We're talking short-term rentals in this episode! Meet Culin Tate, a serial entrepreneur, owner and host of nine Airbnb properties, short-term rental coach, author of Host Coach, and Airbnb ambassador.
His mission is to share his experiences and knowledge of specific tools, software, and systems that will turn your short-term rentals from being a "hobby" into a legitimate business.
Get an inside look into the tools and systems that Culin has implemented, and scale your short-term rental business into a life of financial freedom by starting to live your "why."
Most of Culin's properties are in the Blue Ridge Mountains of Central Virginia. The first one that he purchased is a condo on Turks and Caicos, and we discuss the differences of mountain and beach markets, and why he continues to operate in the Caribbean as a break-even.
If you're in that 2-4 Airbnb homes and you're thinking that you can accelerate that into a larger portfolio, or if you're just trying to figure out how to land and launch that first place, this episode will give you plenty of knowledge and confidence.
Things we discussed during this episode:
- Buying turnkey properties versus fixer-upper Airbnbs.
- Why you should think about Airbnb as a search engine.
- Utilizing a dynamic pricing tool such as PriceLabs
- Implementing an automated messaging system such as Hospitable
- Why you should spend a fair amount of time staying in your listing yourself.
- Using technology and short-term rental automation.
- What are the benefits of having a short term rental business?
- What is Airbnb arbitrage? What is co-hosting?
- Hacking the Airbnb algorithm for listing placement and success
- How do you know when an Airbnb market is too saturated?
- How do you properly vet Airbnb guests? What criteria are you looking at?
- Using a market analysis tool such as AirDNA
- When to know that a market is oversaturated
- Why to focus on secondary markets or properties outside primary markets
- Market regulations and having a Plan B for each property
Where to find Culin online:
HostCoach Website - https://www.hostcoach.co/
Instagram - https://www.instagram.com/host_coach/
Facebook - https://www.facebook.com/HostCoach
LinkedIn - https://www.linkedin.com/in/culintate/
Join Jason Muth and Attorney / Broker Rory Gill of NextHome Titletown and UrbanVillage Legal in Boston, Massachusetts for another episode of The Real Estate Law Podcast!
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The Real Estate Law Podcast is hosted by Jason Muth and Attorney / Broker Rory Gill.
This podcast and these show notes are not legal advice, but we hope you find both entertaining and informative.
The Real Estate Law Podcast, because real estate is more than just pretty pictures and law goes well beyond the paperwork and courtroom arguments.
There are third party dynamic pricing tools available that attach to your Airbnb listing. I use one called PriceLabs. And that software is attached through an API directly to the data at Airbnb. And it knows precisely how many people are searching for a property in a given area. Every specificAnnouncer:
You found The Real Estate Law Podcast, because real estate is more than just pretty pictures. And law goes well beyond the paperwork and courtroom argument. If you're a real estate professional, or looking to build real estate expertise, then welcome to the conversation and Discover more at the realestatelawpodcast.comJason Muth:
Thank you for listening to The Real Estate Law Podcast we have another great episode today. I'm your host Jason Muth along with real estate broker and real estate attorney Rory Gill NextHome Titletown Real Estate and UrbanVillage Legal in Boston. And Rory, I have been looking forward to this episode for a long time because I never sound like an idiot when I'm talking Airbnb because we're doing that. And we have an Airbnb expert, coach, operator, financially independent gentleman from Maryland. This is Culin Tate. And we can't wait to hear more about his story because it really feels like the story that we're writing as well, doesn't it?Rory Gill:
I'm very excited to jump into a topic that is near and dear to us and see what our trajectory could be. Ultimately, this is a path for us for financial freedom. It's a topic that we know a good amount about and something we're happy to talk about. So with that, let's welcome on Culin.Culin Tate:
Thank you gentlemen. I'm excited to be here.Jason Muth:
Yes, welcome. When we booked this, we were reading up on your background and you know, I kind of had this date circled in red on my calendar saying all right, we got another great Airbnb episode coming up we did one long time ago with an amazing host named Natalie Palmer. She is also an ambassador for Airbnb. And it was just such a good episode. The conversation flowed so well. So I've been looking forward to this conversation just to see what you're up to here on the East Coast, how you got about doing all your Airbnbs all this great work that you're doing, setting yourself up for financial independence and setting your family up for lots of dad time with the kids. Actually what this leads to. So Culin, tell us your story. Tell us how you started in the short term rental space. And you know, that's probably a good startingCulin Tate:
Yeah. And I started really full full tilt in 2018. I point. had sold a company, I've always been an entrepreneur really never had a W-2 type job, and was really scratching my head thinking, you know, what's next? I got you know, what's the next great idea what's next big thing. And I had two properties that were vacation rental properties. And they were doing really well in terms of cash flow. And I thought well, you know, I've always been very curious about real estate, you know, done a little commercial, but a little bit of long term. But this short term stuff is really exciting to me, it really, really resonates with me. And so I decided to jump in in 2018 and I ended up buying a wholesale property from a wholesaler, I ended up buying an on market, MLS property and then an off-market property from the owner who owns that MLS listing. And so those three properties really kind of kick started me to go dive deeply into, you know, being not just having an Airbnb listing, but being a short term rental investor, and really honing my processes and technologies.Jason Muth:
How many properties do you have now?Culin Tate:
I have nineJason Muth:
Nine. Are they all in the same geography?Culin Tate:
So eight of which i- t's kind of a two sided portfolio - eight of which, which is really the primary operations is in the Shenandoah Valley, which is part of the Blue Ridge Mountain chain in sort of Central Virginia. And then there's this one outlier, which was actually our first short term rental property, which is a condo in the Caribbean, in Turks and Caicos Islands.Jason Muth:
Yeah. Do you use any of the properties yourself when you're going on vacation?Culin Tate:
Yeah, actually, particularly the Turks andJason Muth:
That's the story that I think we've heard a lot Caicos property - we're actually heading there next Friday for two weeks. We historically spend, you know, two to four weeks a year at that one. That's an interesting property. And and encountered a lot. People who kind of enter the short term that, as I said, there's kind of two sides of the portfolio. That is a sort of legacy property that we've owned, you know, and rental space because they're looking to subsidize a property it doesn't really cash flow from an investment perspective. It's an interesting, it sort of ties into some of the things I teach about the beach, basically, which is the beach, it's hard to make money, it's hard to really create strong cash flow in all beach markets, and particularly the Caribbean is very expensive. So it pays its mortgage, you know, and so on a short 15 year note, so it's not losing anything. It'd be paid off here in five or six years. So that's a plus but wouldn't buy it again, as a cash flowing property. that they intend to use as a vacation home and there's absolutely nothing wrong with that is an approach is that a way to get that second home that you dreamed of, but And it's different, again, a little bit for a true short term rental investor, which is I think more in line, what you're doing in the Shenandoah Valley. Correct. Two sides, Dr. Jekyll, Mr. Hyde kind of story there. But yeah, so it's positive in that, you know, we do use it three, four weeks out of the year. And it's a beautiful property and a beautiful island and it pays for itself. So that's a win. But in terms of financial freedom and generating cash flow, I prefer things not at the beach.Jason Muth:
Right. I mean, it also probably appreciates in value and there's some tax benefits to having it. I'd imagine, you know, and then 15 years later, it's yours free and clear.Culin Tate:
Which at this point is in six years from now, so.Jason Muth:
Yeah six years. And yeah, not not a cash flowing thing. I mean, a lot of people that are getting into the short term rental game, whether they're owning properties, or they're doing arbitrage, or they are, you know, just hosting, they're looking for cash flow. When you have scale to the point that you have right now in the Shenandoah Valley, where you have a number of systems, I'm guessing, with your properties, and they sound like they cash flow really well, I want to really get into that in a second, then you're allowed to kind of carry the other property that is the outlier. And you know, you're not relying on that to pay your personal mortgage or feed your family.Culin Tate:
So let's talk about your primary properties, though. I mean, like you've clustered eight of them in a similar area. Did you do that intentionally? Or did it just kind of build itself out that way.Culin Tate:
I would say that I did it intentionally. The whole Blue Ridge Mountain chain, you know, is great, right? It's still anywhere couple hour to three hour drive from a major metropolitan area where you can find a property that final location where properties are being sold from the use case of this was just a family getaway place. We had a lake house, a river house mountain house. When the use case is you know, family getaway, and you can buy it at that type of price per square foot price point, and then repurpose that asset into a full occupancy short term rental business. That's where the real strong opportunity is, is that repurposing. I focused them all in the same county. It's just scale up operations, you know, I can go and bounce between really easily when I need to.Jason Muth:
I've seen on your social media looks like you work on your properties yourself at times. Talk about buying turnkey versus buying something that needs a lot of work.Culin Tate:
Yeah, my wife and I operate the renovations together. She sees it likes to say she likes to buy them crispy, you know, meaning that, you know, some deferred maintenance would be the professional term, and then put her own touches on do more renovations. I prefer a little more turnkey. But really it boils down to you know what's available, what you can find in the market and what fits your skill set. If you're working a nine to five W-2 job, you might not have time - this last property sheet my wife's actually polishing floors right now in a place, you know, we've basically in and out of it for the last two months, right? Because it needed renovation. So not everybody has the time to do that. Right. So if you are working a full time job, then something a little more turnkey, where you can go spend a few weekends and get it ready is a better approach.Jason Muth:
Yeah, but you started this in 2018, you said, so it's been a couple of years.Culin Tate:
Yeah, four years.Jason Muth:
We bought our first place in 2016. Just to kind of compare some notes. I was working a W-2 job that whole time. I think that I started that last position five months before we bought the first place. And we honestly had no idea what we were doing. We bought it not quite on a whim. We bought it, we bought it with intent. Like it was down the street from some family members. And we knew we'd be visiting that area a lot. And it just seemed like a really good deal. So we bought it. And sure enough, you know, turned into a great deal where we use the property but we also rented it. Turned into a great cash flowing property where we eventually bought the lot next door to build on which we're doing right now and then bought the property right next to that to do another Airbnb and that one just went live as we record this just went live this week. We just got two bookings in the past two days.Culin Tate:
Yeah, thank you. And I mentioned to you before we hit record, I'm like, if I get one more booking this week, I'm jacking the prices up today. So that leads me to to pricing. So you know, if you can give some advice to some people that are saying, This sounds awesome. I don't know where to begin. I don't even know where to charge. Like, what would you say?Culin Tate:
There's a great technological and process answer to that. So 95% of hosts are doing what I call, like, set it and forget it price, right $200 a night, plug it into the calendar. And what happens is your weekends fill up real quick and your weekdays stay vacant. So if that sounds familiar to anybody, the solution is a technological one. There are third party dynamic pricing tools available that attach to your Airbnb listing. I use one called PriceLabs. And that software is attached through an API directly to the data at Airbnb, and it knows precisely how many people are searching for a property in a given area every specific day. It knows that historic information as well and it knows the current occupancy. So with a software like that you would set a base price of say $200 And then the software would adjust automatically for you, your price upwards in the case of high demand. So let's say there's a concert coming in town, or, you know, a fair or, you know, it's a college graduation weekend, it would apply a factor to that $200 price. And maybe that makes a weekend price more like $400. And so, on the other side, you know, if the property is vacant next Tuesday night, Tuesday and Wednesday night of next week, it will say, Well, that's pretty close, let's start cutting those prices down. And so what that does is it maximizes your revenue by getting those higher prices, but equally important to maximize your occupancy. A lot of people don't think of Airbnb as a search engine, but it is. It's an interest algorithm. And so when you can start thinking about, well, what would the algorithm prefer? What are the things that are going to make the algorithm like me better, meaning, they have to decide in which order to show property. So if there's 300 properties in the market, you can't show them all at once, and it doesn't make sense to show them randomly. So we'll show them you know, there's a lot of factors, but think about what's important to the algorithm to the company, which is they only get paid their service fees when your place books. So the place the books the most generates closes the most leads, turns converts the most views into a booking will be preferred by the algorithm, therefore will be shown higher and rank placement. And it's a self feeding circle. So pricing for occupancy.Jason Muth:
What percentage of people would you guess are using dynamic tools like this, like it versus the set and forget it model?Culin Tate:
About 5%?Jason Muth:
Very low.Jason Muth:
I was thinking single digit percentage as well. We actually are not doing that right now. But I have five tools that are on my list of vet right now. Now that I'm no longer working my W-2 job, and I get to do this full time. So our objective is to scale this up a little bit more. And you know, we're actively searching for another one or two investment properties, maybe short term, probably long term just to kind of diversify a little bit. But some other tools, what are some other tools that you're using? Is there anything else? Besides besides the dynamic pricing tool?Culin Tate:
Yeah, so the next big headache, and these are things that I discovered, when I said when I went from, you know, just kind of two hobby properties to buying the three in that summer range, and getting real specific. And you know, all of a sudden, now you got to figure out operations. So I was spending a lot of time messaging guests. And there's another technology and other software as a service called Hospitable, which is an automated messaging system. So when a guest books, through instant book, they automatically receive instantaneously a message back from Hospitable that we've customized. It says thank you for booking. And here's everything that you need to know about visiting this area. Right, Jason, if you are coming to DC, you know, and so what am I going to do? What should I do? What should I say, I'm going to send you a long email with all my favorite restaurants and attractions, right? So that automated message goes out. So all of the messaging with the guests is automated. So their check in message that goes out three days before they check in automated - WiFi, passwords, all that kind of stuff, then we check in with them after 24 hours in the stay, how's everything going? Is everything all right? That heads off any type of well, gee, you know, the toaster didn't work during my whole stay. So it also decreases your operational time, and increases your kind of touch with the guests, which leads to higher reviews, which is also important.Jason Muth:
Right. Because that's another factor that Airbnb will use to rank your property or drop it further down their rankings. If you as a host have poor ratings, you know, they're going to rank properties that are hosted by people that have higher ratings higher than yours.Culin Tate:
That's very strong. And it's a very, very strong, strong driver placement.Rory Gill:
I want to ask about your philosophy of outsourcing to and using these different tools for automation, because I feel a tension between the idea that it's sometimes great to do everything yourself, so you understand what's going on. And by that, I mean, when we first started doing our rentals, it was nice to do a few cleanings ourselves to experience the place ourselves. So we know what's involved with all of those things that also messaging the guests by, you know, manually every single time just so we understand what the conversations are. But if we continued on that forever, we would be inundated with that level of work for every single listing. So I wanted to ask before we go too far into all the specific tools and ways to automate what you know, What's your philosophy of outsourcing and automating?Culin Tate:
Yeah, I think there's one is spending time in your listing. And we definitely advocate spending a lot of time in your listing particularly as you're setting it up kind of my book answer is, you know, try to spend a week as I was saying the last place that we're renovating we've probably spent two months there you know, we know that the hot water heater gurgles. We know my wife heard a little critter overhead a few nights ago and you know, it was time to call the pest management company, right? So we do advocate spending, particularly during the setup phase, a good amount of time in your property. And that's why I always advocate starting locally start, you know, nearby start in a place that you're passionate about in terms of the, the automations, and guests communications, I guess I maybe over simplified the the automated messaging messages go out. But we see the messages coming in from the guests. Also, we run the Airbnb app on our phones. And so we're watching all of the communications and you're still receive, you know, specific questions from the guests, you know, where's the lighter? Where's the charcoal, you know, the automation has taken care of the heavy lifting of rote lifting, but we're still monitoring all of the communications and specific guests needs and responding.Jason Muth:
Let's talk a little bit about neighbors. All your properties in the same town or the same city, and how have some of the neighbors reacted to some of their homes within the same communities becoming short term rentals.Culin Tate:
So luckily, I'm in a county that have historically been a, you know, cabin type getaway community, I will tell one story. So I do have a property. It's basically top of mountain kind of neighborhood. Well, the property is sort of the highest in the neighborhood. And it's kind of a mountainous type neighborhood. And it's a mix, there's probably 50 homes in the neighborhood, and maybe a dozen short term rentals. And this is a rural type of neighborhood. So we did have a situation where like the board director came to us and said, the neighbors are going to kind of PO'ed. So what's going on? They said, Well, your guests are flying up and down this road, people are worried about their dogs are worried about their kids or just maybe generally irked, you know that there's traffic through their neighborhood. So we got real proactive about it. You know, I bought signs that said, you know, kids at play hung on the roads at my own cost, and that I put a specific message in my system, saying, hey, guests, we've had a previous guest, as you know, really, you know, was driving unsafely, you know, these are mountain roads, Please mind the neighbors and everybody writes back? Oh, my gosh, yeah, absolutely. Ended the problem like that. So you know, you just have to be a little bit creative and work with your neighbors. You're on the same side. You're not the renter investor. You're the neighbor. Right. So, you know, there was a similar situation or somebody's like, there's gonna be trouble up there. And I'm like, I've got cameras there. You want the driver's license? You know, are you want the license plate? No, I'm on your side. Yeah, we don't want any trouble either.Jason Muth:
Yeah, have you had trouble with parties at all? I know, Airbnb just changed their policy. And I believe they're not allowing any parties or properties now.Culin Tate:
I out of of two thousand-odd guests stays. I had one situation where I came into a house didn't bother the neighbors. But you know, there was obviously five or six people and I was like, red juice everywhere. Right. So they were partying. There's some technologies that you can use, if you're concerned about that. There's technologies that monitor for sound in the house, and will alert your phone, it's a threshold, there's technologies, like little plug in smoke detectors. There's a technology that will monitor the number of cellular devices in the house and let you know. There's devices that will monitor for tobacco or cannabis smoke and notify you. So there are some things to be done about that. And some people use some exterior cameras.Jason Muth:
Yeah, we have Google WiFi in we check every so often to see how many devices are on - you can see people's device names, just started leaving some signs around the house about smoking. We haven't really had smoking issues in the house, I did have somebody that had must have had a container of cannabis in one of our dressers because, wow, that smell remains for a long time. So you know, we New Hampshire is actually it's actually not recreationally legal, although Massachusetts it is. A lot of people turn a blind eye around here. But you know, we just encourage people not to be using any of those products inside the house inside what we say. Yeah, so yeah, let's talk a bit about your coaching though. Because, you know, you have worked with students, both online and some mastermind courses, you've written books before, I'm sure you get questions all the time about, you know, how did you get into this? Or what are the things that you know, I can do to get into this business? Let's talk about some of the people that are just starting out, like what is some good, quick, actionable advice that you can give to the person that just wants to get that first place?Culin Tate:
You know, we call it finding your where, you know, sit down with your spouse or significant other or friends and think about where do I like to go? Do I like to go ski? Do I like to go hike? Do I like to go to wineries? Do I like? So sort of brainstorm where to people where do you personally like to spend time? You know, if you had a long weekend, where would you go and where do other people in the area, you know, like to go and find a place that you're going to be passionate about you know, that you're not going to mind spending, you know, a month of Sundays so to speak, you know, they're getting it ready, right? You know, my son loves to fish. And so when we go for a weekend, you know, we bring the fishing rods and he hits the pond or the river while we're, you know, hanging light fixtures. So my first advice is don't go to a list of where's the hottest market, you know, and try to, you know, invest in Miami from from Boston, right? Where do people in Boston go? When they've got a three day weekend? Where would you take your spouse for romantic, you know, anniversary getaway, and find a place like that, find your where.Rory Gill:
And within the market, you know, there are sort of the premier destinations that, you know, everybody likes to go in, in some ways that they're obvious. But we've had good luck with I don't want to say my will say the secondary kind of destinations in the area. Because you never know how many people are traveling to that area for college graduations, for weddings, for all those other things that make up a great shoulder season is particularly in those areas that are, you know, maybe not the premier destination, but in the general vicinity of it, because they have less hotel infrastructure, and you have kind of less obvious competition on the platforms.Culin Tate:
Yes. So I tell people, there's a couple of things you can do there, you know, first, you can brainstorm those areas. And then if you want to dive in and check them out. So I like to see, let's say, you know, there's a town outside of Boston that has some draw that you're interested in Rory, and let's plug that into Airbnb and see if it's supporting other listings. I was actually just did a presentation in New York, Pennsylvania, and was doing a coaching call. And this person has a house and she's moving to Philadelphia. And she's like thinking put it on Airbnb, I don't know if it's gonna work or not. So the first thing we did, we went to Airbnb and we said, well, how many entire houses are for let on Airbnb. It was 173. So there's 173 people that are choosing to keep their property as a short term rental. They didn't sell it and turn it into a long term rental. That means there's enough demand there to support a good listing. The other thing that we can do - so I like to see more than 100, maybe less than 600- 700- 1000. Right, it's kind of hard to stand out in Miami, or Atlanta, you know, where there's thousands of listings, because we want to get to the top right, that's the goal. We don't want to be on page 10, we don't want to be page 5, we want to be on page 1 so we can get the most views and charge the most, right? So a market big enough to sustain over 100 listings. But you know, definitely under 1,000. The other thing that we can do to evaluate the market, there's another software called AirDNA. And you can it's a subscription based software, I think it's different for each market. But I think I pay like $25 a month for my market. And it will give you a lot of data, it'll give you the average daily rate for all the listings, it will give you the average occupancy for all the listings, some investability scores and regulation scores, rental growth numbers. So if you're the analytic type that likes to dig in, and boil the ocean on those numbers, that's a great place to also then figure out if this is a good market, what's the average property making? Is it making $2,000 a month or is making $8,000 a month. And then the things that we talked about earlier in the program, we're not striving to be the average daily rate or the average occupancy. We can take that average daily rate and then pump it up to we're shooting for 90-95% occupancy by using strategies discussed the pricing for occupancy.Jason Muth:
So Rory, Culin just mentioned AirDNA. And I think we just got a little lucky with our first property. And I'll tell a little story here, the one that we just launched, which we bought last fall, and you also mentioned, you know, a bunch of Sundays, you know, renovating the place, you know, be somewhere that you wouldn't mind being. That was our life. Last fall, like, you know, been there done that. But the company that we used for financing for that property, this one's in an LLC, and we actually used who's the lender? Rory, do you remember?Rory Gill:
We used host financial?Jason Muth:
Yep, Host Financial. Okay, so they actually tap into AirDNA to run their numbers, basically, because that's the system, I don't think that we had to supply income or anything for that property, right? I think it was all based on the property.Rory Gill:
So we hit a snag with that. So they underwrite their debt service coverage ratio based on AirDNA data for the area. We actually didn't have enough data in, in our immediate market for AirDNA to function. So we were able to use our own comparable next door. But it impacted our lending options because AirDNA, what didn't have sufficient data in the specific area where we are located,Jason Muth:
Which tells me that, you know, we kind of have a sleeping giant, I think, because we know how well the property that we've been operating has been doing, it could probably do even more. I bet you, you know, Culin, if you were to take a look at our listings and whatnot, you'd probably find a way to squeeze another 20 or 30% out of it. No doubt in my mind. But AirDNA just didn't have the data. And you know, then we ended up having to put I think 25% down instead of 20% down which you know, that's fine. Suddenly there's a couple more listings right where we are. So, you know, let's chat about that a little bit like how, how do you know when something is too saturated? A lot of people want to get into this space, because you could make a lot more money on short term rentals for the same property versus a long term rental. But you know, what is the upside here? Are we cooking the golden goose?Culin Tate:
So, you know, you'd asked earlier, why I focused on going to be one county, and one of the reasons is risk, right? So I know, I don't have to run detailed analysis, you know, I know exactly what a two bedroom in that vicinity is going to make, because I've got six of them. And they all make about the same amount, right? And I'm going to do the same decor, I'm gonna run the same operations, right. So how do you know when too many people like I said before, I don't really like to, I want to be number one, right? I want my clients to be I say I build first page hosts, right? I want you to be on page one. And I'm gonna monitor that I'm gonna teach you how to monitor where exactly you are in your ranking listings. There's another software there, by the way, but yeah, getting over 5-6-7-800 listings, that gets to be a little bit more challenging. So yeah, like to like to stay under those really over oversaturated markets. Yeah, that's like what Rory were saying like, what about the secondary market? Yeah, I favor the secondary market. Let's find those undiscovered places where three wineries have popped up or up and coming markets like that.Jason Muth:
Yeah, or the place that might be you know, half hour away from the primary market or the town next to the primary market. You know, one thing we've lucked out on is that it's a destination unto itself, but it's a quick 30 to 60 minute drive in any direction from a cool attraction. Whether you're going to Lake Winnipesaukee, which is a big lake in New Hampshire, that's a half hour drive, you're going to the Seacoast in New Hampshire, that's a 45 minute drive, you go to the Seacoast in Maine, that's a 45 minute drive, you're going outlet shopping, that's under an hour, you know, like there's just.Culin Tate:
A lot to do.Jason Muth:
A lot to do. And that's why probably the beach doesn't do as well, they're probably way oversaturated, all the places look probably about the same. And you know, you kind of have, I mean, there's a lot of attraction at the beach, but like people are going there to get sun.Culin Tate:
My problem with beach-type properties is that we're not getting that reclassification of the asset, right? So like, I have a beach property, it pays its mortgage, I get to enjoy it, but it doesn't cash flow. The reason most beach places don't cash flow as strongly is because there's already a rental component baked in. And anytime you're buying a beach house, all the comparables have been sold on the assumption that there's at least a 12 week rental season, right? So if you buy a beach house and you don't plan to ever rent it, you're still paying a premium price per square foot, because 90% of the other property sold in that market, have some rental roll baked into the price, right?Jason Muth:
Shifting gears, what is some of your thoughts on Airbnb arbitrage, which as I understand it, it's where you're renting a place from somebody and then you're re-subletting it out essentially on Airbnb, but you don't own the property.Culin Tate:
It's not my approach, but I under so everything that I teach everything in the book, you know, all the things we've talked about pricing, all still apply, right? You just don't own the property. I think it's a good way to start perhaps if you don't have capital, you know, you're young and you're just, you know, hustling and want to learn the craft, I think is one of the biggest things that you would get out of, you know, from my perspective, is that you're now going to have a property to experiment with and learn and set up your systems and learn the craft before making an investment.Jason Muth:
Yeah, I've always kind of equated it to like wholesaling, you know, where you're kind of looking to bring cash in relatively quickly. You're not really taking ownership of the property. But you bring up a great point. I mean, like honing your craft and building your systems. You know, we had to do that ourselves, like you, Rory, myself, like, you know, with that first property, you know, you sign the papers, you say, All right, well, let's figure it out, right? Roll up your sleeves, start painting. Yeah. How about Co-hosting? Have you worked with students who are just looking to kind of get into the hosting game?Culin Tate:
I have three or four clients that are professional co-hosts? Yeah.Jason Muth:
Just go into like what that is for people that are listening to this podcast.Culin Tate:
So yeah, let's say you're ready to make an investment and you've got a good place picked out. But you don't necessarily have the time or inclination to do the management. So a co-host is someone who handles the operations were very similar to a property management company. But this is more of a freelancer that understands you know, has honed their craft, right? And they have access to your give them access to your Airbnb account. They have their own logins as a co-host, and they manage your operations. Maybe they would set the pricing they would manage the housekeepers they would do all the guests messaging and you as the investor can just collect rents and expenses.Jason Muth:
Hey, Rory, you want to throw in any kind of legal questions to Culin? Anything that he's encountered in setting up Airbnb is on the law side?Rory Gill:
I mean, this is a question where I think I already know his answer to some degree. But with anybody who's doing Airbnb, I always have to ask, you know, what is your backup Plan B in case regulations change? How do you keep abreast of what's going on in your area? But what do you what are you planning for in case the rules change?Culin Tate:
Regulation is the big legal issue, you know, and Airbnb, so it starts with your property selection, right? So regulation can take place, you know, when a state or a county level, but it could also take place at an HOA level, right? So I have looked at properties near my properties in the same state, maybe one county away where it's, the county has no restrictions, but an HOA could have a restriction. So the first layer of protection is to buy a property that currently is not regulated. I also like to buy properties in markets that are historically been short term rental destinations, right. So short term rental has been around for thousands, hundreds of years, right, you know, we've been renting cabins and beach places and lake houses for and we just did it through a property management company. Airbnb has just now empowered the individual. When COVID hit, we did have onset regulation. So our county was fearful and restricted a short term rental use. And they defined that by anything less than 28 days. So we basically pivoted into longer stakes.Jason Muth:
Yeah, same thing happened to us in Provincetown. Remember, Rory a couple years ago when COVID first hit, and basically the the town kind of locked it down. I mean we have to have a rental license there, which we do. And they said no more short term rentals for the foreseeable future, which they eventually opened back up again, when the summer started.Rory Gill:
That was an interesting time, just for regulatory reasons, and just matters of what was going on with international travel, you know, everything kind of came to a screeching halt, but then our faraway guests were shortly replaced by local guests who wanted to travel, just a state away or so. The other, you know, regulatory issue that I kind of want to ask versus a legal question I want to ask is, how do you vet your guests? What criteria are you looking at? Do you have any interesting ways to predict who's gonna be a good guest who's gonna be a bad guest,Culin Tate:
I've met my guests the same way Marriott and Ritz Carlton that their guests right, which is I operate a business. You know, we do require that function in Airbnb is called Instant Booking because they want you to be operating like a hotel. They do require a government issued identification. Airbnb has their own insurance and support called AirCover, which gear which is basically an insurance product in case of damages. And then we carry commercial insurance. So that's actually a good point, maybe as a takeaway, which is, if you do have a short term rental, or you're thinking about starting one, make sure to have a real frank conversation with your insurance agent. Because the insurance that you would put on a long term rental is very different than what you would need for a short term rental. When you get into a short term rental, basically, short answer here is that it needs to be on a commercial policy. And so be very specific, all you need to do is ask your insurance agent, you know, make it very clear that this is a short term rental, it's going to be used on Airbnb, and it's a commercial endeavor. And they're gonna write you a different type of policy. That's, that's the other layer of protection, right? Is this is your personal insurance policy? Yeah, across 2,000 guests, I had like, one $450 damage claim. It's kind of like when Uber first came out, and everybody was like, well, that's crazy. I'm not gonna write in somebody else's car. That sounds dangerous. But personally, I feel now, Uber driver, I'm rating him, he's rating me, it's a community, they're bending over backwards to be, you know, on time and prompt and provide mints in the backseat and stuff like that. I think Airbnb as a community sort of same thing, as a super host, I am going above and beyond for my guests. And my guests know that I'm going to rate them also. And, you know, back to the Uber example, if you're a bad passenger, you get a rating too - not a lot of people know that. Right? So you might not get picked up next time. So same thing with guests is they know that they're being held accountable through a rating system. And if they don't follow the house rules, they're potentially going to get a bad rating and not be able to book again in the future.Jason Muth:
It's partly why we only use Airbnb and VRBO. You know, we do have our listings on VRBO as well, because of all the protections that the sites offer. We will rent to friends or referrals from the neighborhood or repeat guests if they want to book directly with us. I know that there's a really big movement in direct bookings, which we have not done our direct booking engine just yet. Are you doing that? Or are you doing everything through your team?Culin Tate:
I am the absolute, yeah, I am not an advocate. We can have a whole show on that. Yeah, we have a whole separate show on that. There for a lot of reasons. I'm a, I'm a single platform person. And just think about really the quick answer is, if the algorithms are placing you based on what you're feeding them, the revenues that you're generating for them. If I'm on three platforms and spreading that revenue across three platforms, I'm not actually going to get three times the views, right, I'm gonna get less views, because I'm gonna get less placement. So I feel it's very detrimental to be on multiple platforms.Jason Muth:
Let's talk about your book. And then we'll get into our final questions, because it looks like you just published earlier this year, it's Host Coach, A Blueprint for Creating Financial Freedom Through Short-Term Rental Investing. How did that come about? I mean, 2017, you weren't doing any of this stuff. Now you have nine properties and a book.Culin Tate:
I started my portfolio, I got real good at it, I was able to sort of compare and contrast between properties, experiment with a lot of things. And it really my friend started coming to realize like how much money you make it with this stuff. And I had the opportunity to see if I could relocate, you know, my processes in different areas. You know, did I just get lucky in my hometown, right? And I found that those were repeatable. And so that led to more and more people calling me asking me for advice, friends, family, friends and friends, right. And that turned into kind of the coaching aspect. And then I got asked to speak to a group of Keller Williams real estate agents in Wilmington, North Carolina. So I had to, instead of just sort of talking to people put all this in an organized presentation. And that presentation, then became the outline for Host Coach the book, and we're driven to write that just just to share the knowledge that we have, is so powerful. And it really, you know, Jason, you said, you kind of hit like three properties. That's usually about the magic number where people, you know, a lot of the people I've coached, it's been one of the people that are persons in the relationships, looking to get out of a job looking for a second career, you know, at just a few properties, you know, we can start to break away and really achieve financial freedom. And that's super exciting to me, like, I have my financial freedom, I know what it's done for me. And I'm just on a mission to help other people do the same thing.Jason Muth:
We spoke with another great guest a few months ago, Michael Dominguez, and he had 10 properties. And you know, that was his magic number, where he got to the financial freedom point, somewhere along the way. And I think that, you know, a lesson here is that we listen to so many podcasts, and you hear of these people that have, you know, 750 doors they talk about, and if you want to be that, that's great, all right, but you don't have to be that to be successful or financially independent through real estate. I mean, like, you're showing how you could do it with under 10 properties, you know, we're at three with a fourth that's coming in line in January and money to invest, you know, so like, we're kind of right there also at that precipice. And, you know, if you're listening, trying to get out of a career that you know, you want your second career, or you have that first property, and you don't know if you could parlay that into the second or third, it's worth a shot. I mean, you don't need to have 750 doors to have enough cash to live the rest of your life financially free and happy.Culin Tate:
And this is a golden opportunity. You know, I grew up and, you know, friends, parents or friends, you'd have the beach house that they bought for $50,000. And, you know, now it's $500k or a million, you know, I always, always, always, always asked myself, What are those deals for our generation? And I am a very firm believer that this is the opportunity, this is the moment for our generation where we can get in not like he said, don't even millions of dollars and 750 units, that we've got an opportunity to get in, get started with something that will create generational wealth.Jason Muth:
Yeah, well, you've built some great systems. And you know, we're eager to have you back on in the future, also to talk more about, you know, how your properties have been going, and you know, your next book that you're going to write in your next coaching class, and whatever the future has to hold.Culin Tate:
There are some fun things in the works.Jason Muth:
Yeah, yeah. I mean, like, I think for all of us, you know, it's kind of cool when you don't have to punch in somewhere, and you get time to focus on your properties and focus on thinking about what the next step is. Let's get into our final three questions that we ask all of our guests just to get to know you a little bit better. And then we'll give you the opportunity to tell everyone where they can find you. The first question that we have is, I think it's a pretty simple one. And we might know your answer, but maybe it's entirely different. If you can get on stage for half hour and talk about any subject of the world with zero preparation. What would that be?Culin Tate:
Yeah, the easy answer is obviously I'm passionate about talking about short term rentals, right. I'm also really enthralled with the moment with my son and his sports and lacrosse tryouts, and he's kind of getting recruited into high schools and stuff like that. So that's been a passion, something I could speak passionately about with no preparation as well.Jason Muth:
So I grew up in a lacrosse school too. I did not play, but I grew up in New York and went to a prep school in Westchester County and like there's a couple pockets of lacrosse, like Maryland is a pocket of lacross in the United States. If you're listening to this out west stir in the south or anything, you're probably thinking, lacrosse?Culin Tate:
It's a big deal here on the East Coast.Jason Muth:
Oh yeah, it's a big deal the East Coasts. Second question, Rory, oh, my God I just blanked on the second question.Rory Gill:
Can you tell us something that happened early on in your life, that impacts the way you do business or live yourCulin Tate:
You know, my parents were separated, kind of divorced life today? at a young age. And I think I actually credit that for a lot of my drive, you know. I don't know, if I had something to prove to the world or prove to myself, you know, I worked pretty hard in college. And then one day in college, I was walking to class and realized it just hit me like, I gotta feed a family someday soon. And that was another moment where I was like, I just kind of aha moment woke up when I got to make sure I'm growing up here. And, you know, making sure that I'm taking the best classes, because I'm gonna have to provide for families someday, maybe not too far away.Jason Muth:
Yeah, I always found college. I kind of went through it the way that I was told to go through it. But I, you know, I ended up going into a career path that had nothing to do with the actual coursework that I did in college. And you know, a lot of young people listen to this podcast and other podcasts, they might be saying the same thing, like geez I studied this in college, but like, this real estate thing sounds like a way that I can be financially free. I would say, you know, think about what you studied in college and the relationships that you've built. And, you know, apply that knowledge. Like, it doesn't have to be the knowledge learned about history, or anthropology or German language. You know, it's the relationships and the way that you study and the way that you research that you can take into a career like this, and then just continue learning.Culin Tate:
My wife has a biology degree, and she's always commenting like, well, you know, what, am I doing with a biology degree? And I remind her, you have a biology degree, but you worked really hard for it. Yes. Right. Like it was a tough major in her school. And she, like, went off. And she was gonna go to med school, you know, what's that biology degree doing for me? Not much. But the tenacity and the amount. I know how hard she worked in college and how hard she studied. That's what she learned. Right? That is, you know, it's not the cellular dynamics or organic chemistry, it was that work ethic that she has, it's beyond, you know, most.Jason Muth:
Well, I'm going to have to have your wife on next time because I too, have a biology degree and I too was going to go to med school and said, No to know both of those things.Culin Tate:
Well, you better want to talk about Airbnb design and hospitality. Because that's..Jason Muth:
I also found I knew that the answer was not going to med school when I realized I like my courses outside of my major more than my major. And I took some great classes in college that were not connected to my concentration. And that was the answer right there to me. I'm like, Hey, why am I doing this? I like all this other stuff instead, I mean, like your wife found a passion with the design work, right. Final question we have for you tell us something that you're listening to watching or reading these days.Culin Tate:
A lot of TiktokJason Muth:
How old's your son?Culin Tate:
He's 13.Jason Muth:
There you go.Culin Tate:
Now the good funny thing about TikTok is it's not just little kid stuff. There's great real estate stuff on there. There's great Airbnb stuff on there. There's great home improvement type stuff on there. But yeah, other books that I'm reading, you know, I listen to a lot of podcasts on this topic of Airbnb that I about halfway through is the Airbnb story. It's the story of the founders. And when you read it, you kind of understand the platform and policies, it really kind of understand some of the history, understanding their origin story helps you understand what the company looks like today. So I found that pretty fascinating.Jason Muth:
Yeah, release changes to their policies and algorithms. And some of the videos they put out. I mean, like, they're so well done. They really are. And they explain why they do what they do. And you know, they kind of put the essence of the company into you as a host. I mean, a couple it was it two years ago when they went public, and they offered stock to their hosts. Yeah, I mean, it's great. That was great. It was I thought was such a nice gesture also. And, you know, I kind of wish I bought more, but I bought a good amount.Culin Tate:
I was just so yeah, I was blessed there, too. Yeah, they allocated right? There's always some they did. They did. So that was a wonderful thing that that they did. But yeah, you definitely understand that the founders and the philosophy, check the book out. It's well done.Jason Muth:
Thank you so much for spending some time with us talking about Airbnb talking about short term rentals and success in it. We'll have to come back for another episode also, because there's so many topics that we can go into. But for now, why don't you tell everyone where they can find you if they want your advice? Want to take some of your coaching become a client of yours learn about your properties?Culin Tate:
Yeah, the website is hostcoach.co You can read a little bit about our background there. Also have a button just to set up a free consultation. And then kind of for the fun behind the scenes stories of us doing renovations and inspirational quotes on Instagram is just at host underscore coach.Jason Muth:
Yeah, mixed in the inspirational quotes, quotes along with photos of renovations and photos of you and your wife and family and whatnot. It kind of humanizes the account.Culin Tate:
Thank you. We have fun with it.Jason Muth:
Rory where can people find you?Rory Gill:
If you want to find me, you can find me at my Real estate brokerage which is NextHome Titletown, nexthometitletown.com. Or my law practice UrbanVillage Legal. urbanvillagelegal.com.Jason Muth:
Well I guess I forgot to mention Jason, the book host coach is available on Amazon in Kindle, audible. Paperback.Jason Muth:
Yes, we will put the link in the shownotes right here as well, so people can click directly on it and purchase host coach, which is an excellent, excellent Listen, in our case, because we're audio book people. If you've enjoyed this podcast, we'd love it if you want to give us a rating or drop us a message or reach out to us firstname.lastname@example.org We certainly appreciate all the feedback and we respond to everything that we get. And that's about it. So thank you so much for spending time with us for another episode of The Real Estate Law Podcast Culin, Rory, hope it's, uh, enjoy the conversation. I certainly have. And I learned a bunch of different things. And I definitely have a couple more things that I have to do for our properties ourselves as a result of this.Culin Tate:
Yeah it was a blast, guys. Thank you.Jason Muth:
Yeah. Thank you guys. And thank you for listening. We'll see you next time.Announcer:
This has been The Real Estate Law Podcast. Because real estate is more than just pretty pictures. And law goes well beyond the paperwork and courtroom argument. We're powered by NextHome Titletown Real Estate or Boston Boston's progressive real estate brokerage. More at nexthometitletown.com and UrbanVillage. Legal, Massachusetts real estate Council serving savvy property owners, lenders and investors. More at urbanvillagelegal.com. Today's conversation was not legal advice, but we hope you found it entertaining and informative. Discover more at the real estate law podcast.com Thank you for listening