The most common question that comes to mind with real estate investing is: where do I start? While there’s no one right answer, this week’s guest is passionate about sharing one the easiest way to get into real estate investing: Airbnb co-hosting!
This week, Craig and Zeona are joined by Natalie Palmer, a certified Airbnb Ambassador with 17 Airbnb Superhost awards and 9 rentals under her belt. In this episode, Natalie shares how she went from managing just one unit to purchasing her very own property.
If you’re looking for a stable source of passive income without much capital, then Airbnb co-hosting might be perfect for you! Join us in this episode and learn the importance of diversifying, setting boundaries with renters, and asserting your value as a property manager.
Watch the episode here
Listen to the podcast here
Kickstarting Your Airbnb Co-Hosting Journey With Natalie Palmer
So our guest today is really interesting. It’s kind of funny because we’ve had a couple of guests that were into RV type of things so we are going to talk a little bit about that, but what we mostly talk about in this episode is co-hosting, which may be a strategy that some of you would be excited to get into. I think most of our listeners are kind of new to real estate investing and so they may be looking for ways to get in with low or no money down. And co-hosting is just not talked about much but it is one of those strategies that you can leverage and she was able to stop working after five properties so, yeah, I think you want to stay ’til the end and hear all her tips about co-hosting.
Yeah, I think one thing that you might want to consider, if you’re in that early stage and you’re saving up for that down payment and you’re looking for maybe a side hustle to do outside of your W-2 job, co-hosting is one of those things that, I mean, you’re going to make a good portion of that Airbnb income, I think she said 20 or 25%, which is insane. Once you get your systems in place, it’s a relatively passive income stream. You’re not getting any equity so you’re not really like — you’re not getting rich off of it but you’re getting a little bit of extra cash flow each month that can go towards your down payment, and then when you get your own, you can easily manage your own and you’re building the systems to manage your own properties so that you can get even more cash flow off of, so it’s just such a synergistic side hustle that works for later on, which is why I think it’s one of my most recommended ways of, if someone doesn’t have a down payment, how to get started.
Yes, and it’s the way I not initially started but I did it for a lot of years and it helped me build up capital to buy houses. So, if you have a goal in mind and you’re working towards it, definitely any of these more active roles at the beginning can be helpful to get you there faster so, yeah, love co-hosting for that.
Love it. Awesome. Well, should we bring on Natalie?
Let’s do it.
Natalie Palmer, welcome to the show, my friend. How you doing today?
I’m good. How are you two? Thanks for having me.
Yeah, we’re doing good. We’re doing good. We’re so excited to get this thing going. So, Natalie, why don’t you kick us off and tell us how you first heard about financial independence?
Sure. So, my journey to it, I think I kind of got into things backwards, it’s not like I heard about financial independence and then decided to pursue it. I was already hosting short-term rentals for, actually, it is my five-year anniversary like this week, the first short-term rental ever listed was my parents had a second vacation home in Big Bear, California, and they owned it for years and just as we got older, we weren’t using it as a family as much and so December 2017, right before Christmas and New Year’s, I was like, “Hey, can I host this place? I think it would do really well on Airbnb,” launched it and then, from there, basically realized the power and cash flow of short-term rentals and just that whole world of real estate investing through one season, one winter ski season of running that property. My parents, we had saved up enough that we ended up putting a down payment on another condo in Big Bear and did the same thing. And then, through there, I started co-hosting for other owners. The first property I purchased, I guess we’ll get into that in a little bit, but the first property I purchased was April of 2021. So I was full-time hosting for three and a half years just as a co-host taking commission before I invested in my own real estate.
That’s super cool. So, basically, you started off, you didn’t even know what financial independence was, you just kind of saw this as a means to a side hustle. Maybe you saw an Instagram video or I think that was even before TikTok so maybe not a TikTok but it’s super cool though and so I love that because if you are just starting out and maybe you don’t have that money for a down payment or maybe you are in a more expensive market, a great side hustle that’s super synergistic for what you want to do is to just do the property management side. Z, is that how you started off or, no, did you…?
No, I started with arbitrage so I started just like renting out a room in my house that I wasn’t an owner of and then kept going from there. I started co-hosting maybe a couple years in because people started to know that I did Airbnb and they were like, “How do you do that?” and they didn’t have time so I took them on for them. Yeah, co-hosting is awesome.
Isn’t that funny how it happened? People always ask me how to become a co-host and I’m like if you just start hosting one, people will just approach you because they don’t know what to do and they’re like, “I know someone who hosts, let me just ask them to co-host my property.” They don’t even know what co-hosting is but they’ll find you and they’ll ask you.
So, curious about what that lightbulb moment was for you. Was there a point there where you were like, “Wow, actually, I can get so much cash flow and then I don’t have to have a job,” or when did you realize like this could support your life?
Yeah, I would say — well, I basically started doing it full time two years in, yeah, two full years in, so December 2017 was I started managing my parents’ place. That spring, they invested those earnings into another one so at this point I was managing two, and then just along the way was picking up co-hosting gigs for other people. And so I had five properties I was managing by the time I made it full time. And, yeah, it’s, again, like I wish I could pinpoint that lightbulb moment but it really just all of a sudden one day was like, “Whoa, I’m making enough money just —” this was supposed to be a side hustle, I had a convenient location through my parents and, all of a sudden, I can do it full time.
You built that all through referrals, basically? Like you didn’t do any sort of like outward marketing? Did you go to any meetups or was it just like, “Oh, hey, she’s doing this”?
Yeah, good question. So it is all organic referrals how my co-hosting and property management grew but it’s purely because of the location. So, that first property I managed was a condo in a complex up in Big Bear and then that second one we invested in was the same location and so it was other condo owners there that just saw us constantly being booked, renovating the new place, and so they approached us. And so, actually, today, I manage nine listings, including the one that I own and purchased last year and they are all nine in the same complex.So no outside marketing, it was just being tuned in to that neighborhood where I was already doing it. Click To Tweet
I was gonna ask a question about that, if it was that nine units in the same place, because she posted something on Instagram recently and I don’t know if you guys follow Natalie, but you should, she’s very funny, but she did post something about how design makes such a difference. And, at the time, I was on a design trip, I was like redecorating house and I was feeling kind of cheap and a little bit strung, like my budget was getting tight and I was like, “Oh my god, I’m spending too much money,” and then, luckily, Natalie pops into my feed and I see that she has nine places in the same building and she says the only difference is the furnishing, and she’s the manager, they have the same cleaner, the same handyman, and the only difference is the furnishing. And I think you said the lowest grossing one is like 40K a year and the highest grossing is closer to 90. And so just, as an aside for people, if you’re getting into Airbnb, definitely don’t be cheap on your furniture because it makes such a difference. And that’s true in short- and medium-term rentals.
Yeah, that’s right. After 2021, we closed out that year with, across the nine properties, if you just looked at them, you could easily rank them from the worst design and you can tell they cheaped out on furniture to the best design and if you were to rank all nine of them, the difference between the worst performing was 40,000 to the top performing was 85K.Again, all in the same condo complex, same number of bedrooms and bathrooms, same handyman, same cleaner, I’m the same manager, so it really goes to show how much design can impact your profitability. Click To Tweet
So, question, what is the — how much are you spending on the unit that makes 40,000 and how much are you spending on that same unit that makes 85,000 or 90,000?
Sure. So the one that’s the 85,000 is actually the one that I own and so we did a full — we’ll get into that too but it was a total fixer upper, had a history of flooding and everything, and so we just pretty much rebuilt the thing, tore it down to the studs and rebuilt it from there. So we did put in a good 40,000 to 50,000. I would say probably we put in 45,000, which if you look at that, we made that back basically in one year because that’s the top performing property that did 85 compared to the one at 40. So, definitely took more chunk, a bigger chunk of investment upfront but, to me, it’s absolutely so worth it that it pretty much paid off within the first year.
Okay, so it’s not just the furniture, there is some sort of rehab and some systematic, like the counters are better, the cabinets are better, like it’s more than just, “Oh, we’ve got the pottery —
— whatever, Pottery Barn, I don’t even know if Pottery Barn is a good brand but I heard it on Friends once.
Pottery Barn is a great brand. Pottery Brand is a great brand but it is expensive, but, yeah, for us, it was really a lot of — that is one thing I’ll say, like if you’re not building new or planning to rip it down and completely flip a property, you are a little limited in what you can do but I still think fresh paint, wallpaper, drapes hung at the right height, artwork, like there’s still a ton you can do, redo your kitchen backsplash, paint your kitchen cabinets…... you don’t have to tear everything out to bring in that value. Click To Tweet
Okay. I think we’re getting on a real big tangent so let’s go back to your chronological story. I think it is time for…
The For Real Deal.
Natalie, this is your first ever deal that is intentional or unintentional. Z, do you want to get into the management side as her first deal or the first deal that she actually bought?
Oh, the first deal that she actually bought. Let’s hear all the details of what you spent, I know you talked a little bit about what the renovations costed, but all of the other details about how much it costs every month and how much you make out of it.
Sure. I’m actually so excited to talk about this because going through this escrow and this purchase process was a nightmare and I’ve wanted to vent about it so thanks for giving me an opportunity to do so. Okay, so this property, I had had my sight set on this condo for years, like when — so I said in December 2017, started managing the one condo. That spring, so like April 2018, invested in another, and I liked this one this whole time. It was a total train wreck. If I can curse on this show, it was like an absolute shit show. The history of this one condo was it had flooded previously, the floorboards were just completely warped. It was like unlivable at this point. The owners had had three long-term tenants previously. One was there for a year and it was this chain smoking grandma. After she moved out, someone else moved in for a year and they smoked hookah every single day. And after they moved out, someone else moved in and they were like a pot dealer. And so when we got in there, it was three years of every type of smoke smell baked into the walls, like just it was so bad, but I loved it because I knew what those condos were appraising for and nobody would touch this thing because of the flood damage and just from how involved we were in that condo complex, I had been watching this property for years and knew that it was realistically the only condo I’d be able to afford when I was ready to invest in property and I knew what we could do with it and how we had kind of designed the other two that my parents owned so I saw the potential in it.
And, finally, we were getting ready to put money down and purchase it in like January of 2021. Someone else put an offer and I was crushed and it, for whatever reason, fell through. So we put an offer in April and ended up getting it but it was the gnarliest escrow ever. This was my first experience purchasing a property and God bless our realtor and the loan officer for holding our hand through everything but we found out every hurdle in purchasing it, we found out. So, halfway through, we found out that the sellers had gotten a divorce years ago. The ex-wife had forgotten that she even owned this property, the husband was the one managing the long-term tenants, and she decided, apparently she had a lien on the property for alimony or for child support or something and, basically, the guy said, “Okay, if you wanna sell it, you have to come up with the child support money,” which was going to be like $20,000 for this lien. And it was still so undervalued, so under the market costs that I was like, okay, if we need to come up with 20K to pay this guy’s child support, we’ll do it. And my husband was pissed. He was like, “No, we’re not paying this deadbeat dad’s child support. Absolutely not.” But, anyway, then we found out like a week later that the name of the wife that they had tracked down, it was like a very generic name in California, they ended up finding out that there was like 35 other of hers in the state and they got the wrong lady. And so it was a lien on a completely different property. I have no idea how they even mixed that up. But we ended up not having to worry about that at all. There was just so many like things that it was like, okay, let’s delay escrow another week because they think that the flood came from a city pipe and now they wanted to inspect if everything was right with the city. And every single hurdle that popped up, it ended up being okay in the end. So, it was just crazy. I feel like it was totally meant to be ours. In the end, we purchased it for 183,000 and, after putting in about our 45 in renovations, it’s now appraised at like 400,00, 395. So it was definitely worth it and we made that money back from the renos in the first year. Condos right now in that same complex are selling for 325, 350, so I was so happy with that investment. But it was definitely trial by fire just going through every day. It was a new call, like, “Hey, we found out this,” “Hey, we found out this.”
Wow, that is absolutely insane, especially for your first deal. It sounds like you kind of really went through the wringer. And so how did you do it? How did you — like while there’s clearly a lot of stress that goes into it, and then not only that, but you closed and then the stress really begins with a massive rehab. And so what did you do? What did that 45K entail? How did you find these contractors? How did you save? Because even if you’re doing a full gut, 45K sounds pretty cheap for a full gut.
Yeah. Well, we did a lot of the work ourselves so that definitely helps.
There is a hack.
Yeah, there’s the catch. But, yeah, I mean, really, if I had been a first-time investor or trying to — well, okay, I was a first-time investor at this point but I’d already been managing for a few years and so I knew what the potential was going to be and what the cash flow would be once we got through it and I think that that’s the only reason I kept my sanity. My husband does not do the short-term rental business with me at all. He’s a teacher and he’s just like, “Whatever, Natalie’s doing her thing.” He every night was like, “Let’s just pull out. It’s not worth it, this is crazy,” and I was just like, “No, just see the vision, we got this.” So if this was like my first exposure into short-term rentals or something, I probably would have given up and pulled the plug so it definitely took just what we were already doing and knowing if we just pulled through it would be okay. And, yeah, we did a lot of the work ourselves to save that money.
Okay, so what was your mortgage or what is your mortgage? And then these numbers, I did a little math, but 85,000 is roughly like seven grand a month, which is great, but those are 2021 numbers and most people listening might know that 2021 was the biggest year for short-term rentals and so how is it doing comparatively this year and what do you think it’s going to continue to do?
Yeah. Okay, so I am disappointed to report that, this year, we’re ending with that property doing 52,000. So it took about a 40% hit this year. I’m very optimistic, because we only purchased it for 183, the mortgage is not that much all in and we got a low interest rate last year, of course. All in, after HOA fees, we are paying like 13 something a month. Our mortgage and insurance is coming out to just over a thousand and our HOA fees there are 330.
Okay, great. I do have another question for you just because it’s California and people love to come to me and say, “Oh, but what about squatters?” So I just love to hear from you since you’re managing nine places in that one complex and I imagine it’s just not something that attracts squatters but have you had any sort of issues with evictions?
Well, in California, the squatter, the eviction laws are 30 days. Once a tenant has been there for 30 days, they can officially squat and you have no rights over them and I do almost exclusively all short-term rentals so people are in and out within three or four days so that hasn’t been an issue. But, actually, this year, and, Zeona, I know we talked about this when you came on to my podcast, I actually have two mid-term tenants we’re dealing with right now. And one thing I’ve just been very diligent about is we send in our cleaners still once a month. Every 30 days, we make her go in and the guests understand that and we also, instead of just letting them extend their reservation, we always cap it at 29 nights and then they have to book another 29 nights. So just something that’s kind of on the books to show that it’s not one long reservation but these are still short-term rentals. And I’ll add too, we’re very particular about that 29 nights because,in our city, we have to pay short-term rental taxes, TOT taxes on anything 28 nights or less so by pushing it to 29, we’re in that perfect window of not having to pay TOT taxes Click To Tweet
but we’re not creeping up into the 30-day-plus territory where squatters could become an issue.
How many of your properties are 20 — are doing medium-term rentals with?
Only two right now. Only two of the nine, and that was totally accidental too, there was just a local leasing office that said the whole first floor of their apartment complex flooded and they needed to move some people while they were doing renovations and so two of the family leads were the perfect size fit to come into two of our units.
Gotcha. So, real quick, just want to kind of recap that first deal that you had. So it looks like — so you bought it for 183, you put 45 into it, it’s now worth 400. So, as you can see, the wealth in real estate comes to the equity, it doesn’t really come that — I mean, the cash flow is great but the equity is really where you get rich. And, now, in like a more normal-ish year, hopefully, 2022, your rough, rough numbers here but, monthly, you’re making about $4,500 a month in revenue, your mortgage payment, PITI, 1300. You mentioned that the property had flooded so are you needing to buy flood insurance on top of that and is that expensive? Or are you able to circumnavigate that somehow?
Yeah, so how it flooded, that was one thing we were concerned about when we were purchasing and did an inspection, we really wanted to know where the flooding came from, if it was like something messed up in the crawlspace or something. It actually flooded twice according to the history from the realtor, but both times, it looks like it was totally just user error. So, one time, the toilet backed up, and then another time, I think they left a sink running or something so we were super nervous for it to have flooded twice but I think the previous owners just did not care about that property, like they just didn’t even remember they had it and, yeah, pipes probably, a pipe froze over or something in the winter in a ski resort town. So, I mean, we do have short-term rental insurance and everything which covers a lot but, other than that, we did our inspections and stuff and we are not concerned that it will happen again with us as owners.
So, let’s go on to your next deal. What did you do once you survived and thrived after this big renovation that’s probably taking some years off your life but, yeah, what did you do next?
So my next deal after that, so at this point, that was the seventh property in Big Bear and then, since then, I’ve picked up a couple more for management, but I’m done buying in Big Bear, I think it’s too saturated at this point and they’re becoming really unfriendly with STR regulation. So, actually, what I did after that is we purchased an Airstream this year, a camper, and we are currently looking for land, which I guess will be the next deal, currently looking for land to park it on and I would love to build out a glamp site or something like that and we can talk about that a little bit too because one thing that really attracted me to the Airstream model was I had built such a thriving business in Big Bear and I have the same cleaner and handyman and everything is so dialed in because it’s all in the same condo complex but I realize where I was short sighted is I have not diversified at all. And so, this November, we had a huge measure on the ballot that if that had passed, it would have totally shut down our short-term rental operation.
One mistake I had made was we had a big voter, so through growing the business in Big Bear, I was able to scale it really quickly because all the condos were in the same location but I realized that I hadn’t diversified and we had a huge measure on the ballot in November, if that had passed, it would have completely shut down our business and so that really got me thinking that I have to start spreading out my locations. And the reason a camper, an Airstream was really attractive to me was if I park it somewhere and there ends up being some sort of regulation, I can move it, and even though it’d be a pain in the butt to do and I’m still not opposed to just buying land or real estate, but I liked the idea of having an asset that’s still rentable and can cash flow but I can kind of move it around a bit. So, yeah, that’s why the Airstream option became really attractive to me so when I had the opportunity to buy this one, I jumped on it. Yeah, but now I got to find land to park it on.
So what are you doing with it now? Is it literally just hanging out, like it’s parked but it’s not operational?
It’s not operational. I mean, it’s fully drivable. It’s been parked in my driveway for a couple of months since we bought it and I’ve just been really patient with the process. The payments on it are so cheap, we can talk about these numbers too. The reason I liked the airstream option, like I said, the movability was great, but all in, we bought it for 73,000. However, in California, we had to pay sales tax on it because you’re purchasing an item, I guess, so 10 percent sales tax here in my county, in LA County, so, in the end, all in, we paid about 80,000 for it and we were able to do a 15-year fixed mortgage for it, you can do a mortgage on campers because they’re livable and it could be considered a second home. So we did a 15-year mortgage on that and our monthly payment is about 500 bucks a month. So I’ve had it in the driveway for a couple months and, at first, I was in a huge rush to try and find the right property to park it on but, right now, I kind of decided to take a step back.
Once I find something, I really want to build out a whole deck and a hot tub for it and a fire pit and just make it a whole atmosphere and a whole vibe and so I’m trying to be patient with actually finding the right piece of land and then getting all the hookups in there. So, right now, I’m looking most likely at either Yucca Valley or Twentynine Palms. Joshua Tree, unfortunately, just banned, that you cannot rent out anything that doesn’t have a solid foundation so a camper will not work. But one thing I wanted to touch on too with the Airstream was, as I’ve been getting more interested in real estate investment, I almost pulled out of that deal because I was really trying to invest in things that would long term appreciate and be growing assets and I kind of wondered if a camper was just distracting me from my long-term goal, but…... I ended up being convinced to get it because Airstreams actually are known for holding their value really well Click To Tweet
better than any other brand of RVs and they actually go up in value the older they get because a lot of people really like collectors, Airstreams and vintage Airstreams. So that kind of sealed the deal for me that I can resell it and it’s not like a car that just depreciates the second you drive it off the lot.
Natalie, I feel like you’re answering all of my questions before I have to ask them, like before I’m able to ask them. It’s like you’re in my head. But one thing I want to ask about the Airstream, kind of with that depreciation, like you bought the airstream new, it sounds like.
Yes, it was 2021 model.
Okay, so does it kind of go down in value slowly for the first 10 years and then when it kind of gets into that antique vintage —
— kind of mode, that’s when it pops so you kind of have to hold it for a while in order for it to get that pop or is that —
— not right?
That is spot on. That’s a perfect question. That’s exactly what I’m seeing and so just from the research I’ve done, it seemed like everything that was like 2011 and newer were kind of some of the lower priced ones and then anything that’s like past that, especially like 70s, 80s, 90s, those ones seemed to be going for higher. So, yeah, I think there is kind of a little bit of a curve with it but I don’t mind, you know, because I’m trying to cash flow on it for the next 10 years so if I get bored of it by then, then maybe it will have gone up in value by then.
So I want to talk about co-hosting, and so many people get really hyped about the arbitrage model but I think co-hosting can be great because you actually don’t have to put any money in, like a lot of people are trying to get into real estate and looking at zero money strategies and co-hosting is actually a great way for that. So maybe you could talk about a couple of different reasons why somebody might want to look into it as an option.
Yeah. What you just touched on, so even though arbitrage is obviously the lower priced option compared to buying a property, rehabbing it, getting it all ready, it still involves signing sometimes a year- or two-year-long lease, paying first and last month’s rent, putting a deposit down, furnishing the whole thing, getting your supplies, paying a photographer to stage the photos and everything so there still is a good few thousands involved in cost there.Co-hosting, there is virtually zero startup cost. Once you find someone to co-host for, you are just strictly taking a commission off of that and that is it. Click To Tweet
Photography, all of those things I just mentioned, furnishing, all those costs get passed off on to the owner, all you do is take that percentage. So it is a really attractive option. And like I know that this whole show and your audience is really interested in ownership and long-term wealth and financial freedom but kind of like I touched on, our first deal was so tricky, if I hadn’t had the co-hosting experience and known what was on the other side of that deal, I probably would have given up but I knew what I would do with the property once I got it so that made me a lot more confident. So, yeah, I think if anyone is interested in this whole world at all, like just start co-hosting, and it’s so much easier to get that first deal than you think. If you post on Facebook today and just say, “Hey, I’m really interested in managing a property. Does anyone have an uncle or a brother or a sister or an aunt that has a property?” Somebody you know has something.
Natalie, how much do you charge to co-host? What’s your rate?
I just changed my rates this year actually. So I was doing 20 percent commission and I just upped it to 25 percent, but what I’m doing now is including the cost of their consumable supplies. So, before, I would charge 20 and then I would purchase toilet paper, shampoo, coffee, whatever it was, and expense it to the owner. I always wanted to purchase everything so I get those credit card points but I would then bill the owner to reimburse me. But this year I made the change to — I upped it to 25 and I’m now including the cost of refilling those supplies. And that change happened because, first of all, the bookkeeping across all those units I was co-hosting was so tedious, I would do a huge Costco run and if I put half a container of toilet paper, like toilet paper comes with 24 rolls, I would put twelve in one unit, eight in another unit, four in another unit, and the bookkeeping on that was so tedious in how to split apart those things and, sometimes, I’d even go in with a gallon of shampoo and just need to top off a little bit in the containers, how do I even bill that or expense it? And so it just made it a lot easier that I don’t have to put in like full things of TP, full things of paper towels, I can just refill what’s needed so I’m covering the cost of supplies. I think I’m making a little bit more of a profit with the 25 but, yeah, that’s the reason I upped it. And owners love it too because they now just have 25 percent all included and they don’t have to do the consumable supplies.
Natalie, I can just envision you walking around with one of those little kitchen scales and measuring the shampoo per ounce and being like, “Oh, four ounces, you’re getting billed here.” Oh my gosh, that sounds like a disaster.
I luckily never did that but I swear, like it was getting close to that point because I felt like I’m not just going to charge this owner for a gallon of shampoo and I only gave them a quarter but, oh my god, what a nightmare it was. So, yeah, if you’re going to be doing multiple co-hosting gigs, especially in the same area where, for us, it was just so easy to go from unit to unit to unit and restock things in the condo complex, the bookkeeping was just insane on that so I’m really happy with the change. One thing, though, is I still do make the owners cover that initial supply closet setup. So, they have to do the whatever, $800 trip to Costco in the beginning and like stock that supply closet full but after that, the refills, I will take that out of that 25 percent.
Cool. So this sounds like maybe this was a mistake or an upgrade that you learned over time. Can you talk about a couple of maybe mistakes or tips that maybe people would benefit from just getting started in co-hosting?
Yeah, definitely. So one thing to set very clear is how often the owner will be using the property and on what dates and I don’t think that there’s a right or wrong answer to this at all but the first co-hosting gig I started doing, I calculated my percentage based off how much I thought they’d make in a year and I did a lot of the work upfront for free, setting up their property, helping furnish it, because I figured, okay, I’m going to make this much back over the year and that’s okay. Then they wanted to block off the week between Christmas and New Year’s to use it for themselves, they wanted to block off Fourth of July, they wanted to block off Labor Day and those are our peak weeks where I make the most money off of hosting and so that was really tough that I put all this effort into setting it up and didn’t make the money back I thought because they blocked off all these peak weekends. So, now, I guess one option could have been I could have written into my co-hosting contract like you’re limited to the personal days you can use but I know a lot of co-hosts do do that, some property managers do that as well. I didn’t like that solution because if they’re the owner and they want to use it when they want, I’m fine with it but I do now charge my time in helping set up the property instead so that, even if they dropped me in a few months or they block off whatever they want, maybe they have a family member come into town who wants to stay there, I already got paid for my time setup and it’s not an issue that they blocked those dates.So that’s one lesson I learned, is just set those expectations up front of how often they’re using it and what days. Click To Tweet
That’s a great move.
Would it make sense at all to like charge them maybe a little bit less, like 10 percent or 15 percent for the fit they occupy because you’re still having to monitor the soap and all that and you’re paying for the soap now so that could be something.
Like you guys used 25 cents of shampoo, yeah.
Yeah, but it’s more than that, right? It’s like how do you justify to them, because it’s really like, “Hey, yeah, you can stay for Labor Day but just give me my 15 percent,” right?
Or whatever it is.
No, that’s a great point too. And that’s one where, again, I personally wouldn’t track it like that. I just don’t feel — that’s just not my management style, and I don’t consider myself, even though I am managing their properties, I always call myself a co-host, because, to me, co-host, maybe it’s just a technicality but that terminology to me makes it more like a partnership and that’s really how I view it is like owners, when you block off a weekend at your place, we’re both not making money. It’s not just like I’m this like big scale, big conglomerate property manager or something that’s like taking over, like I really do see it as like we’re working together, I only make money when you do. So I could get into those technicalities but the biggest thing I found is just explaining, basically, you want to make money too, you probably bought this as an investment property, or if they had it for years as a family home and now they’re switching it to a short-term rental, you’re doing that and you’re putting this money upfront because you want to make money so like these are the dates and the months that you should avoid blocking off. And at this point, all the owners I work with are really good. They’re like, “Oh, we can make that much for Christmas Eve? You know what, we’ll stay home. We don’t need to go to Big Bear for those holidays.”
So if somebody wanted to get into co-hosting, I feel like you teach about it. Is that true?
I do, yeah. I’ve talked about this on my podcast, I do consultations and stuff on this. If anyone follows me or heads to my website, they will learn all about this.
Okay, one question I have and this is coming from somebody that has a couple small term rentals but does it in kind of a different way, but I always — what I always —
Small term — short term. Oh, man.
I was like what?
Medium term, big term, that’s what — it’s small term, medium, big term, that’s what we’re going now.
Yeah. So I have a couple of short-term rentals, kind of. I do like the arbitrage thing but I’m the landlord and someone arbitrages the property from me. And where I always got caught up with doing property management or co-host was that 20, 25 percent number and so it’s like how do you — and I think that might be someone that’s just getting into this, that might be a big hurdle and this might be a softball question for you but how do you tell somebody that, “Hey, I’m gonna take 25 percent off your top line, not even your bottom line but your top line.”
Yeah, it’s so funny because I would never pay someone to do what I do. I don’t know if I should —
Natalie, you’re not allowed to say that.
I would pay someone to do what I do, okay? But I have to realize, you are working with opportunities of scale, right? Am I using that terminology right? It is so much easier for me, like at this point, my co-hosting business is like almost automated, it seems like a joke like how much I’m taking. I should not be saying this but, truly, I’ve trained one cleaning team and they go to all the same condos and they’re the same layout and it’s just so structured and optimized how it’s happening. But what I’ve realized is that for one of these other owners to do this on their own, it is so much more difficult with like being in Big Bear, if it’s snowing, it will take a cleaning team, if you hire a cleaner who’s got 15 other properties that she cleans for and it’s snowing and there’s backed up traffic and you need to put snow chains on that day and they’re barely plowing the roads, she physically will not make it over to your property by check-in time. I know so many owners who have to block off 24 hours between every reservation because there’s just no way to even get the cleaning teams across town. You have to do really early checkout times of like 9 or 10 a.m. You have to do late check-ins of 5 or 6 p.m. if you want to make it work. And there’s a cost associated with that. And same thing with the handyman. We bring enough business that we almost have a handyman full time. If you were to scrap it together like as an individual owner and you’ve just got the one property, you don’t have any loyalty there. You’re going to have to pay them extra if you want them to show up quickly. And I think that there’s a value that we bring in just having all those systems in place and having enough work for a cleaner and a handyman that they will show up every single time and be done on time.
That makes perfect sense.
Yeah, those are good pointers.
So, yeah, it seems like easy work to me but it’s a — like I always have to understand that I’m bringing in a value that just an individual owner, they don’t have the infrastructure to do it. And I think people can self manage, for sure, but you just need to be realistic that if you don’t live in the area and you don’t know the handyman and the cleaners there, you might have to pay extra to get someone to show up and that eats into your profits too.
Absolutely. I think that’s important, right? I think a lot of people stumble and they’re kind of maybe a little bit too cheap or too miserly when they’re starting or when they have some sort of investment, but, really, just like you said, Natalie, it’s like — what is that quote? Like if you go alone, you’ll go fast but if you go together, you go far. And so like with a team, and, Natalie, as part of your team, you can go much farther, you can get more properties. Hopefully, however, you saved up that money to get that down payment to buy that property, you can probably double down on that so you can buy another one versus trying to save 20 percent of 50,000 or whatever.
Yeah, and another thing too is like I’m a weirdo who loves actually talking to guests, like I love communicating with guests and I do not mind if they hit me up at 8 p.m., “What’s the Wi-Fi? It’s fine, you’re paying to be here, I have no issue, I get to work from home, from my phone, wherever I’m at, I have no problem sending you a message. A lot of owners I work with, there is no amount of money in the world that they would go for to be tethered to their phone 24/7. And so that’s another thing too is like understanding what you bring to the table and that if you are interested in hosting, that, in itself — it’s funny how things that come naturally to us, we think that nobody would be willing to pay for it, like I said I would not pay someone to do what I do, because I can do it and I like doing it. But I will pay a bookkeeper or someone to do my taxes and a CPA might be like, “Who would pay someone to do taxes?”So I think it’s really about finding your strengths and just knowing that there are other personalities out there who do not want to do it and that’s where you come in, you solve the problem for them of what they do not want to touch. Click To Tweet
I love that.
Okay, Natalie. So you’ve got this rental, you’ve got your co-hosting business, you’ve got the Airstream, so what’s next for you in 2023 and beyond? How do you want to scale your business?
Yeah, essentially, what I’m really interested in doing right now is, like I said, I’m done with Big Bear, I’m too concentrated there, but I like what I built in terms of how quickly it scaled and how it’s all concentrated in the same condo complex. So, right now, I’m really interested in the boutique motel model. I just like the idea of picking up like one property that’s got a ton of units and doors within it. Even with the Airstream, once I find a piece of land to park it on and get the hookups, I would love to park like five or seven more camper vans on there and just turn it into something where you could book each one individually or rent out the whole site. I’ve just seen how much easier it makes it to scale when you’re in one area but I also see the value in picking up different areas so that you do have different seasonality and if short-term rental regulation passes or something, it doesn’t wipe out the whole business.
Totally, yeah. And you already are running a hotel, kind of like you said, so I think it’s kind of —
Like on accident, I feel like I…yeah.
The accidental hotel owner. That’s hilarious. And so with this buildout of this piece of land that I guess you don’t have yet but you’re thinking about getting, are you wanting to build hookups, like 10 hookups on the land and get like 10 acres and do it that way? Or are you just kind of looking at whatever is available at a good location?
Great question. This is something I know nothing about and I’ve been trying to binge so many YouTube videos and podcasts on this. If any of your listeners have experience with land and putting the RV hookups and that, hit me up, please, because I am totally like a fish out of water on this topic and I know I’ll learn it but I’m not there yet.
You’re creating an RV park is really what you’re doing.
So it’s like a whole ’nother thing but that’s amazing. Cool, well, Natalie, I’m super excited to kind of follow your journey and see where you go with these RVs and whatever the Airstreams, all that good stuff, but I think we are needing to move into the final part of our show. But before we do, do you have any parting words of wisdom for the listeners?
I guess what I would kind of want to wrap this up on is really like once you kind of realize like the —I would say it’s really important to get in touch with what your goals are before you sort of start. Click To Tweet
Like I said, we jumped through so many hurdles with that one condo but I had the end vision so that’s what kind of kept me through. Even with the Airstream, I asked myself a lot of questions, is this diverting from my long-term goal of getting appreciating assets and when I realized that it was totally in line with it, it was just a very easy yes. So I would just encourage anyone to get very clear on your goals and your vision and it will make the yeses and noes really, really seamless.
I love that. Yeah, once you have your North star and you know what you’re going towards, really nothing should get in your way. Z, you know what time it is?
It’s time for…
The Final Four.
Z, kick us off.
All right, Natalie, we believe that reading is a great way to learn. What are you reading right now?
Okay, I don’t know if you guys are going to like this one. I’m not reading an investment book at the moment. I’m reading, this is so dorky, I’m reading The Beginner’s Guide to Carpentry.
Oh, that’s an investor’s book.
Does that count? I just had a realization like a week ago, I was like, you know what, like with cooking, this is sort of a tangent but I’ll tie it back, I was like with cooking, I’m a fairly good cook and I don’t follow recipes, I can open a fridge full of ingredients and leftovers and like I feel like I just have a very good understanding of salt and heat and temperature cook times and like acidity and I realized, with woodworking and like home repairs, I don’t know anything. I can follow instructions for like a DIY or like installing a toilet or something but I’m like, “Okay, oh my God, what’s this step? Okay, what was I supposed to do?” and it’s like just a whole other language and I realized I want to get like an overarching understanding of carpentry and construction and, that way, other fixer uppers aren’t as intimidating and I’d be more willing to invest in those or even if I hire a contractor, I want to be able to ask them the right questions and vet if they know what they’re doing and if the quote is appropriate. So, yeah, that’s what I’ve been reading, like The Beginner’s Guide to Carpentry or something.
Man, this cracks me up because when I got started in real estate, we have this friend, Mister Money Mustache, he’s got a blog and he’s really into carpentry and he’s really into this idea that you should be able to be self-sufficient, do everything yourself. And I thought, okay, great, I’m going to learn how to do renovations and all this stuff and, today, I do not even know how to put together furniture so I quickly passed that on. I was like, “Oh, yeah, what the hell am I thinking?” So it’s funny. We’ll see if this lasts for you but maybe this will be something you love.
I mean, my dad is super handy. We basically did all the renos on that big flooded fixer upper ourselves but, again, it was like all with his guidance and him being like, “Get me this power tool. It’s the yellow one in this orange bag,” and it was like just a whole foreign language. So I just need to get like a better fundamental understanding of this whole world.
Sounds like your dad’s a DeWalt guy.
Totally a DeWalt guy. You knew from the yellow brand.
I’m a Ryobi girl.
I’m all Milwaukee, baby.
Oh, big controversy.
Yeah, yeah, we may not be able to publish this episode now. All right, second question. Natalie, what is the best piece of advice you’ve ever received?
Oh, my mom always tells me this. She always says, “Natalie, do not let other people make their problems your problems,” and that has carried me through so many situations. A guest that wants a refund because they hit traffic on the way to the property and couldn’t check in. That is not my problem, I am not letting you make your problem my problem. Just all sorts of things, like you can carry that any which way but that has helped me save so many headaches of like not being a people pleaser and just, yeah, there you go.
Okay, this is like perfect timing that you just said that and, Z, I want you to answer this too, but a lot of people, we’re in a period right now where there were some ice storms across the US, Southwest canceled a stupid amount of flights and people were kind of screwed and couldn’t get to their Airbnbs. Did you have anybody in that situation? Did you offer them a refund? Would you have offered them a refund?
Travel insurance. You didn’t get travel insurance? That is not my problem. If I have other guests, the only time —
Oh, she’s cold.
The only time that I would have refunded is — I’ve refunded once ever and it was when all three roads to Big Bear were closed. There’s three highways to get there. If all three were closed, then I would not have been able to rent to anyone, in that case, fine, I’ll refund you. But as long as one road is open, if somebody didn’t take the time to — and the thing is too, I equip my guests so much. I send them info on road closures, which type of snow chains to get before they start their drive. If they don’t read that and they end up taking the wrong road or they can’t make it there because they didn’t take a four-wheel drive or something, I’m not letting you make your problem my problem. So, no, as long as there’s a way that somebody could have made it to the reservation, I don’t refund.
That’s big. That’s big. Z?
So I did have one and I think the thing I want to say about like Natalie’s position is like if you are going to be a co-host, you have to have strong boundaries because people are going to push you all the time. And so it is important to kind of have maybe your policies, your rules, so you can go back and look at them and refer to it because it is confusing. But for our personal home, these people couldn’t get here right on Christmas and it’s because all the flights were canceled and so they said, “We’re trying to rebook and we think we can come two days later,” but they have a booking until New Year’s Day and so I told them, “Hey,” again, I’m trying to help a little bit I don’t want to make it my problem and so I told them, “I’ll refund these two days but if you end up not coming at all, I can’t refund you anymore because we’re counting on this income and all this stuff.” So that was kind of my thing and everybody has their way of doing it but, sometimes, I like to give somebody a little bit of something so they still feel like they win rather than just telling them no. It just depends.
I totally, I think that’s extremely fair and like, you know, we’ll do cases where I know if someone had to check in really late because, whatever, the drive took them longer or something, if I can give them a late checkout, I totally will, like I’m definitely not trying to be like heartless here but it’s just very much, and like you touched on it, especially with the properties I co-host for, I feel like it’s honestly not my call at a certain point to refund them or not. As much as it might pull on my heartstrings, owners invested so much money in these properties, they’re trusting me to make them money in the end of the day and if there’s an option that they could have picked up travel insurance, it’s not my call to just refund money on behalf of the owner. The other thing that frustrates me is like, in these cases, I’m like, “Okay, if you bought lift tickets for the ski resort that day, they’re not going to give you a refund.” It’s like there’s certain things that people will always like turn to their Airbnb host for but they don’t ever try to take advantage of other businesses. It’s like always they go for like the mom and pops and that really just bugs me and so that also is a huge part of it for me that’s like, “No, I’m not letting you take advantage. We are still a legit business, even if we seem like it’s just a friendly host but I have money, I have bills to pay and a mortgage and an HOA and promises I’ve made to owners.” So, yeah.
I love that. It’s hard to be strict and stern when people are in distress, especially if it’s around the holidays or something like so kudos to you, Natalie. All right, Z, third question.
What is your why?
Yeah, for me, this one really just comes down to like being able to be a stay-at-home mom and I will say there have been like other co-hosting opportunities and stuff that have popped up that I know I would have made a lot more money on but they were in a different market that I know is really difficult to navigate, hard to find reliable cleaners, really difficult regulation, I’ve just said no to those flat out because I know it will take so much more time for me to go set them up and stay on top of regulation stuff and training cleaners and my ultimate goal is all of this is to help me be able to stay at home with — I have two young kids so anything that kind of distracts from that, I will just say no to, even if the money could be good.
I love that. Family first. That’s one of the FI Team’s — it’s actually the number one value of the FI Team, family over everything. Okay, Natalie, last question. What’s your favorite type of cheese?
Ooh, maybe goat cheese —
Goat cheese is good.
I honestly love, I love all cheese. Like I’m a cheese freak, for sure. Yeah. Yeah, all cheeses are good. Some Gouda, some smoked Gouda, mozzarella, Burrata. I think I like the soft cheeses, mozzarella, Burrata, and goat cheese, that’s like my peak family of cheeses right there.
You sound like you make a killer charcuterie board.
The prosciutto roses, once you find that, yeah, people will just love you at the holidays.
Me and cheese is like —
Sprig of rosemary and it’s like instantly you elevated it.
Yeah. Love it. Okay, Natalie, so where can people find out more about you? If they want to learn more about co-hosting, if they want to follow your journey on IG, give us all of it.
I am most active on Instagram, so Natalie Palmer, you can find me there, and then I’ve also got a podcast that Zeona was on. To this day, one of my most popular episodes so thank you, Zeona. People loved hearing about mid-terms. So, yeah, Zeona’s been on and that is called No Vacancy. It’s on Spotify or Apple. And then I’ll also be speaking with Zeona at the STR Summit in Orlando in January so you can catch us both there live.
Yay, that sounds fine. Definitely go follow Natalie on IG, get to that conference if you’re interested in short-term rentals. I will say that conference, if you want to take action and you feel like you’re kind of hesitant, conferences are the best way to go. You’re going to meet people, you’re going to see people crushing it right there in the flesh, and then you’re going to be like, “I need to do this co-hosting thing,” and so definitely if you’re thinking about it, head over to Orlando.
Craig, on that note, can I also plug the conference I’m planning really quickly?
I’m actually planning an all-women’s short-term rental conference in Scottsdale in February so I agree with you 100 percent, conferences and just networking in person has been the biggest game changer for my business and growing my network as a host and opportunities like that. So, yeah, if you guys believe in networking and all of that, 350 all women, short-term rental conference in Scottsdale.
That sounds fun but I’m not invited.
You can come. We’ll sneak you in.
I’ll be the janitor. I’ll be vacuuming the carpet —
That sounds terrible.
Any way to get in —
To be the janitor. To be the janitor, not the conference. Great.
All right, Natalie. Well, thank you so, so much for coming on and sharing your experiences and your stories with us. Again, I think it’s truly inspiring and I really hope that someone listens to this episode and then just does one co-host to see how it does as a side hustle and, who knows, maybe someday there’ll be speaking at your conference.
Would love that. All right, thank you guys so much.
All right, see ya.
And that was Natalie Palmer. Z, what did you think of Natalie?
Well, I love following Natalie on Instagram. So, again, if you guys don’t, please go follow her. She is really funny. She’s got a lot of really good Reels and it’s very educational so if you are interested in short-term rentals or getting into co-hosting, there’s a lot of good tidbits there. I think she’s very approachable and her story is great for beginners because she’s not super far along and it didn’t seem like a difficult climb to get to where she’s at. So I think that even if you don’t have nine units in the same building, you can very easily build out management of nine units in the same town and still utilize the same cleaning company and handyman and leverage it that way so definitely don’t let that hold you back because that might be harder to get all in the same building.
Yeah. I think I do like the play of having just a couple of different towns that you’re in, kind of like what you said, Zeona, in the last episode, one of the previous episodes with Jesse Vasquez, and let’s say the regulations change, you need to switch to medium-term rentals, then you can become the go-to when you’ve got 10 units for insurance companies, for hospitals, for construction workers, and you’re that number one person and you don’t have just one house there, you’ve got a slew of options for people. But the downside of that is you can’t really just have everything in one market because if that market does go to crap for some reason, all your eggs are in that one basket so I think it does make sense and, Z, I know you’ve done this pretty well in being in a few different markets with that same strategy.
Yeah, and a couple other things that are good about it is it sort of allowed me at least to learn how to manage while I was getting paid to manage. So it’s like having these management training wheels before you even go out and buy your property. You can get really proficient in all the things that you need to know and see if you even like it. So I thought that that was a cool way to go. And I had another point and I can’t think of it right now so, with that said, I think we’ll wrap up this episode.
Yeah, well, if you guys would please leave us a rating and review on iTunes, it super, super helps us out and it helps the show grow and helps us just spread this financial independence love to everybody out there. And so if you haven’t already, definitely go do that. And if you haven’t already followed us on Instagram, you can follow me, I’m at @thefiguy, and Zeona is…
All right, we’ll see you all next week.
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