Startup costs and length of time

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Startup costs and length of time

Ashley Wolfe
Realtor · Bedford, TX · Member since 2015 · 172 posts · 55 votes

All-Knowing Ones,

My husband and I have our little log cabin in La Grange, TX and we've received six bookings in the last six weeks through all three of our platforms (Airbnb, HomeAway, and Glamping Hub).  We're pretty pleased with it so far and are super excited about hosting our first set of guests at the end of December.

Slowly but surely, we've gotten past the small expenses like stocking paper supplies, dinnerware, and linens and are starting to look at the larger expenses like new TV, mattress and new living room furniture.

The two crumby recliners and the outdated TV in the listing photos are already out.  We know which mattress we want to buy, we've bought the TV on a Black Friday sale.  Now I'm stuck with which sofa/loveseat to purchase.  I find something that has a decent price but crappy reviews.  Then I look at the price tag of the nicer ones and it seems counter-productive to spend so much money that we don't have covered with rental income yet. 

This comes to my next question: when does the spending stop and the money making begin?  I think that my husband and I will be learning in the first year then improving significantly in the second year.  We will also hopefully see some repeat business in the second year.  But I want the first impression of our very first guests to be awesome so we start off with strong reviews so we can get some more bookings.

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Julie McCoy
Real Estate Agent · Sevierville, TN · Member since 2015 · 1k+ posts · 1k+ votes
7y

This is the moral equivalent of doing rehab on a house you intend to use as a LTR.  You spend a bunch of money up front, but if you set it up right, you're only doing it once.  Think of them as capital investments (and don't forget to write them off!).  It improves the value of your home, in the sense that with the improvements, you've created both a more desirable property and a higher rate threshold.  

Yeah, it'll take a little while to recoup the expenses, BUT you're definitely doing it right by wanting those first awesome reviews - once those start coming in, the bookings will start to snowball.  If you get meh reviews the first couple times out, it's really really hard to get momentum back.  People are willing to take a risk on something new, but if the only reviews are blah, they'll pass.

However, it's only honest to say that while the spending will certainly drop off (significantly!) it's never going to *stop* - there's always going to be sheets to replace, or the coffee maker that broke, or fixing this or that random thing.  But that feels like nothing once you've done the hard stuff of furnishing it nicely and outfitting the kitchen!  

I'm impressed you've done it on a budget of around $1600 - I probably spend twice that when tricking out a new place, and once you factor in true capex (like a new roof) I spend closer to $10k per property when I initially begin.  I am also excited to learn Zinus makes sofas!  I LOVE their mattresses and I'm going to be in the market for a new sofa very soon... 

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  • Paul Sandhu
    Investor · The worst town to live in, KS · Member since 2016 · 4k+ posts · 4k+ votes
    7y

    It really depends on how well you initially stock the place and how modern you want to keep it when technology and fashion advances.  At least 75% of our furnishings come from estate auctions.  That's everything in the living room, kitchen and bedrooms.  

    7 years ago I thought a big old fashioned tv in the living room was acceptable.  It was.  They cost about $10-$15 at an auction.  3 years ago I thought an HDTV had to be the norm in the living rooms, old style tv's were obsolete.  Lately I've been going with a SMART tv or a Roku device with HDTV in every living room.  Rooms with their own bathroom or rooms with 2 beds also get an HDTV that can stream.

    You can also donate the furniture and appliances from your own house to your rental. Buy new furniture for yourself and keep the receipt. When you buy and furnish your next STR, donate your current furniture and buy new for yourself. Your accountant can determine the expense you can deduct for the furniture with the receipt. I think we were buying 2 new gas grills every year for a couple of years in a row. Whenever we bought a house, it would get a nice stainless 4 burner grill with a side burner and the whole thing was already broken in and seasoned.

    Boy, that really is an outdated TV.  I had 3 of them when I first started.  2 of them are now in a landfill, and the 3rd one is in a laundry room that has a bed in it.

    2Reply
  • Ashley Lewis
    Rental Property Investor · Jacksonville, FL · Member since 2018 · 16 posts · 1 vote
    7y

    Following. 

    0Reply
  • Ashley Wolfe
    OP
    Realtor · Bedford, TX · Member since 2015 · 172 posts · 55 votes
    7y

    I went ahead and bit the bullet on buying the mattress, sofa, and loveseat (all from Zinus brand on Amazon) and a few extras like bedsheets, pillow and mattress protectors, coffee mugs, throw pillows, and a few more blankets.  We have a 15-night renter in mid-Feb who has been very communicative and seems to only care about the updated living room furniture and sports to watch on a new TV.  So we bought it.  Everyone else will appreciate those things and so will we when we vacation there ourselves.

    All in all, I know that the furniture and other expensive items we've purchased will last years with normal wear.  Its just painful to drop $1100 on that stuff after already dropping $500 on other items needed for the photo shoot.  But, its all for the cause.  And, this is a marathon, not a sprint.

    1Reply
  • Ashley Wolfe
    OP
    Realtor · Bedford, TX · Member since 2015 · 172 posts · 55 votes
    7y

    Also, anyone have any experience with SlingTV ($25/month no contract) and a 96-mile antenna as  opposed to paying the cable company?

    0Reply
  • Julie McCoy
    Real Estate Agent · Sevierville, TN · Member since 2015 · 1k+ posts · 1k+ votes
    7y

    This is the moral equivalent of doing rehab on a house you intend to use as a LTR.  You spend a bunch of money up front, but if you set it up right, you're only doing it once.  Think of them as capital investments (and don't forget to write them off!).  It improves the value of your home, in the sense that with the improvements, you've created both a more desirable property and a higher rate threshold.  

    Yeah, it'll take a little while to recoup the expenses, BUT you're definitely doing it right by wanting those first awesome reviews - once those start coming in, the bookings will start to snowball.  If you get meh reviews the first couple times out, it's really really hard to get momentum back.  People are willing to take a risk on something new, but if the only reviews are blah, they'll pass.

    However, it's only honest to say that while the spending will certainly drop off (significantly!) it's never going to *stop* - there's always going to be sheets to replace, or the coffee maker that broke, or fixing this or that random thing.  But that feels like nothing once you've done the hard stuff of furnishing it nicely and outfitting the kitchen!  

    I'm impressed you've done it on a budget of around $1600 - I probably spend twice that when tricking out a new place, and once you factor in true capex (like a new roof) I spend closer to $10k per property when I initially begin.  I am also excited to learn Zinus makes sofas!  I LOVE their mattresses and I'm going to be in the market for a new sofa very soon... 

    3Reply
  • Ashley Wolfe
    OP
    Realtor · Bedford, TX · Member since 2015 · 172 posts · 55 votes
    7y

    @Julie McCoy We bought a Zinus mattress for ourselves upon your suggestion that you use them in your rentals.  From there, we were completely sold!  Today, when I found out they made sofas and loveseats AND had a small discount from Amazon for a damaged box, I immediately knew those were the ones I would invest in.  The reviews said they were very quick to assemble (modular design) and very comfortable.  At about $275 each, I knew it would be an easy decision to make.  Not very expensive, good company, and it will be LOADS better than the $hit that's currently there.

    1Reply
  • Brendan F. Nagle
    Member since 2018 · 104 posts · 94 votes
    7y
    @Ashley Wolfe 6 months later. Think of it as getting it ready costs. Don’t risk a bad review over old furniture. Once you have systems in place the money will come. Fund your reserve for the property. Have cleaning crew and backup, for quick turnarounds with guests. Good luck.
    0Reply
  • Michael Greenberg
    Investor · Denver, CO · Member since 2016 · 533 posts · 433 votes
    7y

    @Ashley Wolfe you've done a REALLY nice job on a VERY limited budget, wish I could drop this cabin the Colorado Rockies!  As @Julie McCoy mentioned, they items are your "assets" (CapEx) of your business. They allow you to create fabulous photos and market your cabin. I too spend about $10k-15K per property for furnishings and since you are now receiving bookings you can rest easy that "the money will come" and this upfront expenditure will be a distant memory. One suggestion, get a new TV as @Paul Sandhu mentioned that one is outdated.  If you offer WiFi, you could buy a ROKU TV on black Friday or cyber Monday (I'm seeing REALLY Netflix account (or upgrade your own Netflix to a family plan that costs $15 per month).  Just make sure you put these details in your description.

    Congrats!

    Mike

    1Reply
  • Ashley Wolfe
    OP
    Realtor · Bedford, TX · Member since 2015 · 172 posts · 55 votes
    7y

    @Michael Greenberg  Thanks so much!  Yes, the new Samsung Smart TV is already ordered and shipped.  We have a 15-night stay booked in mid-Feb that asked how the TV and sports stations were at the cabin.  So, since he's paying the entire rent with his booking, we have to get what he wants, and it will go well with all our other guests too.

    I have one cleaning person lined up but I need to get two more so I can throw out jobs to at least two on Properly and let them "fight" for it.

    Otherwise, its just a matter of getting those first reviews.

    How do I explain to guests, before they stay, that certain renovations are still on the calendar, just not happening right now?  The master shower will be one of the first major renos we do but we have to build capital for that because its only cosmetic.  Should I put that in the listing or just tell folks about it after they book?

    1Reply
  • Michael Greenberg
    Investor · Denver, CO · Member since 2016 · 533 posts · 433 votes
    7y

    @Ashley Wolfe I wouldn't speak of the reno's you are going to do in the future, you're getting bookings without them, and when you complete them you can likely raise your rates a bit (but be careful, some reno's don't pay off).  Just honestly describe the place in your descriptions; get the reno's done; take some new photos; and update your listing.  Then I would fire off an email to your prior guests that you've updated the cabin - that's real news for a guest that might be interested in returning.  Nice work on the TV, for some reason it matters most to a lot of my guests as well and I'm looking to add YouTubeTV in the near future to two of my larger homes.

    Cheers,

    Mike

    2Reply
  • Julie McCoy
    Real Estate Agent · Sevierville, TN · Member since 2015 · 1k+ posts · 1k+ votes
    7y

    What @Michael Greenberg said.  Your listing should reflect the place as it CURRENTLY is, in both photos and descriptions, and then update once the changes happen (the only exception would be if you're making a change - like the TV - that will be installed before any guests arrive).  That way everybody arrives with the correct expectations, and if you've improved something since they've booked, bonus!  It's good to remember the old axiom "Underpromise and overdeliver" :) 

    1Reply
  • Luke CarlPro Member
    Rental Property Investor · Tennessee Florida · Member since 2016 · 4k+ posts · 5k+ votes
    7y

    @Ashley Wolfe I didn’t read all of this but whatever @Julie McCoy says is correct.

    My concern is the 6 bookings in 6 weeks. In my market a new property should get 6 bookings in 6 hours.

    Podcast Guest on Show From Surviving on $30/Day to 30+ Properties Thanks to Blue-Collar Skills
    1Reply
  • Kathy Hansen
    Kettle Falls, WA · Member since 2017 · 77 posts · 40 votes
    7y

    If you are a member of groups like this one and those on Facebook, you may not ever really stop buying. LOL. I am constantly getting ideas from these groups for things I'd like to add. Luggage racks! Tissue boxes! Feminine products! Flashlights by each bed! Puzzles and Games! Eye masks! I don't always succomb to these suggestions, but my business model is guest service, so I'm very susceptible to ideas for cool things to have on hand for guests. Also get a lot of guest compliments on how well-equipped the listings are.

    1Reply
  • Ashley Wolfe
    OP
    Realtor · Bedford, TX · Member since 2015 · 172 posts · 55 votes
    7y
    Originally posted by @Luke Carl:

    @Ashley Wolfe I didn’t read all of this but whatever @Julie McCoy says is correct.

    My concern is the 6 bookings in 6 weeks. In my market a new property should get 6 bookings in 6 hours.

    I think my La Grange, TX market is way slower than yours.   I’ve seen your listings, they look great.  One day, I’ll get 6 bookings in 6 hours!  ;)

    0Reply
  • Kate J.
    Rental Property Investor · Austin, TX · Member since 2016 · 294 posts · 104 votes
    7y
    Originally posted by @Ashley Wolfe:
    Originally posted by @Luke Carl:

    @Ashley Wolfe I didn’t read all of this but whatever @Julie McCoy says is correct.

    My concern is the 6 bookings in 6 weeks. In my market a new property should get 6 bookings in 6 hours.

    I think my La Grange, TX market is way slower than yours.   I’ve seen your listings, they look great.  One day, I’ll get 6 bookings in 6 hours!  ;)

     do you have someone who cleans it? I live in Austin and I wonder how things are managed with short term rentals. I am considering to have one.

    0Reply
  • Jeff B. HarrisonPro Member
    Rental Property Investor · Schertz, TX · Member since 2017 · 19 posts · 7 votes
    7y

    Ashley, I used to live in La Grange ( a very long time ago) but still know and keep in touch with several people there. I may be able to get you in touch with someone who could help you cleaning wise, and possibly more. Just shoot me a pm if interested.

    0Reply
  • Jarrod Covey
    Lender · Austin, TX · Member since 2018 · 241 posts · 136 votes
    7y

    Great thread @Ashley Wolfe!

    Getting creative with how you purchase furnishings for a rental and utilizing great insight by @Paul Sandhu seems like the move. 

    0Reply
  • Thomas McQuitty
    Frisco, TX · Member since 2017 · 8 posts · 4 votes
    7y

    A couple thoughts.

    Yes, getting rid of old TVs is going to be paramount.  Go to Monoprice (dot) com and get some cheap TV wall mounts.  First, it gives you something more modern, second, it gives you more room as a big bulky box and stand is no longer required.

    Go with an antenna and cord-cutting solution.  I would personally get a TV with Roku or FireTV built in.  One remote, less hassle.  SlingTV is OK, but I prefer the broader selection on DirecTV Now (directvnow.com).  You want sports for people who want sports packages.

    And your photos look great.  :) 

    0Reply
  • Luke CarlPro Member
    Rental Property Investor · Tennessee Florida · Member since 2016 · 4k+ posts · 5k+ votes
    7y
    @Ashley Wolfe so sell that thing and come make some money!
    Podcast Guest on Show From Surviving on $30/Day to 30+ Properties Thanks to Blue-Collar Skills
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  • Ashley Wolfe
    OP
    Realtor · Bedford, TX · Member since 2015 · 172 posts · 55 votes
    7y

    @Kate J.

    On Monday, I put up a simple FB job post asking for housekeepers and I have 7 phone interviews already.  As I’m getting to know the applicants more, I’m also able to make local connections for people in the trades.  Last night, the gal I was talking to has so many skills that she could be my housekeeper, handywoman, and operations manager.  

    I had to close the ad yesterday because I got such a response from it.

    1Reply
  • Kate J.
    Rental Property Investor · Austin, TX · Member since 2016 · 294 posts · 104 votes
    7y
    Originally posted by @Ashley Wolfe:

    @Kate J.

    On Monday, I put up a simple FB job post asking for housekeepers and I have 7 phone interviews already.  As I’m getting to know the applicants more, I’m also able to make local connections for people in the trades.  Last night, the gal I was talking to has so many skills that she could be my housekeeper, handywoman, and operations manager.  

    I had to close the ad yesterday because I got such a response from it.

     Wow, this is great... I always have issues with handymans, maybe handywomen will be more relieble :)

    1Reply
  • Eric A.
    Rental Property Investor · St. Augustine, FL · Member since 2017 · 189 posts · 127 votes
    7y
    @Ashley Wolfe I will give you one of our secrets that should help you. Always buy your furniture and TV’s on Facebook marketplace or Craig’s list. We furnish all our places with very high end furniture or antiques and get wonderful compliments. People ask huge prices for items but you will soon find out that they will only get pennies on the dollar. Just purchased a leather couch and love seat that cost $4900 at Ethan Allen for $250. They were two years old and after a professional cleaning look like new. Deals like this are everywhere. Oh, by the way they were asking $1500. Take care.
    0Reply
  • Ashley Wolfe
    OP
    Realtor · Bedford, TX · Member since 2015 · 172 posts · 55 votes
    7y

    Even though this is true, logistically, we would have to rent a Uhaul and spend money and a full day on getting the used furniture and such.  So paying more to have a new one delivered is what we’ve chosen to do.  If we were in the same area as our rental, it would be a different story.  We’re four hours away without a truck of our own. 🤷🏼♀️

    0Reply
  • Paul Sandhu
    Investor · The worst town to live in, KS · Member since 2016 · 4k+ posts · 4k+ votes
    7y
    Originally posted by @Eric A.:
    Just purchased a leather couch and love seat that cost $4900 at Ethan Allen for $250. They were two years old and after a professional cleaning look like new. Deals like this are everywhere. Oh, by the way they were asking $1500. Take care.

    You're doing 10x better than me.  I just purchased a gas range and a gas dryer.  They were both $500 when new.  I paid $25 for each.

    0Reply
  • Cheryl Vargas
    Rental Property Investor · Rohnert Park, CA · Member since 2014 · 306 posts · 160 votes
    7y
    @Michael Greenberg Hi Michael I can’t see the need for getting a Netflix account set up in the STR house. I bring my own Netflix account with me wherever I go. And if I get a Netflix account for my STR, and give the guests the password, then the guests can use it when they get home, so I’m going to have to change the password on a daily/ weekly basis. What are your thoughts about this? Thank you!
    0Reply
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