CFD 562 – Short Term Rental Pricing and Becoming More Efficient Q&A

October 16th, 2019

Questions and Answers

  • We currently use two different pricing platforms. If I’m using a tool like Price Labs, how do I set it up so the price is good for relocation companies and change it so I’m netting all that I can from the other booking websites? 

Since direct bookings to relocation companies yield the highest net profit, the ideal set up would be to have Price Labs reflect that in the Lowest price. You should also have an anchor for the Base price.

In general, because of the way things are set up and connected, price for your highest possible outcome. If someone books at that price, that’s great but that’s not the end goal. You want every customer to feel unique and special, and you accomplish this by giving them a personal discount code or adjusting your mark down so they see a price closer to the natural price. This way you will always be in a position to make the adjuster look good.

  • Is Hawaii completely out for nightly short term rentals?

No, we have active students in Hawaii right now who are doing quite well. If you desire to be an entrepreneur, you are making decisions where the outcomes are completely uncertain. The environment we all play in is uncertain and every business has regulations and changes, it’s unavoidable.

Some people will quit, some will keep going, and some will waffle back and forth and get bought out. At the end of the day, entrepreneurs adjust.

  • How do you price listings that require a minimum 30 day stay? What if there is a 15 day gap, do you keep a 3 month booking window?

Pricing is the most complicated aspect of a short term rental business. There are too many pieces to give a quick answer because you need to know all the variables first. The key is to always price it profitably, whatever that means for you. It comes down to a pricing strategy that accomplishes your goals and who you are trying to serve.

  • Do you have any tips or tricks to attract small apartment owners and property managers without actually driving around the neighborhood?

Loopnet.com is a good tool for researching an area. You can use the site to look for owners and operators that have the most listings and use that info to get on the phone and talk to them about the listings that are not yet on the site. Even if that particular realtor has nothing in their inventory that you want to purchase, they can help you get in touch with the top three property managers of that class of real estate. Once you get them on the phone, you do the same thing and find out if they have problems you can solve.

  • Have you ever marketed to landlords?

J avoids direct marketing at all costs. It has always proven to be too expensive and take too long, that doesn’t mean it doesn’t work, just that he doesn’t like it.

  • How has your faith affected your business outlook?

J’s faith has directly affected his business outlook, it’s a major reason he’s even in business. To whom much has been given, much is expected. If you’ve been given any talent, the expectation is that you will at least double it. It doesn’t matter that you succeed, just that you attempt it.

  • Can you offer daily/nightly rentals between monthly rentals?

If you’re in a 30 day market, probably not. However, if you’re not with somewhere with other minimum day restrictions there shouldn’t be any problem.

  • Small tasks can eat up all your time

Small tasks that don’t feel like they take up a lot of time can still add up when you are doing 15 of them every single day. They will also occupy your mental space. As an entrepreneur you have to understand what the highest and best use of your time is. You have a responsibility to those you employ and serve, and you have to protect that opportunity. Often that means delegating.

  • Orlando short term rental regulations are very tight. Do you have any suggestions?

J has a very similar situation in Anaheim, the simplest solution is to just go to the city next door. It’s a bit further but as the situation continues that’s just where the marketplace is. In theory, you could also build an owner occupied business. Episode 320 of the Cashflow Diary Podcast is a good resource for that.

  • How do you handle fobs to enter gated communities?

Any time you have key fobs or gate remotes, you’re going to put those items inside the unit assuming that the answer to the following question is something that’s acceptable to you. When someone orders pizza, how does the order delivery person get to the front door? If they have a process for that, that’s what your guest is going to have to do the first time. Once that’s done, everything is inside the unit. The answer you don’t want to hear is that you have to go down to meet them.

In that case you have to get creative so guests can come get their keys.

  • I’m looking at acquiring my neighbors home for a short term rental but there is a 30 day minimum in the city I live in and I’m used to working nightly rates. Should I do this?

This is a completely different marketing system. I would stay close to what you’ve already built in the nightly rentals business because the amount of energy it’s going to take to build a brand new system to get the new unit going is probably too much, at least until your existing business is self sufficient. Double down on what you’ve already done.

If you want to keep it as a long term rental, that’s fine since it’s close to what you’re already working on and doesn’t require the same level of setup.

  • How do you feel about marketing towards stranded travelers?

If you can become the preferred vendor for the airline for people who are stranded, it can be a good idea. It might be pretty hit or miss though, since your units should probably be occupied in the times where someone stranded would need them.

  • Is there a way to intercept inquiries on AirBnB faster and answer them more effectively with SmartBnB?

Inside the messaging component of SmartBnB you can pre program answers to common questions and train it to recognize questions that it doesn’t already recognize. Chances are the questions you’ve received are fairly similar and can be pre programmed to deal with any future inquiries.

  • Should I be out talking to everyone, even potential competitors?

There are so many people to serve, it’s tough for there to be any real competition. If anything, realtors and property managers can be great lead sources, same with local government officials.

  • Do you suggest shipping container spaces for a short term rental business?

Shipping containers are a unique use case. They can be converted into qualified places to stay if you are the person that wants to serve the customer that wants that unique experience. The question is do you believe enough in the idea, then go for it and create that experience.

It’s not about the real estate, it’s about the experience at the piece of real estate. If you want to do tree house experiences, go for it, but that’s not really the model we advocate.

  • How do I setup a corporate lease when my LLC is so new?

You’re starting with an incorrect assumption. What you don’t know can hurt you because it will cost you opportunities. Many students have gotten started without an LLC, there are other solutions so be careful of claiming you know something to be the case, it may just be holding you back.

  • What are some ways to generate more leads?

The fastest way to create more relationships is to leverage other people’s relationships that have already been created. Go join a BNI, talk to people at doctor’s offices, go to event planners and conferences.

  • How would you go about doing background checks?

I would want to know why they are asking about background checks first. It’s usually about understanding your security procedures and the belief that you don’t do those things already. It’s your job to help them understand that and satisfy what they actually want.

  • Is there a way to automate changing a Friday booking to a one night stay if Saturday and Sunday are already booked?

If you have an orphan Friday, there is a setting within Price Labs that can be used for this case. Change the minimum stay for last night bookings to 1 and it should take care of it.

Links:

cashflowdiarypodcast.com

loopnet.com

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