All Forum Posts by: Ethan Cooke

@Joe Splitrock - You now know more tricks of STR management than most STR managers! Such good feedback from @Stephen E., @Neil Henderson, @Mark Miles and others...

Here are a few of my lessons.

RESPOND LIKE YOUR LIFE DEPENDS ON IT: I try to respond within 5-10 minutes when I get a booking inquiry since many guests want to book NOW. I also respond ASAP and call the guest when they have a problem. This is the hospitality business. Sh*t happens. And it's my job to clean it up ASAP. I have learned that it's much better to let a guest vent to me over the phone real-time about a unit they are disappointed in than to have them cancel a 1-week reservation for a full refund AND leave a 1-star review. 

MEDIUM-TERM RENTALS IN URBAN/SUBURBAN MARKETS: I have been managing 20+ furnished rentals in the SF Bay Area for 3 years. With COVID squashing travel to the Bay Area, I have shifted to medium-term and long-term furnished rentals. Nice balance of solid margins and predictable cash flow. Zillow and TurboTenant have been great marketing platforms--both post to several other med/long-term rental sites including Facebook Marketplace, Trulia and Craigslist. I generally make 20-25% more rent for furnished 1-12 month rentals vs. unfurnished. This covers all furniture and other start-up costs in the first 6-12 months and then brings in nice margins without too much extra work. FurnishedFinder is effective for RNs coming to moderately priced areas like yours. (Most FF leads coming to San Francisco lowball the rent offers since they can't afford the rents.) Should be a great source for you since you are so close to the hospital.

NO QUIRKY UNITS: Every STR unit needs to have easy parking, a decent kitchen, simple instructions and nothing too quirky about it (e.g. tough to park, no kitchen, low ceilings or 1 bathroom that is only accessible through one of the 2 bedrooms). There are a lot of makeshift units for rent in the Bay Area. I have learned that no matter how low my costs or my prices on these units, they are a pain in the ***. Even if the guests are getting an amazing deal and they know ahead of time that parking is tough, some of them will still get upset and leave bad reviews.

STR INSURANCE: Check out CBIZ and Comet for STR insurance. They are specialized for STR like Proper, but a lot cheaper.

Good luck!

@Shannon Ilas - I have been looking for the "holy grail" of furnished rental marketing/booking for 3 years. AirBnB brings in 70% of my short-term bookings for my 20+ units in the SF Bay Area. But with COVID rocking the hospitality market, I have been renting out many of my furnished homes on 1-12 month leases through Zillow and Turbotenant. Both of these post to many other rental websites including Facebook Marketplace, realtor.com, trulia and others. The steady revenue of long-term furnished rentals is great, especially with winter ahead. And it's a lot less work than short-term rentals!

@Avery Carl, @Paul Sandhu and @John Underwood are pros. Follow the successful ones...

Welcome @Jim Edelson to BP! Great advice. Seems like you've been at this a while.

@Anthony Morrow - I recommend that you set up your ADU as a furnished rental and see how well you can do over the next 12 months, then decide what to do with it long-term. I manage 20+ furnished rentals between San Francisco and San Jose. I can make more on a furnished unit than an unfurnished unit after Year 1 as long as the unit offers a decent neighborhood, easy parking and a functional kitchen or kitchenette. It usually takes 9-12 months to recover the extra costs for furniture, linens, kitchenwares, etc.

You can furnish and fully outfit your ADU nicely for about $2K-$3K. Then you can offer it as a short-term rental on AirBnB AND a medium/long-term monthly furnished rental on Zillow, Turbotenant, Craigslist, etc. I find that managing true short-term rentals of 3 days, 1 week, etc. is not worth the work except for special tourist-friendly locations. My sweet spot is furnished rentals for 1-12 months, which has shifted toward 6+ months since COVID struck.

Good luck!

@Mindy Jensen - The ideal set-up really depends on who your customer is--long-term or short-term? Business traveler or vacationer? Economy, mid-range or luxury? I manage 25 furnished homes in the San Francisco Bay Area, and I focus on business travelers seeking value and convenience for 30+ day stays (with some STRs mixed in). Given this market, I put a Queen bed in every room (2 if they will fit), with a sleeper sofa in the living room as suggested by @John Underwood. 

Why not put a bigger bunk bed in one of the front rooms? I just rented a big 5-bedroom home near SFO Airport from a landlord and ordered 2 Full-over-Queen bunk beds for one room so the place will sleep 12-16 people a la @Luke Carl. More beds = more heads = more $$! This gives you great flexibility to rent to 4 business travelers or a 10-person reunion. And yes use the AirBnB feature where you charge an extra $5-$10 per night per person over 6 or 8 so each extra person brings in $150-$300 more per month.

I imagine you have great ideas already about amenities and furnishings. I like to use certain items that aren't expensive but demonstrate good mid-level quality and coziness, e.g. Keurig coffee maker, 10" Queen memory foam mattresses, 100% cotton sheets and oversized spa towels, 55" SmartTV, lots of new throw pillows & throw blankets, big art, cotton poufs, etc.

Have fun!

@Paul Sandhu - The contents of my STR minivan change daily. Two weeks ago I had about 8 bags of rotten garbage that my furnished rental guests hadn't taken out for weeks--along with the usual suspects: tool bag, AAA batteries, power drill, new keycode locks, etc. A week ago I went on a sleepless 24-hour Craigslist rampage to finish setting up a place. I filled my van 3 times--with 3 dressers, 2 sofas, 2 dining sets, 2 standing lamps (free), a huge stone coffee table, an end table and about 6 pieces of art (also free--and nice!). When the wealthy San Franciscans clean house, the early birds have a feeding frenzy...

@James Baker - Rental arbitrage is a very viable business, but it takes work: you need to earn and maintain the trust of landlords, negotiate win-win deals, manage cleaners and maintenance people, and do very good marketing and customer communications. It also helps if you are good at using repeatable and automated processes and doing accounting/record-keeping (my weaknesses). There are many good BP threads on this topic including this one: 

https://www.biggerpockets.com/forums/530/topics/694441-airbnb-rental-arbitrage

I manage 25 furnished rental units in the San Francisco Bay Area and earn a decent income. Two years ago I stepped away from 25 years as an HR Generalist/Director in Corporate America to build and manage a furnished rental business, and I haven't looked back. I love the freedom of running my own business and hanging out with my teenager daughters whenever they will tolerate their dad! I know many other BP'ers who do arbitrage successfully in markets across the US, including my mentors, @J. Martin who travels the world while his team runs his business; and @Al Williamson who has a great course on how to do this from A-Z with a focus on 30+ day rentals. 

The risk of dropping revenues in this business is real: as new Short-term Rental restrictions are passed in a city or state, or a furnished rental market gets saturated with units and/or the travel economy weakens, then the revenues and profits in rental arbitrage drop. But if you rent places at or below market rent that will still be strong rental properties in a down economy, you can usually re-rent them without losing money (especially if you leave the furniture which has value to a renter). You will then need to replace some of your income. 

The risk of losing more than a few thousand dollars on a rental arbitrage property is very low compared to buying a rental property in a hot market and then needing to sell it later during a down economy at a loss of $20K or $200K. I invest in property too and I love it, but the financial risk of owning property compared to rental arbitrage is simply higher.

@Dave Meyer - I manage 25 furnished homes in the SF Bay Area. I self-manage all of them because I am cheap! The big "time suck" is setting up new properties, not managing them. Even a slow-*** perfectionist (like me) can do the management in about an hour a week per property. I agree that a good, well-paid cleaner with a few solid contacts--handyman, plumber, electrician--can handle all of your re-stocking and "boots on the ground" maintenance and other urgent guest issues. Self-management is also a great way to learn the business so you can delegate it later and effectively manage your manager. Great thread and great input from @Jon Crosby, @Paige Kelsey, @Gary Ennis

@Elise Leben - It sounds like you have strong PM experience. I'm sure once you take on managing a few STRs, you will have more demand for your services than you can handle! I manage 25 furnished rental units in the San Francisco Bay Area and can finally pick and choose which units I take and which ones I pass on. My business is a combination of "rental arbitrage" (medium risk, variable reward) and straight-up property care (low risk, medium reward). 

In terms of marketing, I recommend that you approach landlords through craigslist and see if they want to rent their home to you OR let you manage it for them as a furnished rental business partner/co-host. I have had great results approaching landlords from CL and renting their places from them. They have then referred me to other landlords. Some want to rent their homes directly to me, and others are happy to have me care for/co-host the properties.

My most profitable properties are 2-3 unit "rental arbitrage" homes where I pay the rent, buy the furniture, market the property and assume all the risk to keep the property rented. My occupancy rates are 90-95% since I keep pricing fairly low. The biggest benefit to the landlord is free property care and maintenance since they receive full market rent from me. 

The straight-up property management deals are also a win-win, because the landlord gets to be a business partner and benefit from higher revenues when occupancy and rental rates are higher. I also benefit since I get a straight 10-15% of the revenues without bearing the risk of needing to cover the rent every month.

Please put up another post in 6 months--if you keep beating the bushes, you will be killing it by summer!

@Erwin Sham - Read the AirBnB book by Scott Shatford (CEO of AirDNA). Another terrific book is “Optimizing your AirBnB.” And if you want to take a great course with a great coach, contact @Al Williamson.

@Paul Sandhu - If your market is Hades, I know who is holding the pitchfork! 😈 

@Jay Hinrichs - Congratulations and good luck with your STRs! I think that means you have done every kind of real estate investing on the planet. Maybe it’s your turn for some Indiana Jones adventures...

@Erwin Sham - I am part of a network of furnished home operators and rental arbitragers. One of my peers, David Patrick, took J Massey’s course and says it was a game-changer for his business. Feel free to look him up on Facebook or I can connect you.