In the dynamic world of real estate investing, forming the right partnerships is as crucial as making the correct investment decisions. Successful real estate investors know that beyond having capital and property, it's the relationships that can create substantial value for both parties involved. In this blog post, we'll explore the importance of understanding and leveraging strategic partnerships, especially when venturing into new avenues like rental arbitrage.
Embracing the Role of a Partner
One of the key insights from episode 143 (opens in new tab) of The Landlord Diaries (opens in new tab) podcast, featuring Nate and Katie Lyon, is the recognition of mutual value in partnerships. From the outset, it was clear to them that their partner appreciated the potential benefits they brought to the table. Entering into a partnership for their first arbitrage, they weren’t positioning themselves as liabilities but as value-adding partners expected to bring quality tenants and management.
The Value of Mutual Understanding
Aligning values and expectations is a cornerstone of any successful partnership. As emphasized in our discussion with the Lyons, the right partner sees beyond immediate gains, recognizing long-term potential. This aligns closely with what many successful real estate investors have noted: that partnerships should be formed on the basis of mutual respect and shared objectives, particularly when dealing with ventures that require innovative approaches like rental arbitrage.
Why Rental Arbitrage?
Rental arbitrage, where investors rent properties and then sublet them, often furnished for short or mid-term rental, has become an increasingly popular strategy among real estate investors. The advantages are clear: less capital outlay for investors and the ability to rapidly scale a rental business. This method, however, calls for an understanding property owner, who perceives the value of having a reliable tenant who, in turn, attracts great subtenants. Learn more about how to get started with rental arbitrage in this podcast episode (opens in new tab).
Building Trust and Communication
Effective communication is the backbone of a trustworthy relationship, especially in real estate. All parties should have a clear understanding of the goals, terms, and dynamics of the collaboration. As seen in our episode with the Lyons, open dialogue right from the start helped set a foundation built on trust and clarity.
The Impact of a Great Reputation
As landlords and real estate investors, maintaining a good reputation can immensely influence your prospects. Great partners and opportunities often come from references and demonstrated past successes. Just as Nate and Katie's partner saw the potential in them bringing high-quality tenants, building a robust reputation in the market can unlock doors that were previously closed.
Conclusion
In conclusion, understanding the value of strategic partnerships can significantly enhance your real estate investment endeavors. By embracing the role as a partner, valuing mutual understanding, communicating effectively, and maintaining an excellent reputation, investors can turn simple connections into thriving partnerships.
Furnished Finder is a valued partner for real estate investors leaning into rental arbitrage and mid-term rentals because it specifically caters to the increasing demand for temporary monthly accommodation. With its robust platform, Furnished Finder connects property owners with traveling professionals and other monthly mid-term renters, providing a steady stream of quality tenants. This service not only reduces vacancy time but also ensures that investors find tenants who appreciate and maintain their temporary homes. For investors leveraging the rental arbitrage model, having access to such a network is invaluable, as it enables them to market their properties effectively while ensuring they meet the specific needs of this niche market.
For more insights into real estate investing, tune into the full podcast episode with Nate and Katie Lyon here (opens in new tab). For more tips and resources specifically geared toward monthly rentals, visit the Furnished Finder About Monthly Rentals (opens in new tab) page.
Whether you're a seasoned investor or just starting your journey, recognizing and nurturing valuable partnerships will set you on the path to sustainable growth and success in the real estate market.
Episode 143 Transcript
It was pretty clear right up front that it was like he understood the value of us as well, which was great. 'cause we weren't coming in being like, Hey, you're doing us, this favor, or we're gonna be this liability. That partner on our first arbitrage, he understood. It was like, oh, you're gonna have great tenants.
you're gonna take care of the property Like everything that was good for them and was good for us, he very much understood. But it was still nerve wracking, you're still talking about. Furnishing a space when you've never furnished a space before and signing this lease I knew we could get someone in there, but We had never done it before, so we were stepping into a bit of unknown, so. It was, you know, one of those times where you're like, all right, let's try this out. 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.
Today we will be discussing Arbitrage 101 with Nate and Katie Lyon. Most of you are familiar with Katie Lyon, our marketing director at Furnish Finder. Katie has spent over 10 years in the real estate and marketing industries while Nate has an. Dense background in marketing, operations and design.
Together they make a powerhouse landlord team merging the strategies of marketing, creative investing, and hospitality through rentals when it comes to monthly midterm rentals. they are perfecting the out of state strategy with properties in Iowa, Florida, and in their home state of Colorado.
Well, we're excited to have you powerhouse couple on the show. How are you doing today? We're doing great. Thanks for having us. Yes, yes. We get Katie every week. Nate, it's your first debut on The Landlord Diaries. Why don't you give us some story we should know about Katie? oh. Oh, wow. Be nice. Katie and I have been on this journey for a few years, but I think the thing that stands out to me as we work primarily with her family on these rental projects is just her.
Aggressive nature and attitude to kind of just get going. So I think a lot of us would kind of overanalyze things and at some point we just got going and that was really the best thing for us. together we make some of our biggest life decisions the fastest 'cause we just know when it feels right.
I think that's been helpful in our business, world as well. Definitely, and I get to work with Katie every day, so I hear and see everything you say. For those of you listening that don't see what goes on behind the scenes at Furnish Finder, Katie is quick and efficient, and she puts out so much content every day.
I am impressed by her skills and can only imagine it in the arbitrage world. So without further ado. Arbitrage 1 0 1. What steps do you need to get started? So first is the why. What is arbitrage, Katie and why does it work for midterm rentals? Well, you guys are far too nice. I didn't know that being aggressive could be a compliment, but it definitely was in that instance.
So I'll take it and run with it. But rental arbitrage is something that, that we learned at, actually after I started working at Furnished Mine. So rental arbitrage is when you're renting out a property that you don't actually own. So in our case that we are partnering with owners or property managers of apartment complexes or condo buildings or anything, even single family homes.
we are renting through them with the full transparency that we are going to then furnish it and re-rent it to a monthly tenant. So it's really a way that you can get in the door and start seeing if midterm rentals are right for you or grow your portfolio without having to purchase all of these properties.
So that's really what it is and why we started with arbitrage. our very first midterm rental was an arbitrage Our approach was like, okay, what is the least risky way that we can test out this theory? and for me it was like I was working at Furnish Finder and talking about Hey, there's these nurses renting, there's families renting, there's all these people who are renting and it seems really stable we've had an interest in real estate, but purchasing real estate can be really expensive.
And I had more experience on the commercial side, Which is very expensive. so it was like, how do we. Test this on the smallest scale possible. we arbitraged a studio apartment in Iowa. So it was about as, as cheap as you could do a trial investment, and as small as you could do it for sure.
So it was, that's kind the why and how, right. Yeah, absolutely. Awesome. And we'll get to more about that first arbitrage and why Iowa and all those details. but before we get too far into, the details of arbitrage, we need to explain who the players are. So between, you know, there's mainly three arbitrage players out in the midterm rental space.
Katie, you wanna give a quick overview of who those players are? Yeah. So instead of just having a property you own and then you're renting it out to a tenant, you have the owner or the property manager as well.
We work with people who own their property and they would typically rent it out to a traditional tenant. we rent it from them instead and then re-rent it out, or a property manager. we're never truly working with the owner of the property.
They've hired a property manager or a property management company to fully operate their property. A lot of times those are, the complexes or the multi-unit properties, so it might be a real estate group or a property management company. They're responsible for renting it out to your typical tenant.
And then we just come in instead of your typical tenant. we've got the complex or property owner, the arbitrage landlord, which is you guys, and the midterm rental tenant. why would some landlords choose this model over owning property? the big thing, the big two would be, as Katie mentioned, the barrier to entry is much smaller,
So we can. it's maybe a quarter of the startup cost essentially, So we can be pretty nimble and get these up and running quickly. I think the other benefit in terms of, profitability of each property on a yearly basis is, the repairs and maintenance.
Are not falling on us, if a washing machine stops working, we're not out that amount of money to replace it. So that's been big as well. And it's just a. You know, that emergency cost that we know is not gonna fall on us. Yeah, those are great points. Katie, any of the pros and cons to add why someone, would choose arbitrage over ownership?
Yeah, we've been able to scale quickly using arbitrage. we are at 14 properties right now, 13 of which are midterm rentals. We have a mix of owner ownership and arbitrage, but the ar arbitrage, since the startup costs are so much lower, even if you're buying a hundred thousand dollars property, right, 20% down, typically that's 20 grand you need
Plus furnishings and, and other expenses like that. So. Unless you're coming in with a fair amount of capital to invest with, it can be daunting. Even for, for lower price properties. With arbitrage, it really can be like, you usually have to come with a security deposit and furnishings, things like that, but it's much easier to scale quickly and realize the cash flow.
Faster. a lot of times, especially if you're not trying to compensate for that down payment, and like Nate said, the low maintenance costs, like we've had water heaters go out, air conditioners go out, washing machines go out, and none of that has fallen on us. there are definitely some cons when you're looking at long-term.
We're not getting the equity, we're not getting the appreciation. Truly, it's a cashflow play. When we're done, we'll end our lease and we're not gonna be able to sell the property and make the appreciation, or pay down a mortgage. for us it's a means to grow a portfolio, to test different markets, different property types.
Then hopefully graduate into owning more of those. we are at the mercy of complex changes, right? We have one property that has changed their property manager three or four times, and that's made it challenging because they do things differently. They don't always, inherit all the details of our relationship.
Things like that can. So there are some things that are just, they're outta your control. But we've found that for our goal of scaling quickly and testing stuff, it's really been beneficial. I'm excited to dive, deeper into the logistics of, what it looks like with the property owner or the complexes in a little bit.
for those that come from the short term rental world, I think on their mind is why did you choose to do midterm rental arbitrage over short-term rental arbitrage? a variety of reasons, but first and foremost, for us it's just not really our niche we are midterm focused. We like that sweet spot. We like less turnovers. We like a little stability. especially with traveling medical professionals, they often renew. So we're looking off often either three or six months at a time with one tenant. for us as a small company, it's a little easier to manage.
That way. And then a lot of times there's some of these, complexes, they'll have restrictions on midterm, or sorry, on short terms or. certain cities will have those restrictions. So we're eliminating that aspect altogether by, going with the midterm route. it's a much easier partnership sell.
When you're saying, I won't have any nightly stays, I'm not gonna have anybody staying for the weekend. Or I'll even say we're not planning to do traditional Airbnb with this. When you're talking to a potential arbitrage partner like that, you can almost feel their sigh of relief
A lot of these guys, worse nightmares, are coming from the long-term world. that makes them very uneasy. So it's a much easier relationship and they see the value in the community, right? Like we're housing people who need this housing and they're helping at the hospital, or they're relocating here, they're on a job.
it's a much different conversation you get to have. I love that about midterm rentals. It is such a great quality tenant. You have longer stays on furnish finder. The average stay is around 90 days. so that's four tenants a year. and for myself, a lot of times one to two times.
10 a year. it's a great strategy. before we get started into the arbitrage 1 0 1 of how to really build your arbitrage business, we hope to give you the tools to, feel confident and get started in arbitrage if that's your goal.
also just share what's successfully working for Nate and Katie. So, uh, let's get a quick story before we jump into that. Can you recall your first arbitrage deal and what it was like securing the partnership and welcoming your first midterm rental guests? Do you remember that?
Yeah. and Katie, would know more about the. Conversations that came first. But it was certainly a new concept for that property manager, and for us at that point. that transparency upfront was key. as we've had more deals with that partner,
We've become more valuable to them and vice versa. it was pretty clear right up front that he understood the value of us as well, which was great 'cause we weren't coming in being like, Hey, you're doing this, this favor, or we're gonna be this liability. It that that partner on our very first arbitrage, he understood.
It was like, oh, you're gonna have great tenants. Like you're gonna take care of the property. You're gonna be in good commu, like everything that was good for them. Was good for us. Like he very much understood, but it was still nerve wracking. Like you're still talking about furnishing a space when you've never furnished a space before and signing this lease I knew we could get someone in there, but We had never done it before, so we were stepping into a bit of unknown. So it was, you know, one of those times where you're like, all right. let's try this out. And you guys didn't have this episode to walk you through it.
So let's get you started. They've already laid the groundwork. They have, couple years of experience in the arbitrage space, grown to 14, properties in their portfolio, majority in Iowa. let's lay the groundwork of what's the first. Thing you need to do before you actually start calling complexes, or property owners, is you wanna establish your arbitrage business.
So, Nate, Katie, what were some of those necessary groundwork that you had to do, to get ready to make those first contacts? Like setting up your company name? Did you put an LLC in place? Things like that. What were, what was important to you when you were getting. Started. Today's episode is proudly sponsored by Furnished Finder, the ultimate platform for hassle-free midterm rentals.
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We haven't always done it all in order, but we've gotten it done. We did get an LLC in place right away. at my old job, I used to set up LLCs all the time, so that was a piece of cake for me. We did eventually get a PO box and a phone number through Google Voice, which if anybody is not using Google Voice and they don't wanna give out their personal phone number, it's fantastic.
It's free, it goes right to your cell phone. So it's essentially like having a different phone number, a different cell phone, but you don't have to have a different one. we used that, but then it was important for us to hit the ground running and figure it out as we go.
We knew we were gonna target, traveling medical professionals. So, we wanted to find units that were close to hospitals that would really be in that prime spot. Mm-hmm. And I think a lot of us start that way. That's how I found out about Furnish Finder. My father-in-law kept saying, Hey, what's y'all?
We need to check out this site about travel nurses. we've expanded to so much more, growth in the last couple years since COVID, got that recognition with travel nurses. Great tenants. A majority of Katie and Nate's guests are travel nurses, but there's so many different traveler types.
So what are some of those other traveler types that y'all have seen over the last couple years? traveling, construction, construction industry and you know, all the support industries around that. that's been big. we've had people coming for medical treatments.
Yeah. which has been, something new, for us. We've seen relocating families, people, that's been pretty big. Even an individual who's coming to get their roots settled and then the rest of the family will follow. We have a friend that had a, I think a minor league baseball players summer at their unit, so, That's a cool one. We'll claim it as our degree of separation We've had lots of interns. Awesome. Well, the other part of the foundation that you wanna lay before you start contacting those properties is how to actually calculate whether a unit is worth arbitraging.
if you don't have that figured out before you partner, you might be stuck in a deal that's not profitable for you. So how did y'all figure out? which area you wanted to invest in, and what was your minimum acceptable, terms to move forward with even contacting that potential partner.
Yeah, we chose the Midwest. my family is all located out there and they're a part of our business as well. the weight they are gonna pull in our business is more being the boots on the ground. that made sense for us to, locate out there. Also, prices are a little bit more in our range, so that fit really well.
Typically when we're looking at a deal. Right off the cuff, we like to see could we charge double what we're charged? So if we are paying $2,000 of rent, can we charge $4,000 of rent? if we know that's like really farfetched and we're never gonna be able to make that work.
It's just a hard pass. If it's like, okay, maybe we could, maybe we couldn't. We'll get more into the numbers as well as if we look at and we're like, oh, we could totally double that. We'll get into the numbers, then we'll just run and add up, typical utility expenses
Sometimes things like water or trash or internet are included. Sometimes they're not. You've gotta know that. and then you've just gotta know, kind of know, you know, what are you gonna be? Running for occupancy, what are you gonna be running for furnishings? Luckily, since we've done so many of these and so many of them are very similar, when we go to furnish a property, we can probably guess within three or $400 what it's gonna cost us.
That's harder to do until you've done it a few times, especially 'cause all the properties can be very different. If you don't have family in a certain area or don't know someone in the area that you're looking to invest, we have our furnish finder.com/stats (opens in new tab) page. You can also get there from the Furnish Finder homepage.
Going to Market Insights. definitely recommend checking it out to see, the balance of demand to property supply. You'll see a breakdown of number of bedrooms, what's the pricing per bedrooms, things like that. So it's a really great tool, and some other factors to consider going.
Into, you know, the, just that idea of is it worth it, on the pricing and the, and the profit side is what costs are you going to incur as you're getting started in your arbitrage. The nice thing is it's very low startup costs, but there are costs. So what, you know, how did you factor those in leading into starting your first arbitrage?
I think the biggie is the furniture. Absolutely. we've found pretty cost efficient ways to do that and we've been able to replicate that, with other units. But like Katie mentioned, utilities are, a factor. internet, everything you would pay for to have a livable home of your own is most likely gonna be on, you as arbitrage.
some of it is included, but, those are the big ones. I would say if you're starting scratch, maybe add another 15% of just miscellaneous costs, because, you know, like Katie said, we have that dialed in better now, but initially a lot came up on the fly.
Yeah. any insight, as far as from your experience of, how long it takes to pay off those startup costs and start making profit on the, the first arbitrage or, or set of arbitrage properties? it depends. I think we found, on, you know, the studios in one bedrooms, it's, I. It's within about six months.
Mm-hmm. Which is great. So within our first lease term of a year, we're, getting to profitability. Yeah. These really pay off. Like if you're gonna plan on keeping 'em for a few years, if it's one that you're gonna do just for a year or two, you probably won't see, I mean, you will see cash flow if you're doing it right.
Not as much. But even if you don't, you're likely gonna learn some other stuff about hey, this market wasn't great for X or this didn't pan out because of this. we haven't moved out of an arbitrage unit yet. They've all been great for us. We have some that are more successful than others.
Nice. All right. We've made it to, now we're making our first call. We wanna look for our first arbitrage deal. How do we structure that conversation, the lease, with the property owners or the complex, et cetera. what should be in your lease when signing with the complex or property owner to protect you and your tenant?
this is one thing that when we were going into arbitrage, I heard a lot of different things and a lot of people said that they wanted to bring their own lease. I got a lot of pushback on that because the operators that we're working on have a very standard lease that they use. They're renting probably hundreds of properties.
It's not just like a one-off thing. so they have their lease template that they really like to use. For us, it's just really important that we get in writing that we are allowed to sublet the unit. We have pre-approval to sublet the unit with a 30 day minimum. and that pets are okay. otherwise, everything that the owner has in their lease that we sign with them seems fair, like pretty agreeable.
we have to make sure that we have a really good lease with our tenants because we're still taking on that liability, right? we put down a damage deposit But if there's damage to a unit, we're still liable. so it's important for us to have.
Two solid leases, One with the owner and one with the person that we are leasing the unit to. the most important thing to us is that we have written permission, especially if ownership or the property manager ever gets transferred, like we're like, Hey, here it is in writing what we're doing.
And it doesn't just seem like some off the cuff thing. I think we're going into these conversations. Trying to present an easy win-win process. if we're upfront saying, Hey, you're gonna have to jump through. So many hoops to make this work for us. then it starts not feeling worth their while.
So I think that's key. We want that win-win. anything else that y'all have noticed over time the property owners, you're saying that they oftentimes have their own leases, You mentioned that pets was an important one that was in there as well as being able to lease it out, to midterm rental guests.
Are there any other little clauses or things that you've learned to watch for in those leases? It's nice to know the early termination clause. most of the properties we work with are very traditional long-term rental properties. So they don't have an early out option. a lot of them have that
You can offer to let them sublet it if you want off the hook. they have an agreement where you're responsible for the rent until they can re-rent it and have, a new lease with a different person take over. I think it's always important to know, Worst case, right?
It's always important to know worst case. And that's financially too. Like, and that goes back to running the numbers, right? it's always nice to know, okay, is demand strong enough in this area where if I need to release this as a long term, I can, or if I decide that this isn't working for us for personal or professional reasons and I need to get out a lease, could the owner release it and let me off the hook?
So, I think that's always just something that you should Understand with any type of rental agreement what if the worst thing happens? Then what? And what we've heard, and I'd love to hear from you guys, is that it's actually the opposite in most cases a lot of arbitrage owners, you know, you want those protections in place, but you end up by the end wanting to have a two year agreement or, a one year agreement and then extend.
So, with a couple years in the arbitrage business now, have you been pleased with those, you know, with those leases and really. Lean towards longer leases now, like what are some of those tips for negotiating with the property owner? we haven't really bridged that gap yet where we've had to approach, for a longer lease term in exchange for a lower rent.
I think it gets back to what's their incentive to do that obviously we can offer stability and, cutbacks on some vacancy for them, but, we did, you know, recently have kind of an honest conversation with one of our property managers about what rates we need to be able to get
And so we were able to work something out there, which was really great I think some of the leases too, it's important to keep in mind what happens after that term. Are you gonna have to renew for another year? Does it roll over to month to month? Because some of them will have that in the, contract as well.
Yeah. A lot of the owners we work with are actually not incentivized to do longer leases because they like the freedom of, if the market changes, they might need to increase rent 50 bucks or a hundred dollars or whatever that is. So that's totally fine with us. we have been able to not negotiate a little bit with deposits or pet, pet like availability, like or a pet deposit.
and that's just by explaining like, Hey, if I take three properties off of your hand, can I. Can we reduce the deposit or can we bypass the pet deposit or rent That usually seems negotiable on our end, but we're also renting in areas where. If we weren't renting it from them, they wouldn't have a problem renting it out.
there's not as much motivation for the owner pay attention to the complexes in the areas that you're looking at. are there any new bills that need to fill their units quickly or is there potentially any. Complexes that have lower occupancy that would benefit from someone coming in, being able to occupy, you know, a, a, a 10% of their units and really bring that number up.
So we have heard on the show sometimes you can negotiate in like one month free rent in those situations. So, you know, play around with the ideas of what's out there, what are the options, but those are all great tips. And I know everyone's thinking, but what about that first call? How do I not get hung up on and just laughed at, when I make that first call?
what did that call look like for you, Katie and Nate? Which one of you made the first call? I still make the calls. I make the initial, connections. part of the reason I feel like we've done okay with our business is because we've all found our roles.
Nate does the operations really well. That's where he truly shines and is so great as far as like refining our processes and, and working with our cleaners and our handy people and tenants. he's really good at understanding the details. I mean, not so much.
so. The call, it's a little, you know, it's intimidating the first time you do it, but it's important to pick up the phone and do it, not try to do it over email or a contact form like you wanna talk to a person. and it's just having an honest conversation and being a real person remembering that you are doing business with them like this.
some people make that call. With the approach that they're asking for a favor. when really it's like you're asking to give them money, right? can I give you money every month for a year to rent your place on time. So it's really like you're calling them asking to be one of their best tenants With the stipulation that you want to also provide housing for people coming into the community with a strong need. the first thing I always like to do is make sure that they understand.
a lot of times people are confused or scared because they think you're gonna be hosting bachelorette parties or having people come in or out, or there's gonna be damage. the first thing is making sure they understand that this is a monthly rental. using examples like travel nurses, relocating families, people displaced from fire or flood or academics, interns.
Then you can hear them start to understand, I have found historically it's very quick who is interested in working with us and who is not and that's fine. the biggest tip is you just. Have to pick up the phone none of us like making phone calls anymore. But you have to do it.
I do. You do. Kelly Bailey? You'd be on the phone all day if you could. you are like the 1%. I feel like the vast majority. even when his mom calls me, I'm like, send me a text lady. Not gonna happen. She's gonna keep calling. Yep. Gotta keep up with the times. That's a perfect segue to our tenant conversation.
You also wanna know how your tenants wanna communicate. So we've got, the furnish finder messaging. You can pick up the phone and call them if they provide their phone number or you can text them. setting up your lease for success with your, monthly midterm rental guests.
How do you. Protect yourself and your business, when you're renting to tenants and having, the arbitrage lease in place. Yeah, I think for us, our lease. documents are constantly evolving. we probably made updates earlier this week. two or three weeks ago.
just to better protect, better communicate, have better transparency, with the tenants, have more upfront where, it's what's included with your utilities. what's that cap that we have that's upfront now where it used to be a bit buried? we have our tenants initial every page of the lease and.
We, frequently double check what the local laws and regulations are. We'd like to probably charge higher late fees than we're allowed to in the state of Iowa. But, we wanna be above the board. And, we always ask our tenants if they have questions about the lease. we can't control if they're gonna read line by line, but we wanna make sure it's in there.
We wanna make sure we have proper protections. especially for the big stuff, you know. Catastrophic type damage, smoking damage, things like that, that, would really derail our business. and go above the deposit. Those are the big things to look out for and make sure you're covered.
Yeah, the lease, anytime we have something that doesn't go perfectly, which if you're gonna have any type of business, it's gonna happen. We always try to think. This happened, how do we make sure it doesn't happen again? Right? So for instance, we've had a tenant whose dog was barking in an apartment building and she was like, I'm so sorry, my dog gets anxious.
And we're like, okay, but your dog can't bark all day. So then we made a modification to the lease, right? And then it was like, you're agreeing that if you have a pet, they follow these behaviors or these regulations, right? So a customizable lease,
Essential for us. It's absolutely essential. like Nate said, we're constantly anytime the littlest thing comes up, we're like, how can we learn from this? How can we move forward? How can we adapt to this? same thing with being really transparent with. cleaning fees, deposits, pet cleaning fees.
We have a pet cleaning fee, and a pet deposit. the damage protection plan is something that we add to properties, particularly if there are pets. we don't. Necessarily involve the tenant in that, but that is something we add as a layer of protection for the properties.
And that's nice for the arbitrage properties because you feel extra responsible for those ones. if something goes wrong, you have to tell the property owners and you don't want to. So having that extra layer of protection is great.
we had one arbitrage property where unfortunately they had some cats and their cats did some fair damage to the carpet we had to replace the carpet in the whole apartment. luckily the property manager was very, understanding and they were like, oh, it happens. And they were able to give us the carpet vendor that they used, so we made sure the carpet still matched and everything.
We didn't have the damage protection plan on that unit, and it would've been really nice to have. And that's available in your furnish finder, landlord tools under your dashboard. So check it out. all the details are there. I think when you're talking about leases, it's always important, to be super protected if something happens.
But I always like to tie it back to why we do midterm rentals, it's the best tenant type. So what you're hearing Katie and Nate say is. Things happen with any rental, but you don't quit. you figure out how to keep going and, modify your changes.
And at the end of the day, it likely didn't come out of pocket because you've got the deposit in place. You've got, you know, the damage protection options. So there are great ways to make sure and protect yourself, protect the property. so let's lean into that tenant type a little more and why.
Midterm rental guests really are one of the best, tenants, in the real estate industry, Katie and I talk about this a lot. So let's hear what Nate has to say about it. Yeah, I mean, you take a little bit of the hit or miss out of the equation, especially with traveling professionals.
for one thing, a lot of these traveling nurses aren't even in the unit that often they're working, long hours. They want somewhere to get restful sleep and a nice, safe place to stay. we do try to put. An emphasis on some of those nicer touches and the appeal of it, and have it be, a little more of a premium, type feel for them.
So, I think in general they're just good, hardworking people that, are appreciative of the great place to stay. They're appreciative of good communication. we don't often hear from them a lot during their stay, which. we count as a good thing. but we'll hear when they move out that, thank you so much for having us.
It was amazing. once they're able to move on to their next thing, we hear that good feedback and that, reaffirms that they're really good people and, there for the right reasons I guess. we've covered a majority of the steps getting started with rental arbitrage, specifically through the midterm rental strategy.
And one of those things that really helps you shine, and drives up your occupancy is the way you market your property. we have the marketing director of furnish finder with us. So let's dive into some of those strategies. Katie, what. Are the, average sizes of your units that y'all have engaged with arbitrage, and how are you marking that to travel nurses in a variety of other, traveler types like corporate, renters, displaced families, et cetera?
Yeah, we have arbitrage properties from 550 square feet to 3000 square feet. So we have a studio apartment all the way up to a four bed single family home. We have more of the smaller properties just because, there was a couple buildings that had multiples of 'em and we just took 'em all. I feel like this is where Nate and I can kind of combine and become a power couple because he also has a really strong marketing background.
so when we put our heads together, we can create some good marketing, the key is quality. We always get professional pictures done. Like hands, it's never debate. It's never like, Hey, but we're running tight on budget. It's, it's every single time it's done.
that is a huge key. We also like testing things, if we are marketing a property towards a displaced or relocating family, we might put that in the headline. We might say four bed, four bath property. Great for relocating families or in a great school district or near parks, things that are good for families.
describing ourselves has also helped a lot like describing that we are professional landlords, that we take this seriously, that we know what we're doing. We've worked out the kinks, right? People really appreciate that when they're traveling, they wanna know that they're gonna be working with a great landlord.
So that is something also that we've, taken pretty seriously. And then just being thorough. Right? And I think it's important when you're doing your marketing to target The tenant type that you think would be best for your property but not exclude others, you can say in your description, like, this property is great for medical professionals because it's close to the hospital facilities, or it's located close to public transit, but you don't have to say it's bad for other people, You can say it's great to downtown or close to restaurants, things that make it so that you can hit on your niche without saying that. Everybody else is gonna feel like, oh, well I'm not a nurse, I can't rent that. Right. So making it feel, high quality overall has become really important to us.
we haven't had any trouble keeping ours full. in fact right now, we're having leads we can't place We have nowhere to put that good problem to have. now we're thinking. Do we have the bandwidth to do another one? should we do another one this summer?
Because we're getting more demand than we have and we are not the cheapest option. But we have found that travelers, appreciate quality and professionalism at least those are the tenants that we are working with. on the listings, you might not get it perfect upfront, but it can be an evolving, thing pay attention to the questions you're getting from leads or current tenants. 90% of the travel nurses, that reach out to us ask how far a unit is from. The, the certain hospital that they're gonna be at. So, we'll, we'll add that to the listing. or whether utilities are included.
So those kind of frequently asked questions get that in the listing because I think people do thoroughly read the listings. They're. Researching it as you would if you were looking to move somewhere permanently? they wanna know as much about where they're staying as possible before committing.
And what about the pricing for your listing? We won't do a deep dive on how to price your listing because we have episodes for that. I'll put it in the show notes. we're really building that structure of how to start an arbitrage business, but how do you adjust for that seasonal pricing?
do you see a lot of seasonal pricing or not necessarily in your market? Yeah. I would say a little bit in the winter we do, adjust but it's based more on demand We don't have extreme seasonal pricing. I think we have somewhat seen in some of our markets a cap.
Whether it's a bigger unit or a smaller unit. that's, something to keep in mind recently we're not seeing quite as much pushback on pricing, especially on two and three bedroom units because, we're seeing more traveling professionals pairing up.
So they're kind of splitting That monthly rent between them, so it's not such a big deal. we're seeing a little more and more of that. Nice. One thing that y'all said that I've never thought about before is, you know, just that idea of, of course, you want a professional listing. Hands down, you want to get high quality professional photos.
to make sure you're marketing your property well. But for arbitrage, it can also be a tool in presenting your opportunity to a complex. once you've got your first arbitrage, you can use your furnish finder landlord profile as a website to show your impeccable properties
The quality of, professionalism and display that they're going to see will carry over into how you run your business as well. along those ideas of just making sure that your listing is on spot, the calendar is, important because we're matching you with, the tenants or the travelers' desired, date And so it's super important that you keep your calendar up to date. I love how in your headlines you're helping reinforce that calendar with, when each of your units is becoming available. one wording that really stood out that I'm gonna start using is available late summer 2025.
Just that idea of, Hey, it's likely coming available, but we don't know the exact. Date. So Katie, what tips do you have for those that we often see in the midterm rental space that guests are going to extend and you don't necessarily know their exact move out date? How do you plan ahead to market your property?
Well, we tinker with our headlines all the time. catching a traveler's attention is more of an art than a science. So. If, if we know that it's coming up late, but maybe we have late summer, but we have maybe someone who doesn't know their exact move out date or something like that.
We will put available late summer, our best guess in the calendar because we want our leads to be matched, as closely as we can get. That's become a really big habit for us is like anytime we can update the calendar, we do like, first thing we have a booking lease is signed, update the calendar, those two go hand in hand and that is non-negotiable with us.
but we do tinker with that because. If it's coming up, like there's a lot of people who say, Hey, I know I'm coming to the area. I don't know my exact dates, but I like your unit can I touch base with you sooner? And I'll be like, yeah, of course. We'll also keep their contact information and reach out to them as the time comes closer and they'll say, Hey, you know, our tenants moving on X date, does that work for you?
And sometimes they say, yeah, that works great. Sometimes they say, oh, that's a couple days, later than I need, but I'll stay at a hotel for a couple days. 'cause I really like your property. There are people that are searching for last minute stays and a couple days before they come.
There's also people who are the planners and they're looking three to six months out where we might not be able to commit then, but we can at least start that conversation, and say, okay, when I do know when this person is moving out, I can reach out.
And once, you get to our stage where you have multiple properties, we often do the shuffle It'll be like, okay. I can commit you to somewhere, I don't know where. It will be one of these four units. Are you cool with that and we'll do the shuffle to minimize vacancies it helps you build future leads so you can keep your occupancy really high. That's a great segue to why it's important to have all your properties on Furnish Finder. one of the most common things we hear for arbitrage hosts is, Hey, my complex or property owner has recognized how much of an asset I am to them, as an arbitrage partner in the midterm rental space.
And they offer me, first choice when new units come available. So then you end up stacking, multiple units in a. Complex, and expanding out past that as well. So, Katie, Nate, why have you found that it's so important to list each of those properties on Furnish finder, not just one
Yeah, I think it's really a logistical thing where we can say, Hey. somebody just signed this lease. It happens all the time. Somebody just signed the lease, this morning on this unit, but I have this other, nearly identical unit here, and you're not taking them off to a different platform that way.
So, they can see that, the pricing is the same and these really are pretty identical and then I can work with this. I think that's great just to keep. the communication channel focused on, one platform. We're trying to be professionals, right?
Like we're, and, and we're trying to be that professional relationship with tenants. And that doesn't start by saying, I have another unit. It's not listed on here, but it looks exactly the same. It needs to be, I have another unit. It looks exactly the same as this. Here's the listing for that one.
And they can take a look. 'cause these guys are, we've never done a showing, Like they're coming site unseen. They want some security. They wanna know that you are legit, that your property's legit. we've done a couple showings. It's not something we advertise and it's really, only if there's vacancy
They can, self lock it themselves. and it's already cleaned and ready to go. we can't really rely on what the place is gonna look like. mid stay for somebody. this has been such a great, just step by step, how to start an arbitrage business. You know, all those details.
Arbitrage 1 0 1. Y'all have done a great job helping anyone listening, to get started on the right foot. few things to wrap us up and reminder, if we didn't touch on something you wanted to hear more about, please put it in the comments. or reach out to our customer service team we are here to help along your journey
Furnish Finder is the go-to place for all steps involved with midterm rentals. we didn't talk about furnishing. Because we have a furnishing partner, Minoan. I'm gonna put in the show notes, the episode so you can check out, what we recommend for furnishing.
We also have a furnishing checklist, so that's why we didn't cover it in this episode. But Katie, Nate, what are some lessons or changes that you've made to your arbitrage business over the Years. Yeah, I don't know if it's as specific to arbitrage, but just in general we've refined a lot. we try to pay attention to the questions we get from our tenants too,
I think we've made a lot of progress on setting the expectations on a really smooth check-in and, covering all those details of where to find the unit how to get in and what's gonna happen next. So, I think that's been huge for us. We've learned a lot with the listings and filling those out really giving a lot of information and transparency.
So, you know, those are biggies. I think the arbitrage, what we've really learned is which partners are really high quality and which ones. maybe leave a little more to be desired. And so, having that great partner, asking those right questions upfront, we didn't touch a ton on maintenance, but really understanding how they approach maintenance and service requests and that communication channel has been, key as well.
But if there's no transparency upfront with them, it's gonna be a little rockier and feel like you're kind of sneaking around once you have that good relationship, then it doesn't feel like that. It feels like a partnership. Yeah. All right. Well, we are wrapping up this episode. So, Katie Lyon, I want you to, take us out with, just a recap of the simple steps to get started in arbitrage if someone is curious and wants to get started today.
I think once you've decided what market you wanna be in and what property looks good, pick up the phone. Don't be afraid to make the call. It's okay if you call and mess up. You can just hang up and you'll never talk to that person again. it takes a little bit of tenacity, but usually not too much and you'll build your confidence pretty quickly.
remember you're doing them as much of A favor as they are doing you, and then dive into furnishing. furnishing does not have to be overboard. You don't have to go crazy. It can be very simplistic. You can be like Kelly Bailey, who loves to go on Facebook marketplace.
Or you can be like me and love to go to Target and Amazon. there's different ways to do it. Get yourself a good checklist and just start picking away at it. and then find yourself a really great cleaner, With, arbitrage, you don't need a realtor. You don't need a lender.
You don't need a handyman. Usually. the property will have its own maintenance team. you just need a really good cleaner and someone to be boots on the ground. we have a property that's actually two and a half hours away from my closest family member. Our boots on the ground is another one of our podcast guests who is just kind of the, if if everything goes wrong, Chris can go take something for us, right?
just have at least someone that you can get there if you absolutely need to. And then just give it a try. it's a low risk thing, right? you're not buying a property, you're just trying it out. That was Chris Dickey. he markets his midterm rentals with Furnish Finder.
So another great episode to check out. just as we wrap up this episode, a reminder, we create playlists on YouTube for any topic that you might wanna hear more about. Arbitrage is one of those topics. stay tuned to Furnish Finder marketing channels. We've got our. Email, we've got, you know, social media.
We've got our fantastic customer service team. We've got our help center on the website. So we are here to support you in your journey. Katie, Nate, thanks so much for sharing your story today, of growing your arbitrage business, with midterm rental tools. Like I said, their properties are impeccable.
So if you really wanna see what a well marketed property looks like on Furnish Finder, check the show notes, go click on their listings, you'll ha get lost and have fun just exploring their different marketing avenues. So until next time, thanks so much. Bye everybody.