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Sarah Karakaian: [00:00:05] You are listening to the Thanks for Visiting Podcast. We believe hosting with heart is at the core of every short-term rental. With Annette’s background in business operation–

Annette Grant : [00:00:14] And Sarah’s extensive hospitality management and interior design experience, we have welcomed thousands of guests from over 30 countries, earning us over $1,000,000 and garnering us thousands of five-star reviews.

 Sarah Karakaian: [00:00:28] We love sharing creative ways for your listening to stand out, serve your guests and be profitable. Each episode, we will have knowledgeable guests who bring value to the short-term rental industry–

Annette Grant : [00:00:39] Or we will share our stories of our own experiences so you can implement actual improvements to your rentals. Whether you’re experienced, new or nervous to start your own short-term rental, we promise you’ll feel right at home. Before we dive into the content, let’s hear a word from our sponsor.

 Sarah Karakaian: [00:01:01] Hello. Welcome back for another great week. My name is Sarah Karakaian.

Annette Grant : [00:01:05] I am Annette Grant. And together we are–

Both Sarah & Annette: [00:01:07] Thanks for Visiting.

 Sarah Karakaian: [00:01:08] Well, thank you. We got this episode like we do every week and share one of you our amazing listeners who’s using our hashtag, #STRShareSunday. Annette, who are we sharing this week?

Annette Grant : [00:01:17] This week we are sharing @thecatskillsmountainhouse. But there’s a little special twist here. I’m also sharing @thecrestbeachhouse. Sarah and I get asked all the time, what do I do if I have two properties and they have different identities? 

And this listener has that. She has a mountain house and she has a beach house. And what she’s chosen to do is create Instagram accounts for both of them so she can have her beach house and her mountain house, but what I love what they’ve done and I want you to check this out is if you go to the Catskill Mountain House, you’ll notice in her bio she says, “Hey, there’s a little sister of this house.”

The little sister is the Crest Beach house. If you go to the Crest Beach house, you’ll see that she says, “Hey, we have a big sister here.” So she’s letting you know she has multiple properties. She has multiple places where you can stay, and I think people get stuck on, is there a right way? Is there a wrong way? Do I just have one overarching property and then I have separate properties? But I think they’ve done an excellent job here of just saying, “Hey, we’ve got two different spots. We’d love for you to stay in each.”

And they’re not overthinking it. They’re just going with it. They’re posting on both of them, but please check it out. But they’re giving that nod to each of them, “Hey, you can check us out here.” So don’t overthink it. Do what feels right. You can always change it, but definitely I love that she has her identity out there, people can follow along, they can book direct. So please go check that out, if you’ve been trying to figure out how to bring identities to multiple properties. I think they’ve done an excellent job at that. 

So without further ado, Sarah, I know you’re super pumped. Sarah, actually, before we got started said, if 2009, Sarah even knew we were getting ready to interview this guest, she would be trembling, shaky, nervous. And a lot of you don’t know this, but I’m normally the one that gets super nervous, not Sarah. But she is super pumped. I’m pumped for this episode, but 2009, Sarah is shaking in her boots, but let’s tell them who we have on today, Sarah.

 Sarah Karakaian: [00:03:16] Yeah, so I am so excited. My husband and I had a turning point, so I used to be a performer in New York City, listeners, if you didn’t know that. And my husband just after the recession and he has a master’s degree in architecture and he is holding A Come Inside and Eat Here Planet Hollywood sign in Times Square with a master’s degree in architecture. And we’re just like, “We cannot live like this.” We can not live paycheck to paycheck. 

Nick had some construction knowledge when he was in college, and I’ve always loved houses. And Nick told me to read this book Rich Dad, Poor Dad. So I’m researching Robert Kiyosaki after reading that book on the entrain every day to my commute to New York to Manhattan for auditions. And in that funnel of Robert Kiyosaki, I come across Kathy Fettke, and I say “Whoo, a female. Let me dig into Kathy a little bit.”

So to introduce you to, like Annette told her before we got on the show, she’s our mentor. She’s even know it, but the passion for researching and sharing the most important facts on real estate and economics, Kathy is a frequent guest on such media as CNN, CNBC, Fox News, NPR, CBS MarketWatch, and The Wall Street Journal. 

She’s the author of the number one bestseller Retire Rich with Rentals, which is a fantastic book and host of two long-running real wealth podcasts, The Real Wealth Show and The Real Estate News for Investors. You’ll also find her on the recently launched BiggerPockets on the Market Podcast as one of the several co-hosts. Kathy, welcome to our show.

Kathy Fettke: [00:04:41] Thank you so much. That was probably the sweetest intro I’ve ever had. I really appreciate it. It made me cry.

Annette Grant : [00:04:47] Well, we are so happy you’re here. And listeners, not only is Kathy, just crushes in the real estate world, you probably heard what Sarah said, she is storied, long-time original podcaster. So we’re also a little bit nervous there because it’s like, wait a second, she has hundreds and hundreds of episodes. 
She actually does a daily show, too, so she knows her stuff when it comes to this whole audio game. But Kathy, for our listeners that may not know who you are, can you please let them know your origin story because it is one that they will not forget once you share it with them?

Kathy Fettke: [00:05:23] Oh, I’d love to. And by the way, you both sound great and your setup’s great. Everything’s perfect, your lighting. So yeah, thumbs up there.

Annette Grant : [00:05:32] Thank you.

Kathy Fettke: [00:05:33] All right. The origin story, I think it’s really important to share that because, well, I was struggling and a lot of times that’s when the breakthroughs happen. So keep that in mind if you’re ever feeling like you’re struggling. And right now we’re going into potentially hard times, so this may fall on ears that need to hear it. Let’s see, it was 2003 and actually things had been going amazing for us like incredible. I married my dream man, and when I say that, he literally proposed to me in a Prince costume with a feather in his way–

Annette Grant : [00:06:04] I did not know that part of the story.

 Sarah Karakaian: [00:06:06] I want to see pictures of those.

Kathy Fettke: [00:06:08] Oh, I got great pictures. Red tights.

Annette Grant : [00:06:10] Oh, my God.

Kathy Fettke: [00:06:11] Was on a horse. It was incredible. So I was really living a dream life with my dream man and we just bought a big house and two little kids and white picket fance, all of it, just living the dream. He was just come out with his first book, Extreme Success. He was on all kinds of media, and I was a  stay-at-home mom. I had been in broadcasting for years, but I didn’t want to be chasing fires and murderers while I had two little babies at home. 

So I just stopped that part of my world and making dinners and changing diapers. And I loved it. One day he came home from the media tour and he’s a redhead with lots of freckles that comes with the territory, so many freckles. But he noticed this one freckle was different than the other ones. I have no idea how he knew. He went to get it checked. It turned out to be melanoma. 

After more tests, the doctor saw something in his liver and just looked at Rich and said, “If it spread, you probably have six months.” So if you can just imagine, being at the top of your game and everything being perfect and blissful and then bam– and so I refused. I absolutely refused to believe the doctor. My husband is big and strong, and he jumps off cliffs with a bungee cord, rock climb, surfs, there was just no way. I refused to believe it. 

So I just thought, well, how can I take over the finances and let him just take the time he needs to get better? So it really came from that place of total passion for him and to take care of our family. So I still had this radio show in San Francisco that I barely got paid. It was like it wasn’t about the money, it was kind of a way for me to stay in the industry while being a stay-at-home mom. So I just had an hour show on Saturdays and it was not great. 

I would take a news story of the day and talk about it, but I would ramble. Anyway, I didn’t have a huge audience. But I thought, now I’m going to take this thing that I have and I’m so lucky to have this show and focus all of my energy on how can I make money. Because I just had never really worried about money. I was always a follow-your-heart kind of person and the money will follow. 

And so I was like “Gosh, I really got to figure this money thing out.” And I just started interviewing people and asking how they made money. I just found millionaires and interviewed them and it really came down to two things that made them wealthy. And that was owning a business or owning real estate. It was a common thread among all of them, and really it boiled down to one which was business, because you’ve got to treat your real estate like a business, which is what they did. 

So my world was completely changed to be able to get insights from people who normally don’t get a chance to sit down and talk to a millionaire. That just wasn’t in my world. We tend to hang around people that are more like us. So to have this platform where I could find the secrets, really the mindset of the wealthy and what they were doing with their money, it changed everything. And it changed my audience as well.

 Sarah Karakaian: [00:09:21] It’s just an incredible story of having your back up against the wall and instead of breaking down, you took that step forward. You didn’t know where it was going to take you, but you took one step forward to do something different and you took that opportunity. Kathy, I think what impressed me so much, especially as I was learning, was you were learning in front of a ton of people, in front of your audience. You were asking really vulnerable questions and learning as you go. 

But that is where people can feel they can relate to you in that way. And that’s how you get them hooked. And I just think that for me too saying like, “Oh, it’s okay to ask questions in front of people who know more than me, it’s okay to show up and be with people who know more than me so that I can better myself and in turn better the people who I come in contact with.” It’s that ripple effect.

Annette Grant : [00:10:10] So let’s fast forward just briefly so our listeners understand. Kathy now, she has the Real Wealth Network, which has– what are you up today people in your membership there?

Kathy Fettke: [00:10:22] I think it’s over 66,000 today. 

Annette Grant : [00:10:25] Yes, 66,000 people. And then what’s your real estate portfolio looking like these days?

Kathy Fettke: [00:10:32] Yeah, we really started with a lot of single family. And then in 2009, I got a call from a developer who was like, “Hey, I listen to your show and I got to tell you, I’m retired, but I’m coming out of retirement because there’s so much opportunity.” He’s like, “Can you raise money?” And I said, “Oh, I don’t know.” Yes. Well, I’ve got 27 townhomes waterfront in Portland that were 75% complete. 

But then the banks failed and 2008 happened. So they were ripped out by the FDIC, actually, because they’re worth 20 million, but we can get them for 3 million. Do you think you can raise $3 million? And was, I don’t know. So I sent out an email to our little tiny list at the time, and within 5 minutes I had commitments for 3 million. 

It was very quick that I learned from somebody on the email list who said, “Honey, that is not how you raise money. That’s illegal. You actually have an attorney and a PBM.” Oh, okay. So I called an attorney and got it done properly, but that brought me into syndication. So I still absolutely advocate for single-family homes as a way to get started as an investor and to build a portfolio and why not. Get as many loans as you can. You can get up to 20 conventional loans to buy single or 1 to 4 unit properties, but we also syndicate bigger deals.

We spent a lot of time on multifamily. So as far as holdings, they’re all over. We still have 4,200 lots. No, much less because we sold a lot of the lots in Tampa. We just closed out two developments in Reno. We’ve got a few hundred lots up in Bozeman. So we’ve really kind of focused on development, which by the way, has been very difficult. The one industry that’s getting hit pretty hard right now, but it’s been a good run for the last 12 years for sure. 

 Sarah Karakaian: [00:12:24] So obviously, Kathy. Our listeners, they’re into short-term rentals, vacation rentals. And as you mentioned in one of your recent YouTube videos, 2020, 2021 were great years for short-term rentals and vacation rentals. As we move into 2023, and some people are calling a recession, how are you staying positive and looking for ways to pivot or get ahead of things?

Kathy Fettke: [00:12:55] Well, Rich and I got hit pretty hard in 2008. It was a difficult time. I wrote about it in my book, Retire Rich with Rentals. But we kept two homes in California that were million-dollar homes that I should have sold and I knew I should sell. And I had Robert Kiyosaki on the show telling me to sell them. And we didn’t. I didn’t take my own advice. 

So those were worth about half of what we owed on them. We had some new construction homes in Tennessee that they ballooned because they were construction loans, and instead of getting the construction to Perm, which I knew I should get, but I was just too lazy and got already their construction loan. And then by the time those homes were, we couldn’t refi. There were no loans left. 

So we just got absolutely hammered in 2008. So this time around and since then I learned my lessons. I learned to stay under leveraged, have really good long-term debt, make sure things cash flow because by 2009 we had probably $10,000 a month negative cash flow on homes that were underwater. It was just brutal. So we knew how to position ourselves for a downturn. 

And we’ve been teaching that ever since 2008 on how other people should be positioning themselves, which is, again, being in markets that are recession resistant because there’s so much job growth, so much population growth, making sure that you are not overleveraged, not counting on rents, continuing to go up, not counting on pricing, continuing to go up, it never does. 

So we went into this super low leverage and I’m not worried at all about this recession except, like I said, we syndicated a lot of new home developments which have absolutely slowed down in sales because we’re in a housing recession right now.

So from our personal portfolio, again, we were really prepared for this. We knew what was coming. And with the new home developments, we also knew. So it was like we need to stay low leverage there as well and be able to ride out a slowing market. If your question is like, what are we looking forward to? I can tell you for sure our short-term rental business has slowed down dramatically. 
I don’t know if that’s across the board for everybody else, but we kind of fell into short-term rental. We didn’t really mean to do it, but we found this glorious piece of land that we decided we wanted to build a house on and the plans came with a guest house. So we’re like, “Yeah, let’s put that on short-term rental.” We were blown away. It was rented every single night. We put another unit on, rented every single night for the past couple of years. We had no vacancies and that has changed a lot in the last couple of months.

But it wasn’t like we were depending on it. I can’t imagine if we were depending on that income, I’d be terrified right now. So I don’t know if that’s across the board for people, but for me personally, I’m a little bit shocked at how much that’s changed. 

Annette Grant : [00:15:43] Yeah. What would you advise or just offer to someone though? Because obviously you were hit really, really hard in 2008. Let’s say you did have a short-term rental right now where you were dependent on that. What are some tips maybe that you could give someone that’s like, oh my gosh, this was a cash flowing property. It’s maybe at even or maybe negative right now. 

What are some things that the 2008 Kathy went through that can maybe help people that might be headed towards some tough times and maybe they might be overleveraged? Is there anything that you would have done different in 2008 now if someone’s going through that tough spot without the bookings?

Kathy Fettke: [00:16:24] So much of the decision-making needs to happen before the downturn. So sometimes you just have to take your losses. I hate to say that, but you got to sometimes walk away from something that’s hurting. And when we were negative cash flow, it’s like, how long can you do that and how long does it make sense? 

Now, looking back, I actually think we could have held on to some of those properties and they would have been fine if we had enough money to handle the negative cash flow. But then our business slowed down too, which is what a lot of people are experiencing. So we just couldn’t hold on. And I remember the day we were like, “What do we do?” Like, Oh my gosh, at this point, I’m kind of known in the industry.

I’m going to have to do a short sale. I’m going to have to hand this property back to the bank. At the time, so was everybody else. So it wasn’t that shameful so much at the time because everyone was going through a similar thing. But yeah, we had to give those properties back because we couldn’t take the bleeding any much longer. 

So to really look at your portfolio and say, what am I willing to let go of? Now keep in mind when you do that, your credit’s bad for seven years. You can also have your credit fixed. And in times when there’s a lot of people going through a difficult time, oftentimes the laws will change on behalf of the consumer because our government needs consumers to keep spending money.

So I know for a lot of people that went through foreclosure and short sales, they were able to buy again in a couple of years due to so many millions of people going through the same thing. Now, obviously, I’m not saying that– if there’s any way to get around that, that’s even better. But just know that sometimes you got to cut your losses and move on and do a better deal next time.

 Sarah Karakaian: [00:18:13] And I think that’s comforting, honestly. You have rebuilt an amazing portfolio. So I think that’s one thing for our listeners is like if you do have to walk away from something, it doesn’t mean that your real estate investing career is over, final, done. It’s just might need to take a pause. 

Dump the assets and then reconfigure for the next round. So I think that you’re a great story in that of like yeah, you had to have that hard conversation with yourself but then you moved on from it. 

So you have such a close pulse on the market just with all your connections, the people you talk to, everyone in your network, Kathy. How was 2008 different from what we’re going to be facing here in 2023?

Are you seeing a lot of the same parallels? Are we going to see more foreclosures and short sales and things of that nature? Or what does it look like? I know you don’t have a crystal ball, but what are you sharing in terms of what you’re seeing and had you experience in 2008? What is that? Is anything the same? Is it different? Is that we have no idea. Just hold on.

Kathy Fettke: [00:19:14] Well, no, to home much is different. 2008 was a credit bubble where nobody ever should have owned those homes. They never qualified to begin with. I was a mortgage broker at the time. There were literally liar loans and it was very well accepted within the industry, so fraud everywhere. Obviously, and years later that was corrected and it’s been tough to get a loan. 

So people who have qualified, people who own homes today had to qualify and they had to put money down. And we have record equity, home equity within homes today. So you’ve got these homeowners today who are really incredibly strong, historically strong. They’re sitting on more home equity. They have good credit, incredibly good credit. 

They have the lowest payment that they could possibly have. If they left the home that they currently have, where would they go? They’re either going to rent for twice what they pay right now, or they’re going to buy something where the mortgage payment is double or triple than what they have. 

So right now, no one needs to worry about the homeowner. They’re in great shape for the most part, unless they took on a bunch of second homes or if they overleveraged. But most homeowners today are strong. So we’re not going to see a ton of foreclosures, in my opinion.

What I think has changed the most is the Internet, and it’s aging me. But there was an Airbnb. That didn’t exist. There wasn’t Uber. These things didn’t exist. In fact, in 2012, I was awarded the top 100 Most Intriguing Entrepreneurs by Goldman. It was amazing. I guess it was because we were taking busloads of investors and going into foreclosed neighborhoods and buying up all the homes, renovating them, and restoring neighborhoods. 

And it was really important to the economy. So Goldman Sachs recognized that. It was an incredible event. I was with Elon Musk and like biggest names in the world. That was crazy. But I’m sitting at one table with these guys who are like, who are you? And this is 2012, you guys, 2012, 10 years ago. And they’re like, oh, yeah, well, we did this thing where we’re going to the bar hopping in San Francisco and you can never get a taxi.

And I remember that I went to San Francisco State. You could never get a taxi at 2 AM when you’re drunk and need one. And it would take hours to get one. So these guys are like San Francisco partiers and they’re watching cars drive by and gosh, I wish I could jump in one of those cars instead of waiting two hours for a taxi that may never show up.

And literally on this corner, they wrote up a business plan which is now Uber. I was sitting next to this guy and he’s like, “What do you think of this idea? I think it’s so brilliant and weird. Why would you jump in someone’s car you don’t know?” But this is 2012. So really the biggest difference is technology. 

And technology can always do good and it can also do bad. Anything that’s accelerating things can accelerate for the good or the bad. And so I think this time around, information gets out faster, people jump on things faster. So there will be pain. There will be pain for people who haven’t had pain before. I hate to say it. People who went through 2008 probably don’t want to do that again. They probably were very cautious. People who didn’t experience that, younger people, they might have gone in a little deep and weren’t necessarily prepared for a change. 

There’s going to be a lot of pain in syndication with people who were buying apartments that just did not underwrite. It was like not what was happening out there. It’s lessons. Investors lose money and there will be losses, but it’s not going to be homeowners this time. That’s the difference.

 Sarah Karakaian: [00:23:10] You said a few times, and we have a lot of listeners who have gotten excited about the idea of having a short-term rental and having their own business. And you mentioned the word don’t be overleveraged and make sure you remain under-leveraged. Can you get specific with what you mean by that? Do you yourself have parameters that you try to keep yourself into to remain safe? 

Kathy Fettke: [00:23:31] Yeah, on our construction projects with our main builder, the one who brought me that original one in Portland, he refused to get debt. So we raised equity. That’s it. And we would build five homes, sell those, use the money to go build five more because he’d been developing for 40 years and he knew what could happen.

So those projects all went great because we didn’t get debt. Now that’s extreme. But on a couple of our other projects where we did get debt, we’re dealing with what I knew what happen, which is we’re not selling homes, but we have debt to pay. So you have to have enough reserves to cover that. And that’s the same. And this is for bigger deals. And I’m talking about apartments. 

I don’t think people realized that when markets change, when rents go down, and when the NOY changes because rents have gone down and you’re not making as much cash flow, banks will come in and reset. They want more money and you don’t have it. So then you’ve got to go back to investors and get more money or sell the property. 

So with Airbnbs and I’m assuming that’s more, staying under-leveraged would be recognizing that changes could happen and that maybe the last two years was an anomaly. It certainly was an anomaly, but a lot of people getting into it didn’t understand that and I didn’t really understand it, but I wasn’t dependent on the money. 

If I was dependent on the money, I would have had an exit strategy in case things slowed down. I would have had like a plan B, which would be what if– when hotels open up again and people want to use hotels and not Airbnbs, how is that going to affect my business? Because that’s really the situation we were in. You didn’t want to go to a hotel that was all germy and you could die. You weren’t going to do that. But my little Airbnb is a guest house all by itself that was immaculately cleaned. We were booked every night. 

But now that there’s hotels back open, what are you going to choose? So there’s more competition, more supply. And when you suddenly open up a whole bunch of hotels, you’ve got competition. And that’s what we’re at. That’s where we are today. So again, if I were going into it as this is my business plan, I would have wanted to make sure that I accounted for that and that I was looking at numbers based on 2019 versus 2020, 2021, which were just strange years.

 Sarah Karakaian: [00:25:59] So I want to also go back to something you said. Annette and I preach all the time. So, Kathy, a little backstory on us. We’ve been in the short-term rental industry. I got in 2010. Annette in what? 2015, 2016? Around there. And we’re in a metro market. So we have always said if the short-term rental income doesn’t work out, our first exit strategy is can we then go to long term? And if that fails, can we sell the property easily? 

And exit strategies are a big part of a business strategy. And you said, the things that you learned building wealth are real estate and business ownership and really business ownership because you should treat your real estate investments as a business.

What of that statement would you say? If you can give our listeners two tips or three tips or one big mindblowing thing about how to treat your real estate portfolio as a business, is it the exit strategy? Is it really knowing your numbers off the top of your head? What is it about relating your real estate business to a business strategy in general that really changed the game for you as you were scaling?

Kathy Fettke: [00:27:05] It’s a great question, and I would say, especially since you said a lot of your audience is women. There’s one purpose for a business and it’s profit. If that’s not your focus, then have a nonprofit if you want to do something for passion. So a business’s purpose is for profit. 

Now you can do great things with that business, but if it’s not making a profit, you’re not going to have a business for very long, right? So that means staying nonemotional. I think that’s really the key there. It’s a business. How does this business make money and to keep the emotions out and look at it that way. 
Now, if you want to be emotional, then again, do something else. Do something your heart desires and start a nonprofit or an art project or something. So when you’re looking at the business and how do I make the best decisions that involve profit, then it’s just analytical. It’s really that’s all it is. Do the numbers work? Do they not? What happens if the market changes? What happens if there’s another pandemic? What happens if you can’t get loans anymore? 

All the questions that you would ask if you were going to say buying somebody’s business. You wouldn’t buy someone’s business if you didn’t have all the information on how it’s run and who’s running it and what the strategies are in the systems. So I guess that’s the best way to say it is– I went into real estate more emotional in the beginning, and that’s why I kept those California properties when I knew I shouldn’t. I knew I shouldn’t, but I was attached to them. 

So that was a big mistake. Whereas if I really just sat down and was like, would I own $1,000,000 property that rents for $4,000 a month? No, that makes no sense.

Annette Grant : [00:28:57] Right. I love this because we’re coming to the end of the year, beginning of the year and I think there probably are a lot of people that are going to have to make some decisions next year. And it’s not even about a potential recession. I feel like sometimes what you just said, we get so invested in something because we’ve already invested in it that we just hold on to it like we freaking grip it to death. We don’t want to let it go.

And I know a lot of people, especially with their short-term rental, it’s their vacation home. There’s memories there. There’s a lot more than just the financials there. And I do encourage the listeners to not just hear what Kathy is saying, but really listen to her, that it can be painful if you hold on to things for longer. You can go make memories somewhere else. You need to make sure it’s profitable because the one thing that we see, Kathy, and I’m interested in how you’ve done this over your real estate career, we see a lot of hosts that don’t account for their time in their property and their real estate portfolio.

How did you go about that in the beginning and still today? How do you account for your time in looking at these deals and the relationships for our hosts there maybe turning over the home or they’re messaging them on the app and they’re not taking their time into any sort of account on the profitability of a property. So how did you start to equate your time in the beginning and now today?

Kathy Fettke: [00:30:19] That is such a good question. And I want to say that it’s kind of a female thing in a way where just over the years we’ve undervalued ourselves and it really needs to end. It needs to stop. The fact that there’s still a glass ceiling just makes me sick. And I still talk to young women who were– it’s the same thing where they have an idea, their person, their manager takes it and takes credit and they get the raise.

Anyway, we got to fight for our rights, right? That fight still continues. But the only way you win that fight is if you really value yourself first and your time and decide what is it worth. Now, for me, this is going to sound funny, but I actually manage my two little Airbnbs and I actually like it. Now, if I really looked at the time I spend on it, I’d probably be like, “Why am I doing this?”

My time is worth so much more, but for some reason I like it and I still do it. But if I didn’t, I definitely I wouldn’t do it. I certainly don’t clean it. I’m not good at that and I don’t like it. But my daughter likes to do that. So sometimes I’ll let her clean it and she’s better at it than me. 

So just really looking at what’s your time worth and where is it best spent. And again, for me, the Airbnb stuff that I do is almost like a break for me, it’s almost fun because it’s not so much thinking like the other things that I do. It’s not so intense and I get to kind of build relationship with these people. So I don’t mind it.

But with anything that you’re doing when you sit down and look at how am I spending my day and is this the best use of my time or could I be using this time elsewhere, having more of an impact or making more money doing something else. And let’s say you could hire someone that’s $20 an hour to do that. Would that be worth it to do the managing for you so that you could spend your time doing something where you could make more money at it? That’s really probably what I’m telling myself right now. Maybe it’s time for me to not do this.

 Sarah Karakaian: [00:32:15] But I think it’s like you said, you do it because you want to do it. There are some people out there who feel like they have to, and I think that’s the difference between really achieving real wealth and freedom through our assets and really holding on emotionally and not really knowing where we stand in our goals.  

So if your goal is to reach this number and you’re not there yet, maybe you shouldn’t be messaging the guests because that task has a certain value to it at this point in your life and you’re not looking for the bigger goal at the end of the tunnel there. So Annette and I talk about all the time Kathy, but hearing it from someone like you, where you’re at, you’ve experienced so much I think holds a lot more weight than maybe coming from Annette and myself. So as 2023 approaches here, what are you guys working on? What are you excited to tackle in the new Year? Yeah, what’s on the horizon?

Kathy Fettke: [00:33:10] We just launched another fund at my new company Growdevelopments.com. We’re raising $20 million to take advantage of the market right now. I’m obsessed with markets especially after getting blindsided by 2008 and not even so much blindsided. I knew it was coming and I still wasn’t prepared.

So this time it’s like, oh, I’m going to be prepared. So we’re going to have cash ready and we’re going to buy houses cheap. And it’s just an incredible time because so many people are scared of a massive recession, massive foreclosures. I don’t see that coming at all. I have a completely different perspective and I love being the only buyer in the room. I love negotiating. I haven’t been able to do that for years.

So this is like a play day for me to be in a situation where we can raise money and be the only person at the negotiating table just getting unbelievable deals and putting them on the market where there’s tremendous demand for rentals. What better timing could you have to be a buyer right now where there’s nobody else bidding and then putting it on the rental market where there’s more people who need rentals than ever? It’s an incredible time to be an owner.

Annette Grant : [00:34:22] Kathy, share with our audience. Can you talk about your syndications? Talk about how our listeners could– because maybe they’re tapped out. Maybe they’re like, okay, I’ve got my short-term rentals, it’s now time to diversify. Can you talk about how you help investors and how they can lean on you and get connected with you?

Kathy Fettke: [00:34:41] Yeah. So syndicating is basically a group investment where there’s a manager who has experience and they run the show and investors invest passively. It’s ruled under the SEC. So you’ve got to follow SEC law and have an attorney draft the documents. 

But there’s unlimited access to money, unlimited. When you syndicate, you’ve got to have an expert who knows what they’re doing, though, because that’s who’s leading the show there and the investment. So learning about syndication, I think, is really important if you’ve already learned operations side of things. If you haven’t really learned operations, then this would be a great time to really understand how to wholesale subject to– 

There’s going to be a ton of opportunity because there’s going to be pain. So investors solve problems. They solve problems for people who have problems, which is there’s going to be owners out there who have problems. So you can come in and solve that and make a win-win situation. But as far as syndicating, that’s the second thing that I’m excited about, is starting a mastermind for new syndicators to teach them how to do it.

Annette Grant : [00:35:53] Awesome. Okay. Interesting.

 Sarah Karakaian: [00:35:55] Okay. So we do talk about short-term rentals here, and Airbnb is a hot topic. And you said in one of your recent YouTube videos, you market three, I believe that, listen, Airbnb has more users than it ever has before, but there are more short-term rentals on the market as well. 

So if there’s any diehard listeners out there, Kathy, are like, I know that short-term rentals are for me. What do you say to those listeners out there, they’re like, “No, I know that short-term rentals are not my thing.” Is the advice really just to know your numbers have some exit strategies or what are you seeing for the short-term rental industry moving forward?

Kathy Fettke: [00:36:28] I think it’s like anything, it’s based on supply and demand. So right now you’ve got to look at demand. What’s demand mean? It’s who is going to rent your short-term rental? For the last two years, we had people who couldn’t really travel internationally. They had to stay local and drive to wherever their vacation spot was. And there weren’t really hotels that were that exciting because the pools were shut down in the gyms and everything. So short-term rentals were really the thing over the last two years.

Now we’ve got to look at what’s the market like now. I’ll just give one example, and I could be totally wrong. This isn’t a market I really understand, but I know a place like Phoenix, they’ve had so many hotels turn into apartments that it seems that there’s actually a hotel shortage in Phoenix right now. So I know people who are going and buying hotels, but maybe that’s an opportunity, Airbnb as well.

Again, I don’t know the Phoenix market. I know there’s a lot more supply there, but I also know that so many of their affordable hotel or motels or whatever have been turned into apartments. So it could be an opportunity. And I would just look at that like, where are the places where people are going? And then, of course, the medium-term rental I think is really cool to understand. That’s the traveling nurses. I just wrote the foreword for 30-Day Stay and I just haven’t tried that yet.

But I do have a property in Cleveland that’s getting decent rent. But wow, what if I tried a medium-term rental? The traveling nurses tend to I think it’s at least six weeks that they need a place and it’s furnished, so you could just try it. If you have a 30-day window where you don’t have any bookings on your short-term rental, why not try a medium-term rental and just see how that works?

 Sarah Karakaian: [00:38:16] Yeah, and that is why I like the short-term rentals that are in the more metro markets because there’s just so many ways to play around with them from short to medium to long to sell in it. We can do so much with them. It’s like you said, the vacation rentals and the excitement of the drivable destinations. And as a consumer of a vacation rental, going to them has been exciting because, man, you can stay in a tree house, you can be off the side of a cliff. There’s a lot of really cool stays, but is the demand going to be there as we move forward and people tighten their belts in 2023? 

Because like you said, media and news and all that information is getting out super fast. There’s some fear out there which whether that’s facts or not that’s what determines the market, is how we all behave in the economy. And there’s a lot of truth to how we consume our social media and how we interpret it.

Kathy Fettke: [00:39:05] And then also just having something unique. If you go on and look at who your competition is, you can see what are they offering, how can I be different? So a little example is we allow dogs of any kind in our short-term rentals, and I don’t think too many of my competitors do. And people love their dogs. People want to travel with their dogs. 

So we just have a dog fee and that fee goes to the house cleaners to make sure it’s just top clean after they leave. But that’s something unique and different. So that’s what I would look at is how can I make my rental stand out. That’s like business. Again, it’s business. How can I be different? How can I be unique? How could people want what I have more than what’s next door?

Annette Grant : [00:39:53] Can I have some selfish questions here? What was your favorite or is your favorite just business book, period? What’s one that you’re like, that’s the one you would recommend to anyone?

Kathy Fettke: [00:40:06] That’s such a good question. Definitely, why am I forgetting the name? But the iOS book.

Annette Grant : [00:40:12] Traction?

Kathy Fettke: [00:40:13] Traction. Yeah. It’s been just a life changer for our real wealth business because I really didn’t know too much about business when I started business, which is funny, but my husband has a business degree and he’s obsessed with running a business.

So when he kind of came in to help me with real wealth, he started to bring in all these things that I just thought were weird and like, oh, I don’t have time for this and why are we doing this? And one day he wanted to sit us down and talk about company values. 

I am like, I need to– phones are ringing, people want real estate. I don’t have time to talk about my values, but it turns out that that’s really important for your company to know what you stand for and you hire and fire to your values and are really clear. And also you attract that. It’s on our website. It’s like people who take self-responsibility.

So I don’t want investors who are going to be whiny. It’s like, “No, your job is to do your own due diligence. We’re going to help you with that.” But these are our fundamental values. So that was the first thing he took us through. And then when we read Traction and he brought in an iOS coach for Real Wealth, then at the beginning of the year, you get together and really get clear about what the vision is for the year and everybody is on board and everybody’s excited. 

And that vision is not just money, it’s meaningful. It’s like how this company is going to make a difference in people’s lives and how you’re going to be different and how you’re going to have raving customers that just love you. What does that look like? And then you break it down into quarterly goals and then it’s like, “Here’s how we’re going to get to this big goal. We’re going to break it down into steps in each quarter. We’re going to tackle this section of it.”

And then you break that quarter down into 12 weeks and here’s how you break that one down so every week you’re moving forward on this goal. And as someone like me who is a visionary, I have million ideas every day. I have new ideas all the time. And I’m on the forefront of what’s happening in real estate, and I’m talking to people all the time and I’m always wanting to do something new or bring something new in.

So now the team will say, “Okay, we don’t want you to not share your ideas. Let’s put it here on the idea chart and tell me where is this going to fit in with this year-long vision that we have.” What do we have to remove? Because there’s only so many of us. We already have our tasks. We either need to hire more people or we got to remove something that we already have on the list if you want this new idea in there because that’s generally how companies zigzag through life is they have a visionary like me, wants to do everything all at once and will burn out their staff and have them just have whiplash. 

Mystic Quest is the show. Watch it. Watch Mystic. Oh, my gosh. That’s the typical visionary, just making employees crazy. So traction is just a way to get the ideas on paper, get a system for implementing. And then if the visionary has another direction he or she wants to go, then together as a team, you look at it and figure out where does it fit in to this system that’s already there.

 Sarah Karakaian: [00:43:30] Yeah. Staying focussed it is so hard. Especially when you let your emotions kind of drive things, too, whether you’re a visionary or just an entrepreneur with some drive and you want to– whether you’re leaving your 9 to 5 or want to support your family or, yeah, focus.

Annette Grant : [00:43:46] Just legacy wealth.

 Sarah Karakaian: [00:43:48] Yeah.

Annette Grant : [00:43:48] Awesome.

 Sarah Karakaian: [00:43:49] All right, Kathy, is there anything? So, yes, we have listeners who are short-term rental investors, but they also have long-term rentals and mid-term rentals and they just love real estate. So how can they find you, learn more about you and tap into all the content that you create all the time?

Kathy Fettke: [00:44:06] Well, realwealth.com is our company and you can get lots of information on different markets and get referrals to teams and property managers that we’ve worked with for years that have done a great job. If you’re trying to build your own portfolio of long-term rentals and some short term, we’re doing a little bit of that too. 

And then, like you said, Retire Rich with Rentals is my new revised book. I finally did the audio version and that just came out this month, so I updated it for 2022. So we have Retire Rich with Rentals and then finally Growdevelopments.com is where you can find out about our single-family rental fund in Dallas.

 Sarah Karakaian: [00:44:43] I love it. We’ll put all that in the show notes.

Annette Grant : [00:44:46] And listeners, please if you have extra time, don’t abandon our show but please go see Kathy. So Kathy, we want to thank you, a, so much for your time but b, you have been giving to the real estate community, specifically females in the real estate community for years and years now, and we just cannot thank you enough for being that voice for all of us and a mentor for all of us to look up to.

 Sarah Karakaian: [00:45:10] Yes. Thank you so much for your time. With that, I am Sarah Karakaian.

Annette Grant : [00:45:14] I am Annette Grant, and together we are–

Both Sarah & Annette: [00:45:16] Thanks for Visiting.

 Sarah Karakaian: [00:45:17] We’ll talk to you next time. Thanks for listening to the Thanks for Visiting Podcast. Head on over to the show notes for additional information about today’s episode. And please, hit that subscribe button and leave us a review. Awesome reviews help us bring you awesome content. Thanks for tuning in and we look forward to hanging out with you next week.