All Forum Posts by: Robert Gilstrap

Guess I'm going to be the lone voice of dissent here...

1. You should never own anything in your own personal name ever in my opinion, especially real property. If you don't own it then someone can't take it. 

2. Thinking that insurance will protect you exclusively is naive and very risky.  Insurance is just one part of risk management and asset protection. Yes you should have it but I would never rely exclusively on it.

Just food for thought but a great avenue that addresses your concerns would be to own the property in a revocable trust with an LLC holding beneficial interest in the trust and you and your wife are members of the LLC. Almost no lenders would ever loan in the name of a trust so you will buy in your name then transfer to a trust after closing. If the borrower is a beneficiary to the trust then the Garn-St. Germain Act prevents the bank from invoking the due on sale clause simply for transferring into a trust. Since trusts are not filed anywhere on public record then one could change the beneficiary at will from you to an LLC or vice versa.

The true answer here is what is the highest and best use of your time? If you only make $18/hour then manage it yourself. If your time is worth much more then you are crazy to manage yourself. 

Remember, you can NEVER do something as fast, as cheap or as good as a professional who does it for a living. Pro's know the ins and outs, they have the knowledge and experience, they have the contacts and the team. Yes, you can build all that yourself but you can never build it as cheap as you can hire someone.

Having owned long term rentals for 26 years now I can tell you short term is WAAAAAY better in my opinion. It's a completely different animal for sure and has its own set of problems (some mentioned previously) but the cashflow aspect is night and day from long term if it's run well. I was happy to make $150 positive cash flow on a long term rental (units with a mortgage) but when the tenants leave all that gets eaten up in rehab/turnover expense. So long term is get rich REALLY slow. Short term the properties stay in mint condition virtually all the time, the maintenance is half of that in long term (biggest surprise to me), all of the legal headaches of long term are gone ( no evictions, bad checks, collections, security deposit disputes, etc.).

Nobody making meth in the bathtub, no tenant not cutting the grass, no cars on blocks in the front yard, etc.
Short term rentals force you to be a good owner meaning you cannot defer maintenance else you risk bad reviews and then you are out of business. BUT it is a TOTALLY different business model and STR are hospitality 100% so if you aren't into the details then it may not be for you.

Non-vacation areas mgmt fees are 20%-30% of revenue vs. 7-10% for long term. Vacation areas can go higher for short term obviously to offset for seasonality.

Doing an LLC for each property is too expensive and too cumbersome in most states but is just fine until you start to accumulate lots of properties. Personally I hold my 40+ properties in individual land trusts (1 for each property) and then one of my 12 LLC's owns beneficial interest in each land trust but thats spread around (i.e. 1 LLC owns beneficial interest in 4 land trusts, 1 LLC owns 2 land trusts, etc.) but its based on risk, value and exposure. Trusts are free to create and regardless of how many LLCs you have owning in trusts has LOTS of advantages (privacy, circumvents probate, etc.) You still want the LLC in there to "own" (beneficial interest) the trust for legal protection but it works really good and I've been sued multiple times over the years and nobody ever touched anything I owned. It would take an hour to explain why you want things done in a certain way using trusts and LLC's but for sure in my opinion it's a great way to go. Everything is about your risk tolerance and your exposure and your assets. If you only have one property then don't get tripped up on complex asset protection schemes just buy property! The more you own, then the more you have to lose so its a gradual thing where you add in layers of protection as you grow.

Minut multi sensor (but mainly for sound levels for us), zwave everything (door contacts, yale locks, thermostats, water leak sensors, temp/humidity sensors, garage door controllers, garage door tilt sensors (to see if the door is open/closed), security cameras covering all exterior entrances plus the driveway, zwave lights switches to remote control lights on exterior security floods and/or certain lights inside the property, some type of doorbell cam, zwave motion sensors, Samsung Smartthings hub, wifi smart plugs for certain devices inside...and the list goes on.  You can spend a little or a LOT just depends on how much visibility and control you want to have.

@Pablo FloresMinut is only indoors, batteries take a long time to charge but they last like 4-5 months for us. Works very well. 

@Sean McDonnellWe have 3 sets per bed now and carry one to the unit with us and strip everything and bag it up to be cleaned off site by the housekeepers. I've been paying them a small amount to do that (not enough).

@John Underwood Yeah relying too heavily on any one company or person is my worry as we scale. I think I'm inclined to give 5-6 houses to each person/team/cleaner and that becomes "their baby" and then just split revenue on what the unit brings in net profit. This way I get their interests aligning with mine. Just gotta figure out that percentage!

@Boris Mordkovich I did look at one linen rental service but I didn't crunch the numbers 100% so I guess I'll revisit that. I think for getting them too/from places I can use runners or task rabbit or services like that.

@Matthew Swearingen I'm lost here...how exactly are you figuring your desired return to determine that you can only get 1-1.5% return? 

I only have 10 listings currently but my goal is to ramp this up pretty rapidly towards 50+ units and I can already see housekeeping and linens being my #1 stumbling block. 

Linens: We do houses not apartments for the most part so there is no washing the linens in the unit option; there's just no time between guests during a turnover. Right now the cleaners take them home to launder and maybe that's the scalable solution but I pay them extra for that and they still hate it. Commercial laundries and even local wash and fold places work but they're expensive and they could care less about getting stains out it seems and that's a big thing to save on linens.  I've even considered putting a bunch of washers and dryers in a house I own and paying someone there to just wash linens all day. Any ideas?

Housekeepers:  This one is critical because finding people to clean is easy but as you know this is SOOOOO much more than just cleaning. It's staging, it's minor maintenance, basic property care, etc. so getting someone and training them on the way it has to be done is a big process and it seems hard to scale because right now I have 2 cleaners which is great but what happens when I have 8 checkouts on the same day?  Right now we struggle with 5 same day checkouts. Houses just take a LOT longer to turn than a small 1BR condo. Any ideas or wisdom?

@Kevin Boyd So I would agree  with you that if you can't get anywhere then arbitration is what you need to do. I honestly think that before you go that route you work the leadership resolution route.  Right now Airbnb has turned the corner and realized they have f*cked over too many hosts and that is going to cause them major problems moving forward. Write out a well documented email (minus the bitching and complaining) to their senior management team first and see where you get. You always have arbitration as a last resort. I've had luck doing the same and I can now that see that like most things in life it's all about who you know. Get to the right person and your problems disappear at Airbnb.

Off subject but slightly related...One of their head resolution guys told me that if I mention the word "safety" in any resolution that it immediately gets reviewed by a special team of people and things happen at light speed in the company right now in regards to "safety" issues. This is coming from a host who had a 4 person shooting/double homicide happen at one of my units so I'm talking from some experience.