- Avery’s first couple years in real estate [2:20]
- Avery’s first real estate investments [3:08]
- Why vacation rentals can be a better option than Airbnb [10:10]
- Lessons learned from the pandemic [15:29]
- Avery’s diversification strategy [16:46]
- What agents need to know about vacation rentals [20:27]
- Returns to expect on a vacation rental [25:42]
- Advice on working with real estate investors [29:49]
- About Avery’s real estate team [34:21]
- Short-term rentals and business during the Covid-19 pandemic [35:39]
- Advice for new agents and investors [42:03]
- How to break through your goals.
- Plus so much more.
- Grow Your Real Estate Profits with Our Agent Success Toolbox
- Enroll in Pat Hiban’s 6 Weeks to 7 Figures Course
- Get Tribe of Millionaires by Pat Hiban and David Osborn for FREE
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- Avery’s Facebook
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- Avery’s LinkedIn
- Download Avery’s Short-Term Rental Calculator from the Agent Success Toolbox
Aaron: Real Estate Rock Stars, this is Aaron Amuchastegui, and I am back for today’s episode that I am super excited about today. I get to interview Avery Carl. It was fun, I just got done chatting with Avery we got to talk about that she’s been a long-time fan of the podcast. We actually have a lot in common. Some relationships with Gobundance and things like that, that we didn’t realize ahead of time, that we had, but today we get to talk about everything real estate.
Avery’s been an agent for a few years. I’m going to let her tell the story, but when you get to hear some of her revenue volume stuff that she’s done and her skill set, you guys are really going to love it. I think it’s really going to go in line with a lot of the interviews we’ve done in the past month. Where people have talked about, if you can find an investor, and have them become your client, that can be a repeat investor. Find a niche for them. She’s got some really unique stuff that I think she’s going to be really skilled with, so, Avery, thanks for coming on.
Avery: Thank you so much for having me. I’m super excited. Like I said, I’m a super fan.
Aaron: I love it when people that listen to the podcast come on here. Any of you listeners that are out there, anytime you guys message me and tell me we had a good episode, I always ask, “When are you going to get on the podcast?” Keep crushing it out there, so many of you guys, if you’re listening now, and you’ve thought, put that on your goal list, make sure you get it on there. We want to get you on the podcast to share what you’ve learned with everybody else. When did you get your real estate license, Avery?
Avery: I got my real estate license at the beginning of 2017, so it hasn’t been too terribly long.
Aaron: All right, so not too long, and how much volume did you do last year as an agent?
Avery: Last year, without the team, because I kind of started my team about mid-way through last year, myself personally, I did $60 million.
Aaron: So you did $60 million, you got your license in 2017, and you did $60 million in revenue last year. Listeners, right now that is the big thing and so, let’s buckle up. Let’s buckle up and listen because if you’re just getting your license now, and you’re hoping at two or three years from now you’re going to have a $60 million volume year, that seems like a really, really crazy goal, but Avery’s done it in just a few years, and we’re going to get to dial into that. Avery, how did you get into real estate?
Avery: I got into real estate from the investing side, which is going to sound really similar to any real estate investor story. I had a corporate gig as a marketing manager, was making $37,000 a year. My husband and I decided to “buy a rental property,” we didn’t even know it was called real estate investing back then. We bought one, and we were living in Nashville at the time, and the cash flow and that was really great. After that first one, we said, “Let’s start educating ourselves on this so we can do this again.” We only had one down payment worth of money to put down on anything, so we thought, how can we best capitalize on this to make the most money off of it so that we can go buy more and more, and scale this business faster?
We settled on doing an Airbnb, again, living in Nashville at the time, we did not want to invest in an Airbnb in Nashville. The regulations are terrible, they’re changing all the time, so it felt like that wasn’t a safe bet. We went a few hours east of Nashville to the Gatlinburg/Pigeon Forge area, the Smoky Mountain National Park because that’s what people do when they go there. They rent a privately owned cabin on an overnight basis, so we figured oh, the regulations are probably easier to deal with here. We bought one there. Quickly scaled that into five over that next year, and then that has become 28 units over the past three or four years.
I got into having my license because when we were buying those short-term rentals, especially in that market, I had a lot of questions about return on investment, and you know the numbers, and how to manage these things that none of the agents that I found could answer. We had to figure it out all ourselves, and then I got my license just to do our deals, and then it grew from that to friends saying, “Oh, how much are you making on this? How do you do this? I want to buy one.” Then it just became a business from there.
Aaron: Has your niche always been selling Airbnb investments to people, or do you do a lot of regular transactions as well?
Avery: I tried to fight it being only the Airbnbs at first. When you first start, you’re like, “Oh, I need to take all the business that I can, I need to get business from everywhere.” My pipeline just kept being short-term rental investors, so I finally stopped fighting it, and just said, “This is all I’m doing now. This is clearly what I need to be doing.” I stopped taking primary home investors. I don’t even take long-term rental investors anymore.
Only short-term rental investors that are looking for vacation rentals, which we can into the difference between what I call a vacation rental and just a regular Airbnb in a minute, but just only vacation rental investors. My business took off once I started cutting out taking anybody.
Aaron: It’s almost like the four-hour workweek type method. I remember when I first read that, and Tim Ferriss said, “No, you need to focus on the things that make you the most money.” They say 80% of your income comes from 20% of your effort.
So you were trying to do everything, and then somewhere along the line, you realized, just Airbnbs, you were getting more money for the amount of time you were spending. It was easier for you to get the deal, easier for you to get the client, so that became your focus niche. What year did you buy your first one?
Avery: Probably mid-2016 was when I bought my first one.
Aaron: All right, so you had your first one, and then you were interviewing agents. We hear this story a lot on here, of people that they were trying to buy houses, there wasn’t a good agent there, they weren’t able to find a good agent, and this was just a few years ago, too. Everybody out there, whether you’re new as an agent, or you’ve been an agent for a few years, it’s remembering there are plenty of people out there that still are struggling to find a good agent. If you can just bring the skills and provide the value, you will stand out, because we do hear this story so much, investors saying, “Hey, I was asking the questions, nobody had the answer.
I had to find the answer myself anyway, so why was I paying an agent?” Also, if you’re trying to– Your primary goal was to be able to form investments yourself, and so, being an agent, it’s the easiest way to generate cash flow, but then when you would buy the properties, would you use your buyer’s agent commission as a discount, or would you use it as a down payment for the property?
Avery: I don’t use it as a discount. I take that commission, and it cancels out the down payment. I haven’t leveraged that as a discount, because I’d rather have the cash in hand than I would a $12,000 discount, or $20,000 discount amortized over 30 years, that doesn’t do me any favors. I take the cash.
Aaron: I think that’s smart. I think agents out there, as you’re thinking about that, I remember early on in real estate, we were thinking about that, right? Discounted buyer’s agent commissions, or being able to say, “Hey, because I have my license, why don’t you sell it to me for less?” I don’t think that’s the right way to do it. I think Avery’s right in the sense that, no, you take the cash, because it increases everything. It increases your gross revenue when you’re trying to get approved for loans later, increases the cash that you have for that down payment especially if you’re going to start getting loans on that.
Aaron: Why do you think Nashville is so anti-Airbnb, because you talked about that’s where you lived, you wanted to do it there. I’ve got a friend of mine has a bunch of rentals out there, and for him, he was paying a daily fine for a while. He was like, “Well, the daily fine, I still make enough money to make up for it,” but why are they so anti-Airbnb, and a place like The Cabin three hours east would not be?
Avery: That’s a really good question. That’s kind of why, once we got really established in the Smoky Mountain area, that’s why I then chose Destin and Panama City, Florida as my next office to open, and then Gulf Shores, Alabama, which is just really just down the road from Destin as my third, because these are what I would call true, mature vacation rental markets. This is the difference from what I was talking about earlier, the difference between just an Airbnb and a vacation rental.
These are markets where it has been the norm for vacationers to stay in a single-family home overnight on vacation for decades. Well before Airbnb, even before the internet in a lot of these cases, where somewhere like Nashville, that’s what I would call an Airbnb market. Those vacation rental markets are what I would call vacation rentals, where people have always stayed in the single-family homes that are privately owned, not a hotel. Whereas Nashville is a metro area, and Airbnb is kind of a new thing, as of the past 15 years.
People had always stayed in hotels until 10-15 years ago when Vrbo and Airbnb ramped up. Now you have big hotel money getting annoyed with losing some of the market share. You have people going in and buying properties in what used to be quiet neighborhoods, and turning them into, essentially, hotels, and the neighbors get annoyed with that. When it hasn’t been the norm, and it’s kind of a new thing, you run into all these clashes. The hotel lobbyists are really the big player in the metro areas, as far as anti-short term rental regulations, because they’ve lost a lot of market share. They’re trying to make that go away.
That, coupled with disgruntled neighbors, and then the fact that the prices have shot up in these metro markets because of the premium that the Airbnb-able properties are being sold for, which is making it unaffordable for the permanent residents in those areas. You just have a lot of different things in the metro markets that are driving anti-short term rental regulations, whereas in the regional, drivable vacation rental markets, there really is no industry other than tourism, so it would be really, really detrimental for the local economies to regulate against short-term rentals because there’s just really no hotel presence to lobby against it.
Aaron: That makes a lot of sense. One of the things that Avery said there is, there’s a difference between an Airbnb of a normal house in a normal neighborhood that you also rent, and there’s a difference between a vacation rental area, where there’s a bunch of that. In northern California, it’s like Lake Tahoe. There’s a bunch of cabins on Lake Tahoe that people go to for the night, for the weekend, for everything. This place that’s a few hours east of Nashville, that’s normal, but in Nashville, Nashville’s a popular place for people to go party, and go for bachelor and bachelorette parties, and go hang out.
I think one of the other things that happens with Airbnbs is, they’re more valuable if you have more bedrooms. In a normal neighborhood, you’ve now got a four or five, six-bedroom house, people are remodeling them to add beds, and so there’s a bunch of people there. Even when I went and stayed at my buddy’s Airbnb in Nashville, there was no driveway. Up to eight people can stay there, and there’s no driveway, so that means whenever eight people were staying there, man, that street was just going to be packed.
I could see the neighbors going, “Hey, this sucks. I live in a very normal neighborhood, a 10-minute drive from downtown Nashville, why am I dealing with that?” I think that is a very clear distinction, and I have two of those. I’ve got one of each side, so I have an Airbnb in southern Oregon that’s in a Running Y resort. It’s like a vacation rental property where people go stay there for a few days or a week, and there’s also a lodge and a hotel there, but they were built in order to be vacation rentals. Some people live there full time, but most of the people are coming and going.
With that, there are a lot less complaints, too. There’s less complaints of people saying, “Hey, people are partying,” because they know people are going to those resorts, and going to the lake to go have a fun time and go have a good time. There’s going to be a lot less complaints from neighbors with that, whereas I also have an Airbnb in a normal neighborhood. It’s on a bunch of acreage, and it’s big, and people do company retreats there, but every once in a while I do get a complaint because a party runs too loud and people who live there aren’t living there for that reason. When you were first saying Airbnb versus vacation, I wasn’t sure where you were going with that, and now that makes a lot of sense. You focus yourself on vacation rental areas.
Aaron: You don’t do Airbnbs in a normal town, a normal city.
Avery: Right. We don’t invest in those, and I don’t even take clients like I used to. We were living in Gatlinburg for a while, now we’re in Destin, Florida. I used to have part of my team in Nashville to do short-term rentals there, and it just got to be too much of a pain with all the regulations. I would have people get under contract on something that was pre-construction that’s going to be finished next year, as of right now, they’re selling it as these are Airbnb properties, these are built specifically to be Airbnbs. By the time it’s completed, it’s not allowed to be an Airbnb anymore because things have changed with the city council. We just cut that whole part out of our business, because the metro Airbnb thing is just such a hard thing to keep up with.
Aaron: This is a One of the things that I think everyone learned in COVID was that you can’t have all your eggs in one basket. You’ve got to have a back-up plan with stuff, because there’s certain industries that have flourished, and Airbnb and vacation rental areas have seemed to flourish. Especially ours on the west coast are doing fantastic because hotels are closed in San Fransisco, so people want to drive to a place where there’s a pool, and they can go get together with other families and have some space.
Some industries have flourished, but then having a backup plan,. I know a lot of people, too, that kind of bought Airbnbs in downtown Austin, in downtown Wacko, downtown Nashville, with the idea that, hey, this house would normally rent for $1500 a month, but as an Airbnb, we can make $2500 a month on it. We’ll go ahead and pay the premium, but now, if Airbnb gets shut down, or regulation happens, and they can only rent it for $1500 a month, it doesn’t even cover the debt service. It becomes a bad investment instead of a good investment.
I would say, when people look at Airbnbs, the backup plan is, and if Airbnb shuts down, what does it rent for? Do you have a backup plan for vacation rentals that are these cabins by the lake? Is there a backup plan if something did happen there?
Avery: My backup plan is, cash reserves, and then I have a diverse portfolio. Six of my 28 properties are short-term rentals, the rest are just regular long-term rentals. $6-700 a month, because at the end of the day, if the world falls down, sky falls, whatever, I mixed my euphemisms there, whatever, people are always going to need a $6-700 a month to live. We have those, and now our buying strategy is kind of one vacation rental, then 10 units of long-term rentals.
The vacation rentals make so much money that we use the heavy cash flow from those to go buy more traditional long-term rentals. My backup plan is really just having a diverse enough portfolio that, if something happens to the tourism industry, then it’s not going to sink me. If something happens to the long-term rental industry, then it’s not going to sink me either.
Aaron: It’s great advice for anyone as they start to get into investing to be diversified with that. Industrial, commercial, hotels have been hit the hardest through quarantine. Retail, where there’s restaurants have been hit the hardest through quarantine. Single-family real estate seems to be doing great, apartments seem to be doing great, Airbnbs seem to be doing great, I guess, depending on the area. There are less people coming into downtown Wacko right now because Magnolia’s closed. Everybody travels to Wacko to go see Chip and Gain’s place at Magnolia, well that’s been closed for a few months, and now nobody wants to go to Wacko. They want to wait until that opens up again, so you never know. What a strange world we live in with that.
Rock Star Nation, this is Aaron Amuchastegui. Hey, I hate to interrupt the current podcast that you’re listening to, but I am so excited to share this with you. I just finished interviewing the original host of this podcast, my good friend, Pat Hiban. I got to talk to Pat about how he started his real estate career and a whole bunch of tips and tactics that he used to be successful. If you haven’t listened to it yet, go check out State of the Market number 49. On there, I get to talk to Pat about all those different things. In there, too, he talked a lot about his Six Steps for Seven Figures book and training program that he built over the last couple of years, and I realized I haven’t done a good enough job of reminding all of you lately about all of the resources that we built for you out there.
If you want to check out Pat’s course, we’ve got a three-minute summary video when you go to it. It includes so many easy-to-follow tips that you can follow on a day-to-day basis. You get email reminders, all sorts of different things that come with that course. To find it, you go to rebusuniversity.com. R-E-B-U-S, rebusuniversity.com, look at courses. You can find the Six Steps for Seven Figures book, and really, there’s a whole bunch of other courses in there, too.
Our normal prices used to be $1500 or $2000 a course. These are real-deal, professional courses, but now during quarantine, a lot of them are priced down to $90, $95. We slashed the prices because we know right now is the time for everybody to be focusing on growth and education, especially while they’re feeling like they don’t have as much to do. If you go in there, and you figure like there’s a lot of different courses you want, maybe you don’t want to buy a la carte, you can go to futureofrealestatetraining.com, and you can get access to all of our different courses for $97 a month.
I think there’s a discount on there if you go a year, or there’s even like, a lifetime option you can pay to get access every course we ever put on Rebus University for as long as we have it. Go check out those options, Rebus University or futurerealestatetraining.com. All right. Back to your podcasts. Sorry for the interruption.
You talked about when you were looking to go find your first investment properties, you would ask questions to the agents. They didn’t know any of the answers. Now, that’s what you provide to your prospective investors. If somebody listening right now wants to go do that, they want to go find some vacation rentals and present them to an investor. What’s the info that they should find and be ready to present to an investor and how do they know if it’s a good deal?
Avery: That’s an awesome question. I would first take a look at what markets are around you that are drivable because just because it’s drivable and remote and it might be fun to go. There does not mean that market is going to be a good investment. This is going to sound silly, but Google is a really good place to start because if you just take a look at the best places to invest in short-term rentals, well, Gatlinburg is number one on that list in on a lot of lists because we get 13 million visitors a year to the Smoky Mountain National Park. Almost every single one of them is staying in a short-term rental, not in a hotel. You want to start with that bigger picture data.
You can drill down further into a price per night. What the average price per night is, average occupancy rate. There’s a few places you can get that. I trust the bigger national property managers a lot more than I do the local regional guys because they just have so much more access. A lot of them are venture capitalist-backed. They have a lot more access to big data and good data and machine learning on these things than just the local guys. AirDNA is another really accessible tool for us to be able to go and just look at, okay, this is what the average price per night is for a two-bedroom in this market.
This is the average occupancy rate and their data’s not perfect, but it’s pretty good and cost-effective. Really, you just want to start with all these data points, so you can get projections from the big national property managers, AirDNA. Just going on the sites like Airbnb and Vrbo and looking at what the listings on there look like. What are their calendars look like? How booked are they, how far out are they booked? Things like that.
You want to start there and then you can work down into the more granular data like, what are the expenses. Does everything here have hot tubs? How much is that? Are there any extra expenses that you wouldn’t think about? Like in my market, pretty much everything’s on a well, people don’t really think about wells if they live in a big city. If there’s not a lot of expense to deal with the well, you just have to change the filter once a month. You want to start with the big data, the market-wide data, and then drill down into the individual properties.
Aaron: I was on a short-term rental panel. It was like a three-hour panel a few weeks ago with the founder of AirDNA, and among a bunch of other people. They talked about at the beginning that the data just wasn’t out there and this went on combining it. They’re combining it the same way that you’re talking about doing it manually. You can buy services like that pay for services like that. I like to look at it. When we got to analyze ours, we went through a similar sort of thing. Agents out there, if you’ve never looked at an Airbnb or a rental, it’s like doing a CMA. When you’re going to buy a house, you go see what did the houses that look just like this sell for.
The ones that look just like this sold for 180,000. We’re going to list this one at 180,000. You’re essentially looking at comps. If you’re going to buy a house for a rental investment, you do the same thing. You go look at comps and you can go into Zillow and, see what recently, what’s listed for rent right now in that neighborhood. Does it look like mine? Is it the same floor plan? If that one is listed for rent for 1500 and next week it’s rented out, then that’s a good price, but if it’s been listed for 1500 for six months, then you can tell yourself that you’re probably going to have to list for less. When you go to the Airbnb analysis, it’s similar.
One of the things that Avery mentioned that I think is really cool is before I bought the one at the Running Y, I went into Airbnb and I looked in that neighborhood and because there was a bunch of houses that were the exact same house. There were condos that were built as vacation rentals. You could click on all of them and say, what’s this person’s average price. You could say, see their calendar and you could look at their calendar next month and go, “Okay, here’s how many days they have booked.” When she’s talking about how to analyze that. What’s our income for that? First, you’re going to look at, here’s a similar one and it actually rented for 20 days last month and 20 days next month.
You’re like, “Okay, that’s, top-line it rents for $200 a night. Okay, it’s $4,000 at the top.” You have to look at it and say, “Well, how many guests did I have?” if I had eight guests in that, that’s going to be I’m going to have to get it cleaned for $150 every time. I have to deduct $1000 out of the top line for cleaning. You’ve got your stuff that you don’t normally have on a rental is you got to pay for internet. You got to pay for utilities. You might have to pay for the hot tub, things like that. You start to look at that and then you can back into it and go, “Okay, if I do like these people did and I have similar expenses to that, I can bring in the $2,000 a month. I can pay this much for it.” Would you say that that is a decent way to analyze it? Anything that I missed? Anything that you look at in your numbers that I had forgot to mention there?
Avery: No. I think you pretty much hit everything.
Aaron: That’s great. What sort of return are you looking for? When you go look at that and you go, “Okay, here’s a house, it has the potential of making 2000 a month. What return are you– How much will you pay for that? How much would you recommend to your clients to pay for that?
Avery: Well, it just depends on the property. In the markets that I’m in, the four bedrooms and up have a significantly higher return on investment in the three and below. Those are going to be doing a lot higher than 2000 a month, but you want to be able to hit at the very least a 15% cash on cash return. For the non-investor agents that are listening to that the money, you put down at the front versus the money you end up with after all the expenses at the end of the year. You want that to be 15% or better, but 20 to– Sometimes even the above 40% is totally attainable in the markets that I’m in.
It’s not sitting out there on the MLS and every single property and just waiting. [crosstalk]. You go to wait and you got to watch for it and you have to jump on it and be ready when it comes but they pop up all the time.
Aaron: When you were saying 15% cash on cash is that net?
Aaron: That’s after you pay your cleaners and your changeover fee, so that’s a big difference between normal rentals. I would say Airbnb investments are riskier than single-family, but with the return that Avery is talking about here, a 15% cash on cash return for our single-family stuff, we’re looking at like a 6% to 8% cash on cash return. After all, expenses, if we buy a house for $100,000 at the end of the year, we want to have made six or $8,000, that’s a good, safe return. It’s really easy to see. There’s not a lot of work involved of moving stuff in and out, other than normal landlord stuff.
Airbnb is more work, it’s more active, but that return is much higher. One of the big differences that I was learning in Airbnbs that I think maybe you have some stories about this. Is it really is a service industry. As a real estate investor going into that was much newer when you’re like, actually– If you have a rental property and somebody calls you at nine o’clock on a Friday night about the air conditioning being out, you can schedule somebody for Saturday, Sunday, or Monday. You could say like, “Hey, this is the emergency guys can’t get there until Monday I’m sorry.
If that happens on Airbnb, it’s like a huge deal. Somebody doesn’t have air conditioning at their Airbnb. Like you’ve got to rent a portable machine to come on the weekends or you’re going to get a lower return. Is that accurate? Do you have similar feelings with it? Do you live and die by the reviews that people give you?
Avery: You do live and die by the reviews. I think that’s a big limiting belief that a lot of people have about doing short-term rentals is they think they’re going to get those calls every night in the middle of the night, and they’re never going to be able to sleep. It doesn’t happen nearly as much as people think that it is going to. Is it going to interrupt your dinner at some point? Yes, probably, but we don’t get those kinds of calls. Across six properties in five years of doing it, it probably happens like twice a year, maybe.
What we do is if we can’t fix it in one or two phone calls in like 20 minutes, then we offer a refund for those nights and say, “Okay, you know, we can’t get anybody right now, but we’re happy to refund you for these nights. We try to just fix it that way. We would rather them leave happy than sit there and still and be mad at us for the next few days because we can’t fix the problem. It’s pretty rare that that comes up, but that is something that you have to deal with because it is a review-based business.
Aaron: When you go present those deals to your investor, do you go find one. Now you probably want to keep a lot of them, but you still have plenty that you find and you go bring to your customers as an agent. You go present it to your customer and say, “Hey, here’s an opportunity for an Airbnb investment.” Or they probably came to you and said, “Hey, I want to buy an Airbnb. You’re like, “Okay, here’s a good one. This one will give you a 15% return.” You show them all the numbers. “You should get 10 people a month. You should get to do this, and here’s your projected return.”
Avery: I have a calculator that I built around the markets that I have to help with that, but I have found it’s best and actually David Green said this on our mastermind the other day. My spreadsheets are built to spit out the data the way my brain works. Your brain doesn’t necessarily work the same way that mine does. What I tell clients and the phrase that I use is “Here’s a calculator that will give you, roughly the numbers that you’re looking for, but I can’t do your pushups for you. I can guide you along the way and say, this should be able to hit this. This should be able to hit this. Your expenses should be about this, but you have to do your own analysis.”
Because I found when I was doing all of that for all the clients, A, it’s sucked all the time, out of my day. B, it set them up to expect me to do every single thing for them, and like feed them dinner at night and sleep in the bed with them every night. You do want to teach them, especially as you get to be higher volume, how to analyze their own so that they’re not expecting you because when you get really high volume, you can’t just sit there and analyze everything all day.
There’s always going to be the people that their numbers didn’t hit the exact penny that your number on the spreadsheet did. They’re going to come back and yell at you later. You want to coach them on how to analyze. Say, “Hey, this is how you do it.” Then give them the rough numbers and let them do their own pushups so to speak.
Aaron: What percentage of your customers buy more than one from you? They come back and have you do another one.
Avery: Probably 70, I would say.
Aaron: Like 70. Adam Whitmire and Jared Garfield I talked to them a few weeks ago. They talked about investors as clients as that. If you helped someone buy or sell their home, they’re probably your client for life, and every five or 10 years, you could probably get to do another deal with them. Investor client is different. You could be doing a couple of deals a year with them or a deal every year with them. That’s one of the interesting things about having investor clients as at least part of your niche in real estate can really lead to return volume.
It’s always tough to get that first lead, get that first customer. Avery has gotten that niche, and that helps, and then she has those people return 70% coming back. I’m not surprised by that number. I think that’s really common with investors, but it really goes to show what’s there and the opportunity. Do they ever ask you to manage it themselves, or are most of them excited about starting to manage their own Airbnbs?
Avery: I get that question every now and then, but it’s different with long-term rentals because most of my clients are coming from a place of having had long-term rentals before. Having a property manager for long-term rentals it’s only 10%. 10% of 700 bucks a month is not that much, but the standard for short-term rentals is at least 20%. If you’ve got a property that’s gross. It’s even up to 40% in some markets. If you’ve got a property that’s grossing $100,000, and you’re paying 20%, that’s a lot of money to be paying someone.
It sucks a lot of the cash flow out of the deal. What I do as my value add as an agent, which because people are like with agents a lot of them don’t the value in us. They’re like, “They’re all the same. They’re used car salesmen. They’re like bookies or whatever sleaze.” The way that I set myself apart and value add is I teach all my clients how to do it. How to self-manage from wherever they live. We have a guy in our office that that’s what he does is shows our clients how to run their Airbnbs, the automation tools we get you set up with vendors and everybody that you need to be able to make that money yourself from your iPhone so that you don’t have to pay somebody 20,000 a year to do it. You can take that 20,000 and go buy more real estate with it. That’s what we do.
Aaron: I’d love to get some of those tools too. Did Curtis ask you about putting something in our agent toolbox to provide for people? Did you have something that you’d be able to provide now?
Avery: Yes, I am going to provide my short-term rental calculator.
Aaron: That is awesome. I was hoping you were going to say that. As you were going through that, I was thinking that would be a great thing for our agents you can always go to the toolbox and get that stuff, and you can do some of this analysis and maybe provide some of that same value to your prospective clients that Avery is doing. Tell us about your team. You are the short-term shop broker, the exp, and you’re in like three different states right now. How big is your team? I think you said you did 60 million last year. How much is the team doing and what’s that experience like?
Avery: Awesome. I have six agents in the Smoky Mountain market right now, I’ve got two in Destin and Panama City Beach, Panhandle of Florida. I’ve got one in Gulf shores, Alabama, looking to expand to the Carolina beaches and in the North Carolina side of the Smoky Mountains over the next year. Any agents that are in those markets hit me up, I need to hire you. [laughs]
Aaron: Yes, and she’s serious too. I know Avery’s team is growing. If you’re looking at trying to get into this in any of those different areas, I’m sure she can teach you a lot about Airbnb stuff and be able to keep you busy. 60 million in gross last year, what’s the average price, a house.
Avery: Average price point is about $400 across the board in these markets. They get a lot of like two-bedroom condos and stuff, but then you get a lot of– We’ve actually seen in the past year, a big gain in investors who want to go buy the big $800,000 properties too. That’s growing all the time.
Aaron: During COVID in quarantine and all the craziness, what did you see with your investments during that time, and what’s your long-term outlook for vacation rentals?
Avery: Also a really good question. March and April, the calendar is completely clear. [crosstalk] Yes, That didn’t count, it didn’t happen in March, and April was canceled. It was canceled for Netflix bingeing. Everybody, every market was that way.
We were able to break even honestly though because as people that live in big Metro areas that are drivable to our markets that maybe live in a small condo saw, oh, I’m going to be working from home for a month. I don’t want to sit in my small condo. I want to come rent your cabin in the woods for two weeks and work from there. We actually did break even those two months without having to dip into any cash reserves on our Airbnbs. Once everything started opening back up, the tourists just kicked the doors back in, and they came back with a vengeance.
We would be 100% booked right now anyway because it’s summertime, but as soon as everybody was allowed to leave their houses, we were getting higher prices per night than we’ve ever seen even on holidays. People were just like they’re busting to get out of their houses and A, they don’t want to get on planes in a confined space and be breathed on, and they don’t want to go to big Metro areas with a whole lot of people and be breathed on with the current situation with the virus. They’re driving to wherever they can get to, to get out of their houses. We have strategically bought in markets that are drivable. We really reaped the benefit of that, barring any big, second shutdowns. It’s actually caused a boom in the markets that we’re at.
Aaron: I’ve definitely seen the same thing for those outskirt areas for people who are trying to get there. I think as people are trying to thinking about investing or in Airbnb or getting into that niche or they want to start experimenting in it. I think the downtown city staff it’s going to be a while before we know if that’s a safe investment or not because right now the demand to be in downtown Austin, isn’t the same. The demand to be in downtown Nashville isn’t the same. Those are two, like the music capitals of the world in all the bars and music are closed. Those you can’t go listen to music right now.
Nobody is going to come there, but when it comes to drivable places or places that are drivable near heavily populated areas where people can go drive to go get their vacation. I know my family right now is in desperate need of a vacation. They’re in desperate need of going, “Hey, where can we go for a couple of weeks?” I’ve got four kids. We’re usually traveling the world. We usually spend a couple of weeks flying somewhere every month. We haven’t flown anywhere since all of this started. We left a vacation early for that. I know we’ve been looking like crazy for what’s drivable for us.
We have not been able to find very many options here in Austin, Texas. Yes, I think there is a really good long-term opportunity there. What about real estate in general, anything that you have seen in the last few months that you’re like, “Wow, that’s changed everything.” What are some big things that you’ve learned through COVID in quarantine?
Avery: To be honest with you in the markets that I’m in it really, since I don’t do primary homes or anything where people are having to sell because they’re really getting into financial trouble. We had a dip in March and April that the bottom of the market happened at the same time as the height of the uncertainty with COVID. As soon those tourists came back everything just went right back to normal with our sales. We thought we might see a drop in prices. We did a little bit just because people were like, “Oh, I better unload this. I don’t know what’s going to happen.” Now that the tourists are back, they’ve stopped being as negotiable the sellers, I had $3 million, which is not funny.
It sucked, but $3 million in listings pulled from me at the end of April by panic sellers who at the beginning of March said, “Oh my God, we need to sell.” Then they’re like, “Wait, nevermind. We don’t need to sell it’s making money again.”
Aaron: They were ready to sell it, and they were like, “I’m glad I didn’t get an offer.” I know I did a few things like that. I sold a bunch of things really, really quick, and in hindsight, I was like, “Man, maybe I could have hung onto that.” I wanted to be early instead of late, and who knows maybe it’s still early. We’ll get to see what happens in the world. I’m part of the GoBundance men’s group. You are part of the GoBundance women’s group. You want to do just a shout-out for GoBundance or tell people what GoBundance is.
Avery: Yes. I call it like a club kind of other like-minded entrepreneurs, I’m in the women’s side. In my pod, I’ve got a real estate author. I’ve got a really well-known doctor who has also written books and gives all these speeches all the time. We have meetings a few times a month and just bounce ideas off of each other and just support each other. We have really cool speakers come on Zoom and cool events. It’s been really awesome network. I’ve only been in it for about two and a half months now. I don’t have a year’s worth of experience with it yet, but so far it’s been awesome. I’ve really loved it. My husband’s in the men’s side too.
Aaron: I’ll just wait until you get to go to some of the live events. Also, our local Austin group has about 20 guys in GoBundance we’re meeting up today. We’re going to go over our end-of-year goals and financials and go wake surfing out on the water so we get to have a little bit of fun out there. Avery, if people want to reach out to you, if they want to come find you and learn more about Airbnb stuff. Or if they want to join your team, if they’ve realized that they’re in one of those markets that you’re expanding into, what’s the best way for them to reach you?
Avery: You can find me on my website at the shorttermshop.com. My email address is right on their info@theshorttermshop. I also need agents in the existing markets that I’m in. The Smoky Mountains and Destin, Panama City and Gulf Shores, Orange Beach, Alabama. Please reach out.
Aaron: Yes. Reach out to Avery. She has no shortage of deals right now. She is super, super busy in a time when so many agents are having to work extra hard. That’s really, really awesome news, Avery. If there was one thing that someone could have told you when you first got into real estate, either as an agent or an investor. What’s one thing that looking back, you wish you could tell yourself now?
Avery: I just wish I would have started earlier. Honestly. You live in Austin sounds like. I went to school in Austin and I went to the University of Texas. I remember I was bartending at the Jackalope downtown in college. All the bartenders who were older than me were buying these like $70,000 houses on the East side of Austin. I was like, “Why would you do that? That’s not as nice as my parents’ house. Why would you do that?” They sold them, not even three years later, for like half a million. I thought, “Oh, wow. Why was I so dumb? Why did I have to be like that?” I would have just told myself to pull the trigger in both sales and in investing.
Aaron: Pull the trigger. If you guys are on the fence with something about trying to figure out if this is a good industry or something good to get into, Avery says, pull the trigger. Avery, that was an awesome interview. I look forward to chatting with you again, somewhere down the line. Thanks for coming on. We hope that a lot of people reach out to you.
Avery: Awesome. Thank you so much for having me again.
Aaron: All right. Real Estate Rockstars. Thanks for joining us. We’ll be back again soon.