Lessons Learned from my Short Term Rental
Outsourcing is a business practice in which services or job functions are hired out to a third party on a contract or ongoing basis. If you’ve read The 4 Hour Workweek by Tim Ferris you’re probably familiar with this concept. Typically, larger businesses outsource some projects or work to other businesses or individuals, hence: consulting. Consultants are hired by the firm to provide expert advice and carry out certain projects.
In his book, Tim Ferris changed this concept to not just apply to large businesses but also to individuals and labeled it ‘outsourcing life’. Highly recommend you read about it. This article highlights how I outsourced different aspects of my STR (Short Term Rental) to make it profitable.
As you know, there’s a few different things I have going on: 1 long term rental, 1 short term rental (“Airbnb”), running my website, writing an eBook, and my tech job. To manage it all is a task that could and has taken anywhere from 10-12 hours per day. That’s not how I’ve ever envisioned living my life. I want to be sipping martinis by the beach just like you.
Last year when I purchased my short term rental, I decided to do it all myself. Mostly because I was short on funds and this was a large purchase but also because I wanted to learn more about the real estate process to see if it’s something I want to explore full-time. After closing in May, I put up my property on the platform in July, giving it 6 months to see progress and break even in terms of bookings. I would manage everything: from scheduling cleaners, to messaging my tenants, to even driving 8+ hours to fix things at the property. It was quite a hassle and I thought ‘this is all worth it, one day I’ll thank myself’. The months came and went; I was barely making any progress or enough cash flow to cover all my expenses. I was definitely not thanking myself.
I talked to several investors in the STR industry looking for feedback and trying to figure out the source underperformance was. The market trends showed that this shouldn’t be the case. I received lot’s of valuable feedback such as “hire a designer” or “hire a professional photographer”. If you’d asked me to do this a year ago, I would’ve called b.s. because how hard is to decorate a place yourself and taking pictures?? Pshhh with the latest phone camera technology, I’m sure I can do a much better job myself without paying 100s of dollars. But because it’d been 6 months without breaking even, maybe there was some truth to what these people were saying.
I let go of my ego and worked with an interior designer to re-do the property all in 2 weeks.
I let go of my ego again and hired a professional real estate photographer that charged me $1000.
Excited and satisfied with the new updates, I decided “okay I’ve done everything people have suggested. Things should look up now. Let’s put the listing back up” And boom! I got a booking. Then slowly, another.
And then …
… nothing.
Had I made a wrong investment decision?
Was it time to sell my property?
I was embarrassed to tell my family and friends: I had failed.
Two weeks ago, I decided that I’m not ready to fail. I’m not ready to sell. I had done my calculations on the property, the market is still booming, I’m going to give it another shot. Maybe I just need to figure out a different angle. I asked myself “how can I make this profitable?”
After a lot of thought, consideration, and again: letting go of my ego, I decided to hire out a property management company. We signed an agreement on Monday stating they will handle all guest communications, any fixes the property needs, and the listing itself.
It’s now Wednesday and I’ve received 4 bookings in 3 days. The month of March is completely booked out and for the first time since I purchased the property have I broken even. For the last 3 days, I’ve truly sat around and waited for the cash to come into my checking account.
Moral of the story: while you can be an expert on anything, you cannot be an expert on everything. There are reasons why people hire interior designers and photographers and property managers. And you don’t have to have a business or be a millionaire to do so. If you notice that hiring people for certain services will either help you save time or money, it’s a good idea to do so.
Today, I wouldn’t have been able to run my Airbnb successfully without my team.
Outsourcing has saved me time, money, and most importantly: a headache.