The Wisconsin Investor
Each week, we bring you interviews with some of Wisconsin's top real estate investors who share their tips, tricks, and strategies that you can implement right away. This show is dedicated to helping Wisconsin real estate investors elevate their game. Along with interviews, I'll also dive into hot topics in solo episodes and feature experts from various real estate sectors across Wisconsin.
The Wisconsin Investor
NFL Draft Rental Rush: Key Upgrades, Investor Mistakes, and Maximizing Your Property’s Potential
What if you could turn your passion for real estate into a thriving short-term rental business? Join us for an engaging conversation with Tyler Kabat, co-founder of Doorway Travel, as he shares the incredible journey he and his wife, Nicole, embarked on from real estate wholesaling to managing 38 rental units. Inspired by "Rich Dad, Poor Dad," Tyler reveals how they transformed their dream into reality and discusses their strategic plans to expand their operations beyond Northeast Wisconsin into the Northwoods. Discover the unique satisfaction they find in creating memorable vacation experiences for families while navigating the complexities of short-term rental management.
Listen as Tyler opens up about the secret to maximizing rental revenue, particularly during high-stakes events like the NFL draft in Ashwaubenon, Wisconsin. We'll explore the potential rental income opportunities and the challenges of operating in regions like Florida, where insurance and tax rates are pushing investors to rethink their strategies due to hurricane risks. Tyler emphasizes the importance of understanding local ordinances and choosing markets with established short-term rental rules, offering insights on how to balance risk and opportunity in this dynamic field.
Finally, learn about the often-overlooked upfront costs of converting long-term rentals into short-term rentals, as Tyler underscores the value of impeccable decor and a dependable cleaning team. We highlight how features like hot tubs can boost rental income and discuss the role of professional management in ensuring a seamless guest experience. Tyler shares his experiences with platforms like Airbnb and Booking.com, offering tips on leveraging third-party insurance providers to safeguard rental properties. This episode is packed with actionable insights for anyone looking to thrive in the short-term rental market.
Hey everybody, excited to be with you on another episode of the Wisconsin Investor Podcast. I'm going to get into the episode here with our awesome guests, but before I do, today, this episode is sponsored by Wisconsin Discount Properties and I want to tell you about a deal that you guys probably missed out. On a hot deal we had an upper-lower duplex in Green Bay out to our buyers list. Our buyer picked it up for $225,000. It was a three bedroom upper, three bedroom lower, split utilities and as is appraisal they just got it back and texted me this morning it as is appraised at 275. So they made $50,000 in equity just by buying the property without sticking a dollar into it. So those are the kinds of deals we put out every Monday. We're putting out two to five deals a week that are available to our buyers list. So if you want to be on that buyers list, just go to wisconsindiscountpropertiescom, put your information in and you'll start getting the emails and texts with the info to those deals. All right, all that to get into our episode today.
Speaker 1:I've got my good buddy here, mr Tyler Cabot. Tyler, what's going on, man?
Speaker 2:How are we doing, corey? We're doing great dude.
Speaker 1:Excited to be seeing your beautiful face again. It's been a while. Yeah, it's good to be on. Thanks for having me. Absolutely so. Tyler and his wife Nicole own a company called Doorway Travel Did I get that right, Correct? Awesome. And they are in the short-term rental management space. And so one of the reasons I want to have Tyler come on today is the NFL draft is coming up. That's a huge topic for a lot of people that are in Northeast Wisconsin, so we'll talk a little bit about that today. We're going to talk just about short-term rentals in this area and all over Wisconsin a little bit. What's happening with those? We'll get in all kinds of fun stuff. But, Tyler, tell us, start us out like a little bit how did you get into real estate first and then into the short-term rental management side of things?
Speaker 2:Yeah. So I had read Rich Dad, poor Dad when I was like 19. And I know that's like where everyone's story starts it. Just it does put you into that mindset. You start to realize there's another way to kind of live life, and real estate is a great tool to create freedom for yourself and your family, and it can create generational wealth If you really get into it. I read it at 19,. Didn't do anything with it. And then what was the year, corey, that we met? 2020?
Speaker 2:I started working for your company, a wholesaling company, and that's when we really started buying real estate. We actually bought our first property from another wholesaler. So I mean, plug the wholesalers out there. I think everyone that's getting started in real estate should try to get on everyone's buyers list, because that's how you make money. I know you opened the episode with a deal that was out there. You know that's a great deal on paper, right? And you, if you don't have the time to find the deals, I think wholesalers are a great resource to help you lock the deal up and then you can focus on what you can do with the property from there.
Speaker 1:Yeah 100%.
Speaker 2:Yeah, we've bought a number of properties. I think we own 20 units now. 14 of them are in the short-term or mid-term space. Wow, six of them are long-terms. And then we launched Doorway Travel just two years ago and we started taking on clients ourselves, which was kind of a new experience. Yeah, and here we are two years later and we're still growing that PM company.
Speaker 1:That's awesome, and how many units are you guys managing now for other people?
Speaker 2:Yeah, so we've got 38 units under contract. I always kind of lump our 14 into there, so I guess we've got 24 units buying properties and we've got another four to six that are in various stages of onboarding. So should be cresting 40 units here pretty quick.
Speaker 1:Very cool, very cool. And before this, when we were talking, you guys are expanding a little bit outside of Northeast Wisconsin. Now talk a little bit about that. What's happening with the future of doorway travel here and where you guys are headed with the management side of things?
Speaker 2:Yeah. So I think we just started evaluating what we want to do as a company and what kind of goals we have, and I think for us to grow we can continue to eat up market share in Northeast Wisconsin. But I also feel I don't like the word saturated but there's only so much opportunity in any given market based on how many people are traveling to that area. Obviously, green Bay has Lambeau Field, so that's like the hub of vacation rentals for Northeast Wisconsin. We're based in Appleton. We own and or manage a handful down here. You know there's a couple here in Oshkosh, fond du Lac. You can get out on Lake Poigan. So there are some opportunities here locally.
Speaker 2:But I think the real opportunity for us to grow as a company is to get up into the Northwoods. So we are looking at some properties up in the Eagle River Phelps area. We've looked at some up near St Germain. We want to move up. That way. I think there's some opportunity to work on some really cool properties For sure, and you know we're always evaluating. Why did we get into this business? And at first it was out of necessity. But vacation rentals are fun. People are on vacation, they're with their families, they're making memories and to be able to put together a cool product and let people experience. It is a really rewarding experience. It's a cool way to make money. Yeah, is a really rewarding experience. It's a cool way to make money, and I think getting into the Northwoods gives us more opportunity to grow or we're not super restricted to these tight metro areas.
Speaker 1:For sure. No, that's exciting and I love the Northwoods. I think you know several people at the end of this episode. We always ask favorite place to visit in Wisconsin or tradition, and more often than not, I mean I would think the repetitive one is the northwoods. People love going up the eagle river, monaqua. It's such a beautiful place it's, it's my heaven on earth up there. Honestly, like I live in door county and I love door county, but if it was up to me I would, I would rather live in eagle river someplace over there on a lake.
Speaker 1:You know like I don't know what it is about the area, but it's just. It's just so peaceful and so beautiful and there's so many lakes and so much fun stuff to do fish you know, do winter time. If it's cold enough, you've got snowmobiling, ice fishing. It's a good year-round market too for short-term rentals exactly.
Speaker 2:Yeah. Yeah, you know locally here it's not been. There is ice fishing, but it's not been cold enough and we haven't got enough snow. So you really can't count on winter bookings in northeast wisconsin much anymore. Yeah know we have properties that will probably sit empty for the whole month of February because there's just no one coming to the area. No one wants to be here when it's cold. But up North that far they have snow. They've got good ice. You can still play in the winter.
Speaker 1:Yeah for sure. Talk a little bit. I want to. I want to look at your. You mentioned you guys own some in Appleton. There's some in Green Bay, right, I think. With some of them I would say I want to call it misnomers out there, but like, maybe some of the thought is like if you just have I would call it an average property in a city that's not on a Lake, it's not next to Lambeau field, you can't short-term rental it. What do you see? Cause I I know personally people who own some that I'm like you're going to short-term rent that thing and they do amazing with it. Talk a little bit about that. What is a property that can be short-term rental? Is there anything that you shouldn't short-term rental? If you have to avoid it, what are some of those properties look like? Or is everything within reason potentially a short-term rental in your opinion?
Speaker 2:yeah, yeah. So I think when you look at the property it starts by looking at the quality of the finishes and then the potential for amenities in the space. If you're just going to have a nice furnished space, it's probably going to do okay. If you're in Appleton or in Green Bay, you know, if it's not like a Lambo themed but you're just in Green Bay in a high traffic area, it might still do okay. We always say that a short-term rental should be finished to the highest standard for any type of rental property. There are properties you walk into and you can just feel this should be a long-term rental.
Speaker 1:And if you were going to?
Speaker 2:make it a short-term, then I would say we need to do some rehab work. So I'm very honest with people. When the you know, the people ask us that very question quite often, you know hey, would this make a good short term rental? What would the numbers look like? Um, and I have to be honest with them Like I think in its current state, we can do X amount. But if you're willing to stick 10 grand update the kitchen, the fixtures, the bathrooms, hey, this old trim from 1950s got to go right.
Speaker 2:Because it comes down to photos, this is now a commercial product and the marketplace, let's say, is Airbnb or Vrbo, and it's just like someone looking on Amazon. They're looking for the best photos, they're looking for the product that's going to solve their need, and so we can do a lot with decor and paint to make something look great. You'll see that if you look on Airbnb, but you need someone to click on your property. That's where it starts, and so you can take an average property and make it look great. I think we've come down from the peak of the market of 21, 22, 23, and four. We've seen lower numbers across the board. We have been able to still perform, I think just what we've been able to do as a company, but for people putting out an average property it's just not going to work anymore. I don't know that the numbers are worth it when you have to take on all the expenses as well.
Speaker 1:So what I'm hearing here, tyler, correct me if I heard this wrong but if you have a property in an average area at least in a place that has people come into it an Appleton, a Green Bay, milwaukee, madison, whatever as long as you make that sucker top notch, you're going to get some bookings and it's going to be a good investment for you.
Speaker 2:Yeah yeah, you can still pull it off. The next layer to that is are you self-managing or are you paying management? Because if you have only a couple and you can self-manage that yourself, then you're able to hold on to all that cashflow. If you're holding onto a property that's only going to gross 30 to 40K annually, you got to subtract all your expenses from that first, and now if you're going to pay a PM company 20 to 30% on top of that, those numbers start to get really tight, yeah.
Speaker 1:And that I think is important for the audience to realize is long-term rental, the average property management. We see it's about 10% of gross rents for the management. Short-term rental is a lot more involved, right, you've got guest relations. You're working the bookings consistently, versus like a long-term property management company, they get a tenant in, set it, forget it, collect the rent, make sure they don't destroy the place, right, short-term, you guys are a lot more active with each property and you got constant communication going back and forth all these bookings and that stuff.
Speaker 1:So traditionally, what we've seen and I think you just mentioned it, tyler 20 to 30 is about what people can expect for short-term rental management. Correct, yeah, cool, now, hopefully again, as you're saying, you're running your numbers and you're like great, if I don't have to touch it, you know, awesome, this is a passive, very passive investment for somebody. Then, if they turn it over to you guys, is that what they can expect when they work with the short-term is a full service? Do they have to do anything, you know, as the owner, once they pass it off to you or somebody like yourself?
Speaker 2:Yeah, I think. I think in our space it's very similar to long-term rental management. From what I've seen from a lot of other management companies in the area as well, it is full service. Typically, you know, you can find the someone that just wants to co-host on the side and they're maybe only taking care of the messaging, but you got to take care of your maintenance or something. If you're um a property management company like ourselves or any of the others in our marketplace, it is full service. You can be pretty much hands-off. Nice, very cool.
Speaker 1:It just comes down to you in the audience here what do you want? You want to be hands-on and keep all the cash? Do you want to be hands-off and just get a nice asset? That's the thing I like about the short-term rental piece of it is you're getting nice assets, then I own a mix of all. But we have long-term and short-term Hands down. That nice exit strategy with the short-term rental is I can turn around and sell those babies tomorrow if I needed to. I'll probably make a decent profit after I've held it for a little while. The long-term's still great, but we're not fixing those babies up to the nines May or may not be someplace. I personally would want to live Most of our short-terms. I'm like hell yeah, I'd move into that tomorrow.
Speaker 2:I do like to caution investors, buyers, that when you're buying a short-term rental, if it's not in a homeroom location or the property itself isn't a home run on paper, Will it still cashflow or at least cover your expenses, your PITI, if it's a long-term rental? That's great advice, right, because a lot of people bought. We saw what happened in Ashwaubenon, so in a local market here, right, ashwaubenon is part of Green Bay, it's just south of Lombardi Avenue, and they decided to crack down on short-term rentals. They put a six-night minimum on all rentals and a lot of people have sold their homes because they bought it with the sole purpose of being a short-term rental, 100% dude. And then that business model gets squashed and now they're underwater, unfortunately. So you got to be smart on the purchase side.
Speaker 1:That's such a great point. I've had that conversation with a lot of people. In fact I just had a guy this week that we're recording this hit me up about maybe partnering on a deal or helping maybe wholesale a deal that he's got a lead on right by Lambo, but it's in Ashwaubenon and I'm like that's going to be tough, bro, Cause your only exit strategy here is short-term rental, and if that doesn't work, cause you got six night mins and you got all the rules, you're screwed. You're screwed, yeah, so it's going to be. You got to get it at a much better price in this market now than what you had to three years ago, and I think that's important to note too.
Speaker 1:Tyler, what are you seeing as far as, like when you guys are evaluating a market? Are you looking for a market that's already kind of established short-term rental rules? Because I think the last few years we've seen a lot of townships, municipalities, all of a sudden now they put rules and restrictions in it. For me I like that because I know now what the rules are that I have to play by and there's a good chance they're not going to mess with them too much more anymore. What are your thoughts on that?
Speaker 2:Yeah, anytime someone brings a deal to us. I would assume other management companies would do the same. Before I even run numbers, we hop on Google and okay, what town is this? What is their short-term rental ordinances? And look into it right away so that we know, going into it. Is there a six-night minimum? Is there a 30-night minimum? Are there basically no regulations and you've got to hound them to pay your taxes every month? There's plenty of municipalities that are like that. So it does start there. You do want to make sure that they allow them and that it's not too restrictive, that you're going to be able to operate the business and make money off it. I would say we bought one sight unseen in Panama City Beach, Florida, when we first got started and we chose that market because it has a strong history of vacation rentals, so you can still make money buying locally or you can buy out of state and go to like a vacation rental destination and go somewhere where there's a strong history of that. The chances of them regulating that industry is very, very low.
Speaker 1:Right, yeah, good point, good point. Yeah, we had a couple and we still have a couple in Florida as well, and we just sold one last year. More so because the insurance rates and tax rates were just getting out of control down there. More so because the insurance rates and tax rates were just getting out of control down there and with the hurricanes and everything else they've been experiencing, I'm like I don't know how much longer they're going to insure properties here. So we got out of it and thankfully we did. I feel bad for the guy who bought it, because it was in a flood zone and it was right by the intercoastal, right where the hurricanes hit. This last fall Worked for us. Sorry, guy, you know sorry yeah.
Speaker 1:Yeah, just timing. But that's great Talk. Let's talk about a little bit. We mentioned Ashwaubenon. What's happening with the draft? The draft is coming up and I'm hearing things from some folks I talked to that are like, oh, this guy I know rented his house for 20 grand a night and he's not even right next to Lambeau. And then I hear other folks who are like, yeah, I mean like twice what I normally get, like what are you seeing and what are some things you guys are doing to help maximize the revenue potentially coming up for the draft?
Speaker 2:Yeah, I swear. Everyone seems to know somebody that got 30, 40 grand for the weekend.
Speaker 1:Yeah, I haven't met him yet. I just keep met people.
Speaker 2:Yeah, so they're out there and my, my personal take is it's gotta be the teams and the media outlets.
Speaker 2:They're like hey, we got to lock down a spot, you know, or who's who's bringing in the draftees. You know they invite a number of first round pick draftees to be in town with their family, so they're paying whatever they got to pay to get them. We've priced everything quite high, okay, um, and we're our plan is to kind of hold it there. We do talk with a lot of people in the space to see what they're seeing come through the market, um, and we're watching the numbers coming out by the city because they're they're putting out some great data on how many listings there are. So there's normally about 200 listings live for like a home Packer game during the season and as of, I think, last week, there's 450 listings live just on Airbnb alone and they expect to see over 600 total by the time. You're a typical homeowner that wants to rent out for the draft. So the volume of properties is increasing exponentially.
Speaker 2:The big question really is how many people are going to come to Green Bay, wisconsin, for this event. We saw Detroit get 700,000. However, every projection I see for Green bay is like 250. Really, I don't understand why there's such a low number projected to come to the area. Yeah, I don't know if we're just fans of the packers and so we're like, hey, historic lambo, the lombardi trophy, like everything's here, yeah, so we think it's going to be bigger than it is. Um, just because we're all fanboys, yeah. Or if the projections are low, because if the projections are low at all, these people are gonna have to pay to stay, for sure. There's just not enough places to stay, yeah, yeah. So I think I think it's. It's going to be a healthy weekend. Even if prices settle low. You're still talking numbers that are going to be greater than what you'd get for a packers game yeah is everyone gonna get 40 grand for the weekend?
Speaker 2:I don't think so. Yeah, you have to remember who's traveling for these things outside the teams and the media outlets yeah, it's your everyday fan. Yeah, it's people that want to go spend three days in a city to watch their team draft and just talk football and sports and drink and eat their way through the city. Well, that's your average family, and so you know. Are they going to pay 10 grand a night to stay? Probably not, right, yeah?
Speaker 1:It's not like you get a lot of corporations, like, hey, we're going to fly our team in like a game, you know where you'll have the corporation. Maybe like hey, we're going to fly you to the game or you're going to, you know, we're bolt construction, we're gonna get a house right next to lambo for the game or whatever it's. It's the draft, so you're right. Like that audience is is different. I also wonder the timing of this. So we're recording this as we're, as we're about to hop into february, this will probably hit next week tuesday, uh, when we drop this, and part of me also thinks, maybe, why we're seeing a little bit of this.
Speaker 1:Uh, delay maybe in bookings is like for me as a fan, I'm kind of waiting for the season to be over and then I'll start thinking about next season. Like, even though the packers are out of it, I'm still like, oh, there's still football happening, cool. Yeah, like we have the super bowl coming up sweet, even though I don't really give a rip about either of the teams, it's like, oh, there's still football happening. I think once that super bowl is over and people are going to go wait, what's football's over? No, like that depression starts setting in for serious football fans.
Speaker 1:I got to get my fix, man, give me my fix. They got to. They're going to book maybe something to the next thing they can look forward to. So we might just see a little bit shorter lead time than maybe what I think some of us were expecting. When they announced the draft, we saw a big boom, big. All the major fans booked right away, right. And then now I think maybe we'll see that second round once the season is over. That's just my no data whatsoever to support opinion.
Speaker 2:I think. I think we're seeing the same. We have a similar opinion, I think. In January, the only industry in our country that does well is liquor sales. Otherwise every other market sees almost nothing, and so we're getting through january into february. This is just slow season for everything, yeah, and booking lead times across the board have come down and it's getting tighter and tighter for the last couple of months. Our average booking lead time is just short of 30 days. Wow, so and that's across. You know, 35 to 40 active listings all over Northeastern Wisconsin.
Speaker 1:That's really so you know, looking at the draft.
Speaker 2:I think people are going to plan further ahead than that, but we're still one, two, three full months away from the draft. I think it's far enough away that people are like maybe they've planned their spring break vacations, but people that are looking at the draft, I think you hit the nail on the head, corey. The season's not officially over. You know. The rest of the draft order is decided by now, but people are still thinking about football. They're still looking forward to the big game.
Speaker 2:I think we won't see a big boost in reservations and bookings until we get into February. Yeah.
Speaker 1:That's interesting. Why do you think that lead time has dropped so much? Because I think for those, for the folks out there listening, who maybe don't have short-term rentals or are looking at it like, we see a lot of times like we're booked out on ours for summertime and all of our stuff is mostly summer bookings, we're booked out a year in advance in a lot of them, you know, but then we have those gaps. We do have the gaps that you know. They'll just book, you know, relatively shortly. What do you think is happening with the booking times being just shorter? Are people just not planning out as far? Are they more spontaneous now? Is there any kind of data that you guys are seeing that's leading to that shorter booking time?
Speaker 2:Sure, one piece that could be playing a factor is that a lot of our properties, in terms of percentage of the properties that we manage, are urban, and so what's bringing people to the area? They're going to do a girls' night, a guys' night, they're going to a concert, they're in a pool tournament, d tournament, someone passes away, a birthday party, a wedding, those kinds of things. When you're coming to the urban markets, okay, those types of events are all planned. Um closer to the date, I would, I would guess, right, you're not necessarily planning those types of events way in advance.
Speaker 2:Um, for our lake properties, we're seeing, you know, half of most of june and july are booked up at our lake properties. Okay, we're seeing, you know, half of most of June and July are booked up at our lake properties. It depends on the type of properties that we're discussing. So, in terms of the draft, we're talking about all urban properties. Some people are coming for a one-time event. Obviously, we've had the dates for this event for a year, but I think there's a lot of factors at play for that Right on, right on.
Speaker 1:Very good, we'll talk a little bit. I want to transition a little bit just into general short-term rental stuff. So what are some of the do's and don'ts? Say, we got some folks out here that are either looking to get into short-term rentals or have some properties now and are thinking of maybe getting that first short-term rental. What are some of the biggest, I would say, mistakes you see people make? Or what are some of the things that are going to almost guarantee success when you get into a short-term rental?
Speaker 2:Sure, I think people underestimate the upfront cost of furnishing, furnishings, the decor and the stocking of inventory. So I've seen people that look at well, hey, this is my purchase price, they can just swing that. But then, depending upon how many bedrooms and bathrooms you now need to put furniture in every single room, you've got to have extra stock of all the linens. They can just swing that, but then, you know, depending upon how many bedrooms and bathrooms you now need to put furniture in every single room, you've got to have extra stock of all the linens. You have to completely stock the kitchens, all those little, the dishware, the cookware, all that stuff adds up real fast and especially if you want to make the place stand out okay, we got to do some accent walls, you got to put some things in the walls that are different besides just hanging a plaque. You can't just go to TJ Maxx and just grab something thrown on the wall and call it good. And, like we touched on earlier, I think you need to put a little more effort in to stand out and so there can be sticker shock in the front end if you're not mentally prepared for what it's going to cost to make the property perform. That's a great point. Prepared for what it's going to cost make the property perform. That's a great point I think there's a lot of.
Speaker 2:In my experience, a number of real estate investors look just at well, if I can convert this LTR to an STR, so long-term rental to a short-term rental, the cash flow is better and they're just looking at that data point, not taking into account this is now its own business entity. You're communicating with guests, you got inventory, you're restocking on a weekly basis. There's just a lot more involved. So we have to furnish it and then you got to be able to run it continuously. It's not just a rental that you can just like, set it and forget it right I mean, of course, if you hire management.
Speaker 1:That's gonna say, unless you hire the management, that solves that issue. Plug for doorway travel here yeah, plug for doorway thank you.
Speaker 2:There's a lot of great companies out there that do it. Um, we just happen to really love what we're doing, and so I think that shows up for our clients. Yeah, but, um, yeah, I think the upfront sticker shock is is the biggest thing. People underestimate what it's going to cost the furniture property what about cleaners?
Speaker 1:how important is it to have a have a great cleaner, and how does how does somebody go about maybe finding a quality cleaner for the property?
Speaker 2:real estate, your CPA, maybe you have a bookkeeper, your insurance guy, the title company that you're using, maybe you're using a realtor. You've got your wholesaler and then you've got your contractors you work with. They're all part of your team. Now to get in the STR space, you need to have handymen that are available almost 24 seven. You'd have cleaners that can meet your standard that you set, Because, at the end of the day, we live and die by reviews in this industry. Your standard that you set because, at the end of the day, we live and die by reviews in this industry. Yeah, and so if you're getting any, if you're getting poor reviews, you guys know you own strs. You have poor reviews from cleanliness.
Speaker 1:That's going to tank your listing real fast yeah, and it's hard to crawl out of that, right you know, the algorithms with. You know the platforms, the airbnb and the vrbo's, they. They will not show you as much correctly if you're.
Speaker 2:Absolutely yeah, yeah.
Speaker 1:I know that I'm not going to stay at a place that has a bunch of three or four star cleanliness reviews.
Speaker 2:No.
Speaker 1:I would, but Carrie would not. That is her number one thing, honestly, when she looks is if we're staying someplace. What are the clean reviews? We're okay if it's a little bit outdated or whatever, as long as it's clean. That's the biggest thing. Yeah, sure, Cool. I wanted to get your opinion on that, Cause I know for us that's one of the biggest things. Like we, we emphasize to our team with our properties, like it has to be impeccably clean, Like people to review it and talk about how clean it is.
Speaker 2:That's what kind of reviews we want yes, yes, we have a couple different things we live by, and that is the property should be instagram worthy. Every time you walk out the door, oh, I like that, should be able to turn around, take photos and put that online. People should be like, wow, that's a beautiful property, that's good. And two, it should be cleaned and staged um to the owner's expectation. So if a client walked in the door and they want to sit on the couch, is it? Is the space clean or am I going to get a phone call? Yeah and so, but through those lens, that's kind of the expectation.
Speaker 1:I like that. That's good to set those expectations too with with your staff or your people, your, your contractors or whoever you're using to do those cleans. It's great. How are you guys evaluating properties? Or how are your investors running numbers? We've used AirDNA in the past as a resource. Is that still the main way for people are using to run numbers, or what are you seeing people doing, and how accurate have you seen some of these tools be with running numbers?
Speaker 2:Yeah, the tool is as good as the data that you know it's extracting from and what it spits out. Airdna is still the resource that we start with, but I don't. We don't rely on the initial number. So, people that aren't familiar, you can put in a property address into AirDNA. It'll spit out their rentalizer report, what they think it would do annually, and then they give you like a subset of comps that they pulled that data from. We take it the next step and we'll create a spreadsheet every time we run numbers and we'll dig deeper into those comps. So, based on the address, how many people we can sleep, the type of amenities that we anticipate having in the property we now need to click each of those comps and see if they meet those exact details. Okay, because I'm not exactly sure they don't share their data, right. That's kind of like the secret sauce of how they're pulling their comps. Yeah, but sometimes those comps aren't accurate at all.
Speaker 1:Yeah.
Speaker 2:And like one little thing that I think people might overlook is some of the comps. It'll say they've only been available for 150 nights a year or something.
Speaker 1:Yes.
Speaker 2:Yep, right. So they maybe are being used personally half the year and so the data that's coming up, the number it's giving you, is not fully accurate. And then I think for us personally, we have enough experience in the space that we can lean on data points from properties we already have live in the market. Oh sure, right. Yep, on data points from properties we already have live in the market oh sure, right. So if you bring to me a three-bedroom, two-bath ranch in an urban setting in northeast Wisconsin with average amenities, I can tell you right off the bat it's going to do about 40K. Okay, if you really push up amenities, maybe you can push 50. Okay, if it's going to be whole home average, you might only do 35. Right, like, you know that off the bat and so you can take it from there based on the occupancy numbers.
Speaker 1:You've mentioned amenities a few times. What are the main amenities you're seeing that really moved the needle with short-term rentals?
Speaker 2:Yeah, you'd be surprised how big game rooms are.
Speaker 1:Okay.
Speaker 2:Like ping pong table, air hockey, arcade games, decorative walls, maybe with the green turf, with LED signs Make them stand out from just. It's not just a property. It now feels like an experience. It's good. If you can make it feel like an experience, you're automatically set yourself above and beyond. Okay, hot tubs in our experience automatically add 10 grand plus annually. Wow, um gross by just adding a hot tub. That's crazy. People love to relax in hot tubs. They photograph really well. Focus on outdoor spaces.
Speaker 2:I know it's in northeast Wisconsin so we may get terrible weather for four months out of the year, but if you can have nice lighting, a nice spot for a fire pit, maybe a fire table, you do some things in the outdoors that make it photograph well Again, creating an experience for guests. Then people can see themselves spending time there. It's going to get people to click and you can drive your nightly rates up because you're getting enough bookings on the calendar.
Speaker 1:That's awesome. This is why I love doing these podcasts, dude. Every single time I'm like, oh, and I'm like we have no hot tubs at any of ours. I'm like we need to look at where should we add a hot tub, because we have some properties on the lakes and stuff Like I'm just thinking about, like that'd be sweet to be in the winter, a little snow coming down, sitting out there looking at the ice or lake or whatever it is you know, or the fall. Even that's a great time. Yeah, get some more bookings year round.
Speaker 1:How hard is it to maintain these hot tubs? That's my fear. It's like, hey, I put a hot tub in. They're kind of cesspools in my brain. I don't know what happens in the hot tub. I don't want to know what happens in the hot tub, but how do you maintain and make sure? Because I'm thinking that's going to be a similar review, right, if you have a hot tub that's not clean, that's going to show up in reviews. So, maintaining those, how hard are they to maintain and make sure they stay clean? Like what's that look like?
Speaker 2:Yeah, so there's a couple of different ways you can do it. Some people hire like pool spa teams to come out weekly to handle their hot tubs. I think they're a little easier to clean and maintain than you would think. We have our cleaning team do it. We just pay a premium at that at those properties to handle the hot tub as well. Okay, you're just using a pool vacuum or skip, you're testing the water, you're getting all the physical pieces out. You know, hair and fake eyelashes and fake nails show up all the time. Really, those things come off in hot tubs.
Speaker 2:So, ladies, just prepare that glue is melting if that temperature's hot enough so just you know, you're using a pool vacuum, you're skimming the water, you're testing it, you're balancing the chemicals in the water, we're changing out the filter on a regular basis and then we schedule monthly deep cleans of the hot tub. Where it's being fully drained, we're scrubbing it out, refilling it, balancing the chemicals again. It is a little easier to maintain than I think we thought. Going into it, I had a lot of fear around managing as well. I don't ever want to hear someone get sick. Heaven forbid someone gets sick. There's some sort of bacterial infection. That's like my worst nightmare, yeah. But um, I think if you stay up on it and you're intentional with it, because guests will let you know right away they'll message you the second they get to the property. Hey, this water looks green. Boom, we're there.
Speaker 2:Yeah, all right you gotta get over there right away with some pool shock and balance that stuff out, and maybe you gotta drain it and refill it okay, cool.
Speaker 1:Oh, that's great dude. That's a great little nugget right there, because you're saying that adds. What about what you say about 10k? Yeah, annually. Spread that out like we have 14 of them right now. We won't be able to put it in all of them, but let's say 10 of them we added in. That's 100 Gs a year. That's pretty cool.
Speaker 2:Your cash on cash return is pretty good.
Speaker 1:What's a hot tub cost? Like 4 Gs.
Speaker 2:Inexpensive. One is about 5-6 grand, nice ones are 15. So, depending on the, occupancy of your property and the quality of the property, so the type of guests that's going to be coming out. You know, if you're sleeping 14 to 20 people but your hot tub can only seat four or five like maybe you want to put a little more in the front end, but you'll get that money back within a year or two and then it's just gravy from there on out.
Speaker 1:And then what's the install look like? Do you have to set up a whole separate electrical panel, or how does that look?
Speaker 2:Yeah, I'm definitely not an expert on that, but I do know you need a specific power supply ran for that. So there's a little additional. There's a little additional on the front end.
Speaker 1:Yeah, you'll need an electrician to make sure it's done correctly 10 to 20 Gs roughly, but landscape around it or something, and then you'll be.
Speaker 2:Yeah, most of the time people have room on the patio or whatever you got to do. If you need to make it better, yeah.
Speaker 1:Just throw some block down underneath it or something and make it cool. Yeah, Sweet, Awesome dude, I love it. Are there any other things you could advise people on as far as? How do they figure out what to price their property at per night? So I bought a property. I've done everything Tyler told me to do. I've got the green wall, I've got the hot tub. I got all this stuff. How do I know where to price the property?
Speaker 2:Yeah, that's a good question and I'll start by adding to that. For someone that's managing their own property, which is the basis of your question there, I tell people all the time it's easy enough to part-time manage one to three properties yourself. So if you have any level of interest in it or you have any level of time, you can definitely manage a few properties yourself before you need to hire management. Now a lot of people get into this space and they don't want to do it. They don't want to handle the guest messaging and all that. I totally get that. But you can definitely handle one to three, for sure, on your own and still maintain a full-time job and still take care of your family, et cetera.
Speaker 2:The number one pricing tool for setting your price is Price Labs. There are other competitors out there, but it is the number one. It's called a dynamic pricing tool other competitors out there, but it is the number one. It's called a dynamic pricing tool. It's acting 24 7 365, pulling data on bookings in your market based on your similar comps and just what's happening in the market in general, and it's pricing. It's giving you that kind of that baseline pricing and you'll set it. You can almost set it and forget it.
Speaker 2:Now, if you really want to maximize your bookings, you'll go in and you'll tweak it almost daily Because little tweaks shows up in the algorithm for Airbnb and Vrbo. It's going to help push you up in the algorithm. It's going to help you get more bookings that way. But that is the best place. And if you don't want to pay for a pricing tool, even though it's not very expensive, but if you want to do it raw by yourself, take time and spend time on Airbnb, look at competitor properties, do that little bit of legwork, build out a spreadsheet. Hey, what's everyone pricing for the next month? What's everyone pricing for summer months? What are they pricing for home packer games based on occupancy? You can do that yourself.
Speaker 2:You just got to take a little time to dig into the numbers if you're not going to pay for a dynamic price tool, but I would encourage anybody that's investing in the space and self-managing Price Labs is 100% worth it.
Speaker 1:Right on and the platforms that you guys are seeing most of the bookings is it mostly just Airbnb and Verbo, or do you guys have any other platforms you're putting the properties on as well for listings that you're seeing success with?
Speaker 2:Sure, yeah, this is a good word of caution. So we've experimented with some other platforms and Airbnb provides the best tools and protection for hosts. Okay, about 75% of our bookings come through that platform. Okay, verbo is a great number two choice. Okay, their software is not as robust. Okay, but it still has protections built in. However, we've tried Bookingcom, we've been on Expedia, tried some of those others Some of those platforms have zero protection for hosts and so I highly caution anybody going down that road and wanting to try other platforms. Okay, for example, we had a Book bookingcom reservation come in. They were doing um, a same day booking, so it was the afternoon. They wanted to come in that night.
Speaker 1:It's a little risky, always a little risky always the risk.
Speaker 2:It was a weekday, so it was all right. Yeah, yeah, but he books and he gets his automated messages right away and he gets all his check-in details because it's same day he's able. Yeah, but he books and he gets his automated messages right away and he gets all his check-in details because it's same day he's able to check into the property. And he still hasn't paid. Oh, and so now you're chasing that person and calling them to get their credit card over the phone If they haven't submitted it through bookingcom. But bookingcom doesn't prevent them from making a booking even if their payment system is not set up. What? And so, luckily, this guest called us back and he gave us his credit card over the phone. But he could have stayed in our property for free and we would have been knocking on the door with, like, the local police department to try to pull him out. And so once we had that experience, we said we're not, we're not going to use their platform anymore and their customer service was terrible as well.
Speaker 2:We've experienced far with your cable company terrible as well.
Speaker 1:We've experienced this On par with your cable company, yeah we've experienced that too.
Speaker 1:I'm like how does anybody use this platform? I didn't know if it changed. We haven't used them for a couple of years now, but when we did, it was atrocious to try to get any. We had to try to cancel a guest and it was brutal and it was a terrible experience. So that's pretty much all we use right now too. I wasn't sure if there was anything different that you guys were seeing, so that's no, there's still the bread and butter, especially in in Northeast Wisconsin, I think.
Speaker 2:Bookingcom and some others are bigger and larger metro areas, especially outside the United States, but Airbnb is like the main platform here.
Speaker 1:So what about as we're getting ready to wrap here, tk. What about, like Airbnb experiences? Do you be experiences? Do you guys have any experience in that realm? I see it on there. We don't do any of it at this current moment, but, like, are you guys having any success with that? Or any kind of packages you guys are putting together that have been fruitful in any ways, or any kind of creativity that way?
Speaker 2:we haven't really tapped into that yet.
Speaker 1:No, all right, yeah, same here. We're kind of just, we're looking at, maybe doing a few things, but it might be the juice might not be worth. The squeeze is what we're seeing.
Speaker 2:We're starting to look at add-ons and potential upsells to improve the experience and bring in a little additional revenue. Things like grocery delivery or different types of welcome packages for people. You know you guys travel as a family. If you're going to stay in an Airbnb, you arrive late in the day. The first thing I do is figure out dinner. Yeah, you know, if we can have some sort of prepackaged grocery delivery that you just click and it delivers from Walmart in 45 minutes yeah, you know, things like that might be a great addition. That's easy enough to manage, especially for your investor. That only manages a couple themselves. Yeah, there's a little upsell opportunity. It's that only manages a couple of themselves. There's a little upsell opportunity it's worth looking at.
Speaker 1:Yeah, that's really cool. You mentioned last thing here. You mentioned protection from Airbnb. I've heard some people where they add on there's some other insurance or something that you can make the guests pay for, or something like do you guys do any of that or have any experience with that type of a thing?
Speaker 2:Yeah, so all of our short-term rentals. We manage a mix of short-term and midterm, some more corporate rentals. Okay, All of our short-term rentals have safely as a third party insurance provider.
Speaker 1:Okay.
Speaker 2:There is a couple they do have a couple of competitors out there that do similar, offer, a similar product, so safely provides like up to five thousand dollars in damage protection for every individual reservation. Okay. And so for us as a company. We file insurance claims with them almost daily for damaged linens, just stained linens that we're not able to clean.
Speaker 1:No, no deductible or anything, once you, once you have no because you're it a charge to the guest?
Speaker 2:They pay for it in their reservation fee. Oh cool, and so our number one replacement item is stained linens, so we try to get out. If we can't get it out in one wash cycle, we remove it from the property and we order new stuff. But someone scratches the hardwood floors and you gotta bring in a hardwood floor guy. That's guest negligence in the eyes of the insurance company and you can get that 100% covered.
Speaker 1:Wow, do you guys have any issues with the claims, or is it pretty seamless?
Speaker 2:They might ask follow-up questions, but as long as we provide them the data they're looking for whether it's just photos or additional notes from maybe the contractor, from his invoice or something, then they've approved, I'd say, 99% of the claims we've processed in the last couple of years. That's amazing. It's a really great tool especially if you're looking to scale and add more properties. I couldn't imagine running the business without it.
Speaker 1:to be honest, and how do they? Is that something that you could just build right into Airbnb or VRBO? Or how do you guys get them to pay?
Speaker 2:for that insurance? Yeah, so there's a way that you list it as like a fee, but it looks like it's part of the booking cost. Okay, so it's not a standout fee, so that they don't really they don't even realize they're paying for it, the guest Okay, so it just looks like it's $150 a night. Part of that $150 is paying for the safely insurance.
Speaker 1:Okay, so it's a great tool. I mean, I've replaced appliances, replaced appliances, replaced couches, chairs, the whole deal. Wow, that's amazing. Yeah, we could definitely use that because we just it's for us. We found it's not worth fighting airbnb because it's a he said, she said thing, and then they're going after the guest. The guest is like no, it wasn't us, so that yeah, they're covering everything.
Speaker 1:Yeah, so that just you guys, just the booking happens, and then what's the mechanics look like of how safely gets paid and notified that it's this booking and this guest? Is that just an automation that's set up or how is that?
Speaker 2:yeah, most of that is automated, yep, and then their payouts are just direct deposit right back to our bank account. Sweet, once you got it set up, it's super easy.
Speaker 1:You don't have to think about it huge nugget right there, folks listen, that's gonna save you thousands and thousands and thousands if you have short-term rentals. I can tell you that A hundred percent. Yeah for sure. Well, TK man, I learned a ton.
Speaker 2:This is going to make me a lot more money now, once I implement all these things I took away from here. I want to sell some hot tubs.
Speaker 1:Yeah, I'm going to start wholesaling hot tubs after this, so, but it's got to discount properties. Fill it out. If you want properties, then I'm going to have a little subsection there. If you want hot tubs, I'll just discount up a hot tub. I'll work on a contractor with some manufacturers, but no, this has been awesome, dude. Last question we always end with, as I mentioned earlier, favorite Wisconsin tradition or place to visit TK.
Speaker 2:Yeah, my favorite tradition used to be old fashions, but I'm almost a year sober now, so I feel like I could do something else and I don't know how I walk away from the Northwoods. You said it's like I think God just like perfected that space up there For sure, and to get away to the woods where it's still quiet, you're up in nature. There's nothing better than diving in a spring-fed lake where you can probably drink the water because it's coming right out of the ground. It even feels good on your skin just to swim in the water, so there's nothing more beautiful than that.
Speaker 1:Yeah for sure. I'm totally with you. As you know, we're big fans of that. So if anybody wants to connect with you or Nicole about short-term rentals or maybe looking at getting management from you guys, what's the best place for them to connect with?
Speaker 2:you guys. Yeah, they can go to our website, doorwaytravelcom. On there they can fill out a contact us form or our phone number is even listed. That's our business line. So either myself or someone from my team will answer, and I call back everyone that inquires about services or just has questions about STRs and just wants to bounce it off us. We'll always have it help.
Speaker 1:Okay, cool. So if somebody just wants to pick your brain a little bit, you're cool with that, even if they're not looking at management at this point 100%.
Speaker 2:We try to lead with value and just help anybody else that wants to get into the space.
Speaker 1:Awesome man. Well, appreciate you taking the time. Speaking of giving value, this has been an awesome episode. I think there's a lot of great nuggets in here for everybody. I always say I tell every guest this might be the most downloaded episode today. We'll see Help TK out with that.
Speaker 1:If you guys got value out of this, share the episode. Sharing is caring, as I say all the time, but it really does help a lot of other folks out there. They see it, they learn, they want to get into it. And if you're out there listening and you want to get into real estate similar to what TK said, I love talking real estate, my team loves talking real estate. So if you're not ready to buy a property yet, you're just inquiring, you read Rich Dad, poor Dad, and you're like this sounds awesome, I want to get into this thing. Just go to our website, wisconsindiscountpropertiescom. Just fill out the contact us if you're not ready to hop on the buyers list yet, and we'll hop on a call with you and see what we can do to help connect you to great folks like TK. If you're looking to get into short-term rentals or many of the other folks that we network with and help you get started in this amazing industry that we love so much. So, tk, appreciate you being on.
Speaker 2:Thanks a lot, Corbin.
Speaker 1:You bet All you guys listening, sharing is caring. We'll see you on the next episode.
