Shawn Moore - Lifestyle Freedom Through Vacation Rentals
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"Dad, you should sell real estate in Hawaii!". As a suggestion from one of his kids, it was at this moment on a family trip in Hawaii, that an idea grew. Instead of having to go back home to the lower 48 states to sell real estate, what if you could go where you want to go AND make money at the same time? Today Shawn Moore runs Vodyssey, the #1 vacation rental investing education company with the goal to cut through the noise and help you find success managing profitable vacation rentals yourself. He's helped people acquire over 1,000 properties in the past 2 years and is also the host of the Vacation Rental Revolution podcast. Learn some of the top ways that Shawn helps people identify markets, review pricing, occupancy, and start building the life they've always wanted through vacation rental properties.
In this episode, hosted by Mike Swenson, we discussed:
- Customer experience is the key in the hospitality space.
- Real estate allows the average everyday person to build wealth and financial freedom.
- You can choose your own adventure in real estate.
- Building a passive income stream gives you freedom.
- When you have a larger passive income, there will be more opportunities.
- The ratio between acquisition price and revenue potential determines whether a market is good or bad.
- You have to understand how to underwrite a deal to have a good cash flow in buying property.
- Occupancy is understanding the seasonality and demand.
- Start with the areas and properties that you love when picking a location.
- You can make way more money by creating unique experiences to market to.
Timestamps
0:00 – Intro to Shawn’s Career
1:30 – Vacation Rental Space Background
8:09 – Passive income vs Flipping Game
9:38 – Choosing your Own Adventure
11:46 – Passive Income Stream
14:05 – Vacation Rental Market
18: 34 – Shawn’s Top Tips
23:59 – Customer Experience
32:51 – Financing Properties
35:12 – How to find Shawn
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Full transcript here:
Mike Swenson
Welcome to The REL freedom podcast where we inspire you to pursue your passion to gain time and financial freedom through opportunities in real estate. I'm your host, Mike Swenson. Let's get some real freedom together.
Mike Swenson
All right, welcome everybody to another episode of The REL freedom podcast where we talk about building wealth and gaining time and financial freedom through different opportunities in real estate. And so today, we've got Shawn Moore on, and we're going to be talking about vacation rentals. So Shawn is the host of the Vacation Rental Revolution podcast, and the Founder of Vodyssey, which is the number one vacation rental investing education company in the world. And your goal is really to work with people help them understand the investment of what they want to do, you've got over 1000 acquisitions in the past two years for vacation rentals.
Mike Swenson
And so it's about the education, making smart decisions, and also making money as well. So I should add that in addition to working you spend time with your wife and two kids, I love your introduction to your podcast with your kids during the intro. That's awesome. And so you just love being able to disconnect when you're not connected. And so excited to hear more about that as well. So thanks, Shawn, for coming on the show. We're excited to have you.
Shawn Moore
Awesome, Mike, really appreciate you having me and really excited to chat with everybody listening to us. I know, their time is valuable. So we appreciate them spending it with us.
Mike Swenson
Why don't you just share a little bit about your background, kind of how you got into the space and particularly the vacation rental space?
Shawn Moore
Yeah, yeah, so I'll get the real short version. But I've been a full time real estate investor for 22 years never done anything else other than full time real estate investing. So I've been around the block a little bit and started off originally in the fix and flip game, I actually did one wholesale deal that got me some capital and then started buying properties, fixing them up and selling them did that for a long time. And started to realize, in fact, I remember back when I was in my 20s doing this and thinking that I was a big shot. And we were fixing and flipping a number of homes in my area, we were one of the top fix and flip companies in the area. And in Real Estate Investing Club meeting, a guy named George put his arm around me and was like, hey, Shawn, you're you gotta quit calling yourself a real estate investor, you're not a real estate investor.
Shawn Moore
I'm like, What are you talking about George, you know, he, he was hurting my feelings. My ego was shot. And he said, you have a job fixing up houses and you get paid, and then you do it again. And so he explained to me that the holy grail of real estate is passive income, you've got to buy properties, invest in properties that create passive income for you. And so that was my like, eye opening moment that okay, maybe I need to start thinking about some of these long term investments. And at the time I, the most obvious for me was single family long term rentals. And we started building a portfolio of single family long term rentals. And this was in the early 2000s. And when you could fog a mirror, you could get a mortgage. So we were my wife and I were able to get 52 properties in a matter of two years.
Shawn Moore
Like it'd be much more difficult to do that right now that we were actually able to get mortgages on that many properties and built a nice little portfolio of single family homes in our area, lived in northern Utah. And so, but at the same time, I was only making about $3,500 a month at the time. And I remember thinking Nana, I'm averaging about 35 to $40,000 per flip. And so basically a year's worth of income on my rentals, and I just never got excited about it had him for a couple years, finally decided hey, listen, I it just it's it's not enough to keep my interest and really short sighted one of the worst decisions we made. We sold them in 2005 We had some really nice equity I looked at you know, three years later, I thought it was a genius because we sold them close to the top and but it was really probably still even looking back my worst decision because some I had 52 homes that somebody else was paying the mortgage on.
Shawn Moore
We were cash flowing, they weren't that difficult to own and but I got rid of them all and at the time we started you know getting back into development deals build jobs, those those one time the like the cash like the it wasn't passive income, but it was given me big lump sums of cash to go do another deal and we would just keep doing that. And I started to realize again that this is not you know, there's nothing passive about what we were doing in Georgia is right I mean, the more and more we built the more and more we hustled there was really nothing passive. And you know fast forward a few years there's a few things that happen but we started getting introduced to the hospitality world the really high end resort side of life. And I started to my you know, in about I had a property in 2006 that we bought as a as a vacation home right we bought a second a second home vacation home.
Shawn Moore
And when everything started sliding in the during the you know during the last crash that we had I started this property was producing really well we started renting Get out. And you know, it was short term rentals were nowhere near as mainstream as they are now. But people were still renting cabins and vacation homes and this cabin produced really well. During that time. Again, I was still not quite ready, like we weren't ready to jump into this game full time. Fast forward a few more years, we had, we had our kids who you mentioned, we had twins. And I started to I was working on a development deal. And we always go to Hawaii for their birthday. And we were on the beach in Hawaii, and I was on working on a development deal. And, and I think I don't even remember what the conversation was, I was visibly, like, distraught and frustrated with the conversation. And my son is four years old, and he grabs my hand, he's like that.
Shawn Moore
You should just sell real estate in Hawaii, if it's if it's that stressful, you know, basically at home is he's like, You should just sell it here. And I'm like, Okay, well, that's, you know, from a four year old, he's like that, you know, everything's fun in Hawaii, because we're on vacation. But it really actually started getting me thinking, what do I really like about what I'm doing? What do I love about real estate and I love two things. One, I really love investing in properties. And two, I really loved when we were exposed to the resort side of life, when we were doing those big high end developments, and they were second homes, vacation homes, and I started to my wheels started spinning same and I had a vacation home that was producing really well, even during one of the worst slides in real estate. And so that's when really Vodyssey started to come, you know, as a like, Okay, do I really want to dive into the short term rental game, and that was in 2011.
Shawn Moore
And that's when we, by 2012, we dove, you know, all the way into the deep end into the short term rental game, and really started to take this asset class seriously, as its as an its own asset, like and treating it as its own asset class within the real estate world as a long term investment, right. And so, again, that's when you know, Airbnb started to gain some traction, still not fully mainstream, still kind of the wild, wild west back then, when we were doing this, but it allowed us to dive into the game, figure a lot of things out, buy some properties. And when we were doing that, we started having a lot of other people say hey, how can you help me do this, and I never even thought of coaching, right? never even thought of, of having what Vodyssey is turned into today.
Shawn Moore
That it was that's where we kind of got started and what led us to short term rentals, then we just started to realize, man, as we start to really understand this game and figure it out and refine this process. It's a pretty powerful asset class. And just like any other asset class in real estate, it short term rentals have their pros and cons, right, there's not a like for us, it checks a lot of boxes, we love them. But you know, it doesn't, you'll never hear me talk about about multifamily or development or single family rentals. I love real estate in general, for what it allows the average everyday person to do to build wealth and financial freedom, I just happen to really love this asset class for ourselves.
Mike Swenson
It's funny, because doing interviews with people, you see some certain themes that come out. And typically one of those themes is around the passive income versus the flipping game. And some people, you know, realize, hey, I can make a lot on flips. And I can funnel this into passive income or they get burned out because they realize there's there's just a continuous hustle that has to happen. So it's interesting to hear that. And then the other thing that jumped out at me was what your son had said to you, I think a lot of times people feel like, if I'm chasing what I want to do, it has to fit in a certain box. And that box isn't necessarily like the perfect situation. And in your mind, it's like, yeah, I can do what I do in real estate and do it in an area that I love doing it.
Mike Swenson
And you can line up, you know, it doesn't have to be work, when the asset class that you're pursuing is the stuff that you want to do the enjoyable stuff, the sexy stuff, the fun stuff, like hey, Hawaii, that's awesome, you can actually do that. And that's what I love about being in real estate is you can choose your own adventure of where you want to go and stuff slowly morphs over time. So you know, you may need to get experience in one area to do something else and it opens up a different door and a different spot but it really allows you to build the future that you want to build and you can work with the type of property that excites you, you know, instead of feeling like I have to do multifamily, because that's what everybody else does. Or I have to do this thing because that's what everybody else does. I have to do flips because that's what I have my past experience and you can really just take all that knowledge and experience and go plow it into something else and hit UNLOCK that next level in your career.
Shawn Moore
Love it in your to your point I love that when you say just kind of real estate can really kind of be choose your own adventure. And you know, like we talked to people all the time where I tell people hey, listen, my portfolio doesn't have to look exactly like your portfolio you know we you can. Real estate is such a large ocean to play in and there's lots of different avenues and lanes. You can go down, figure out what you love. Figure out what your property goals are, figure out where you're starting from, and then figure out the asset class that makes the most sense for you. And because if you're going to do something for the long term, for me, like I tried owning the single family rentals for me, I didn't, it didn't excite me, I know I have one of my best friends who loves single family rentals, it excites him, and he, he has a great portfolio, and he's able to stick with it long term, if you're going to build a portfolio for the long term, it might as well be something you're interested in, right.
Shawn Moore
And so because you're going to, you will stick it out, you will, you will actually get to that, you know, where the asset maximizes, and it actually matures, and you actually start to see, you know, what, what a long term investment can be when somebody pays it off for you, and it becomes this, you know, this great, you know, mailbox money, what they call her that that Holy Grail, and we talked about that passive income, but it can there's, there's lots of, you know, lots of avenues you can run down. And that's what's so fun about real estate in general,
Mike Swenson
thinking about the passive piece, you know, I, I grew up on the agent side, you know, doing residential real estate, and it's like, for those people in that space, every year starts at zero, you know, I had production last year. And I either make money by doing more deals, larger deals, or more money per deal, those are really the only three ways you can leverage your income or grow your income. Now that you can have people around you, but but January one, you're back at zero, again, in terms of kind of your annual production production. And so you can continue to pursue that and find ways to have passive income as well. And then either you can choose to grow both paths, I kind of say you've got your active path path and your passive path. Yes.
Mike Swenson
And as your passive path grows, you can either choose to do less active, or you can choose to do the same and just push both down on both gasp paddles, and decide at some point you want to be done. And so that's the beauty of that of building that passive income stream, it now gives you freedom, it gives you choice, it gives you the opportunity, or if life throws throws a curveball at you and you need to take six to 12 months off of work, you have the ability to do that, when you've got that passive piece there as well.
Shawn Moore
Exactly. And you and you hit it right on the on the head, when you said you have the choice, I always tell people, we, you know, the goal is to take our active earned income and create that passive income. And many times it's not that like when we when we go through this with a lot of our students and a lot of people I talked to is saying a lot of people are a lot closer than they think to financial freedom right to getting their bills paid. A lot of people have an arbitrary number in their head, like I need x millions of dollars, or I need X amount of money per month. And a lot of times if they really look at their bills, a lot of times you can hit financial freedom a lot sooner, if you're disciplined to take that active income and create that passive income. Right. And then to your point, most people that you know, like most people that I know, that are financially free and financially independent, that could take six or 12 months off and their bills are paid and they're and they're making money.
Shawn Moore
Most of the time there they've got they've gotten the pedal down on both sides, they're still wanting to they still work on that active income side and they're not looking to retire and sit on the beach and sip margaritas right there. They're going to continue to build that passive income because of the and then the larger that gets, the more opportunities you have. And the more choices you have. And the options, you have to decide what you want to do. Right, you end up now. Now I don't have to go to work. I'm doing it. And I'm working because that's what I want to do. And I'm driven to continue to build this.
Shawn Moore
And that's what you see more often than not, I don't know if you get this question very often, Mike, but I get this all the time. It's like, Well, if you've if you've done this and you have this great portfolio, why do you keep working? Why do you keep doing this other thing, these other things? Well, almost everybody I know that is financially independent continues to work because we it's we like the game we'd like to continue to build we'd love to, we'd love to keep taking that active and turning it into passive that's pretty fun. Once you learn the game.
Mike Swenson
Let's dig in a little bit then to kind of the vacation rental market here. So I'm coming to you, Hey, I've always thought about getting in doing a vacation rental kind of where do we get started? Help help point us in the right direction here. Yeah,
Shawn Moore
awesome. And I love it because that's where a lot of people are at, right? Hey, I thought about this. And what do I do next? Like how do I get comfortable writing a check, right? These are big purchases. Something I thought about something I want to do. One I always tell people first of all, I usually will tell people start with your start with the top three bills that you want to because it's always nice to know what you're doing it for tops, write down your top three bills that you want to replace because what I always look at us like let's simplify it down to let's take let's buy one asset that replaces this bill and then let's buy another asset that replaces this bill. So I always like to start with no one know what you're trying to pay off know what you're trying to do because sometimes it simplifies the process a little bit. Next, let's decide. In our case in vacation homes, I always tell people, regardless of whether you think the markets investable, regardless of whether you think it makes sense or not, tell me the top three markets that you would love to own a vacation home.
Shawn Moore
Because one thing we understand you're about to see is there's good properties. And there's bad properties. In almost every single market, what we have to understand is actually how to underwrite these deals. And there's a lot of data tools out there we use air DNA. But even air DNA has its, it's got its pros and cons. And there's a lot of you have to recognize not accurate data, you have to recognize bad data, right. And so there's a lot of ways that you have to dive into and we extract some of that data, but there's a lot of moving parts. And so what's more important when somebody somebody will say, well, Shawn, tell me what the best markets are telling me where it should go, I said, don't worry about that, I'm going to show you how to recognize a good property in any market by understanding the underwriting. And so start with an area you would love to own a home.
Shawn Moore
Because if you if you could have two or three homes, and they happen to be in areas you love, one, you're going to stay interested for the long term one because you you're proud of your portfolio, you know, it's kind of an ego boost a little bit like, Hey, I've got I've got my lake house, I've got my Mountain House, whatever it is that you like. But then also, if we're not chasing the best markets today, because these markets at the top, it's like musical chairs, the minute one markets at the very top bunch of people go there, prices go up. And what makes a market good or bad is, is the ratio between the acquisition price and the revenue property generates. And so as people flooding the market acquisition prices go up. And typically, it's a race to the bottom as far as as far as nightly rate.
Shawn Moore
So revenue goes down a little bit in those markets, and everybody's trying to get their fair share, well, your slice of the pie just gets smaller and smaller. So I always, I always really, really encourage people before you dive into this, tell me where you're at, tell me what you want to do, where you'd like to go. But then really understand how to underwrite a good deal. And you have to understand what the profit drivers aren't an area, you have to understand nightly rates, occupancy. And it's not always i Another thing, that's a misconception in short term rentals is if If an area is really seasonal, and let's say you, let's say it's mainly, you know, summertime, Memorial Day to Labor Day market, and then there's a little bit of action outside of that people will say, well, that's not gonna make sense, because I don't have revenue all year long.
Shawn Moore
One of my most profitable properties that I own, it get, we get about 30 to 35% annual revenue, because we only were on we only get Memorial Day Labor Day. I mean, it's it's a really short season. It's up in the mountains by Yellowstone, it's a lake house. And so I mean, hell, there's still snow melting and Memorial Day. So it's really like a three month season, where people come in to rent that lake house. And it's really, really profitable, because the nightly rate in that area during that peak year during the peak season are really high. And so we make up a lot for those market for that for that type of an area. But that's just again, it all goes back to the underwriting on the deal. So really, like don't just say, Okay, I'm gonna buy in Destin, Florida, or I'm gonna buy in, you know, Gatlinburg or the Smokies because I know those are hot markets.
Shawn Moore
There's great properties in those markets. Don't get me wrong, and I love those markets. We have a lot of members who own in those markets I own in those markets. But not every property works. You have to understand how to underwrite a deal so that it's possibly cashflow positive when you buy the property.
Mike Swenson
So how do they walk through that analysis? Then what what what are some of your top tips there for okay, I've identified that market that I think makes sense for me, I'm excited about it. Where does that next step of research go?
Shawn Moore
Yeah, for then it's understanding you're going to understand or or get an idea of what your what your average acquisition price is going to be? Right? And so we need to kind of know where we're, what we're going to be spending, just go on Zillow look at if you're thinking a three, four bedroom, right, just go on Zillow, and look at three or four bedrooms in that market and see what your ranges understand what your range is, because there's really three things we need to know we need to know the acquisition price, we need to understand the average nightly rate for that property type in that market. And then we also need to know the demand, which is a is a function of occupancy. What can be a little, what can throw you off a little bit on aka on occupancy is that's really understanding the seasonality and the demand. We look at it as a function of occupancy, but you have to understand the relationship between those three things acquisition price, average nightly rate, and then occupancy.
Shawn Moore
And it can make it can get a little complicated from there because like, for example, when I do an analysis on a property, it will take me about 45 minutes and I've done 1000s of these. So first time you do this, it might take you a couple hours. If you're not diving in where it's taking you a little bit of time to pull this data, put it in look at it because we're we're really looking at a very good granular level, those, add those three things. And then to decide if this is a one if it's a viable market for that acquisition price, and really what that ultimate revenue, that annual revenue as a function of average nightly rate and occupancy for that property type, how does that look versus the acquisition price. And I'll give you an example a lot of people don't, in long term rentals, you kind of hear about the 1% rule, right? Like, okay, if I buy $100,000 property, I pretty much need to have an average monthly rent of $1,000, we kind of have what we look at as a 10% rule.
Shawn Moore
So we're looking at about 10% of the acquisition, for the of annual revenue, our annual revenue needs to be gross revenue needs to be about 10% of our acquisition in order to break even, that's about our breakeven mark. So if I'm buying, if I'm buying a $500,000 property, my I have to I have to generate $50,000, in gross revenue before I even start to make any money. And so once I understand those numbers, and how to get that revenue number, now I can start to analyze, does the market have potential versus does the each individual property then I have to figure out if it has potential, so there's layers that you kind of step through, when you when you start to when you start to dive into if one if a market makes sense, based on the average acquisition price and the average revenue, then we get really granular on specific properties.
Mike Swenson
And another thing, you know, just things to highlight too is, you know, looking at it income expenses on an annual basis, right, because you had mentioned you've got seasonality. And so now you had mentioned a tool, like err DNA. And so because I know for people are like, gosh, I don't even know where to get started. That's a great tool to get started. Because it gives you some entry level data, you can certainly go in and buy deeper data. But that's where you can start to see those average nightly rates and, and that and then to I mean, going on
Mike Swenson
Airbnb and VRBO. Looking what's out there, just like in long term rental spaces, you know, you go on Craigslist, or apartments.com, or different things like that to see like, what are people charging, that's what's out there, it's it's kind of the same thing, at least it gets gets you started. And you can see if it's viable. And then yeah, if you want to dig deeper, you can certainly spend as much time analyzing data as you want. Yeah,
Shawn Moore
yeah, for sure. At some point, you have to make a decision, right? The data is never going to give you a for sure you do this or force like I mean, a lot of times for sure you don't there's if the numbers don't make sense as negative but also, you if you are going to dive in, you definitely want the paid side of error DNA, you definitely want to understand because even like we you have to get down to you know, what is the market look like for two bedrooms versus a five bedroom like it might be a market that the smaller homes do a lot better in that market than the large home so you really analyze the market, bedroom by bedroom.
Shawn Moore
And then property type by property type so you can start to get because a two bedroom, standalone home is going to bring in and different nightly rate than a two bedroom condo. And you know your distance to the amenities. If it's a beach town or a ski town or something like that, you know, if you're one or two rows back all the sudden your your revenues takes a significant dive if you're beachfront, it takes a significant increase. And so it's all those different things you're looking at, and using those tools that are available, because they're out there and they're available.
Mike Swenson
Another thing that I know that that's helpful for folks is, you know, understanding that when we're pursuing the short term rentals, your mind is really in the hospitality industry, right? We're, we're not landlords, we're not property owners. In that sense. We're hospitality and you have to think hotel, you have to think high end experience, creating the good experience, great customer service, responsiveness, repairs, getting all over the top of that kind of stuff. And so it's, it's a totally different mindset. So if it's somebody that's owned rental properties in the past long term rental properties, I do have to flip the switch here and make sure that I'm thinking high end customer service experience. Absolutely.
Shawn Moore
And you've said it a few times. It's all about the experience, customer experience is key in the hospitality space. And that's what you're selling. That's what you have to articulate. And that's what you have to deliver. I always tell people when you look on Airbnb, most of the most of the listings on there, could you could take them right off Airbnb, put them on Zillow, and sell a house. That's not how an Airbnb listing should be set up, you know, it should be able you should be those two listings should look completely different. And that's what's kind of fun about this game as well as in the long term space. There's a market rent and you can go on like you said, Craigslist and stuff, you're gonna find that it's pretty close to the same like if you and I both owned a duplex in the same town, we're going to be getting about the same market rent with short term rentals. It's very different.
Shawn Moore
The range Yeah, between what you know, even if we were next door neighbors on the same lake, it's really likely that one of us could be making double the money the other person is making because they understand the hospitality game they understand how to articulate and put Got a great experience how to stand out in these markets. They're, they're like little businesses. And so that's a, I believe it's a huge Pro. And I love it because of that, because I love that. But that's also one of the reasons that some people it might not be a great fit for if you have no interest in that, you know, you might be better off with a long term rental or a multifamily or commercial deal, because it's a lot more cut and dry. You don't worry about that nearly as much. It just isn't. It's a different game. It's not you're not in the hospitality game, you're not in the experience game.
Mike Swenson
For people that aren't thinking about premium aren't thinking about quality. They're thinking I'm competing on price. And when I'm looking at, you know, different listings, or let's just say it's 100 bucks a night, like, Oh, if I charge 95 A night, now I'll get their business, well, then the person that's charging 100 sees you charge 95. And then they think, Oh, if I just go to 90. And we always said, you know, back in the real estate agent space, when you compete on price, it's a race to the bottom it is and so that's where you have to, once again, change your mindset, I'm not looking at low price here, I'm looking at quality experience and premium that I'm charging for my space. And that's where you have to continue to think about how do I deliver a premium experience versus how do I look like everybody else and try to compete on price, that's just not going to work? Because if not, you're gonna get, you're just gonna get knocked out.
Shawn Moore
Yeah, and it's a race to the bottom. Dan Kennedy always says if you can't be the low price leader in your industry and make money, then there's no reason to even try to be a second low price, because everybody's just gonna race to the bottom. If you're not your Walmart, in your industry, and you can sell lower than everybody else, then you better start to figure out how to operate at the top and in in our game, the short term rental game. That's all about the experience and the customer experience. Let's talk about
Mike Swenson
a place like Hawaii as an example. Talk about the fun experiences some of the nice properties that you've helped folks buy or maybe not Hawaii, but another great community. I want people to hear about the the cool the cool side of what's happening here. And when you do it well. What does that what's what doors does it open for you?
Shawn Moore
Yeah, well, let's go back to that property. I was telling you that we only had 35% occupancy. It was it. It was a cabin, right on Henry's lake by if anybody's familiar with by Yellowstone National Park right outside of West Yellowstone. And it's I mean, Yellowstone is a major profit driver. Most national parks are major profit drivers, lots of people coming in and out of there. And there's there was a lot of really nice cabins on the lake like my next door neighbor had a million dollar cabin right next door to us. Beautiful cabin, arguably maybe better than my cabin. And in the way that we decided to develop an experience for that was we're also we're on a lake called Henry's Lake, which was a blue ribbon, trout fishing lake and I love to fly fish.
Shawn Moore
And we're right in the middle of you know, you know, we're we're 20 minutes from five blue ribbon, you know, world class trout rivers, the Madison the Yellowstone like you're right there for like, it's like a fly fishing Mecca, the South Fork of the Snake and the Henry swore. So for us instead of doing instead of just having a nice cabin, 10 minutes from the gate to Yellowstone in a great area like everybody else had and kind of in trying to appeal to everybody. We decided that we were going to go after fly fishermen. And we were going to set and experience the customer experience was all going to be about fly fishing. That didn't mean that it was just a fly fishing theme. What we did is we set our property up so that fly fishermen coming in had an amazing experience I had waiter drying stations, we had a drift boat that they could use that so they didn't have to go rent one. We had rod carriers fly fly rods are 10 feet long.
Shawn Moore
And they're they're hard to travel with if there unless you take him down every time. Well, if you're fly fishing and you're going from river to river, it's a pain to take him down every time. So we had magnetic fly rod holders that would go on top the top of any vehicle that they would have when they checked into my property. They got a handwritten note from me with a map that I actually went through and I'd highlight areas on the map and I would say okay, this is my favorite spot on this river fish behind this log. I also had a custom fly box with my favorite flies that were all tied and ready for them to go for the area and the time of year that they came in. And so when somebody came to our property, and they were there to fly fish, they would say Okay, listen, I go to Shawn's property of God. He's got everything mapped out for me. He's got his favorite flies, I don't have to travel with a lot of these things. I don't have to put on, you know, when when waiters at day two.
Shawn Moore
So knowing that group, and I always tell people, you should be part of your target audience, when you set up the experience. It's really difficult to set up an experience for somebody that you don't understand. And so I always tell people, that's why I tell people start with areas and properties that you love because when we get to the marketing section where you actually make your money and you actually set these unique experiences up. It's it's much easier for you to be a part of that group. I get excited about fly fishing. So that entire property, when they went there, it was built it was put together and that was it was it was Laid out just for them. Right?
Shawn Moore
My next door neighbor's had just as nice of a property. But it was, it was kind of, okay. It's a beautifully furnished property. But nothing, you know, they have it didn't have all these little extras. Now, every one of those extras I just mentioned, it didn't cost me a whole lot. It's just it I was I thought out what would the experience be like if I had to if this was here? Well, our property was a waitlist only property, our average nightly rate was $1,500 a night my neighbor's average nightly rate. And this goes right back to the conversation we had a minute ago was that you were averaging just over $600 A night.
Shawn Moore
So we're more than double their average nightly rate? And you're like, Well, why would somebody pay more than double to stay in your property, I store my name. And the people who visited my property knew that they could go to my neighbor's for less. But they didn't. People are willing to pay for that. So that's a good example of, of taking one property, thinking about the customer experience, putting it in play, articulating it through your through the marketing and everything else, and people are willing to pay more for that. And it helps us maximize those assets.
Mike Swenson
Yeah, and if you think about the guests, I mean, they catch a nice fish, they're posting about it online. Oh, awesome trip, where did you stay? Oh, hey, let me send you the link. Boom. Now it's just you've created a marketing funnel. And, and, and you're gonna have repeat people, because when they have an I mean, the fishing group is the type of people or if they have a good experience, they're going to want to go back there again, they're not going to go check out another spot. Because if they had a killer experience, and they caught some great fish, you want to go back to the honey hole and have have a great experience again.
Shawn Moore
Yeah. And why would you roll the dice, right? None of us want to spend that kind of money, whether you're spending $1,500 A night or $300 a night, if I know, I had a really good experience somewhere, I'm coming back. And that's what that's really where I love short term rentals, because it allows us to by the time you hit about that 18 month to 24 month mark, you really start to gain your stride because you're starting to get those repeat customers and they're getting that that list of repeat customers is snowballing large enough that it makes a significant impact impacted the bottom line.
Shawn Moore
And so that's the it's it's all about that game of saying, Okay, how can I take this asset? How can I understand how to market I start to gain some traction, and then all of a sudden, these properties become self sufficient, because you're starting to get all these repeat customers that start to book out your property. And when I say it was a waitlist only property, that's because, you know, four or five years in, we're not even marketing anymore, we're only we're only getting repeat customers.
Mike Swenson
And for those folks that may not understand to when you're out on those big platforms, the platforms charge a fee, if you can go directly booking through you now your money. So absolutely. What are some other tips that you have for folks things that are you know, hey, if I'm thinking about getting started things that I need to make sure that I remember, what about financing properties? Kind of what what do you have to say about that?
Shawn Moore
Yeah, that's a great question. So one, there's, we are seeing more and more short term rental specific lenders come into the game. And we're starting to see I know if anybody's familiar with like commercial lending, multi big multifamily lending, it's more asset based lending, right debt service coverage ratio type lending, where the bank will actually look at the asset rather than the borrower to see if it can cover its own cover, the mortgage REIT does, it doesn't produce enough, what's really fun about this space, we're getting more and more lenders popping up and coming into this game saying, Okay, we're, we're, we want to be in this asset class, and we're going to come in as a lender, a lot of institutional money comes in, as lenders, and they're asset based lenders.
Shawn Moore
Now, they're, it's not a No Money Down game, I will say that, like we, we really focus on ownership, and, and I don't, in my opinion, I we tried to put money down and you're gonna be anywhere from 10 to 25%, down, depending on how the property under REITs. But it's, you're going to have some skin in the game, you're also going to have some skin in the game with the furnishings in the setup to develop that experience, have the nice furnishings, all that stuff. So when you budget getting into this game, just budget around 20, to 30%, down into whatever whatever acquisition price you're getting into, budget that in so that you don't bite off more than you can chew or you don't you know, you don't get into the game. And then you're a little short when you have to go set the property up. Because then all of a sudden, the customer experience goes down and all of a sudden when that goes down your revenue tanks, and now all of a sudden you're not producing what you thought you were going to produce.
Shawn Moore
So one of the things I always do tell people is, this isn't one of those games that that works really well on. You know, you can do it on a budget. There's no question. You don't have to have millions like we have members that buy $150,000 houses that do awesome, right? They're not these luxury beachfront homes, and they do great as far as their return. But you do have to budget some some downpayment, money and some setup costs and it's going to be anywhere from 20 to 30%. For folks that want to learn more about you how to do so. Yeah, no, yeah, if you're thinking about Getting into the short term rental game. We love talking to people about getting into this. If it's something you've thought about, we understand it is a big decision. I know we talked to so many people about that say, man, I've thought about this for two or three years.
Shawn Moore
And I'm always like, well, you know, if you're in that situation, reach out to somebody, and we'd love to talk to you. And you can find more about what we're [email protected] Just go to VODYSSE, why we've got YouTube channel got podcasts, we got free trainings, all kinds of stuff. And ultimately, if you want to talk to somebody, you'll have that option as well. But really, I would just say it's, it's such a fun asset class, we have so much fun with this. It's like I said, it's not for everybody. But if you're thinking it could be for you, don't wait on it, do it. And don't worry about like I always we buy properties and up markets, we buy properties and down markets, no matter what's going on, we're always buying properties. And there's always going to be deals that you can find. And short term rentals are no exception to that to that rule.
Shawn Moore
So don't think about timing markets. Don't think about all the reasons you can't do it. Reach out to us reach out to listen to some other things out there, it's if you're thinking about it, my advice would be take that next step and decide if it's the right fit for you. Because it's a really, really fun game to play. Yeah, that's
Mike Swenson
a conversation we have with a lot of our investors, mostly long term rentals, it's, well, I'll just wait until the market goes down. Or I'll just wait until this it's like, well, the opportunity cost of waiting is gonna far outweigh what you might potentially gain. And so it's more about consistency. Just like with the stock market, it's at dollar cost averaging, just consistently getting into that market, is what's going to help make you money versus trying to perfectly tie in the market of okay, I think the dip is going to come in three months, and then we'll be perfectly perfectly able to buy on that dip. And now we're gonna make a bunch of money, you just gotta get in, get out. And I always tell people to you got to get to step one before you can get to step 10. Well, just to see the fruit of your labor. I mean, you've you've learned a lot over time, but you had to start with that first property. And that's how your second property becomes better. And your third property becomes better because you did the first one.
Shawn Moore
Absolutely, yeah, absolutely timing a market. You will not talk to any real estate investor that's had a lot of success that tries to time the market the least I haven't come across any yet. And I've been doing this for 22 years, the people who are trying to time the market worried about the market. That means you don't understand the game you're playing and you shouldn't dive in to a game you don't understand. There's no question. You want to make sure that you bridge that knowledge gap, get the help that you need to do that. But timing the market is not something you will hear from almost released. I've never run across anybody that tries to time the market when they're playing for the long term.
Mike Swenson
Awesome. Well, thank you so much, Shawn, for coming on. appreciate you sharing and yeah, make sure that folks check out vitc.com and learn from all the awesome wealth of knowledge that you have. So we're so excited for you and best of luck in the future.
Shawn Moore
Thanks Mike. Really appreciate you having me on.
