Ep #572 – Making money with short term rentals
TJ Tijani graduated from the University of Houston with a degree in Mechanical Engineering in 2012. While working in the oil and gas industry, he bought his first investment property in 2015. In 2017, TJ discovered the short term rental strategy and hasn’t looked back. His portfolio now consists of a mix of single and multi-family properties that he buys, remodels, furnishes, and turns them into full time short term rentals. He also has full time units that he rents via a rental arbitrage.
Here’s some of the topics we covered:
- AirBNB
- Rental Arbitrage
- Proximity matters
- Proper amenities
- Know your demographic
- Managing turnovers
- Tech stack
- Photo tips
To find out more about our guest:
http://strroadmap.com
Full Transcript Below:
Rod
Welcome to another edition of “How to Build Lifetime Cash Flow through Real Estate Investing.” I’m Rod Khleif and I’m thrilled you’re here. And we’ve got kind of an unusual guest today and you’ll understand why when we get into it. His name is TJ Tijani and TJ’s been in the fix and flip game for a while, wholesaling for a while. But now he does short term rentals. And we’re going to drill into that because he actually has multifamily units that he does this on. I’ve got students doing it as well. And when I met TJ on Clubhouse, I thought, you know what, it’d be a great conversation to have on this platform. So let’s have some fun today. TJ, welcome brother.
TJ
Appreciate you. Thank you so much. I appreciate you bringing me home.
Rod
Absolutely. Absolutely. So why don’t you go back and give us a little history on yourself and then, you know, bring us up to the point when you first started taking a look at short term rentals and then we’ll drill down on the mechanics of it.
TJ
Yes, sir. So it’s interesting. Originally I was born in Nigeria. I came here when I was eight years old. I end up going to college here in Houston. I went to University Houston, which was an interesting time. It was a trying time, though, because having to work my way through school was always a challenge, but it honestly would have had any other way. Studying engineering. I graduate with an engineering degree and a mathematics minor and I start working for the oil and gas company. And but while I was in college, because I was trying to figure out more ways to make money to pay for school. Right. So I had to figure out a way. So I was still had entrepreneurship side hustles, right where I would– I worked at a shoe store so I would take old marches and things that went on clearance. And I would add my employee discount that I would come resell them to the dorm rooms on campus. And so when I graduated and I read “Rich Dad Poor Dad” of course, has a lot of people’s kind of first step into this entrepreneurship world. And so I read “Rich Dad Poor Dad” and I decide I want to own assets. I say, you know what, I want to get into the game of real estate. I want to own assets. And so I started to educate myself on how to do it. I was definitely a member of YouTube University. So then I joined a local group that was focused on real estate investing, specifically on buying holds. A lot of folks I know that’s a little bit backwards. Most people get into the game and get to wholesaling or fixing the flipping. But I joined a local group. I once owned assets, so I joined a group that was focused on owning assets. And so that’s what I did. And so then I actually did I end up on a course on wholesaling selling. When I started learning about wholesaling and I was like, oh, wow, I was kind of already doing this back in college just with a different type of product. And so then I really stuck my teeth into wholesaling. My very first deal made me 7,000 and it was one of those deals, my very first mail that was sent out. And so I did all this while I was working in oil and gas. But the thing about working in oil and gas and in the world that I lived in, I was working in a field that required me to be gone quite a bit. So I was a substantial engineer. I was working offshore. I was working out into rigs as an installation engineer. And so but so I really took advantage of my time when I was in Houston. And so but then for folks who don’t really know or mostly everybody knows, the oil and gas market is very finicky. So when the market dropped, I was kind of put in a position to where once my project with Exxon Mobil was done because I was an Exxon Mobil portfolio and what was my project with them was done then they pretty much didn’t have anything for me to do. So I was forced to take a severance package. At the time, my goal was to get to 10 rental properties. That was my goal. I want to 10 rental properties before I walked away from my full time job because I didn’t hate it. Honestly, I didn’t necessarily hate it, but I just knew it wasn’t for me, wasn’t what I wanted to do in the long term. So but by the time I had to take that severance, I was at five rental properties. And so, but it was okay. I decided to better myself. I wasn’t necessarily– look, it’s against a short term rental space. I had a few projects that I was remodeling, some I was going to keep, some I was going to sell. When I– in my market research and trying to figure out more lead generation strategies, I came across a video by short term rentals. I said, well, I’m a little bit familiar. I’ve heard of Airbnb, I’ve heard of things like that. I haven’t started one yet before at the time. And so then I just, I looked into it and I decided to try this Airbnb thing on one of my assets. And so I furnished this property, remodeled it the full remodel, use private money to fund it and furnish this property. Then I listed it. The very next day I had two bookings come in. Then I did the math. I said, wow, okay. These two bookings came in even at 50% occupancy. With these numbers, I would make twice as much as I would as a traditional rental and it was like the light bulb moment for me. And that’s what kind of went off my head. And I said, you know what, I want to sink my teeth into the strategy. And now we’re almost at 30 units later.
Rod
So you’re 30 units doing Airbnb now. And I know you’re also doing rental arbitrage where you don’t actually own the units, you just lease them from the landlord and then we’re going to drill down on that some more here in a minute. But so that first property, what was attractive about that property that caused you to get two bookings so quickly? Was it strategically located? Just talk about location first, if you will.
TJ
Absolutely. So one of the things in terms of determining what kind of property you’re going to have and how your property will perform in the location definitely matter. This is definitely what I like to consider, proximity based business. Proximity definitely matters because you have to understand who you serve. Why would somebody want to come back to that particular area? What’s a fact is that people want to travel to any sort of state. They need somewhere to sleep, and so they know where to go to get set accommodations. But what is actually attracting those people to that particular unit? So the question that we always have to answer in this business, who are we serving? Who is actually that target demographic? Right. So for this particular property, it actually is in a very transitional neighborhood. And I was super nervous to do it. I was really scared to do it because the neighborhood isn’t quite as caught up. Right. Phenomenal area. A lot of a lot of opportunity in terms of growth in that area. A huge upside in terms of appreciation in that area. But when I looked at the proximity was 10 minutes of downtown Houston, it was 10 minutes to the medical center, Houston, which here in Houston we have one of the biggest medical centers in the nation, 10 minutes to the midtown area. So it was perfectly located, even though the neighborhood wasn’t quite caught up proximity wise, it was still a great look. And so when you couple that with a very nice unit, that’s homely, that’s nice. The property was just got done being remodeled when you consider all that. Yeah, it was kind of a no brainer. And people were booking it left and right. And that was my very first unit. So my very first unit was one that I own. And I like to consider this landlord owned property like, I like to consider myself a landlord host and a rental arbitrage house. So that property particularly goes under the landlord column for sure.
Rod
Okay, got you. So when people at– Let’s take with locations for just a moment, so when people are looking for a location, let’s say they own a multifamily property or they’re looking at multifamily properties, because obviously that’s my listener base. You want to look at the demographic you might serve. Obviously, medical is really big. I know you talked about that with the rental arbitrage before we started recording. If you’re near a hospital, that’s huge because they have people coming in all the time, residency, things of that nature. And so what other types of industry might you look for? I mean, near a downtown. Sounds like it’s important. Do you have anything? Are you mostly– are you all in Houston?
TJ
Right now I’m all at Houston.
Rod
All in Houston, okay.
TJ
All in Houston right now.
Rod
And because I know that there are people that do it, like I live in Florida here and there are people that do it along the coastline, you know, where obviously it’s the resort type thing, whether it’s a vacation rental. Can you speak to that at all?
TJ
Yeah, absolutely. I mean, well, and those are still– because there’s different type of, I guess, kind of properties that you can do. Right. You can be and have kind of vacation areas, those more beach areas and things like that which don’t do very well. Now, for folks who do that, there’s huge upside because those properties, you can tend to charge a lot more per night just because of the value that those properties bring. But then there’s a lot more seasonal. Right? That’s the kind of downside of that. There’s a lot more slower months than higher months just in terms of seasonality. But the higher months are so good that they absorb kind of the downside.
Rod
Right.
TJ
But then you have– but then when you’re in a city like Houston, you have more–
Rod
Longer term.
TJ
Longer term. Exactly. And longer term, you have more avatars to work with. For me here, we work with business travelers, medical travelers. Our guest avatar also include weekend travelers. We have families who are huge, our families. This is why no one who you serve matters, because that way it also answers the question of how to even set up your units, because a lot of times you want to make sure to set up units to where it’s optimal for the people that you serve, like if you serve in families is a great idea to add a pack of planner, because think about it, when people travel, they don’t want to.
Rod
What? I’m sorry, I didn’t catch that.
TJ
A pack and play. A pack and play.
Rod
What is a pack and play?
TJ
That’s like, a pack and play is what it’s like for a kid, like for an infant. It’s like a small bed, but it’s foldable. It’s–
Rod
Gotcha, gotcha, gotcha. Okay, so it’s like a crib almost.
TJ
Like a crib. Yeah, exactly. It’s like a crib. It’s like a crib for like an infant though. Like an infant or topknot it.
Rod
Yeah.
TJ
So, those are crucial. Right. A lot of times people will book your units just because you have that, because they say, okay, wow, this unit is amazing. It’s beautiful. And we don’t have to travel with that. Right. Having things like a high chair. You saw families have board games, things like that. So knowing that guest avatar actually answers a lot of questions and also asks a question how you should even set up your units.
Rod
Sure. By virtue of answering those questions. You’re really seeing– you’re not only determining who the avatar is, but you’re also, you know, positioning yourself to attract that person. But by virtue of answering that question, who is your avatar? You know, it helps you not just with determining where you’re going to, you know, either rental arbitrage or by unit or units or and how you’re going to position it. Got it. Okay, so we talk about location. What platforms do you market? You know, I know you’ve got your own site now. We’re going to talk about that. But as for someone starting out, what platforms do you utilize and what is Airbnb? What else is there?
TJ
So there is multiple platforms and people don’t realize that there’s a lot of platforms out there. What’s important when you own multiple platforms is to make sure that everything is succinct. Well, for want to answer your question more directly, Airbnb is the one that I would like to consider Airbnb like the short term rental on training wheels. Right. That’s one– that’s literally the most turnkey platform that’s out there. And it’s one of the most widely known. So definitely start with Airbnb, 100 % start with Airbnb. And a lot of times, there are a lot of people who really only use Airbnb because it literally still brings them enough traffic. It brings them enough bookings. But there’s booking.com. There’s the Vrbo, which used to be, which is now Vrbo’s owned by Expedia. But Expedia, you have to have at least 20 units to get on Expedia. So there’s Expedia, there’s Vrbo. HomeAway was a previous one, but now HomeAway and Vrbo are one because of your home away. So then there’s other sites. There’s things like that, a smoke free like budandbreakfast.com. There’s, yeah, there’s sites a newer one that’s more so focused on business travelers. Kopa, these are kopa.com, that’s a site that mainly focuses on monthly rentals. So they target businesses and actually have partnerships with different businesses in different markets. So that’s another good site to know. What’s important when you own multiple various sites is to make sure that you have calendar management though, because that’s crucial. If somebody puts it somebody. If somebody puts it in booking.com–
Rod
Oh yeah, you get two people on two different sites. They booked the same time. You’ve got a problem. Okay.
TJ
You’ve got a problem. So that count– that’s a sickness is crucial. Right. And there are multiple platform.
Rod
How do you do that? I mean, if you’ve got– if you’re on two completely different platforms–
TJ
Yeah.
Rod
And somebody books on one of them, I mean, you almost have to instantaneously change it on the others. Yes?
TJ
Yes, absolutely. You have to. But one of the beautiful things about this business and one of the reasons why I– when I started learning about this business and I knew that I wanted to get into this business because I realized that as many moving parts as there is so this business you can live with systematize and automate it with field teams, with technology and technology is definitely your best friend when it comes to what we’re talking about right here.
Rod
Okay.
TJ
There are multiple platforms that you can use that are channel management platforms that can bring all your calendar succinctly into one platform.
Rod
Okay, so there’s software that’ll cover this–
TJ
There’s a software that will cover this formula.
Rod
Okay.
TJ
It’s not a books on booking.com, it automatically block it on all the other platforms, including your direct booking site.
Rod
What’s the name of one of these platforms that does this, if you know–
TJ
So there’s a few. So there’s I mean, there’s Guesty, right? Guesty. There’s Lodgify. There is Toolkit. There’s home– Hostaway, I should say, Hostaway. There’s YourPorter.
Rod
Okay.
TJ
That’s a few of them or be rental. Yeah–
Rod
Okay, great. So that’s how you would organize the calendars. Yeah. I was like, holy sh*t, that would be a problem. Okay.
TJ
It’s very important to– Yeah. Go ahead.
Rod
No, no, please finish–
TJ
It’s very important. All these platforms that we’re talking about, like especially the ones I just kind of named of, they all have their own personalities. They’ll have different things that they provide versus others. So what I encourage people to do is to just do your research, look at to all of them, most of them will have a trial period or they can do a demo for you. They will go to stage one. They’re going to go live with you to run through it to do a demo. So just do your research, understand to each have their own personalities and then go with one and just–
Rod
And do they take different percentages? I’m assuming they get paid by bookings so you’re not paying a fee to get on them, I would guess. But, I don’t know.
TJ
So some get paid by booking, but most of them actually just get paid a flat fee depending on how many units are actually listed. So, depending– some might say a $6 per listing that you have on a platform. Right. So that’s a kind of round going.
Rod
Is that $6 per month or–
TJ
Yes.
Rod
Okay, so you do pay a flat fee. Interesting, okay. All right. So now let’s talk about how you take care of servicing them, how you take care of washing the sheets and the maid service and all that business? How do you– so let’s start with servicing and then I want to talk about pitfalls. So I was just thinking about something there as I was thinking about, like, I was just thinking spring break and getting unit destroyed. But let’s talk about how you service the units first.
TJ
Yeah, absolutely. And this is where your team comes a very, very crucial, right? So you need a field team, the most important team member that you’re going to have. And I think every probably every short term investor would probably agree that your cleaning team is the most important team member that you’re going to have. Your cleaning team literally is going to be the backbone of your business. They’re the ones who are going to handle the turnover process. They’re turning over your units. So you need to have a system where not only are you having a solid cleaning team turning over these units, but you don’t have a system to where you are managing the entire process. Well, my cleaning team goes in. I get notification on my phone. Boom, cleaning has started. When a cleaning is done, I get a notification that, hey, the cleaning is done. In the process, I also get they have checklists. So we see that everything is checked off that they need to be doing. We also make sure that they send pictures or photos to confirm that everything is where it needs to be, that everything was good, everything was clean, everything was clean. And you can automate that entire process and their software and technology that we use to manage the cleaning, the cleaning process as well. So that turnover process is very crucial.
Rod
Give me an example of that software. Is it off the shelf software that you can use?
TJ
Yes. So there’s TurnoverBNB. There’s one of them.
Rod
Okay.
TJ
Yeah. So there is Properly is another one. Those are probably the top two.
Rod
All right. And so and they have checklists in them so that nothing gets missed. Now let me ask you a question. So they’ll go in and clean, they’ll wash the sheets, remake the bed, all that. What about– I know that, again, I don’t do Airbnb personally and not– I just like hotels. But the point is, don’t they, like some people, put water in them. They’ll put some food in them. They’ll put some other cool stuff. Do you do any of that? I mean, talk about that a little bit.
TJ
Yeah.
Rod
What’s little– I mean, we, you know, I think we talked about– where we recording when we talked about the babies demographics? Was that after we started recording? Family, yeah, we did. Okay, good. So you put a chair and the portable crib and stuff. But are there any other things you put in there? Talk about that and then does that cleaning crew handle that? Those are my two questions.
TJ
Yeah, absolutely. And again, it’s definitely going to depend on who you serve it. Right. Like for me, for example, I serve a lot of folks in the medical center area, so I always put like a big flat screen TV in every single room. Do you need to do that? No, but I do it. Why? Because of the people that I serve. A lot of times when people come, whether they are travel nurses or whether they’re patients and they get some type of procedure done. A lot of times when they booked these Airbnb, they are recovering at your units. So their mobility is usually quite limited. Right. So when they recover in your units, you want to make sure that for one, we do a king bed in our units. Well, have at least one bed in every single unit. Comfortable mattresses. See, when it comes to furnishing these units, I send these units up. It’s okay to be savvy. Like you can cut costs, but don’t cut quality, especially on certain things like your beds, your pillows, your pot set because when you think about what really differentiates is that differentiate– that experience with an Airbnb versus a hotel is like a full kitchen, right? Which is one of the biggest things that people use in an Airbnb. So make sure that pots and pans, that is quality. And like going back to the beds, we make sure we get a quality bed. You don’t have to break the bank. There’s actually a bed on Amazon that is literally has five stars with thousands of thousands of reviews. The Zinus green tea mattress on Amazon. It’s a phenomenal mattress. A lot of hosts use it. It does not–
Rod
How much?
TJ
I think a king is about $400 a queen, maybe like $250 or something like that.
Rod
That’s cheap. Okay, good.
TJ
Yeah. Nothing bad.
Rod
Okay.
TJ
So yeah, so we want to make sure that like for those folks that we serve, like for example, like when people come recovered our units, their mobility is limited. Right? And so having a TV, a nice TV with all the apps, right? We provide Netflix and cable in our units as well.
Rod
Perfect.
TJ
And so they can think but it’s a smart TV. They can log into the APL subscription, they can log into, you know, whatever subscription they have.
Rod
This mean whatever, right?
TJ
Exactly. And they can be entertained while they’re recovering. Right? And we do a king bed makes it about as comfortable. A lot of times when patients come in, they have a support system, a family member or somebody that’s probably want to lay with them. And and if they’re good overnight, you know, so thinking about folks like that, putting yourself in their shoes and providing that experience will go so long.
Rod
So what about some things like, do you do any perishables? Like I was talking about, like water for them when they come or any like gift basket or any kind of stuff that makes them think, oh man, this guy, these people really care about us. Do you do any of that stuff?
TJ
So we do do snacks. We used to do wines, you know, a lot of wines. We put a bottle of wine out with a nice note card. When I got to probably about eight units, I realized that for me, now this could be very different. And everybody runs a short amount businesses differently. And for me, it just wasn’t scalable for me. It just wasn’t scalable for me.
Rod
Okay.
TJ
So it just became a little bit too cumbersome.
Rod
Got it. Yeah, just. You’ve got to stock all that wine and, you know, the maids are opening up and enjoying their time cleaning your units and everything else. I got you. So you really don’t do any perishable stuff, because I’d heard, you know, people put a gift basket with a couple bottles of water and some snacks.
TJ
Yeah. So what we do like, yeah, we do like the little snacks and waters. We do like snacks and waters, but that’s as far as it goes for us.
Rod
Okay.
TJ
As far as it goes for us. Yeah.
Rod
Okay, got it. Got it. Got it. Okay, so now let’s talk about pitfalls. What are some horror stories? Talk about some– because I’m sure you got a few if you’ve got that many units. So talk about some doozies that have happened and really the lessons learned and or, you know, how you got through. Yeah.
TJ
Absolutely. And I’ll give you– there’s definitely a few. For one, I’ve had– because we don’t allow pets in our units. Now, pets are going to actually to teach his own on that. Right. There’s actually a great argument to be made with having pets and not having pets. But there are a lot more people that don’t allow pets. So if you actually allow pets in your listing’s, that’s a great way to stand out honestly or for me personally, we don’t allow pets in our units. One time somebody snuck a German shepherd into our units and somebody snuck a German shepherd in there and they checked out. By the time they checked out, the next guest checked in two days later and they were like of stuff everyone is biting us and they left fleas.
Rod
No kidding. Oh god, that’s horrible for your … Oh, wow. Okay.
TJ
Yeah. So we had to get the whole place treated, had to move the guest out, had to get the whole place treated. Things like that. We’ve had somebody– we had a raid. Like an FBI raid in one of my units before because we had, one of the guest, that not the guest– and this is a direct booking. There’s a direct booking. This is my earlier days where the screening process, my screening process wasn’t as strenuous as it is now.
Rod
Okay.
TJ
But somebody booked it. But it wasn’t that guest, actually. It was actually somebody else that came into the property, one of their friends that came into the property. What happened was that the FBI sent a package, a FedEx package to the front door. And when I came and rang the doorbell, when I came to open the door, they want to confirm to see who was inside the house first before they make their move. And when they saw that they person that they wanted to get was there, they came in. They actually kicked in my front door.
Rod
Wow.
TJ
And then, they, and I heard about it the next day. I’m like, What? But then, the thing is that, and I was out of town at the time. And so, then I looked at the camera and I was like, What in the world? So.
Rod
So, you’ve got cameras in the front doors of your units?
TJ
Very important. Very important to have cameras only an exterior.
Rod
Of course, only in the exterior. Got you.
TJ
And for folks who are listening, if you’re going to have a camera, actually, matter of fact, you’re well within your rights to have a camera inside if you want to.
Rod
Yeah.
TJ
You just got to make sure that you state it. If you don’t state it–
Rod
Guys, don’t do that. Trust me.
TJ
Don’t do that. I wouldn’t recommend it whatsoever.
Rod
Do you do just one camera in the front, or do you do one in the back or what do you do?
TJ
One in the back. One in front, one at the back now depends. A lot of arbitrage properties, it’s like they’re in apartment communities or we have a lot of landlord properties as well. So, if it’s a standalone property, we have cameras covering both the front and the back, for sure. And it’s very important to have cameras. You want to make sure, for one, that you are tracking, that you are making sure that you are seeing the people that are coming to you. And it’s ask a lot of times people will be slit. They’ll say, That was two people checking in and it’s like, ten people to check then–
Rod
No kidding.
TJ
You need to have a state in your house rules how that language in your house was to make sure that you will collect money. And state how it’s a violation if they violate the number of people. That’s supposed to stay.
Rod
Now, these house rules. Are they just stated on the website or do you actually have a sheet inside on the countertop that has them as well?
TJ
So, what we do is we utilize technology. It was definitely stated on a website.
Rod
Okay.
TJ
But for the guys prior to every guest that checks into our problems, they get a digital guidebook.
Rod
Got you.
TJ
And also highlights the house rules there. And back when everybody books, no matter what platform, when they book, they have to agree to the house rules before even confirming a reservation.
Rod
So, they check a little checkbox and read the rules.
TJ
Exactly.
Rod
Got you. Okay. Now, you talked about screening. I don’t want to pass that by. I need to think about that. What do you what do you do to screen a short term rental?
TJ
Well, there’s a few things you can do. And, you know, again, another thing, people have different ways of that.
Rod
Oh, sure. But I want to hear your way. Right. Or what you’ve heard, you know, from other people as well.
TJ
Absolutely. So, for one, we look at the reservation. We look to see if they actually have any positive reviews. One of the best things you can do for screening, by the way, is to make sure that for especially for bigger units, we don’t have it to where you can instantly book it. And I want people to understand that instantly booked, especially on Airbnb. Airbnb likes instantly bookable listings, but don’t be scared to turn that off, like protect your property still at the same time.
Rod
Right.
TJ
So, especially for bigger problems that slip more because those are the bigger targets for the Riff-Raff.
Rod
Right.
TJ
And that there’s a lot to–
Rod
Let’s have a party, you know, bring a hundred people over, right.
TJ
Exactly. So, for people that want to book those listings, I understand you have to send in a request. And we look at your profile, we say, Okay. How many, do they have positive reviews from other hosts? Had it provided a good service to somebody else before? Then, we look at how many times they’ve done that. look to see if they’re local. A lot of times, and traveling metrics and traveling has changed ever since Covid. So, there’s a lot more local people traveling to our amazing guest, but pre-Covid, we were super, super, super strict against local travelers and we still are. But we just–
Rod
Oh, because of that whole party dynamic.
TJ
Because the whole party dynamic.
Rod
Got you.
TJ
My mindset is, Okay. You live in a city. Why would you want to book my listing, my big house? You don’t want to party your house. You know, so we’re very wary of local travel. We look at–
Rod
That’s a good point. So, all you can do is really look at their history. And if they don’t have one and it’s a big property, you might be, Nope. Not happening. Especially if it’s short term. Right?
TJ
Exactly. And depending on how many days. Right?
Rod
Right.
TJ
They booked it for one night, that’s a red flag, right?
Rod
Yeah, you bet.
TJ
But if they want to book it for five nights. Okay. Let’s see what.
Rod
Their chances are, they won’t last that long with the alcohol. So, that’s probably …
TJ
Exactly. Exactly.
Rod
They’re like, Gotcha. Okay. So, that’s the screening. That makes good sense. Oh gosh. And I just had another thought that escaped me. Okay. But, bear with me, one second. Pitfall, screening, darn it, escaped me. It was a good one, too. Yeah. It’ll come to me. All right. So, let’s talk about now. Have you encountered, I know, Houston is Lucy Goosey. They don’t even have zoning there? I don’t think. So, have you encountered legislation that is adversarial to this short term rental business in your business so far?
TJ
So, I haven’t personally counted it, but people are counted all the time. Here in Houston, we’re very, matter of fact, the city makes money on short, on a platform on Airbnb. There’s a transient occupancy taxes. It’s the hotel tax does collect it. The guest pays that. So, that’s a portion of that tax goes to the city and, you know, the city’s happy. Well, the thing is that, when it comes to these regulations, there are different reasons why different cities have different regulations. Like in New Orleans, New Orleans was people making money hand over fist on Airbnb in New Orleans.
Rod
Right.
TJ
What happened was that a lot of people from out of town were coming in and buying all these properties and building new properties strictly for the purposes of Airbnb and what sort of feel like they were losing the culture of the city. So, city council, people sort of complaining, the council got involved, everybody got involved, and now, you have to own the property and live in it to make the property your short term.
Rod
You have to live in it, too. Wow. Okay.
TJ
So, that’s why–
Rod
Orleans is off the table. Okay.
TJ
So, if it’s an investment property that you don’t live in right now, it’s a no go. So, you have to, that’s why properties like do multifamily duplexes and triplex.
Rod
So, I met a guy, so I was a member of a mastermind. That’s the reason I ask this is I met a guy that does Airbnb, really, really sharp guy. And what he told me, and I don’t know how you feel about this, I’d like to get your opinion on this was, you know, when he does one, he always makes sure he has multiple exit strategies. Just in case the legislation changes, like I don’t want to pay so much for a property that I can’t sell it regularly if I had to or rent it annually if I had to. What are your thoughts on that, buddy?
TJ
That guy was a very smart guy. This is stuff that that’s very important. And I say this all the time, especially when I speak in our clubhouse with people that tell me things, I want to buy this property. I want to– Listen. You have to have multiple exit strategies.
Rod
Okay.
TJ
The property and the numbers have to make sense from a traditional rental perspective. If that property will not cash flow with a long term traditional tenant in it, then I don’t, I like to look at the short term rental income as the icing on the cake.
Rod
Right.
TJ
Now, it’s a huge icing on the cake. But that should be looked at just like the extra. Their property should be able to cash flow with the long term traditional tenant in it, because you have to, you never know what might happen. If legislation comes down in a city and you might have to pivot and make that adjustment, you’ll be fine. Now, even if even if things are great in a city, if HOA or deed restrictions in that particular area, even that neighborhood comes down and puts it puts a damper on your business strategy. It’s a good idea to have an exit strategy.
Rod
Yes.
TJ
So, a lot of people, they look to buy their short term rentals. I’m like, look, make sure the numbers make sense on a front end, like you’ve got to, because we both know, it don’t matter what exit strategy you do. You making money when you buy when it comes to real estate. So–
Rod
Right. Now, let’s talk about the rental arbitrage, where you’re actually going to a landlord and saying, Hey, would you allow me to do short term rental here? And so, talk about that conversation that you would be having. And I know you do inside of other people’s apartment complexes as well. Is that correct or no?
TJ
Yeah. So, we work with apartment complexes and landlords.
Rod
Oh, right. So, talk about that conversation. How do you, you know, because, I mean, obviously, the first thing I would think is, Oh, Christ, they’re going to tear my place up.
TJ
No way. I’m not doing that.
Rod
How do you get past all that fear?
TJ
So, for one, your approach with landlords is from a fact of, first of all, putting yourself in their shoes and understanding their pain points. When we talk to landlords, we want to, for one, we don’t talk to them about all we want to do, Airbnb, whatnot. Not, I say this small caveat real quick. Airbnb, just a platform, is not the business you’re.
Rod
Right.
TJ
In entrepreneurial business. You’re a corporate housing company. However you want to position yourself, but you do not in Airbnb because it’s just a platform. So, when we go talk to landlords, what tends to happen is we call them up, say, Hey, you saw your property on Zillow or Hopheads. Wherever you see the property at, it looks really great, would like to come schedule, take a time to come look at it, go look at the property. And what happened is landlord is actually going to ask you questions and they’re going to find and they want to know, how are your family? Are you, you know, how long do you want to do the lease? They’re got to start asking you questions, but then you start asking them questions because your goal is to more so find out about their experience as a landlord and what their expectations are. And you want to get them talking about that, then you kind of go into the space.
Rod
So, no, hold on. Don’t move past that. So, what are some questions you would do to find out about? I mean, let’s drill right down.
TJ
Yeah.
Rod
You know, questions would you ask to find out about, you know, just, I guess that’s the landlord ones. Have you enjoyed being a landlord? I mean.
TJ
A lot actually. Well, yeah. I mean, like you said, like, Hey, so what was your experience like as a landlord? I’ll ask them also, did you used to live in this property or is it always been investment property? Do you own a property? Is it under your name? Do you own it under a business? I’ll asked and I’ll say, how long have you been doing it for? How was your last tenant? Did you like them? Were they good? Questions like that to get them talking, to get an understanding of what their experience has been like and they actually like, So, what do you look for in a tenant like, you know, what was important to with a tenant? I already know these answers? I just want to get them talking. That way when I speak to those answers, it’s registered even more. So, then, we go into the spill, say, Hey, we actually want to rent. I like this property a lot. And another thing that people want to make sure that they do, when you go look at these properties, you want to qualify him like logistically. Make sure that they work for your business model. How’s the parking situation? How does food get delivered like the check in the check out process? Will you be able to even install your tech stack into these properties? Would that be okay? So, then you go into the–
Rod
What is the tech stack?
TJ
Tech stack include doorbell camera. We don’t deal with keys. So, keyless entry.
Rod
You got a keyless entry, right. Lock system.
TJ
And we usually set the PIN codes to the last four digits of the guest phone number on a profile, and that was easy for them to remember. Things like that. We use a nest thermostat because we want to make sure that things like that are super easy. So, even though, and we get a lot of people, especially pre-Covid, a lot of folks, they’re not even from this country that come here. And so, we want to make sure that they have systems and things that they use in a property that’s easy to use. So, things like that, those all fall into the tech stack conversation of cameras. All that noise monitoring system. We talked about parties and all that. We use noise monitoring system to monitor the noise level. That way, once it goes up to a certain level, you know that there’s some riff-raff going on over there.
Rod
Noise monitoring system. No kidding. So, that’s, yeah, I had those alarms here, like glass brake alarms. If, you know, the alarm goes off, if the glass is broken. So, it’s similar to that, I would guess. Okay.
TJ
Similar to that, but it’s not just like, it’s actually the noise level, like conversation.
Rod
Wow.
TJ
Like conversation. So, once a conversation gets like, to a certain level, then you know that, oh, this is a party level. Then in a large one you follow, hey–
Rod
Oh, that’s cool.
TJ
That’s quite a party level activity going on. It’s a problem right now.
Rod
Drop the hammer, call the cops. Wow. Okay. Very cool. Okay. Please continue.
TJ
No. I was going to end that conversation. Just wrapping up that conversation real briefly, because that part I want to make sure that the people understand why it’s important to speak to the pain points of these landlords. We talk to these landlords. We let them know like, Hey, you know, we want to rent this probably low to property, but we’re not going to be your typical renter. We actually want to rent this property and rent this property to the people that we serve, because I think it’s very nice. And I think that the medical travel and the business travel that we sort of really like it. You’re going to get your rent paid on time every month. It’s going to be fully automated. We are going to handle maintenance for you. We handle maintenance up to $200. Anything above $200, we let you know, we’ll oversee the process, we’ll make recommendations for contractors, and then we’ll oversee and make sure it gets done. They will invoice you for the cost of it. Anything under $200, don’t even worry about it. We’ll take care of that on our expense, things like that. We let them know this is how the property has to show for everybody checks in here. So, nobody is actually going to take care of this property. We’re going to take care of this property. Nobody’s going to take like we’re going to, we have, it has to show for everybody that checks in. So, we speak to that. We say, Hey, this is how we insure the property. We insure it with short term rental insurance, but it’s liability coverage as well to make sure that the entire business is covered. And we also give them the option to transition because there’s a short term rental policy if you own the property and it serves as a complete replacement to the landlord policy. And then, we still have our own arbitrage policy as well. So, we showed them how we’re going to insure the property. We let them know ahead the people that we serve. A lot of times, it’s in their best interest to take care of these properties because they don’t want to look bad to their employers. They come in to get the job done and they check out whatever the case may be and and that’s it. So, we speak to their pain points and the landlords pain points of this. How will they get the rent paid on time? Will somebody take care of the property? How was maintenance being handled? Right? These are three things. And what about, and also turnover. So, we actually look to do 24 months like, at least 24 months when we do it.
Rod
Right.
TJ
I can understand. Landlords, when they like their cash and they like money on time every month. But turnover is also a big deal. It may take them a month to fill in their vacancies.
Rod
Sure.
TJ
Hey, we’ll fill in. We’ll keep this for two years.
Rod
Do you do rent bumps on the second year?
TJ
Exactly. So, we actually negotiate that. We actually try to negotiate rents down because not only are we feeling this vacancy, but we are being the perfect tenant while we’re doing it. So, that’s how we position ourselves with landlords and we actually use all these factors to actually help us get lower rents. But usually, when we look at properties, we are actually okay with the rent. We actually make sure that the rents work before we even going to tool. Make sure there property–
Rod
These are formula that you use when you’re evaluating a property on this arbitrage model that, I mean, obviously, I guess you’d need to see what the market bears on a daily basis. And then, what do you do? Calculate that you’ll be half full or what are the numbers you use?
TJ
Well, there’s technology that you can use to run comps.
Rod
Oh. Okay. So, give me, throw some of those out. Well, how do you–
TJ
The main one is airdna.co
Rod
airdna?
TJ
.co, yeah, .co
Rod
.co Okay.
TJ
And that’s almost like running comps for short term rentals. Right?
Rod
Oh, very cool. Okay.
TJ
You can put in, and now they charge, they charge for the market, for the report.
Rod
Okay.
TJ
You can be on subscription and they’ll pull up the report and let you know on the occupancy, the average occupancy. They’ll let you know what the income is in terms of what people are charging, things like that and across Airbnb and Vrbo as well. So, but I caution people when it comes to AirDNA, please take the data with a grain of salt.
Rod
Right. Same way with rental comps, guys. You know, if you’re going to check a rental comps on a multifamily, you’re going to Zillow and Rentbits and Rentometer and in apartments.com, it’s not enough. You have got to do some of your own homework.
TJ
Yes.
Rod
And actually go on the freakin’ platforms and see who the competition is. Right? Are we on the same page? All right.
TJ
100%
Rod
I mean, in our case with multifamily, you need to call the competition. You know, you don’t even rely on the websites, but okay. Good. All right.
TJ
So, we also, generally, we also usually outdo the numbers on AirDNA, just as a point.
Rod
Okay.
TJ
But that’s why I still rock with AirDNA, because the numbers are quite conservative, actually. But, like you said, couple that data with going on a platform itself, go under as a traveler. Look at and look in that particular area. Cross-reference that, look at the data on occupancy. Look at the data in terms of how well the listings put together. Do they even have professional photography? Look at what they’re charging. Look at how far out they’re booked. Look at couple that data, what you get from AirDNA. That’ll give you a solid information on what to expect in terms of income on a shorter rental basis for that particular area.
Rod
All right. We just said something else that, you know, I’m going to ask a question about. So, you get professional photographs at all your places.
TJ
Absolutely. 100%. I highly recommend.
Rod
How many photos of a property? All the rooms, I’m guessing inside, anything that’s a plus like a backyard view or something, a yard.
TJ
Everything.
Rod
Everything.
TJ
I let people know. And two caveats to these photos. For one, about 15 or 20 for a one bedroom. Check on about five every additional bedroom.
Rod
Okay. So, that’s it for the photos.
TJ
For the photo count. Right?
Rod
The cost. Got you. Okay.
TJ
Yeah. For the photo count. For the amount of photos that you’re going to put on the listing, on listing itself. Now.
Rod
Oh, wait a minute. Are you paying the photographer or you’re paying the platform?
TJ
Oh, no. So, we paid a photographer.
Rod
Okay. I just got confused for a second there. Got you. This … photographer to do it fifteen bucks a room.
TJ
Oh, no.
Rod
What am I missing?
TJ
A flat fee. What I’m saying, when you list your property, the amount or photo, because you don’t want to have too many photos on.
Rod
Gotcha. Oh got you. It’s only about … just money.
TJ
Yeah. 15 to 24, one bedroom. Photo is on sell. The photo count on the list.
Rod
Got You.
TJ
Yeah. I’ll say about 20 to 25 for a two bedroom. Probably, no more than like 28 for three bedrooms, something like that.
Rod
Got you.
TJ
Already even. But when it comes to photography, hire a professional photographer. I don’t know, I still don’t understand why a lot of hosts miss on this, but there’s so much money you’re leaving on the table. When I have professional photography. And I’m not just talking about any photographer, a lifestyle photographer or wedding photographer, somebody a real estate photographer, because you have certain ways that photos have to be set for real estate purposes.
Rod
You do virtual tour. Is that something that you could do?
TJ
So, that’s actually something that Airbnb, as the rumor, is looking to add to their platform. Right now, I used to do the Matt Report. When I got styles on the Matt Report. That’s where you can do a virtual tour. It’s like the virtual tour. But you can’t add links to Airbnb right now. So, but apparently that’s something I’ve been looking at in the future. But one other savvy way to do it is you could have it to where, hey, text. You could have a text software. Text this number to get the virtual tour. Right? Text this number to this number to get the virtual tour.
Rod
Oh, cool.
TJ
That’s a list of you can do.
Rod
That’s cool.
TJ
You got a little creative with it, and I heard a guy on clubhouse, they had a genius idea. He has one of his photo reels, a photo on his photo reels, he has a QR code. Right? So he say, Hey, you scan a tracker with your phone it’ll take you straight to the virtual tour of property. I thought that was pretty cool, too.
Rod
Yeah, that is cool. I love it. So, online, you just scan the QR code and boom, there you go.
TJ
Exactly.
Rod
Okay.
TJ
And another good point with photos like make sure like let them see everything. Like, your photos should tell a story. Like, let them see everything. If they don’t see it or at the minimum you don’t state it, they will assume you don’t have it. So, you have to make sure that you show everything. If you have a sofa bed, it’s a good idea to have one, because the more heads you can sleep, the more money you can make. So if you have a sofa bed–
Rod
Do you charge more for more people?
TJ
So, yes. You can definitely charge more for more people. Like, just overall of your listing, the more you can sleep, the more you can make money.
Rod
Got you. Okay.
TJ
So, even like with your sofa beds, like pulled a sofa bed and make it, dress it, let it like, put the duvet on it, put the four pillows, put a decorative pillow on it. Dress it, make it look nice. Let them see it’s a sofa bed. But hey, it could be comfortable like this. You could still get some good sleep here. So, let them see everything. Your pots and pans.
Rod
Oh, really. Oh, wow.
TJ
Yeah. Everything. We actually like to dress the dining table. We’ll dress it like, you know, make it a nice.
Rod
Make it up. Basically.
TJ
And photograph it that way. Like, let them see, tell those, tell the right story with your listing and that would go a long way.
Rod
I love it. So, how do you manage your, this is the last topic. How do you manage your reputation?
TJ
So, by providing exceptional service.
Rod
Oh, of course.
TJ
Like, here’s the things.
Rod
What do you do actually? Tell me what you do besides just make sure looks good and all that and well taken care of, cleaned properly, you know, what do you do to manage that experience?
TJ
So, the word that you use is experience and that’s what’s crucial. Right. What’s going to translate to good reviews, because the reviews is what’s going to keep your reputation high. What’s going to translate to good reviews is to expect is the experience that they get at your unit but a lot of holes don’t really realize though, that that experience doesn’t necessarily start when they get there. It actually starts at the listing itself. How clear is your listing? How good of a job are you showing? What you’re listing has to provide at the listing level? Then, they book you’re listing rocketeer track that they’re sold, they book your property. What is your communication like? How are you communicating with them in which a lot of that can be automated? You’re checking instructions. How clear is that? So, what makes that experience great? One of the key aspects of that is the fact that a guest can book your listing and have the right instructions, and then check in and have a great experience at the property from even utilizing your TVs. We used a Roku. Only one type of TV we use in all of our units, is the TV with the Roku built-in because the remote is so small and simple. Very simple. What matters is if they don’t have to ask you anything. If they can come use your property, we’re not having to figure things out. Hey, how do you use this? How you use this? That speaks to the experience quite a bit as well. The more questions they have to ask you, the more dwindle down to your experience. So, how well are you being clear in providing that experience, even at the level of your listing. Then, when you check in, Okay. The thermostat remember, we use a super simple nest. All you gotta do is turn it to set.
Rod
That’s it? Wow cool.
TJ
That’s it. The remote, super simple. It’s like, two buttons on a remote.
Rod
What about, do you do anything while they’re there or after they’re gone? For reputation.
TJ
So, for reputation. Now, if sometimes guests will have special requirements, right, maybe it’s an occasion. Now ,this is a great way to host. Can you actually make even more money by partnering with a third party company or somebody that has a business that, Hey, we provide, you know, certain packages for the guests.
Rod
For party or something?
TJ
Yeah. So, maybe, you know, they’re here for, you know, they want like anything.
Rod
Forget that. I’m really more interested in like a normal one week rental, two week rental. Is there anything you do, you know, like, sometimes Amazon sellers will will put in a card or they’ll put the thing in a bowl where they’ll do something, just to make it a little extra special. Don’t contact Amazon. You got any problems, call us. We will make sure you’re taken care of. Do you do anything like that?
TJ
Well, absolutely. And for one thing, we say stuff like that, like, even in our guidebooks and stuff like that, like, make sure you don’t even worry about space in our apartment communities because guests tend to want to just reach out or go down to the front office.
Rod
Oh, yeah.
TJ
Like, Hey, just make sure that if you want the best service, just reach out to us directly. We’ll make sure that you’re well taken care of and things like that. Okay. We’re used to go all out with the services, with wine and chocolate or whatever.
Rod
Right.
TJ
But again, we got to a certain level like, you know, we’re going to scale that back, but we do still provide snacks and things like that.
Rod
Right. Okay.
TJ
So, when you–
Rod
So, there’s nothing you do to, like, ask for a five star rating or anything like that? Just that’s what I’m asking, I guess.
TJ
Not yet. Well, what we do ask for one. I think the average number of people plus 65% of guests of hosts have their guests leave a review. We had like 85% because we actually ask, and we opted to do it. And is also psychology.
Rod
That’s what I’m asking. Yeah. Okay. So, you ask for it.
TJ
Exactly. And even like when we check in, is automated the very next day, we check on them. At 10:00 a.m. the very next day, we have to check them, Hey.
Rod
Phone call, text?
TJ
Through to the platform. Text to the platform. Which is also goes through to the email as well. Hey, hope you have a five star state. Let us know if you need anything.
Rod
Oh, pre-framing. Hope you have a five star recommendation mark. They love it. Oh, I love it.
TJ
Things like that. You can even have like your Netflix. Say you have Netflix, right? You can have title one of your Netflix profiles. Five Star State, right?
Rod
Love it. Subliminal.
TJ
Subliminal, exactly.
Rod
I love it. Love it. All right, guys, listen, his website is strroadmap.com and TJ, this has been a blast, brother.
TJ
Thank you so much, I had a great time.
Rod
Yeah, this has been very informative. I will tell you. I’ve learned a lot. And and it’s making me think about this, honestly. So, I appreciate your time, brother. And, you know, I’m sure I’ll see you on clubhouse.
TJ
Absolutely, man. Thank you so much, man.
Rod
My pleasure, brother. Take care. Thanks.
