212. End-Of-Year Business Planning for STR Hosts

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

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

Sarah Karakaian: [00:00:29] 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 episode. I am Sarah Karakaian.

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

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

Sarah Karakaian: [00:01:08] We’re going to kick off this episode like we do every week, and that’s sharing one of you who’s using our hashtag. If you haven’t used our hashtag yet, get on Instagram, use our hashtag, #STRShareSunday, because we will share you here on the podcast, on our Instagram, blast you out to our whole email list. It is some free marketing. Who are we sharing this week, Annette?

Annette Grant: [00:01:29] This week we are sharing @home_girls. Again, that’s @home, which is H-O-M-E_girls and they’re three sisters. And they just opened a short-term rental in Vermont and I just loved it. I love that it’s a play on their last name. I think their original last name was Homel, but they dropped the L. So it’s the Homegirls now. And a couple of things I want to point out about their property. 

Number one, it’s about their partnership. If you have been on the fence about investing with your family, show your family during the holidays, the site, let’s do this, let’s do this together. It can be fun. You can go into business and real estate investing with your family and they have an amazing, amazing– what do I call this?

Sarah Karakaian: [00:02:22] Mural?

Annette Grant: [00:02:22] Mural. Thank you. That’s hand-painted in their home. It’s gorgeous. And the design throughout, lots of use of color. You can see they all contributed here. It is a gorgeous spot. One thing I saw, I’m going to let you know it’s in Vermont. And they have a boot warmer, which I think I’m going to have to– they provide several of them for their guests. And I was like, “That looks luxurious.”

So I think I’m going to have to buy one for myself. But the design is great. I love it. They have some pictures of people cuddled up with books under covers. It looks exciting. It looks they’ve poured their heart and soul and there are some amazing paint colors that I’m swooning over.

Sarah Karakaian: [00:03:01] They’re really cozy paint colors. And I told Annette, I was like, “We need to share them here on STRShareSunday, to show them how awesome the hosting community is. So find them on Instagram, send them a DM, tell them good luck. We’re here for you. Thanks for being hosts in this space and for doing it as women and family. I think it’s cool around.

Annette Grant: [00:03:20] Yeah, let’s do it, ladies. Congrats. Good luck.

Sarah Karakaian: [00:03:24] All right. Let’s get to today’s episode. And today, Annette and I want to chat with all of you about planning for the New Year. Planning is essential in any business, and you know that Annette and I believe wholeheartedly that your short-term rental is your business. It is not an Airbnb. It is your hospitality business, it is your real estate portfolio and it matters.

Annette Grant: [00:03:48] Yep. And we’ll let you know, we haven’t gotten to this part yet, but we already have a lot of time blocked off on our calendar for reflection, looking at numbers, planning for 2023. There’s been some planning and number crunching already going on. And we just want to open up and be honest and let you know some of the stuff that some of the pivots that we’re making in early 2023 to prepare financially. 

So as all of you know, we are here in Columbus, Ohio. We are at metro market. It gets cold, real cold in the winter. Our beloved team is done playing here in Columbus. It’s a slower time. And Sarah and I have been hosting here for quite a while, so we understand January and February are bleak here. 

We know that that is not a news flash to us and there is a lot of chatter out there in the economy of just overall bookings slowing down, vacationing slowing down, what’s going to happen. So we’ve been prepping for that. And Sarah, let’s talk about how we’re moving to some mid-term rentals during this slower time.

Sarah Karakaian: [00:04:58] Not only have we heard a lot about booking slowing down, but there’s also, especially in our market and we know this to be true across a lot of markets, it’s a lot more competition. And a lot of times people are finding themselves blaming everything but themselves when it comes to planning for income for your rental, and this episode is going to put a fire under you to take responsibility and to take some action while you still can. Unless you’re in a ski area, then you’re about to blow up. We’re jealous of you guys.

Annette Grant: [00:05:29] Yeah. Good for you.

Sarah Karakaian: [00:05:30] So Annette and I, we love our short-term stays. We like short-term stays. We’re in a metro market one, two, three nights. There were no stranger, though. Sometimes we get week long bookings, maybe a two week booking, but really our stays average about two to four nights. But I know now after several years of hosting in Columbus, I was like Annette yeah, take what we can, but we’re not throwing numbers up on the listings and just taking whatever. 

We know what our expenses are for the month, and what’s going to be worth it, to have a body in that home during that time, and when we need to stop the midterms to go back to our short-term stays. And something I want you to keep in mind, if you pivot from short-term to midterm stays and your biggest lead generator are the OTAs like Airbnb, when you try to ramp back up, it’s going to be slow rolling because you’ve now taken your listing and you’ve booked it out for that longer period of time and it hasn’t been active. You haven’t been getting a lot of reviews, so you not only need to plan for Q1 if you’re heading into slow season, but really plan for how you’re going to ramp up excitement again at the beginning of Q2.

Annette Grant: [00:06:41] Yeah. And so we’re doing those longer 90-day stays and we are filling majority of them with traveling nurses. We have tons of hospitals here. We have the Ohio State University, we have children’s hospital. So we are lucky in that that we have an influx of that. Sarah and I had just made the decision that it’s worth it to us. We have a lot of other things going on in our lives too during the first quarter, we call it the mental mortgage. 

Your properties take up this mental space. There’s a mortgage going on inside your head too, and we’ve decided that we want to take those midterm rentals and then just know that they’re going to be booked through those really slow months. But I will say historically, I haven’t done that. I haven’t normally done the longer, but we just know where we’re at now, we feel comfortable with doing it and we don’t want to gamble that.

Sarah Karakaian: [00:07:33] Well, and since COVID, the furnished midterm stay is now a quote-unquote a “thing.”

Annette Grant: [00:07:38] So much more popular.

Sarah Karakaian: [00:07:40] Why not leverage something that other people want and need? And hey, it’s a perfect time for us to do that. Now, again, if the midterm stay isn’t right for you, I want you to at least parallel this to something else that could be a good fit for your rental in your area because you need to take responsibility for getting your places filled. 

With that being said, before you can say you want to do something and throw a number out there, you need to look at your historicals. So whether Annette and I are looking at our numbers for our real estate portfolio, or our business with Thanks for Visiting, because we’re also doing some things for Thanks fo Visiting planning for next year, the first thing we do is look at our historicals and then we look at where we want to go by the end of 2023 so that we can reverse engineer that overall revenue goals.

Annette Grant: [00:08:30] Right. And we’ll be honest with you. We are making sure to continue to beef up our reserves for sure. I actually would put myself in the bucket of a risky investor, but we could probably go out and buy more houses right now. We just don’t want to do that. We’re looking at what we want to have in the bank for our properties and I like sleeping cozily at night.

There’s probably some upgrades that we could do at our house, and we’re not going to do those right away. We don’t have a king-sized bed. We really want a king-size bed. And we’re like, “You know what? We’ve got someone staying there for the first quarter of the year, so that’s definitely not something that we’re going to put money into. Maybe after that person has stayed and we are heading into a busier season, we might invest in that. But that’s something right now we you know what? We’re going to keep that money. We’re not going to go ahead and upgrade.

And that was a big discussion because we did just have holiday sales going on. So little things like that that we definitely want to upgrade. But we’re going to hold back on it and wait.

Sarah Karakaian: [00:09:35] Something else, Annette said, when it comes to the topic of reserves and making sure that you have enough of it, whether you have a long-term rental, short-term rental, mid-term rental, whatever we’re talking about here, it’s important to have reserves not just for doom and gloom, but you have a team, most likely whether it’s a cleaning team. 

Maybe this year you invested in an inspector, maybe you’ve got some remote guest services or your co-hosts that are helping you with messaging. You’ve got some people who are helping you and is it slows down. I like to think about them. So if I have less cleans for them to do, now they’re not my employees, but I still care about them and I still want to make sure that they’re going to be okay over the next three months. 

Again, am planning head’s up, “Hey, things are going to slow down. What can I do? What can we do? How can I help you and your business in this time” and really just foster that relationship because when it gets busy again, I want to make sure that the people who I love and depend on in terms of their work ethic and the service they provide, we can hit the ground running when business picks up again.

Annette Grant: [00:10:38] Well, and let’s tell our listeners that that is something when we do midterm stays, we require it to be cleaned. And it’s not just because we want to get in there and clean it. It’s a way to show solidarity to our turnover team and just the team in general that, hey, yes, we needed to get a longer-term booking, but we also thought of you. We are going to require that it be cleaned on a biweekly basis. 

So that is not just for the property, that’s also just that solidarity move with our team. And this is the time where we get creative too. Is there deep cleaning that can go on? Can they come to our personal residences? Are there things that they can do that we can supplement some of that income that they will be losing because we’re not doing as many turnovers?

Sarah Karakaian: [00:11:21] Absolutely. Maybe they’re a big company and they’re fine. But a lot of us employ solopreneur hours, people who don’t have big companies. So I really want you to think about them and see how you can help.

Annette Grant: [00:11:34] Also how we get creative with that, too, one thing that will also do is we’re in a colder weather town, so we need snow removal. We need salt be to be put on the sidewalks and the paths to the property. So that’s also something that we offer to our turnover team first to see if they want to do that. And that’s another way to help diversify and pivot maybe some of that income that they were earning in the slower months.

Sarah Karakaian: [00:11:58] Absolutely. Also, when it comes to midterm stays, furnished stays, if that’s something that you’re thinking about doing, whether it’s going to be Q1 or later in the year during your slow season, when it comes to the amenities you offer for your short term guests, can you afford to offer it to your midterm guests with the price they’re paying? 

If the answer is no, I’ve already blocked off some of my calendar that before we rent out the property that Annette and I owned together is to because it’s not locked up. All the toilet paper paper towels I’m just going to remove it. Give them enough to get started.

We give them plenty to get started. We message that very clearly that will get them started for several days so they can get settled in and go shopping. But that’s something that we want to let you know we’re aware of that and how much that would cost. That’s not built into their long-term pricing. However, if they were to ask for it–

Annette Grant: [00:12:46] Absolutely.

Sarah Karakaian: [00:12:46] We would do that and raise the price. But please be aware of that. I know some people have questions of like how much do I use, what do I actually supply them with?

Annette Grant: [00:12:55] And these are things to really think about too, is talk to them about if you can have some conversations just about the usage of everything in the home during that time, i.e. especially utilities, there’s things that you can chat about.

Sarah Karakaian: [00:13:07] Another consideration as you pivot from a short-term vacation stay situation to something maybe a little bit longer if that’s your thought is legality. So when a guest stays more than a certain amount of time, I think almost in every state they become tenants. So if you’re thinking about a midterm stay, makes you really understand laws in your state. And what if you get a bad apple? Or what if something happens and they stay past their checkout date? How can you prepare yourself in the first way to prepare yourself as a proper lease agreement? 

So go to your attorney, see if you can get something that really is specific to your property, and make sure that those terms are dialed in. Some tips we’ve gotten from people who are way smarter than us is on those lease agreements. Make sure they put their signature next to the cancellation policy because they’re staying along around time. You’re taking it off the OTAs and off your website. You want to make sure that you’ve got enough time to put it back out there should they end their lease early or whatever those terms are that you agree to have them sign next to those very, very important terms in your lease agreement.

Annette Grant: [00:14:11] Yeah, but we’re excited about it. Yeah. It’s going to be nice actually to have someone in there and be able to focus on some other thing in and out of the guest. We have some people I know in our membership. We have one person. She’s actually going to close her doors during January because she has just been crushing it. She knows her numbers and her and her husband are going to go to Europe for a month or something. 

So there is stuff like that really looking, I feel there’s a lot. I don’t have any bookings, I don’t have any bookings. That’s why it’s really important again to look at the full 12 months, hopefully, 24 to 36 months of your property so you’re not panicked if there is a slower month or slow– you’re going to have a slow season. So every business has peaks and valleys. They have shorter seasons, they have busy seasons. Short-term rentals are not anything different.

Sarah Karakaian: [00:15:00] Now with that downtime of having a guest in there a longer-term basis, here’s hoping. Oh, one other tip for you. We are going to be there when they check-in and when they check-out. Check-in so we can make sure they understand this is how you’re finding the place. And we do our checkout, we’re going to make sure that we’re all on the same page with how you’re leaving the place. 

But also, this gives me a really nice time to show them how to use all the things because they’re really going to be using all the things. And just have that more personal touch, hey, we’re not far away. We don’t do this for our short-term stays, but for this situation, it’s nice to connect on a one-on-one basis because we’re staying longer. But with that being said, with that quote-unquote “time off” from short stays, Annette and I we do really well together is figure out where we want to end up at the end of 2023 with our business, and then we figure out how we can back into that.

So if we want to hire average daily rate, if we want less guests but more money, if we want to make more money with the same occupancy we had this year, we talk about those strategies and we figure out how can we get to where we want to be at the end of 2023. With a lot of money in the bank.

Annette Grant: [00:16:12] Dramatic pause.

Sarah Karakaian: [00:16:13] I know. Well, I was just thinking, where do I want to be at the end of 2020? We haven’t had the conversation yet, but we will.

Annette Grant: [00:16:18] I think the whole premise of this episode, though, is to give you permission to pivot, to think about all the ways and you could use your property or potentially not use your property, take a vacation, offer it up to somebody else. Maybe you have friends and family coming into town, that you could offer it up to them. But we just wanted to make you aware of what we’re doing, that we are pivoting there with not just the property that we own together, but with some that we manage also. So just wanted to let you know that’s what we’re doing.

Sarah Karakaian: [00:16:49] One other thing I can add before we sign off is we talked about how we’re going to tackle Q1. It’s going to be slow season for us. We talked about talking and dreaming about where we want to end up in 2023 if we can back into that with Q2, Q3, Q4. But then we didn’t talk about yet, Annette, is you and I looking over how this year went, what did we like? What didn’t we like?

Really understanding who was staying in our property? Why were they staying there? What are 80 on track with what we wanted to get. We made some renovations to the home this year. How are we on track on paying that back? How’s the investment looking? Just really unpacking what happened?

Annette Grant: [00:17:27] Deep dive into the numbers.

Sarah Karakaian: [00:17:28] Yeah, and making notes and making it really easy to read so that as we have as we continue to build up these historic goals, when we go back year over year, we can see that and hopefully the improvement.

Annette Grant: [00:17:39] Yeah, for sure.

Sarah Karakaian: [00:17:41] Okay. With that, we wish you so much luck with planning your 2023, your Q1. Remember, it’s a business for you and it’s got to be profitable. Are you making money and doing what’s best for you?

Annette Grant: [00:17:54] And if you’re not, you just got to make a plan.

Sarah Karakaian: [00:17:56] Let’s make a plan because maybe the cash flow is the number one for you. So make a plan. Stick to it. All right. With that, I am Sarah Karakaian.

Annette Grant: [00:18:05] I’m Annette Grant. And together we are–

Both Sarah & Annette: [00:18:07] Thanks for Visiting.

Sarah Karakaian: [00:18:08] 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.