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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: [ 00:00:15] And Sarah’s extensive hospitality management and interior design experience, we have welcomed thousands of guests from over 30 countries, earning us over a million dollars and garnering us thousands of five-star reviews.
Sarah Karakaian: [ 00:00:28] We love sharing creative ways for your listing to stand out, serve your guests, and be profitable. In 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: [ 00:1:01] Welcome back listeners. My name is Sarah Karakaian.
Annette Grant: [ 00:01:04] I am Annette Grant and together we are–
Both Sarah and Annette: [00:01:06] Thanks for Visiting.
Sarah Karakaian: [ 00:01:07] We’re going to start this episode like we do every single week, and that’s sharing one of you, our amazing listeners and viewers who is using our hashtag #STRShareSunday. We will not only share you on our Instagram channel on Sundays, there’s also going to be a shout-out here on the podcast, on YouTube, to our email subscribers. So we’re talking–
Annette Grant: [ 00:01:24] About, come on, all the things.
Sarah Karakaian: [ 00:01:26] Free marketing.
Annette Grant: [ 00:01:27] Let’s do it.
Sarah Karakaian: [ 00:01:27] Get your property out there. Annette, who are we sharing this week?
Annette Grant: [ 00:01:29] Today we are sharing @bellacrestabrokenbow, again that’s @bellacrestabrokenbow. And I’m going to hit you with something I haven’t seen before. I love this. And right when you go to their Instagram, it might not be when this airs, but there is a video, the bella button, I love it. They have their YouTube there. And it’s a full tour. And Sarah and I talk about all the time like we cannot wait till video is a part of the booking process and really being able to show off the property. But they bypass like, hey, if people are coming to our Instagram, I’m going to take them to our YouTube and show them the property.
So well done there. I love it. Take some notes from them. Just do a tour of it. It doesn’t have to be your face if you don’t want it to. But let’s get a video, a tour of your property out on the World Wide Web so people can really see what they’re going to get when they stay with you. So well done @bellacrestabrokenbow. Sarah and I need to go to Broken Bow. Everybody loves it there. We need to go there. Maybe we should buy a house there. All right, Sarah, let’s get on to our episode for today.
Sarah Karakaian: [00:02:32] Yeah, we’re on a conversation about–
Annette Grant: [00:02:36] Should we tell them we’ve pre-talked to him because we already had an episode before the episode because I’m talking all the things?
Sarah Karakaian: [00:02:43] Annette and I are obsessed with entrepreneurship. We love the short-term rental industry. It is so good. And our guest today is not going to disappoint if you want to hear about scaling a management company, all the verticals that are in the short-term rental industry space and Scott Graden is killing it. So he is the founder of Goodnight Stay, a scaled short-term rental operator with over 600 homes in Arizona, Tennessee, and Texas and so much more. Scott, welcome to the show.
Scott Graden: [00:03:10] Thank you so much for having me.
Annette Grant: [00:03:12] Let’s dig in because as all of our listeners know, no one started out saying, hey, I want to be a short-term rental entrepreneur. So take us back to the beginning of your journey and Goodnight Stay.
Scott Graden: [00:03:23] Wow, this is a long story because I’ve been doing real estate for about 30 years.
Sarah Karakaian: [00:03:26] Make it quick. No, we’re here for it. Give me the details. I want the details.
Scott Graden: [00:03:30] Okay, so let’s start back. I graduated from Indiana University and came out with an entrepreneurship and business degree in computer information systems. Went to the corporate world for a few years. I worked for Kraft Foods and Ernst and Young and just found out that that wasn’t for me. My parents are entrepreneurs in the real estate business. And went back to my roots and got my real estate license while I was still working at Ernst and Young and got into the real estate sales game.
After just a few short months, I was making double what I was making at Ernst and Young selling real estate. So I knew that was my passion and my calling in life. And over a couple of years, I was able to scale that business to become the number one agent and the biggest agency in town in Chicago. And we were selling all the large high rises and great multifamily developments and did really well. We were able to sell a few 1,000 units, over a billion dollars in sales. And we were poised to become just the biggest company in town, and then the downturn hit.
And so we were doing really well and I was very thankful for all the business that I had. And then one day the faucet shut off. So I had to pivot, but I was also in that early 30s age where I was still single, and I thought I might need a life change. So I had been going down to Scottsdale, Arizona, and just decided to pick my business up and leave and go to Scottsdale. And everyone thought that I was crazy because we were selling a few 100 million dollars a year in real estate, and I just decided that I’m going to leave it behind and figure it out when I get down there.
So I got down there and thought I would maybe take a year off and just relax, and mountain bike, hike, get back to being myself, workout a little bit more, be healthy. And I started looking around and the real estate market was so low at the time. It was $100 a square foot for anything that you wanted to buy, previously 300 or $400 a square foot. And right away, I said, “You know what? I guess I’m going to get back into this game again.” And I bought about 75 to $100 million worth of property. And they were all luxury properties. And we were able to get great tenants in there, and the long-term tenants and they were all 800 Credit Score business people, had deep pockets, and I thought I was totally safe during a downturn.
Two years later, the downturn got deeper, and those that had money lost it. And we ended up evicting about 95% of those people. And so a million dollars later in a ton of stress in about a year in my time, we had an empty portfolio of these beautiful homes in Scottsdale– all mountainside, beautiful views of the mountain, amenities, everything we want for short term rentals. So I came up with the idea I was going to do short-term rentals. And at the time, this is 15 years ago, 16 years ago, there was no Airbnb, no HomeAway, no 300 different websites that you put your property on. We had my database from Chicago– it was about a million persons deep, Hustle, and Craigslist, that’s all I had.
So I decided to jump in and we basically used the database from Chicago. We started getting about 20 and 30% of our homes full. I started reaching out to all the corporations in town like Adnet, GoDaddy, American Airlines, traveling nurse organizations, all the baseball teams were there for February-March for spring training. And they all just shut the door on my face and said, “We’re really not interested. We have a hired Hilton deal and that’s where we stay.” And it’s strange, by the way, just to stay in a house over our hotel.
So we were resilient and just kept on going back and back and back again, and got those people to listen. We started making financial models on how they’re going to save millions of dollars in staying in homes over hotels. And they started really listening. And I said, “Listen, the next 10 executives that come through the door, have them stay with us and report back.” They all stayed and they came and said, “We’re never staying in a hired Hilton. This is unbelievable.” And we signed major deals. Today we have 37 corporate deals between Nashville and Arizona that bring in about $35 million in business.
So corporate was going really well for a number of years. And five years later, the Airbnb’s ease of the world came to become popular. And we have properties like three or four in Arizona on Airbnb. And we started getting 30 or 40% of our weekends booked. And we were doing a dance because it was we were making double or triple what we were doing on a long-term rental. So we’ve had definitely some ups and downs in there. But now we run a really, really nice business that’s both corporate and vacation rental. And the portfolio stays full, even in times of pandemic, even in times of downturn or recessions. We’ve been very, very full compared to the other companies in town.
Sarah Karakaian: [00:08:25] We probably have like 4 million questions at this point in time.
Scott Graden: [00:08:29] That’s a little good. There are so many more details in there, but that’s the story.
Sarah Karakaian: [00:08:33] So the whole time as you’re growing, was it always called Goodnight Stay from the inception?
Scott Graden: [00:08:39] We actually were called Scottsdale Luxury Villas at one point, because, obviously, I needed a more generalized name for the company in order to go into multiple markets. So yeah, we’re called Scottsdale Luxury Villas.
Sarah Karakaian: [00:08:50] Okay.
Annette Grant: [00:08:52] And then did you have partners? You said in the beginning, you had 75 million to $100 million in homes. Did you have an investment group or is it multiple partners? Was it one partner? Can you walk us through what the portfolio partnership looks like?
Scott Graden: [00:09:05] Most of it was my own funds for the down payments. And then I leveraged myself. I did have a couple of those units in partnerships that if they were too large for me to take down by myself.
Sarah Karakaian: [00:09:14] And so were you freaking out then when you’re evicting 95% of these tenants?
Scott Graden: [00:09:21] Totally freaking out. We were about 50% leveraged, and obviously, the rates were really low back then as well. So it wasn’t as bad as you think. But yes, when you have that much under your belt, it’s not a good feeling. It’s hard to sleep at night. So yeah, it was one of the toughest times I’ve had in my life because since I hit the ground running in the late ’90s in Chicago, I was just on an upward swing of income for myself. So that was probably the only time that I went negative severely. So it was definitely a tough time in my life. And everyone thought that, oh, wow, he bought this great portfolio. But it was a major strain just mentally on me.
Sarah Karakaian: [00:10:04] But maybe I’m sure you had the moments that the sky is falling, but you also had more moments apparently of, how can I pivot, how can I make this work? How the heck did you think of short-term rentals pre-2008 or right around when Airbnb was maybe just propagating in large markets?
Scott Graden: [00:10:21] So I came down to Arizona the first time in 2005. And I had the hardest time finding a place for myself to stay. And I had done well for myself. So I wanted something that was– I’m from Indiana. I don’t really care about the super luxury, but I wanted something nice. And it was impossible to find something nice. And there were no platforms for me to even find something.
I’ve ended up finding this guy that was running this little three-bedroom, two-bath condo in Old Town, Scottsdale on Craigslist. And I just thought that there was such a bigger need for that because I knew all the Chicagoans that were coming on. I heard the word Scottsdale and Phoenix a million times from my clients in Chicago. And I just knew that there was a massive need for short-term rentals that were actually run correctly, and designed more upscale. All the short-term rentals that I saw when I first came in town were full of 20-year-old furniture, hadn’t been renovated in 15, 20 years.
So I just knew that there was a calling for something better. And so we just fell into the corporate business because one of my friends was working with a lot of the baseball teams, and he had a 10 unit, little development. And he actually just threw some inexpensive IKEA furniture in there, and was taking care of all the B-class baseball players. The guys didn’t really do as much and they were putting six guys per one bedroom pretty much. And so he was doing really well. He was making almost double what he would normally make just by putting $1,500 with IKEA furniture in there. So I didn’t want to be that guy. I was always selling luxury properties in Chicago. So I wanted to be the luxury rental guy. And I had this great portfolio. So it was time to present a nicer product to the world.
Sarah Karakaian: [00:12:14] If you could change anything, knowing what you know now, would you have changed anything about the business you built? Luxury properties, the market, would you change anything or are you so happy with the way it turned out?
Scott Graden: [00:12:28] I’m always the person that whatever happen happen for a reason. And the reason that I had so much hardship is because I knew I was destined to do this property management business. Another point is that, I was able to sell that portfolio for almost double what I paid for it. And I had this infrastructure of people that were watching it, and then everyone else started asking me to manage for them. That’s how I got into the business.
So I always think that things happen for a reason. And I think that if I didn’t have those hardships, I would just be cash flowing those properties to probably owning today and it would have been a great life. But I really enjoy what I do. And I think that there’s a long runway still in the short-term rental game. And I think that we’re in the infant stages of it. So I’m really excited to be part of it and try to do it at a larger level, but also stay small feeling so that the host or the guest is always feeling they have the attention that they need.
Sarah Karakaian: [00:13:30] We love hearing you say that.
Annette Grant: [00:13:31] Yeah, so I know our listeners are excited about that. They want to hear because they’re like, “Wait, Scott’s been doing this for 15 years. I’m way behind the eight ball,” but then you’ve just shined light of like, hey, this is the infancy. Can you talk to us about why you think this is the infancy, where you think it’s going, and who is going to excel, and who’s really going to come out on top?
Scott Graden: [00:13:53] I think obviously, we all know that this is a incredibly attractive investment for a lot of people. So a lot of people are pivoting their dollars from the stock market and buying homes and putting them on Airbnb and hiring managers, whatever they’re doing. But it’s a very sexy, interesting business, and people want to be part of it now. So what’s going to happen is you’re going to start seeing some saturation in certain markets and in certain sub-markets.
So the people that are really going to excel at this business are going to be the people that put the attention to detail into the design, the way they treat their guests, the customer service, and the maintenance of their home. That’s one of the hardest things that we do is the maintenance. And I think everyone can design the home and get it up and running, but to maintain it correctly is really tough, to remarket back to all your guests that have stayed with you and make sure that they come back to you year after year.
So there’s all these little things and we’ve been so dependent on the Airbnbs of the world. We’re building a house on someone else’s land. So we need to be the marketers that we can all learn to be. I have a great background because that’s all I did in Chicago is collect lists of database, people that I’ve met for many, many years and just remarket back to them for more visits. So we’re doing the same thing now. If someone stayed with us, we’re touching them many, many times a year, and intentionally touching them at certain times a year, because we know that that’s when they book. So we all have to get better at all of that.
Annette Grant: [00:15:27] Sarah and I talk about this all the time. We get tons of questions, DMs, things like, oh, like, the algorithm, I’m not getting the booking. It’s like, that’s not Airbnb’s problem, that is just one platform for you to– that’s should be one tool in your marketing tool belt. And so we love that you’re saying that because a lot of hosts don’t want to do any of the outreach, even to people that have stayed with them. And Sarah and I talk about that in our workshop. That was a major mistake that we made from day one. We actually want to bang our heads against the wall of how many people stayed with us and had an amazing time and we never reached back out to them because we weren’t collecting their information when they first stayed with us.
I think a lot of hosts want to make it more difficult than it is. But you can literally just ask them for their email or their phone number during their stay. It doesn’t have to be this elaborate CRM and emailing them. And so you can start with just the basics of like, did this person enjoy your space? You’ve got to reach back out to them, because it’s maddening how much business and just relationships in any way, shape, or form that have passed. They’re spending the night in your house, in your property. You’re having a very intimate relationship with this person. So how can you keep them closer? So what are some of your marketing strategies for Goodnight Stay if you don’t mind sharing some of them?
Scott Graden: [00:16:14] Yeah, we do everything from postcards back to the guests because we have all their addresses, we do birthday cards, we do obviously email and eblasts. We pick up the phone, we have sits, we call them sits and we call all of our top clients. We do concentrate on the larger clients, obviously, because it’s only a certain amount of time in the day. But if anyone’s spent x amount of dollars in the last year with us, we try to get them on the phone and say, hey, listen, if you’re coming back, we’d love to have you on by the way. We also do homes in Nashville.
So wherever they stay, we’ll always push that market, that home that they stayed in. If they, for some reason, say, “Hey, you know what? That house was amazing, but we need a four bedroom, instead of a three bedroom.” hey, we’ll have a list of 10 suggestions over to you in the next hour. So we’re constantly just touching people. And then we have a CRM system that is pretty extravagant. That’s one thing that I was really good at in Chicago. Before CRMs were a thing– I mean, there were CRMs, but they were really primitive– I was really good about hacking those primitive CRMs that do business the way I wanted to.
And it was just more about touching them in a million different ways from text messages, calls, and then sending out flyers automated. Everything’s automated in our system, except for the manual phone call. But I think the manual phone call is what everything’s missing. Everything’s automated. Everything is a text or email. And we have to honestly get some of our younger employees to understand that because our younger employees always want to just be cranking on their phones and not talk to anyone. They’re scared, I think.
But as I know, the people that have money might be a little bit older. So we need to call those people like they’re used to. And when they get that call, they’re like a little bit taken aback where they’re like, “Wow, this is really neat. This company might be different because I’m used to getting texts and emails from everyone.” So there’s the guest side and then there’s also the listing side. So listing side, we have a whole other campaign that we do. But on the guest side, it’s important to– you can use the aggregator websites to get your business, but make sure that they come back to your website and book from you direct.
Sarah Karakaian: [00:19:00] And I know you scaled to quite– you’ve hosted over a million guests. How many markets are you in?
Scott Graden: [00:19:08] So we’re in Arizona, Tennessee, Florida, Colorado, and we’re opening up in Texas right now.
Sarah Karakaian: [00:19:15] Okay. So you’re in several markets, I think it was like five.
Scott Graden: [00:19:20] Yeah, five.
Sarah Karakaian: [00:19:21] A lot of our listeners are in a market or maybe a couple of markets, they’ve got one or two properties, their property owner operators. That kind of marketing the calls, the emails, the automations, they’re wondering, is it worth it for me with a couple of properties to invest in that kind of marketing, in that kind of outreach? If you can think back to your beginning days, what would you say to someone if you could talk to a listener right now, who’s got a couple of properties, and that’s where they’re happy, they want to build some long-term off their family, enjoy that experience of hosting? What would you say to them when it comes to marketing?
Scott Graden: [00:19:54] Absolutely. Why would you pay an aggregator website 6 to 15% when you can get– that 6 to 15% if you add that up over a couple of properties that you own, if you only own two properties, it could be 10,000, 15,000, $20,000 a year or 30,000, whatever the number is. So if you spend 5 on remarketing, you’re still ahead tremendously. So I would say absolutely worth it. You have to figure out some type of system that’s going to automate it. Most of these hosts are owner operators hosts that are maybe doing a different job too. If that’s not their 100% job, they need to automate this. But they definitely need to do it because it’s a huge savings or pay someone else to do.
There’s so many companies out there that market for you these days. We do everything in-house because I’ve got that experience. And we put our own system together that I believe is better. But there’s a lot of companies out there that are really good at what they do. And I think that it’s well worth the investment, well worth it.
Sarah Karakaian: [00:20:57] I love it. In your onboarding for us, you put, “We are all about the details.” What are the details? Is there a mission statement at Goodnight Stay? When you’re saying details because it’s hospitality, but what are those top things that you are not going to miss on because you know it matters to the guest?
Scott Graden: [00:21:14] Yeah, not to say that we never miss, it’s impossible. [Inaudible 00:21:19]. When you have hundreds of homes that are all over the city and just the back and forth and getting to those homes, and then trying to fix something between 11 and 4 when there’s a same-day turn, that’s all an almost impossible task for anyone. So we do the best that we can. And so when I first started this business, I was a hotel guy. I love a nice hotel and everything about it where I can pick up the phone, I can get something upstairs.
And so I thought about that in short-term rentals. I had stayed in enough short-term rentals before I started this business that I knew that one time you can hit a home run and walk in and you can’t believe where you’re standing. It’s amazing and that host is so detailed, and they might just have one home and they don’t have a job. And that’s all they do. They’re prepping everything. And then you’ve got people to have three or four or five houses and they might have a separate job, their own job, they’re not willing to outsource a lot of the things they should. And you walk in and you’re like, “This is not for me.”
So I wanted to build a standardization from whether– when we first started, our homes were not as nice as they are today. We were taking some things on that we probably shouldn’t have just to grow. And I wanted the standardization, so obviously cleanliness, the maintenance test to be amazing. We want to touch that guests multiple times before they arrive to make sure that they know that we’re thinking of them and ask them how we can help them have a better stay, but also help them within our city that we know better than them and hook them up with amazing restaurants and events and just the best place to go because that’s part of the experience. It’s not just your house.
If you can send them to the best places, and they just love Scottsdale or they love Nashville, that’s part of our job as well as hosts. And so making sure that we’re standardized, we’re touching them a couple of times before they arrive, making sure that they know that we’re here. If they have any questions about the home or the city, we’re going to be answering those questions for them.
Once they arrive, checking back in with them again, “Are you guys you having a great stay? Is there anything that’s wrong with the unit? Can we send someone over to help you in any way?” Just making sure that we’re constantly checking in, everything’s standardized, the cleanliness, the comfort. So we just started our own mattress and linen line. So we have amazing linens, amazing mattresses different in all of our homes.
So I know I’m a tired dad. I have three little girls, and they keep me up all night. So when I’m away, if I have a bad mattress, that’s terrible. We’re on vacation and I can’t sleep. So I went out and literally built our own mattresses and tested a few 100 of them before I found the one I liked. And we think that we’ve got a mattress that’s superior to everything out there. And so comfort, cleanliness, and standardization of all the kitchen supplies and make sure there’s enough in there where they can have a nice meal if they want to. Obviously, we’re not monetizing the kitchen for Thanksgiving dinner where we’re going to have a huge mixer or a rolling pin, but we have almost everything else.
So just all those little things and then making sure that those are maintained. If the glass is broken on Wednesday, we need to replace those. So we tried to standardize that because we obviously had a big stock in our warehouse and can get it. We have a runner that takes things over to houses really quickly before they arrive. And we’re doing inspections after the guest leaves and before the next guest is coming.
So all of those standardizations is really what sets us apart because I know a lot of the management companies aren’t doing the inspections or they’re relying on a third party, which we’re sending one of our own employees that’s been trained by us is using our inspection software. And then we have a person in the office that is checking inspection real time to make sure that they agree with it as well.
Sarah Karakaian: [00:25:13] It’s like music to my ear.
Annette Grant: [00:25:15] I know. So that I want to go back really quickly. So you have an inspector that goes before the turnover team even starts. Did I hear that right?
Scott Graden: [00:25:22] Yes, to make sure there’s no damage in the house. So we check for the guest damage, we inspect it, the cleaning team comes in cleans the house, and then there may be a one or two day empty, and then they’ll come back the next day and inspect again to make sure the lawn guy didn’t blow in weeds and leaves underneath the door or–
Sarah Karakaian: [00:25:43] A hair blows in between [Interposing voices 00:25:47].
Scott Graden: [00:25:47] Or the cleaning lady left hair on the bed or whatever it is. So we just need to make sure that we’re inspecting the cleaning teams. We have our own cleaning team, but we also do outsource during high times. So we have to make sure that we’re– our team is really good, and they still miss things. So we have to have a separate person that’s not involved in that team to say, “Hey, they did do a good job.”
Sarah Karakaian: [00:26:12] Yeah, we call it trust, but verify. And that layer of quality assurance is what will set you apart in those five-star reviews, and they’re not going to say, a great place to stay. People are going to leave you reviews that are just gushing, because I’m like, oh my god, I literally had someone tell me that I’ve restored their faith in humanity because our short-term rental was so clean and dialed in, which is like, we forget that it really is that big of a part of they’ve paid some money and they’ve trusted that when they arrive, it’s going to be a great place.
But well, I want to ask really quick, you have luxury stays. There’s a certain caliber of guests that are expecting something. How does Goodnight Stay– how do you deal with it when stuff doesn’t go right? What’s the protocol for your team? Is it discounting? Is it trying to make it up with them with a dinner? Can you help us? Like you said, everything is not perfect all the time. These are human beings. And these are houses that are snowflakes. So talk to us about those difficult situations when you have someone spending a large amount of money for their trip, how do you deal with that? Give us some guidance there.
Scott Graden: [00:27:17] I mean, number one is expressing empathy for their situation. They planned this six months ago. This is one of only two trips they can take for the year. And you have to be understanding of that and keep your tone down, and keep them calm, express the empathy that they deserve. So that’s number one. Number two is we do have a calculation or an algorithm that determines large medium or small issue and how many days it was happening, and then there is a reimbursement usually.
And then number three, depending on the guests and what they’ve spent, obviously, it’s typical that the higher level of the person and the more they spent, we have to touch them multiple times with things. So we’re going to do the empathy, we’re going to give them a discount, and then I’m going to send over something, whether it’s a gift basket or dinner, set them up for dinner for them to party, something like that. It’s super important.
That’s usually on our dime because it happens. And it might have been the house’s fault. A lot of our homes in Scottsdale average 60 years old. So in Nashville, our house is average three years old. So we have a whole other level. And those houses are averaging 4,500 square feet in Scottsdale. So they’re just a whole other level of home, and so many things could go wrong, and they do. So I think just the empathy and just knowing that hey, listen– and they understand. They probably own multiple homes or one home and they’ve seen their home break. So they do understand. They just want to see that you’re empathetic to their situation.
Sarah Karakaian: [00:28:56] Absolutely.
Annette Grant: [00:19:15] I like the equation, though. It’s like how many days did it happen? Is it something you saw the first day? Or did they deal with it the whole time? And what level of amenity potentially was it for them?
Scott Graden: [00:29:07] If we fix it in two hours, then maybe there’s no incentive or maybe it’s just something saying, “I’m so sorry. We fixed it in two hours. I’m hoping that you’re happy. Enjoy the rest of your trip.”
Annette Grant: [00:29:19] No, love that. It’s good.
Sarah Karakaian: [00:29:21] All right, Scott, we talked about maintenance and cleaning, and inspectors. There’s a human behind all these roles. And before we hit the Record button, we were sharing with you, we’ve gone to these conferences, and there’s so much tech out there to quote-unquote, “solve our problems.” but at the end of the day, the hospitality industry is driven by human beings and we know that right now it’s a really tough market to find amazing help. If you want to be an amazing operator with amazing homes, you got to have amazing people behind you. So you are scaling like crazy. And so you’ve got to be very good at finding amazing people. So how do you do it?
Scott Graden: [00:30:01] We have a great hiring manager, first of all, and she’s just awesome. She’s like, every time someone comes to an interview– I only interview people of let’s say, a C suite level, but my director of operations is all he hears is that she is like, everyone says, “Christina is the most amazing person to talk to.” So she’s like this person that sells them on what Goodnight is, the vision that we have, and then also makes sure that they’re the person for us as well. So she’s just on the phone all day long. And it’s hard right now. Sometimes you think you have the best person in the world and then the last two weeks– the hospitality business is not easy.
And honestly, I tend to go outside of the hospitality business to get people. Because I think that hotels, and as we know, short-term rentals are going to not overtake hotels, and they have an occupancy, but hotels are not going away. But what I can say is that the hotel model is broken. There are so many levels of people at these hotels, and I think it might have changed a little bit since COVID in all of the layoffs, but before COVID, there were so many levels where everyone always had it was like passing the buck all the time to get things done.
So I tend to not like to go to the hospitality world to hire people because I think if they have a tremendous amount of hospitality experience, they might not be self-starters. So I go outside of it, someone that wants a new career that has been successful in a different career, that is a hustler, and has the smarts on their shoulders to come in and make a difference. So that’s why I tell Christina, I’m like, Christina, that’s who I’m looking for. Whether they’re starting at the bottom as an inspector, or they’re a marketing manager or vice president, whatever they are, I want those type of people.
And if they’re successful in another industry, they can be successful in ours with a little bit of coaching. And they don’t come in with bad habits. So I think she’s our gold standard for hiring people. And she’s the best I’ve ever had. And I love her. And I think that’s how we find a lot of people. It starts with her because she has to put that excitement about who Goodnight is and what we have to offer. And then it’s up to us to have the culture to keep the people, and so we’re working on that.
Sarah Karakaian: [00:32:26] Is everything that you have from maintenance, laundry, turnover team, inspector, that’s all in-house right now?
Scott Graden: [00:32:32] Yeah, with some outsourcing for the cleaning when we’re at high levels.
Sarah Karakaian: [00:32:36] Oh, wow. Okay. So you basically have a staff 24/7 on all these cities?
Scott Graden: [00:32:42] Yeah.
Sarah Karakaian: [00:32:42] Wow.
Scott Graden: [00:32:42] Yeah, it’s a lot. So we have people on call, obviously. And it’s hard to be on call in the middle of the night for a maintenance issue or a guest noise issue or whatnot. So yeah, it’s very difficult, but everyone’s great. They understand we are in the hospitality business. It’s a 24/7 business, even on Christmas Day, or New Year’s Day, or whenever it is, we’re all on call for that. I’ve been called in the middle of the night when we had a major issue. And it’s just something that I knew that I have to do if that level of issue comes up. And so I think just instilling the needs of the company in someone from day one and then understanding that is important.
Sarah Karakaian: [00:33:23] So now you have a whole C suite, you’ve got all the people, all the layers, it’s wonderful. If you can go back and remember growing, when you’re that size where it’s just you are everything, can you give a message for our listeners who are feeling that way? They love this, but they feel like they’re everything that is 365 every day. So is there like a sweet spot, like keep growing? Or how can they find– I hate the word work-life balance, I think it’s more like balancing, especially when you’re in hospitality, but what I just my mumbled words there, what would you say to someone who’s just feeling that right now?
Annette Grant: [00:34:02] Right. It’s like burnout, quit, or scale or–
Sarah Karakaian: [00:34:05] Or keep going, yeah.
Scott Graden: [00:34:07] So I think that I was probably honestly doing a lot more things than I probably should have been until about six months ago. I hired a couple few cheap people. They’ve taken a lot off my plate. And I was in the ruts in the dirt with them six months ago even. And I think there’s always a mentality that I can do it better than whoever I hired. And that’s just because I’m a hustler and I’ve been successful. And I just always think that, but I think scaling, if you can do 80% of what I could do at that level if I was running it, if I can do 80% of what at least I think I can do, I’m good with that because I know that people don’t have 30 years of experience like me in real estate. They’re not going to have the skill set that I have until they’re much, much older.
So I’m great. And I’ve hired some really amazing people that have 25 to 30 years of experience in hospitality and in general in real estate. And those guys have taken a lot off my plate, and I can now concentrate on the bigger things like larger deals that will bring 500 units to the table for me eventually, and just from a bird’s eye view, looking at the whole org chart and seeing where our holes are, and where we’re failing and plugging someone in there and helping a little bit on the training.
And once you get all of those levels, and not being overburdened with employees– we have a lot of employees, I think we’re over 100, but I think we’re running lean enough, where the company is not burdened by the employee factor. And we’re running strong enough where all of our homes are maintained. I think a lot of management companies, and especially the huge management companies, they’re not getting that right now.
They’re trying to show that they’re making money on their balance sheets, instead of spending money on employees that can take care of these homes, so they can maintain them, keep those homes for longer, instead of them turning and going out of their portfolio. So I think that’s where I’m hopeful that while we might not be the biggest, we can grow at a fast pace while maintaining our homes and adding value for owners in that way is that we have to protect their investments.
Sarah Karakaian: [00:36:32] Yeah. If we had listeners, Scott, that were interested in, potentially having Goodnight Stay being a part of your program, what does that look like right now? Do they apply online? Do you have standards out there? Are you bringing more homes on? Or like you said, are you looking at more of these like you said, 500 units? What’s the future? What are you looking for right now in your portfolio?
Scott Graden: [00:36:54] Yeah, thank you. We’ve always loved the decentralized portfolio. They’re all over the place. They’re more unique. That’s been my passion because I can make each unit more unique. I’m in a building right now. It’s a 53-unit building called Loft at 30th in Nashville, and these all are standardized. We have three different furniture packages, it’s more running like a hotel, it’s running amazing. And it’s so much easier for us to run something like this because we have a laundry facility in the basement, we have storage, and everything comes up the elevator down the elevator, we don’t have to leave the building. Maintenance people are on staff here. So that is really amazing for us.
And I think that you’re going to see a tremendous amount of purpose-built, short-term rental communities like this. This was a conversion from an apartment building. But you’re going to start seeing purpose-built multifamily buildings like this. And it’s already happening. We’re working on 131 unit building here in Nashville, and it’s purpose-built. And it’s basically a hotel zone that was more built to be short-term rental, meaning it has more bedrooms and has a full kitchen.
So you’re going to start seeing that, and we love these buildings. I’ve always been this kind of person. In Chicago when I was selling real estate, I was always the development guy that would lease 50 or 100 units at a time versus getting one single-family home here and there. I’m the same person now, but I do really enjoy the decentralized. So if someone had a decentralized one-off unit, we love those too, and we’ll do a great job maintaining it.
What I like to do with those units, when someone brings them on, though, I’d like to give a full consult to make sure that the design is done correctly, and they have all the amenities in those units that their guests deserve. Because if they don’t, they’re going to get lost in the shuffle on the websites out there. We have to make sure our design is on point and that we have everything in these units, and they have to have the cleanliness. Everything that we know that we need, I want to make sure that this onboarding unit pass.
So we can take on. We do a really good job because we do what we call a pod system. So every pod is 25 to 30 homes in Nashville and 20 to 25 homes in Arizona. And it’s basically a field supervisor and two to three field managers. So we have three to four people, depending on the size of the homes and the number of bedrooms per 20 to 25 in Arizona and 25 to 30 because they’re smaller and geographically located closer in Tennessee. So we do these pods.
Literally, if we get a big building or a bunch of small ones, we can literally just form another pod, plug them into our system, if we need to add another reservation person, if we get X amount of units, we’ll just have a reservation person for– if we got 100 unit building, we just put one reservation for someone that would overflow onto the team. And we just plug in people to our current system and just expand it. So it’s pretty easiest for us to grow at this point. Obviously when we were coming up it with was super expensive for us to do that. But now we’ve got the scaled operation and we just plug a couple of people in where needed.
Sarah Karakaian: [00:40:10] Would you rather get the units and grow fast with inventory, and then maybe fix some broken things later or maybe slow it down while keeping some more control as you grow? Is there a better, in your opinion, way to go? Or is it really just kind of like– because we’ve talked to a lot of people on the show who like it’s all about the inventory so they can financially back their business and make sure they’re staying financially healthy. And they’ve admitted, but along the way, these houses got in disrepair or the culture wasn’t great, but we can go back and fix it. So what’s your thought on that?
Scott Graden: [00:40:47] Well, it did happen to us. That was two or three years ago. We grew so fast that we couldn’t keep up with the maintenance. We couldn’t keep up with that. That’s why I bought into Airbnb and they were a Godsend for us. It started in Nashville, and then we moved into Scottsdale, and they’re taking care of all of our maintenance now. So it did happen to me. And it does happen to most people that I know. At this point, we’re in this sweet spot where we’re accurately staffed, we have the processes and procedures and technology to monitor everything, and we have everything documented.
We have what we call the STR Bible. And it’s basically how to of everything in our business. And we’re writing all these SOPs for everything. And we feel like we’re in a great spot right now. And we’re taking business from a lot of those smaller managers that were in our position for years ago. But if they can get over the hump and scale their operations, they’re going to be the people that take business from other people as they want. So I think any business– and that doesn’t matter what industry you’re in, this is how it works, unfortunately. But I think scaling fast, and learning from it is the way to go if you’re trying to build a larger management company because otherwise, it’s going to take you 10 years to get to a small level.
Sarah Karakaian: [00:42:08] All right. Let’s see. Is there anything else that we haven’t covered that you want to give to our listeners or any words of wisdom just because you’ve been there? And one thing I love that you’ve been transparent about is there’s going to be issues. It’s more of like, if and when. I think that’s something people get bogged down in, you are going to have a guest, you are going to have to get that late night call, is that like once you’ve digested that, like you’re going to have a turnover person quit, just getting over that hump, is that like, do you think have been your secret of like, “Look, I’m just going to take the punches and get back up and keep rolling with it”?
Scott Graden: [00:42:46] Yeah, for sure. I think it comes down to, unfortunately, you’re going to have to spend money for someone that’s quality before you need that person, and then you’re going to have to be the salesperson that you can be to grab enough business after this person comes on and you’re taking care of that person, within a few months that that person is easily paid for plus some. And then it’s all upward from there. So you have to take chances if you find good people.
We probably don’t need that many people right now, until a couple more buildings come on, but if I found them, I would grab them and pay for them right now because I love great people. And I want to make sure that they understand the more that they can handle is the more that I can pay them. And I want them to go up the ladder quickly within the company. And I want to keep them. I don’t want turnover all the time. So I’m willing to pay upfront for employees that are just phenomenal because I know the salesperson that I am and our sales staff will add plenty of properties to pay for the people in the near future.
Sarah Karakaian: [00:43:49] Well, it sounds like you’ve really come to peace with believing in yourself and believing in the product that you created. And then investing in other people is just saying, yeah, I deserve and this company deserves, these homes, these guests, all this whole ecosystem deserves good people. And those people come, they’re not going to volunteer their time. You know what I mean? So, especially in a market like today where employees are hard to come by. So I love that you said that. Scott, thank you so much for your time today and sharing your expertise. We all know how busy you must be if we are incredibly busy with all our spaces.
Annette Grant: [00:44:25] So, Scott, where can people find out more about you and more about Goodnight Stay?
Scott Graden: [00:44:29] Yeah, goodnightstay.com is our website. But I always offer as much time as I can to people. So if you have a property, I’m really great at working with investors. So I still work with our larger investors. If someone’s willing to spend enough for their portfolio dollars into a portfolio of STRs I’m involved. So if there’s any people out there that are listening that are scaled investors and maybe just long-term rentals or real estate in general, I would love to talk with those people directly. They can email me scott@goodnightstay.com.
And then we have salespeople. We have great salespeople. I’ve trained them personally. If there’s just a one-off property, hello@goodnightstay. If someone has a listing that we want to take over for them, hello@goodnightstay and they’ll get it to their proper market. And we would love to advise you and make sure that the property is set up for success up front and then obviously maintain and run that property for you. So those two things you can email me directly. If you’re more skilled investor, I will 100% work with you. Obviously, I’ve got 30 years of experience in everything from acquisitions, we have our own brokerage, we have our own construction company, we have our own furnishing business, so we can take it from inception all the way to success at Goodnight Stay.
Sarah Karakaian: [00:45:50] Awesome. Perfect, reach out. All right, let’s just I hope today left you inspired to go and tackle whatever you want to do. This industry has no ceiling. So follow your passion, solve the problem. Please we’re all waiting for all the problems to be solved. I am Sarah Karakaian.
Annette Grant: [00:46:05] I’m Annette Grant and together we are–
Both Sarah and Annette [00:46:07] Thanks for Visiting.
Annette Grant: [00:46:08] We’ll talk to you next week.
Sarah Karakaian: [ 00:46:14] 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.
