[00:00:02] Speaker A: This is Short Term Rental Management, the show that is all about short term rental property management.
With your host, yours truly, Luke Carl.
Short Term Rental Management, we're having a winter special 2024, 2025 winter special. This originally aired on the Short term show last week, so you may have already heard this. If you haven't heard it, you need to subscribe to the Short Term show with Avery Carl. She's fantastic and you're gonna love it.
But if you're not familiar with her show, you will hear for the first time the 2024, 2025 winter special. We're gonna talk all about how to get through the rest of this winter and how to prepare for next year. In the world of vacation rentals with Luke Karl, are you having trouble trying to decide which market to buy in? No problem. That's just one of the many live sessions we offer in Short Term Shop plus, everything you need to know about buying and managing short term rentals from anywhere in the world right at your fingertips.
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[00:01:43] Speaker B: All right, Tim Griglio, introduce yourself. He is a very familiar face on this podcast, but go ahead. For those who may not be familiar.
[00:01:51] Speaker C: My name is Tim Grillio. I am also the world's greatest landlord. No, not for real, Lucas, but I live in the Smokies.
It was rigged live in the Smokies and got eight short term rentals and a slew of long term rentals as well. And just love this, love this industry and happy to be here.
[00:02:13] Speaker B: All right, so Luke, do you want to get us started on getting ready for the holidays?
[00:02:19] Speaker A: Yeah. Winter special. Winter special, man. 2025 is upon us, you know, so we've got to prepare for the holidays and get ready for the new season and hopefully a lucrative wonderful season that it will be. Yeah. So getting through the holidays, you know, I mean, honestly with this subject, you should be already done with them in my opinion by the time you hear this recording, you know, your holidays should be rocking and rolling as far as what's left of them anyway with Christmas and New Year's, I like to try and package Christmas and New Year as one deal. I'll write. I'll offer the entire section of that calendar up at basically, you know, the same type of a price and the Same minimum night stay from anywhere, from say maybe, oh, you know, December 17th all the way through the first of the year. And then I wait to see what gets booked and I'll adjust what's left accordingly. So that's kind of how I do it. But at this point, beggars can't be choosers. If you still have Christmas available, it's too late. Christmas does come on a Wednesday this year, so that's a little bit weird. We saw a lot of folks, and I'm sympathizing with you right now, we saw a lot of folks that would get that weekend after Christmas booked like Friday, Saturday, and then ended up leaving their weekdays, which is actually Christmas this year, available for quite a while. Depending on the airing, the time of the airing of this podcast might still be available right now. And it, it is a little bit weird, I'll give you that, with Christmas being on a Wednesday this year. So if you still have that available, I feel for you. But in my opinion, it is time to go ahead and get that rented. Assuming you're in a market where Christmas is desirable, which it's, it's, it's not always, but if you're in a mountain market or, you know, a typical vacation town, then we do need to go ahead and get Christmas done. Like I said, if you got Friday and Saturday booked, it's time to get over it, get over the fact that, you know, Christmas is still available and just kind of creep those prices down because that Wednesday, Christmas is not nearly as desirable this year if somebody else booked that Friday and Saturday. It really needed to be a package deal. But I'm seeing that time and time again right now where people kind of screwed that up a little bit, maybe didn't do a no check in, check out on 25, 26, 27 of December. So it's time to just get over it and get that, get that rented. And hopefully your, your New Year's is rocking by now. We'd like to see that rocking. If it's not, then we need to just get over that as well. And keep in mind that first of the year is again, on a weird day, it's a Wednesday. So usually this type of a holiday season where the holidays end on a weekday, where the major holidays on a weekday, anything after the New year holiday is kind of just garbage. So once you get to the second of the, or even the first of them of the year is a little bit, you know, not that desirable. A lot of folks will be checking out on New Year's day and moving about their business. That being said, a lot of folks will have that day off as well. So kind of weird this year with both Christmas and New Year's falling on right in the middle of the week. So any. Any more thoughts on that?
[00:05:30] Speaker C: I agree with you. I've got. I'm. I'm. One of mine is in that situation. It's actually my biggest, most expensive one. I've got the middle of the week open still. You know, I know this is going to air probably right after Thanksgiving.
[00:05:41] Speaker A: I'm.
[00:05:41] Speaker C: I'm holding out a little bit, you know, kind of hoping Thanksgiving people get together and book that, but if not, I'll be doing exactly what you said there.
[00:05:49] Speaker A: It was a. It was a bit of a weird year as far as those Wednesdays are concerned. I think we're going to get some of that back when Valentine's rolls around, because Valentine's is on a. On a Friday, so that's cool. We can, you know, not generally as nearly as big as a Christmas, but I did fall victim to the. Somebody booked my weekend of Christmas and not my Christmas on at least one or two properties, and we just kind of got to get over that and move on. I think we can just continue with pricing in general as we prepare to get, you know, for the new year and. And get through the holidays.
The holidays are stressful enough, right? How do you get through the holidays? Eggnog. That's how I get. Get through the holidays, I think. But spiked.
[00:06:27] Speaker C: Spiked eggnog, yeah.
[00:06:29] Speaker A: What do they put in that? Is that rum? Avery?
[00:06:31] Speaker B: I don't know. I have to ask Nana. She's. She's the eggnog officiant. I know her eggnog, like, will put hair on your chest.
[00:06:38] Speaker C: So I. I want to hang out with Nana.
[00:06:40] Speaker B: Yeah, I think it is a spice drum. I don't know. That was never really my thing.
[00:06:45] Speaker A: I've made it a few times over the years. Let's Google it. Hold on. We got. No, we're in no hurry. What is egg nog? Go ahead.
[00:06:52] Speaker B: My nana is really more of a brandy milk punch. Like, that's that' drink that she makes to kill everybody with.
So I think it's. Yeah. Great Aunt Emmy Lou that does the eggnog. I'll have to ask.
[00:07:07] Speaker A: Yeah, it's brandy and rum and, oh, typically made of rum. Brandy or bourbon. I was like, oh, man. All three.
[00:07:14] Speaker B: Oh, they're doing bourbon. They're doing bourbon for sure.
[00:07:17] Speaker C: Where I grew up, it was Irish coffees and homemade wine, which was A.
[00:07:21] Speaker B: Weird combination, but homemade wine sounds terrible.
[00:07:24] Speaker C: Uh, my grandpa did homemade wine and they made like 50 gallons a year. It was a thing.
[00:07:28] Speaker A: Yeah. So again, back to our original question. That's how you get through the holidays, right? We're already through Thanksgiving here and Christmas at this point. Gotta go. It's gotta go. So I'm, I'm gonna creep that price down and just, just get it going. Let's talk about pricing as far as the rest of the year, I think, and when I say year, I mean 20, 25. Really get, you know, preparing for the new year. I think it's best to keep your base rate high right now and then just do a lot of manual overrides for your upcoming less desirable dates. I also would recommend you do again, when we talk price, we generally speak in price labs terms because that's what we're most familiar with around here. But there's plenty of options out there as far as your pricing software. So some of these terms will be a little bit price labs geared. But when it comes to the, the upcoming season, the upcoming year, I think it's best to keep your base rate high.
And when I say high, I mean like somewhere in line with April and maybe June and then just kind of black line your way out of the rest of the less desirable dates between now and March 1st. Because March 1st is when things start to pick up again. If you're, if you're on your first season, just be aware that it's going to be dead from now until about March 1st in most markets in America without, with a few exceptions, you know, ski towns in Colorado, maybe super South Florida, deep South Florida, where it's very hot, they will be pretty busy in the wintertime and not busy in the summertime in some cases. But in most vacation town usa, you're looking at pretty dead for Jan, Feb. And so I like to handle that by setting up a custom season where I'm basically creating a new base rate for that period of time. So I'll go in my advanced customizations on my pricing software, create what they usually call a season, and then that will give you a new base rate for whatever period of time you want. And this is a great way to not rely on the base rate on your main page of your pricing software because to have just one base rate for an entire 12 month period is very difficult to do when seasonality is at play and as it is in such most vacation markets and shoulder seasons, et cetera. So most certainly I do like to have a separate season For Jan Feb, I usually just call it winter. And you know, that is an art form in itself where you're going to need to fluctuate the percentage. If you're doing a percentage where you're, you know, you're, you're just doing a regular average base rate price, you're going to need to change those numbers pretty often as that gets closer. So keep in mind that Jan Feb, I like to see, you know, a little bit less about maybe a negative 15% is pretty common depending on what your base rate is. Right. So if your base rate is set for April, May, June, I think your Jan Feb, a good starting point anyway is going to be like a negative 15 for that season in your custom seasons. Anything to add there, Tim?
[00:10:21] Speaker C: I did something a little different this year. It's similar, but different. I actually wiped out my seasons, my winter season just because, I don't know, it's been a lot more last minute the last year or two. And so I like a week ago entered in my summer base rate on all my properties and then I'm black, using black lines and I'm getting pretty aggressive with it up front and kind of what I'm doing is I'm blasting out some cheap days and I'm actually doing some, some weird manual overrides and just putting out some cheap dates and, and as they book I'm, I'm raising up the rest of it just to kind of get it rolling. So. But it's just something I'm trying different this year. So I don't have any, any results from that yet. I have had some bookings in January and February so I guess I shouldn't say I haven't had anything. But that's kind of the way I'm going at it this year is I got summer, summer loaded manual override and then some pretty aggressive manual overrides, you know, in places I think are going to be dead dead and trying to get some action going.
[00:11:16] Speaker A: Yeah, I'm using more black line overrides than I ever have right now for whatever reason. I think a lot of it has with the economy really.
[00:11:23] Speaker C: But I did November that way and I ended up with a record November. My December is not quite where I want it yet, but it's close so. But my November ended up rocking and it was the first one I tried that on. So I'm kind of trying it for January and February too.
[00:11:39] Speaker A: I woke up one day and my calendar wasn't as full as I wanted it to be.
We've all had that Happen and I went in and did a bunch of custom overrides and I was able to get things gone. Now, I did go way lower than I wanted to, but my strategy has always been rear rear ends in the seats. And it worked. I did get them sold, you know, and I look back on it now after that is gone and I'm filled in and I'm happy and I'm functional. And I remember doing that three or four times last year. You know, I think we're definitely moving in the right direction. My gross income 2024, just for my number ninjas out there, my gross income 2024 will be slightly higher than my 23. So we're moving in the right direction. And I do see that Trend Continuing through 25. I'm not concerned whatsoever.
[00:12:24] Speaker C: Yeah, I had a fairly strong fourth quarter.
[00:12:26] Speaker A: Strong fourth quarter, yeah. Fantastic. Yeah. Pricing wise, you know, I think the main thing to keep an eye on right now is June, July. I think a lot of folks are super hyper focused on what's left of these garbage dates and they don't even realize they're garbage. You know, talk about like your Jan and Feb kind of stuff. And super hyper focused on still trying to cram in a good Christmas booking and very possible that you could end up getting some June and July gone for much less than you should have. And that can really start tweaking out your 2025 gross income. So do not neglect the super far and advanced dates. Right now, your June and July should be pretty high.
[00:13:05] Speaker C: That's a massive good point. And also I'm going to tag onto that a little bit as you're rolling into the new year. It is so easy to do what Luke just said where you can, like, you get so focused on filling in your winter, you. You sacrifice some stuff because you're like, it seems like desolate when you're going through win and there's just nothing, nothing, nothing. You got to remember it's going to come back. And I'll say also on top of looking at your June, July, like, pay attention to your specific markets and upcoming events and stuff, I've got some stuff in Gulf Shores and we've got a unique concert coming in. I think it's in May and I missed it on one of them. I've got two properties there. I it booked at my max, which was, you know, fairly high. But as soon as I realized what was going on, I was a Morgan Wall, Morgan Wallen concert coming in. And, you know, I went out and raised the other one like almost Double. And it booked too. So, you know, you can't just like get stuck in winter. I mean, winter's important. You got to be hyper focused on it. It takes more work to get it filled. But don't, don't lose track of what's coming.
[00:14:07] Speaker A: Yes. And to your point, furthermore, I would like to say that there's a perception there throughout the year that gets people in trouble. In other words, this time of year people are, it's too late, first of all. But let's say maybe if you're hyper focused, maybe two months ago there was a period of time where people were afraid to really get into those nitty gritty deep discounts. Tom, discount's not the right word, but low dollar winter prices because we're still riding high on those big numbers. And we're going to go through the same thing here right now where we're sliding, we're finally sliding into, okay, here's the reality of Jan, Feb. They're dirt cheap in a lot of markets. The numbers are super low. And we're going to have the reverse of that where we're going to have a hard time pulling ourselves out of that super low dollar price per night and remembering how much June and July need to go for. You know what I mean? So in other words, it's just, it's just human nature to get comfortable. Oh, here's what my prices should be. Here's what my prices should be. And we're pricing our summertime and we're at 450 a night or 600 a night. And then the next thing you know, it's winter and we're struggling to get $110 a night on the same property on a Tuesday or whatever, you know, so throw perception out the window. Forget about it. You just gotta sell your nights for what they're worth. And they are worth wildly different amounts throughout the year. And as we prepare for spring, one more comment that I have to make. We're obligated to make this comment and if you've heard it before, it is on. It's in our contracts with nobody that don't exist that we must remind you that may stinks. Okay? So as we're preparing for spring, some things we need to do spruce up our property for, you know, bright sunny vibes. We're getting rid of, obviously the Christmas vibes. I'm talking maybe a couple of little decor changes, just little baby changes like new doormats, new oven mitts with a lemon on it instead of a pumpkin, you know, just little Touches like that. And I'm not an interior design type of guy, but I do this stuff. I think it's cute and I think it's fun. Get to Hobby Lobby. Get you a couple things. Send some couple things from Amazon on your to your cleaner. We do have a Black Friday list going on, by the way, on our private Facebook group. If you want to get in there and see what was going on, what you know, this holiday season, hot stuff, but just little stuff for spring that's important as the season changes. And keep in mind that May is not going to be good. Okay? So if you're looking at your calendar and May is priced the same as April and June, you will not do well in May. Your May or March. I missed one.
March, April, June. All right, so May should be lower than March, May should be lower than April and definitely lower than June. Right? And again, this is not every single market nationwide. It's just most markets nationwide. So take a look at your May right now. That's another thing you need to do with your base rate. If your base rate is pumping your May, you're either either your base rate's way off or you need a separate season set up for the month of May. Or you need to go in and do some manual overrides on the month of May. Right now, May should be about 15, maybe even 20% lower than say in April right now already before the end of the year is even here. Okay? So keep an eye on that or you're going to be sorry. May does not get the big numbers. All right? And then also headlines. Do not hesitate to throw in a super early seasonal headline. I think this is huge. I think it's a great idea. Those people that are shopping early, all right, now, there's not that many of them, but when you got somebody that's shopping early, they're going to appreciate that you've got a headline that mentions something about spring special or Easter vacation, you know, and guess what? People are shopping after the holidays. One of the biggest booking times of the year is the two to three days after Christmas. Okay? For whatever reason. There's a lot of reasons. I got a lot of theories on this. One of them is that people are sad that Christmas is over and they're worried that their kids are growing up too fast and they want more family time and they want to get that springtime, that spring break vacation booked. Boom. Another one is maybe they got a Christmas bonus from grandpa or something. You know, maybe they got a couple of bucks for the holidays and it's burning a hole in their pocket, you know. So another thing is it's just over. The, the holidays are over and, and it's time to shift into what's next. And a lot of people get ahead of that. Some people jump, jump ahead of that. And we, we will see a bunch of bookings December 26, 27, 28. And it's never too early, in my opinion, to change your headline to go ahead and talk about, you know, what's coming up. Sorry I cut you off. Go ahead.
[00:19:10] Speaker C: No, no, it's fine. I was just going to jump in. You brought up Easter real briefly there, and I was going to ask is it too soon to talk about Easter? And in my opinion, it's not. It's the Easter was weird last year and I think a lot of people missed that. Similar to this Wednesday, Christmas, the deal. So I'm just going to throw in there on spring, Pay attention to spring break season for schools and Easter because those vary year to year and it can make a big difference in your strategy and how what you want your minimums dated to be in pricing and all that kind of stuff for those, because those matter.
[00:19:41] Speaker B: Yeah, I remember this. This past year in 2024, a lot of the, there were no spring breaks in April this year. Almost all of them were in March. And a lot of times it's like this.
Historically, it's mostly like the second two weeks in March and the first two weeks in April are spring breaks, but they all kind of consolidated like three weeks in March. And then everybody flipped out about April not being good and the world was ending and it was because they just didn't look at when spring breaks were this year. And there's lots of websites where you can find, you know, colleges and high schools. You know, look at the, the states and municipalities that are the big feeder markets into the market that you own in and pay attention to when those spring breaks are.
[00:20:22] Speaker C: And I think in addition to that, Avery, I think Easter was later, if I remember right, or something, in addition to the spring breaks being weird.
[00:20:30] Speaker B: Yeah, it was, there was something about Easter this year. I can't remember exactly what.
[00:20:33] Speaker C: But anyway, pay attention to your holidays. I mean, and on that same note, you know, talking about January and February, you know, don't. It's easy to go and like black line the whole month and just like do manual override or even like your, your, you know, if you do a season but protect, you know, there are some good holidays in there, you know, mlk, Martin Luther King Day and Valentine's Day for sure. You know, watch them again. Know your market because it's not the same in every market. But watch your holidays.
[00:21:00] Speaker A: Yeah, we, we need at least, and I'm talking probably a smaller house here, a three Night Men for MLK and for Valentine's, because Valentine's is a Friday this year. Protect that weekend. Do Three Night Men at least. You're probably really not going to get that. Thursday maybe. Depends on the market in the house. But we want three nights out of that for sure. And you'll get it. You'll get it. Now back to Easter. The weird thing about Easter is that it was in March 2024. It was the weirdest thing ever. And everybody like, it was almost one of these where it just like came and went and nobody even realized it because it was so early March 30, March 31, 2024. And we're going April 20, 2025. So we're talking over three week spread here. I didn't do the math, but it's probably right at exactly three weeks spread on last year's Easter and this year's Easter. So that's a huge deal. You know, we, in other words, we get three more weeks of Easter this year than we did last year. Three more weeks of bunnies on that in the house, you know, but also, I want to mention price labs can't be trusted. We love price labs or any. Let's forget price labs. Your pricing software cannot be trusted. Your pricing software will have some nights, usually right in the middle of April, that it's highlighting as super desirable. And if you hover over them, it'll say spring break. And I'm sitting there like, who's spring break? I mean, it's like one spring break, a random, random spring break. And there's a billion spring breaks in the world. Every college in Georgia has a different spring break. Every college in Alabama has a different spring break. And all of these people are going on the road. They're going on road trips. Not only the kids, but the parents. And so to me, the entire month of April needs to be considered spring break, including the last week of March. Really? So it's the last week of March and the entire month of April. I have no problem again, being the guy that everybody always says I go too low on everything. Those, that five week period, I'm, I'm going high and I'm gonna, I'm gonna do like almost like a mini Christmas strategy there where I'm gonna let it fill in, then lower. What's left over. We sell what's desirable at a high rate as best we can. And then we get rid of the three day old meat.
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Again, I'm going to preach a little bit more here. If you're listening to this and you're sitting here saying, man, these people are going crazy about pricing every single night of the year and, oh, I can't keep up with this. This is too much work, then you're just not cut out for this. We're really, we're talking about listening to a one hour podcast and spending 20 minutes on your calendar is all you need to do. Just dedicate 20 minutes a week, maybe twice a week to your calendar and you will be fine. This is not a massive commitment here, guys. 2025 travelers are predicted to be a little bit on the older side. Avery, you want to go over the statistic with us for us, if you don't mind?
[00:24:20] Speaker B: All right, so 80% of travelers in 2025 will be 45 years and older. Younger travelers are predicted to be down by 11%. So is that due to just the way the economy is? And younger travelers typically don't have as much disposable income as more established individuals. What do you think?
[00:24:40] Speaker A: So, you know, this article comes from a hotel news publication and they're suggesting that travel has gotten slightly more expensive. So, you know, folks that are no longer working are the ones that are going to be traveling a little bit more, whatever that means. But we do have a statistic of 53% of all 2025 travelers will be boomers. And then it trickles down. Gen X 21%, millennial 11%. And again, this is just a forecast, but I do think there's something to that. I think we probably will see a little bit more travel in the slightly older generation.
I think that people have gone back to work.
I think that the honeymoon is over with the, you know, the whole work from home thing and the let's get a motorhome and go on the road for three years thing. I don't know. Just an interesting concept. But I do think, I believe, I do agree with these statistics that travelers will be slightly older in 2025. 80%, up as much as 80% over the age of 45 and average of 11% down on the younger travelers. So in other, in other words, 11% of younger travelers will not be traveling.
[00:25:54] Speaker C: As a guy that, As a guy that's about to turn 45 next week, I'm not loving this being called older thing.
[00:26:01] Speaker A: I'm right there with you. Years or older, it doesn't mean you are older. But anyway, you know, there might be something to this concept. I think we might be looking at a little bit of that, and that could mean one or, you know, multiple things for us. Might not matter to us at all. The first thing that comes to my mind is it might mean more Verbo in 2025, which I'm, I'm all about that. I like Vrbo anyway, which is, you know, it's kind of difficult to even bring that up because people throw tomatoes at you. But, you know, be on the lookout to make sure that your verbo. I, I think that that's the way it should be all the time. Anyway, make sure your VRBO is primed and ready and you're paying attention to it and you're not neglecting it because that, that's pretty common for that to happen. And they do generally have a little bit of an older demographic. So something to keep in mind for.
[00:26:42] Speaker C: 2025, another thing, it's a little bit different than that, but it's kind of on the same topic.
Just about when to pay attention. Another. Another point in time to really pay attention is tax season, tax return season. You know, a lot of people, and, you know, I see it being more younger, they tend to be shopping and they're going to take a little trip after their tax return. So, you know that, you know, mid, late April be. Just be on the ball a little bit paying attention of, you know, grabbing some bookings.
[00:27:11] Speaker B: Then.
[00:27:12] Speaker A: Yeah, you want to go nuts, put it in your headline on tax return specials. Yep.
[00:27:16] Speaker C: I mean, for real, you know, people lose track of that because, you know, for some people that's not a thing. But you gotta remember, I mean, when I was younger, that was a, that was a thing. You get that check every year. And what are we gonna go do? So. And that still happens.
[00:27:27] Speaker A: All right, let's talk about what deals are gonna look like in 2025. Of course, we don't have a crystal ball, but we do have one of the biggest real estate agents on the planet. And just in case you don't realize the short term shop who brings you this program does sell houses in the most desirable vacation Markets in America. And Avery, what is going on with home sales in the new year?
[00:27:51] Speaker B: All right, so I've said this on many podcasts before and I'm going to keep saying it. 2024 was the worst year for the real estate market that the US has ever seen. What do I mean by that? I mean fewer homes were sold in 2024 than the entire, like great recession, then the dot com recession, then all of these, all these times. So everybody was waiting for this big home crash which did happen. But what didn't happen was prices didn't go down.
So we're in the crash right now. So I want to be very clear about that. There are a lot of houses sitting on the market and listings expiring, things like that. So when shopping for deals in 2025, I feel like we have until, I would say mid February before we start to see mortgage rates ticking down some more. And right now, while rates are still high, you still have the ability to get in there and negotiate, get lower prices. You're not competing with a lot of buyers. I read a statistic, something like for every quarter point that rates come down, several million buyers enter the market. So you know that that's a statistic for the housing market overall, not strictly limited to investors. But, you know, you get the idea. And once those rates start coming down, you will have more competition because numbers are going to start making more sense. It's going to be easier to find deals because rates across the board will affect all deals. So here's my advice. Get out there now and start digging through especially listings that have been on market for a very long time that are getting close to expiring and start making those low offers. See if you can get, you know, see if you can get a discount on the price. Find a deal where the numbers work now at the rates we have now and then in the future when rates do go down, because here's the deal, they are going to go down. It's not a question of if they're definitely doing it. The housing market has completely stopped. The rates are going to have to come down because the housing market affects a lot more than just the people who are in real estate related fields. So it's not if, it's when, now. We don't know if it's going to be next month or 10 years from now, but they are going to go down. And you want to be able to refinance when that happens. So usually the next argument that I hear is, but it costs money to refinance it costs money to do everything. Get over it. If you want a deal, find one that works now at the rates you're able to get now, and hopefully in the future, you know, we'll be able to refinance and get a little bit better cash flow. Now, when you're shopping, a word that I hear all the time from clients is, well, these sellers overpaid.
Not every seller is an investor. So there is a difference. You're looking at two different silos, I'm going to call it in the market. So what is paying too much for an investor is not the same as paying too much for somebody who just wants a second home. When there is a good, pretty attractive property out there, second home buyers are willing to pay for that. So when you get where I've seen investors get themselves in trouble or not be able to find deals this year is when they're looking at prices and going, I'm not. Well, these people overpaid. I'm not going to pay what they're asking. And you don't have to pay what they're asking. That's fine. Offer whatever number makes sense for you. But understand that these may not be investors who are losing money. These may be people who just wanted to buy a beach house or a mountain house and put it on Airbnb to put a dent in its own expenses. So they don't care. These are people who bought this not for cash flow, but just to have. And they don't care what your number is. So here's what I would advise doing. I like to know what a seller paid for a house. Not because it matters, because it really doesn't. In the grand scheme of things, it doesn't matter what they paid for it. What they're willing to take for it is what matters. But I like to see how much room they have. So if you're trying to negotiate with a seller who may be distressed, let's say it is an investor who miscalculated or decided this wasn't for them. Them, and that you're looking at a $1.5 million house and they paid 1.3. And you're like, well, I'm going to offer 1 million. You're. They're not going to give that to you. They. You are asking them to come out of pocket to pay off the bank so that you can buy the house. So you have to use the knowledge of what a seller paid for a house like, be reasonable. Don't be ridiculous. Just because, you know somebody is in trouble financially and they're selling because they're distressed doesn't mean they are going to or are able to come out of pocket to pay off a loan because you're trying to get a discount. There is a finite number that people cannot go below. It's not that they don't want to. It's not that they don't want to sell the house. It's that they don't have money to pay off. They don't want to bring money to closing. Who does? Would you? No. So I like to know what they pay just so I know how much room I have to try and negotiate. If I see that they're, that they're listed for really close to what they sold it for. Sorry, what they bought it for two or three years ago. I know this is not a deal that I can probably get much of a discount on, but if I see that they bought it 10 years ago and they've got a lot of room to run, well, I'm getting in there and I'm low balling again. It doesn't mean that a seller is going to sell it to you for what you lowball for, but you never know. If you throw out enough low offers, eventually you will find, find a seller who's ready to get rid of something. So in the end of 2024, beginning of 2025, I think it's the volume number of offers. Get as many offers out there as you can. Try to find those guys who are willing to negotiate who truly are ready to get rid of their property and try to avoid the ones that you can see. Okay, well they paid really close to what they're trying to sell this for. These are people who are not going to have a lot of room to negotiate. And don't try to force a, a square peg into a round hole around, into a square, whatever that dumb saying is. Don't try to force it. Find the ones that have the room to negotiate and try to negotiate those. And there are, there are going to be deals that do work at asking price. They're very, very few and far between currently.
And also I want you to understand too that what the number that makes sense for you to buy something is not the same number as what the market value in that real estate market is. So like we've, we see a lot of people like here on 30A that you know, they want a property to produce. You know, they want a $2 million property to produce what a $5 million property would produce. And this is not a market of investors. We have $25 million houses here, and people pay that, and they are not planning to rent these properties. So pay attention to what, what you're asking a property to do and what you're asking of a market. And just understand that just because when you are lowballing, because that's, you know, that's what you have to do if you want to deal, you gotta offer low. But understand when you get these sellers that will not come below a certain dollar amount, look at what the market value actually is. Because in some markets, like 30A, like these luxury markets, the market value is higher across the board than what you're going to need to get the property for in order for it to cash flow. Because there are plenty of people from Atlanta and Nashville who will just come down here and buy a $5 million property and not care if it makes money or not. So make sure you understand that market value and the value that makes sense for you are not always the same thing. And a seller that's not an investor, they are not going to go below that market value. So when you're trying to lowball, you have to understand too, like, okay, is this someone who bought this to use it as an investment property, or is this someone who bought it as a second home and they kind of don't care what it makes? They've got it on Airbnb to, like, maybe cover some taxes or put a net in its own expenses. And that's definitely a factor when it comes to being able to negotiate, because those types of sellers, those second home sellers, they don't give a crap what your number is. They give a crap what market value is. And they're probably not going to unload that for less than market value. They're going to hang onto it until somebody comes along that actually wants it because they want it and not because they need it to hit a certain number. So you have to understand all that long monologue to say, understand who you're negotiating with before you go in there and start throwing out offers, because you're not going to be able to force people to do what you want them to do. But you can use some of that information to know if there's room for them to do what you want to do and rant solid gold.
[00:37:05] Speaker A: Yeah, yeah. No, you're right. I mean, people act like there's just, like, deals hiding under rock somewhere where you just, you know, like, that are secret, like, secret deals, you know, and.
[00:37:16] Speaker C: They'Re not another part of that equation. The only thing I can even begin to add to that is interest rates. Another part of that, like what their interest rate was compared to what it is now, you know, so somebody that paid more back, you know, whatever three, four years ago, they may be sitting on a 3% interest rate. So like their numbers may look, you know, everything avery said is 100 true. And also the, the interest rate can play into like what people's number, like their mortgage might be less than what yours is at a lower price.
[00:37:44] Speaker A: It's a weird time. There's no way to deny that. It's a weird time. You got, you gotta, you know, one thing I'll point out that she said that stood out to me was that it probably is the time to know what they paid, you know, or when they bought it, which in the prior to whatever the hell this economy we have right now is not something that you should have cared about. You almost didn't even want to know. And we went from a period of time where, oh my God, they paid half as much as this house as what I'm paying for this house, and to now it's, it's all over the place. You might be paying less than what they paid. You might be. You'll still be paying three times what they paid. It's all over the place, you know, so don't let that stop you. There's always deals.
[00:38:22] Speaker B: Yep, it's, it's quantity of offers nowadays with, with trying to find deals, you got to find the sellers that have the room who are willing to do it and try to stay away from the ones that, that don't have the room. And you got to keep in mind too, that a big part of doing short term rentals, right, is financing correctly, which includes not doing gigantic helocs. And we've seen a lot of sellers that did huge, several hundred thousand dollars helocs on these investment properties that they bought. And they. The cat that the gross income is amazing. The gross income is exactly what it should be, but they're not making any money because they've got like a $500,000 HELOC, which you don't think about is basically a mortgage at a worse interest rate on an entire other house that they're trying to make the expenses of this one house pay for. So when you have these big giant helocs, it's really almost like you've bought another house that is not cash flowing. So you have to keep that in mind. You've got it. Let's say you've got a $1.7 million house and you've taken a $500,000 HELOC. And that's. You've done everything else. Right. The property is producing exactly what it should, but you did not finance. Right. So you've got this gigantic extra expense that you're like, oh crap, I've got to pay for this. And I'm trying to make this house pay for this. And now I'm in the negative cash flow because I've taken out an entire other mortgage on this house and you know, done, done whatever with it. So keep that in mind too. There are properties out there that are distressed sellers, that they're producing fantastic numbers. But these sellers did not look at what their expenses were going to be correctly when they took out these HELOCs to try and go buy more properties.
Because a lot of the big, A lot of the big podcasts, a lot of big real estate podcasts act like they didn't say this now, but their big thing is, was right before COVID Oh yeah, for some equity and take a HELOC and go buy more. And a lot of people took that advice, but I think a lot of those podcasts meant like $30,000 HELOCs and not several hundred thousand dollars HELOC. So keep that in mind too. You can find distressed sellers that have properties that are producing great, but their expenses, they put themselves in such an over leveraged position that even that great income cannot cover all of it.
[00:40:49] Speaker A: Yeah. And there was a period of time where the sky was raining money. It was literally raining money, you know, for some people, trillions of dollars just manufactured trillions of dollars. And everybody forgets that, you know, what that was like. And either they forget or they think that that's how it should be all the time. And it's just, you know, I mean, it's. No, it should be. No wonder at all why we're in the situation we're in now because it's been a lot of ups and downs over the past three or four years and it's been an emotional situation.
So here we are post Covid Living. Remember when everybody had a motorhome? Yeah, we had one, Tim had one, I had two.
[00:41:30] Speaker C: I think.
[00:41:32] Speaker A: Yeah, we'll talk about. Just wrap things up here basically with how do we make sure we keep an eye on our gross income, 20, 25, I think exactly what we already talked about. Get ahead of it. Make sure your base rate is as high. I think we need a base rate right now, not a low base rate. I think that's the biggest mistake right now as far as pricing. Get that Base rate high for June and July. Look at that, even rhymes. But then you do not forget to fill in the gaps for these junkie dates that are coming up here in the very near future, you know, and set goals. All right, so let's say you think you got a gross income goal of $85,000 on a two bedroom house. Or let's say, let's go $75,000 on a two bedroom house dot well, the first thing you gotta do is take your cleaning fees out of that. You know, that's gonna be, what, I don't know, making it up off the top of my head, something like 12, 13 grand, right? So let's, let's just, just say we got, let's say we got 60 grand left over, which is probably a little on the low side. Then, then you just start doing math. It's all math here, guys. And it's simple, really kind of simple, easy math. So if you've got a, if you got a goal, like I just mentioned, of a gross rents. By the way, there's a difference between gross income and gross rents here, folks. Okay? But we're gonna, we've already broken down the gross income to GROSS Rents of 60 grand. And let's say that that house we're going to pretty much completely forget about two months of the year in January, February, we're not going to get any dates. And then we maybe we just divide that by 10, right? For 10, the 10 months that are left. So you just take the 60 grand and divide it by 10 and you got $6,000 a month in gross rents that you got to make up in a 10 month period.
You know, I'm just making that up. But take that gross income and play around with it. What's your gross income goal? Because in vacation rental, real estate, short term rental, single family home, overnight rentals, whatever you want to call them, we do not have a lease. Therefore we must have goals. You got to have a goal. The goal needs to be based on whatever you do for data. Data and your enemy and historical data data, okay? So if you have last year's numbers, your goal can very easily be derived from that. Let's bump it 3% just for, you know, the general real estate rule of thumb. 3% a year is a good idea is what you're hoping for for rents.
Maybe five if you get real lucky, maybe 15 if it's Covid, you know, but now we're on the other end of that and we're seeing some rents nationwide in certain markets. I'm Talking about long term now that are going lower, we're going lower on rents in certain markets than we had in Covid, you know, does that mean that we aren't still historical average 3% higher than we were the year before? No, it means that it went. Everything went nuts for two years and bumped up to whatever the hell you could get. And now we're back down to reality. Okay? And we're seeing that in vacation rentals as well. We're seeing that. So forget about 21, 22. Do a 3% increase over your 2019 numbers, okay? Over those past four years. So take 2019, add 4, 3, 3%. Take that, add another 3%, do that four times. That's where you should be. Five times. I guess for 2025. That makes sense. So anyway, we just need to sit down and do more math. If you want to succeed, if you want to have a happy, functioning home that your family can enjoy, it's not a burden, then just sit down, do some math, set some goals. What do I want March to look like? What do I want April to look like? Well, I think June's going to be 15 to 20% higher than April. So what's that look like? And maybe just chart all that out on your New Year's Eve resolution night where you're sitting there saying, I want to lose £18. Well, then spend 15 minutes on the property and figure out what the month should make. Now, you don't have to go that far. I'm not saying you need to break out every single month of the year and write it down. But what I am saying is that if you're not doing as well as you would like, that's a pretty good way to do better. You know, stuff, little stuff like that, make an effort. It's just like anything in life, if you want things to be better, you got to make an effort.
[00:45:26] Speaker B: Very true. All right, Well, I guess that is it. That's very like ton of information Podcast today, guys. If you have any interest in asking questions, you can do that by signing up for one of our Wednesday calls. You can do
[email protected]. we've got them every Wednesday and I believe that's it. You guys want to sign us off? Say goodbye.
[00:45:50] Speaker A: Had a great time. 2025 winter warm up. Can't believe it's already here. We're in a new year and get, get ready, man. Get used to it. It's going to fly by. What do you got for us, Tim?
[00:46:00] Speaker C: The same. I'm excited. It's you know, I always get side excited this time of year. I start looking at spring, and it's just. I don't know, it's just like a starting over again. But it's. It's big fun, and I get excited about just all the little stuff, you know, everything you talked about is great.
[00:46:14] Speaker A: Take the kids to Disney. That's my advice.
[00:46:17] Speaker B: All right, later.
