BiggerPockets Podcast 057 with Matt Landau Transcript

Link to show: BP Podcast 057: An Introduction to Investing in Vacation Rental Properties with Matt Landau

Josh: This is the BiggerPockets Podcast Show 057.

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Josh: What's going on everybody this is Josh Dorkin host of the BiggerPockets Podcast, here with the freshly tanned Brandon Turner, what up Brandon?

Brandon: What’s up Josh? I don’t know if they call this tan in your part of the world but here they call it sunburned.

Josh: Yeah you're one of those translucent guys who gets red when you go out in the sun aren’t you?

Brandon: That’s it. Well here's what I did; so I was on vacation last week I went and took a cruise down to the Bahamas and Aruba and it was amazing. And it was good weather right hot sunny and I'm like I’m going to go get a tan. So took my spray sunscreen a new fancy spray stuff and I sprayed it all over. And then I went out in the sun for like nine hours. And then like the next day I woke up

Josh: Yeah if you read the directions by the way it says reapply every X hours.

Brandon: No, that wasn’t even it, here's what happened; the spray apparently I like sprayed it across my body but I didn’t rub it in. So I woke up the next morning with bright red stripes of followed by white stripes and I look like a candy cane, across my entire body. I am a giant candy cane.

Josh: That’s awesome.

Brandon: Yeah apparently you’re supposed to rub that stuff in, it’s not just spray lines on your body and it magically covers anyway moving on.

Josh: That's awesome; candy cane man, I love it. Well welcome back it's good to have you man we’re excited you’re back in the motherland.

Brandon: Thank you, it’s good to be back I left 85° weather for rain in 45 and Indi music and I was like, “I'm back in Seattle!”

Josh: Nice that's awesome. Well cool man; that's great. So all's well here at BiggerPockets we’re staffed up right we just brought on a new team member her name is Caitlin you'll see her on the forums you'll see around the site. If you need help with stuff she's there to help you out so I'm super excited to have a little bit of assistance for Brandon and I, so that's kind of a cool thing.

But yeah man well let's kind of start moving into this thing. Why don’t we start with our quick tip? Today’s quick tip; if you've got a company some kind of business you’re a real estate investor and you’ve got a company name go and set up or even if you're a company in the industry go ahead and set up a company profile n BiggerPockets you can do that really easy at BiggerPockets.com/companies.

Set up one of these company profiles so people could find out about your business and the cool thing is it's actually linked to your personal profiles so on the top right of your personal profile there’ll be a company logo there and it'll point people to that company page which is, kind of like your calling card for your business.

So definitely do that. One of the other really cool benefits of a company profile actually comes only if you’re a Pro member. But for those Pro guys what's awesome is you can actually add your company logo below everyone in your forum posting your signature and it’ll link to that profile. So essentially, as you participate on the site you're getting all this great brand awareness.

So that it's definitely something to look at. You can find out more about it at BiggerPockets.com/Pro where we talk about all the Pro benefits. And if you want to learn more about building your business, building your name, your brand, your company on our site, definitely check out BiggerPockets.com/Biz which has got this, cool tutorial for you.

With that said this as show 057 in honor of Brandon's return from vacation, we’re actually going to be talking about the topic of vacation rentals. So our guest today is Matt Landau and Matt specializes in vacation rentals and has been featured in places like CNN Money, U.S. News & World Report, Business Week.

And of course he’s a blogger on our very own BiggerPockets blog. Matt knows a ton about marketing, filling vacancies, dealing with of vacation tenants and a whole lot more. So we’re definitely excited to have him here. And with that why don't we jump into the show; before we do that if you've got questions definitely jump in the show notes at BiggerPockets.com/show57.

Alright Matt, welcome to the show man good to have you here.

Matt: It is a pleasure to be here Josh or there e wherever we are.

Josh: Where are we by the way?

Matt: I think we’re meeting somewhere over the Pacific Ocean at this point.

Josh: Damn.

Matt: I'm in Panama.

Josh: You’re in Panama. Alright well let's get Brandon in on this. Brandon you welcome him or what?

Brandon: Matt, welcome to the show man, how are you?

Matt: Thank you so much Brandon it’s a pleasure to be here.

Brandon: Awesome, awesome. Do you like how my introduction was much better than Josh’s?

Matt: Yeah way more refined.

Brandon: Very much so.

Josh: Yeah clearly.

Brandon: Clearly. Alright well yeah you said you're in Panama so before we get to why you’re in Panama, why don’t we get kind of the back story I mean how did that happen, why are you there, where did you come from et cetera?

Matt: Yeah I’m originally a New Jersey native Princeton New Jersey. Was not…

Josh: East Coast.

Matt: East Coast that's right; was not smart enough to actually go to Princeton I was deported down to the University of Richmond in Virginia. After graduation I made my way to Costa Rica, at the time I was doing some travel writing. And in that southern trend I made my way down to Panama next which according to all my colleagues in Costa Rica was the perfect destination at the time for someone like me, who was not only looking to invest in some projects but also just for a very high-quality lifestyle.

And I found myself here in the historic district of Panama City which is sort of a mixture of New Orleans about 100 years ago if you can envision that down in the tropics, found more or less a neighborhood I fell in love with, stayed in a fleet of vacation rentals that I now own. And the rest is history, seven years later we’re now the top ranked lodging here in Panama City, and we have more five-star reviews than almost any other hotel in the country apart from the Panama Canal of course.

Josh: Fascinating so well that’s awesome man. So you decided you weren’t going to take the traditional path, and found your way down and now you're a vacation rental landlord.

Matt: Yeah I can't say it was planned at all it sounds romantically organized but in reality it was all just sort of off the cup decisions that brought me down here. And time really does fly when you're having fun.

Josh: Nice, nice that's awesome.

Brandon: Very, very cool. Well as I said in our intro I just got off of a long vacation and it was wonderful and the whole time I kept thinking, how could I incorporate my real estate investing into my vacation life? So I thought I need talk to Matt and get him on the show.

Josh: Wow.

Brandon: Yes.

Josh: Your vacation life; wow it sounds good to me I don't know.

Brandon: Yes.

Josh: You must have a pretty good boss.

Brandon: I must, I don't know yeah you ought to meet him someday. So I guess what I'm wondering is, I mean I got 1000 questions we’re to try to cover today and the next hour. But why don’t we start out which is a really basic one, what is a vacation rental? I mean for those people who’re brand new at this, what are we even talking about here?

Matt: A vacation rental can be any property really. I mean it started off as kind of second homes that were used only part-time and in searching for a new source of income, the owner decided to rent it out short-term where in my part of the world short-term means under 30 days. I think the actual logistics change depending on where you’re based.

But in general the vacation rental targets tourist typically a group, a family and some cases couples that are looking for a more private and in a lot of cases much more affordable place to stay than a traditional hotel.

Josh: Got it. So what's the difference between a hotel and a vacation rental then?

Matt: There's massive differences; the idea behind the vacation rental being that you can live a little bit more like a local, have a little bit more of an authentic local's experience as opposed to the generic hotel confines of a traditional tour bus for instance, this is more an experience of immersing yourself in the local community, cooking your own meals, making friends, inviting them over for drinks if you're lucky.

Josh: There you go.

Brandon: Nice I was able to say I just went to vacation I did my first like vacation rental. I went to Miami and I stayed in one. And I found out the lady had asked us she said, “Don't mention that you found this is a vacation rental if you see the neighbors.” And I didn't know why and later I found out that’s because Florida has some really strict rules and laws about vacation rentals. So what can you kind of tell us about that; are they legal, illegal I mean what are we looking at?

Matt: Yeah again it’s specific to each state and in some cases county. But as vacation rentals have emerged as such a powerful trend in the travel sector according to a recent Google study, vacation rentals are going to comprise 30% of all US travel by the end of this year, which is massive. With that giant boom and more and more travelers staying in rentals and more and more owners deciding to rent out their properties you can imagine that a lot of the more traditional hotel owners are sensing some unfair competition.

So, most of those destinations that have vacation rental bands, or at least rumors of vacation rental bands those bands are driven by the hotel lobbyists. But there's also some legitimate components to those complaints in that vacation rentals are not standardized they’re not operated in the same way that a traditional hotel would be in terms of security and safety and insurance and all that stuff.

So there are some very fair and legitimate concerns about that movement as well but in general it really does depend on your local legislature. I would recommend anyone who's considering investing in a vacation rental go directly to their local Tourism Board and ask if it's an okay thing to do, unlike your Florida host.

Josh: Yeah nice. I’ve got a buddy in New York who has a bunch of property and he does the air B&B VRBO video thing. And it's at least from what he told me it's not 100% kosher in New York City to do that and the hotel lobby in New York City is staunchly against allowing vacation rentals to be operated through the sites because it's not in their interest it’s killing them.

Matt: Yeah I mean it’s again a very legitimate concern if it's being monitored and sort of enforced in fair and safe way I think there's everyone can win. So there's several reports out of San Francisco that vacation rental guests are generating more per capita than hotel guests.

Josh: Interesting.

Matt: Which from a tourism perspective, should make the government very happy.

Josh: Is it- okay sorry, go ahead.

Brandon: Well I was going to ask about the tax implications. It would seem the government doesn't like vacation rentals maybe because it's a lot easier go under the table. Like I'm sure this lady I paid my $65 to each night in Miami I'm sure she didn't go immediately report that to the government. Is that a concern?

Matt: That is a concern but there's a very simple way around that and that is to run your vacation rental like a business, and report all of your income and obviously right off your various marketing expenses in the same way that Uber or a number of the shared economy applications that have sort of made these services available at much less expensive prices have organized it in a very formal and businesslike sort of way vacation rental owners need to be doing the exact same thing.

Josh: Yeah for sure. So I mean how easy is this; am I just going to go open the doors and have people rushing in to rent my condo in Miami assuming of course I’ve got one, we could talk about that another time.

Brandon: You know.

Josh: I don't. But I mean what kind of challenges do new vacation rental owners face? Obviously you had talked about you want to go out and look into local legislation so you're not running- I think they call it what a boarding house right, is that kind of term that folks…”

Matt: Yeah down here they call it Hoteles Clandestinos which would be Clandestine Hotels but.

Josh: Oh sounds sexy.

Matt: With a little Spanish on yeah.

Josh: So beyond that I mean what other things do you really need to do; obviously I’m assuming they’re furnished.

Matt: Yeah we’re very fortunate right now to be at the very, very beginning of a massive trend. And a funny thing has happened in that over the past 10 years vacation rentals have become so much more popular than they once were. And with that boom comes a couple of interesting dynamics, so if you Josh were to have your ‘Miami condo’ 10 years ago, you probably would have had no trouble filling it up more or less at any price that you chose on a regular basis.

Because more and more competition has come to the market because for instance Brandon has bought the condo next to you in Miami and priced his a little bit lower than yours, or maybe given a little bit of better service than you did Josh because we all know your customer service.

Josh: Wait, hold on let’s stop for a second. I think my headset was not working for second or did you just like really? Oh that’s awful man.

Brandon: I have a story that got around Josh.

Josh: Hey Brandon, guess what we’re getting a new guest on the show today. Matt Landau couldn’t be here he was struggling through fighting off shark bites, in Panama.

Matt: No, but in all seriousness the amount of competition has increased exponentially. So what used to be a very easy gig of putting your property on one of these large websites like Airbnb or HomeAway or FlipKey which is the trip advisor branch has become a lot more difficult than it once was. So no longer can you just open your doors, put up a listing and expect to be full year-round and that's changing more and more every single day.

Brandon: Yeah, yeah that makes sense and I know we’ll get into that here little later when we talk with marketing which is one of your big emphasises in the vacation rental world. But before we do that, let’s talk more about investing in vacation rental properties.

The people listing to this show are either real estate investors or soon-to- be real estate investors. So I guess my first question would be why would somebody buy a vacation rental and not just a duplex down the street from their house?

Matt: The short answer to that question is the return on your investment can be exponentially higher. Let’s say you do buy that condo down the road that is in a tourism district and you can typically get $2000 a month on from a long-term renter, in let's say we were to use very, very conservative numbers and say you were to book 15 nights out of the month, at an average of $250 or $300.

That's already $2000 you've already increased your income by about 100%. Of course it does require a lot more maintenance it does require a little bit more of a marketing sense to keep those 15 nights filled every month but when you put it side-by-side alongside a long-term rental, the numbers can be staggeringly higher.

Josh: Yeah for sure which leads me to think about the turnover; obviously on a on a traditional rentals your goal is to minimize turnover and to keep it to as little as possible, on a vacation rental it's part of the game right. You’re going to get people who come for one day, two days, five days, a week, two weeks, whatever but nobody's there for six months.

So I think of life as a landlord and in dealing with the just nightmare scenario of people destroying crap. How much of that have you experienced in terms of your properties do you have a lot of people destroying them or is that part of screening? Can you even screen for vacation renters?

Matt: It’s a great question Josh. And because this industry is so new, we've seen a lot of those kinds of disasters happen I don’t know if you guys followed that disaster in New York City where an Airbnb renter totally trashed and ruined the nice condo. And in that case I believe Airbnb covered the damages.

Josh: Okay.

Matt: But as a lot of these vacation rental owners and/or managers are new to the game, they're not quite as well versed as maybe a hotel would be in handling those kinds of challenging situations. So in my particular case because I've now been doing this for about eight years, I have a really good idea of what type of clients we like, what are the telltale signs of potential crazy folks which sure we we've all stayed next to once or twice.

And in my particular case it's a combination of the right price point obviously if you're renting something out at $500 a night chances are there's not to be quite as much damages ideally as if it was $50 a night.

Josh: That makes sense.

Matt: The same goes for the kind of clients you're targeting, if you're hosting a family with kids on you'd expect the care to be slightly more familial than say a group of spring breakers. So a lot of that does go into the marketing and a lot of new owners do find that it takes about a year to hash out their ideal guest profile before they can really hit a sweet spot.

Josh: Hey Matt you just said something that got my brain turning. So as a landlord I have fair housing laws that have to follow. I can't discriminate based on family, based on any origins whatever but you're talking about marketing these vacation rentals to families. Is there any kind of fair housing laws that oversee this industry or where are you kind of free to say this is perfect for families to something that you could never say obviously in a in a typical rental?

Matt: I can't really speak for the United States because I’ve kind of made my living down here in the Third World where we can discriminate as much as we want.

Brandon: And I do.

Matt: And I do. Be very thoughtful in who you rent to, be generous in having faith in folks because a lot of people are concerned right up front that someone’s going to trash their house and it never happens.

Josh: Yeah.

Matt: There are those unusual scenarios in which case I would recommend home insurance; this kind of home insurance that a lot of owners have been using that covers that sort of thing. But in general, have faith in humanity.

Josh: You can you really quickly last question on this line; is or any kind of screening that you can do or if you're using one of these third-party sites like in Airbnb do they have screening processes where the actual renters are screened or is it only the reverse?

Matt: Not yet and I think that's coming. A lot of the screening that’s taking place right now is to weed out scammers because so much money is flowing in such a new industry there's a bunch of sort of sketchy folks that are taking advantage of the weaknesses and the holes in the system. But beyond that, the way that I've seen most owners vetting their potential guests; a big one is talking on the phone.

It's not the most streamlined or efficient way to start generating bookings but you get a much better sense of who someone is what they're looking for on the phone than you do from some anonymous email.

Brandon: Than I noticed I noticed on Airbnb when I booked mine that I had to connect- I don’t know if I had to-but I think I had to connect my Facebook page to it. So and I assume that was so that the person could see that I was a real person and that I wasn’t just a scammer. Is that that true, was that why I had to do that?

Matt: Yeah most likely and a lot of the new sort of security measures that are being put in place are designed to do just that; verify that you are someone real. And actually the reverse is happening as well right now there's a lot of scammers who’re posing as owners, stealing photos off Craigslist or off the VRBO saying come stay at my rental.

A family pays him $3000 for a vacation and that shows up at someone's door totally unexpected.

Josh: Well that’s we’re laughing but like that's the thing I'm petrified of. I have yet to do one, I haven't taken the leap of faith but man, that would really destroy a trip absolutely just devastate a trip.

Brand: Well that’s where the reviews come in handy though right like I looked at my place and there were the 197 reviews of the place. So I think a lot of it would depend on that right?

Matt: Yeah these are just I think natural hitches in a new industry and if these hitches didn't exist everyone would be renting and everyone would be staying in vacation rentals. So it's kind of a drawback of getting in early on a new opportunity.

Brandon: Yeah that makes sense. And hey you mentioned earlier, you said you’ve would do this for eight years and you’ve kind of learned what type of guests that you're looking for and what kind you don't. So what are some of those things you're looking for when you get a good guest?

Matt: A lot of our guests are coming on vacation; a lot of them are coming to experience Panama City in tandem with another one of the destinations in the interior of the country. So Panama if you guys haven’t been here is an amazing country I’ll give Panama a plug right there.

Josh: It’s not like Detroit.

Matt: It's not quite like Detroit slightly sunnier with equal amount of ghettos.

Brandon: Slightly.

Matt: But again a lot of our guests are coming to stay with us in Panama City for several days and in they’re going to the interior for the beaches or the mountains and then they’ll stay with us at the end. So in terms of a profile, we really like people who like experiencing the authentic side of a destination, people who would stay in a resort or who would stay in a Marriott is not necessarily our typical type of client.

And there's plenty of times that a guest will arrive and have entirely inappropriate expectations of what a vacation rental is. They’ll be looking for valet parking or room service or a Jacuzzi inside of their bathroom. And in that case we very simply send them to a chain hotel because we’re not in the business of trying to convince people to stay in rentals as opposed to hotels.

That being said, there's an increasingly large demographic of folks that really do want to live like a local so that's kind of our ideal client is someone who's coming to look and immerse themselves in the local community.

Josh: Got you. So what’s the first step in buying one, Brandon went away on his is little jounce to paradise while I was here in 10 below Denver. And he's cruising around, he’s like wow this is a great place to be, I would love to have a place here. I mean is it is a just buy you like, I mean get a place…

Matt: Surprisingly that is a great first step because in the end this is a piece of real state that you own. So it doesn't make sense to be investing in a property where you're not comfortable going on vacation that's the added perk is that you can use your own property when it's not rented. So as simple as it sounds that is a really good first step; choosing a destination that you really enjoy.

Maybe it's a place for your family has traveled to for summers on end, maybe it’s a place you grew up. There’s any number of reasons that people choose destinations. But apart from that the amount of tourism in said destination is also extremely important. It's way easier to rent a condo in Miami than it is in Detroit.

Josh: Hey I didn’t that time.

Matt: If you want to jump right into a competitive environment that has a lot of tourism already flowing through it's going to be a little bit easier than trying to build your own niche in a place that's just starting up. In my particular case when I opened up shop in the historic district of Panama City, it was more or less a ghetto back then. And we were the only nice place to stay so I kind of had to build this entire thing from scratch.

Josh: Interesting.

Matt: But I would say to someone who doesn't have that marketing hand or background, choosing a place that already has an established tourism sort of flow is a very easy way to get started.

Josh: Got you. No that’s great. So say I'm not from an area I go I visit once I mean do you think it's a good idea to I don't know I go down to New Orleans and I find it pretty amazing. And I think of it kind of like just again buying a rental you really want to know the area that you're in as a vacation rental I mean are you kind of cruising up and down the blocks finding out the crime-ridden areas?

Are you doing a lot of scouting as a typical person would? Or is it pretty self-evident like hey this is all the tourists are down in Orlando so anywhere in Orlando close to Disney's going to work?

Matt: So here’s a really good easy way to go about doing it. go to one of the large websites whether it’s VRBO or HomeAway or FlipKey and just peek at the amount of properties and the prices and the amount of reviews and you can even see their live calendar availability. Take a peek at how everyone's doing so chances are that’s going to be a pretty good reflection of how you can potentially do if you were to insert your property into that market.

Josh: Yeah that’s great so what kind of expenses, what were the costs that are associated with vacation rentals? It’s again turnover is obviously going to be very high unlike a hotel, where hotels have maids and staff for that presume. I think most vacation rentals you're paying a third-party service to kind of handle be the turnaround and the renters pay a fee to housekeeping is that right?

Matt: There is a number of different ways that it can be done and that’s kind of the beauty of this industry is that it’s incredibly flexible in terms of how much work you want to put in and how much you’re expecting to get back. So let's start at the beginning of the spectrum, someone who buys a property and basically never wants to visit the destination in their life.

You hire a property manager let's say the same person doesn't even feel like doing any marketing that same property manager or another marketing sort of branch will take care of the marketing. Typically those kinds of agencies collect a fee on commissions which can be anywhere from 10 to 45% of nightly rates.

The other end of the spectrum is the owner who wants to do everything themselves and there are plenty of those folks who might live next door to their vacation rental or they might live in the same town or even a town over. And they love going and doing the flower gardens, and they love doing the maintenance themselves and they like doing the marketing on their own.

And in which case you have very few expenses, but in terms of the basic things that you should be expecting to pay for when you're renting out your property to travelers, the turnaround like you mentioned Josh is important so there's a little more wear and tear on typical portions of the rental. You also are typically looking at a little bit of a higher-end f furnishings and finishings.

So higher-end linens, indestructible pots and pans that kind of thing. There is the additional check-in procedure, some owners are using these techniques where you don’t even really have to be there to do the check-in, you can use an automatic lockbox or in some cases a cell phone app that allows the guest to enter using a barcode.

Josh: Oh it’s great.

Matt: A lot of these kinds of services are just starting to emerge in what is again very, very green industry. But apart from that you also need to add into your business because this is a business, the cost of marketing. And like I said it's not as easy as just buying a $300 listing and filling up your rental on the spot. There's a lot of time and there’s a lot of sort of know-how and money that needs to go into generating a reliable following.

Josh: So what does that entail? My thought was now that you've got all these portals and they all collect a fee, you basically go take some really nice pictures or in the case of like in Airbnb they'll take it for you. But they’re listing it up and they'll collect their X% at the end and it costs you just that percentage that you're paying to the company. What other marketing fees do you have, how you market outside of these portals?

Matt: Yeah those portals on their own are great if they can fill up your rental but there is also that feeling of dependence of being reliant on this third-party portal which might increase their prices which might require me to log into the system to get the email address. And there's any number of sort of these dependencies that owners aren’t too keen on.

So kind of what I preach in my marketing work is building your own reputation online, building your own website, harnessing your reviews, establishing really basic online marketing techniques like email marketing and press releases and some basic search engine optimization. We’re not talking about rocket science but it does require putting together some pieces of the puzzle.

And a lot of owners who’re not ready for that a lot of the owners in this industry are 60,70 even in some cases 80 years old and don't even know what the heck a URL is. So there's been some cases a daunting learning curve that is presented to some of these owners but those who are ready to jump in and start learning it's actually an incredibly gratifying process.

A lot of subscribers who start from literally nothing and just take great pleasure in learning these new really simple techniques and generating more trust with their with their guests and ultimately a much better bottom line.

Brandon: Yeah I think that's true in the long-term rental field too like that we’re in, that most landlords are 67 years old and don't know how to use a computer. So by being the landlord who can actually do that it puts you at an advantage above everyone else, being able to put a good Craigslist posting versus just some wall of text you’re definitely going to stand out a lot more than the competition.

Matt: Yeah I would even go as far as to say that the next generation those who grew up as babies using iPads, they’re going to be way beyond us. So each generation has a slight advantage on the previous but I would say stuff like video and mobile these are online marketing components that even my generation is very new to. Anyone who's slightly ahead of the curve in that sense, I think is going to take their own particular market by storm.

Brandon: Yeah that makes sense I think that’s a really good idea and that's why like I don’t know those are some of my favorite posts that we see on BiggerPockets are things like how to do this or how to do that with technology and the new things. So it’s very cool. So why don’t we actually go more onto the marketing now that we’re talking about marketing and you mentioned the portals there was no HomeAway.com, Airbnb, FlipKey.com is that what you said?

Matt: Yeah that’s the trip advisor branch.

Brandon: Okay cool so what else is there I mean you throw your listings there you said website what about Craigslist, is that a big thing for you?

Matt: I don't like to recommend owners or managers rely on Craigslist, it's good for a promotion here or there but it's not it's not necessarily a sustainable marketing effort that can feed you increase over the span of time. More of what I preach is creating a bulletproof reputation, as the industry expert. A lot of owners and managers when they go in and buy their property they buy it for reason because they love the neighborhood, they love the area.

They have great memories from their vacations there. So it’s a skill in turning that local expertise into useful information that potential guests can use. It’s a much more subtle form of marketing in providing that kind of useful content. But ultimately what vacation rental travelers are looking for is two things; one is trust that their host is actually a person.

And actually has a rental that’s actually going to host them and their family as opposed to someone who's trying to scam them and two, someone who really does know a lot of insider information that can give them the absolute best vacation possible.

Josh: So are you basically advocating that vacation rental owners should become quasi-travel writers/like travel bloggers essentially about the areas that they've got rentals in to attract folks?

Matt: Yes and in a sense they already are. So a lot of these folks if you were to go visit your friend who has a condo in let's say Miami, you go to visit and let’s say he's not there for the weekend, he’ll send you an email saying this is the restaurant you need to eat at, this is the dish you need to order, this is the bartender at the local club that you need to connect with.

This is the tour guide who gives the best undercover tours yada, yada, yada so providing that insider information from a vacationer’s perspective is pretty much priceless.

Josh: It’s awesome and you threw down the yada, yada, yada which is even more awesome.

Brandon: I actually wonder if he couldn’t translate that into the long-term rental market like that landlord. and I’m in a small area but maybe an area like Denver like if Josh started a Denver blog about the different places and different activities I wonder if you couldn’t use that in the same way to try to find tenants eventually just kind of build yourself up as a reputable landlord or reputable property manager.

Josh: Well some realtors are doing that I mean that’s how a lot of them are attracting folks. I don't know that I know any landlords who do that so it's interesting thought.

Matt: It is in a in a greater marketing sense the way things are heading instead of selling and pushing, pushing, pushing your product, helping people providing useful information and that goes no better industry than vacation rentals.

Brandon: Yeah that’s cool. So then what about like YouTube I mean obviously YouTube or Flickr or Facebook any of the more social channels are you using stuff like that?

Matt: Yeah it's all relatively new to the industry as well and I can't say that any of the social media networks will generate bookings for you off the bat. A lot of people think that they’re going to put up a fan page on Facebook and generate 20 bookings in a week. This is not going to happen. What those social media networks are good for is developing a trustworthy following.

So people who like to follow the stuff that's going on in Detroit. Maybe we should study using another city example.

Josh: Gotham City.

Matt: Yeah, folks who like to follow the new restaurants and bars in Gotham City, they like to follow your lead and ultimately when they do decide that it's time for a vacation where do you think they’re look?

Brandon: Yeah, that’s smart. And then I read on your actual blog you talked about Ad Words and that’s something that fascinates me because I've dabbled in it in the past but never really actually done it for rentals. So can you kind of explain like what is Ad Words and how do you use them like that try to generate listings?

Matt: Yeah Ad Words is a sort of the most straightforward, black-and-white way to see if people are interested in what you're offering. So on a very basic scale Ad Words is pay per click which is represented by the ads you'll see on the side of anywhere from an organic search if you type into Google, Gotham City vacation rental, you'll see a column of various ads posted by owners and managers in Gotham City.

Josh: From the penguin I think.

Matt: Yeah the penguin has one I’m pretty sure batman has another. It's also populated in things like Gmail and various other websites that are hosting Google Ads. So on a very, very simple level you as the vacation rental owner or manager are paying per click which is to say you're paying every time a user clicks on your advertisement.

And that price can be anywhere from 10c to $10 depending on the competition in your own particular environment. So if you have vacation rental somewhere that's not quite popular yet the price per click is going to be way lower than somewhere extremely popular. And from there it's an amazing way to test out whether those users are actually interested in what you're offering.

So when they do click you can decide where they’re landing and that could be anywhere from home page of your website to a specific landing page of your website to a listing that you have on one of these major listing sites. And in driving all that traffic you can see pretty clearly if it's working or not.

So if you Brandon were to go out and spend $50 attracting traffic to your VRBO listing and you got one inquiry it might be a pretty good sign that you need to improve either your title or your photos or your description or your pricing and then several weeks down the line after implementing all those tweaks you might spend that same $50 and see 10 inquiries.

So it's a nice sort of form of A/B testing that allows owners of any skill level and really any budget to see if what they're offering is what people are looking for.

Josh: Got you. So a there's a guy on marketer's name is Pat Flynn and his whole thing is be everywhere, and it seems like you have these days with vacation rentals and that that's probably the path that you really want to be to make sure you get everybody. You want to be on YouTube, you want to have the blog, you want to be on AdSense and do some Facebook Ads.

You want to do, be anywhere and everywhere that people might be that word where they’re looking for vacation rentals.

Matt: And in that same breath that’s a great point in that same breath because the industry is so new, and because in two or three years from now I'm going to have 10 times as many competitors as I do today, another huge component of today's vacation rental marketing is keeping in touch with your former guests.

Josh: Yeah.

Matt: Once a guest has stayed in your vacation rental most likely they had an amazing experience, you were a great host the property itself was stellar, they had a wonderful vacation. Keeping that same guest coming back year after year is far less expensive than going out and trying to convince a new guest that again you’re a real person, you have a real property and you're the real deal.

Josh: Yeah that's great advice and I think traditional landlords could heed that in a similar way by taking their happy tenants those tenants who re-up and stay at their properties presumably you're taking care of your tenants. And you know use those guys is your best refers for new tenants when vacancies come in.

Matt: Yeah if trip advisor is any indication of the way this travel movement is going which is to say reviews. There is nothing better that a vacation rental owner or manager can do than to not only start collecting very, very high quality reviews but to learn to leverage them.

Brandon: Definitely good advice. Alright, so one final I guess topic on the marketing and that’s something that fascinates me. I read that your listings have been featured in places like the New York Times, Vanity Fair, National Geographic and I've never even featured in like my local newspaper. So how did that happen I mean how do you get your listings like national press as a vacation rental owner?

Matt: Well I will say this, after you get the first one or two, they really do tend to domino. So once a writer from the New York Times comes, chances are any writer from the New York Times in the future is going to come back to me, any writer from GQ is going to do a Google search and see that I was in the New York Times and then come back to me.

So the big trick is getting that first one or two. For me it was a large-scale publication like the New York Times, for you might be your local newspaper. So how do you reach out to those journalists and publications? There's a couple different ways that I’d like to recommend, the first is coming up with really interesting stories that are happening in your local area. So perfect example is an owner who’s based in I believe San Pedro and I don't know if you guys saw it but there was a sea lion who went and snatched a prize-winning fish right out of a fisherman's hands. You guys happen to see that video that went viral?

Brandon: No, I must look that up…

Matt: There’s a sea lion whose name is like Pablo and everyone in town knows him.

Josh: So Pablo is the sea lion?

Matt: Yes Pablo is the sea lion.

Josh: Not the fisherman okay.

Matt: No, no one cares about the fisherman. And the fisherman was holding up his prize-winning catch for a photo and literally the sea lion snatched it out of his hand. Anyway it went kind of viral and a vacation rental owner in the area wrote an article about Pablo because everyone in the area knows Pablo. He always does that this is not new to any of the neighbors Pablo is just to the sea lion that steals fish.

So in writing that article she was then approached immediately by I believe National Geographic who wanted to learn more about Pablo so they could do a show. She was also approached by a couple of bloggers, a couple of journalists who wanted to learn more about Pablo and in quoting this woman whose name I can't quite remember they also gave her a wonderful little plug for her vacation rental at the end of the story.

So providing is funny or interesting or new updates about your local area is a great way to do it. Learning how to pitch journalists is a science in itself anyone who comes off sounding as to salesie or too greedy is barking up the wrong tree. So I really would encourage an entirely selfless perspective on this, really just try to provide as useful and interesting information as possible.

And in truth I'm friends with a lot of the journalists of now featured my properties and they like that kind of stuff. They like hearing from locals about interesting stories because the story about Pablo went on to generate a ton of traffic for their own newspaper. So reaching out and presenting helpful stuff without sounding too salesie, you might get a couple of singles or doubles like Brandon that might be a good place for you to start to get into your local newspaper, but then again you might hit that home run where you get featured in the New York Times.

Josh: Yeah, that's great advice and a good way to market. So we kind of glazed over the economics. We talked about the fact that you can rent these properties out and if you were to get X number of days you’re in a good way, what's the typical vacation rental vacancy rate? Is a typical rental owner getting 20 days a month of vacancy or are there any statistics on what's going on there?

Matt: Not really I mean it varies so much across the board and so many owners are so bad at keeping track of these things. A lot of owners starting off don't even keep track of their occupancy. So unlike hotels or B&Bs or anything like that, there is not a lot of data to go on just yet. Again a good way to gauge a good litmus test to use is to look on one of these major listing sites at the availability calendars of something comparable to what you're considering investing in.

Josh: Yeah.

Matt: That should give you a rough idea borrowing the fact that they’ve probably been doing this for a couple years and have a very good reputation should give you a rough idea of what to expect. And I should mention that as I was answering that last question I remembered that the sea lion’s name is actually Poncho it’s not Pablo.

Josh: Cousin. Oh man.

Matt: I didn’t want to misquote there.

Brandon: Poncho is a better name for a sea lion.

Josh: Yeah indeed. Okay so I don't know I remember Brandon you said you actually looked at some rentals right I mean you guys were driving around when you were down on your trip?

Brandon: I did yeah. When I was in Fort Lauderdale actually I went looked at a four-plex and I thought man this would be just great to buy down here and I could manage it from home, I could- and I just kind of started like dreaming of how I can make this happen, this nice little like four-plex and doing the numbers in my head and they looked amazing.

Brandon: But I guess then I found out about all like the Florida laws and stuff like that so I don’t know if I’m going to go there. But I guess what do you recommend for somebody like me who wants to go buy a vacation rental like that? I mean is that a stupid idea for me to be even thinking like that?

Matt: It's incredibly stupid Brandon, why would you ever think that?

Josh: I love it when my guests call my co-host stupid.

Brandon: Thank you.

Matt: It's not a stupid idea at all. And I would recommend you first start staying in more vacation rentals so you can familiarize yourself with what's expected from a travelers perspective because a lot of owners need to know that information when they're either furnishing their unit or when they're describing their unit to potential guests.

So, all of us have rented an apartment at one point in our lives, that's why being a landlord for long-term rentals is comparatively much easier than marketing the short-term rentals. So once you get a good feel for what is expected of a high-end vacation rental experience and I'm not necessarily saying a high-end property but a high-end experience.

Customer service, the actual stay itself and then details after this that once you have a good idea about that, I would say start looking at some of the other pricing in your area. You should get an idea really quick about what's an okay price to be asking. I like to recommend that owners or managers slightly undercut most of the competition especially when you're starting.

So if you have the exact same condo in the same development as Josh let's say and Josh is asking $200 a night, you’ll have a giant upper hand if you're asking $175 let’s say.

Josh: You bastard.

Matt: Don’t tell Josh I told you that though.

Brandon: Hey so I know we’re kind of jumping around here so I apologize to our listeners but as these things are coming to me. Let’s say I wanted to buy a condo in Panama City. I don't live in Panama City I live up here near Seattle, is that something that I could do; I could buy it and then kind of manage it via the internet and via the lockboxes and all that like the electronic things, and pretty much take care of it from 5000 miles away or is that a stupid question?

Matt: An incredibly stupid question. No, that’s not a bad idea at all and I would say 50% of owners out there do operate remotely. But it also means that you’re going to be collecting a smaller amount at the end of every month. So you do have that property management fee that you have to add in there, you have to add in whoever's going to be cleaning your rental if that's not included in the property management fee.

So there is a number of costs that do go into operating remotely but it’s not to say that say that it can’t be done definitely, not a lot of people do that.

Josh: Hey so my final question here before we move on to the next section is on scale. Presumably renting out one unit is going to be a lot easier than having 20 vacation rentals that are turning over every day or two. And I personally could see that as a somewhat of a management nightmare. So my understanding is if you've got a pretty decent portfolio at this point of vacation rentals. How has scaling been one of the biggest challenges as you’ve scaled?

Matt: The biggest scaling challenges for me personally have been proximity. And I think this will probably apply to most owners and managers wherever they are in the world, if you're managing or operating 10 different rentals that are located 10 miles apart it’s going to be much more challenging than 10 different rentals in the exact same complex.

So in terms of proximity, the closer and more similar of a product that you can get, the better it’s much easier to a) streamline the actual booking process and your customer service and your actually in-stay customer service. It’s also easier from actually no, that’s pretty much the only reason it’s easier.

Josh: Nice. So listen that's great, it’s really good information then and I think it will help a lot of folks out. So let's move onto the next section of the show here our;

It’s time for the Fire Round.

Brandon: Alright the BiggerPockets Fire Round these are questions we ask everyone- let me redo that. Alright the Fire Round these are questions direct out of the BiggerPockets forum that we’re just going to fire at you and you can fire right back at us. So #1, multifamily property or single units what makes a better vacation rental?

Matt: Multifamily property just because the large bulk of vacation rental travelers are groups that are looking to avoid hotels, whether it's because of more privacy, more economical, any number of reasons. There is a larger amount of group demands than there is for singles or couples.

Josh: Nice alright well single-family or condo which is a better vacation rental?

Matt: Really hard to say it depends on where you located in. If it's a corporate type metropolitan environment you have a lot of business travelers for instance who want their own space. The smaller scale properties are much more sensible compared to say a beach, a more vacationy destination where I would opt in the other direction.

Brandon: Okay what do you think is it a bad idea to do a rehab into a vacation rental or as a better just to buy Turnkey and all finished?

Matt: You guys are the sort of experts on rehabs so I’m not going to try to pretend like I know what I'm talking about there. But I will say that in the in the large-scale of operating a vacation rental business, the more the finished product that you can start with, the better. If you're rehabbing and it's an entirely different industry getting to that beginning point than if you were to buy something that's ready to roll.

Josh: Yeah for sure. Alright this last question I'm not quite sure why I'm asking it, but because I’ve got my own answer but the question is I want to buy vacation rental with family members is, that a good idea or bad? The answer is bad; but let’s see what you have to say about it.

Matt: I guess the next question is, do you like your family members? It’s not all that uncommon I’ll say that, a lot of investors go in on a vacation rental with family just because they're all using the property anyways. So if you look at a five bedroom home on the beach, a lot of cases it's exorbitant, it’s prohibitively expensive for one particular investor.

So if it's going to be a group thing you might as well go with the people you trust most or in some cases need to just lease to your family.

Josh: There you go and then the thing is ultimately you want to minimize squabbles, and I think sharing times and then having to fight over who gets to have the vacation rental on Christmas and holidays can be damaging. I know I've heard a lot of folks who own these types of properties who’ve dealt with that stuff and just it's always a disaster at least what I’ve heard.

Brandon: Yeah I definitely agree. The reason I picked that from the forms is because I know a lot of family members have said that to me like, “Hey Brandon we should go buy a condo in Hawaii on the beach or we should go buy a condo down in I don’t know Aruba and then we'll just use it whenever we want to and we’ll vacation rental it out the rest of the time.” And I haven’t done it obviously but it’s been a conversation.

Matt: Yeah the only the only tip I would give is make sure everyone's duties are very clearly outlined to start with, there is a lot more work that goes into operating a successful vacation rental than there might seem. So if that kind of stuff is not outlined to begin with you might have some squabbles.

Josh: And along with that along with responsibilities the costs associated with running the business probably need to be discussed up front as well.

Matt: Absolutely.

Josh: Yeah for sure. Cool man. Alright well let's crank out to the final section of the show here our Famous Four.

Brandon: Alright these are the last four questions we ask everyone and yeah let’s get to them. First one, do you have a favorite or what is your favorite real estate related book? I know this might be a little bit different approach to you because you’re dealing with vacation rentals but do you have a book that you would recommend as your favorite kind of vacation rental book or real estate book?

Matt: There's not a lot of vacation rental literature period. Because it's such a new industry the stuff that's out there is very limited and in most cases outdated. So I do not have a favorite vacation rental investment book.

Brandon: Alright, that’s alright.

Josh: Wow you know 6 shows man and you're the first to not have a favorite book how does that make you feel?

Matt: Special.

Brandon: We had somebody earlier on one of early shows said they couldn’t think of one.

Josh: Alright, so forget favorite real estate and vacation rental book, who reads that anyway? I mean I don’t know what kind of question that was. Let’s ask a real question here, what about your favorite business book

Matt: My favorite business book; I just finished a book about a year ago and it’s not exclusively about business but there's a ton of business ties and it’s called The Happiness Hypothesis. Have you guys ever heard of that?

Josh: No but I want you to say it six times fast.

Matt: This is a book that really did change my perspective not only on business but just on sort of gratifying way to live my life and it kind of breaks down the world civilizations and understand how everyone describes happiness and defines it, and then kind of helps you define your own version of it as it applies to any number of components.

And that book itself kind of changed the way I was operating my business, it changed the kind of investments I was making both in time and money, and in the end I found it to be one of the more gratifying transitions in my professional career.

Josh: Nice, nice; awesome. And we’ll point to that in the show notes which is going to be at BiggerPockets.com/show57. Finally for me I guess so what do you do for fun besides vacation? Life is a vacation I mean like what you do for fun; I live, I breathe that's fun.

Matt: I do live in the tropics; I have both the Pacific and the Caribbean Ocean within about 45 minutes from my house. So any kind of outdoor activity whether it's swimming I’m a huge swimmer, so I can swim in the Caribbean and the Pacific in the same morning. I love biking into the rain forest that's kind of one of the more fulfilling things I do down here.

Apart from that of the big foodie, any kind of interesting or new food that tastes delicious I'm a big fan of that and soccer; I'm a gigantic soccer fan. And when I'm down here I have to call it football but I really do.

Josh: Nice.

Brandon: That’s very cool. Alright final question from me, what do you believe sets apart successful vacation rental owners from those who fail?

Matt: That’s a great question. I think the differences those who are in it for the long haul; there is a number of people who are just looking for a short return looking to make a quick buck. And if that's what you're looking for rehab home and sell it but vacation rental hosting is all about building a reputable reputation over a long period of time.

And as you go along each year kind of adds on to t that credibility. So the owners and managers that I see that are investing not in tomorrow but in a year from now and two years from now those are ultimately the ones that win the end of the race.

Josh: Nice, now that’s great. Well so an interesting topic I wanted to something it's not directly related to our traditional mission here at BiggerPockets to kind of talk about flipping houses and renting a traditional rental but I think it's part of the industry and we wanted to make sure to at least start covering it a little bit because so many people go and traveling and think about doing this.

And hopefully we bring a little bit of insight. If you had one last piece of advice for folks who were thinking to themselves, “Hey I'm going to do this I'm here in wherever Brandon Turner just was on his vacation his round the world yeah let me do this.” What one piece of advice do you think is probably the most important that you could give?

Matt: I would say do it immediately. I would say don't hesitate decide you’re going to do it and do it. This is such a burgeoning industry and those who have gotten in on it early are going to be the winners and in the end of this marathon. So I would say, if you were going to do it this tiny sliver of vacation rental buzz that you guys have heard as ‘outsiders’ of the industry is just going to multiply over the coming years.

And I think in very, very short period of time vacation rentals are going to start to sort of compete very, very seriously with hotels. so if 10 years from now our kids are looking back and saying, “You mean you had the opportunity to get in on the ground floor of the vacation rental boom and you didn't? What were you thinking papa?” You don’t want to kick yourself in the foot.

Brandon: And on top of that you mentioned earlier that the competition is heating up more and more and more, but by getting in now you establish your reputation now and you start building that now so in five years when the competition is crazy you’ve had five years of solid track record versus the guy would just bought five years from now and overpaid because of…

Josh: Well that's the big thing right if it's getting that hot, presumably real estate in those markets are going to continue to climb to exorbitant levels and it's actually interesting I’d be very curious to see what typical market rents for long-term renters are in some of these areas how bad vacation rentals are affecting rates for those renters.

Because presumably if I could go and take an apartment that I'm renting for two grand and rent it out to make three, 4000 bucks a month as a vacation rental, well the value of that property is going to increase and is that going to force out traditional renters?

Matt: And that’s already starting to happen, Josh and I would say in places like New York and San Francisco where the biggest sort of hype at around this industry is, you can't stop this movement. It’s a very, very organic movement that is happening because vacation rentals are an amazing product. And I know you haven't stayed in one yet Josh but 10 years from now I think you will have and you'll have that …

Josh: Hey Matt whenever you give me free access to your [Inaudible] [1:03:25] I'll be there buddy.

Matt: Consider it done; just bring me a really nice podcast microphone.

Josh: There you go. That’s awesome great stuff. Hopefully people stay to the end because I think we nailed some of the really interesting stuff here. But Matt, thank you so much we really appreciate you taking the time. Before we let you go where can people find out more information about you?

Matt: One place my website is vacationrentalmarketingblog.com which is as long and annoying as it sounds is where I put my entire host of advice and it's all free. So check it out.

Josh: Fabulous.

Brandon: Awesome.

Josh: Awesome man hey thanks again for being on the show and thanks for being one of our BiggerPockets bloggers as well folks can find posts from Matt on the BiggerPockets blog. Matt we’ll see you around and of course for everybody listening if you've got any questions for Matt definitely jump on the show notes at BiggerPockets.com/show57 and Matt will be there to answer those questions for you. Thanks again Matt.

Matt: Alright adios.

Brandon: Bye, thanks Matt.

Josh: alright everybody that was Show 057 on the BiggerPockets podcast with Matt Landau, big thanks to Matt makes me want to go down to the Bahamas or Panama or anywhere else other than freezing cold Denver, and go pick up some vacation property. What do you think Brandon?

Brandon: I think that sounds like an amazing idea let’s do it.

Josh: Should go in together like family?

Brandon: We should like family.

Josh: Yeah, I don’t it’ll work I think it’s a bad idea. You're not my family, you don’t know me. Yeah alright so now great show lots of cool insight. So big thanks again to Matt. With that said, a big reminder to anybody who's listening if you guys are not connecting with us please be sure to do that on the big typical social channels, places like Facebook, Twitter G Plus, LinkedIn Pinterest. We’re all over the place. We’re multimedia global; YouTube.

Brandon: We’re not on Tumblr yet.

Josh: Yeah well you know I don't know; we’ll get there. But yeah like we do focus a lot of our efforts and things on Facebook so if you're not already following us check us out Facebook.com/BiggerPockets. Also cool thing we just got our name finally from G Plus so if you go to Google Plus I think it’s like Plus.Google.com you go/the little + sign and then BiggerPockets so we have our own name on G plus which is kind of cool.

Brandon: Look at you, fancy Josh.

Josh: Yeah there you go was that your little mayor of…

Brandon: Oh look at you?

Josh: Is that that candy cane voice now that you’re striped from your vacation?

Brandon: Yes that is my candy cane voice; oh look at you.

Josh: Yeah so yeah can we finish?

Brandon: Let’s end this, people are bored.

Josh: Yeah let’s end this. Alright guys if you're not on BiggerPockets if you’re not connecting, participating please do so introduce yourself most people join and jump in and introduce themselves get a lot more out of the site than those who just joined and do nothing. So get involved be part of the community and thank so much we'll see you next week Show 058 at the BiggerPockets podcast coming up.

And if you haven't checked out all our previous ones definitely jump in we’ve got a lot of amazing, amazing content. Thank you so much I’m Josh Dorkin host of the BiggerPockets podcast signing off.

You’re listening to BiggerPockets Radio, simplifying real estate for investors, large and small. If you’re here looking to learn about real estate investing without all the hype, you’re in the right place.

Be sure to join the millions of others who have benefited from BiggerPockets.com, your home for real estate investing online.

Josh: This is the BiggerPockets Podcast Show 057.

You’re listening to BiggerPockets Radio, simplifying real estate for investors, large and small. If you’re here looking to learn about real estate investing without all the hype, you’re in the right place.

Stay tuned and be sure to join the millions of others who have benefited from BiggerPockets.com, your home for real estate investing online.

Josh: What's going on everybody this is Josh Dorkin host of the BiggerPockets Podcast, here with the freshly tanned Brandon Turner, what up Brandon?

Brandon: What’s up Josh? I don’t know if they call this tan in your part of the world but here they call it sunburned.

Josh: Yeah you're one of those translucent guys who gets red when you go out in the sun aren’t you?

Brandon: That’s it. Well here's what I did; so I was on vacation last week I went and took a cruise down to the Bahamas and Aruba and it was amazing. And it was good weather right hot sunny and I'm like I’m going to go get a tan. So took my spray sunscreen a new fancy spray stuff and I sprayed it all over. And then I went out in the sun for like nine hours. And then like the next day I woke up

Josh: Yeah if you read the directions by the way it says reapply every X hours.

Brandon: No, that wasn’t even it, here's what happened; the spray apparently I like sprayed it across my body but I didn’t rub it in. So I woke up the next morning with bright red stripes of followed by white stripes and I look like a candy cane, across my entire body. I am a giant candy cane.

Josh: That’s awesome.

Brandon: Yeah apparently you’re supposed to rub that stuff in, it’s not just spray lines on your body and it magically covers anyway moving on.

Josh: That's awesome; candy cane man, I love it. Well welcome back it's good to have you man we’re excited you’re back in the motherland.

Brandon: Thank you, it’s good to be back I left 85° weather for rain in 45 and Indi music and I was like, “I'm back in Seattle!”

Josh: Nice that's awesome. Well cool man; that's great. So all's well here at BiggerPockets we’re staffed up right we just brought on a new team member her name is Caitlin you'll see her on the forums you'll see around the site. If you need help with stuff she's there to help you out so I'm super excited to have a little bit of assistance for Brandon and I, so that's kind of a cool thing.

But yeah man well let's kind of start moving into this thing. Why don’t we start with our quick tip? Today’s quick tip; if you've got a company some kind of business you’re a real estate investor and you’ve got a company name go and set up or even if you're a company in the industry go ahead and set up a company profile n BiggerPockets you can do that really easy at BiggerPockets.com/Companies.

Set up one of these company profiles so people could find out about your business and the cool thing is it's actually linked to your personal profiles so on the top right of your personal profile there’ll be a company logo there and it'll point people to that company page which is, kind of like your calling card for your business.

So definitely do that. One of the other really cool benefits of a company profile actually comes only if you’re a Pro member. But for those Pro guys what's awesome is you can actually add your company logo below everyone in your forum posting your signature and it’ll link to that profile. So essentially, as you participate on the site you're getting all this great brand awareness.

So that it's definitely something to look at. You can find out more about it at BiggerPockets.com/Pro where we talk about all the Pro benefits. And if you want to learn more about building your business, building your name, your brand, your company on our site, definitely check out BiggerPockets.com/Biz which has got this, cool tutorial for you.

With that said this as show 057 in honor of Brandon's return from vacation, we’re actually going to be talking about the topic of vacation rentals. So our guest today is Matt Landau and Matt specializes in vacation rentals and has been featured in places like CNN Money, U.S. News & World Report, Business Week.

And of course he’s a blogger on our very own BiggerPockets blog. Matt knows a ton about marketing, filling vacancies, dealing with of vacation tenants and a whole lot more. So we’re definitely excited to have him here. And with that why don't we jump into the show; before we do that if you've got questions definitely jump in the show notes at BiggerPockets.com/show57.

Alright Matt, welcome to the show man good to have you here.

Matt: It is a pleasure to be here Josh or there e wherever we are.

Josh: Where are we by the way?

Matt: I think we’re meeting somewhere over the Pacific Ocean at this point.

Josh: Damn.

Matt: I'm in Panama.

Josh: You’re in Panama. Alright well let's get Brandon in on this. Brandon you welcome him or what?

Brandon: Matt, welcome to the show man, how are you?

Matt: Thank you so much Brandon it’s a pleasure to be here.

Brandon: Awesome, awesome. Do you like how my introduction was much better than Josh’s?

Matt: Yeah way more refined.

Brandon: Very much so.

Josh: Yeah clearly.

Brandon: Clearly. Alright well yeah you said you're in Panama so before we get to why you’re in Panama, why don’t we get kind of the back story I mean how did that happen, why are you there, where did you come from et cetera?

Matt: Yeah I’m originally a New Jersey native Princeton New Jersey. Was not…

Josh: East Coast.

Matt: East Coast that's right; was not smart enough to actually go to Princeton I was deported down to the University of Richmond in Virginia. After graduation I made my way to Costa Rica, at the time I was doing some travel writing. And in that southern trend I made my way down to Panama next which according to all my colleagues in Costa Rica was the perfect destination at the time for someone like me, who was not only looking to invest in some projects but also just for a very high-quality lifestyle.

And I found myself here in the historic district of Panama City which is sort of a mixture of New Orleans about 100 years ago if you can envision that down in the tropics, found more or less a neighborhood I fell in love with, stayed in a fleet of vacation rentals that I now own. And the rest is history, seven years later we’re now the top ranked lodging here in Panama City, and we have more five-star reviews than almost any other hotel in the country apart from the Panama Canal of course.

Josh: Fascinating so well that’s awesome man. So you decided you weren’t going to take the traditional path, and found your way down and now you're a vacation rental landlord.

Matt: Yeah I can't say it was planned at all it sounds romantically organized but in reality it was all just sort of off the cup decisions that brought me down here. And time really does fly when you're having fun.

Josh: Nice, nice that's awesome.

Brandon: Very, very cool. Well as I said in our intro I just got off of a long vacation and it was wonderful and the whole time I kept thinking, how could I incorporate my real estate investing into my vacation life? So I thought I need talk to Matt and get him on the show.

Josh: Wow.

Brandon: Yes.

Josh: Your vacation life; wow it sounds good to me I don't know.

Brandon: Yes.

Josh: You must have a pretty good boss.

Brandon: I must, I don't know yeah you ought to meet him someday. So I guess what I'm wondering is, I mean I got 1000 questions we’re to try to cover today and the next hour. But why don’t we start out which is a really basic one, what is a vacation rental? I mean for those people who’re brand new at this, what are we even talking about here?

Matt: A vacation rental can be any property really. I mean it started off as kind of second homes that were used only part-time and in searching for a new source of income, the owner decided to rent it out short-term where in my part of the world short-term means under 30 days. I think the actual logistics change depending on where you’re based.

But in general the vacation rental targets tourist typically a group, a family and some cases couples that are looking for a more private and in a lot of cases much more affordable place to stay than a traditional hotel.

Josh: Got it. So what's the difference between a hotel and a vacation rental then?

Matt: There's massive differences; the idea behind the vacation rental being that you can live a little bit more like a local, have a little bit more of an authentic local's experience as opposed to the generic hotel confines of a traditional tour bus for instance, this is more an experience of immersing yourself in the local community, cooking your own meals, making friends, inviting them over for drinks if you're lucky.

Josh: There you go.

Brandon: Nice I was able to say I just went to vacation I did my first like vacation rental. I went to Miami and I stayed in one. And I found out the lady had asked us she said, “Don't mention that you found this is a vacation rental if you see the neighbors.” And I didn't know why and later I found out that’s because Florida has some really strict rules and laws about vacation rentals. So what can you kind of tell us about that; are they legal, illegal I mean what are we looking at?

Matt: Yeah again it’s specific to each state and in some cases county. But as vacation rentals have emerged as such a powerful trend in the travel sector according to a recent Google study, vacation rentals are going to comprise 30% of all US travel by the end of this year, which is massive. With that giant boom and more and more travelers staying in rentals and more and more owners deciding to rent out their properties you can imagine that a lot of the more traditional hotel owners are sensing some unfair competition.

So, most of those destinations that have vacation rental bands, or at least rumors of vacation rental bands those bands are driven by the hotel lobbyists. But there's also some legitimate components to those complaints in that vacation rentals are not standardized they’re not operated in the same way that a traditional hotel would be in terms of security and safety and insurance and all that stuff.

So there are some very fair and legitimate concerns about that movement as well but in general it really does depend on your local legislature. I would recommend anyone who's considering investing in a vacation rental go directly to their local Tourism Board and ask if it's an okay thing to do, unlike your Florida host.

Josh: Yeah nice. I’ve got a buddy in New York who has a bunch of property and he does the air B&B VRBO video thing. And it's at least from what he told me it's not 100% kosher in New York City to do that and the hotel lobby in New York City is staunchly against allowing vacation rentals to be operated through the sites because it's not in their interest it’s killing them.

Matt: Yeah I mean it’s again a very legitimate concern if it's being monitored and sort of enforced in fair and safe way I think there's everyone can win. So there's several reports out of San Francisco that vacation rental guests are generating more per capita than hotel guests.

Josh: Interesting.

Matt: Which from a tourism perspective, should make the government very happy.

Josh: Is it- okay sorry, go ahead.

Brandon: Well I was going to ask about the tax implications. It would seem the government doesn't like vacation rentals maybe because it's a lot easier go under the table. Like I'm sure this lady I paid my $65 to each night in Miami I'm sure she didn't go immediately report that to the government. Is that a concern?

Matt: That is a concern but there's a very simple way around that and that is to run your vacation rental like a business, and report all of your income and obviously right off your various marketing expenses in the same way that Uber or a number of the shared economy applications that have sort of made these services available at much less expensive prices have organized it in a very formal and businesslike sort of way vacation rental owners need to be doing the exact same thing.

Josh: Yeah for sure. So I mean how easy is this; am I just going to go open the doors and have people rushing in to rent my condo in Miami assuming of course I’ve got one, we could talk about that another time.

Brandon: You know.

Josh: I don't. But I mean what kind of challenges do new vacation rental owners face? Obviously you had talked about you want to go out and look into local legislation so you're not running- I think they call it what a boarding house right, is that kind of term that folks…”

Matt: Yeah down here they call it Hoteles Clandestinos which would be Clandestine Hotels but.

Josh: Oh sounds sexy.

Matt: With a little Spanish on yeah.

Josh: So beyond that I mean what other things do you really need to do; obviously I’m assuming they’re furnished.

Matt: Yeah we’re very fortunate right now to be at the very, very beginning of a massive trend. And a funny thing has happened in that over the past 10 years vacation rentals have become so much more popular than they once were. And with that boom comes a couple of interesting dynamics, so if you Josh were to have your ‘Miami condo’ 10 years ago, you probably would have had no trouble filling it up more or less at any price that you chose on a regular basis.

Because more and more competition has come to the market because for instance Brandon has bought the condo next to you in Miami and priced his a little bit lower than yours, or maybe given a little bit of better service than you did Josh because we all know your customer service.

Josh: Wait, hold on let’s stop for a second. I think my headset was not working for second or did you just like really? Oh that’s awful man.

Brandon: I have a story that got around Josh.

Josh: Hey Brandon, guess what we’re getting a new guest on the show today. Matt Landau couldn’t be here he was struggling through fighting off shark bites, in Panama.

Matt: No, but in all seriousness the amount of competition has increased exponentially. So what used to be a very easy gig of putting your property on one of these large websites like Airbnb or HomeAway or FlipKey which is the trip advisor branch has become a lot more difficult than it once was. So no longer can you just open your doors, put up a listing and expect to be full year-round and that's changing more and more every single day.

Brandon: Yeah, yeah that makes sense and I know we’ll get into that here little later when we talk with marketing which is one of your big emphasises in the vacation rental world. But before we do that, let’s talk more about investing in vacation rental properties.

The people listing to this show are either real estate investors or soon-to- be real estate investors. So I guess my first question would be why would somebody buy a vacation rental and not just a duplex down the street from their house?

Matt: The short answer to that question is the return on your investment can be exponentially higher. Let’s say you do buy that condo down the road that is in a tourism district and you can typically get $2000 a month on from a long-term renter, in let's say we were to use very, very conservative numbers and say you were to book 15 nights out of the month, at an average of $250 or $300.

That's already $2000 you've already increased your income by about 100%. Of course it does require a lot more maintenance it does require a little bit more of a marketing sense to keep those 15 nights filled every month but when you put it side-by-side alongside a long-term rental, the numbers can be staggeringly higher.

Josh: Yeah for sure which leads me to think about the turnover; obviously on a on a traditional rentals your goal is to minimize turnover and to keep it to as little as possible, on a vacation rental it's part of the game right. You’re going to get people who come for one day, two days, five days, a week, two weeks, whatever but nobody's there for six months.

So I think of life as a landlord and in dealing with the just nightmare scenario of people destroying crap. How much of that have you experienced in terms of your properties do you have a lot of people destroying them or is that part of screening? Can you even screen for vacation renters?

Matt: It’s a great question Josh. And because this industry is so new, we've seen a lot of those kinds of disasters happen I don’t know if you guys followed that disaster in New York City where an Airbnb renter totally trashed and ruined the nice condo. And in that case I believe Airbnb covered the damages.

Josh: Okay.

Matt: But as a lot of these vacation rental owners and/or managers are new to the game, they're not quite as well versed as maybe a hotel would be in handling those kinds of challenging situations. So in my particular case because I've now been doing this for about eight years, I have a really good idea of what type of clients we like, what are the telltale signs of potential crazy folks which sure we we've all stayed next to once or twice.

And in my particular case it's a combination of the right price point obviously if you're renting something out at $500 a night chances are there's not to be quite as much damages ideally as if it was $50 a night.

Josh: That makes sense.

Matt: The same goes for the kind of clients you're targeting, if you're hosting a family with kids on you'd expect the care to be slightly more familial than say a group of spring breakers. So a lot of that does go into the marketing and a lot of new owners do find that it takes about a year to hash out their ideal guest profile before they can really hit a sweet spot.

Josh: Hey Matt you just said something that got my brain turning. So as a landlord I have fair housing laws that have to follow. I can't discriminate based on family, based on any origins whatever but you're talking about marketing these vacation rentals to families. Is there any kind of fair housing laws that oversee this industry or where are you kind of free to say this is perfect for families to something that you could never say obviously in a in a typical rental?

Matt: I can't really speak for the United States because I’ve kind of made my living down here in the Third World where we can discriminate as much as we want.

Brandon: And I do.

Matt: And I do. Be very thoughtful in who you rent to, be generous in having faith in folks because a lot of people are concerned right up front that someone’s going to trash their house and it never happens.

Josh: Yeah.

Matt: There are those unusual scenarios in which case I would recommend home insurance; this kind of home insurance that a lot of owners have been using that covers that sort of thing. But in general, have faith in humanity.

Josh: You can you really quickly last question on this line; is or any kind of screening that you can do or if you're using one of these third-party sites like in Airbnb do they have screening processes where the actual renters are screened or is it only the reverse?

Matt: Not yet and I think that's coming. A lot of the screening that’s taking place right now is to weed out scammers because so much money is flowing in such a new industry there's a bunch of sort of sketchy folks that are taking advantage of the weaknesses and the holes in the system. But beyond that, the way that I've seen most owners vetting their potential guests; a big one is talking on the phone.

It's not the most streamlined or efficient way to start generating bookings but you get a much better sense of who someone is what they're looking for on the phone than you do from some anonymous email.

Brandon: Than I noticed I noticed on Airbnb when I booked mine that I had to connect- I don’t know if I had to-but I think I had to connect my Facebook page to it. So and I assume that was so that the person could see that I was a real person and that I wasn’t just a scammer. Is that that true, was that why I had to do that?

Matt: Yeah most likely and a lot of the new sort of security measures that are being put in place are designed to do just that; verify that you are someone real. And actually the reverse is happening as well right now there's a lot of scammers who’re posing as owners, stealing photos off Craigslist or off the VRBO saying come stay at my rental.

A family pays him $3000 for a vacation and that shows up at someone's door totally unexpected.

Josh: Well that’s we’re laughing but like that's the thing I'm petrified of. I have yet to do one, I haven't taken the leap of faith but man, that would really destroy a trip absolutely just devastate a trip.

Brand: Well that’s where the reviews come in handy though right like I looked at my place and there were the 197 reviews of the place. So I think a lot of it would depend on that right?

Matt: Yeah these are just I think natural hitches in a new industry and if these hitches didn't exist everyone would be renting and everyone would be staying in vacation rentals. So it's kind of a drawback of getting in early on a new opportunity.

Brandon: Yeah that makes sense. And hey you mentioned earlier, you said you’ve would do this for eight years and you’ve kind of learned what type of guests that you're looking for and what kind you don't. So what are some of those things you're looking for when you get a good guest?

Matt: A lot of our guests are coming on vacation; a lot of them are coming to experience Panama City in tandem with another one of the destinations in the interior of the country. So Panama if you guys haven’t been here is an amazing country I’ll give Panama a plug right there.

Josh: It’s not like Detroit.

Matt: It's not quite like Detroit slightly sunnier with equal amount of ghettos.

Brandon: Slightly.

Matt: But again a lot of our guests are coming to stay with us in Panama City for several days and in they’re going to the interior for the beaches or the mountains and then they’ll stay with us at the end. So in terms of a profile, we really like people who like experiencing the authentic side of a destination, people who would stay in a resort or who would stay in a Marriott is not necessarily our typical type of client.

And there's plenty of times that a guest will arrive and have entirely inappropriate expectations of what a vacation rental is. They’ll be looking for valet parking or room service or a Jacuzzi inside of their bathroom. And in that case we very simply send them to a chain hotel because we’re not in the business of trying to convince people to stay in rentals as opposed to hotels.

That being said, there's an increasingly large demographic of folks that really do want to live like a local so that's kind of our ideal client is someone who's coming to look and immerse themselves in the local community.

Josh: Got you. So what’s the first step in buying one, Brandon went away on his is little jounce to paradise while I was here in 10 below Denver. And he's cruising around, he’s like wow this is a great place to be, I would love to have a place here. I mean is it is a just buy you like, I mean get a place…

Matt: Surprisingly that is a great first step because in the end this is a piece of real state that you own. So it doesn't make sense to be investing in a property where you're not comfortable going on vacation that's the added perk is that you can use your own property when it's not rented. So as simple as it sounds that is a really good first step; choosing a destination that you really enjoy.

Maybe it's a place for your family has traveled to for summers on end, maybe it’s a place you grew up. There’s any number of reasons that people choose destinations. But apart from that the amount of tourism in said destination is also extremely important. It's way easier to rent a condo in Miami than it is in Detroit.

Josh: Hey I didn’t that time.

Matt: If you want to jump right into a competitive environment that has a lot of tourism already flowing through it's going to be a little bit easier than trying to build your own niche in a place that's just starting up. In my particular case when I opened up shop in the historic district of Panama City, it was more or less a ghetto back then. And we were the only nice place to stay so I kind of had to build this entire thing from scratch.

Josh: Interesting.

Matt: But I would say to someone who doesn't have that marketing hand or background, choosing a place that already has an established tourism sort of flow is a very easy way to get started.

Josh: Got you. No that’s great. So say I'm not from an area I go I visit once I mean do you think it's a good idea to I don't know I go down to New Orleans and I find it pretty amazing. And I think of it kind of like just again buying a rental you really want to know the area that you're in as a vacation rental I mean are you kind of cruising up and down the blocks finding out the crime-ridden areas?

Are you doing a lot of scouting as a typical person would? Or is it pretty self-evident like hey this is all the tourists are down in Orlando so anywhere in Orlando close to Disney's going to work?

Matt: So here’s a really good easy way to go about doing it. go to one of the large websites whether it’s VRBO or HomeAway or FlipKey and just peek at the amount of properties and the prices and the amount of reviews and you can even see their live calendar availability. Take a peek at how everyone's doing so chances are that’s going to be a pretty good reflection of how you can potentially do if you were to insert your property into that market.

Josh: Yeah that’s great so what kind of expenses, what were the costs that are associated with vacation rentals? It’s again turnover is obviously going to be very high unlike a hotel, where hotels have maids and staff for that presume. I think most vacation rentals you're paying a third-party service to kind of handle be the turnaround and the renters pay a fee to housekeeping is that right?

Matt: There is a number of different ways that it can be done and that’s kind of the beauty of this industry is that it’s incredibly flexible in terms of how much work you want to put in and how much you’re expecting to get back. So let's start at the beginning of the spectrum, someone who buys a property and basically never wants to visit the destination in their life.

You hire a property manager let's say the same person doesn't even feel like doing any marketing that same property manager or another marketing sort of branch will take care of the marketing. Typically those kinds of agencies collect a fee on commissions which can be anywhere from 10 to 45% of nightly rates.

The other end of the spectrum is the owner who wants to do everything themselves and there are plenty of those folks who might live next door to their vacation rental or they might live in the same town or even a town over. And they love going and doing the flower gardens, and they love doing the maintenance themselves and they like doing the marketing on their own.

And in which case you have very few expenses, but in terms of the basic things that you should be expecting to pay for when you're renting out your property to travelers, the turnaround like you mentioned Josh is important so there's a little more wear and tear on typical portions of the rental. You also are typically looking at a little bit of a higher-end f furnishings and finishings.

So higher-end linens, indestructible pots and pans that kind of thing. There is the additional check-in procedure, some owners are using these techniques where you don’t even really have to be there to do the check-in, you can use an automatic lockbox or in some cases a cell phone app that allows the guest to enter using a barcode.

Josh: Oh it’s great.

Matt: A lot of these kinds of services are just starting to emerge in what is again very, very green industry. But apart from that you also need to add into your business because this is a business, the cost of marketing. And like I said it's not as easy as just buying a $300 listing and filling up your rental on the spot. There's a lot of time and there’s a lot of sort of know-how and money that needs to go into generating a reliable following.

Josh: So what does that entail? My thought was now that you've got all these portals and they all collect a fee, you basically go take some really nice pictures or in the case of like in Airbnb they'll take it for you. But they’re listing it up and they'll collect their X% at the end and it costs you just that percentage that you're paying to the company. What other marketing fees do you have, how you market outside of these portals?

Matt: Yeah those portals on their own are great if they can fill up your rental but there is also that feeling of dependence of being reliant on this third-party portal which might increase their prices which might require me to log into the system to get the email address. And there's any number of sort of these dependencies that owners aren’t too keen on.

So kind of what I preach in my marketing work is building your own reputation online, building your own website, harnessing your reviews, establishing really basic online marketing techniques like email marketing and press releases and some basic search engine optimization. We’re not talking about rocket science but it does require putting together some pieces of the puzzle.

And a lot of owners who’re not ready for that a lot of the owners in this industry are 60,70 even in some cases 80 years old and don't even know what the heck a URL is. So there's been some cases a daunting learning curve that is presented to some of these owners but those who are ready to jump in and start learning it's actually an incredibly gratifying process.

A lot of subscribers who start from literally nothing and just take great pleasure in learning these new really simple techniques and generating more trust with their with their guests and ultimately a much better bottom line.

Brandon: Yeah I think that's true in the long-term rental field too like that we’re in, that most landlords are 67 years old and don't know how to use a computer. So by being the landlord who can actually do that it puts you at an advantage above everyone else, being able to put a good Craigslist posting versus just some wall of text you’re definitely going to stand out a lot more than the competition.

Matt: Yeah I would even go as far as to say that the next generation those who grew up as babies using iPads, they’re going to be way beyond us. So each generation has a slight advantage on the previous but I would say stuff like video and mobile these are online marketing components that even my generation is very new to. Anyone who's slightly ahead of the curve in that sense, I think is going to take their own particular market by storm.

Brandon: Yeah that makes sense I think that’s a really good idea and that's why like I don’t know those are some of my favorite posts that we see on BiggerPockets are things like how to do this or how to do that with technology and the new things. So it’s very cool. So why don’t we actually go more onto the marketing now that we’re talking about marketing and you mentioned the portals there was no HomeAway.com, Airbnb, FlipKey.com is that what you said?

Matt: Yeah that’s the trip advisor branch.

Brandon: Okay cool so what else is there I mean you throw your listings there you said website what about Craigslist, is that a big thing for you?

Matt: I don't like to recommend owners or managers rely on Craigslist, it's good for a promotion here or there but it's not it's not necessarily a sustainable marketing effort that can feed you increase over the span of time. More of what I preach is creating a bulletproof reputation, as the industry expert. A lot of owners and managers when they go in and buy their property they buy it for reason because they love the neighborhood, they love the area.

They have great memories from their vacations there. So it’s a skill in turning that local expertise into useful information that potential guests can use. It’s a much more subtle form of marketing in providing that kind of useful content. But ultimately what vacation rental travelers are looking for is two things; one is trust that their host is actually a person.

And actually has a rental that’s actually going to host them and their family as opposed to someone who's trying to scam them and two, someone who really does know a lot of insider information that can give them the absolute best vacation possible.

Josh: So are you basically advocating that vacation rental owners should become quasi-travel writers/like travel bloggers essentially about the areas that they've got rentals in to attract folks?

Matt: Yes and in a sense they already are. So a lot of these folks if you were to go visit your friend who has a condo in let's say Miami, you go to visit and let’s say he's not there for the weekend, he’ll send you an email saying this is the restaurant you need to eat at, this is the dish you need to order, this is the bartender at the local club that you need to connect with.

This is the tour guide who gives the best undercover tours yada, yada, yada so providing that insider information from a vacationer’s perspective is pretty much priceless.

Josh: It’s awesome and you threw down the yada, yada, yada which is even more awesome.

Brandon: I actually wonder if he couldn’t translate that into the long-term rental market like that landlord. and I’m in a small area but maybe an area like Denver like if Josh started a Denver blog about the different places and different activities I wonder if you couldn’t use that in the same way to try to find tenants eventually just kind of build yourself up as a reputable landlord or reputable property manager.

Josh: Well some realtors are doing that I mean that’s how a lot of them are attracting folks. I don't know that I know any landlords who do that so it's interesting thought.

Matt: It is in a in a greater marketing sense the way things are heading instead of selling and pushing, pushing, pushing your product, helping people providing useful information and that goes no better industry than vacation rentals.

Brandon: Yeah that’s cool. So then what about like YouTube I mean obviously YouTube or Flickr or Facebook any of the more social channels are you using stuff like that?

Matt: Yeah it's all relatively new to the industry as well and I can't say that any of the social media networks will generate bookings for you off the bat. A lot of people think that they’re going to put up a fan page on Facebook and generate 20 bookings in a week. This is not going to happen. What those social media networks are good for is developing a trustworthy following.

So people who like to follow the stuff that's going on in Detroit. Maybe we should study using another city example.

Josh: Gotham City.

Matt: Yeah, folks who like to follow the new restaurants and bars in Gotham City, they like to follow your lead and ultimately when they do decide that it's time for a vacation where do you think they’re look?

Brandon: Yeah, that’s smart. And then I read on your actual blog you talked about Ad Words and that’s something that fascinates me because I've dabbled in it in the past but never really actually done it for rentals. So can you kind of explain like what is Ad Words and how do you use them like that try to generate listings?

Matt: Yeah Ad Words is a sort of the most straightforward, black-and-white way to see if people are interested in what you're offering. So on a very basic scale Ad Words is pay per click which is represented by the ads you'll see on the side of anywhere from an organic search if you type into Google, Gotham City vacation rental, you'll see a column of various ads posted by owners and managers in Gotham City.

Josh: From the penguin I think.

Matt: Yeah the penguin has one I’m pretty sure batman has another. It's also populated in things like Gmail and various other websites that are hosting Google Ads. So on a very, very simple level you as the vacation rental owner or manager are paying per click which is to say you're paying every time a user clicks on your advertisement.

And that price can be anywhere from 10c to $10 depending on the competition in your own particular environment. So if you have vacation rental somewhere that's not quite popular yet the price per click is going to be way lower than somewhere extremely popular. And from there it's an amazing way to test out whether those users are actually interested in what you're offering.

So when they do click you can decide where they’re landing and that could be anywhere from home page of your website to a specific landing page of your website to a listing that you have on one of these major listing sites. And in driving all that traffic you can see pretty clearly if it's working or not.

So if you Brandon were to go out and spend $50 attracting traffic to your VRBO listing and you got one inquiry it might be a pretty good sign that you need to improve either your title or your photos or your description or your pricing and then several weeks down the line after implementing all those tweaks you might spend that same $50 and see 10 inquiries.

So it's a nice sort of form of A/B testing that allows owners of any skill level and really any budget to see if what they're offering is what people are looking for.

Josh: Got you. So a there's a guy on marketer's name is Pat Flynn and his whole thing is be everywhere, and it seems like you have these days with vacation rentals and that that's probably the path that you really want to be to make sure you get everybody. You want to be on YouTube, you want to have the blog, you want to be on AdSense and do some Facebook Ads.

You want to do, be anywhere and everywhere that people might be that word where they’re looking for vacation rentals.

Matt: And in that same breath that’s a great point in that same breath because the industry is so new, and because in two or three years from now I'm going to have 10 times as many competitors as I do today, another huge component of today's vacation rental marketing is keeping in touch with your former guests.

Josh: Yeah.

Matt: Once a guest has stayed in your vacation rental most likely they had an amazing experience, you were a great host the property itself was stellar, they had a wonderful vacation. Keeping that same guest coming back year after year is far less expensive than going out and trying to convince a new guest that again you’re a real person, you have a real property and you're the real deal.

Josh: Yeah that's great advice and I think traditional landlords could heed that in a similar way by taking their happy tenants those tenants who re-up and stay at their properties presumably you're taking care of your tenants. And you know use those guys is your best refers for new tenants when vacancies come in.

Matt: Yeah if trip advisor is any indication of the way this travel movement is going which is to say reviews. There is nothing better that a vacation rental owner or manager can do than to not only start collecting very, very high quality reviews but to learn to leverage them.

Brandon: Definitely good advice. Alright, so one final I guess topic on the marketing and that’s something that fascinates me. I read that your listings have been featured in places like the New York Times, Vanity Fair, National Geographic and I've never even featured in like my local newspaper. So how did that happen I mean how do you get your listings like national press as a vacation rental owner?

Matt: Well I will say this, after you get the first one or two, they really do tend to domino. So once a writer from the New York Times comes, chances are any writer from the New York Times in the future is going to come back to me, any writer from GQ is going to do a Google search and see that I was in the New York Times and then come back to me.

So the big trick is getting that first one or two. For me it was a large-scale publication like the New York Times, for you might be your local newspaper. So how do you reach out to those journalists and publications? There's a couple different ways that I’d like to recommend, the first is coming up with really interesting stories that are happening in your local area. So perfect example is an owner who’s based in I believe San Pedro and I don't know if you guys saw it but there was a sea lion who went and snatched a prize-winning fish right out of a fisherman's hands. You guys happen to see that video that went viral?

Brandon: No, I must look that up…

Matt: There’s a sea lion whose name is like Pablo and everyone in town knows him.

Josh: So Pablo is the sea lion?

Matt: Yes Pablo is the sea lion.

Josh: Not the fisherman okay.

Matt: No, no one cares about the fisherman. And the fisherman was holding up his prize-winning catch for a photo and literally the sea lion snatched it out of his hand. Anyway it went kind of viral and a vacation rental owner in the area wrote an article about Pablo because everyone in the area knows Pablo. He always does that this is not new to any of the neighbors Pablo is just to the sea lion that steals fish.

So in writing that article she was then approached immediately by I believe National Geographic who wanted to learn more about Pablo so they could do a show. She was also approached by a couple of bloggers, a couple of journalists who wanted to learn more about Pablo and in quoting this woman whose name I can't quite remember they also gave her a wonderful little plug for her vacation rental at the end of the story.

So providing is funny or interesting or new updates about your local area is a great way to do it. Learning how to pitch journalists is a science in itself anyone who comes off sounding as to salesie or too greedy is barking up the wrong tree. So I really would encourage an entirely selfless perspective on this, really just try to provide as useful and interesting information as possible.

And in truth I'm friends with a lot of the journalists of now featured my properties and they like that kind of stuff. They like hearing from locals about interesting stories because the story about Pablo went on to generate a ton of traffic for their own newspaper. So reaching out and presenting helpful stuff without sounding too salesie, you might get a couple of singles or doubles like Brandon that might be a good place for you to start to get into your local newspaper, but then again you might hit that home run where you get featured in the New York Times.

Josh: Yeah, that's great advice and a good way to market. So we kind of glazed over the economics. We talked about the fact that you can rent these properties out and if you were to get X number of days you’re in a good way, what's the typical vacation rental vacancy rate? Is a typical rental owner getting 20 days a month of vacancy or are there any statistics on what's going on there?

Matt: Not really I mean it varies so much across the board and so many owners are so bad at keeping track of these things. A lot of owners starting off don't even keep track of their occupancy. So unlike hotels or B&Bs or anything like that, there is not a lot of data to go on just yet. Again a good way to gauge a good litmus test to use is to look on one of these major listing sites at the availability calendars of something comparable to what you're considering investing in.

Josh: Yeah.

Matt: That should give you a rough idea borrowing the fact that they’ve probably been doing this for a couple years and have a very good reputation should give you a rough idea of what to expect. And I should mention that as I was answering that last question I remembered that the sea lion’s name is actually Poncho it’s not Pablo.

Josh: Cousin. Oh man.

Matt: I didn’t want to misquote there.

Brandon: Poncho is a better name for a sea lion.

Josh: Yeah indeed. Okay so I don't know I remember Brandon you said you actually looked at some rentals right I mean you guys were driving around when you were down on your trip?

Brandon: I did yeah. When I was in Fort Lauderdale actually I went looked at a four-plex and I thought man this would be just great to buy down here and I could manage it from home, I could- and I just kind of started like dreaming of how I can make this happen, this nice little like four-plex and doing the numbers in my head and they looked amazing.

Brandon: But I guess then I found out about all like the Florida laws and stuff like that so I don’t know if I’m going to go there. But I guess what do you recommend for somebody like me who wants to go buy a vacation rental like that? I mean is that a stupid idea for me to be even thinking like that?

Matt: It's incredibly stupid Brandon, why would you ever think that?

Josh: I love it when my guests call my co-host stupid.

Brandon: Thank you.

Matt: It's not a stupid idea at all. And I would recommend you first start staying in more vacation rentals so you can familiarize yourself with what's expected from a travelers perspective because a lot of owners need to know that information when they're either furnishing their unit or when they're describing their unit to potential guests.

So, all of us have rented an apartment at one point in our lives, that's why being a landlord for long-term rentals is comparatively much easier than marketing the short-term rentals. So once you get a good feel for what is expected of a high-end vacation rental experience and I'm not necessarily saying a high-end property but a high-end experience.

Customer service, the actual stay itself and then details after this that once you have a good idea about that, I would say start looking at some of the other pricing in your area. You should get an idea really quick about what's an okay price to be asking. I like to recommend that owners or managers slightly undercut most of the competition especially when you're starting.

So if you have the exact same condo in the same development as Josh let's say and Josh is asking $200 a night, you’ll have a giant upper hand if you're asking $175 let’s say.

Josh: You bastard.

Matt: Don’t tell Josh I told you that though.

Brandon: Hey so I know we’re kind of jumping around here so I apologize to our listeners but as these things are coming to me. Let’s say I wanted to buy a condo in Panama City. I don't live in Panama City I live up here near Seattle, is that something that I could do; I could buy it and then kind of manage it via the internet and via the lockboxes and all that like the electronic things, and pretty much take care of it from 5000 miles away or is that a stupid question?

Matt: An incredibly stupid question. No, that’s not a bad idea at all and I would say 50% of owners out there do operate remotely. But it also means that you’re going to be collecting a smaller amount at the end of every month. So you do have that property management fee that you have to add in there, you have to add in whoever's going to be cleaning your rental if that's not included in the property management fee.

So there is a number of costs that do go into operating remotely but it’s not to say that say that it can’t be done definitely, not a lot of people do that.

Josh: Hey so my final question here before we move on to the next section is on scale. Presumably renting out one unit is going to be a lot easier than having 20 vacation rentals that are turning over every day or two. And I personally could see that as a somewhat of a management nightmare. So my understanding is if you've got a pretty decent portfolio at this point of vacation rentals. How has scaling been one of the biggest challenges as you’ve scaled?

Matt: The biggest scaling challenges for me personally have been proximity. And I think this will probably apply to most owners and managers wherever they are in the world, if you're managing or operating 10 different rentals that are located 10 miles apart it’s going to be much more challenging than 10 different rentals in the exact same complex.

So in terms of proximity, the closer and more similar of a product that you can get, the better it’s much easier to a) streamline the actual booking process and your customer service and your actually in-stay customer service. It’s also easier from actually no, that’s pretty much the only reason it’s easier.

Josh: Nice. So listen that's great, it’s really good information then and I think it will help a lot of folks out. So let's move onto the next section of the show here our;

It’s time for the Fire Round.

Brandon: Alright the BiggerPockets Fire Round these are questions we ask everyone- let me redo that. Alright the Fire Round these are questions direct out of the BiggerPockets forum that we’re just going to fire at you and you can fire right back at us. So #1, multifamily property or single units what makes a better vacation rental?

Matt: Multifamily property just because the large bulk of vacation rental travelers are groups that are looking to avoid hotels, whether it's because of more privacy, more economical, any number of reasons. There is a larger amount of group demands than there is for singles or couples.

Josh: Nice alright well single-family or condo which is a better vacation rental?

Matt: Really hard to say it depends on where you located in. If it's a corporate type metropolitan environment you have a lot of business travelers for instance who want their own space. The smaller scale properties are much more sensible compared to say a beach, a more vacationy destination where I would opt in the other direction.

Brandon: Okay what do you think is it a bad idea to do a rehab into a vacation rental or as a better just to buy Turnkey and all finished?

Matt: You guys are the sort of experts on rehabs so I’m not going to try to pretend like I know what I'm talking about there. But I will say that in the in the large-scale of operating a vacation rental business, the more the finished product that you can start with, the better. If you're rehabbing and it's an entirely different industry getting to that beginning point than if you were to buy something that's ready to roll.

Josh: Yeah for sure. Alright this last question I'm not quite sure why I'm asking it, but because I’ve got my own answer but the question is I want to buy vacation rental with family members is, that a good idea or bad? The answer is bad; but let’s see what you have to say about it.

Matt: I guess the next question is, do you like your family members? It’s not all that uncommon I’ll say that, a lot of investors go in on a vacation rental with family just because they're all using the property anyways. So if you look at a five bedroom home on the beach, a lot of cases it's exorbitant, it’s prohibitively expensive for one particular investor.

So if it's going to be a group thing you might as well go with the people you trust most or in some cases need to just lease to your family.

Josh: There you go and then the thing is ultimately you want to minimize squabbles, and I think sharing times and then having to fight over who gets to have the vacation rental on Christmas and holidays can be damaging. I know I've heard a lot of folks who own these types of properties who’ve dealt with that stuff and just it's always a disaster at least what I’ve heard.

Brandon: Yeah I definitely agree. The reason I picked that from the forms is because I know a lot of family members have said that to me like, “Hey Brandon we should go buy a condo in Hawaii on the beach or we should go buy a condo down in I don’t know Aruba and then we'll just use it whenever we want to and we’ll vacation rental it out the rest of the time.” And I haven’t done it obviously but it’s been a conversation.

Matt: Yeah the only the only tip I would give is make sure everyone's duties are very clearly outlined to start with, there is a lot more work that goes into operating a successful vacation rental than there might seem. So if that kind of stuff is not outlined to begin with you might have some squabbles.

Josh: And along with that along with responsibilities the costs associated with running the business probably need to be discussed up front as well.

Matt: Absolutely.

Josh: Yeah for sure. Cool man. Alright well let's crank out to the final section of the show here our Famous Four.

Brandon: Alright these are the last four questions we ask everyone and yeah let’s get to them. First one, do you have a favorite or what is your favorite real estate related book? I know this might be a little bit different approach to you because you’re dealing with vacation rentals but do you have a book that you would recommend as your favorite kind of vacation rental book or real estate book?

Matt: There's not a lot of vacation rental literature period. Because it's such a new industry the stuff that's out there is very limited and in most cases outdated. So I do not have a favorite vacation rental investment book.

Brandon: Alright, that’s alright.

Josh: Wow you know 6 shows man and you're the first to not have a favorite book how does that make you feel?

Matt: Special.

Brandon: We had somebody earlier on one of early shows said they couldn’t think of one.

Josh: Alright, so forget favorite real estate and vacation rental book, who reads that anyway? I mean I don’t know what kind of question that was. Let’s ask a real question here, what about your favorite business book

Matt: My favorite business book; I just finished a book about a year ago and it’s not exclusively about business but there's a ton of business ties and it’s called The Happiness Hypothesis. Have you guys ever heard of that?

Josh: No but I want you to say it six times fast.

Matt: This is a book that really did change my perspective not only on business but just on sort of gratifying way to live my life and it kind of breaks down the world civilizations and understand how everyone describes happiness and defines it, and then kind of helps you define your own version of it as it applies to any number of components.

And that book itself kind of changed the way I was operating my business, it changed the kind of investments I was making both in time and money, and in the end I found it to be one of the more gratifying transitions in my professional career.

Josh: Nice, nice; awesome. And we’ll point to that in the show notes which is going to be at BiggerPockets.com/show57. Finally for me I guess so what do you do for fun besides vacation? Life is a vacation I mean like what you do for fun; I live, I breathe that's fun.

Matt: I do live in the tropics; I have both the Pacific and the Caribbean Ocean within about 45 minutes from my house. So any kind of outdoor activity whether it's swimming I’m a huge swimmer, so I can swim in the Caribbean and the Pacific in the same morning. I love biking into the rain forest that's kind of one of the more fulfilling things I do down here.

Apart from that of the big foodie, any kind of interesting or new food that tastes delicious I'm a big fan of that and soccer; I'm a gigantic soccer fan. And when I'm down here I have to call it football but I really do.

Josh: Nice.

Brandon: That’s very cool. Alright final question from me, what do you believe sets apart successful vacation rental owners from those who fail?

Matt: That’s a great question. I think the differences those who are in it for the long haul; there is a number of people who are just looking for a short return looking to make a quick buck. And if that's what you're looking for rehab home and sell it but vacation rental hosting is all about building a reputable reputation over a long period of time.

And as you go along each year kind of adds on to t that credibility. So the owners and managers that I see that are investing not in tomorrow but in a year from now and two years from now those are ultimately the ones that win the end of the race.

Josh: Nice, now that’s great. Well so an interesting topic I wanted to something it's not directly related to our traditional mission here at BiggerPockets to kind of talk about flipping houses and renting a traditional rental but I think it's part of the industry and we wanted to make sure to at least start covering it a little bit because so many people go and traveling and think about doing this.

And hopefully we bring a little bit of insight. If you had one last piece of advice for folks who were thinking to themselves, “Hey I'm going to do this I'm here in wherever Brandon Turner just was on his vacation his round the world yeah let me do this.” What one piece of advice do you think is probably the most important that you could give?

Matt: I would say do it immediately. I would say don't hesitate decide you’re going to do it and do it. This is such a burgeoning industry and those who have gotten in on it early are going to be the winners and in the end of this marathon. So I would say, if you were going to do it this tiny sliver of vacation rental buzz that you guys have heard as ‘outsiders’ of the industry is just going to multiply over the coming years.

And I think in very, very short period of time vacation rentals are going to start to sort of compete very, very seriously with hotels. so if 10 years from now our kids are looking back and saying, “You mean you had the opportunity to get in on the ground floor of the vacation rental boom and you didn't? What were you thinking papa?” You don’t want to kick yourself in the foot.

Brandon: And on top of that you mentioned earlier that the competition is heating up more and more and more, but by getting in now you establish your reputation now and you start building that now so in five years when the competition is crazy you’ve had five years of solid track record versus the guy would just bought five years from now and overpaid because of…

Josh: Well that's the big thing right if it's getting that hot, presumably real estate in those markets are going to continue to climb to exorbitant levels and it's actually interesting I’d be very curious to see what typical market rents for long-term renters are in some of these areas how bad vacation rentals are affecting rates for those renters.

Because presumably if I could go and take an apartment that I'm renting for two grand and rent it out to make three, 4000 bucks a month as a vacation rental, well the value of that property is going to increase and is that going to force out traditional renters?

Matt: And that’s already starting to happen, Josh and I would say in places like New York and San Francisco where the biggest sort of hype at around this industry is, you can't stop this movement. It’s a very, very organic movement that is happening because vacation rentals are an amazing product. And I know you haven't stayed in one yet Josh but 10 years from now I think you will have and you'll have that …

Josh: Hey Matt whenever you give me free access to your [Inaudible] [1:03:25] I'll be there buddy.

Matt: Consider it done; just bring me a really nice podcast microphone.

Josh: There you go. That’s awesome great stuff. Hopefully people stay to the end because I think we nailed some of the really interesting stuff here. But Matt, thank you so much we really appreciate you taking the time. Before we let you go where can people find out more information about you?

Matt: One place my website is vacationrentalmarketingblog.com which is as long and annoying as it sounds is where I put my entire host of advice and it's all free. So check it out.

Josh: Fabulous.

Brandon: Awesome.

Josh: Awesome man hey thanks again for being on the show and thanks for being one of our BiggerPockets bloggers as well folks can find posts from Matt on the BiggerPockets blog. Matt we’ll see you around and of course for everybody listening if you've got any questions for Matt definitely jump on the show notes at BiggerPockets.com/show57 and Matt will be there to answer those questions for you. Thanks again Matt.

Matt: Alright adios.

Brandon: Bye, thanks Matt.

Josh: alright everybody that was Show 057 on the BiggerPockets podcast with Matt Landau, big thanks to Matt makes me want to go down to the Bahamas or Panama or anywhere else other than freezing cold Denver, and go pick up some vacation property. What do you think Brandon?

Brandon: I think that sounds like an amazing idea let’s do it.

Josh: Should go in together like family?

Brandon: We should like family.

Josh: Yeah, I don’t it’ll work I think it’s a bad idea. You're not my family, you don’t know me. Yeah alright so now great show lots of cool insight. So big thanks again to Matt. With that said, a big reminder to anybody who's listening if you guys are not connecting with us please be sure to do that on the big typical social channels, places like Facebook, Twitter G Plus, LinkedIn Pinterest. We’re all over the place. We’re multimedia global; YouTube.

Brandon: We’re not on Tumblr yet.

Josh: Yeah well you know I don't know; we’ll get there. But yeah like we do focus a lot of our efforts and things on Facebook so if you're not already following us check us out Facebook.com/BiggerPockets. Also cool thing we just got our name finally from G Plus so if you go to Google Plus I think it’s like Plus.Google.com you go/the little + sign and then BiggerPockets so we have our own name on G plus which is kind of cool.

Brandon: Look at you, fancy Josh.

Josh: Yeah there you go was that your little mayor of…

Brandon: Oh look at you?

Josh: Is that that candy cane voice now that you’re striped from your vacation?

Brandon: Yes that is my candy cane voice; oh look at you.

Josh: Yeah so yeah can we finish?

Brandon: Let’s end this, people are bored.

Josh: Yeah let’s end this. Alright guys if you're not on BiggerPockets if you’re not connecting, participating please do so introduce yourself most people join and jump in and introduce themselves get a lot more out of the site than those who just joined and do nothing. So get involved be part of the community and thank so much we'll see you next week Show 058 at the BiggerPockets podcast coming up.

And if you haven't checked out all our previous ones definitely jump in we’ve got a lot of amazing, amazing content. Thank you so much I’m Josh Dorkin host of the BiggerPockets podcast signing off.

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