenue management. It is a full time job, kind of. And you could do it. Don't get me wrong. If it's like two or three hundred dollars a month, I just feel like it's not worth it. Yeah, you should still audit them. But I think it's very helpful to have a revenue manager because that's a lot of time that you could take off the table.

1:04:13Natalie Palmer:You know, I know we're at time, so we'll close out here. But one thing that really just clicked for me is you said that almost all your five-star reviews specifically mention the hospitality and that most of your hospitality sounds like it's coming before they've even checked in. And that's just such a – I've never even thought about it in a way where you are basically earning your five-star review before they've even arrived. They've already come and been seeded such good hospitality this whole time that even if something goes wrong in the property, they've already decided that they like you, that they know they can pick up the phone and call you, that they're forgiving.

1:04:50Natalie Palmer:They're not going to run to Airbnb. They're not going to run to leave a bad review. So that's just such a good perspective to have. You can literally earn that five-star review in the months leading up before they've even arrived. I think that's the takeaway point here is this is not an investment business. It's a hospitality business disguised as an investment. If you don't like both, then just really think about who's going to do the hospitality if you have a partner or something. If you don't enjoy that part, I'm not saying it's not for you. Like there's definitely properties where you can still do it.

1:05:21But if you want to do a really, really high end property and make these like high numbers, whether it's like, you know, 500 ,000, this property is doing 500 ,000 in Sedona, 800 ,000. They all have concierge services, all that. But I guarantee you, even those properties that are big don't always have the hospitality that you could bring. And you could still one up them. So like, don't be scared about that. You can always do more hospitality than almost 95 % of the hosts out there. And that could be your, that could be your, your, your hack, right? That could be your way in is I'm just going to out care everyone.

1:05:54Natalie Palmer:And that you can do at any budget, any property size. Yeah. And guess what? Maybe your year one will be slow because you're not as nice as them. But once these guests stay with you, they're not going anywhere else. They're coming back to your house the next year. Yeah. Yash, I absolutely love that. I would love to have you back in. I think you said you have a six month timeline for redoing the Sedona house and upgrading that. You're keeping a lot of things secret. but I just would love to have you back and like explore that one a little bit more and what you've done there. Yeah, you just have such a well-rounded experience with only two properties, but they're both in such different markets and it's just so interesting what you've done with both of them.

1:06:31Natalie Palmer:So thank you so much for taking the time and going through everything. And then please reach out when the Sedona house is done. I want to get you back on here for an update with that one. I know it's going to take more than six months. Okay, nine months. Thanks. Where can people, Can I get links to both of the listings? I'd love to link them below and hopefully so many books, but even just to be able to see the photos and stuff and know what we're talking about here. Yeah, let's put those in the show notes. And then where can people connect with you if they want to learn more from you? Yeah, I have a Instagram account I opened.

1:07:02It doesn't have any posts yet. I wanted to make a business one. I'm still curating it, but it's just called like STR Investor and then my name, Yash.

1:07:09Natalie Palmer:Okay. And I would like, I'm going to start, I think talking and posting more on there about stuff like this. Yeah. I hope this was educational for people. I didn't want to just talk. I hope you learn something about whether it's hospitality or not being scared of having a professional job in doing this. It's all possible. And yeah, I would love to stay in touch if anyone has questions. I'm always open to chatting about stuff like this. It's a passion project for me, for sure. Yeah, I love it. And I think right now when a lot of people are feeling lower demand and stuff, you've really proved like it is so possible.

1:07:43Natalie Palmer:You just have to be willing. It's, you know, you have to check all the boxes today. Design, amenities, branding, and hospitality. You have to have all of them. Yeah, there's no shortcuts, I think, in today's market. But if you're hitting that, you can be blowing your expectations out of the water. Yeah, and everything falls apart without the hospitality. That's like the foundation above all the pillars or below all the pillars. Thank you so much, Yash. It was a pleasure talking to you. And good luck with the Sedona Project. We'll get you back on as soon as that one's wrapped up. I can't wait to hear about it.

1:08:13Thank you.

1:08:14Natalie Palmer:And with that, it is now checkout time. Thanks for listening and I'll see you back here next week. Lastly, as Airbnb hosts, we all can appreciate a good five-star review. So you already know a great review on this podcast would mean so much to me. Please subscribe, review, share, and connect with me in the show notes below. Bye.

1:08:43Thank you.