Welcome back to another episode of Landlord Diaries (opens in new tab)! In today's episode, we dive deep into the world of midterm rentals with Allen Duan. Allen manages an impressive portfolio of over 26 midterm rental properties across Southern California. If you’re a real estate investor looking to delve into midterm rentals, this post will provide you with valuable insights and practical tips.
What are midterm rentals?
Midterm rentals are furnished properties rented out for durations typically ranging from one to six months. These rentals are ideal for traveling professionals, relocated families, or those in need of temporary housing. With increasing demand, midterm rentals present lucrative opportunities for real estate investors.
The opportunity in midterm rentals
Allen Duan, our guest on today's Landlord Diaries episode, shares his extensive experience and success in the midterm rental market. His journey began in 2017 with short-term rental arbitrage near Disneyland. However, when regulations tightened, Allen pivoted towards midterm rentals, a decision that has propelled his business forward.
Networking: the key to success
One of the central themes from Allen’s story is the importance of networking. He emphasizes the role of networking in acquiring clients, both through online forums like BiggerPockets and various Facebook groups dedicated to midterm rentals.
Key networking tips:
Provide value first: Engage in these groups by answering questions and offering help. It's not about self-promotion but about becoming a valuable resource.
Consistency: Be a regular presence in these communities to build trust and establish yourself as an expert.
Relationships over transactions: Focus on building relationships rather than just closing deals. This long-term approach pays off.
Acquiring arbitrage properties
Many landlords are hesitant to try rental arbitrage, but it can be a great way to scale your midterm rental business without huge upfront investments. Allen highlights that being a problem solver for landlords is crucial to securing arbitrage properties. By offering solutions to their pain points, he successfully convinced property owners to allow him to sublet their properties.
Steps to acquire arbitrage properties:
Identify Pain Points: Understand the issues landlords are facing, whether it's vacancy or problematic tenants.
Present Solutions: Offer how you can resolve these issues with midterm rentals.
Showcase Benefits: Highlight the consistent income and low maintenance needs that come with midterm rentals.
Check out more on how to jump-start your real estate investment here: Jump-Start Your Next Real Estate Investment with WIIRE (opens in new tab).
Managing a midterm rental portfolio
Managing numerous properties can be daunting. Allen shares his approach to property management, emphasizing the importance of systems and a strong team.
Building a strong team:
Onboarding Specialist: Ensures smooth transitions from sales to operational readiness.
Property Care Team: Manages on-site tasks and inspections.
Virtual Assistants: Handles guest communications and administrative work.
Allen also recommends local property management systems like Hostfully, which integrate reporting features and owner portals to streamline operations.
Abandoning security deposits: a new approach
Allen recently shifted to a damage waiver fee instead of traditional security deposits. This change has reduced operational burdens and provided better protection for his properties.
Benefits of damage waivers:
Reduced Administrative Work: Less paperwork and financial management.
Enhanced Protection: Coverage for damages without the hassle of collecting and refunding deposits.
Detailed market analysis
Before diving into a new market, conducting a thorough analysis is vital. Allen advocates for manual research, combining data from Airbnb, Furnished Finder, and other platforms. This hands-on approach ensures accurate projections and informed decisions.
For more market insights, visit the Furnished Finder stats page: Furnished Finder Stats (opens in new tab).
Final takeaways
Allen's journey from short-term rental arbitrage to managing a successful midterm rental portfolio is a testament to the growth potential in this niche market. Here are his top three tips for aspiring midterm rental investors:
Network Relentlessly: Build meaningful connections within the real estate community.
Provide Value: Always aim to solve problems and offer solutions.
Stay Informed: Continuously analyze market trends and adapt your strategies accordingly.
Remember to subscribe to the Landlord Diaries podcast for more episodes packed with invaluable real estate advice. As always, you can find us on YouTube with playlists categorized for new to midterm rentals, arbitrage, co-hosting, and more. Share this post with fellow real estate enthusiasts and stay tuned for more!
Episode 108 Transcript
Welcome to the Landlord Diaries, where we talk about midterm rentals and the opportunities behind them. We'll share landlord stories, talk about maximizing investment potential, and discuss how to live the very best landlord life. This podcast is proudly brought to you by Furnished Finder, the leader and largest online marketplace for midterm rentals.
Remember to like and subscribe if you enjoy our content. It's Kelly Bailey and Katie Lyon, hosts of the Landlord Diaries podcast. We are coming to you as midterm rental investors. I have around eight doors. Katie's got around 10 doors. Minor owned Katie's are mainly arbitrage. So we bring to you all things, midterm rentals.
And today we have a great story from Allen who manages over 26 midterm rentals. So Katie, what did you learn from Allen today? Yeah, Allen has a very interesting story. He has a mix of arbitrage and managed properties, which for those of you wondering, what is the difference? What do you mean? We go into that in depth.
But what's cool about our conversation with Allen is we dive into those two and we talk about how there's all these different ways to get involved in midterm rentals. And it doesn't always have to mean that you're buying your property, right? But then what does that look like? How do you find the right partner?
How do you communicate with them? How do you make sure that you get great tenants in the properties? All of these details that when you think about something like managing or arbitraging all of a sudden flood your mind. So really great insights from Allen. And he's got a wonderful growing portfolio and a good strategy.
So some really good takeaways from this episode that we are all excited to share with you.
Today we talk with Allen Duan about his portfolio of over 26 managed and arbitrage properties he has acquired through networking with online midterm rental groups. Allen has hosted thousands of guests in Southern California, markets his midterm rental portfolio on Furnished Finder, ranging from a store.
for 2, 000 per month to three bedroom homes ranging from 7, 000 to 10, 000 per month. Today, Allen will talk us through the process of scaling to over 26 managed midterm rentals in five years. We're going to focus on two main parts, obtaining midterm rental management properties, And building your midterm rental team and standard operating procedures.
Allen, thanks so much for being with us today. How are you? I'm good. Thank you for having me. I've been looking forward to doing this. Yes, sir. We've been excited to tell your story and. Correct me if I'm wrong, but I believe your real estate journey started with short term rental arbitrage in 2017 and then shifted to midterm rentals starting in 2019.
Is that the case in, and do you still do only midterm rentals or you do the hybrid strategy as well? Yeah, that's correct. So we started off doing rent arbitrage Focused on short-term rentals near Disneyland. Here in SoCal we, we do manage short-term rentals as well. But because of regulations, most of our properties are midterm rentals.
So we, we market ourselves as we do both. All right. Okay. So you started your own business, you're entrepreneurial, which I love. I think so many midterm rental hosts like have that little entrepreneurial gene within them. Within them which. Is great because we have to pivot all the time, right? Like you said, with regulations and things in your local area that you have to deal with and adjust for.
So tell us as an entrepreneur and a small business owner, what led you to real estate? And rental arbitrage, like how did you just wake up one day and you were like, Oh, I think I'll get into real estate. And you know what? Rental arbitrage in California sounds great to me. You're like, how did you stumble upon this?
Yeah. Yeah. Great question. I would say my first exposure to real estate was books and then finding bigger pockets. So my friend, who's actually the co founder of hospi homes with me we were both learning from bigger pockets talking about real estate together. And then he stumbled upon online the idea of rental arbitrage, obviously very brand new to us.
And in 2017, it wasn't that popular yet. So he got one property himself told me about it. And that summer again, by Disneyland, that summer was amazing. So I decided to join him. Scale it and get a bunch more. All right. I love it. So walk us through what that looks like for you right now. Is your partner still involved with the business?
What's your team look like and what's your portfolio look like? How many properties, what type of properties, and then we can dive into kind of what the management style means to you after that. Yeah, definitely. Yeah. So my friend, he has since started another company, another business. So he's focusing on that.
So we'll talk strategy and updates and stuff like that, but I'm essentially running the day to day with my team. I have a team of six currently. Some of them are overseas like VAs. Some of them are local. They go on site to properties to do different tasks. And we really. Pretty much the whole range of properties you could expect in SoCal we manage.
So we have apartments. Those typically are arbitraged. We have duplex, triplex properties. We have single family homes, condos, townhomes ranging from the apartments, small apartments up to three bedrooms, single family homes. Yeah, so really a large variety and LA County and some Orange County as well.
So you manage 26 or more midterm rentals, and some short term rentals. So what's the difference to you in management? You also have some arbitrage. We've heard of co hosting. How would you describe the difference and what works for you? Yeah, that's a great question. Essentially when someone wants to be a I kind of see, I guess you could say four, I say I'm thinking three or four ways.
Of course you could own the property yourself. You could do arbitrage, which essentially for those who don't know, you're renting as a tenant with permission to sublet, right? You furnish and sublet it. And then the co host and property management has They're very similar with some slight differences.
I often use the terms interchangeably because people understand it that way. The main difference is like legal financial, and it does vary state by state. So I'm speaking from California perspective as a property management company, we're able to collect a rent from our tenants and then we'll pay our owners.
So the funds flow that way. If you're a co host, you can't handle the funds. So the rent goes directly to the owner and then you build the owner of your fee. Just different direction of money, right? And another big difference for us in California at least is on a lease, I could put my company's name as a landlord because we're a property management company.
If you're a co host, you're supposed to put the owner's name as landlord because you're not a landlord, right? You're just a co host. But otherwise, operationally very similar as far as the services we provide for our clients. And I think when you start researching how many states actually require broker's license or real estate license to either manage or even co hosting is getting into laws as well.
So make sure you do that research, check with your local real estate agency. So that, what the laws are in your area. So you in California have to roll up under a broker. So how did that work for you? How'd you overcome that hurdle? Yeah. The first decision for me was, do I want to get my license?
It, it takes time. There's opportunity costs. So I happen to have a connection. Someone who he's actually a attorney as well. And he has a broker's license. So I've worked with him up for a number of years and essentially I partner with him, operate under his license and he provides some guidance, with his services.
So it's a great partnership and a way for me to meet that requirement without me having to go do all that and get it myself. I think this is another example of how, there's always a solution. It's not, can I get. To the end goal. It's how do I get there? And it's also that within midterm rentals, you have ownership as an option.
You have arbitrage and you have co hosting, you have management, you have all of these different ways that you can get your own midterm rental property. What to remember is that there are a Endless options and to just dig into what is required in your area. And how do you meet those requirements? And like, how do you make it work right there?
There are ways to make it work everywhere. Allen is in California, which has some pretty strict regulations on a lot of things. But it's not, you just have to ask yourself how and not. Can I? Exactly. So Allen, one of the big things people always want to know is what's the value of your portfolio and in a management or arbitrage scenario, that's even more important because you're reporting to your owners and your Setting it up where if you decide to sell at any point, then you have, you have this business that you've created with all of your contacts, all of your property owners that you could pass on to someone else.
So how do you value your portfolio? Yeah, there's a number of ways of doing that. Because we're in This, I would call pretty aggressive growth phase of the business. We're not when it comes to the profit number, it's not super impressive because we really have been investing and growing our team and our systems.
So we can't onboard a much more. So I went to the MTR summit, what is that a couple months ago now? And it really increased my ambition for the goals for a company. So I have. bigger goals now. But one number I can share I think this is 2023 total booking volume. So this is the actual rents, not our management fees was about 700, 000 for all the properties of course, management fees, but we actually take is different, right?
But I think that's a good measure of just, the properties and the rental values of the properties we manage. Yeah, I think it's important that everybody, you can hear on the internet that people, brought in a million dollars of rent in one year or whatever. It's okay, double check that number and make sure that that there's expenses to all of this.
And it's not a get rich quick thing. It takes some investment, both in money and time and effort and blood, sweat, tears, all the above, right? But the goal is that you're really creating a sustainable and very manageable built business, especially compared to short term, which is just so hands on and you've got to just be dialed in all of the time and handling those turnovers and all of the guests.
So I would love to just sidestep just here for a second and hear about what differences you've experienced with the short term versus the midterm since you have had both. Yeah, that's a great question. So give some context. There's also this contract contrast of arbitrage versus the management, right?
So at our peak, when we started doing short term mental arbitrage, we had 13 units, so 13 arbitrage or short term. And then Long story short, we lost those during the pandemic. So one of the differences. I guess really the way I sum up the difference with short term and mid term is short term is harder operationally, like what you were saying, Katie.
With the 13 units I think it was each day, we did same day turnovers so check in and check out same day. Each day typically have between three to eight turnovers, same day turnovers. So basically every day cleaners coming in, all that and I'm a systems guy. So I enjoy building those systems.
That's the hardest part of short term. The harder part about midterm compared to short term is the marketing. With short term mentals, if you create a great listing, great photos, instant books just coming in on on Airbnb. And I loved getting the notification on my phone new booking.
It just felt great. But then for midterm mentals, you have to do a lot more proactive work to go out there and hunt for the bookings. Operationally it's easier once they're in for three to six months. Cool. You wait for the next vacancy, but you can't just sit there and wait for booking to come in through Airbnb like short term rental.
Yeah. We talk about this a lot where midterm is not a sit back and wait, right? Like Airbnb, I feel is all about making the cover of your book as pretty as you can. And then you put it on the shelf. And you wait for someone to come buy it. And then you're like, great, you bought it. Like it's sold.
Here we are. Midterm rental is more yes, you still need a really good listing, right? You still need a really good cover. But then it's about relationships and connecting and saying, does this work? Does this not work? Negotiating, getting to know each other, screening. And there's a lot more patience involved.
And it, it truly is that middle between. Long term where with a long term rental, like you're might be doing tours, right? And you might be doing more like showings and midterm. That's not really a thing, but you are having more conversations, which is so great. Cause you get to know who's going to be in your property for at least a month, usually more at a time, but it's totally different.
It's marketing in the sense of relationships. and communication versus marketing, just in the sense of how pretty does your listing look. So I agree with you. And I think that is like our number one tip for anybody who's new to midterms or to Furnished Finder is yes, make your listing beautiful.
But remember that's not. the end of the road to success, right? It takes a lot more than that. I think of the analogy of setting a trap and waiting versus going out to hunt for the actual animal. Yes. Oh, I love that. That's great. That's a good one. For sure. While we're headed this direction, let's go ahead and continue talking about Furnished Finder.
You have around 20 listings on Furnished Finder. How has it been a huge part of your midterm rental operations and what percent of bookings typically come from Furnished Finder? Today's episode is proudly sponsored by Furnished Finder. The ultimate platform for hassle free midterm rentals. Whether you're a seasoned landlord, or just getting started, Furnished Finder has everything you need to find your next tenant.
With Furnished Finder, you can say goodbye to booking fees, markups, and commissions, and hello to direct bookings. If you're ready to experience all the benefits renting your property for free, 30 days or more head over to furnishedfinder. com where you can list your property for one low annual price. We make it easy to get started.
We've been using Furnished Finder since let's see that first midterm mental, which was 2019. So I think when I learned about travel nurses and Furnished Finder, like it came together to me. If you want to travel nurses, it's Furnished Finder. And of course then that was during the pandemic.
So travel nurse bookings were a big part of it. I would say, rough numbers, just without any data, it's about 50 50 or maybe like 40 40 Airbnb and Furniture Finder, and then 10 what is that left? 20 percent something else, something like that. So it's a good portion of our bookings through Furniture Finder.
We, there are certain properties. If you break it down by property or by property type and size, certain properties might have more on Airbnb and more on Furnished Finder. So also varies in that sense. Yeah. I think that's also great because we're not over here saying that you have to get a hundred percent of your bookings through us, right?
Furnished Finder is a key part in a midterm rental marketing strategy. Yeah. But I think what is great is for the price that you pay to list on Furnished Finder, like you get that back plus so much more with literally just one booking. So sometimes I'll hear people say Oh, I only got one booking off of it, off of Furnished Finder last year.
And I'm like was it vacant? And they're like, no, it was booked the rest of the year. And I'm like, okay, cool. If it's not vacant, we can't book it. But also, even if you only got one booking, Like you paid one flat rate to list it. So that is a huge W in my win. And I just want everybody to remember that we're not here saying that you can only list on our site or anything like that.
I think that's awesome. And you have that range, Allen, of studios all the way to three bedrooms. And I think you're adding a four bedroom to your portfolio. So what traveler types are you seeing at the varying property sizes? And is there a difference in the management of a studio versus a three bedroom for your team?
Yeah. Yeah. I don't, I'm, I don't know, and I'm curious that this varies market to market, but in. Here in LA SoCal it does seem like a lot of the housing requests on there are On the lower end budget wise and it could be people who are not familiar I just don't know how much la costs since sometimes it's funny I see someone post like I want to furnish one bedroom apartment for 1500 And i'm like you could get a room maybe in la for that much a month.
So practically what that plays out to is that it are Nicer, so we have some there's a couple one bedroom apartments. We have that are nicer more expensive You We tend to get more Airbnb bookings for those and then we have some other properties that are maybe a little older more affordable And we'll get more furnished finder with those and then Larger homes.
So this is something, you know We've talked about before and i've seen come up is that a lot of the housing requests are individuals or couples looking for smaller properties but we do get a fair amount of bookings for larger properties through furnished finder as well I think of it as You know there's not as many fish, bigger fish looking for bigger properties.
But then there's also maybe less supply. I'm not sure. So when it comes around, if we could get those, they're great to get. Yeah, this is an interesting conversation because we've actually been able to pull a lot of new data since we have our new leadership team in place and we just, Honestly, have more people looking into and uncovering the data that we have and we've learned a lot of key information that even to me and Kelly as landlords was oh, like a little bit eye opening.
And I think 1 of the 1st things is that Our housing request feature, and this is a form. If anyone is unfamiliar with the platform or needs a reminder, it's if I'm a traveler, I can go on furnished finder. And instead of just searching the map, I can put in my information in a form of what I'm looking for and furnished render will search for me.
Serve that information to landlords who either match that information completely or very closely come to it. And that shows up in our dashboard as landlords as a matched or an unmatched lead or a general housing request and housing requests. Sometimes, as you see it labeled. But a very small percentage of travelers are using that housing request.
So you might see as a landlord, you might see a lot of these lower leads lower budget leads. And sometimes I look at that as a landowner. I say. Yes, I would like to pay a thousand dollars for my mortgage too, right? Just because it's someone's wish list doesn't mean it's reality especially depending on your market like you said Allen But the other thing is we have so many travelers who will Search the map independently because they want to find their own property, right?
And search a little bit more specifically, and they'll uncover your phone number or your email address, or send you a DM on the platform or send a booking request, which means it's only coming to you. And I think those are so high value and they're used so commonly, but you really want to make sure your listing is like.
Buttoned up and top notch and that your calendar is super up to date and that you're being responsive so that you can prime yourself for getting those but You're I mean you're absolutely right and there are You know I always talk about the pyramid on Furnished Finder where we have almost 50 percent of our inventory as a studio or a one bed And the most common traveler size like party size is 1.
6 clearly you don't have 0. 6 of a person. So it's between one and two people. But there are still like families and insurance housing. And there, there are those that need for a larger home. It's just less, but the inventory for those is less as well. So it's still, very much parallels itself.
But I just want everybody to remember. And cause I think even for us as landlords, it's a good reminder, like there's a lot more than just what in that lead section. And it's pretty amazing what you can see come through but I do think it's, I think it's great that you've put together strategies where you can cover as much of the marketing areas as you can, right?
There's nothing wrong with that. Yeah. When I think about it I, it does seem like our, the larger the bookings to Furnished Finder for larger homes tend to be those DMS Yeah. I think that makes sense. And when I put myself in that traveler's position, I'm like, okay, if I'm traveling with my kids or I've been displaced from my home, I might, one actually hand select versus putting out.
I I think of a housing request. It's you've taken the megaphone as a traveler and you're like, who's got something for me. Who's got it. Versus zoning in and handpicking. So yeah, I love it. Before we move on to the operations and the team that you've built, one last question.
I was looking at your Furnished Finder listings and you don't ask for a deposit that I could tell. Instead, you have 150 damage waiver fee and that's for your studios all the way up to your three bedrooms. What led to that decision?
Hey, landlords. Are you ready to level up your rental game and simplify your midterm rental business? Get ready to meet your new best friend, KeyCheck. KeyCheck is your all in one solution for stress free property management. With tenant paid screenings, online rent payment processing, custom lease creation, and a suite of incredible landlord tools, you'll wonder how you ever lived without it.
No more chasing down checks or sifting through piles of applications. Keycheck helps you organize and manage all things, landlording in a simple and efficient way. Make landlord life a breeze with Keycheck, the game changer for modern property owners. Visit keycheck. com to unlock the power of stress free property management and take your rental business to new heights.
Yeah, that's great. Great question. That is a more recent change we made earlier this year. There's several different companies to do this. We use Wavo but essentially it's a fixed fee that we pay, but then we all of course pass it to our tenant where they get a certain amount of protection up to a certain dollar amount if things were damaged or broken, right?
So it serves a very similar purpose to a security deposit. A few reasons we made the change is a My kind of more minor reason, but with our payment processor, there's essentially we pay a fee when we collect that deposit, and then we refund the whole thing back to them. So we lose money every time we do a deposit refund, right?
But I think a bigger part of it is it really lessens our operational burden of having to You know, we do the inspection still, of course, but then we don't have to do the step now of itemizing, sending it to the tenant modifying the refund amount and all of that because we find most of our bookings were setting the full refund back anyways.
So it's not, we don't have damages that often. So really it was a a little bit of a cost, cost savings, but really operationally it's easier for us. I love that. Deposits are one of my biggest pain points. Not in that I'm keeping them. I think I've only kept part of a deposit once.
But more in that it's okay, I need to make sure I separate this in the bank account. I need to make sure I remember to send it back. And then sometimes I just, it's just one more thing to keep track of. And I know some of these travelers, to put up a decent sized deposit is, can weigh pretty heavily on them.
So Kelly, what do you think? Have you ever thought about using like a waiver alternative or how are deposits for you? Are they a pain point? I know your husband is the financial manager, but it's, it can be I like the deposit mainly because it gives the traveler a buy in, right? I could see for myself a combination where maybe since my three bedroom, two bath homes, I have a 500 or a thousand dollar deposit.
Maybe I take that down to 500 and include a worry free waiver until I get to use that first worry free waiver. And that was the one thing that I was curious about for Allen is have you ever had to turn in a worry free waiver claim? And what did that look like if you did? So we had one recent so the, it was the first time really, but recently I didn't actually file a claim.
But I, it looked into it, so I guess this is a downside, and this is specifically Wavo, so maybe other companies are different, of course. They don't cover odor remediation and deep cleaning if it's over 30 days. So we had one guest, right? Cause it makes sense, right? Cause it's always gonna be deep clean.
And then they said odor is too subjective, right? You can't really measure it, which I get it. But it was something we had a guest that was I think there might have been pet sorry, not pet pet urine smell and a decleaning needed. Of course I paid for the additional cost, or a company did, and I explored if there's ways to get it, reimbursed.
But those specific categories weren't. But, again, that's the furthest we've went to with Weivo. But even going back with our scatepods, it's like you're saying, Katie, it's pretty rare where we, I would say less than 5 percent of bookings, where we actually have to take some of it.
This, I actually like your idea, Kelly, about Using a little bit of a hybrid method, right? Like maybe a smaller security deposit. If they have pets, I think asking for a pet deposit is still okay. But using that waiver, I think there's something to be uncovered there. Especially with a little bit of the hybrid model to cover yourself fully.
These midterm guests, they're great guests and they're very much like professional and yeah, I think, yeah, I think that's a great approach. That's honestly the part about Airbnb that I wish I could take a small deposit, right? Because the question is, if Airbnb, if you did have something happen, are you documented it?
Documenting it properly like Allen saying and is Airbnb going to support you? I don't know. I haven't gotten there and I don't really want to find out So I'm very happy with furnished finder deposits And yeah, I would definitely be open to the hybrid option of combining a worry free waiver and a deposit Alright, we've made it to scaling to 26 midterm rental Manage and arbitrage Okay, that's not just something you wake up and do.
So Allen, one thing I love that you said was you enjoy the game of business. Tell us more about that. Yeah. I love real estate and venture mentals, of course, but over the past few years, as I've grown our business and hired more people, learned to be a better manager, I found that I enjoyed business in general.
When I say that, what I mean is, inherent to all businesses, you have to build systems and hire people, right? I think this is from the book, E Myth. Basically every business is just a bunch of systems with seats in it that people sit in. So I enjoy that. I've heard before other entrepreneurs, they don't like dealing with people and managing employees.
I found that I actually enjoy that, which I didn't expect cause I'm introvert. But I enjoy building the culture and build it and creating great jobs people enjoy and find satisfaction. And in the future, if that means I start a different business in a different field, maybe that's what I'll do.
But yeah I love what I do this. I love the game. Love it. All right. Let's talk about how we acquire these arbitrage properties. I know whenever I mentioned my arbitrage properties, people's eyeballs get so big and they're like, but how did you get someone to do that with you? Let me ask that question to you, Allen.
How did you get someone to do that with you? Oh, it's, yeah, I've had various number of stories of some landlords saying What? I would never do that. And then there are some landlords who get it and understand the value. I believe if a landlord Open minded to the idea, they'll see that a good arbitrage operator is a better tenant than a regular tenant, right?
And I could go, I have my three or four points I usually go into. We've probably, I believe, we've only had four total arbitrage landlords, multiple properties, for each of them. But I like that model versus one landlord per property, less to deal with. And of course, once. When we started off with our short term rental arbitrage they were actually all one large apartment building.
Of course, once they know us, they know we're paying rent they saw us as a way to help fill vacancies, so they kept, so we're giving us more, right? But The first one was much more of a cold and again, my, my, my friend, business partner was to do more of this, reaching out, going to leasing offices, much more of that, a lot of no's before a yes type of situation, but really after that, once you've had a track record and that, we're established business, the other landlords were, let's see, pretty much all referrals.
Yeah. One of them was through a realtor that I connected with, and then he said, Hey, I have a client who bought a property, I think he'd be open to it. Another one was a friend of a friend. Great connection because that person's family owned and operated apartment buildings in my area. So we've had a number of properties with with them.
And then someone else, I can't remember the last one, maybe also a referral from a friend. So it's the way I always tell people who try to get started with arbitrage is You want to be the problem solver for a landlord who has a problem. If they have, if they love their tenants and they love being a landlord they don't see a real value to change things up, but let's say a tenant, a landlord's Oh my gosh, my tenants are so annoying.
I don't want to deal with them. You could come in and offer like an alternative solution. So that's how we've done the more recent ones. That's any type of business, right? Any type of businesses, we're taking a problem and solving it for people. So I love how you have positioned it like that.
And it's not can I use your property for this? It's Hey, I see you have a challenge. I have a solution. This might work for both of us. And one thing about your referrals is that I thought was very unique about your approach is you've connected with a lot of your management clients through midterm rental groups online.
So where are you finding these clients and how does that what does that conversation look like online to draw out those owners that maybe are struggling and don't really want to self manage anymore and need someone to jump in and come alongside them. Yeah. Yeah. So most of our clients have come from, I'll say generally networking and then employment.
Both in person and virtual, of course, virtual, you could do it more, reach more people. So whether it's websites like BiggerPockets to have a forum or Facebook, MentorMentor groups. My strategy is I have this principle, this core value, provide value first so in those groups, I'm always answering questions, right?
I rarely post like a advert, like a post advertising our services, I'm usually just answering questions, and naturally when I answer questions, I'll bring up, context I'm in LA, I manage this many properties. Here's how I do it. So we've had, essentially we've had clients who may, maybe they're researching MTRs for their own property.
They see my post. They see I mentioned LA, property management oh. There are not many MTR property managers anywhere. I think in LA, we might be the only one. So that's how they initially find us. So it's. Almost I think it's similar to social media advertising where it's natural and organic.
But in this more like directly answering people's questions kind of approach. And with your portfolio of around 26 managed properties, four of those being arbitrage how many owners or clients do you work with? Yeah. So most of our properties, let's see, are one owner per property. We have. I think maybe only one owner that has multiple properties with us.
Yeah. Okay. So you're working with around 20 owners. Close to that. Yeah. Nice. Which is not always easiest thing. Sure. They're reporting. We're getting there. Yeah, that's a lot. All right. So how do you look at a potential midterm rental arbitrage and decide if it's a good fit or not? Yeah.
So whether it's cool. We have Kelly mentioned that we have four arbitrage properties. We still run we're not actively seeking out more arbitrage properties. So we're really scaling the property management. But I think it's similar to either strategy, right? That question of will this property do well as MTR.
I'm. A proponent of doing a manual analysis, looking up comps manually Airbnb and Furniture Finder. There's tools out there. A lot of those tools are really short term mental focused. So I think it's a great high level, view if you want a quick, number. But one, one thing we do for all of our potential clients is I always provide a compri a Complimentary mental analysis for them.
So I'll look at comps, I'll send them a report. Here's how much I think you can make with your property, the type of tenants that you can expect. And whether they want to choose to hire us or not, they have that to use. Cause that's the question. The number one question we always get with our leads is I have a property.
How much will it make? What's the vacancy and stuff like that. Yeah, what are those Furnished Finder tools that you use to build that report? It's really I'm literally just looking up the area and finding properties out somewhere. It's very manual. I like it because to me, it's the most precise, right?
I'll look up a property. I'll look at the photos. And then the question I'm asking myself is if I was a traveler and I saw I had this target property I'm analyzing, which other properties would I compare with it when I'm deciding? I love that. Yeah, it's running analysis and researching a potential property for a midterm rental is not as complex as people want it to be.
You don't need giant spreadsheets. You don't need huge calculators. You just need a little bit of time and effort. And really looking at the obvious, right? What are other properties in the area? What do they look like? What are they charging? Things like that. but one of the most helpful tools on Furnished Finder is our stats page, which you can get to on Furnished Finder.
com slash. Stats, S T A T S. And this is somewhere that we've put together a bunch of stats that you can get custom for your market. And I know that is a page that I will look at to get some hard numbers and data, and it's super, super insightful when you're either looking for A new property to add or just Hey, I've been in this market for a while.
What does the market look like? What's like insights into that market. So I do love that one as well. So Allen, we have acquired the property. The we're the first step. At least they're interested. You've hooked them in. They like your communication style. Now the contract would be the next step to really secure that managed property.
So what are the main points you include in your management contracts? And do you have a desired contract link? Yeah. Great question. There's a lot of obvious ones like our management fee property information. Most of our contract is standard. So the standard amount we have on there, the term length is 12 months, but we, I think we have on there 60 day notice if you want to cancel early.
So essentially, we're not locking them into any kind of long term contract. We want to give that flexibility especially if an owner is like not sure they want to hire a manager, they're trying it out. A lot, most of it is the typical legalese we'll mention stuff in there, like how maintenance is done and supplies and just, those common questions that we typically talk about with our clients when they ask about our services.
And then last piece of this puzzle is how do you report back to your, to the property owners, whether it's with an arbitrage situation or whether you are managing for them? So when it comes to pros and cons of property management and arbitrage, the main thing about, from my experience, that's harder about property management is that client management piece, right?
They're more invested in the performance of the property versus an arbitrage landlord. They get their rent, they're happy. So there's not really any reporting there. We use a, there's different ways of doing this. A lot of property management systems have reporting features and owner portals, owner statements.
We, we use hostfully and it integrates with something called VR platform that creates the statements for owners. So they have a login, they get notifications each month when it's ready. So pretty straightforward there. Yeah. And then they get the monthly payout with that statement. Awesome. Once you have acquired the property, now we've got it going.
It's operating. We'll come back to the furnishing in a little bit, but you need a team to be able to set up your property and the operations of your property. So tell us about your team. Yeah. So we have a team of six one person, her primary job is she's our onboarding specialist. So essentially.
I do the whole sales process myself currently. So once they've signed up, essentially that property passes to her and she takes it from a new client to ready for first booking. And we have a SOP for that, very repeatable process. I have three. People who are, I call them our property care team.
They're locals and they essentially, anything that involves going to a property, the most routine thing they do is we do a post day inspection after the cleaner's finished. So they'll do those, but of course, any kind of random, stuff that's needed. One of them does showings when people when tenants request showings.
So three, three people on that team and the other two are overseas virtual assistants. One of actually both of them together cover all of our guest communications 24 7, so they have shifts. Some other kind of light admin work that they do. Yeah. So that's my team of six.
Awesome. And how have you been pleased with the team you've built? Have you had to let anyone go? What tips do you have for finding the right team from step one? Cause I, I believe one of your favorite things is helping your team thrive and find value in their position, which is very admirable. Yeah, definitely.
It wasn't too long ago. I was a W2 employee and. My job was good in some ways, but in some ways not as satisfying. So I know that experience all of my, let's see, all of my current team does not count in the VAs, of course. Are through I found them through some sort of connection and what I mean by that is i've never posted job ads on Indy.
com or stuff like that it helps now that I have my network where I could post like right now i'm actually hiring We're looking for someone else. So I just post my social media and then people respond like people know what I do already and I like to think that they're thinking oh, I get to work for ellen's opportunity kind of thing.
So networking again, so many benefits, right? Finding clients, finding people to hire. And really, I'm also trying to find people who want to learn about this industry. So they see value in that. And it's not just because we're not offering, super competitive salaries and we're small company that's growing.
So they, they find value, maybe the flexibility of the work and they want to learn this industry. So it's up, it's a, Value for them beyond just a pay. Allen, we have brought so much value here and we've got so many takeaways that we had from you and insights into management, which we honestly don't talk about probably enough.
But I think is a great way for anybody to get into midterm rentals or expand in midterm rentals. So as we wrap up here, I would love it if you could just give Anybody out there who's again, starting or expanding their midterm rental business, your top three tips, your top three insights are like, what are things that have helped to make you successful and get to where you are today?
Yeah. I would say the first one really is the networking piece. I think especially in the midterm mental community. I've never experienced anything like that in a short term rental community. I feel like short term rentals is much more. An owner has one property type of situation. So Again, I mentioned, we get a lot of our clients through networking of course meeting with others the same level, you know as far as inspiration ideas is great so many benefits Yeah, I wish I started The networking that I'm doing now years ago, I think would have, I would be so much more further ahead.
While you're thinking we hear that a lot, that it's a different mindset, right? That the networking piece is so valuable because like you're saying, and Katie says this often, you've on average, our furnished finder stays are around 90 days. You only need four. a year. And with that in mind, you're booked, but you've still got leads coming in and you want that.
You have a heart for those travelers like, I want to help you find a place. So a lot of people embrace the networking so that you're all working together, which you probably don't see as often in the short term rental community. Because you're trying to get, weekend bookings and as many bookings as possible.
And they're sitting back and waiting for those, ding, I've got a direct booking. When that's not the case with midterm rentals and we all love networking together. So yeah, that's a good thing to highlight. Yeah. Yeah. One of the unique ways that I've been able to do that is. We often get people asking us if we manage properties in other markets since they're looking for an MTR manager.
And typically we'll say no if it's, someone we're not at. But to me there's a lot of, there's someone there looking for help. And I'm sure there's people in those markets trying to find clients to get started co hosting property management. So I'm trying to figure out a way to connect those dots through my essentially a pipeline of property management clients.
So very similar to the booking side. The other thing I would say, then this is again, true for all businesses. We talked about already is the provide value first, be a problem solver. I remember I read this somewhere or multiple places, this idea that if you offer value to the marketplace, you cannot fail, right?
People will want you around. People want to work with you. You're not there to take, you're there to give and everyone likes that. So networking, of course, also, really connects with that piece. I love that. I think it's just, I think it's just so important. Like this midterm rental space.
Everybody's entrepreneurial and everybody is so motivated and they're not just motivated selfishly, but they really are like, let's all get better at this together because that's, it's just like a reflection of this podcast, right? Something Allen has to share and give a value like he can also gain from things from other guests or episodes or networking.
And it's, we all have things that we can grow in and do better. And that's going to make us all business, all better business operators, but there really is enough need for all of us, right? There is no shortage of demand for these midterm rental stays. And I think once that clicks within you, you're like, Oh yeah.
I don't have to gatekeep. I don't have to hide my quote unquote secrets. Everybody can do this better. And just, we keep moving the train forward. And I think that's going to put this particular rental or this real estate investment method, like just, we're going to see so much positive. Yeah, definitely.
I agree. Allen this has been a great episode. If anyone wants to connect with you, how would you like them to do yeah I'm on not all social media channels. There's so many now. But Facebook, YouTube, Instagram, it's all Allenduan120 where you can find me. I'm trying to put out more content as a way to help people on those channels relatively new, still at it, but I'm trying to do more.
Excellent. And thank you all for tuning in quick reminder. If you are new to midterm rentals, then head over to the landlord diaries channel on YouTube. If you're not there already. And we have a whole playlist called new to midterm rentals, and you can just watch ones that we say are great episodes for getting started in midterm rentals.
Same idea. There's a playlist for arbitrage. Co hosting, manage properties and if you like the idea of sitting back and not operating your own midterm rentals, then there are plenty around the country that are doing it like Allen where they just want to jump in and help you out. And so we have a playlist for that as well.
So thanks for tuning in. Share this with a friend. We just really appreciate you guys listening to the Landlord Diaries and just want to give you the best content we can and. Have a great day, everyone. Bye. Thanks guys.