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Sarah Karakaian: [00:00:05] You’re 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. We love sharing creative ways for your listing 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] Hey, 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 and Annette: [00:01:07] Thanks for Visiting.

Sarah Karakaian: [00:01:08] We are pumped to have you. It is feeling like a beautiful fall here in Ohio on my view of these gorgeous trees. So we hope that you are enjoying wherever you’re at right now. We are going to get this episode started like we do each and every week, and that is sharing one of you, our loyal listeners or viewers, if you’re tuning in on YouTube with STRShareSunday, it’s our hashtag that you can use on Instagram. And we are prowling so we can share you, amazing owners who are sharing your properties on Instagram. And we will give you a shout-out here on the podcast, email list, Youtube. Who are we sharing this week, Annette?

Annette Grant: [00:01:38] Today we are sharing @Yellowood_Farm. And there are not two Ws. It’s Y-E-L-L-O-W-O-O-D_Farm. And what the heck, they’re in our backyard. I didn’t even know. We have to come stay. Listen, they are designers gone farmers working on yard turned farm. How cool is that? They are acts and tool restoration, they have sheep, they have a flower farm. What is going on here? How do we not know you? Can we be friends? We want to come stay. First of all, let me just get that out of the way. 

But look through their feed. I mean, this is the spot. I feel like this family, they had a dream and they are like, we are going to make it happen and we’re going to use something on our property to help us facilitate the funds here. And so if you look at this, it’s Corey, by the way. So, Corey, please reach out to us. We want to come and hang out with you. But it’s a renovated 1950s kit home, situated alongside a small family farm. Fresh flowers and free-range eggs await you. This is amazing.

Sarah Karakaian: [00:02:42] They got this survey of their property in their listing and they map out all the different areas of landscaping on their property. So if you’re curious about what’s going on there, even their listing before you like, oh, if you are an enthusiast of all things outdoors, fall, whatever, plants, this is the place to go. Yeah, they have an aerial view of what the farm looks like– 

Annette Grant: [00:03:06] And it’s beautiful, excellent use of wallpaper, you guys.

Sarah Karakaian: [00:03:08] And listen, it’s far enough out of the city limits, but stargazing is spectacular here. I love that. And there’s walking distance to Taverns and just around the corner from local shops. So, man, they are crushing it. Please check them out for inspiration if you have that idea of you’re like, I want to do this. I want something different for my family. I think they’re making that happen. They have created it.

And you know what they’ve really done to Annette that I think we try to get out on the podcast over and over again, is they’ve really leveraged who they are as humans, what they love to do, and they translate it into their brand.

Annette Grant: [00:03:40] Yes.

Sarah Karakaian: [00:03:41] They’ve translated into their property because if you’re ever confused, like, how can I brand this property or our short-term rental hospitality company, you don’t have to look any further than yourself and what you love to do.

Annette Grant: [00:03:53] Yap. Just be you.

Sarah Karakaian: [00:03:53] And you know what? That’s a really great parlay into today’s episode. Someone who innately loved running numbers and finding properties and great markets to invest in and they found their new calling. And so we are so excited to have on the show today Kenny Bedwell. While working for Citibank doing financial research analytics four years ago, Kenny purchased his first short-term rental. After deciding to grow his short-term rental portfolio, he found it difficult to identify the best short-term rental markets based on his budget. 

Who else out there feels that pain? I mean, we’re here. He found Short-term Rental Insights in 2021 as a tool to help investors find their best short-term rental markets. He now has six short-term rentals throughout New York. Kenny helps investors find the best short-term rental markets using data and unique finding strategies based on their circumstances. We’re going to have him at TFV Experience live to educate us in person and we thought it would be great to share him on the podcast as well. So, Kenny, welcome to the show.

Kenny Bedwell: [00:04:56] Glad to be here.

Annette Grant: [00:04:56] Let’s actually say something. Speaking of live events, we did not know Kenny Bedwell existed until we got out of our homes and went to a live event and saw him on stage. So kudos to that event where we met, Kenny. But just letting everybody know, Sarah and I are very connected in this world, but we still have to get out of our homes and go meet people. So we made an investment. We got to meet Kenny and now he is on our show. So, Kenny, we loved your story there. Let’s dig in. Let’s tell our audience about who you are and how you’re just back there crunching the numbers that we love.

Kenny Bedwell: [00:05:30] Sure. So just so everybody knows, I live in Buffalo, New York, around Buffalo, New York. And I was recruited there for Citibank and I did financial research in the equities market for them. In 2018, we kind of read that a little bit, I got my first short-term rental and started doing it and I was like, “Wow, this is awesome. I’ll make this my side hustle and make some side income.” And we know that progresses and then–

Annette Grant: [00:05:55] Wait a second. There’s a lot of ways to side hustle. Were you already into real estate? What drew you to short-term rentals? Because you say that kind of like, “Oh, I am into side hustle.” That’s a pretty big commitment for a side hustle.

Kenny Bedwell: [00:06:06] Yeah. So I went to a real estate meetup in Buffalo, and for those of you– this is no offense to Buffalo, but it’s just an older kind of community. And then you go to these real estate meetups. This is not a short-term rental real estate meetup. This is a real estate like buy and hold single family or a multifamily. There’s all these old guys there. And I’m asking questions and they’re all talking about save up, buy a duplex or triplex and then earn the income, save up again and repeat. And I’m like, “This just sounds painful and not very fun.”

I don’t know. I was looking for something a little more interesting. And I met this younger guy there and he’s like, “You need to check out Airbnbs.” And I was like, “What are you talking about?” He goes, “Here, watch this. Go on YouTube. Just YouTube it.” And so I started watching videos and trying to learn all I could about it. And I was surprised at how much money people were making. 

And so with the property I purchased, I picked the right location where I could have an exit strategy of, well, if it doesn’t work out, I’ll just long-term rent it. I think a lot of people that’s what they do with their first one.

And so I did it and it worked out. And it was such a good location when I did my research because I’m very much into numbers. I’m always looking and calculating and saying, okay, what’s the worst it’s going to do? What should I expect, what’s the best? And I always underestimate. I mean, it’s been in service ever since. Last year was my best year. This year I might bit last year, but last year I did– so the property budget was $250,000 down in Buffalo. And last year I grossed over $130,000 on that property.

Annette Grant: [00:07:58] What! So what are you giving away there? What’s going on? What’s going on here?

Sarah Karakaian: [00:08:02] Well, Kenny, here’s a question for you. So I grew up most of my life in Erie, PA, which is a neighbor of yours in Buffalo. We would pass through Buffalo to go to Niagara Falls as a family trip often. And like you said, Buffalo and Erie, PA, that whole area, it’s not necessarily a tourist area, although I was just a hypocrite because I would go through it to go to Niagara Falls. People come to Erie to go to the beaches and the peninsula. Who is your target market And what kind of home is this sample property?

Kenny Bedwell: [00:08:30] That’s a great question. So the property is in downtown Buffalo. It’s in this artsy neighborhood called Allentown which is on the border of downtown and neighborhoods. And it’s near a hospital. So there’s a lot of different things going on. There’s like a convention center nearby. There’s downtown Buffalo, there’s all the great restaurants, there’s art festivals, and there’s a different season for different things. 

And we’re in the fall right now. We’ve got Bills games. They’re very popular. And those people will pay anything, believe it or not. So just a little clarity, in 2020 it’s tough because of COVID, we got hit by a month, but I made about $80,0000 to $90,000 in 2020 on that property. And I really elevated it because I started noticing a trend of the guests who were coming. And that trend was in the fall, the early fall to the late fall, I guess, were weddings. And I couldn’t believe it. I was like, “Why are all these weddings coming?”

And there was actually somebody, they took a picture, their whole wedding party, at the front of the house. And they sent it to me and I’m like, “Awesome, okay.” And I started looking and there’s four or five venues within walking distance or like a five-minute drive. And I’m like, “Holy cow.” So I go on– and I’m sure you guys have talked about it and we don’t have to go down this route, but I did Facebook ads and I targeted everybody within the radius and I knew where these people were coming from, or they could be locals, this radius of, I hit Cleveland and Pittsburgh and around New York. 

I have people who are recently engaged and send them to the direct booking site and they will pay a lot more than a typical guest because they want their whole family. And we also bought things for them. They want full-length mirrors everywhere. We even have this bar with all these seats specifically, like they were like, it’s perfect for bridesmaids doing makeup and things like that. And you post the reviews and it just sees it and it’s like a no-brainer because it’s a perfect situation for what they’re looking for with the proximity. 

And so that’s really what elevated that revenue even higher, is finding and identifying the correct target audience and then marketing towards them. So I’m in no means an expert in marketing, but that was just kind of like–

Sarah Karakaian: [00:10:55] Oh, it sounds like you are. I think this revenue proves it. Let’s unpack what you said a little bit because I know listeners are like, what the heck? So Facebook ads, would you mind giving us some transparency on how much money you are spending on the Facebook ads? Or were you running them yourself?

Kenny Bedwell: [00:11:12] Yeah, I was doing it all myself. I was only doing like a dollar a day.

Sarah Karakaian: [00:11:17] Oh, okay. Okay.

Kenny Bedwell: [00:11:18] Yeah. And this is last year. I probably spent a little bit more now, but a dollar a day. And I was sending them to a direct booking page so I could track that traffic.

Sarah Karakaian: [00:11:30] I love it.

Kenny Bedwell: [00:11:30] So you can embed the pixel so you know what the conversion is. You want to be pretty specific, but there’s two people who are booking the place for weddings, that’s either the actual bride or the parents. So I targeted both groups. And Facebook keep changing their stuff, but at the time, I was able to say like, wedding or mothers whose daughters recently engaged or something like that. And I’m like, well, here we go. This is perfect. 

And it got a lot of clicks. And our design for that house is mid-century modern which fits in really well with the eclectic area of Buffalo. And in downtown area, I would say of Buffalo, the downtown area that we were in. And so it stands out and we have some eye-popping pictures that when you scroll, it’s boom, you stop. And looking at the impressions and also the clicks and things, it was a really high conversion rate that we’re pleased with.

Sarah Karakaian: [00:12:42] What the heck inspired you though, because wouldn’t Airbnb be enough of a lead generator for you? Kenny, what made you think to not leave that job to just Airbnb to find you these leads and to take your revenue to the next level with knowing who your ideal client is?

Kenny Bedwell: [00:13:03] Well, honestly so it goes back to me being a numbers person. If I can’t track it, it’s almost like–

Sarah Karakaian: [00:13:12] It’s too uncomfortable. You don’t like that you don’t know where it’s coming from.

Kenny Bedwell: [00:13:15] I don’t know. Yeah. So even today with my businesses, with Facebook ads, if we don’t have the tracking set up, I get pretty antsy because I’m like, what is the conversion rate from this? I’m just throwing money out here and I can only see people clicking, but I don’t see, are they booking my property because they clicked? Do I need to change up my ad? That’s why I really did it.

Sarah Karakaian: [00:13:40] But doesn’t Airbnb have a dashboard, Kenn? Those data points that they give they’re not good enough for you?

Both Sarah and Annette: [00:13:47] Well, not when I’m paying money for ads. So that’s how I look at it.

Sarah Karakaian: [00:13:51] So let’s ask a couple more questions here. When you say the word Facebook ads, are you also doing Instagram ads? Are those bundled in there?

Kenny Bedwell: [00:14:00] Yeah, Facebook and Instagram.

Sarah Karakaian: [00:14:01] Okay. And then can you give our listeners a little bit of an idea? Is it a photo of your property? Is it that wedding picture? What kind of images are you using in the Ad or video?

Kenny Bedwell: [00:14:12] So I did split testing on two. So I did a photo. I did three photos. So two of the photos were of my property, the different bedroom or one was the living room. We had a really good shot of living room and then one of the bedrooms. There was a huge king bed, really spacious area. So the living room one really popped because we have these funky green couches with like a special light to show it. You guys to see what I’m talking about. It’s a good shot. And just take my word for it. 

And then the other one was like of– I took a shot of downtown Buffalo, a really popular area. Buffalo is really cool. Sign’s one of the famous shots or whatever. And it was the living room shot and then the downtown shot did about the same, which were the best. So my ads were like, so I started like ones I would say ask a question like, “Hey, or in town for a wedding, stay here, perfect house for the wedding or whatever.” And just very specific. So if you were getting married, it was just calling to you. If not, it’s a scroll by whatever, but you want to target the people to just speak to them kind of thing.

Annette Grant: [00:15:27] Awesome.

Sarah Karakaian: [00:15:28] All right. So let’s go back to– you went to this real estate meetup in Buffalo. This other guy told you, you got to watch Airbnb how-to videos on YouTube. You buy this home. How were you running your numbers then? Because this was your first project. So what were your expectations, knowing what you knew about long-term rentals and having that exit strategy that it could just turn into a long-term rental if this didn’t work out?

Kenny Bedwell: [00:15:51] Right. So the first thing I do and I mean, I still do this method because it’s very successful, I did this in my last property too, and I’m seeing the fruit of that. And I’ll tell you the numbers on that guy in a second too. The idea is finding the right market is important, but we also need to find the sweet spot in the market. So where in the market is the opportunity, the best place to be for the best prices?
When I say prices, I mean the price to purchase the property if you’re buying. 

Where is the traffic because downtown is a great area to be in and most people want to be downtown, but the housing prices are significantly higher whereas I can be just literally like 100 steps away is what I tell people from downtown and the housing prices are not $400,000 down to $250,000. So it’s this big difference and I’m still in a really cool area. So it’s not just prices, but it’s the second part too, which is the revenue. I think the most probably one of the most important is how much money are these properties making in this area.

So when I’m targeting a new market, I’m actually looking and trying to find where those properties are performing the best and then looking and circling those areas within. And then I do that in several different markets at the same time when I’m finding. So I know it’s more of a generic approach overall finding because I don’t want to just focus in on one market because it’s literally there’s not many areas in those markets that are going to really exceed and find what I call an opportunity. I won’t call it an opportunity zone, but just an opportunity area because opportunity zone is something else, but an opportunity area within that market where the revenue is really high and the housing prices haven’t quite caught up to that revenue yet.

And in every single market, believe it or not, in the Gatlinburg to the Destin and Myrtle Beach, even the popular ones, there’s those little neighborhoods and those pockets are across the street from the beach. But it’s got the beach view. There’s those areas you just have to look and do the research and find them and spend the time doing that.

Sarah Karakaian: [00:17:52] And I wish everybody could see Kenny, maybe you’re watching, but he just  lit up when he was like, “There are those areas in every town.” So I love that you’re giving us all that. You don’t have this like one-hit wonder in Buffalo. Buffalo was your backyard, though, correct?

Kenny Bedwell: [00:18:05] Yeah, that’s correct.

Sarah Karakaian: [00:18:06] So talk to us about your new properties. Are they all in your backyard or have you started to branch out in these opportunity areas? Because we want to see can Kenny do these numbers somewhere else. Talk to us about that.

Kenny Bedwell: [00:18:18] Yeah. So the end of 2020 I was like, all right, cool. I’m getting all this money now and I got–

Sarah Karakaian: [00:18:25] Not only that money, you were providing an amazing stay. You weren’t just getting it.

Kenny Bedwell: [00:18:29] There we go. I’m earning all that money. That’s definitely better. I had other properties and I was like, co hosting and I even did some rental arbitrage and I was doing all this stuff and really building. But my gut, especially with COVID, it just happened. I’m like, I really need to diversify. Buffalo is seasonal. In the wintertime, we still do well, considering I actually make money in the wintertime, obviously, not as much as like the middle of August, but because Buffalo is seasonal, I’m like, “I need to find somewhere else just expand.”

But I hit this wall because everyone’s chasing these markets, these popular markets. And I’m like, okay, cool. This is where everyone’s saying to go. And I go and I check and I’m like, “I can’t afford $1,000,000 property in the Smoky Mountains.” And I’m looking–

Sarah Karakaian: [00:19:15] Are you sure? I think your stock and cash there in Buffalo, I think you got it.

Kenny Bedwell: [00:19:20] Yeah. Well at the time no I could not. But yeah I’m looking at these different markets and I’m like, I can’t afford that. And also how do I get there? I don’t know that market. I’m going to have to drive it. I’m going to check it out. How do I learn about the markets that fit not only my budget, but my personal preferences in terms of my emotional preferences? One thing and I preach this from the top of the hills is that vacation real estate investing is both a logical investment and an emotional investment.

Annette Grant: [00:19:58] Coming from a numbers guy.

Sarah Karakaian: [00:20:00] Now I love that.

Annette Grant: [00:20:01] Coming from a numbers guy, I love that. Elaborate on that.

Kenny Bedwell: [00:20:06] Here’s one of those simple ways to know. One of the top markets in the country just throwing away everything aside regions, size of the market, the traffic drivers there, anything else is Indian River, Michigan is the top market in the country today. And this is just per hour tour. I got this information from STR Insights, which we’ll talk about in a second. But Indian River, Michigan, I don’t even really know where that is. 

And I see hundreds of these markets in Minnesota, Wisconsin. And this is no offense to the Midwest here, but Arkansas, or Missouri, or wherever, and I don’t know where they are, but they’re just the top markets. And I personally do not want to go and invest there. 

And if that’s the case, the numbers are telling me, “Hey, Kenny, you should invest in this market because these are where the best numbers are.” However, because I recognize that I have this emotional draw to particular regions or areas or wherever that makes the investment partially emotional. 

So all vacation real estate investors need to understand that there is some emotional side to the investment more so I would say for people who are looking truly for a home that they can go and visit. And that is really important when you’re trying to identify the right markets to target is, “Hey, here are my emotional preferences.” I identify those first. Now here are my logical goals and numbers that I’m expecting. You put those together and then you start trying to find the right market.

Annette Grant: [00:21:41] And how do you even argue for long-term buy-in holders? Yes, there are people who they’re just strictly driven by numbers. But my husband and I  we from day one– I’ll never forget, we bought this four-plex here in Columbus, Ohio. And right next to us is another four-plex identical. And we decided to paint it because they were five four plexes right next to each other, and they all looked exactly the same. 

And we were going to short-term rent out these one-bedroom apartments and we wanted the guests to show up. We all know that check-in review is super important, not setting the stage. So we painted it, did some stuff, the exterior, and our neighbor who was an investor, she was like, “Do you want to look good or do you want to make money?” And I wanted both because I know that that will translate into whether it’s a long-term tenant who wants to stay there because they have pride in where they stay and of course, a short-term rental factor. 

So I feel like you’re giving us permission, Kenny, as the numbers guy to involve your emotions somewhat in these purchases as long as they’re backed up by a good investment, backed up by numbers and data. Is that right?

Kenny Bedwell: [00:22:42] Yes, exactly. I don’t necessarily say you need permission, but to me, it’s you have to do that. I help people find markets and a lot of times vacation rental markets and a lot of times where would you prefer the market. I don’t care as long as the numbers work. And it’s like “No, you do care because I’ll start listing off markets that you don’t care about and that’s a waste of time.” 

And so if that’s the case, if you have no draw to Indian River, Michigan, you just identified that there’s emotion in play. And you need to identify what that emotion is. Is it you need to be within driving distance or my family wants to go visit there or we want to retire there someday, or we just want something with a traffic driver? There’s some sort of emotional thing that you need to identify. And that’s one of the number one things. And when we’re going to be at your event that I’m going to be talking about is identifying your goals before you even start looking. 

And that’s not just, “Oh, what is my cash on-cash return goal or my goal or my corporate goal or whatever. Not the numbers, but the emotional side as well.

Annette Grant: [00:23:48] And, Kenny, preach. Kenny, I love this. This is so good because the emotional side too this is where short-term rentals get a bad name in neighborhoods is that the owners don’t care and they don’t care about the community. And it’s funny Sarah just talked about her short-term rental because we were doing some filming there last week and I was with a videographer. I’m like, and people don’t like short-term rentals. We look down the street at those four other rentals and they haven’t been taken care of at all.

And Sarah is like, “This gem in middle–” it is pristine and these four other long-termers are like, it looks like the garages are getting ready to fall over, the landscaping hasn’t been taken care of, nothing has been done. And I’m like, “Oh, but the neighborhoods don’t like short-term rentals” when hers is like the shining light. So I love that you just said that because it does matter. It matters to the community when it’s like if you have an investor, like it’s just the numbers that doesn’t work. 

That doesn’t work for what we’re all trying to accomplish with the short-term rental. So I love that you are just being passionate about that. And when you talk to investors, it’s like, let’s talk about the overarching goals, just not the number goals.

Sarah Karakaian: [00:24:52] Okay, Kenny, so let’s say we’ve identified our emotions and we found a market or a few, so what data is important to you, Kenny, that you’ve learned over the years as you’ve bought your next six and helped others? What data do you think is the most important to put at the top of your proforma?

Kenny Bedwell: [00:25:12] Sure. Okay. So I’m going to drop my four methods. And I’m going to be talking about these at the event too.

Sarah Karakaian: [00:25:17] Awesome.

Kenny Bedwell: [00:25:19] But I’ll get in a lot more detail. So we’re going to just cover from a high level. So once we identify our personal preferences, we need to also identify our finding strategy or finding method. What that means is we’re all looking for vacation rentals for a different purpose, for different goal. Is it what I call the first one is a cash-on-cash goal? Are we trying to quickly grow our portfolio? How soon do we get our money back? That’s cash on cash. 

So for anyone out there, let me quickly define that. If you buy $1,000,000 property, let’s say you put 200,000 down, we’ll just put in $200,000 in that property. How quickly do you get that $200,000 back? If it’s a 30% cash-on-cash return, so that means it takes about three years to get your money back, which is a great investment. If you’re focused on that, there are markets that are better for cash-on-cash returns than others. 

The second one is cash flow, which is completely different. So cash flow is more about bringing in more revenue. Might not necessarily be more net revenue, but you’re making more money and there are markets that make more money than others. 

The third one is tax strategy. So a lot of investors in the short-term rental space, like we’ll say physicians or attorneys high W-2 income earners are trying to find markets to offset the W-2 income. There are certain markets that have better tax advantages than others, and we can talk about those in a second.

And then finally, there are some investors who just want to park their money somewhere because they know it’s going to appreciate, which is also a great strategy. So appreciation, there’s better markets for appreciation than others. This is going back at very at the beginning. We need to identify which one of these strategies we fall under because that will help us identify the right markets for us. 

So whether we’re focused on just growing our portfolio quickly or we just want the cash flow to make that money, maybe we’re trying to quit our job and we need to purchase in markets that are making a lot of money so our properties are making a lot of money or we’re just trying to offset our W-2 income or just take advantage of appreciation. Sure, we’re in vacation real estate investing. We want to take advantage of all four. I’ve heard that all time. Well, Kenny, I want all four of those. Great. You’re going to get all four of those. 

But certain markets leverage each of those differently. And so your focus on that is going to really put you in the right direction for the market you should be targeting.

Sarah Karakaian: [00:27:50] Love it. What do you want, Annette?

Annette Grant: [00:27:51] I want Kenny to just come hang out with us all the time. But he is hanging out with us soon. So we’re going to have our notepads ready and get down to business at our event for sure. So with your properties in Buffalo, for example, number one, do you use the word vacation rental as a blanket statement or would you consider your Buffalo rentals to be metro furnished rentals? What’s your take on that?

Kenny Bedwell: [00:28:14] I don’t call them vacation rentals, I call them short-term rentals because Buffalo isn’t necessarily a– in the summertime it is because of Niagara Falls. We have over 10 million people visit Niagara Falls and there’s nowhere to stay there. And Niagara Falls, not the Canadian side, but the United States side is actually really dumpy and dangerous. That’s no offense to Niagara Falls. The state park is great. Go see it. Come see us, but stay at my place.

But in Buffalo, though, the downtown area, that’s where a lot of people stay because you got hotels, you got everything for Niagara Falls. It’s only 20 minutes away. So it’s sure vacation rental, but it’s a very short-term rental. So I’ll host people for businesses, there’s a hospital in downtown. People are coming for that. I mean, it’s just kind of that. So I say short-term rental.

Sarah Karakaian: [00:29:04] And I don’t know if we covered this because we got all excited about all the other things. Did you tell us where you did the other investments after your golden child there in Buffalo?

Kenny Bedwell: [00:29:13] Yeah. So my most recent purchase was in the Finger Lakes of New York. Now I decided that, so that was probably my second or third market that popped up. So I created this tool. I guess I should go back to the story. I created this tool called STR Insights, but before that it was just spreadsheets. So I took all the markets, and from my experience at my job, I was able to go in and figure out housing prices of vacation rentals. That’s really important because the issue I have with a lot of data out there in the industry is no one was providing the prices of vacation rentals.

And some data platforms were just giving me the average prices of all homes in that market. For example, they were saying the average price of a home in Gulf Shores, Alabama, was $400,000. Well, beginning 2021, I mean, even then, that would buy me maybe a one-bedroom condo. So that’s not really helpful and it’s not accurate. So I’m like, you know what? Forget this. I’m going to go figure it out myself.

And so I employed the help of one of my friends and we went out and we figured out how to get all of this information, put it together, and find markets that fit my preferences. So I was very specific. And the more specific you are in your search, the more accurate you get. 

So some of the markets that popped up for me was western North Carolina, so near Asheville area, and that’s actually where I was looking heavily, near like Black Mountain or even Candler as well. And then this town in New York called Watkins Glen, because I was like, “Shoot, I’ll do a driving distance, that’s fine with me.” So Watkins Glen is a little over three hours from where I live on the Finger Lakes.

So I looked at both places, I was looking on Zillow and I found a property. I actually found a really good deal in Black Mountain that I was going to look at for $400,000. It was probably going to do about 80 or 90k a year. And then I looked at Watkins Glen and there was a property listed for 350. And I go in and I’m doing all the numbers and the math and it’s telling me $120,000 gross. And I’m like, “Is that right?”

And I’m looking at it, and I start looking at the other properties nearby, and they’re all doing over 100,000. And I called the people who own the house. It was a former bed and breakfast. They’re just trying to get rid of it. I called them up and they showed me their numbers for a bed and breakfast and it was doing over 100,000. I’m like, “Maybe am missing something here?” And I’m like, “It been on the market for 130 days. Why isn’t anyone picked it up yet?”

And they’re like, “Well, everyone wants to, but the city has regulations. They had a memorandum on short-term rentals, so you have to have a permit.” But when I was talking to the realtor, he said they’re actually going to lift it and they’re going to accept new applications. And I said, “When are they going to do that?” He goes, “I don’t know, just give them a call.”

So I called them, which is the number one thing I recommend. Anyone looking in a strict market, call the cities right away to understand, really understand the regulation. Don’t take people’s word for it. So I called them right away and they said, “Actually, you’re in luck. We just started accepting applications today.” And I’m like, “Okay, so here’s my situation. I’m looking to buy your property. Can I try to put it under contract and get the permit?” And they said, “Yes.” 

So I put it under contract and with the contingency that it gets the permit. It is New York. So there was a lot of hoops to jump through. I even had it was a lottery. It wasn’t even just here’s the permit. You had to get drawn. And there was only 20 permits. There was 40 applications, I don’t know. 

Luckily the owner of the house was like the deputy mayor of the town. So anyway, our house was drawn nonetheless. It was legally drawn. It was the fourth one they knew. But I was like, “Hey, we were probably in there a couple of times.” But anyway, so we were drawn. We got the permit. We were able to close on the property. 

But this is a seven-bedroom, seven-bath property. It’s like 3,700 square feet. Got it for $350,000. It sits on top of a hill, overlooks the lake. It’s got the views. It’s five minutes away from wineries. There’s a NASCAR stadium nearby. There’s Watkins Glen State Park with over a million people go there each year. This town is really small. There’s no major hotel chains. There’s literally nowhere to stay. People are staying everywhere, and they’ve capped the number of short-term rentals to 80. There can be no more unless the town grows, which it probably won’t. So it’s a vacation rental destination, especially during the summertime.

And so, like my ADR, those are the beaches. I mean, during June and July and August, my ADR, so average nightly rate was around $1,300 a night for this property. So Glen, in the wintertime it’s probably going to be dead and that’s fine. We’re going to do some rental and touch up on some things. So this year we’ve already made about– and I started midsummer, so the end of June, we’ve already made close to $80,000 this year. 

So my cash-on-cash return is about 75%. Now I’m saying cash-on-cash because that is my focus is to get how quickly can I get my money back so that I can reinvest it. And that is my focus. And that is why I invested in Watkins Glen and potentially Western New York because those fit the criteria for what I was searching for.

Annette Grant: [00:34:30] And for the listeners, getting your money back is that directly correlated to the gross revenue that you’re getting from a nightly rate or are you refinancing? How are you getting that cash back? And what is the time frame in which you need to get that cash back in order to say that you have a 30% cash on cash return? When does that return need to happen?

Kenny Bedwell: [00:34:48] So 30% would be about a three-year time period. It’s up to each individual in terms of what their goal is. In the industry, the sooner the better return on the investment. And so for me, it’s just that three-year mark. Also, my loan, I did a DCR commercial loan, so I have a prepayment penalty here and it’s three years. So I can refinance or I’m probably going to sell it because I can probably sell it for 600,000 because of how much money it’s making. And because I have permit and LLC, which I’ll talk about in a second or maybe another time with you guys. That’s a different story which makes that property very sellable. And so three years. I want my money back in three years, but I’ll get it back in probably a year and a half is what I’m looking at.

Annette Grant: [00:35:51] Awesome.

Sarah Karakaian: [00:35:51] Well, we will keep the LLC and the permit for another either our insider series with our private membership or another show, because I know that this episode is already, like people taking notes and their minds are blown. But let’s segue towards the end of the show here. 

Kenny, so you enlisted the help of your friend. You are obviously getting all this data. You’re not just stopping at buying short-term rentals for yourself, you’re helping everyone. So can you tell us what that parlayed into all of these spreadsheets and all this analysis?

Kenny Bedwell: [00:36:22] So I was a part of a mastermind for those of you listening. It’s just a group of like-minded people, and I recommend everyone figure out and join some sort of group of a mastermind or group of like-minded people, not a Facebook group, but an in-person, at least because they were the ones who pushed me. I showed them my spreadsheets and I was like, “Hey guys,” because I didn’t think. I didn’t have the entrepreneurial mindset at the time. 

I just thought, hey, wow, I just use this found property. And I started helping some other people. I showed this group of 30 people and they were like, “Kenny, you need to turn this into a tool and I want to buy this tool from you. And you need to sell this to other people because this is super valuable. You just found a property very quickly by doing X, Y, and Z. This would take people hours and hours and hours just to figure that stuff out.”

And so I did. And then I started sharing it with them to see if they would find properties too. And they did. And they started buying properties and they started seeing the returns we were originally projecting. And so it was just like this waterfall effect and in a sense that we’ve built this thing up to where we’re like, “Yes, we need to share this publicly with people because we know that this works.”

We know the data is there and it backs it up and people can find good deals quickly by leveraging this tool. Now, our tool doesn’t show you deals. It shows you the right markets and in the right areas within those markets, which is that process we’re trying to go start from where do I look necessarily? Where in the country should I go down to where in that particular market should I be targeting?

Sarah Karakaian: [00:37:59] And I asked you this question back in the day when we first met you. How does this differ from AirDNA? Let’s just say it because I know everyone’s thinking that, well, there’s AirDNA. So are you just a competitor or are you showing different information?

Kenny Bedwell: [00:38:14] Yeah. So it’s a different product. I get that question all the time. And I’m starting to realize like we’re not, quote-unquote, like a “direct on competitor” because we’re showing completely different data in a different way. We’re not limiting people to a particular market. You don’t have to come and say, “Hey, I want to buy Columbus, Ohio.” You get the entire country because that’s– we assume the number one question is where should I look? And then the data isn’t just revenue and occupancy and ADR. It’s vacation rental housing prices, also destination types. 

So we’re trying to take into account these emotional preferences, like do I want to invest in beach markets, mountain markets like Ski River? There’s like nine different destination types. The latest feature, which I don’t know if you guys know, we literally have been working on in the past couple of months since that conference you guys met me at is we put in regulation data. We’re able to characterize it by category so you can filter out markets that might be restricted. So they show up really high in the numbers, but they might have really strict regulation and that’s not your preference. Or maybe they don’t have any regulation at all and you want to stay away from those markets because I have my opinions on both. I mean, you can filter that.

And then obviously the most important one is knowing your budget. What’s my budget? Can I afford to be in that market? And you can throw that in there and then we can break it down by bedroom count and then go in and show you all the individual properties and how much they’re making. And then you can filter and say, where is the best place to be within that market? Where are the properties performing the best? 

Sarah Karakaian: [00:39:49] All right. And we’ll have STR Insights link to it in our show notes. And full transparency, we are affiliates for it. Kenny, here’s a deal. He is going to be at our live event. If you have not got your ticket, get it. They’re only on sale for probably hours at this point in time. But man, come hang out with us. Come hang out with Kenny.

Annette Grant: [00:40:10] Kenny, will you hang out with us all day on Sunday? How long will you be there?

Kenny Bedwell: [00:40:14] Yeah. No, I’ll be there all day. Yeah. I’m going to go to Burma the next day.

Annette Grant: [00:40:18] Awesome. Nice.

Kenny Bedwell: [00:40:19] I will be in an outfit. I’ll leave it at that. So special.

Both Sarah and Annette: [00:40:26] Okay. I love it. I love it.

Kenny Bedwell: [00:40:27] I like to have fun on the stage and theme things up.

Sarah Karakaian: [00:40:33] So we’re here for that.

Kenny Bedwell: [00:40:35] So it’ll be easy to spot me.

Annette Grant: [00:40:37] So awesome. No, that’s great. Kenny, we love what you’re doing. We love you sharing your story because I know it is inspiring to Sarah and I, and I hope it was inspiring to a ton of our listeners. So rewind it, listen to it again. And then where can they find you, Kenny, if they want to reach out to you or find out about your insights?

Kenny Bedwell: [00:40:55] Boy, that’s a great question. I mean, so obviously we have our site, which you guys will put in the show notes. We also have a Facebook and Instagram page. I think it’s @STRinsights for short term rental insights. But yeah, they can reach out to us there. 9 times out of 10 I’m the one that responds. So if you want to talk to me or whatever, reach out, have questions or whatever. But we’ve got a lot of good information on our site too.

Sarah Karakaian: [00:41:18] So congratulations to all your success and for taking that leap yourself and to following something that was inside of you. You really don’t have to look much further than what you’re already good at to like, show you what that next opportunity is in your life. So congratulations. And I cannot wait to see you not only at our event in just a few days, a week and a half, but also over the course of the next few years, especially as rates start climbing and diving into the numbers, it’s going to be just more and more important for us to understand what the deals are out there, opportunities still there everybody. With that, I am Sarah Karakaian.

Annette Grant: [00:41:53] I’m Annette Grant, and together we are–

Both Sarah and Annette: [00:41:55] Thanks for Visiting.

Sarah Karakaian: [00:41:56] 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.