Month Math

[00:00:02] This is Short Term Rental Management, the show that is all about short term rental property management with your host, yours truly, Luke Carl George from Rental Management. [00:00:18] Here we are, yet another glorious Tuesday and life is good. I am so grateful that you are here. Appreciate you, love you. [00:00:27] You want to do better with your property, you're in the right place. It's as simple as that. I'm just here to provide you as much value as possible because I enjoy it. [00:00:37] I enjoy giving back. I have been given too, in the form of knowledge, in the form of books which by the way, I'm going to throw you a book right now. I'm reading a great book, Dan Heath's new book. I'm reading it, it's great. [00:00:53] Reset. [00:00:55] You would think I would know the name of the book I'm reading, but I don't. [00:00:59] Horrible memory. I wish I could work on that. I need a book about improving your memory. [00:01:05] But Dan Heath, one of my favorite authors, he's wonderful. Got a brand new book. A lot of times he writes with his brother. This one is just him and it's called Reset and I'm loving it so far. I think I'm on chapter five, give or take. [00:01:21] And today we're going to talk about price per night. Price per night. Price per night. Is the price right? The price is right. Price per night. [00:01:32] Something I preach about often here at Short term Rental Management which by the way, I'm looking for guests. Strmshow.com guest shoot me an email guest strmshow.com love to have you if you're a property manager that also does, you know, maybe you're a long term property manager, does short term or maybe you're all the time short term property manager. Love to have you on the program, talk about your systems and processes etc and if you're not, maybe you will be sooner than later because if you're hanging out around here, that's the path, that's the journey is to end up being a property manager. That's what I am. [00:02:06] I'm lucky enough that I don't want. Well, I don't know if lucky is the right word. I am, yeah, made me lucky. Grateful. [00:02:17] I don't know that I only manage my own properties which has been a grind and a lot of years of hard work and a lot of doing stuff that people would never dream of doing to get to that point. And I'm living proof that it can happen. [00:02:32] Hard work, hard work, hard work and then work some more. [00:02:37] But tonight, today we're going to talk about price per night. [00:02:42] Your price is too high. I've said it a thousand times. Your price is too high. I do think. [00:02:49] I think we're getting to the point where people are starting to realize it. [00:02:54] I think there was a bit of a stigma there at a certain point in time where people were afraid to lower their rates because they were selling themselves short or something like that, or they may leave money on the table, et cetera. [00:03:11] And I think we are finally getting to the point where people are starting to realize that if you're not booked, you gotta lower that rate. Obviously, a lot of it goes back to the pyramid of pricing. An old video I did years ago, not that long ago, maybe two or three years ago. The pyramid of pricing. Look that one up. [00:03:26] And once you've maximized your pyramid, there's not a lot of places to go other than lower your rates. And sometimes this gets a bad rap for race to the bottom or the economy. Oh, my goodness. [00:03:40] But here it is, a simple supply and demand. [00:03:43] Said it a hundred times and you don't listen. [00:03:47] If you've got a product to sell and nobody's buying it, you need to lower the price. [00:03:54] Very simple stuff. It's simple stuff, okay? [00:03:59] So I think a lot of times ego gets in the way. And that's where the ego, the. The pickleball court comes from, is ego. I want to have the best property. I want to have the best property to get more bookings. But the problem is, is that to have that best property with the pickleball court, you're. It costs a lot of money. And then you got to raise your price. Your price per night does not look as good when you've spent 20 grand on a pickleball court or whatever it is. Not to mention the space that takes up and all the maintenance and all the other stuff. [00:04:33] I'm sorry to pick on the pickleball court. I probably do that too often. I love pickleball. I do. I just don't understand it. Why don't you go play pickleball at the freaking pickleball place? [00:04:44] I'll be at one today. My kids go to tennis once a week. And there's a pickleball court right next door to the tennis court at the same place. And you can play with other people. I don't know why you need one in your fricking backyard anyway. [00:04:54] Just one example. [00:04:56] It's the most popular example, I suppose. People are always talking about these pickleball. And you know what? If it works for you, let it rip. [00:05:04] But if you're putting in the pickleball court to get higher price per night and you're still not getting booked. Then your price is too high. [00:05:14] The short term shop is hiring. [00:05:17] We are hiring real estate agents in the best vacation rental markets in the nation. If you live in a beach town, a mountain town, or want to move to one and you are a qualified rockstar realtor, please reach out to us. [00:05:33] The shorttermshop.com careers we are currently hiring in multiple markets. [00:05:41] The shorttermshop.comcareers. [00:05:46] i've said it a thousand times. Nobody listens. If you're not getting booked, your price is too high. Yes, the economy is terrible, okay? I'm gonna give you that. The economy's not that great right now. People are not spending funny money like they were three years ago. Four years ago. There was a period four years ago where you could not get a hot tub. [00:06:07] Do you remember that? [00:06:10] You could not get a motorhome, you could not get a Rolex firearms. [00:06:20] These things were flying off the shelves because there was free money literally being printed. [00:06:27] And now those days are over. [00:06:30] So we have a different perspective now. And the economy has changed a little bit. [00:06:37] I would say this is much closer to normal than what it was when the money was falling from the sky. [00:06:44] All I can tell you is I'm booked. That's again, you know, a lot of times people don't want to hear me say that. I get in my own Facebook groups and say, well, my stuff's booked. I don't know what to tell you. And it is. I'm booked. I'm recording this in the middle of June right now. I am $6,800 across the entire portfolio, down from last June, which works out to about 750,000 dol. $50 per property. And I have again, I don't know when this is coming out. Just to give you an idea, middle of June right now. So I got half a month to make up $6,800, which isn't sounds like a lot, but it's not a lot in June. June's a high dollar month, right? So I got, I got a couple houses that are a thousand bucks a night. I got three houses that are close to a thousand bucks a night this time of year. Maybe 7:50, you know, so at one of those, I mean, I could book one of those houses four nights and basically make up the whole rest of what I need for the month. All right, maybe 10 minutes, 10 nights. You get the idea. So I'll get there. I'm A little slower. Things are definitely more last minute, I'll give you that for sure. [00:07:45] And are they more last minute because there's less people traveling and less people booking houses? Maybe. [00:07:53] Maybe I don't have to book three months in advance because there's so much stuff available and it's available because people aren't booking it. I don't know. [00:08:04] I don't know. [00:08:06] Probably. Really no way to prove that. And why? Who cares? Be honest with you. Who cares? It's no different than long term rental. If you're having these problems, I'm not getting enough bookings. Blah, blah, blah, blah, blah. Your price is wrong and you need a long term rental. You need to go get a long term rental. [00:08:24] I don't know why so many people are allergic in this vacation rental space too. Long term rentals. You can learn so much about your vacation house by having a long term. [00:08:34] I get it. It's not fun, it's not sexy. You're basically guaranteed you're not gonna make any money. You know, like a hundred bucks a month if you're lucky, until they move out. [00:08:44] Then it costs $7,000 to turn it, you know, I get it. But 20 years from now, you'll be glad you had it and it'll teach you a lot about your short term, about your vacation house. So how do I get a long term rental? That's a whole nother story. [00:09:02] It's not that hard. It's really not. You got to find a market, you know, but find a good agent. [00:09:08] But anyway, you're not getting booked because you're pricing it wrong. Price per night, price per night, price per night. Lower your damn prices. It's not a race to the bottom. It's reality. [00:09:22] It's reality. Do you want to get it booked? Do you want to keep your cleaner happy? [00:09:28] You want to increase your gross income? Or do you want to let it sit empty? [00:09:35] I'm hoping, I'm hoping that I'm preaching to the choir and that you're not having these problems. [00:09:42] Because if you're listening to my show, you probably should not be having these problems. [00:09:46] But if you have come across somebody in a Facebook group that is having these problems, send them a link to this show. [00:09:54] It's not that hard. [00:09:56] Make sure you got nice comforters on the bed and good furniture and lower your damn prices. [00:10:01] It's been the name of the game since the day I started. People get into this ego thing. It's no different than primary homes. My house is worth more than my neighbor's house. I have the superior lot on the cul de sac. [00:10:17] No, you don't. [00:10:18] It's not any different than the damn house right next door. [00:10:23] Plus you got three dogs in there stinking it up. [00:10:27] You know what I mean? Everybody thinks that their house is worth more than the other guy. Everybody thinks that their everything is better than the other guys. And that's a good thing in, in most cases. My wife is better than yours. [00:10:41] My car is better than yours. I can get some. I my vehicle. I bought a German engineered vehicle and I can get such great resale value on this vehicle. [00:10:54] It's so much better than your minivan, it's depreciating. You're driving it, you're stinking it up. Your kids are dropping goldfish in it and nobody cares. And when you go to sell it, it's not worth more than what you think it is. [00:11:16] It's not worth what you think it is. It's not worth. [00:11:20] You think it's worth more than it really is. [00:11:24] Okay. I mean, there's a hundred different ways to say it. [00:11:28] And it's ego. We have the best lot in the neighborhood. [00:11:34] Our unit is better than all the other units in the building. [00:11:41] It's supply and it's demand. If you have availability in the next three to four weeks on your rental real estate, your short term rental, you need to drop your rates. [00:11:54] Let me teach you. Here's a little quick. This is a great trick, all right. You want some, you want some nuggets? Some value, some gold nuggets? [00:12:02] Go look at the next month of on your Airbnb calendar or Verbo calendar. Select the 1st of the month through the 31st of the month. Like you're gonna book all of it and go see how much that costs. [00:12:19] That is price per night only with one cleaning fee, right? Okay, that's just one cleaning fee and maybe some taxes and fees, but it's basically your price per night, which translates to loosely, how much do you need to pay your bills? [00:12:38] If you go check, let's just say July 1st through July 31st and hit reserve, and it comes up with $10,000 and your PITI, your monthly nut, your principal, interest, taxes, and insurance is $2900. [00:13:03] What are you gonna do with $7100? Why do you think you deserve 7, 100 extra dollars this month? [00:13:11] We're gonna give this a name. We're gonna call it Month Math. [00:13:15] What's your Month Math? [00:13:18] How much are you charging for the first of the month through the last day of the month? Price per Night only. And how much more is that than your piti? Are you getting a little greedy? I bet you are. [00:13:32] I bet you are. Go figure out your month math. [00:13:36] It's brilliant. [00:13:38] I can't tell you how many times I'm in there and I'm like, do you really need $6,000 profit this month because you're not getting any bookings? [00:13:48] And it's because you're looking for $6,000 profit and you didn't even know it. [00:13:53] Your price is too high. Price per night. Price per night. Price is not. Price is right. Price per night. [00:14:03] It's like spinning the big wheel. [00:14:06] What does he say? Drew Carey, if you land on a. What do you call it? A tweener? Is it a tweener? Is that what he calls it? You. You get to eat a donut. You know when it gets stuck on the. [00:14:19] The bendy? He calls it a bendy. [00:14:22] Yes. Price is right is still on. And when my kids are sick, they have to watch it because, you know, that's what I watched when I was a kid, when I was sick. [00:14:31] And when it gets stuck between the numbers, it calls it a bendy because the little pointers bent. And then everybody eats a donut. So go figure out your month math and eat a donut when you realize you're charging too much damn money. [00:14:46] All right, Price per night. Price per night. Price per night. [00:14:50] What's your month math? [00:14:53] Take your month math minus your piti, and if it's way too much money, you're an idiot. Simple as that. [00:15:00] All right? If you got a long term rental property on the market for three weeks, four weeks, five weeks, six weeks, your price is too high, you lower the rate. It's supply and demand. People are hurting right now. [00:15:16] You are in the business to provide value to your guests. [00:15:21] And you provide value by having a value property. [00:15:26] Give them a good value for their hard earned money in this economy. [00:15:35] I will hit last year's gross income with my properties this year. [00:15:41] It can be done. [00:15:45] I only spend five minutes a day on it. [00:15:48] Again, I'm preaching to the wrong choir because you're spending 30 minutes listening to me preach about price per night. Price is right. [00:15:57] It's the people that are sucking that need to listen to this kind of stuff and they're not putting in the effort. So I guess, really, to the choir that I'm preaching to right now, bravo. [00:16:08] You're doing your job. [00:16:11] Good for you. [00:16:13] I'm proud of you. [00:16:15] There's a whole lot of lazy ass people out there that don't want to do it. [00:16:21] And there's also, there's also a whole lot of people out there that don't need to. So. And that's. God bless them, man, I want to be those guys, but they, they got to that point by working, working their tail off. Right. So anyway, do your month math. [00:16:38] Take the full month where the rental income, nightly rates minus your piti. I know, it's a ridiculous math situation. It's, you know, it's ridiculous. It is. [00:16:50] But it, you could find it helpful. It might open your eyes a little bit. Wow. I didn't even realize I was charging that much money. [00:16:58] Month math. [00:17:00] Luke Carl, Short Term Rental Management. [00:17:03] I love you, Luke. @the Shorttermshop.com hit me up anytime. Please don't overthink it.