The Hunting Ground, AirBnB, Week In Review with Guest Co-Host Robert Orfino

TRE 10 | Hunting Ground

 

Finding the right place for your Airbnb business is critical, and an excellent strategy for a location is combining business travel and vacation at the same time. Having a place like that of their own, Robert and Jason discuss their hunting ground, a place they bought in millions in real estate for their Airbnb and long-term multifamily rentals. As they move forward to something bigger, they also start hiring their power team and begin to teach about Airbnb. Discover more about finding the right location as Robert and Jason excitedly share more of their venture.

Listen to the podcast here:

The Hunting Ground, AirBnB, Week In Review with Guest Co-Host Robert Orfino

We have had a busy week. I feel a lot of the stuff that’s been hanging out there from the last quarter has gotten resolved here and you have been traveling the state. My favorite Robert Orfino quote from the week, “This state is really big.” We’re going down to the hunting grounds.

A very good place for us. We’ve been very successful down there. We had closed a few. What are we looking at a 200 unit?

207 units which I thought was an odd number.

Maybe like a laundry mat taking one of the units, office for another storage.

It’s funny, they put the storage building up and they turn it into a unit. What is this going on? We’re not going to do that. We look at 200-unit apartment complex down there. We’re closing on a 27 unit. We’re going to look at a one beach house that we have under contract. Are we going to go look at those ten unit too?

Nine.

It is a nine-unit. I have no idea. I hope you got all the addresses because I swear it’s like a dozen properties down there. We closed on a bunch of real estates here. We are going to close on four beach houses and our thirteen unit may close. I got an email. They’re getting all this stuff to title. We get some title stuff that was cleared. Not a bad week. Ended up in the next seven to ten days with 50 to 60 units. A mix of Airbnb, long-term multifamily rentals. The rehab already started in our eight unit, if I’m not mistaken. We have to put all the numbers together. It’s a ton of doors. Somebody asked me in a meeting, “How do you keep all that straight?” I laughed and said, “I don’t, I have a whiteboard with all the deals we’re doing and we get our project teams doing their project thing.” From there, I just ask, “Are we on track for this? Let’s see the numbers for that. What’s our occupancy rates? How much turnover and we have?” Otherwise, I can’t keep it all straight.

It does shift our business. What we’re doing here is marketing, webinar marketing. We’re shifting more heavily into management. We have already brought some people on. We have created a new entity. We handle all that stuff. Going through that metric development of our business. We get it all the time, “How do you guys do it?” It’s like, “You hire good people.” You hire really good people. People who are smarter than you, who know more than you. You surround yourself by those folks so that you can do half an hour worth of management a week and feel good that an entity or a company that you’re an owner of is moving forward.

Somebody asked me, “How do you guys manage all that stuff? Are you down there on the job sites?” I said, “Occasionally, we go down and look at something.” If I am not on the radio, on the blog, if I am not writing, sending emails, taking meals with investors and that sort of thing, we will lose money as a company. I have got to do my job and then our team that we have built got to go do their jobs, which is fixing them up, leasing them up and all that sort of thing. You’ve got to build that team and you’ve got to build a real team. You always joke. You sign up for the guru, you get the $20,000 backpack. Build your team. You said, “You’ve got to build your power team.” My question is always, because I’m that smart guy in the back of the room, “What’s the difference between that or regular team?” What is the power team? You mean a regular team is a weak team? Is that what it is or it’s a mediocre team? We’re talking about a power team. We need power.

That’s why you come here and you build your power team out, buy a program for $9.97 that doesn’t work.

TRE 10 | Hunting Ground
Hunting Ground: It feels good being the owner of an entity or a company that is moving forward.

 

We’re going down to the hunting grounds. We’re going to go look at a handful of deals. We’ve talked a lot about Airbnb as we’re closing on a handful of more Airbnb deals. It is also what I like to call the Airbnb season, February, March, and the rest of the year until about November, it’ just phenomenal. You are going to make your year in a handful of months. I always feel this is Airbnb season and I know we don’t necessarily preach vacation rentals, but I always feel this is that time of year where everybody’s families are planning vacations. You can see the contracts come in and it’s getting warmer outside but it’s not too warm. A Chamber of Commerce weather, a little California weather out here. It’s an exciting time to be doing the vacation rental stuff and be outside, going out in the construction sites, and playing around the hunting ground.

I hope to have that one beach house up and running by at least half one side of it by Memorial Day. It would be good for me, but not for a family of four. You can bring the camper down there because there’s a lot of land on that property.

It’s a big lot. What’s amazing is our property there, five doors down there’s a house in the corner at $2.3 million. Do you remember we paid for this thing?

$2.46 million.

We paid $2.46 million. It’s a five bed, five and a half bath. Is it going to need $40,000 of work?

We’re up to about $80,000 because we’re going to add the Jacuzzi. There’s a whole little, I don’t know, I’m calling it the cove. There’s a little back side of the property, a little private garden. There are no windows that overlook it.

We’re going by to take a look at all that stuff. A super exciting property, we are turning that into a corporate retreat and Airbnb spot.

They can follow us on Facebook if they haven’t already sent their followings up and then we’ll be doing Facebook Lives.

If you are following the Texas Real Estate Radio Network or Robert and I, just about everything I post on Facebook is public. You can request friends, but I’ve hit my stupid friend limit and they won’t let you add any more. You could follow me and set your notifications at the Texas Real Estate Radio Network. If you’ve followed that Facebook page, you’ll see all this stuff we’re doing. A buddy of mine reached out to me. He said, “You are all over Facebook. I had three hours of content that released all at once between Quest IRA, Quest Trust, the radio show, and Propelio. All those things landed all at once. People were saying, “Is your job Facebook these days?” It might be sitting on Facebook and looking at a deal. It’s marketing. You went back to what’s marketing.

It’s affordable marketing.

People look for excuses versus solutions. Click To Tweet

Building that Facebook following, folks are sending me deals all day long, from all over the place. It works. It’s virtual meetup that never ends. It’s the way I look at Facebook. We always posted stuff, “I’m doing this. I am doing that.” It works.

The engagement has been massive. I am shocked by how big the engagement is. There is a funnel. We will talk about marketing. We will do a whole week on marketing. There’s a real science to it but the top of the funnel is awareness and we are raising awareness. The next one is intent. People start direct messaging you and emailing us or texting us. They have the intent to do something with you guys. We are hitting the top two layers of that funnel phenomenally in the first two weeks of our show.

Big thanks to everybody. It is getting wildly popular and we are having a lot of fun doing it. It starts with marketing. Where are the deals at? What deals am I looking for? It is not necessarily just sitting on MLS. The other thing I would like to look at marketing, how do you distinguish yourself from someone else? That is what I think is so important. What distinguishes you from anybody else? As a potential business partner or customer, how do I know you are a legitimate practitioner in this industry? What makes you a professional real estate investor? Part of that has to do with your marketing and building that brand.

If you are what I like to call “also and,” I do real estate also and flipping, wholesaling. I was at a networking event one time. Like any other networking event, there was this big circle of us, “What do you do?” “I am a wholesaler, flipper.” “What do you do?” These two gals walked up to me and I said, “What do you all do?” She said, “We are real estate investors.” I said, “You don’t close any deals like most of these people?” She got offended. She said it like she was flipping. “I am a real estate investor.” She said, “No, we do this and we do this.” I said, “That was all I was asking. What are you really doing here?” Everybody is a wannabe real estate investor but what do you do?

It is the same thing from the contractor. You have to be so careful because the contractor says, “I do that. We do that.” No, you are a plumber. You are not going to glaze my tub.

Getting back from the Texas tour. You were in Dallas Fort Worth, San Antonio, and then made it back here in Houston. We haven’t chatted about this in a while. You are not from here. You are one of the foreigners moving into Texas. Any other Texas insights, weird stuff that you have observed that’s just like, “This is some weird thing.” You’re like, “That’s Texas.” I will give you one, San Antonio. This is unique to San Antonio. I am going to get into a lot of trouble for saying this but I don’t care. San Antonio is the only city in Texas where it is acceptable if you miss your exit you can pull over to the side of the road there and back up on the freeway to then exit. Did you see that when you were in San Antonio?

I saw a sheriff going to the opposite way on the shoulder on I-10. On I-10, he was going to the opposite. I was like, “Look at that.” We are doing construction during the day. That is not a thing yet. We haven’t figured out how to do construction at night. New York City, LA, a lot of construction gets done at night but here we’re like, “We are going down into the one lane, too bad. Deal with it.” In the middle of the day. Here is a big one, trucks get to drive in the left lane here. They are humming along in the left lane. Eighteen-wheelers, in the Northeast they are not allowed on the left lane. In New Jersey, we have a road just for cars, no trucks.

You don’t realize until you are in the middle, you are getting boxed in with all these eighteen wheelers around you. How big these things are and all of a sudden you are forced to go 85 or drop down to 65 if someone has got a big load. The trucks were very interesting. When I grew up there was a model, a prototype of this old happy guy driving his truck. He has got his baseball cap on. It is not happening. I drove by, it was like three women. Clearly, she was in the middle of her third pack of cigarettes, just chain-smoking out the window. The highways are so aggressive here. They are very aggressive. That is the thing that sticks out the most.

The speed limit is really a suggestion in Texas.

I am loving them. I’m like, “How fast should I go?” If the speed limit is 75, what do I set my cruise control at?

TRE 10 | Hunting Ground
Hunting Ground: Everybody is a wannabe real estate investor. They’re just looking for validation.

 

Did you hit any of the 85-miler spots?

No, on the way out I did.

I don’t think you get far enough out. Even when we are towing and we are out in West Texas or North Texas, even 85 miles an hour is a friendly suggestion.

People are towing it like it’s 80 miles an hour.

I realized at least with our trailer, we got little wheels. I was chatting with my dad about it. He said, “Do you know how fast those bearings are moving back there with those little wheels?” My next stop was, “I probably just need to get bigger wheels.” The eighteen wheelers are absolutely flying.

Every single insect woke up in Houston. They are everywhere.

I’ve got the invasion of caterpillars at our house there everywhere. I noticed it was in the backyard. You and I were chatting about something. I’m standing there in the backyard and the wasps are everywhere. It is that time of the year to get out the spray.

Give me the stronger poison that only creates a mild rash on my skin and I will deal with it.

For those of you who are in here in Houston, if you got a two-storey house, you get those eaves. Our roof is actually a storey and a half and you look up and you go, “I am going to need the wasp spray that shoots like 50 feet.” They build those nests at the very top. I am sitting there looking at it, “This is going to be great.” You are up there spraying it. Half of it comes down in your eyes. Wear your Personal Protective Equipment accordingly. Get your PPE on. Going to the hunting grounds, we got to look at a handful of properties. It would not shock me while we are down there, we start getting text messages, “While you boys are in town, why don’t you go and come to look at this and this?” We built up a great little network down there for houses. Does Matt know we are going down there?

I will let him know. We have a good team. We have a property manager. We have a good agent, pretty aggressive. She is right out of Jersey. We are vetting contractors, but we have one or two that we are comfortable with.

When you have a failure, you correct and fix it. Click To Tweet

That is building a team. I hear this all the time. You don’t want to do small multifamily because the management is hard. I’m like, “Do you not want to do small multifamily because of the management or do you want to figure the management out?” “Jason why would you do that?” I’m like, “Why not? Can we see, we can figure it out?” Don’t get me wrong. Some things just don’t work. The next question I ask is, “How do we create a situation that does work?” That doesn’t make any sense to me. Let’s see if it actually works.

People look for excuses versus solutions. It’s like, “What if one of your guests has bed bugs?” We deal with it and we give that guy a really rotten review on Airbnb. “What if they steal stuff?” We replace it. We file a claim. Most of the time we are not allowing strangers to walk into our Airbnb. We vet everyone, there is no automatic booking unless you have a certain amount of reviews or we know you.

You know what I think is so funny about a lot of these things in life in general, but especially in real estate, folks ask a lot of questions. The questions they are asking are not unreasonable. These are very smart people. Sometimes I wonder, “You know there are hotels.” They figured this business out. Hilton cannot afford to get furniture stolen out of their hotel with every stay. They figured out a way to make sure that doesn’t occur.

I stayed at the Sheraton and I didn’t see a lot of people walking through the lobby with art under their arm that they took off. That wasn’t happening. There’s a couple of people putting an extra Danish in their backpack, but so what.

They probably monitor that Danish shrinkage. There’s the right way to do stuff and there’s the not right way to do it. That’s what’s so important that if you decide to do that, you work with somebody like us. It’s like, “This is how you do it the right way.” This is how we do it based off our experience. This is how we do it. Maybe there’s a better way out there, while I was looking for the next best way to do something. This is how you do it, you do it profitably with the least amount of operational overhead and the most amount of profit. This is how we manage the downside. Here are the risks and here’s how we manage them.

When you have a failure, you correct.

You fix it. It’s no big deal. You’ve got an Airbnb class coming up. There’s a number and you’re sharing with everybody the number. What are those two numbers, and which one would you pick?

In our presentation we ask, what’s greater five or one?

Five, because number five is bigger than one.

The answer is one because your one Airbnb should be equivalent to five rentals, maybe better. I was up in Dallas and that was fun. We went to a San Antonio, that was another good turnout. A lot of people coming out. I want to say about 40% of the people who I’ve talked to about Airbnb are already doing it. They’re just looking for validation.

TRE 10 | Hunting Ground
Hunting Ground: 40% of the people are already doing Airbnb.

 

They might be looking for a peer group like, “Where can we share best practices?”

For sure they are, there’s nothing out there and there. They feel like us, like other people who are in real estate or their friends are like, “What are you doing? I don’t understand.” I met a guy, Avery and he’s in the Air Force. He bought a house in Tampa and with the VA loan, which is great. He got transferred but he kept the house. He’s making $2,000 a month. He was like, “Is this how it’s supposed to work?” I’m like, “Yes, this is how it’s supposed to work.” He was like, “I am going to buy another one. A station in San Antonio, I’m going to buy another one here.” I’m like, “Buy two.” He’s got only three years of service left. I said, “At the end of those three years if you’ve got five producing $2,000 a month, life doesn’t suck.”

You got to make $10,000 a month.

I told him how I do it. He was like, “That is much better.” I was like, “Avery, do not walk out of this meeting thinking that you have a problem. You have a money tree that’s growing in Tampa, just don’t mess with it. Let it go.” He’s got the right person managing. He is going to a good cleaning crew and he does Turo.

He’s got a car sitting there too.

He bought a brand-new Jeep. They rented six days a month and it pays for the Jeep. Anytime he goes back to Tampa, he’s got his beautiful Jeep.

We just drive down there, so it’s not that big a deal.

We’re getting a Jeep and a Mustang convertible for sure.

Is there a better big Mustang guy?

I’m over 50 so I’m a Mustang guy.

Diversify your portfolio to create extra cashflow. Click To Tweet

That’s Corvette territory there. It needs seating for four. That’s the hard part. Lexus made a convertible for a while. Can we get those use pretty cheap? I’m going to start looking.

They use Turo, which was another sort of sharing economy. The Millennials get mocked a lot. They have really embraced the sharing economy and it has absolutely changed the way we look at tons of things. A lot of the folks who came out to these Airbnb, one nighters that we were doing or are just looking for validation. They’re like, “I’m doing it. I’m doing this, but I have a problem doing it.” Someone who came and said, “I have seven units, I own 60 apartment buildings, but I have seven Airbnb’s. I’m about to buy another twelve-unit apartment building.” I was like, “Are you going to do them all Airbnb?” He was like, “I’m thinking about it.” He needs a little encouragement to get over the line.

Here’s a guy who’s a successful multifamily investor and says, “I’m going to do Airbnb instead.” That’s when things get interesting. When you look at that revenue per door model, once you’ve got it figured out and dialed in, you start realizing in order to build real cashflow and wealth, I don’t have to buy a 200-unit apartment complex. We’ll go look at them, they’re fun.

Someone in California will buy it for sure.

Some guys here that just, “I’ve got to buy a 200-unit apartment complex and show off my friends.” I’m a less work, more cashflow guy, although it doesn’t seem like that sometimes. I was going over the numbers, the webinar I did for Quest Trust and I was looking at the numbers for the four-unit that we’re buying down in Surfside. You’re looking at the numbers and you’re like, “You could rent this out each door for $1,000 a month and you’d make $1,000 a month net.” It falls down on the bottom line, that’s your net cashflow. You could do short-term rentals and make $3,600 a month. You could do Airbnb. It makes $6,000 a month. You start looking at these numbers and you go, “Why would I go back to the traditional rental property model ever again on purpose?”

You want some diversity. I know we’re going to do a class and we have a mastermind, all of this stuff, but I believe in diversity even though Warren Buffett calls me a knucklehead. A lot of folks are doing it and looking for validation. They’re like, “Am I doing it the right way?” I’m like, “You’re doing great. Have you tried this and this?” They’re like, “No.” I’m like, “Go back and try it.” Our little niche, and we’ll talk about it for a whole segment is the financing we have. We figured out that financing model which is a nut that a lot of people have a hard time cracking in the Airbnb. First of all, every loan officer’s just a loan salesperson. Let’s understand what they are.

They’re not bad people. It’s what they do. They’re selling money all day.

The sales guy is like, “Don’t mention Airbnb because I don’t know how the underwriter is going to take it. Don’t ever mention it.” We’ve found a service that has a box, “Do you know Airbnb? Check it right here,” with very low fees and sometimes credits. We can leverage that to get into your Airbnb. That’s a home run for us. I’m not a big fan of renting your rental to do my Airbnb business because you’re building the equity. I get cashflow out of it, but you build the equity.

That’s a terrible model. Let’s talk briefly about that. There are a lot of real estate gurus out there that are teaching, “You need to rent the house and then Airbnb it on behalf of the landlord.” You don’t even own the house. I’m like, “That is a terrible idea.”

Let me tell you how to get into the class. If you want to go ahead and text me at (281) 401-9008. Let me know you’re interested. A couple of folks had to do that. The first few folks that do that, we’ll do some free stuff for you. I look forward to hearing from you. We’ve got a webinar coming up and I don’t want to turn us into too much of a pitch fest because we make fun of those other guys. We do have something coming up and if you’re interested, you should take a look at it. It’s $97 for the six-hour webinar. I got enough time to probably do four or five more property reviews. If you are interested in learning about Airbnb and you have a rental that you’d like to change over. I’ll do five more. If you just text me at (281) 401-9008 and you say, “How can I sign up?” I’ll send the link for the register. You send me the property address and I’ll do a quick little analysis on that for you.

TRE 10 | Hunting Ground
Hunting Ground: Taking care of your property arguably could accelerate appreciation.

 

You’re doing a free property analysis.

We usually charge $350 for it because of the software program’s expensive.

You can’t find Airbnb comps on MLS. That’s proprietary software that we use to find the comparables for what these things should be renting for, their occupancies, all that stuff. If you guys are interested in having Rob taking a look at that for you, shoot him a text message. You will be live. You’ll be teaching. I’m sure everyone’s got to have a million questions. Rob’s webinars are fantastic. You guys are going to like it. Down the hunting grounds, do we need a plane to go down there because we’re probably going to be down there a couple of times a week?

Maybe, I don’t know if that screams hubris. I’m not sure.

It’s nice to get down there and back. We could talk to the guys. What was that service we had?

They don’t. I have looked. I found one charter that I’m sure we can arrange something for. If Surf Air went down under, that’d be great.

Guys at Surf, if we could get a little daily charter down there, that’d be nice for us.

They will because they basically service the oil fields. This whole oil patch that was their whole business and where we’re going is big or coming up pretty big.

We’ll be down there. Are we get to look at the eighteen units too?

We’re looking at all of them.

We are going to go look at all.

This is a strategy that you should be looking at in your portfolio that was going to increase your cashflow. I would argue that probably accelerates appreciation because you take care of the property so well. That’s a big thing. We teach having a handyman come in one day a month, pay the guy $200, $150, whatever it is. Go through a checklist, maintain the property. The maids will then create a little work order for the handyman. They’ll notice things and they’ll make the list. You got to go if there’s a leak, the faucet’s dripping, they go through and fix it all. Your property stays in pristine condition. If you need to sell it, you can in a week put it on the market. There’s nothing to clean up, there’s no paint, there’s none of that. It’s ready to go. You have to explain what these little digital locks are in every bedroom that we’re not locking the kids in. For sure this is a product out there in the marketplace. It’s a system and we show you all the systems. It is a way to diversify your portfolio to create extra cashflow.

It’s so much fun because we like the buy and hold space rental properties. If there’s one regret I have in life, it’s not by more rental properties. Airbnb, we are going down to the hunting ground. Got to look at all of our properties down there. It’s going to be like a day at the beach. I love that strategy of business, travel and vacation at the same time because it does even out your cashflow. The property stays booked most of the time. What are you at on your two in Jersey?

We hit 88% occupancy, that’s going to be $8,600 gross. The other one is in the mid-60s, 64%, 65%. That’s the little one but we have a steady client in there. We’re doing well. Our goal is, can you run it at 50% occupancy? Does it break even at 50%? If the answer is yes, then do it and then strive for 65%. Let the normal course of travel bring you up to 80%, 90% in some days. We’re very happy on both of those properties. We have a third one coming along and then all the beds we’re doing down here. We’re excited about that stuff. You have to start thinking of it as beds. That’s how the hospitality industry does it. We have to follow along and think of it as beds, not just rooms. It’s how many beds you can get because certain rooms we could fit three beds in there. We’re excited about it. We’ll be down there. It should be a little trip.

You being a Disney guy, I wonder how much of this you borrowed from the Great Disney for this hospitality?

I tell you what we’re going to love about that house. It is an absolutely perfect layout for you and me. There’s an apartment that has one bedroom. There’s the main house, which has three bedrooms on the first floor, all with their own bathroom. You’ve got the kids and you guys, and then there’s the main area upstairs. It’s a huge area. It’s perfectly laid out for us that we’ll never cross paths. We can do our own thing.

You don’t have to hear the kids screaming. When I was looking at the pictures, it’s got that deck that goes, it looks like there are two or three different levels.

It a crow’s nest.

You could see everything. We’ve got no neighbors. You can see it’s the ocean view and all that stuff. It’s going to be awesome. I can’t wait to see it. I was looking at it, getting excited. I was like, “I’ve looked at this deal, but I haven’t really looked at it.” I started cruising around on Google Earth and I’m like, “We would have paid more for it if I’d actually looked at it.” I was like, “Here is the number. It will work.” I was just looking at cops like, “I think this is what it will be worth.” When I started cruising around there, I was like, “We could have lost a deal if I got a little too stingy with the seller.” Looking at that deal, “We need more of these.”

We did get stingy with one seller on the other six unit. I was having a bad day. I was like, “I want to win now.” I know we’re going to have to replace the weather heads on the electrical side. I want a $2,000 credit. I went back and forth and then I told the agents, “You call her up and you tell her, is she really going to lose the deal over 8% of a point? Are you going to let this thing go at 8/10 of a percent?” She called back and she was like, “Okay.” They got the deal. It’s less than 1% difference.

It was the principal.

I just needed a win that day.

Is this like changing the new diet or something like that?

We got piled on something, the bad appraisal came in. She calls up and I’m like, “I need $2,000 on our credit because I’m sick of paying electricians all this money.”

“I need $2,000 credit because I lost it over here in this other deal.” She said, “What does that have to do with anything?” I don’t know. Get it forget it sake.

No, that was a valid repair. We blow over the repairs because we have a crew out there and they’re going to do everything, but it was like, “Now, I’d like to have the weather heads credited to me.”

If they want to go to the Airbnb class, where do they need go?

Make sure you text me. It’s (281) 401-9008. Thanks.

I’ll see you guys next time.

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