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[00:00:00] Sarah: Hello, hello. Welcome back for the great episode. My name is Sarah Karakaian.
[00:00:03] Annette: I am Annette Grant, and together we are–
[00:00:05] Both Annette & Sarah: Thanks For Visiting.
[00:00:06] Sarah: We are going to kick off this episode like we do every week, that’s sharing one of you, our amazing listeners or viewers if you’re here on YouTube with us, and share your property.
You’re using the hashtag #STRShareSunday. We will not only share you on our Instagram page on Sundays, but also blast you out on our email list, talk about here on the podcast, give you some free marketing, which is a segue to today’s show. Annette, who are we sharing this week?
[00:00:28] Annette: Today we are sharing @purvisionproperties, and that’s P-U-R-V-I-S-I-O-N, and it’s Jake and Jackie Purvis. Please go check them out. I’m going to give you a couple of reasons why. Number one, they’re short form video content, aka reels, they are crushing it. Jake and Jackie, I hope you don’t mind, I’m going to tell our listeners, please go look at what they’re doing. Look how they’re showcasing their properties with the short form video.
They’re doing an excellent it’s job. It’s fun. It shows you would want to go to their place. It gets you excited to stay in the property. But one other thing I want to highlight, because we talk about this very often, just like most people in the short-term rental world, they don’t just have one because I’m sure they started with one, they have three and they’re all under their larger brand of Purvision Properties.
But they have the centennial, the perch, and the cove. And I love the centennial, it’s a 100 years old. The perch is a modified A-frame, and the cove is a lake cabin. So they have different properties, but they’re all held under their larger brand of Purvision Properties. So if you are someone that is struggling with trying to figure out, how do I create content for all of my places? Do I have different handles and different names and this, that, go check them out. See how well they’re doing it.
About the interior of their homes too, they’ve done a really great job. One of their properties has this amazing, green accent color flowing throughout from their glassware to wallpaper in a room. Just a really great use of color. And I want to go stay with them.
[00:01:56] Sarah: They’re branding experts. You guys are doing a great job.
[00:01:59] Annette: Yeah. So please, go find some inspiration, in not only the spaces that they are creating, but the content they are creating to showcase their spaces. So well done, Purvision Properties. We can’t wait to hopefully come stay with you one day. But speaking of the Pacific Northwest–
[00:02:15] Sarah: And speaking of marketing experts, we’re going to introduce you to today’s guest. In today’s episode, we have the one and only Ellen Yin, the founder and host of Cubicle to CEO, a top 1% podcast, you’re welcome, and media platform creating a financially transparent content, events and education empowering entrepreneurs to pursue what is possible.
She is my friends. She is STR curious. She is Airbnb curious and so if you are a listener who’s yet to buy your first property, or if maybe you’re a co-host or a property manager and you’re wondering what your client is potentially thinking, this episode is going to be for you. Ellen, welcome to the show.
[00:02:58] Ellen: Sarah and Annette, I am so pleased to be here. And yes, all of you listening, think of this like free market research. I’ll be your guinea pig.
[00:03:06] Annette: And if you didn’t notice in Sarah’s intro, if there is anything to take away from this episode, it is inspiration for the name of Ellen’s podcast, which is Cubicle to CEO. So if you are there, if you’re at work right now today, we want you to be at your job, potentially in your cubicle to the CEO of your hospitality brand.
So please just maybe write that down, cubicle to CEO, that’s on your goal list. That’s what we want for everyone. And hey, you can love your job. Maybe it’s cubicle and CEO. So, um, maybe you’re somebody that wants to do both, so you can rename it cubicle and CEO too. But, Ellen, let’s tell our guests a little bit really quick though.
We are no stranger to you. This is a very normal thing. Ellen used to be one of our coaches, everybody. We can let you in and we’ve been on the mic with her before. We’ve asked her a lot of questions, but always us asking Ellen her expert advice, and she was a very, very important part of us launching our hosting business mastery membership. And so we’re super thankful for her, and also just letting our listeners know, we have always continued to invest in ourselves and so we just want to offer that up to you to invest in yourself.
You never know who you’re going to meet and where that network is going to turn out to, us today on the show. So Ellen, we’ve talked about it a lot because we have done some masterminding, we’ve been in-person, and you have a lot of questions about short-term rentals. And I hope you don’t mind us sharing this. Ellen financially is very capable of purchasing this home. You have some cash, allocated sitting there waiting to pounce at the right property, correct?
[00:04:38] Ellen: Absolutely. It’s really about for me, finding the right opportunity. And as an entrepreneur, and I’m sure the two of you can relate, you’re always thinking about not only the ROI of a potential investment, but also cost opportunity. So it’s like if you use your funds for one specific thing, it removes the option maybe to use that cash for something else.
And so you have to weigh the opportunity cost and ask yourself, which one best aligns with my goals, my long-term vision, which one is going to support my needs in the meantime? And so there’s so many factors to consider, and that’s why I’m so, so grateful to the two of you because you’re the first people I’ve met really in the short-term real estate space that feel so accessible, and even though you’re such experts in this category, I feel like you still can resonate and understand what it’s like to be a beginner, and you’re really able to guide people like me through this process of exploring STR. So I’m super grateful for that.
[00:05:37] Sarah: Where are you today in your short-term rental journey? I’ve talked to you a couple times, and on your mind, but where is it sitting in terms of, is that cost opportunity leaning more towards the short-term rental investment or not?
[00:05:52] Ellen: So interesting thing that has happened since we last saw each other in December in North Carolina for our in-person mastermind, I actually hired a wealth manager that, Hayley, our mutual friend, introduced me to. So shout-out Caitlin Carlson.
And goes back to your point, Annette, that it’s so important in your journey to invest in mentors, invest in help, invest in support in whatever way that looks like, whether it’s a DIY course, or whether it’s something more intimate. But I think that to your point, it’s all about the people that you meet within those containers, like that will pay more dividends in your life than any strategy or skill you walk away with.
Anyways, because I got introduced to my new wealth manager, we literally just had our onboarding call. So I’m actually waiting until she maps out my portfolio strategy before making any concrete purchases or moves to ensure that I’m making the right moves in the right order. So it’s not a matter of if I will have an STR, I know I will. It’s really just a matter of when.
But as far as my curiosity goes, my interest and why I want an STR has not changed. So for those of you listening who don’t have the same context, I live in Oregon and we’re only about an hour’s drive away from the coast. And being by the ocean is one of my favorite places to be.
It brings me so much peace and I have this dream of wanting to have an STR in my portfolio that, of course, can provide cash flow or tax benefits, but also a place that can really be a legacy for my family where we can come personally to stay make memories. So that’s my approach or desire for wanting to buy an STR.
[00:07:39] Annette: Love it. And then I know you and your partner, you have done some pretty extensive research. I think you hired a real estate coach when you were just thinking about maybe long-term rentals. Can you take us through that thought process too of what piqued your interest in real estate period, and then going down through your learning, your education part, and then thinking more on the STR side?
[00:08:02] Ellen: Yeah, absolutely. So yeah, you’re right. We totally invested in real estate programs and mentorship early on, even before we knew for sure if this was an asset class that we wanted to be a part of. And really, I think it comes down to if you’re wanting to invest in something new or try something new, you have to raise your own financial IQ around that.
It’s like you have to learn the language of that industry, and the more you understand the better quality questions you can ask. And this is something I think the three of us agree on. A lot of your success is dictated by the quality of questions you ask. So you need to be able to have better understanding to actually formulate those questions.
And so for us, we first started looking in long-term rentals, so typical single family housing, three bed, two bath style. And the thing that really drew me to real estate is that there are so many levers you can pull within this asset class that are not true for every asset class.
So one I liked that with rentals especially, you don’t have to rely on something like speculation, which is more the deal in an asset class like let’s say stocks and bonds or the stock market. Because when you buy in the stock market, it’s not like you literally control anything that goes on in the companies that you invest in.
And so you’re more of a bystander and you’re just waiting it out and seeing what happens over many decades because I would never try to time the market personally. So one thing that’s interesting to me about real estate is that, yes, your house can appreciate and there’s value in your property appreciating, but also you are able to, in the meantime actively influence the cash flow.
It’s something that you’re not just a pure spectator for. So that was one thing that really drew me to real estate. Another lever that I love is, of course, the tax advantages, especially as a business owner where income can fluctuate wildly year over year and you are really trying to maximize profits.
Come tax time, you still want to make sure that you are taking advantage of as many deductions as possible. And I think real estate just gives such an amazing opportunity to do that. And so those were some of the levers that I was just considering when I was looking at real estate that really drew me to wanting to learn more.
[00:10:16] Annette: All right, so pretend right now we’re at a coffee shop, you’re like, okay, I’m going to buy my first short-term rental. Let’s do a rapid fire coaching. What are those questions you’re literally like, okay, I have Annette and Sarah for this cup of coffee, I am going to– and there’s like anything, like where are the sheets? Do I have a plunger there? What are the questions– never host in a guest in a STR before. What are those questions that you would just love to rattle off and have us answer?
Are all of you listening jealous that I get this opportunity? Okay, cool. I will role play. So I have a lot. I think one of the first questions that comes to mind, I’m sure I’m not the only one thinking this is, for your first STR, does it make sense to buy something nearby to where you live that is easily accessible within driving distance? Or you have this dream destination on your list, should you pick that bucket list? So let’s start there.
[00:11:09] Annette: Hmm. That’s a worst–
[00:11:12] Sarah: Ellen said quality of questions. She’s not messing around. Here’s the thing that no one wants to hear. It depends. So Annette, I know you’ll have a lot to say on this too. If you write down pros and cons of dream destination versus backyard investing, and for some people it might come up with, I am so busy in work life right now or career building right now that for me, I want to get in, I don’t want to hesitate any longer. And you don’t have a dream destination other than maybe it’s at the beach or in a sunny destination, I would say, you buy real estate and wait, so buy in your backyard. It’s inherently easier because you have connections right off the bat with people you know and trust already.
But if you’ve grown up knowing that you want to buy a property on the shores of Oregon, in wine country, it’s a few hours away and there are going to be some getting to know realtor who you can trust and know that they’ve got a good book of business share with you.
There’s going to be more phone calls, there’s going to be some more trips, which poor you, you get to hang out on the coast of Oregon, but you’ve got more time and that would really just help you check one thing off of your bucket, then do that. People do both. They do backyard and they do remote investing as well.
[00:12:24] Annette: What I would do is, if you do, if you have that bucket list place, I would start looking– I mean, I’m sure everyone is probably looking at Zillow on their phone right now. I would really start to look at both of those areas. What’s your book bucket look? Because this research too, you can use it in the future.
So I would start researching both of the areas. What is the cost of the home? What are the average nightly rates there? What does that look like for you? So I would really start two separate spreadsheets on both of those areas and just see what the market’s doing in both of those places.
I’m a firm believer that not everything can go on the Spread Sheet. Not everything can be jammed in a cell to tell you what that’s going to mean to you and your family. So I would actually start researching both, see which one, financially does make the most sense. And, um, one of our mentors said this to us such a long time ago, and it really just hit home for us is, a base hit is good.
[00:13:17] Annette: So maybe you do get that backyard. Start there. See if you really like it because maybe that bucket list place, you take the money from your backyard investment and you go to your bucket list place, and you live it up once or twice a year and you don’t have to worry about the property.
Because we do see that happen a lot, that people buy properties in their dream destination. Well, that week or two, that used to be so sacred, there’s someone sitting there looking at the cracks and crevices and cleaning up and doing DIY projects instead of enjoying it. So I think, definitely do a cost analysis financial plan on both of those, and just see where they sit for you.
[00:13:56] Ellen: I love that advice, to simultaneously be tracking both, and ultimately, I’m not surprised that you guys shared, it comes down to the data. We can feel however way we want to about something, but that’s really helpful. Two other questions popped to mind as you were answering this last one.
Selfishly, I’m going ask my more personal question first then another question that I’m just in general curious about. So I did do some research on properties at the Oregon coast, and actually I think I had shown maybe Sarah this late one night. She was like, probably ready for bed.
[00:14:30] Annette: No, you showed her a house, she’s like, let me get out my computer and a spreadsheet. Let’s look at it.
[00:14:34] Ellen: Yeah, so kind. I found such adorable A-frame property at the coast and I love it because it doesn’t feel like an overwhelming property. It’s two bedrooms, one bath, but it has that ocean front view. And the price is not really the issue. We got pre-approved for an amount that would cover whatever the purchase price they’re asking for is.
Of course, interest rates are high right now, but you guys also taught me some things around, okay, there’s different options for buy downs and whatnot. So my biggest hurdle really in moving forward at all and exploring that is the area that it’s in.
So it currently operates as a very successful short-term rental. And I think I even just peaked on Airbnb. They’re almost booked out for the next 10 months. But in Oregon, when they transfer ownership of the property, the STR license does not transfer to the new owners. So I would have to obviously resubmit with the city.
And my real estate agent, she’s amazing. She called around everywhere, really trying to understand, what is the timeline, what is realistic? And the office came back and said it could be anywhere from three months to potentially two years before you get approved for this license. And there’s really no guarantees or expedited options at all.
So now I’m sitting with this thinking, all right, if I do want to buy that dream ocean front property that I can also see being used for personal enjoyment, but I don’t really know if in the meantime I want to be fronting all of the cash for, let’s say, worst case scenario, it takes two years. Do I really want to be paying this mortgage and all the expenses of upkeep for two years while I’m waiting for my STR license? What would you say to a situation like that?
[00:16:19] Annette: It’s a good one. First, I haven’t encountered this, so I’m just going to put this out there. I don’t know if there is in any way, shape, or form that the purchase of the property could be contingent on you getting the license, the license transfer. Because maybe there’s something with the current owner, since they have 10 months of booking. There’s going to be something in that in-between that the licenses are going to have to be transferred because hopefully this host is not going to sell the property and then cancel 10 months of reservations on people.
So the first thing I would talk to– see if your realtor tour can talk to the owners about their license and if there’s a way to transfer it to you in the sale the property. I don’t know how that municipality works. And then also talk with the owner about, is there a way within the purchase, maybe if you do purchase it, the license stays in their name, you somehow partner with them for until it is transferred?
Maybe just some agreement, obviously with your attorneys and your realtors about that. But the next thing I would do, I know you called there or your realtor called, I would call three more times. See what answer you get. Maybe not three more times, but one or two more times and just see, did the timeframe stay the same? Did you talk to somebody different? And they’re like, “Oh, get in your car. Come down here. We’ll give you one today.”
So I wouldn’t take that one person’s timeline say that’s written in law. So if you have the opportunity, if you’re ever– I would also, depending on how close you are, I would go there and get face-to-face with somebody and tell them, this is my dream place. I want to buy it.
And exactly what you just said to us, seeing you in person telling me your story there, I might be able to, hopefully if they’re at their desk in the city hall or whatever, they can walk over and say, “Oh, well, we’ve got four meetings these upcoming months,” and really help you dive in. So I would not stop the pursuit of it because one person gave you a timeline. I would go dig a little bit deeper with that.
[00:18:18] Sarah: I like the idea, Ellen, of seeing if you could have the purchase contingent on you getting the license, and maybe there’s a lot of things you could discuss with your realtor there of renting it from the owners in the meantime, pre-determined dates where you guys could use the property during this contractual period. That’s interesting to me.
[00:18:37] Annette: I would get creative. Yeah.
[00:18:38] Sarah: Is this place still avail– is it still for sale, Ellen? Because I remember it.
[00:18:41] Ellen: It is.
[00:18:42] Sarah: Wow, girl.
[00:18:43] Annette: Okay. Yes. Then saying that, listeners, we talked to Ellen about this property in December, so I think that was almost 45 days ago, and the market, I mean, rates are rising, I think you have got a lot more negotiating power now. And so I would just start going down that road and pose those questions with them.
And listeners, we would love if any of you had this specific scenario happen with your short-term rental and your purchase and being limited amount of license or things like that, please email us. We’d love to hear how you work through this situation.
[00:19:17] Sarah: Because here’s a thing to consider for yourself too, Ellen, is we always like to buy with exit strategies in mind. And clearly if it’s, I don’t know how long it’s been on the market now, but let’s say you do move into it and actually then you want to upgrade. You know what I mean? Your podcast, it’s killing it. You want eight bedrooms, and so you would–
[00:19:32] Annette: Your cubicle to billionaire CEO.
[00:19:35] Sarah: You want a 1031 exchange it, but you’re having a hard time selling it because of the same exact issue. And I’m not saying let that stop you at all. But that should be a part of your decision factor here of how much will this property cost you each month? And have you stayed there? Could you rent it from them?
[00:19:51] Ellen: I have not. So we would want to stay there obviously and experience it first before we would actually really pull any real moves on this. But yeah. Honestly I had been just stuck at precipice of, is it even worth pursuing any further if I can’t potentially– because we did ask if our licenses are transferable.
They concrete where like, absolutely no licenses are transferrable in this county, unfortunately. But I hadn’t thought about all those other options you talked about like, oh, could we base the sale with this contingency or could we somehow get creative and say, “Hey, you still have this amount of revenue potentially coming in from your reservations. How about you keep the house for 10 extra months and get that cash flow while we’re figuring things out on the backend?” I have so many ideas sparked just from that, so thank you. I really appreciate it.
[00:20:37] Annette: Yeah, and maybe they could, and again, this is all legal stuff too, is maybe there is an opportunity for them to stay co-hosts of the property. You could work out a property management. I would really try to see what their goals are and maybe they own a lot of other properties in that area and they’re just trying to liquidate this one so they can have the cash for something else. But it’s been sitting there for a while, so I think you’ve got some– it might be a nice thing to ping them and see what can happen.
[00:21:00] Ellen: Also, Sarah, the thing that you mentioned about thinking with the exit strategy in mind, I didn’t even think about that. You’re so right though. If I bought this property, if I ever wanted to do the same and leave or sell, that does pose a problem. However, I guess that’s not unique to this property. It’s really unique to the area that I would be investing in.
[00:21:17] Sarah: Because sometimes the license even makes it, they are transferable with the property and they’re limited, and that adds extra value. So if you’re looking at the cost of a property, but the license is transferrable with the property, I mean, you should add some value there because I know someone else who was able to get a property that had limited licensure and they could transfer it to themselves. So there’s a lot to think about there, Ellen, that should definitely not stop you. I cannot wait to hear what happens. You said you had one more question that was more general.
[00:21:43] Ellen: Yes. So the more general question is similar to my first question of do you invest in your backyard or in a dream destination for your first property? Do you think it’s necessary or smart for a first time STR owner to learn the ropes of hosting, at least on some level for a period of time themselves, so that when they hire out to a property management company that they actually know what constitutes a job well done versus not, or can you shortcut hire a PM right away? What do you think? What’s your hot take on that?
[00:22:17] Sarah: Since Annette and I are educators in the short-term rental space, we’re clearly biased. But actually, Simon Lehmann, we had on the podcast prior to you, Ellen, I love the way he put this. Because as a property manager, this made me want to pull my shoulders back a bit more. Think about your property manager as being your asset manager, how they affect the success of your asset.
And so if you are just giving it to some rando company or rando human who, I unfortunately know of people who decided they want to manage property and they’ve never done it before, and they’re touting their expertise and it’s like, oh boy. You know what I mean? Do you know how to care for a furnace? How plumbing works? Where’s the water shut off? What all the things that can happen?
And so I feel, again, I’m biased, but who you hire to manage your asset and a piece of real estate should not be taken lightly. And the more you educate yourself as the investor, even if you have no plans, I know Ellen, for you that’s really important, that this is not an extra side hustle for you. You want to invest and trust the expert to really handle it in the most professional way, that yes, you should educate yourself on what it takes to be a good property manager or co-host.
What are the average daily rates? And is that backed up on data or emotion? So that you, as the owner of the property can speak in a more educated manner about what you expect to make each month. Set those benchmarks with your partner there. What they do for marketing outside of just listing it on an online travel agency like Airbnb, who their maintenance team is, what their credentials are. So if you think of it like an asset manager, I think puts the property manager more on the pedestal they deserve to be on.
[00:23:56] Annette: Mm-hmm. And I think, Ellen, part of your question that you were asking is, should you do it yourself first though, before you hire? And so I don’t think that’s a necessity.
[00:24:07] Sarah: No.
[00:24:07] Annette: Again, that goes back to doing a cost analysis of, is your time better served building your brand and the revenue there or hosting your property? So I don’t think that you have to be in the app and build out your listing to make sure that you’re an amazing short-term rental owner. I don’t think that’s necessary. Wouldn’t it be great? If you want to, if you have the desire, let’s start there. If you are excited and you want to, absolutely. But if it seems daunting and is not a heck yes, then don’t do it. Because it’s part-time but all the time. So like right now you could be recording a podcast and you have a guest that wants to book for their mom’s birthday at dollar, you cannot respond for today if you’re recording podcast all day.
So if it is not a heck yes for you, I would not feel like it’s obligatory. And I’m sure some of our listeners are like, Sarah and Annette, you’re so hands-on. Yes, but only if you want to be. Let somebody that wants to be hands-on. So I don’t feel like you have to host for– you have to do it yourself before you hand it off. I know a lot of times as business owners too, you’re like, well, I need to understand all the things before I hire someone to do all the things because you want to know them. But I don’t think it’s absolutely obligatory unless you are really driven and excited to do that.
[00:25:24] Sarah: Yeah. Let me clarify. It’s not obligatory for you to do the management, but I do think it’s obligatory for you to understand the management, and what makes a good manager versus what makes a poor manager.
[00:25:33] Annette: Yes.
[00:25:33] Sarah: Is that what you were asking, Ellen?
[00:25:35] Ellen: Yeah. It was both, essentially. So that’s really helpful to know that I don’t have to, like you said, be in the weeds manually actually doing each step. But to educate myself on the actual process and what I should be looking for. And again, what constitutes good performance versus, oh, you’re not taking care of this asset like you should be. That’s really, really helpful. So thank you. That gives me encouragement though, because there was a part of me that had this mentality of, oh yeah, I feel like I have to get in the trenches and do the thing to be able to pass it off. So that’s really affirming to know that’s not the case.
[00:26:07] Annette: And to be honest, the property manager, the co-host, whoever’s going to help you, they’d probably rather just start off the listing themselves so they can get all of their SOPs, the way they would get it listed. They could optimize it from the very beginning. I think probably, from that perspective, they’d like to do that.
[00:26:28] Sarah: Well, we did it with you, Ellen, for a mastermind in December, but I also recommend people who want to buy an asset like a short-term rental to stay in a short-term rental. That way you can understand too what you want for yours and what don’t want for yours either. Because the reason why you like this asset class is that you can pull different levers, including your choice of property manager, and that would then trickle down into what they offer.
Because as you know, we had Veronica on the show too, Ellen, and Veronica is who hosts this mastermind, and she ended up firing her initial property manager, creating a hybrid experience because she ended up going to the property between a turnover and was very unhappy with the way it was being managed.
[00:27:03] Annette: And reservations were not–
Being optimized. So, yeah, that’s really important.
[00:27:09] Annette: All right. So still sipping on our coffee here. Do we have any other? What are any other burning questions that you might have?
[00:27:16] Ellen: I think my final burning question around this, and hopefully this is helpful to any of you who are STR curious like me, is when you are personally evaluating a potential property to purchase, what are the most important data metrics that you’re looking at? Is there anything that is a absolute deal breaker when you see this number or this percentage or ratio, whatever, where you’re like, absolutely not, let’s just eliminate move on to the next thing?
[00:27:45] Annette: Ooh, that’s a good question. This is going to be something that actually have– Sarah and I have had a lot of conversations about this, with a lot of people and they’re always wanting to talk about cash on cash returns. Deal breakers for us, because things could amazing on paper, we need to see the property, we need to see where it is. For us, we need to see the neighborhood, where we’re going to be impacting the entire community.
Honestly, that is probably the number one deal breaker for Sarah and I is, is this property a short-term rental? Period. Before you even look at the numbers. Because the numbers could be stellar and it’s bad for the neighborhood, it’s bad the guests, so that is the deal breaker of really understanding where that property is, in the city, in the community, in the neighborhood. That to us is, I think, one of the deal breakers.
[00:28:34] Sarah: And listeners, if you think that’s woo-woo of us, I want you to think about that a little bit longer because it’s just like starting any business. If you start a business and then you get impacted by constantly being reached out by your guests because they don’t feel safe, constantly being harassed by your neighbors because you decided to buy it in an HOA, that doesn’t like short-term rentals, even though they’re allowed.
Now, the cost of your time, if you are self-managing or maybe your property manager then fires you as a client because it just doesn’t make sense for them because you are the 80% of their time making 20% of their money. So these decisions that aren’t the easiest to put into a spreadsheet, for us, are the most important. Plus Annette and I very much value our brand as human beings. And so that to me too is a really important asset that I take care of on the daily. But to give you some–
[00:29:21] Annette: Yeah, we’ll go back to the numbers question though. But that would be the deal–
[00:29:24] Sarah: Yes.
[00:29:24] Annette: That is something, again, because there is so much online about the cash on cash return and they’re running the numbers, and then I see these properties, and I’m like,no. That it can’t even– why’d you even run the numbers? That shouldn’t even be a short-term rental. What are you? Yeah. Anyways, we go on and on about that. But go ahead, Sarah.
[00:29:42] Sarah: So that component next on my list, Ellen, would be exit strategies. So there are people out there that believe, hey, this is a short-term rental, it’s meant to be a short-term, it’ll sell as a short-term rental. I disagree. Even the vacation rental markets, especially if you’re going to go all in on a large luxury property, that exit strategy is going to be a lot more difficult than one that you could sell or you could rent it out to a long-term person and then sell it in with multiple purposes for the property.
So if you want a large property that is mainly a short-term rental market, just understand that. I think then I want my cash on cash to be higher. I want my opportunity for it to appreciate to be higher because I know that I might be up against a bigger challenge when that time comes. So I’m not saying that would be an immediate no, but for me, the exit strategy would be very important.
And third, when it comes on cash on cash, I know the gurus say 30%, but I think if you’re getting 15% cash on cash, on a short-term rental that has exit strategies in place, that it might increase if I need to put those into action. And that for me is a win. And it’s in a great place, great neighborhood, I might want to visit, I’d be proud to have my friends and family, it’ll enhance my brand, sign me up.
[00:30:50] Annette: And last but not least is when you’re doing the numbers, you’re doing the projections, make sure to take into count those shoulder seasons, those slow seasons. Or if anything were to happen and you didn’t have someone in there for 30, 60, 90 days, could you afford it?
I would have, what is that number? What is that worst case scenario number if that property does not bring in that revenue? You’re selling that place. Be really comfortable with what runway you have to run it if and when something were to happen or you had a few reservations canceled. I just wouldn’t want you to be on tilt about the property or paying out for too long. So look at what runway you would have if for some reason you didn’t have those reservations for an extended period of time.
[00:31:37] Sarah: How’s that feel, Ellen?
[00:31:38] Ellen: So much gold. I’m so excited to listen back to this episode so that I can just soak up everything you all said. I just want to point out for the listeners, by the way, so on our show Cubicle to CEO, podcast tagline is we ask successful entrepreneurs the business questions you can’t Google, but what Sarah and Annette just did, those non spreadsheet factors to consider, that is exactly what you all are doing.
And I feel like that exactly proves why it’s so important to hire mentors or to invest in your education in any potential asset class or endeavor. Because these are the type of things that if I googled look for in a potential Airbnb property, I’m not going to get those type of answers.
And so it’s truly the stuff you can’t Google. So I just appreciate you being willing to share some of those non number specific things that I need to look out for, especially the exit strategy. I feel that that’s my biggest takeaway from our conversation today is, for some reason, which is silly, but I never even really thought about what happens if I don’t want this anymore? Or something in my life changes. So I really appreciate you giving me that to marinate on.
[00:32:44] Sarah: I also give you permission. I like to call it future. It’s a future Sarah problem. It could be a future Ellen problem. And if you love the property so much that you’re like, you know what, I’m going to kick that to future Ellen worry about because future Ellen might be in a very different– well, she will be in a very different financial space. So I don’t want that to get anyone out there to roadblock their mindset, but I do think it should be up for consideration.
[00:33:04] Annette: Think about it. Yeah, for sure.
[00:33:05] Sarah: Ellen, I have a question for you now. Because you’re an expert in taking people from cubicle to CEO, whatever that means for them, we have a lot of listeners who dream of trading in what they’re doing now for a life of full-time, short-term rental-ness. In all your interviews, in all the work that you do, what is that non-googleable thing that you could offer our listeners on–
[00:33:30] Annette: Dang, Sarah, that’s a gold.
[00:33:32] Sarah: On how to reframe their mindset a bit so that they can chase that and do it with purpose and ask better questions?
[00:33:40] Ellen: Oh, putting me in the hot seat, I see. Okay. Like you guys, I feel like every question requires some context for me to give the best advice for that particular individual. That said, if you are someone who is actively trying to exit your day job to do something else, whatever that may be, I think the most important thing to consider is, what do you already have available to you?
There’s this weird thing that happens, I see a lot of new entrepreneurs experience where whether they just left their 9-5 or they’re thinking of leaving their 9- 5, they almost discount their entire professional past lives. They’re just like, oh, I’m a new business owner, therefore I know nothing and I have nothing. I have no network. I have no skills. I have no value to provide. It’s crazy.
People who are such accomplished individuals, who have done so many amazing things in their personal and professional lives, they almost act like everything they did up until that point no longer matters. And that’s the biggest, I think, mistake that people make is not looking at what they already have. Who do they already know? What skillsets are they already using in day-to-day job that could be monetized outside of a traditional employee position?
Because that’s exactly how I started my business. I was working, uh, marketing for a corporate healthcare. I was very young and naive, 23, so maybe a lot of the fears didn’t come to my mind because I just wasn’t even thinking, um, big picture. When I left my job, my very first client for my freelance, at the time I was a freelance social media manager. Obviously, my business, uh, drastically in the last five years.
But at the time, my very first marketing client was actually, uh, a colleague of mine at the company I left. I was putting out there, hey, I have these marketing skills that obviously I was getting paid for within my day job, but I knew I could also monetize that existing skillset in a non-traditional way. I knew people were looking for freelance help in marketing, and I just started talking to my existing network and saying, “Hey, I have this skillset. If you know any local, small businesses that may need this support, please send them my way.”
And lo and behold, like I mentioned my colleague, I didn’t even know this about him um, my desires out there. Him and his wife own these local coffee stands, and I knew him as the project manager at a health plan. So why would I ever think that that was something that he did. But he was like, “Hey, we actually have these local coffee stands stands and we don’t really have any presence on Instagram. Yeah, we’d be interested in seeing how you could help us launch our account.”
And that first project, you guys, it was $300. It wasn’t any life-changing amount of money, but it was proof of concept. It was like, okay, there’s someone out there that’s willing to pay for something I already have, already know, I’m already good at, and how can I then reinvest that money into growing my business? And that’s how we generated more than $2,000,000 in revenue now. It all started with that $300 project.
[00:36:45] Annette: That was so much gold. And I want to give to our listeners, Sarah and I get a lot of questions about, how do I become– because a lot of people want to become co-host, they want to become property managers. What Ellen just said, there is someone in your network right now that has a vacation rental, they want to have a short-term rental. They need help with their Airbnb, whether it is, just messaging guests or maybe they need help with their bookkeeping. Maybe they need help with design.
Please look at your immediate network. And when I say, look, don’t just look at them. You got to put the offer out there that you can help them. So that’s my last question, Ellen, is, let’s say someone wants to co-host or they want to use their skillset, what do you think is the best way because you’re expert in marketing, how can they tell people when they don’t have any proof of concept, this is what I’m interested in, this is what I want to do?
[00:37:37] Ellen: I think the best thing– Okay, this is a piece of advice that actually one of our podcast guests shared on the show that really stuck with me. So shout-out to Michelle. She says, sometimes you have to do the unscalable things first in order to do the scalable things later. So what that means is when you’re just starting, it may make more sense than for you to put– I mean, you can do both. It’s not an either or. It’s an and situation. So put out in a social post across wherever you hang out or exist online, do tell people, “Hey, I’m really interested in entering into the real estate market. Um, I’m looking for these type of experiences. I would love to offer time, my services, my skillsets.”
Like you said, if you happen to be really great at design or you’re a really great organizer, or whatever it is in your personal life that might actually help an existing STR host, put those things out there and say, “I’m willing to volunteer my services to learn. Do you know anyone, um, that I could potentially help? I would love to be connected.”
Put that out on social. But don’t discount the part of actually sending individual emails, one-on-one emails, one-on-one to specific people that you know love and support you and want to see you win. Don’t assume things about people because again, like I said, if I had looked, from a very surface level at my existing network, I would’ve never picked this random project manager to be like, yeah, you’re my ideal first client. How would I even– I wouldn’t know.
But sometimes you just don’t know who people are connected to, what other things they may have going on in their lives that they just don’t publicly share. So don’t be afraid to just reach out to anybody who you know has your back and wants to see you win, and tell them, “This is what I want to do. This is the value I have to offer. Can you introduce me to anybody who might be a good fit for that opportunity?” And make the ask, because nine times out of 10, you will be shocked by the plethora of connections that are already within your community. Um, so again, don’t make assumptions and do the unscalable things first.
[00:39:40] Sarah: And the world needs you. They need to know what your special skills are and they need it to come from you, not the other people out there who you are going to tell yourself are better than you are. They need your special secret sauce. And so that is why you need to announce it to the world because we need you. So Ellen–
[00:39:56] Ellen: 100%.
[00:39:57] Sarah: Thank you so much. Where can our listeners find out more about what you have to offer via your podcast and elsewhere?
[00:40:02] Ellen: Absolutely. Well, if you all like to nerd out on business stuff like the three of us do, like Sarah Annette mentioned, our media companies specifically spotlights women-owned bootstrapped businesses that make between a 100,000 and under $100 million in revenue annually. So we think of ourselves as B2B media company for all the stories and amazing entrepreneurs and founders who are ignored by mainstream media since mainstream media likes to hyper focus on billion dollar unicorns and venture-backed startups.
So if you’re interested in that type of content, we send out a weekly newsletter every Wednesday, giving you a peak behind the scenes, into the case studies, real-time strategies, and finances of 6, 7, 8 figure businesses. We also have a podcast that releases new episodes every Monday and Wednesday, Cubicle to CEO. So you can subscribe wherever you’re listening to this or you could head over to cubicletoceo.co. That’s C-U-B-I-C-L-E-T-O-C-E-O.co to add your name to our weekly newsletter.
[00:41:07] Sarah: Do yourself a favor. Ellen is one of the sharpest business owners we know and we are so lucky to have you in our sphere, Ellen. With that, I am Sarah Karakaian.
[00:41:18] Annette: I’m Annette Grant, and together we are–
[00:41:20] Both Annette & Sarah: Thanks Visiting.
[00:41:21] Sarah: We’ll talk to you next time.
