Hello! Happy Monday. This week we’re tackling a much-requested topic—the business side of short-term rentals. As many of you know, we own a few properties we rent out on Airbnb (I’ll link them below) and we’ve learned so much from how to purchase the right property, to setting it up and running it in a way that fits with our lifestyle.
-I thought we’d start out by linking to our properties page. This is where you can see all our properties that are currently available to rent.
Things to have checked off before investing in real estate (aside from primary home):
-Be mostly out of debt. Pay all debts besides mortgage and school debt.
-Have a safety net (emergency fund) of 3-6 months living expenses set aside.
-Have basic needs met, such as reliable health care.
-Be saving for retirement (401(k) or otherwise).
-Ramit’s book—I Will Teach You To Be Rich. We recommend this book if you’ve found yourself with some money to invest, but fear or hesitate getting started.
-A link to our Nashville property managers, Epicbnb.
-“What are you looking at?” segment.
-Emma’s book: The Husband’s Secret
-You can hear more about our lessons from running Airbnbs in this podcast episode!
We’re sending love to everyone listening this week! A lot of our site is pre-scheduled and we want to contribute to a sense of normalcy in such a panicked time. If you are one of the many people who has decided to self-quarantine, we hope our podcast will keep you company this week. Stay safe! xx
Miss an episode? Get caught up!
- Episode 21: Childhood Magic
- Episode #20: Our Clean Skincare + Beauty Favorites
- Episode #19: Elsie’s Forever-ish Home Update
Episode 22 Transcript
Emma: You’re listening to the A Beautiful Mess podcast. Today we’re diving into one of our most requested topics of all time. The business side of being BnBs. And we’re actually going to expand on this topic a little and talk about investing in real estate generally. We’re going to share a formula that we try to follow and steps we took before listing our first short term rentals. So let’s get into it.
Elsie: Before we began, I wanted to start out by mentioning that in our show notes, which you can find at abeautifulmess.com/podcast, we will link to all of that BnBs that we currently have listed. And we will also link to a couple blog posts that we’ve written in the past about BnBs generally.
Emma: Yeah, we recently actually added to our home page too, just ABeautifulMess.com. There is a menu at the top and one of them says properties. And if you click on that then it shows all of our BnBs. And it also links to, if we’ve like, toured the bedrooms or toured the bathroom. So you can like click on those and see. Before we talk about investing in real estate. I thought it would be helpful to just quickly go through a few things that I think you should have going in your life before you even consider investing in real estate. And I think a lot of these are going to be no brainers for most people listening, but also maybe not. I don’t know. I don’t mean that in an offensive way. I just, I had a few friends ask me before because they know I have a short term rental. And I also own a long term rental. And so I just you know, these are some things that I’ve told friends. And so I just thought I would share them here, too.
Elsie: Absolutely. So this is like the groundwork that you recommend having laid before you buy any kind of second home.
Emma: Yes, definitely. I’ll go through it kind of quickly, because this could be like a whole episode. This also could be like someone’s whole brand, this just personal finance stuff. So. And I’m no expert, but I’m just going to list four things that I think you should do. So, number one, be mostly out of debt. Some debt is OK. Debt for a personal home and some school debt, especially if you have a really great rate or if you have like if you’re a physician, if you’re a doctor, you probably are going to be paying off your school loans for a very long time. So that kind of debt’s fine. But I mean, more if you have major credit card debt or debt from school where you don’t use your degree anymore. Those are the kinds of things you might want to look into paying down before you ever start investing. Number two, have a savings account, which is what I would also call this is just a safety net. So I recommend having anywhere from three to six months worth of your living expenses. So this could also be three or six months worth of your salary. And the idea is, if you got laid off, then you have this money to help you kind of make it through until you get a new job. Or if you’re a business owner like I am, then you kind of have a little bit of a safety net. So if your business can’t pay you for a while or if you need to change businesses, you have something there, you know, and if possible, I would recommend even more than three to six months. But I think three to six months is a good like good starting place.
Elsie: The old emergency fund.
Emma: Yeah. Oh yeah. Got to have that. Number three. Have all your basic needs met. And the big one that I just wanted to mention here is health care. And this is a little bit of a business owner problem, which I’m a business owner. It’s also a little bit of a it’s different from country to country. So this is a little bit of an American thing, I suppose. But make sure that you have enough money and you have health care. Maybe you get it through an employer. So this doesn’t apply to you. But what if you get laid off? How’s that going to work? Just making sure that you have that covered off because you never know if something’s going to happen. So that and then the fourth thing is be saving for retirement. And you can do this through a 401K or an I.R.A., a traditional or a Roth I.R.A. There’s multiple options. And if you don’t know about those, there are whole books, articles, blogs, podcasts dedicated just to that. I also highly recommend working with a financial advisor. Both Elsie and I have financial advisors and work with them and they’re great resources for lots of information that you might not have access to if you didn’t grow up thinking about financial stuff. So highly recommend but be saving for retirement actively before you think about investing in stocks or real estate or anything else.
Elsie: Right. Yeah. Because real estate is a great investment, but it’s not the most risk free thing.
Elsie: People do lose money on it, so hopefully that will never happen. But it does happen. It’s happened to me before.
Emma: Yeah, it does happens, though. It’s it’s a you know, it’s icing on the cake. It’s not just the…You need to have the cake first, though. Otherwise you just have icing and that’s too much. You get it.
Elsie: That’s disgusting.
Emma: That’s disgusting. Did you want to talk a little bit about Ramit’s book? Yeah, I know. We’ve talked about in the past.
Elsie: Okay. You guys know I love Ramit Sethi and his book is called I Will Teach You to Be Rich. And that’s his website. That’s his Instagram. He’s the greatest, he’s my hero. And what I love about Ramit’s book I Will Teach You to be Rich is if you have any kind of negative feelings or associations with money, which I did in the past, have a lot of that. I had fear, guilt, anxiety, stress, all of these things surrounding money. And his book really helpED me to rework those attitudes and to have a generally more healthy, realistic and I think smarter perspective about money. So yeah, I highly recommend it. He is actually not that big on like real estate investing. He’s always saying like it might not be good. And he talks a lot about how he doesn’t even own his apartment in New York. And that’s great for him. So that. Yeah. It’s not about real estate investing. It’s just general positive attitudes and, you know, better practices for money.
Emma: Yeah, I I love. So I read that book too after Elsie recommended it to me and loved it. I also just think like if you’re coming from a place where you don’t know a lot about personal finances, maybe you have, like Elsie said, some fear or some hangups around it. I just think that’s so much more important than thinking about investing in real estate. I just feel like so as people see us with our short term rentals Elsie and I think it just looks really cool. And they just get excited about it. And I’m like, that’s awesome. And I hope we can be a model for women investing and women, taking control of the finances or just anyone, not even just women, but anyone. But I also think there are some other steps to take first. And it’s really important not to skip that stuff. So, yeah.
Elsie: Yeah, I I totally agree with that. The short term rentals that we do are kind of like the coolest part of our financial situation where people look at it and they’re like, Oh, that’s neat. But it’s not the most important part. It’s really not. So, yeah.
Emma: Exactly. All right. So the next thing is we have a little bit of a formula that we try to stick to whenever we’re investing in real estate. I like to call it the 1 percent rule. But I wanted to have my husband Trey on to explain it because I think he explains it really well. So I did a little interview with him one evening, just the two of us. So here it is. Can you explain the 1 percent rule and how we use it when we’re evaluating if we’re going to purchase a rental property?
Trey: Sure. First up top I want to give credit to our accountant because he was one who explained it to us at first when he was recommending that we start looking at property investment in general. Jason Jordan, he is wonderful.
Emma: Jason! We love you.
Trey: The premise is pretty simple. The 1 percent is in reference to your rental income. So you want your rental income, your monthly rental income to equal 1 percent of the purchase value of your house or the purchase price of your house. So, for example, these easy numbers, if you have a $100,000 house, your goal then would be to rent that for around a thousand dollars a month. And the reason you go for that, one, it just gives you a simple equation where you can really quickly take a look at a house and just price out and think like, oh, could I get that or would that be worth it? And if you are able to hit that, you know, with the variable, I mean, there’s other variables like what your property manager is in your insurance company and your taxes and all the kind of stuff. But generally speaking, if you’re able to hit that one percent mark you’re able to float 15 percent cash on cash. And what that means is you’re able to get a 15 percent annual return off whatever your down payment was. So that’s that’s what that cash on cash means. So, for example, to again to stick with that hundred thousand dollar House example, you would likely for a business loan, you go 20 percent down on that, which would mean you have a $20,000 down payment and then you’d be flowing 15 percent off that $20000. So that would work out to about $3000 a year is what you’d be returning. And whenever I say cash on cash, that’s to say that you are actually flowing that money. So that’s going right into your pockets. You’ve already paid your mortgages for the year. You’ve already paid your insurance, you’ve already paid your taxes. You paid your property manager. And it accounts for about, you know, 10 percent of your income worth of maintenance. So it covers all of that and then you’re sending $3000 directly into your pocket. So because like a lot of times you hear about people saying, you know, you know, I charge enough to pay for my mortgage or whatever. So this is actually charging above and beyond. You’re making above and beyond what your mortgage is and you’re actually putting quite a bit, or you’re putting a decent amount of money in your pocket.
Emma: This would be for passive income.
Trey: Exactly. And it’s you know, and it’s something to give you a frame of reference. You know, a good year in the stock market is is a 10 percent return on your money. So this would actually be doing better or good, you know, 10 to 20 percent. So this is. We like a good year in the stock market and you’d build it, but you’d feel to do that year after year, regardless of, you know, outside of really, really extreme fluctuations in the market.
Emma: Right. But you might want to do this instead of the stock market because you’re building equity and because you have an asset to sell later on.
Trey: Yeah, well, that’s the thing about equity…
Emma: The stock market sounds kind of safer. I mean no investing is 100 percent safe, but you know, that one seems more…
Trey: Yeah, it’s definitely more liquid.
Trey: Like you’re able, like you can pull your money out at any point in the stock market, whereas in a house you have to sell the house is contingent on a buyer. All of that. The benefit of it is you have that cash flow that is, you know, competitive with a stock market investment on one side…
Emma: Right, the 15 percent.
Trey: But then functionally on the other side, you’re then doubling your money in equity. So you’re kind of double dipping a little bit. So you’re like, you know, again, these are rough numbers, but in the same way that you’re flowing, you know, that three grand, you’re also building up that three grand in equity on the other side as you’re paying off your mortgage. So you’re kind of you’re growing in two directions, one liquid and one not.
Emma: Why would people care about equity? What’s that useful for if it’s not cash money, you know?
Trey: Well, there’s a handful of things you can do with equity, obviously, I mean, obviously, you could sell the house at any point and get all that money right back, presuming that you’re able to maintain it and how much you’ve paid down. So then so then that money would come back to like your equity to come back on a sale. That’s the most straightforward thing that you could do with it. And then, of course, you know if you sit on that till retirement and that’s a nice little nest egg that you would have till then.
Emma: You can make back the whole $100000 and more.
Trey: Or the other thing, like if you did have something, if you did have some idea you had something else in the property or something else you wanted to buy. You could then get a loan against your equity so you could pull that cash out to go do something else if you wanted to. As long as you kept I think around that, you know, 10 to 20 percent down on that property, you could then pull the excess equity out to go to go start a new project or go get a new property or whatever.
Emma: So that’s the formula we try to stick to when buying a property and short term can open up the options a little more than long term, but it’s a little more risky since monthly income will vary. Other than the simple formula, let’s talk through other steps people need to take in order to buy or set up a short term rental.
Elsie: Let’s talk a little bit about laws, because laws and knowing the laws in your area and whether or not property qualifies to even become a short term rental is super, super important. And this is a mistake that I made the first time we bought property. So I’ll share a little bit about that. It’s embarrassing, but I’ll share it anyway. So when we bought our first investment property in Nashville, the laws were rumored to be about to change. And a lot of people told me, oh, it’s fine, don’t worry about it. No, it’s not going to change that much. And unfortunately, it did change a lot and it changed right as we bought our property and what we ended up doing…
Emma: Like the day you closed.
Elsie: Right. It was like the week…It was crazy. It was. Yeah. And then we didn’t we weren’t very speedy about applying for a permit. And long story short, we ended up with a permit that was not really legal because we had an owner occupied permit and people were like, it’s fine. It’s fine. It’s not that regulated. But I don’t know in my heart, I knew that, like, this is not good. And within six months, our permit was taken away and we had to sell our property. And it wasn’t a quick sell. It wasn’t we. We basically, like, lost a lot out of it just by not knowing the laws upfront and not being super safe in the beginning. So what we ended up doing was selling the property and reinvesting in another property, which is the one now that Emma and I own half of a duplex each. So it’s one duplex. So we each own one side of it. That’s our BMB in Nashville now, and it is completely a legal permit because it is zoned commercially. And so now we know that our permit is not going to be taken away, which is which is cool, but it’s very, very hard to find those properties. So in Nashville, we probably won’t be doing a lot more short term rentals just because there’s very few properties now that qualify to become one. It’s very regulated and a lot of big cities are that way.
Emma: Yeah. And if you don’t know, first just start Googling. But also, it’s usually the zoning department of your city or your county. If your city is very small, it might be your county. And you can call. You can always just call and ask questions. It’s very similar to like doing your taxes, which I don’t like. I also have an accountant. But you also oftentimes have to call the IRS or you have to call your local, you know, secretary of state or office or whatever. Just ask questions. So do that if you’re considering doing a short term rental because you know, you’d might not know the laws. The laws may be changing soon and your city government or county government will be able to give you those answers. But yeah, our spring BMB, we we closed on that and a month later the laws there changed too. And it was fine. We had to go through a permitting process and it wasn’t…we have the permit and everything’s on the up and up. That’s illegal. But I was so stressed when I heard they changed until I went into the city to find out what they were and to ask more questions about what I needed to do. So I was like, oh, my gosh, we just bought this house and now we’re gonna have to sell it or we’re gonna have to make it into a long term rental, which the amount of money we are investing to renovate. It didn’t make sense for that. So it was just this very like stressful process. So I, that’s probably my biggest…like, if you’re thinking about short term rental, this is the number one thing to like.
Elsie: This is definitely the number one thing you need to know the laws. And just to be totally clear, this probably won’t apply to you if you’re thinking of renting your own home like while you’re on vacation or on the weekends or something like that, that most homes where you live in the home will qualify. In most cities. But what we’re talking about right now is buying another home for the purpose of making it into a short term rental.
Emma: Right. Yeah. I would still check, though, even on that, too. There are a lot of cities that have like two to three different types of short term rental permits, STR permits. And so and sometimes they have requirements around how much you need to occupy the home. And let’s say you have a job where you’re gone, you know, three to six months out of the year, you may fall into this range of two different permits. So, you know, I still would definitely look into it. Just everyone’s situation is different.
Elsie: So. Right. And there are cities where short term rentals are completely banned. And so, yeah, it’s the most important thing is really knowing the laws and making sure that the property you’re considering will qualify for a permit before you put down any money or make an offer, anything like that.
Emma: Right. Exactly. Okay. So researching the permits and laws, that was the first thing you need to do. A second thing is researching properties, prices, how often short term rentals are renting out in your area. And also, like real estate agents, if you’re going to be using one, so similar things that you would be researching if you were buying the home to live in. But also a little additional research of how often are short term rentals renting out in your area. And you can do that by simply going on air Bnb or HomeAway, VRBO, and like checking out other properties in this area, in the city, in the neighborhood you’re looking at and check for the entire year, not just one season.
Elsie: Yeah make sure you look at the weekend prices because it usually fluctuates quite a bit. Right.
Emma: Okay. So research properties, prices, all of that. Next thing you’re probably going to need 20 percent down. So usually when you buy a personal home, you pay 10 percent down as your downpayment. And when you buy an investment property, it’s usually 20 percent or more.
Emma: We’ve had times Trey And I had to pay 30 percent of the property price in order to get financing. So it just depends. So you want to be saving your money and knowing that you still have that savings account, you still have a safety net, you’re not going to be spending your entire safety net on this real estate property because that’s…I don’t think the best way to go about it.
Elsie: I don’t even think they’ll let you do that, because usually they want you to show that you have like six months of expenses and, you know. Yeah, yeah, yeah. It’s definitely more tricky to qualify for a second home loan. And you do have to save more for sure.
Emma: Right. And as you can probably tell by the advice we’re giving here, we finance all our properties and we get loans from banks or other lending organizations, although it’s always been banks for us.
Elsie: Yeah, someone asked me yesterday if we had bought a house in cash yet and I’m like no I wish, I really, really want to do that someday. And that is definitely the dream. But yeah, I’ve never done that.
Emma: You just think it’s really cool.
Elsie: Yeah, I just think it’s really cool but in Nashville I don’t know if it’s like that possible.
Emma: Yeah. Yeah. And that’s a great goal. If anyone else’s listening and that’s one of your goals. Do it. I don’t think that’s the best way to spend that amount of cash. I think you would be better off financing. But I also think it’s really cool to be debt free on a property, and if so, if that’s the position you’re in. That’s awesome.
Elsie: That’s true. Financial advisors will always tell you that you don’t really need to pay down your mortgage. You need to invest that money instead. But there is something cool about having a home paid off. So I don’t know. I’m kind of on the fence with that.
Emma: Yeah. I also think, too, this is one thing I feel like you get a better sense of as you grow in your confidence. With personal finance stuff, is that a lot of times there really isn’t a black and white right and wrong answer. It’s more about what amount of risk are you okay with and what are your goals like? You know, Ramit` talks about this like what is your rich life? Because the rich life isn’t just about money. It’s about your time. It’s about the stress that you’re gonna go through. You know, if you’re have stress in another area that you’re wanting, like you have young children. Maybe you don’t want to be thinking about this stuff all the time, you know. So I think like all of that is important to think about. It’s not just about the money. So, yeah. Anyway. All right. So saving money. Work with a lender. Talk with them about, you know, getting pre-approved or figuring out your financial situation there. Next, let’s move on to some of the fun stuff. I bet you guys thought this whole episode was going to be fun stuff like couches and furnishings, but it was not. It was money stuff. We tricked you. No, I’m just kidding. But now we are going to move in to the fun part. Yeah, furnishing and other things.
Elsie: Honestly, yeah. I always I think that BnBs look so much more fun than they really are because a lot of it is just like saving for a year and then.
Elsie: Yeah. Buying your furniture really, really, really fast.
Elsie: So yeah. This is the exciting part of the episode. All right. So first of all, the first thing that I wanted to say is that most of us we’re moving from house to house. Right. Like I’ve moved a lot of times in my life. And, you know, you pack up your stuff, you take it with you, maybe a few things don’t work and you buy some new things. But furnishing a house from zero is so different. You will be shocked at how much stuff you have to buy. Isn’t it shocking? Because you don’t have a broom, you don’t have any trash cans. You have to buy every little thing. You have to buy, you know, your coffeemaker, your knives, every single little thing you can think of.
Emma: So I actually, this pertains to that. I’ve been putting up by room tours for by Harry Potter BnB, which is in Florida which you can find from our Properties tab on our blog at abeautifulmess.com. Anyway, I’ve gotten a few comments, which is totally fine, totally fair criticism. This is you don’t need to defend me. It’s totally cool that people are saying this. I think I kind of agree with them. They’re just kind of pointing out like these rooms are so much more bare and not as decorated as some of your other room tours. And I’m like, yeah, you’re right. But also, I’d love to see you furnish a five bedroom house on a 10,000 dollar budget and it be as decorated as your personal home. I guess it’s shocking how fast it goes. It’s like, well, I was either buy more wall hangings or buy knives and I went with the knives. So, yeah.
Elsie: I will back you up on this. I think people are a little bit like too critical about that. And like, I get it. Like, you want it to be like a treat for the eyes. But when I get further down on my advice, you’ll see what I’m going to say about that. But you can’t. You can’t get to that level of decorating in every single space of a BnB and I would argue that people don’t want that. People actually when you go into a BnB, you don’t want like knick-knacks on every single surface the way you do in your own home. Like I really think that you’re BnB feels great in person. And mine are definitely a little bit more bare than my personal home.
Emma: Oh yeah. And it’s a totally fair. I really I’m not upset that people are saying that it’s totally fair. Fair criticism. No big deal.
Elsie: Yeah, OK. So the first step, this is obvious, set a budget. And I would say I mean, obviously you need to set a budget. You can…with cash you have there’s no taking out a loan or putting on credit cards to buy furniture and stuff. No, no, no. We are going to spend cash and it’s gonna be a little bit more than you want it to be. So I would say set the highest budget you can. I always tried to do it under $10000. And maybe some of you were like barfing in your throats right now and you’re like ten thousand. But ten thousand dollars is not a lot of money when you’re furnishing an entire house from nothing.
Emma: I feel like people really could be barfing in their throats because they’re like, that’s too cheap or because they’re like, that’s really too expensive. Like, it’s both in a way, you know, which is kind of funny cause I feel like $10000 to furnish a whole house is an insanely low budget.
Emma: But also, it’s a lot of money. It’s a lot of money.
Elsie: You know, there’s different paths you can go down if you’re doing a guest house that’s behind your personal home and you have six months to do it. Maybe you can do it for $3000 because you can buy everything from Facebook marketplace and the thrift store and paint it yourself and all of that. But if you’re buying everything from places like Wayfair and Amazon, you know, places like that, Target, shipping it. Yeah, shipping it all to the house. You’re definitely going to need at least ten thousand dollars to do a house with just bare minimum beds. Nightstands. Lamps. Couch. Coffee table. Decent dining room table. Yeah. Decent. And yeah, there are certain things that you obviously you shouldn’t or can’t buy used like towels.
Elsie: Set the best budget you can. And if you can do double that honestly like you’ll have more fun shopping for the furniture and it’ll probably turn out a little more your style, a little more special. But you know, it also depends on how many bedrooms you have. That’s definitely a big factor. If you’re doing one or two bedroom house, it’s not going to add up as fast like the ones we’ve been doing in Florida. They’re five bedrooms. That adds up pretty fast. The next step is plan the big pieces first. So the stuff that I would spend the most money on are a nice sofa, nice mattresses and a nice dining room table. Those are things that you want to last. You don’t want the cheapest possible thing. You want something that’s going to wear well and, you know, be good over time, but at the same time, don’t spend too much, because I will say I already had to replace my sofa in our AirBnB in Nashville. We’ve only had that open since last spring and I already had that…
Emma: What happened?
Elsie: One of the legs broke off of it and it and they fixed it and then it broke off again. And so they were finally like, sorry, but you have to send a new sofa. So yeah. Don’t spend like premium like dollars like what you would unlike in your own home on a dream sofa. But also don’t cheap out to the point where it’s gonna be uncomfortable. And you know, anyway, if you have an IKEA, that’s probably your best bet. If you have an IKEA driving distance because I feel like the quality there is good enough and the prices are best case scenario. The next step is to add details. And I think that in BnBs you can do a lot with paint, you can do a lot with removable wallpaper. You can make your own art. You can frame posters and things like that. Like it doesn’t have to be super expensive to decorate a room and make it really cute. And then I have a few tips for ways to sort of save money or stay within your budget. The first one is Facebook market place and reusing things. If you have the chance to do this, I always take at least a few things from my personal home when I’m setting up a BnB, just things that like, you know, I didn’t need anymore or I was planning to donate or sell and I will give them a new home. I love swapping things around any time I have a chance. Then this is my big, big piece of advice to stay on your budget but still achieve this big look because you are going to need to be thinking about your photos from the beginning like you’re listing on Air BnB or wherever you’re going to list it. You want the photos to stand out and like, for example, our house in Florida. There are a lot of houses in the subdivision where the homes are that are up on our BnB and kind of all the listings look the same. So a big opportunity for us was to give our photos an edge and I really feel like that’s going to make a huge difference. Just having like planning what your cover photo is gonna be, I think is a part of decorating. So what I like to do is choose three photo moments for the house. It can be indoor or outdoor. It can be a mural. It can be a wallpaper wall. I would definitely do at least one of them be the dining room or the kitchen and at least one of them be a bedroom and then probably the living room. So choose your moments. In our Florida house it actually might be the pool area, though, and spend more money on those moments to make them really good. Then you’re going to show your potential customer that it’s a cute, photogenic place to stay, because even people who aren’t influencers, even just, you know, your regular family going on a Disney vacation you still want, would rather have a cute house than a boring house, right?
Elsie: So, yeah, that can never hurt. So, yeah, I think planning those photo moments from the beginning is the best thing because then you can choose. OK, I’m going to spend a little bit more on these three rooms to make them extra extra cute. And if you have a couple of bedrooms or a couple of bathrooms that are a little bit boring, that’s OK. Honestly, like you don’t even have to have a picture of every single angle on your AirBnB listing, like we don’t even always put every single bathroom. You don’t have to. You just have to put, you know. The exciting stuff.
Emma: Yeah. So we’re gonna do a few like questions we’ve had listeners ask us before. Right before that, I wanted to mention one last thing, which is property managers so often people ask us, do you use property managers? And the answer is an emphatic yes.
Elsie: Honestly, I wouldn’t even for myself live with our lifestyle. We have full time jobs, right? Some would argue more than a full time job. So if you have a full time job that you love, you don’t have to manage your property on top of that. There are people that do it professionally who are really good at it. And in our experience, it’s been amazing working with managers.
Emma: Yes. And typically, property managers will take anywhere from 10 to 20 percent. I have heard of some that will take more than that. I’ve never worked with one that took more than that. So that sounds a little crazy to me. But it may happen in certain areas that are like very, very poppin’ for tourism. I don’t know. But typically, it’s 10 to 20 percent and you can get a property manager for long term or short term rentals. It’s seriously worth every penny. I wrote down like three questions that I’ve seen from listeners. They’re kind of general like I’ve seen them multiple times worded differently. So it’s not like from a specific listener. But if you have more Elsie, we can add to the list. First One. Do you think most of the guests booking your spaces are blog readers?
Elsie: Ok, so I wrote down 50 percent or less and…
Emma: I would say way less.
Elsie: Yeah, I like yeah. 50 percent at the most. I hardly ever get tagged or get a message from a blog reader.
Emma: This one is kind of similar, but also I think they’re getting at something else. So it is. Do you think you’d ever do a short term rental if you weren’t bloggers? Basically, I think they’re…the question…I don’t know. But from the times I’ve seen this, I think people are asking, is this just your way to get more spaces to decorate? And it actually doesn’t really make money.
Emma: I think is kind of what they’re asking, not in a rude way necessarily — maybe, but not really. Just more like. Does this really make sense or are you just needing more rooms to decorate for your blog?
Elsie: Right. Right. OK. So for me personally, I think I still would, but it is nice to have extra rooms to blog about. But like if you look at our blog, you’ll notice that in my personal home there’s probably like four to six posts for every room. And then my BnBs there’s usually only one. So I don’t think you get as much content out of it, but it is fun. I mean I…I do like that aspect of it and it’s definitely a nice bonus that occasionally we get to work with a sponsor for our BnB or whatever.
Emma: Yeah. That’s what I would say is like it’s a big bonus that we get to show the content. And we sometimes, you know, I…I think readers like it whether it’s sponsored or not. But when we do get a sponsor, which isn’t all the time, but when we do, I think that’s a big bonus for us and it’s a great collaboration. That’s really fun. But yeah, I like we mentioned earlier in the episode, as Trey explained, the 1 percent rule for Trey and I there’s really no way we could have bought our duplex in Nashville or our house in Florida, making it a long term rental. We have to do it as a short term rental in order to get close to that 1 percent rule. So that’s for us why we do it. It’s not so…it’s great that we get to blog the content. And I love it. It’s so fun. But it’s more about the 1 percent rule than…
Elsie: In other words, no, we wouldn’t buy a whole house just to do six blog posts. (laughs)
Emma: (laughs) Yeah, probably not. Probably not. Yes, it doens’t really make sense.
Elsie: It’s a good…it’s a little side business like it really is a small side business. But I think that in the long term of our lives, it’ll be a little more significant. It’s not a quick way to make money. Let’s put it that way.
Emma: No, not really. Okay. And then the last one is I’ve seen people asked, do you think a long term or short term property is a better investment? Like which one makes more money? And I kind of think, you know, from the 1 percent role, you could see, I think it really depends. And the reason why I think both those strategies work long term or short term, I think short term is a little bit more risky and it involves more upfront cost, but it can make more money in the long run.
Elsie: Yeah. Def definitely. They can both be good. It really, really just depends on your area.
Elsie: OK, so we’re going to do what are you looking at and Emma. What are you looking at.
Emma: I started a new book. I’m always starting new books. I didn’t finish my last one. I just didn’t get into it. I liked it at first and I want to watch the movie, but I didn’t get into it.
Elsie: What was it what was it what was it?!
Emma: Call Me By Your Name.
Elsie: Oh, you didn’t like the book? You know, I never saw the book or the movie, so…saw the book. (laughs) Okay, just move on.
Emma: Well, you do look at it with your eyes.
Elsie: I never saw the book!
Emma: (laughs) Yeah. I don’t know. I mean, I don’t want to diss it or anything because I know some people have loved it. So I don’t want to say it’s like bad or anything. I don’t think that. I just didn’t get into it. I don’t know. Maybe I’m not high class enough, but I do like the general idea behind it. And I’m definitely going to watch the movie. Very excited, too. Trey wants to watch it, too. I’m kind of waiting for him, for me to watch it.
Elsie: I want to watch it, too.
Emma: Anyway, I moved on. The book I’m reading now is called The Husband’s Secret, which is by Liane Moriarty. I looked I looked it up. Ok, so here’s the thing about this author. I love this author. She wrote Big Little Lies. If you saw that series or that book. But she has lots of books. I’ve read some of her other books. I love her. I believe she’s Australian. So I was trying to look up how to pronounce her name properly. And a lot of her interviews, the people interviewing her were Australian. And I was like, is this how you say it? You know, sometimes like British accents, people…they literally pronounce it differently than an American would. So I was like, oh,.
Elsie: There’s no way I know for sure, honestly.
Emma: So I’m sorry if I butchered her name. She’s an amazing author, though, and I love her book. So I wanted to read another one. And this one I just picked up randomly at a thrift store. I was like, oh, one of her books is here rad. So I’m reading it. Cool. That’s what I’m looking at.
Elsie: Ok, so we’re moving this week and I have been very stressed like ten out of ten. It’s not a good it’s not a pleasant time for me. So what I’m trying to do is just like anything, self-care, any kind of treat, anything that I can do to feel like a little bit better. So the only thing I’m reading quote unquote, reading is like my inspiration books. So I’m going to link all of these in the show notes: abeautifulmess.com/podcast. So I have this book, this Richard Avedon book. I’ve also just been feeling this like draw towards photography again. So anyway…
Emma: I don’t even know who this is.
Elsie: Richard Avedon is a famous photographer through most of the nineteen hundreds and he I think yeah I think he passed kind of recently anyway. He has beautiful iconic black and white photography. You would definitely recognize it if you saw. I really want one for my home.
Emma: Is it like it landscapes or?
Elsie: No it’s portraits of people mostly. Mm hmm. Well yeah. Like think like Vogue from the 1960s, like that kind of thing. And then I have this Kate Spade book that I love to look at. And I have the big Tim Walker book from the olden days and some art books that I got used. I have a Georgia O’Keeffe one, a Picasso one. So I’ve just been feeling really like I need to just fill my brain up with beautiful things and not think about anything serious. It’s also the week before when we’re recording this. It’s the week before Super Tuesday. And the coronvirus. It’s just been a lot And we’re moving, you know, it’s just been a lot. Thanks so much for tuning in this week. If you have any questions about short term rentals, we are always happy to answer. You can reach us at email@example.com and please remember to click subscribe on our podcast to get updates every week.