All Forum Posts by: Lauren Pitts

Thanks for the heads up! Yes I can feel the heat towards arbitrage emanating off this community. Lol. And your advice was actually perfect because that is exactly what we are ended up moving towards. And who knows, maybe my business will hold onto the unit longer with this change in the arrangement! It is becoming essentially property management/co-hosting.

Im not the biggest fan of arbitrage myself and I couldn't make it work with the STR laws, but it was the avenue I started the business with. I prefer the equity of owning plus the STR cash flow going forward. But less barriers to entry with the arbitrage and I learned a ton. The experience is worth a ton!

Thank you for the encouragement and tips!!!

You said it yourself, you don't have a great view of arbitrage. So ...I guess thank you for letting me know that you do not see the value of what we are doing. 

Also, I did not "try and sell" anything to them. I gave notice to vacate. I planned to deliver the property vacant. I have an excellent relationship with the landlords and I knew the hardship a vacancy would have for them right now so I offered them this alternative and they very much appreciate it. The owners and I are in full agreement that compensation needs to transpire for us to move into this partnership. My post was for tips on how to properly and fairly valuate this unit, preferably from someone who has done this before.

- If I am managing cleanings then I will be compensated. A surcharge structure was my approach.
- The furniture has value. I have been buying and selling furniture for over 15 years, so I know well what items have value and those that do not. I just wanted to figure out how to bundle the entire 2 units, as selling all items at once has a benefit to me compared to selling each item individually to a consumer.
- If I am managing listings then I also need to be compensated. 

Thanks for the comment, but if this is not your thing then I'm not sure how much helpfulness there will be 

I am terminating the lease of an arbitrage rental unit (2 units in 1 house) in compliance with the lease. We rented the house unfurnished and we fully furnished and decorated the property. I am working out a deal to transfer the STR to the landlords instead of just vacating and returning an empty house.

They need to know our price for transferring all furnishings and supplies. I also offered to possibly link them with our cleaner who has been handling turnovers at the property for years now. Since the landlords live on the other side of the country having our cleaner would be extremely valuable as they embark on remotely managing STR operations. For a transitionary period, I also offered to allow them to utilize our online listings to capture longer-term stays (30 days+) until they get their own listings going/obtain a STR license. Then the Landlords also asked if they could use our professional photos to build their separate listings (that will be a no--they will have to reshoot the property themselves as that is our work and portfolio). In any case, I am not sure how to price this transfer. 

- Furnishings and Supplies: Estimate what I would expect to earn from selling all of the furnishings and supplies. Giving them an option to pay a as a lump sum or distribute payments over the transitionary period.

- Booking Platform Listings: To utilize our listings for a transitional period, it would be a profit-sharing. Since we would only manage the listing and not operations, I suppose our percentage should be less than 15%.. so 10%. 

- Cleaning Team: For utilizing the cleaning team that we have trained for years to the point where they basically manage the property (clean, stage, laundry, reports damage, inventory, sometimes facilitating repair appointments, etc)... I am not sure about that. Perhaps I should manage operations and tack on a surcharge to the cleaning (maybe 10-15%).

My goal is to get out of the property. So the more we offer to help, the more we are entrenched in everything. So the transitionary period needs to be clearly defined.

Does this approach to generating an estimate for the transfer sound reasonable? Any other ideas? 

Thanks!!

Hey guys... here's my update for what it's worth! I got a couple messages asking me what I ended up going with after going around the world with this and here it is.... 

Hospitable! (formerly Smartbnb)

 I am with Hospitable now (formerly Smartbnb). For a time I was concurrently with Smoobu and Smartbnb (now Hospitable) and Beyond Pricing and Turnoverbnb (at one point). They are not all PMs but they are software to help manage different aspects. That was pricey. I am now with Hospitable and Turnoverbnb only. Hospitable has the most robust schedule messaging system and the AI guest messaging that I have come across and this feature is truly invaluable to my operation!! It saves so much time. It works consistently well. They are also finally building out a direct booking website which should be available in Nov 1. It looks good from the samples that I have seen. The user interface is really attractive and easy to use and best of all the team behind Hospitable very accessible and connected to their customer. Top management has clubhouse calls every 2 weeks with any hosts that wish to join (I don't even think you have to be a Hospitable customer) On the calls anyone can talk to them and give their feedback on developments we want to see or ask questions about features and glitches, and they inform us of what is coming down the pipeline with their product and integrations. Also, the regular technical support is awesome. I can't say enough how great an experience Hospitable is. And their prices are super affordable.

Smoobu was decent for managing your pricing across platforms and for the direct booking website template they give you. But they are not nearly as a good on the guest messaging. Actually they're pretty horrible at that. I tried the others a couple years back as I mentioned at the start of this post or in follow-up. But Hospitable is where its at for me.

Now that is interesting! I have not seen this before 

Also, I would like to add to the topic to continuously evaluate your own operations and streamline and simplify the turnover process for your cleaners. A friend of mine that owns hostels always shares great tips for tools, products, and supplies that streamline operations. I have come a long way since I first started but there are always more gains to be made in efficiency and organization. 

These are just a few: 

wrinkle-resistant sheets (microfiber are the cheapest, most durable, and wrinkle-resistant)

High-capacity automatic hand-soap and lotion dispensers

robot vacuums

Shampoo, Conditioner, Body Wash dispensers

Shower curtains with snap-off liners

@Ken Boone Thank you for such a very thoughtful response, Ken. Your experiences are very consistent with mine. I agree it is very off-putting to work with a company that defends their employees even in the face of evidence of mistakes. I just had that happen to me last week and it was most irritating. Especially because I had to go fix their cleaning oversights at 10:00 PM on a Friday night after I was all dressed for my evening plans. Not fun to be told by the manager, that it was not their fault and they did a great cleaning. Like you, my best cleaner was a one-woman operation. She recruited a helper but it was often just her and she was amazing--she really became a friend. Unfortunately I lost her during the pandemic. She moved on. In any case, I do like your idea of cheap labor to do the finishing touches because I have also come to the same conclusion that there will always be something off. You need a third-party to pick-up the slack. This is where having kids or little cousins or nephews/neices comes in handy, I think. lol 

I came across one person who came up with a suggestion of a position called something like "Quality Control Manager" or "Hospitality Quality Controller." To combine it with your idea perhaps it could be marketed as a hosplitality internship or a Short Term Rental Internship. Maybe I could attract a young person with the right mindset who sees this an opportunity to learn the business by showing great oversight and initiative. I can definitely beat the pay of an unpaid internship! 

STR arbitrage business owner here! Turnovers/Cleanings are the biggest pain point in my business. Consistent attention to detail is rare. I have found many cleaners that do an excellent job sometimes. But few that do excellent work all of the time. I have gone through many cleaners in the past 3 years. Some attrition is a result of disruptions from the pandemic and some are gone due to quality issues.

I believe that I have pretty solid systems to make things efficient for my cleaners: 

• - well-organized supply closets with printed shelf labels and cubbies. 
• - detailed bilingual checklists with staging photos. 
• - 3 sets of all linens, enough for 3 turnovers to be completed without needing to wash. 
• - laundry handled separately by a wash-and-fold delivery service. My cleaners simply bag the dirty and place the clean in the supply closets. 
• - shared google doc where I put cleaning notes, reminders, updates, and feedback for all turnovers. Cleaners/Cleaning Company managers can open it any time to see last cleanings tip, as well as today's notes. I try to have this completed the day before a turnover but I could improve on this as I often have it is done the morning of a cleaning.

Yet with all of these things in place and more, I still get inconsistent results from my cleaners. I do not believe many of them use the checklists I have had great cleaners before, don't get me wrong. But if I am going to scale my business cannot rely on an exceptional person. It needs to be consistent with an average person.

Post-pandemic it seems much harder to find good cleaners than before and it seems guests are especially critical. So I am now stepping back and rethinking this aspect of the business entirely. Perhaps there are different business models out there for handling Turnovers that will better achieve consistent cleaning standards. 

Below are the Turnover/Cleaning Models that I can think of. I am curious if any of you have other approaches! And what your thoughts are on the best way to handle this? 

1. Sub-contract/Pay-Per-Service a cleaning company
Hire a cleaning company that has multiple teams of cleaners.
Advantages: They can almost always cover a cleaning because they have so much staff. They can often push their staff to the highest standards because they are fully employing them (especially the one’s that offer benefits).
Drawback: Some owners do not ensure quality control. Cleaners are often inconsistent. Often there will be mistakes and oversights. Typically, you will receive less communication from cleaners on damage, supply inventory levels, and problems within the property. They often go really fast (to serve as many clients per day as possible) and with that there is less opportunity for your feedback/oversight before they leave the unit(if they send you pictures) because they leave the property so fast.

2. Sub-contract/Pay-Per-Service an individual cleaner
Hire an individual person as a cleaner. That person cleans themselves and may have 1 or 2 helpers at times.
Benefits: If you can find a good one, they can be very consistently good. They value each client because you are their direct boss. They will often be very communicative of issues they see (damage, inventory low, problems, etc). You will normally be able to check/approve the cleaning before they depart.
Drawbacks: They can’t always provide coverage, especially if you have multiple listings that require turnovers on the same day or get last-minute bookings, or they are prioritizing their other clients. They often don’t do holidays.

3. Hire (part-time/full-time) cleaner
You directly employ a cleaner. (I have not done this one. So I am speculating on these advantages and drawbacks. I am curious those who have what your experience and thoughts are)
Advantages: You can select who you hire, how they are trained/on-boarded. They may have greater attention to detail, communication, and duty to you as their actual direct W-2 employer.
Drawbacks: Must navigate the accounting and legal requirements of becoming an employer. Once you hire, it may be less easy to get rid of them if they are not performing well.

4. Hire (part-time/full-time) manager & Sub-contract a cleaning company
You directly hire an operations manager, in addition to a cleaning team. (I have not done this one but I think this is the best option. I am speculating on these advantages and drawbacks. I am curious those who have what your experience and thoughts are)
Advantage: You can ensure quality control by having the manager check behind the cleaning team and fix any cleaning issues before the guests arrive. They can also help manage other functions as laundry service, guest support, or any other aspect of operations. So you could eliminate another service provider. Free your time to focus on growing and managing the business. Allow your business to grow faster.
Drawbacks: Expensive. You must either have the scale to generate enough cashlfow to pay a cleaner and a manager, or you be willing to take on debt to hire the staff needed to grow and expand. You also have to manage the manager.

If I have left something out, please share. If you have tips on how to improve the advantages or drawbacks to any of these Cleaning Models please share your tips!!

Wow... How wrong people are on this thread. If you are not in STR arbitrage perhaps this was not the question for you to reply to.

@Don Konipol I liked your response but banks don't really jump behind STR rentals because of the regulatory uncertainty, to my knowledge. But I appreciated the blueprint you laid out. There may be some more creative sources of money available now such as microlending.

@Ken Latchers For some reason, you suggested that an arbitrage master tenant does not have the ability to long-term lease as a property owner would. Really? That is one of the key options that a Master tenant has. Lol. STR vs LTR are still essentially a sub-lease in arbitrage.

STR has risk but actually less risk than some other real estate investments. The Master tenant is not responsible for ANY property maintenance and can easily get out of the deal if they need to. They can also transfer the entire lease to another arbitrage business and be compensated for all their furnishings. They can long-term sublease. Sure it depends on how cool your landlords are. But landlords just want rent and their house to not be trashed. In my experience, those are both easily checked off with STR even during the pandemic.

Wow! Thank you so much for your wealth of knowledge and feedback Mike! This was so excellent of a starting point. I feel like I have a road map and I am not just fumbling around in the dark. I will definitely DM you. Sorry I composed this eons ago and it was stuck in composition and not sent!!