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    Real Talk With Gary - Real Estate Investing

    218: Riley Oickle - Why Your Short Term Rental Isn’t Working

    Thu Jul 13 2023
    Real Estate InvestingShort-Term RentalsMarket AnalysisEfficiencyAmenitiesMarket ShiftsMaintenanceManagementGuest CommunicationAutomationInsuranceBoutique HotelsMentorship

    Description

    Real estate investor Riley Euikle shares his expertise on multifamily residential investing, short-term rentals, and market analysis. The episode covers topics such as furnishing, amenities, maintenance, insurance, and future plans. Listeners will gain valuable insights into the world of real estate investing and short-term rentals.

    Insights

    Market Analysis is Key

    Understanding market conditions and analyzing data are crucial for successful short-term rental investments.

    Efficiency in Setting Up Rentals

    Streamlining the process of setting up short-term rentals through established systems and team collaboration can save time and effort.

    Amenities Matter

    Providing unique amenities such as hot tubs, saunas, and geodesic domes can attract guests and enhance their experience.

    Adapting to Market Shifts

    Investors should adapt to market conditions and run numbers properly instead of waiting for interest rates to go back down.

    Maintenance and Management

    Short-term rentals require more maintenance and repairs compared to long-term rentals. Finding reliable contractors and cleaners is essential for successful management.

    Guest Communication and Automation

    Automation and systems are crucial for managing multiple properties and guest communication. A digital guidebook can provide helpful information for guests.

    Insurance Considerations

    Insurance companies may have restrictions on certain amenities like fireplaces in short-term rentals. It's important to find suitable insurance options.

    Transitioning to Boutique Hotels

    The hosts are considering transitioning from single-family short-term rentals to boutique hotels, exploring opportunities in the hotel space and raising capital for the project.

    Importance of Mentors and Coaches

    Finding mentors and coaches who have achieved success in the desired field can provide valuable guidance and support.

    Contact Information

    Listeners can connect with Riley Euikle on Facebook and Instagram as Rylawickel investor, or visit Rylawickel.com for more information.

    Chapters

    1. Real Estate Investing with Riley Euikle
    2. The Journey to Short-Term Rentals
    3. Combining Long-Term and Short-Term Rentals
    4. Arbitrage Opportunity and Market Analysis
    5. Efficiency in Setting Up Short-Term Rentals
    6. Amenities and Maintenance for Short-Term Rentals
    7. Market Conditions and Investment Strategies
    8. Maintenance and Management of Short-Term Rentals
    9. Managing Multiple Properties and Guest Communication
    10. Insurance and Future Plans
    11. Transitioning to Boutique Hotels
    Summary
    Transcript

    Real Estate Investing with Riley Euikle

    00:00 - 06:25

    • Real estate investor Riley Euikle specializes in multifamily residential investing using the birth strategy and joint ventures. He helps beginners find, analyze, and purchase cash flow properties through coaching. Riley owns a real estate portfolio worth over $8 million.
    • In this episode, they discuss short-term rentals and why some may not be working. They cover topics such as furnishing, amenities, cleaners, maintenance, emergencies, Airbnb vs. VRBO, fee structures, air DNA usage, guidebooks for rentals, and insurance. Riley shares his wealth of knowledge on these subjects. Listeners experiencing issues with their short-term rentals will find this episode helpful.

    The Journey to Short-Term Rentals

    06:07 - 12:11

    • The guest has been involved in real estate investment from a young age and had entrepreneurial tendencies. Their interest in renewable energy led them to explore real estate as a tangible asset. Real estate provides a secure foundation and cash flow for business owners. Having both active income and real estate investments is important for financial stability. Short-term rentals became a focus after starting with long-term rentals, creating a blend of both in their portfolio.

    Combining Long-Term and Short-Term Rentals

    11:46 - 17:42

    • The speaker started with long-term rentals and then got into short-term rentals, creating a blend of both. Long-term rentals are secure in all types of economies, while short-term rentals do well in booming economies. The speaker connected with an old friend who was running a co-hosting business in the short term and decided to combine their skill sets. They bought several short-term rentals that performed well. They used joint venture partners for financing and co-owned the properties 50/50. Some properties were also bought with their own money. They negotiated down the price of one property by $100,000, resulting in built-in equity. Most properties are owned by joint venture partners personally, with the speaker as the active partner. They started in cottage country and focused on high-value assets in the Cortha Lakes area. They targeted lake access properties instead of lakefront ones due to an arbitrage opportunity. The average rental rate dropped only slightly for lake access properties compared to lakefront ones.

    Arbitrage Opportunity and Market Analysis

    17:23 - 23:38

    • Arbitrage opportunity in the short-term rental market by purchasing properties for 25 to 50 percent less than Lakefront
    • Using AirDNA as the go-to company for data on short-term rentals
    • Mistake of using NoiseAware device to monitor noise levels, which led to a complaint from a guest and temporary shutdown of a property
    • Adding a clause about surveillance for noise monitoring in the listing description resolved the issue with neighbors
    • Water system issues with one property resulted in running out of water from July until September, but it was resolved by hiring a water truck and relaunching the property on Airbnb
    • Relaunching a property on Airbnb by deleting the old listing and creating a new one can resolve issues with bad reviews
    • Pivoting towards urban-centered properties that can be operated as both short-term and medium/long-term rentals
    • Market analysis and understanding data are crucial for successful short-term rental investments

    Efficiency in Setting Up Short-Term Rentals

    28:50 - 34:46

    • The process of setting up a short-term rental property has become more efficient over time.
    • Having a Google sheet with all the necessary items and amenities helps streamline the process.
    • Using duplicate designs and established software integration saves time.
    • Having a team that can service multiple properties within an hour radius reduces the need for sourcing new contacts.
    • Guest communication and portfolio management are overseen by dedicated individuals.
    • Hiring furnishing professionals instead of doing it oneself saves time and effort.
    • Delivering furnishings to a storage locker with concierge services avoids cluttering the property during renovations or painting.
    • An assembly team is employed to put together the furniture.
    • Sourcing from IKEA, Amazon, Structube, and Wayfair is preferred for cost-effectiveness and convenience.
    • Buying brand new items is more streamlined but discounted opportunities for expensive items may be considered.
    • The cost of furnishing ranges from $8,000 to $9,000 for the first property and $10,000 to $15,000 for one to three-bedroom properties. This includes kitchen supplies, living room furniture, bedroom essentials, and replenishable items like toilet paper and hand soap.

    Amenities and Maintenance for Short-Term Rentals

    34:26 - 40:26

    • Budgeting for finishing a place can be expensive if not planned properly
    • Having a team or virtual assistant to help with busy work is recommended for short term rentals
    • For cottage properties in Ontario, having a hot tub and sauna are important amenities
    • Other additional amenities could include a volleyball court, ping pong tables, and a movie theater setup
    • Geodesic domes are unique auxiliary dwellings that can attract guests
    • Installing a pool heater based on guest demand can improve bookings
    • Listening to guest requests and providing necessary items can enhance the experience
    • The market shift has not impacted the business negatively due to the uniqueness of the properties

    Market Conditions and Investment Strategies

    40:05 - 46:09

    • The market shift has impacted the business in cottage country, but they are seeing a return to normal numbers similar to pre-COVID.
    • COVID caused a spike in Airbnb numbers as people flocked to Cottage Country for vacations. The unique lifestyle and challenges of living in Cottage Country deterred some people from staying long-term.
    • The perspective on interest rates and market conditions varies depending on the individual's experience and historical context.
    • The current market presents opportunities for investors who can make properties work at the current interest rates.
    • Waiting for interest rates to go back down may not be realistic, so it's important to run numbers properly and adapt to the market conditions.
    • Purchase prices and interest rates have an inverse relationship, so when one is high, the other tends to be low.
    • It's crucial to consider different scenarios and ensure that investment strategies work under various conditions, including potential interest rate increases.
    • Instead of blaming external factors like inflation or high prices, individuals should focus on how they can afford what they want and learn from those who are successful in doing so.
    • Personal development plays a role in income growth, so investing in knowledge and education is important for running a successful business.

    Maintenance and Management of Short-Term Rentals

    45:53 - 52:19

    • Investing in personal development is crucial for running a successful business.
    • Short-term rentals require more maintenance and repairs compared to long-term rentals.
    • Budgeting for maintenance is important when analyzing the profitability of a property.
    • Short-term rentals may require up to 10% of gross revenue for maintenance and repairs.
    • Finding reliable contractors and maintenance personnel is essential for short-term rentals.
    • Airbnb's air coverage makes it easy to get reimbursed for damaged items in the property.
    • Glassware, such as wine glasses, often need replacement due to breakage.
    • Cleaning hot tubs regularly can be time-consuming but necessary.
    • Electrical issues may arise with short-term rentals, requiring professional assistance.
    • Finding reliable cleaners who show up consistently is a challenge for short-term rental owners.
    • Reliability of cleaners is more important than achieving perfect cleanliness standards.
    • Testing multiple cleaning companies during the first month can help identify the most reliable one.

    Managing Multiple Properties and Guest Communication

    51:51 - 57:55

    • Competitors are tested within the first month to determine the most reliable option.
    • Software like Hostaway helps manage schedules and prevent overbooking or overlapping.
    • Last-minute bookings are handled by calling the cleaner if necessary.
    • Automation and systems are crucial for managing multiple properties and guest communication.
    • Emergencies are rare, but a guest communication person is available during off-hours.
    • Automation is used for standard responses, but a human is needed for unique inquiries.
    • A digital guidebook called Host Fully provides answers to common questions and information about the property.
    • Portfolio managers in Eastern Europe gather information for the guidebook based on online sources and Google reviews.

    Insurance and Future Plans

    57:42 - 1:04:07

    • Insurance companies are hesitant to ensure properties with operating fireplaces in Airbnb rentals. The podcast host had to disconnect the fireplaces in their cottages to comply with insurance requirements. They use electric baseboards, heat pumps, propane, and oil for heating instead of fireplaces.
    • Banks can be hesitant to finance short-term rentals, but if it's presented as a secondary residence or vacation home, insurance works well.
    • HMS Insurance is recommended for insurance options.
    • Short-term rentals continue to offer good opportunities, especially in provinces investing in tourism like Nova Scotia.
    • The HRM has recently licensed short-term rentals in Halifax and Dartmouth.
    • The podcast host is considering investing in boutique hotels or motels inspired by a Netflix series called Motel Makeovers.
    • They are looking for run-down hotels or motels with around 10-40 rooms that they can renovate and rebrand.
    • Finding realtors with connections to off-market properties is important for this type of investment.
    • They have been researching and analyzing different aspects such as cleaning teams, maintenance, call centers, and booking systems.
    • Scaling up from single-family short-term rentals to boutique hotels requires evolving knowledge and systems.
    • They are considering adopting an existing brand name or creating their own brand for the hotels.

    Transitioning to Boutique Hotels

    1:03:46 - 1:08:47

    • Considering adopting a brand name or creating their own for a boutique hotel
    • Transitioning from greenhouses to the hotel space in Ontario
    • Looking for investors and raising capital for the project
    • Planning to use the JV structure and upgrade to general partner, limited partner structure
    • Expanding their micro investment approach to a macro scale
    • Emphasizing patience and doing it for themselves and their family
    • Slowing down buying singles and focusing on one big project
    • Importance of mentors, coaches, and finding the right people who have achieved what you want to do
    • Becoming obsessed with success and surrounding yourself with successful people
    • Contact information: Rylawickel investor on Facebook and Instagram, Rylawickel.com
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