Welcome to the final episode of Season 1 of Selling Derby City! In this episode, Jonathan and Justin wrap up the season by sharing some of their final short-term rental tips and answering listener questions. They cover topics such as Airbnb policy updates, support and service animals, mattresses, check-in and out times, tips for selling your short-term rental property, and so much more! You will not want to miss out on these final juicy tips and tricks from your short-term rental experts.
Justin kicks off the episode by saying, “we are so grateful to you all for listening to this season. And, don't fear because we will be returning in the fall.”
Jonathan adds to this by saying, "this season has been all about short-term rentals. It is our idea or goal, at least right now, to switch it up every season and bring to you a different real estate topic. And we want to hear from you and see what you would like to hear about, our valued listeners. So we have first-time home buyers, new construction- a lot of people building new houses out there today, developments popping up all over the place because of the housing shortage. We could also touch on commercial real estate or real estate investing. So, if there's something that you want to know more about, you want us to dig into it in future episodes. Please don't hesitate to reach out to us and share your thoughts so we can consider that as we are planning for the fall."
Mark Your Calendars for May 13th
for the Limited Series highlighting all things Louisville, KY.
Check out Jonathan and Justin’s photoshoot on Facebook and Instagram @thejustinreid or @top.louisville.agent
Want to see Justin’s shiny, white teeth and the silver mesh shirt he is wearing in this episode? Watch the Selling Derby City episode on YouTube.
Let's Dive Into the Episode
Justin and Jonathan explain what you will hear in this last episode of season 1. They will be discussing:
-a few important and fun topics
-answering listener questions
-how to sell your short-term rental property
Airbnb for Beginners
Justin says, "You want to attract all of the people out there looking, to your listings. So how are you going to do that? We think that you should start with leading with the 20% and your listing title."
Jonathan explains further by saying, “walk through your property, walk through your listing. Find that 20% that you think really makes your property stand out over others. And lean into that with your title, your pictures, your description. Focus on those areas and maybe touch on, don't fully exclude but don't give a lot of time or the same amount of weight to the things that aren't making your properties as special.”
Justin adds, "things that you also want to kind of stay away from are generic terms in your title. So if you have a modern-looking apartment that you're trying to show off, you don't necessarily need to put modern in the title, that is something that people will capture when they're looking at your photos. So kind of stay away from generic things like that that are plain as day in the listing. You kind of want to just pull from that 20% that Jonathan just mentioned."
Furthermore, Jonathan explains that listings are like tweets. You have a limited number of characters you can use.
“You want to have it pack the biggest punch to get your point across and let everybody see that. So, be very conservative with your words. Use words that matter, eliminate the fluff. And, you're gonna see a lot of results from that.”
Airbnb Policy Changes
Emotional Support Animals vs Service Animals
As the short-term rental host, you now have the ability to determine if you want to allow emotional support animals. However, you still have to allow service animals.
Flexible Cancellation Policy: guests can cancel until 24 hours notice, receive a full refund, and you will not be paid.
Moderate Cancellation Policy: guests can cancel until 5 days before, receive a full refund, and you will not be paid.
Firm Cancellation Policy (NEW): guests can cancel until 30 days before, receive a full refund, and you will not be paid.
Strict Cancellation Policy: in order to receive a full refund, guests must cancel within 48 hours of booking and must occur 14 days before check-in.
Justin also adds, “one thing that I noticed when I was looking at all of these for cancellation policies. Airbnb has added a little extra thing to each of these, where guests can choose to receive a 10% discount if they choose to stay with you if they waived the cancellation policy. Meaning if they cancel, they won't get any money back, but they did get a discount on their overall stay.”
Follow Justin and Jonathan on Facebook and Instagram to get up-to-date information on Airbnb Policies @thejustinreid or @top.louisville.agent
“Thank you again to all of our listeners this season. We appreciate all of your feedback, reaching out to us, and asking questions to assist with this episode. So thank you for sending these in.” -Justin Reid
The first question is from Matt L. “What kind of mattress do you put in your short-term rental? I don't want to spend a fortune, but I also don't want cheap mattresses for my guests.”
Justin explains “ what we actually suggest is on Amazon. There is a great memory foam mattress and it is called a Zinus Green Tea Mattress. This mattress comes in all sizes and is under $500. I think the $500 one is the king-size, but all the other ones are less expensive than that. We've had guests reach out to us after staying with us and they want to buy this for their own Christmas gift and want to know where we got our mattresses from. So that is a great low cost, but very comfortable mattress.”
Jonathan agrees that a good quality mattress is very important. He adds, “an extra little touch to help make this the best experience possible when it comes to the mattress. See if you can find a memory foam mattress to put on top of a platform bed to help without transferring that movement.”
Justin includes two more mattress tips. “You want to rotate them every six months. You cannot flip mattresses anymore, but all you want to do is rotate them. Take the foot to the head and vice versa. Doing that every six months just to the mattress is getting even wear. And then also, for mattresses that you sleep on every single night, you want to replace them every five to 10 years. Airbnb mattresses may not get sleep every single night. So just keep an eye on that and keep that in mind, because you don't want a guest to complain that your mattress is no longer comfortable.”
Question 2 comes from Judy. “Do damage deposits matter on Airbnb?”
Jonathan says, “That's a great question and something that I've wondered for years and I've never really been able to get an answer on. If you collect a $500 deposit from your guests, Airbnb doesn't really take that money out of their account, they allegedly just put a hold on it. But we've also had guests that have used prepaid debit cards to book their stays and they haven't even had the full amount available for their reservation. So I'm not sure how Airbnb puts holds on people's credit cards, kind of similar to how a hotel would.”
Jonathan continues by saying, “unlike VRBO, who has a much better policy and options when it comes to collecting that damage deposit. You can select cash from the guest. So essentially the form of a credit card, they would add this at the checkout time. But that stays separate and you have up to 14 days after the reservation to release that to them. Either in full or a partial amount, if there's something that needs to be repaired that you want to deduct from that amount. The other option is, there's insurance that you can purchase through VRBO. There's a flat fee that the guest would pay that fee is non-refundable but it does provide the host with about $2,000 worth of insurance that you can claim in the event if something occurs.”
Next, Ashley asks, “What are your check-in and check-out times?”
Justin says that their check-in time is 3:00 PM and check-out time is 10:00 AM. This gives you and/or your cleaners 5 hours to clean and expect the property. He explains the 3:00 PM check-in time by saying,
“we've come up with this because even when we go on our own vacation, it feels like 4:00 PM is really late to check-in. If you're going around, you're carrying your bags, you can't lay them down early. It's just a really big inconvenience. So instead of allowing really early check-ins, we think that 3:00 PM is a great middle-ground.”
Derek asks the next question, “What are your thoughts on Airbnb arbitrage?”
“Airbnb arbitrage is going to be very different depending on the market that you’re in. For those of you who don't know what arbitrage is, this is a model where you don't actually own the property or the real estate, you are simply renting it as a lessee or a tenant. So this could be an apartment or a full house that qualifies for short-term rentals. And there's a whole art and science to finding those properties and talking to the landlord's negotiations. And we might dive into that in the future. And certainly, we will on our course short-term rental success that we will be launching soon. But when it comes to arbitrage, it's always going to be about the market. The more you have, the more you can spread the risk over a certain number of properties. The fewer you have, the better that they're going to have to each individually.” -Jonathan
The Short Term Rental Success Course is COMING SOON! Click HERE to sign up to be notified when you can learn and receive the tools from Justin and Jonathan so that you can become a short-term rental expert!
Furthermore, Jonathan says, “There are a lot of good companies out there who have learned to scale that and do it on a large quantity, like Frontdesk. We had Jesse DePinto in our last episode, talking about technology and Frontdesk carries an arbitrage model.”
Continuing on, Danny asks, “ Is there a way to share your Airbnb calendar in a view only mode with your cleaners so that they can always see the schedule needed for cleanings? I don't want to make them a cohost.”
In addition to Airbnb’s new policy update, Justin said Airbnb also introduced a new system called Teams.
Jonathan explains by saying, “Airbnb Teams are going to give you options of being able to bring in employees that you have, workers inside, other co-hosts, who aren't doing a full co-host job, your cleaners. You can select what they have visibility into and not give them carte blanche visibility into everything. As management companies, you may want to consider doing this for your owners rather than making them co-hosts, if they do want some visibility into what you're seeing. And maybe you don't have the technology or sophistication in place to be able to have a portal that's separate on a different website that they could log in. This would be a way to allow them to have access to information that you choose and then not allow others.”
Lastly, Alicia says, “I'm super curious to know if you follow Airbnb suggested booking prices. Please let me know.”
Justin explains that they don’t always follow Airbnb-suggested booking prices but they do take them into consideration. He says, “you can follow their suggested pricing, however, you should pay close attention and monitor. You don't want to give anything away. The purpose is to make money. So please definitely pay attention to that and you can always adjust it.”
Jonathan agrees with Justin and adds, “There are also the rate management software options that we covered in our technology episode. Anybody who's interested in adjusting their rates automatically, so that that's not something that you have to pay too much attention to- you want to set it and forget it? That's going to be a great option for you. It'll come with a small monthly fee that most people believe makes up for the product itself and being able to recapture that lost revenue for you over the course of a month. So certainly recommend that. And our advice is to never let Airbnb automatically adjust rates for you. Especially, back when they first started doing that, as Justin mentioned, that's where they would get down to sometimes $17 a night. And you have to turn off that setting or go in and override it if you don't catch it. And if somebody books, you can't terminate that reservation.”
Quick Tips and Tricks to Selling Your Short-Term Rental Property
***There is a lot that goes into selling your short-term rental property. If you have any questions, please do not hesitate to email Jonathan at email@example.com or Justin at firstname.lastname@example.org***
1. Focus on the property and make it look as good as possible.
Jonathan says, “We had a spring checklist that we go through and that we give to our clients who were thinking about selling. Cause it goes through exactly from curb appeal, to interior, to small repairs, to maintenance items. Things that you should tackle and things that people are going to be looking at as they walk through your property. The fewer things that people find that are wrong with your property, the better standing you're going to have because they're going to think that you're up-to-date on your maintenance, that nothing's been deferred, that this house is well maintained and well taken care of. And they're going to feel more confident about moving forward with the transaction.”
2. Complete a Pre-Inspection of your short-term rental property.
“By doing a pre-inspection, you're going to see what the buyer is going to be seeing whenever they go through the same process. This also allows you to go ahead and make some repairs. If there are some minor electrical, GFC issues, there's some plumbing that was not done correctly, etc. A couple of hundred dollars, maybe $1,000 to $2,000 in fixes, go through and take care of these. Then have the inspector come back out, certify that you've done that, remove them from the list entirely and keep this inspection report handy. Because if you are able to make this available to people interested in your property, it could encourage them to waive that inspection contingency. So you go ahead and take that off the table, right from the beginning.” -Jonathan
“The National Association of Realtors says that roughly 30% of properties that are under contract, go back on the market for one reason or another.” -Jonathan
3. Give yourself enough runway.
Jonathan says, “Give yourself enough runway to get that property in good shape if it's not already. Or just continue to maintain it during this time. But then start focusing on the financials.”
4. Maximize your booking revenue and your occupancy.
Jonathan explains by saying, “this is going to help you have a great profit and loss statement, whenever you go to sell your property. This is the first thing that savvy investors are going to ask you for is a profit and loss statement. And usually, they like to see it for up to two years. If you don't have this together or your numbers haven't been the best, then you can create what's called a proforma. This is under good operating conditions. This is what you would expect to make.”
Selling Your Short-Term Rental Property
“I encourage people who have the capability and the knowledge to sell their own property, to do it. You can use an agent in a limited-service capacity if you'd like to throw the property on MLS with your description and pictures, and then list you as the contact. There are a lot of brokerages out there who will do this for you for a flat fee of $500, $750, a $1,000 and provide a variety of services.” -Jonathan
Selling your short-term rental property off the market.
1. Utilize tools to get as much national coverage as possible.
Post that you are selling your short-term rental property in local Facebook groups, i.e. Louisville Airbnb Host Group.
Message other hosts through Airbnb and see if they know anyone wanting to purchase a property.
List for sale by owner on Zillow.
Jonathan also adds to this by saying, “make sure that you at least have a good title attorney and closing company. Do not attempt to do your own deed. Do not attempt to do your own closing. Make sure that you have somebody in a legal capacity involved to help you through this process, if you decide not to use a real estate agent. Very, very important. Even if you've done transactions in the past, maybe it's been awhile laws change, you could be rusty, or this might be a new state or environment for you. So look for recommendations in your area for people who have helped with these short-term rental properties.”
2. Listing your short-term rental property with an agent
Find an agent who is knowledgeable in selling short-term rental properties
“Be sure to ask during the interview process how many they've done. And don't necessarily settle on the first agent, who may or may not have done transactions like this because you could lose out on opportunities if they don't know where to look and they're not connected in that space.” -Jonathan
Jonathan also says, “People who have experienced buying and selling short-term rentals as an agent, they typically have a number of people that they're working with, who would love to know about this property whether it's on market or off the market and could help handle that sale for you.”
3. Oher things to keep in mind when selling your short-term rental property:
Consider an off-market sale- you would only be showing your property to people who are highly interested in being motivated to buy.
Registrations and Permits- if you're in an area that requires registration or permitting, do make sure that it will transfer to the new owner and understand what that process looks like.
HOA or condo association rules and regulations- disclose any upcoming changes that you’re knowledgeable about with the buyer.
Thank you for joining us. We hope that you learned some great final tips on how you can launch or scale your short-term rental empire.