Is Your Area Suitable For Mid-Term Rentals w/ MTR Coach Al Williamson
Al Williamson, also known as the Leading Landlord, trains others on innovative ways landlords can create new income streams, reduce expenses, and grow their equity. Owning real estate is proven to be one of the best strategies for generating passive income, and Leading Landlord seeks to address the best practices for doing so. Al offers master classes, has a YouTube channel, has 23 listings on Furnished Finder, and has authored at least three books on this topic. You can connect with Al on his website, www.LandlordScientist.com .
Al's portfolio is made up of some apartments he owns, some mixed-use commercial buildings, some properties he manages with partners, and some rental arbitrage. In the mid-1990s, a friend of his suggested that he and his wife buy a duplex and live in one of the units. This was the start of his journey into real estate. In the end, they bought a three-unit building and lived in the smallest one until his wife couldn't take it anymore. During that time, the value of the tri-plex quadrupled, so they were able to buy an apartment building next. From there, things started moving, and they kept adding properties.
Al looked at the numbers for all of their properties one day and realized that the time and money it took to maintain and clean all of them was the biggest drain on their cash flow and net income. Because of this, he became very interested in making their properties more efficient and finding new ways to make money from them.
In 2015, he had a few short-term rental properties, and a travel nurse booked one of them for a month. He was surprised by how much time and money he could save with a mid-term rental. His property didn't need to be cleaned and turned over as often during the month, and it was better taken care of with only one guest. He didn't have to spend much time managing the booking and cleaning schedule, and he rarely had to go to the property for maintenance requests. Because of this, it's not surprising that he turned many of his properties into mid-term rentals.
Al now uses virtual assistants (VAs) to handle much of the daily work in tenant communications, background checks, and lease creation because he has so many properties. A real estate investor friend of his who was already using them recommended him to use virtual assistants. They already had operating procedures in place, so he simply applied their procedures to his portfolio. The virtual assistants enabled Al to take on more of a business owner role and work on his business rather than in it.
Al advises other mid-term rental hosts to make their property and the time their guests will spend there as personal as possible. While mid-term tenants stay for at least 30 days, they still want to know where they should spend their free time. They don't just want to know what restaurants are nearby; they want to know what the best restaurants are for locals, where the best coffee is, what stores and local attractions are worth visiting, and so on.
Al emphasizes the significance of a direct booking strategy. He observes that, while using online travel agency platforms (OTAs) such as Airbnb and VRBO is convenient, it also incurs significant costs. What he particularly dislikes about OTAs is that by relying on them to fill your schedule, you are putting your business in the hands of someone else. That's why he values Furnished Finder so much; Furnished Finder generates leads for his properties, and his team can book them directly, saving money and ensuring the highest-quality tenant.
Direct Booking Strategy
Al discusses how the $2,000 figure is a kind of magical number in his book, " 6 Steps to $2,000 a Month of Passive Income Within 1 Year Using Real Estate ." That $2,000 covers the mortgage for the vast majority of people. When that expense is no longer a concern for you, everything changes. You suddenly have enough money to make significant changes in your life, whether it's finding more investment properties, paying off credit cards, paying off car payments, or being able to afford some luxuries. You're able to put large sums of money towards productive, substantial purposes.
How to Know if Your Property is Right for Mid-Term Rentals
Examine the availability of extended-stay hotels in your area. If there are a number of these types of hotels in your area, you should be able to entice some of their customers to stay at your property. Red Roof Inn caters to the most cost-conscious business traveler, whereas Hyatt caters to the more affluent traveler. There are a number of other hotel chains that target different demographics, and knowing how many of these hotels are in your area and the travelers they're attempting to attract will give you an idea of how you might furnish your property; on the high end and charge higher rent, on the low end with no frills, or somewhere in between.
Determine if your Area has Suitable Rentals
Find out how much monthly rent extended-stay hotels charge. If you see apartments in the area that are renting for half the price of what the hotels are charging, you're probably in a good area. The rule of thumb for rental arbitrage properties (properties that you rent, furnish, and then sublease to traveling professionals) is to charge at least twice your rent. Sure, you'll have to pay for utilities, insurance, and furnishing the unit, but you'll be cash flow positive.
So approach the landlord of these apartments and ask if your company can rent out a unit or two, explaining that your tenants are traveling professionals, not tourists, and that your tenants, along with you as the property manager, will take better care of the property than any other long-term tenant would.
Al mentions that at this point in the process, you might hear "no" from property managers. He wants to be clear that being told no does not mean they are rejecting you as a person, but rather your offer. Inquire about their concerns and whether there are any changes to the offer that they might be satisfied with. You must also be prepared to say no. The landlord may respond with a new offer that is unworkable, in which case you must simply walk away.
Wisely Furnishing your Rental
Al has seen it all when it comes to furnishings, having stayed at a plethora of AirBnBs as a traveling engineer. While some hosts appear to spend the bare minimum to make their unit functional, others put in the extra effort to make their place truly inviting while clearly paying top dollar to do so. So, how can landlords achieve the same inviting appearance without spending a fortune? Working with an interior designer, according to Al and Katy Lyon, Furnished Finder's Marketing Director, is a great help and much less expensive than you might think.
As an example of the impact a designer can have, Al mentioned that he had a vacancy in one of his units for more than a month, which is unheard of for him. He contacted an interior designer, who examined his space, rearranged some furniture, recommended a new couch to buy, and suggested a few other small details to add some personality. Al's unit was booked again the next day after the updated photos were posted.
Market to Business Travelers on Extended Business Assignments
The goal of mid-term rental marketing is to keep your property rented as much as possible. As Al points out, every communication you have with your leads on Furnished Finder should include marketing and selling that lead on why your property is the one for them. He recommends determining their internal needs and emphasizing how your property and the surrounding area meet those needs. If they have a dog, for example, mention nearby walking trails or a dog park. If they have children, tell them about the playground, park, or other attraction that they will enjoy. Every point of contact is an opportunity to connect emotionally with that lead.
Welcoming your Tenant and Repeating the Process
Making your tenant feel welcome is a process that takes time, not just a few kind words when they arrive at your property. According to Al, the smell of your property, as well as the staging and presentation of your property when they arrive, have a huge impact.
Landlords should use a single, simple fragrance throughout the rental unit to avoid distractions from multiple scents. It is important not to overdo it, as fragrances should blend into the background. A fresh, clean scent should be noticeable but not overpowering. When it comes to home fragrance products, there is a wide range available. However, for rental properties, it is recommended to stick with simple scents such as citrus for a fresh and clean aroma, vanilla, mint, or almond for comfy and relaxing aromas, and rosemary, thyme, and basil for welcoming and evocative aromas, especially in the kitchen. For the winter and holidays, pine and cedar provide a complex and woodsy aroma.
Reed diffusers or a plug-in scented device are recommended, as they're quick to set up and the safest.
Communication that is clear and concise is critical in making tenants feel welcome and at ease. As a landlord, you must maintain an open line of communication with your tenants from the start. Explain to them exactly what they can expect from you as their landlord, including your responsibilities for property maintenance, repairs, and any additional services you provide. It is also critical to communicate your expectations of them as tenants, such as adhering to lease terms, respecting the property, and reporting any issues or concerns as soon as possible.
Provide a comprehensive overview of the lease terms during the lease agreement discussion, including rent payment details, due dates, late fees, and procedures for lease renewal or termination. Take the time to answer any questions they may have and address any concerns they may have right away. This ensures that both parties are on the same page and helps to avoid misunderstandings or conflicts later on.
Throughout the tenancy, regular and effective communication should be maintained. Encourage your tenants to contact you (or your VAs) if they have any questions, concerns, or requests for maintenance. Respond to their inquiries and resolve any issues that may arise in a timely and responsive manner. This proactive approach to communication fosters a positive landlord-tenant relationship, builds trust, and provides your tenants with a comfortable living environment.
You and your tenants can establish mutual understanding, respect, and cooperation by prioritizing clear and concise communication, resulting in a harmonious renting experience for everyone involved.
How to use Furnished Finder Successfully
In his mastermind course, Al teaches students that Furnished Finder is a lead generation website, not a booking website like other OTAs. This means that you will receive leads from interested parties but will need to respond to their messages as soon as possible. Leads in the form of ‘matched’ or 'unmatched leads' will be sent to you. Unmatched leads are simply people who were looking for properties in your area but yours didn't quite meet their criteria, such as rent or number of bedrooms. Reaching out to these unmatched leads can still result in tenants because these travelers may have an unrealistic idea of what rent should be in your area or may have simply made an error. You can tell them how great your property is and connect with them on an emotional level by following up and talking with them.
Al points out that even if your property isn't a good fit for that person, you can still make money by referring them to other landlords you know and trust in exchange for a finder's fee (assuming they end up signing a lease with that landlord).