Less Is More: Achieving Financial Freedom Through Short Term Rentals With Rachel Gainsbrugh

 

You can be successful in the short-term rentals space even if you don’t have a big portfolio to start with. As long as you follow the less is more strategy. You don’t need a hundred doors, you just need one or two great properties, and you’re good to go. Because what you get in return is passive cash flow, financial freedom, and a lot of time on your hands. You may not be earning the big bucks but you’re still earning a way to live your life freely. Join Lisa Hylton as she talks to short-term rental expert Rachel Gainsbrugh about the less is more strategy. She’s a healthcare professional by day and a rental investor by night. She’s also the owner and manager of 18 luxury short-term rentals. Learn how she does it and what you need to know before you get into a market. Start your short-term rental journey today!

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Less Is More: Achieving Financial Freedom Through Short Term Rentals With Rachel Gainsbrugh

I’m super excited to have Rachel Gainsbrugh on the show. She was born in Haiti with a drive to make a difference and not take her parents’ sacrifices for granted. She was raised in Miami. She worked hard, became a doctor, and left with over $500,000 in student loans. She grinded hard to pay off her loans. When she found Airbnb investing, it became a game-changer for her, where she was able to make fifteen times on short-term rental real estate rentals over long-term rentals.

She is a healthcare professional by day and a real estate investor by night. She is the owner and manager of eighteen luxury short-term rentals and a lucrative cashflowing rental portfolio. She is a mom, a wife, and a real estate coach that has been featured on a Netflix TV show, showcasing one of her luxury rentals. I’m excited to have you on the show. Welcome to the show.

Thank you so much for this amazing platform where you are educating all of us busy professionals on how to generate passive income. Thank you so much for what you are putting out there.

Thank you for coming on and being a contributor to this. To get things started, why did you get started in short-term rentals?

I’m grinding it out, working all of those hours, multiple shifts, moonlighting between my husband and me. At one point, we had five jobs between us. I wanted to create a revenue stream that was more passive similar to what you teach, but I wanted it to be cashflowing. I wanted to make a difference, be meaningful, and move the needle for us immediately, not several years from now. I didn’t want to go in spending a whole lot of money. I didn’t have a whole lot of capital to invest.

I thought to myself, “What is the most obvious way to get into real estate investing, not spend a lot of money upfront, get my time freedom back, and not just by another job?” The first thing I bumped into was wholesaling. Wholesaling is going to be the answer. It turned out that when you count the cost, that is a lot of time capital. You may not need a lot of front money for wholesaling, but you need a lot of time capital. I identify quickly, “This is a grind, and that is not what I wanted to do. What is it that you wanted? Why are you getting into this?” For me, it was to get my time freedom back but still generate a significant amount of revenue.

I went down the list of all of the real estate investing strategies. I had been consuming real estate investing for the past few years prior to my first investment. I went down to the line, “What’s the obvious next one?” Fix and flip. That is a whole other full-time job also. There is a lot of capital that you may need to invest. You never know how that project is going to go. I leaked its indications for me, not a lot of capital returns on the front end, but passive. I looked at long-term rentals.

At one point, I found a property in Georgia. It was $300,000 for twenty doors. I was like, “This is going to be the thing that completely rocks our world.” I looked at rent rolls, and it is about $160 to $250 a month. My first question was, “Why don’t I live there?” That was astounding to me. When you look at the ROI and your NOI, there’s not much meat left on that bone afterward. I figured, “What else is there?”

I bumped into a short-term rental until investing. On the back end, there is that time capital that you’re going to spend. The revenue that you are able to generate on a month-to-month basis and the cashflow were amazing, especially if you are able to position this one property into a luxury short-term rental, which is not all that hard or super expensive to do. Once I found that, I niched there and I quickly identified that all you need is 1 or 2 of these to be wildly profitable.

 

Is that the strategy you employ now? Do you employ luxury investing in luxury short-term rentals?

I employ investing in nice properties and great locations. I position them to have a luxury field because I’m not going in breaking the bank. If you want to go high on luxury beachfront, a $1 million to $10 million investment is one segment. You can do that as well. As far as the luxury traveler, they have a specific need. If you understand what those needs are, you can position great properties and geographical areas into luxury properties.

That luxury traveler could still get that Instagrammable feels they are looking for. They are still able to reconnect with nature and live like a local. Those are some of the things that the modern luxury traveler is looking for. They are not looking for gold doorknobs or gold toilets. I want to make that distinction. A luxury listing versus luxury travel is different. If you can answer those needs of what that luxury travel is looking for, you are its chef’s kiss.

What’s the difference between people who are doing regular short-term rental and luxury short-term rental?

I have seen anywhere from, “We’re going to use grandma’s old beaten-up sofa, and we’re going to throw this in here. We’re going to make some money.” When it comes to luxury travelers, they are looking for three things. They are looking for a way to reconnect with whomever they are traveling with. I love to serve larger multi-generational multifamilies traveling with children and pets. That is where I get the biggest bang for my buck. They want to reconnect with each other. Can you curate an ambiance or a whole vibe where they can reconnect?

If we want to talk about value add, some of the value add that I would implement in certain properties is an outdoor living space that is amazing without breaking the bank. I’m not going to excavate and necessarily put in a pool, but we’re going to create an outdoor fireplace and a fire pit. We’re going to have comfortable seating and position the property so that we can have pockets of togetherness, whether it’s a game room or a movie theater set up with a large screen TV in the seating. Those are the things that you can implement.

It’s the ability to reconnect with one another and nature. I spoke about the outdoor vibe, but to understand and live like locals. Are there local recommendations you can make? Is there a local recipe that is popular? Can you put together a package that they can throw in a crock pot to eat a meal like a local? They want convenience. The technology associated with the property is going to be important like the keyless entry. If the luxury traveler is looking to enter and exit a property, that is their first impression. If they can’t go in and they are struggling for their lives to find the key in a lockbox somewhere, the whole vibe is off.

Connection, convenience, and the third is communication. Those are my three Cs of luxury travel. Communication is key, and it doesn’t break the bank if immediately you are sending out a message that greets them and speaks to the purpose of their travel. If it’s a vacation rental area, they are typically coming there to enjoy the amenities of the vacation area.

If you are in a suburban area and they’re visiting family, going to a wedding, or going to a funeral, you want to understand the purpose of that travel, and you want to speak to that. Communication is key. Let them know what’s available and your recommendations, “Do you like Chinese? Do you like Mexican? Do you like barbecue? Here are my top three recommendations.” It gives them a warm and fuzzy feeling, for sure.

In wholesaling, you may not need a lot of upfront money but you need a lot of time capital. Click To Tweet

When you talk about communication and a lot of this stuff, I’m sitting here thinking, “There is a lot to this.” Where does the passive part of this play in? For managing properties, what are the strategies that someone who is working full time says, “I want to invest in real estate to have the option to maybe take a different job or not do as many hours.” They’re trying to add real estate investing into their investment portfolio to provide streams of cashflow. What can they expect when it comes to managing their main job and getting this off the ground?

It is like starting any business. You want to know the ins and outs so that you can better inform your team. We have a small but mighty team on the ins and outs and what to do and what not to do. When I first started my business, I was CEO and cleaning lady simultaneously. It was a grind in those first few months as you were standing up this property but worth it.

Here is the deal. That is how you document and you create your standard operating procedures. You leverage your professional photographer to share with your cleaners how that space is staged. That goes into their instruction book on how to restage the space. They are not only cleaning, but they have to stage it as well. That is an added portion. You have those conversations with your guests. You set up your guidebook.

Once you hand it off to your virtual assistant or executive assistant, they can take it from there, rent, repeat, and re-leverage the conversations you have already had, especially if it’s off the cuff because we’re going to use automation to automatically respond to certain things that are typically asked. What is the wifi passcode? Although they have received it, that’s an automated response that the AI in your platform will detect and will respond to that type of question that is asked again.

I would say about 40% of the questions that are asked are responded to in an automated setting. For the other 55%, my team can handle it, and 5% would be me. The last time they escalated something to me was maybe a few months ago. As far as a weekly time commitment, anywhere from 3 to 4 hours a week is what it takes for me to manage our program.

What markets do you play in? It sounds to me that in the beginning, you were playing in the market that you live in, or have you expanded beyond that?

I wanted to have my hands in the entire deal the whole way through. My first one was in my own backyard, my second one was in my own backyard, and I expanded out. The Poconos of Pennsylvania and Smokies of Tennessee. Georgia is where I’m at right now. We’re building one in the Florida Panhandle on Rosemary Beach.

It sounds like you’re now developing. When you say building, what do you mean by building?

It’s a single-family phone home that we purchased. We purchased a lot in a community. We’re building one property on there, and a carriage house as well.

 

Did you focus on buying single-family homes as opposed to condos and townhomes? Why?

When I was looking at the different property avatars, and to get the biggest bang for my buck, I was leveraging my W-2. I was using 10% down loans. If I found a property that was $290,000, that is $29,000 that I had to invest, plus holding costs and things like that. I was leveraging 10% down loans. In order to get the biggest bang for my buck, I recognized quickly that four bedrooms in higher are where it was at. We only have 5 to 8 bedrooms. Five bedrooms plus is what we focus on.

We’re able to demand prices that, to me, are outrageous on those. It’s anywhere from $900 a night to $2,800 a night on those properties, depending on peak season, the location, and the demand, but who is it that I’m serving? My avatar is multi-generational multifamily traveling with children and pets. Imagine you say a partner, their siblings, your adult siblings with their children, and the grands, that’s about 5 or 6 paying adult units. Although that price point would intimidate little me by myself, if you’re going to split it 5, 6, 7, or 8 ways, you got to think about it that way, that’s 5, 6, 7, and 8 hotel rooms. What would that cost?

That’s going to cost a minute, but you have a full kitchen. You have the ability to connect and all stay in one place. Our properties are niche in that. We’re able to host large families and large wedding parties. They can all stay in one location. I feel comfortable demanding the nightly rates that we’re demanding. If I had a condo, I wouldn’t be comfortable demanding that, and I wouldn’t be able to host this avatar. That avatar happens to be me. I always have siblings, their spouses, and two random cousins whom all of a sudden, know your name now that everyone is going on vacation and we travel.

If you are not hosting pets, you’re leaving a lot of money on the table. We started off with no pets at all. When we finally broke down and said, “We’ll accept one pet at one property.” We saw a 30% revenue increase when we were hosting pets. Think about it. How much does it cost to put a pet in a kennel locally by you? They are paying hotel nightly rates. That is why we’re able to demand that. We are one of the only ones in a lot of our locations that is large, and we host pets. The competition is steep.

Talk about expenses. When you have many people, and you’re also dealing with pets, do you see an impact on the bottom line?

Here is where a lot of operators make the biggest mistake, especially If you are looking to position yourself from long-term rentals to short-term rentals. I made this mistake as well. When it comes to occupancy rate, everyone wants the highest occupancy rate, but not necessarily. If my occupancy rate goes above 70%, I start to have a loss. It is what I detected after a couple of years of running the data. If my occupancy rate stays at right about 65%, I am good. I’m the most profitable at a 65% occupancy rate for the type of properties that we own personally.

If I had a one-bedroom condo, I would want people in and out. There is not a significant amount of me on that bone. You want to drive the occupancy, but for us, we drive the revenue, not necessarily occupancy. The amount of time it takes us to do our turnovers to get that property back to that pristine brand-new state is more important than to shove another group into the property.

When we were at 80%, we weren’t able to quickly come in and turn around the property, change all the light bulbs, tighten all the screws, and do all the things. The next thing you know, you have a lower rate. You have maybe the wrong avatar in your property if you’re going to drop your rate because you’re trying to drive occupancy. In order to drive occupancy, you are reducing your rate. Now you have the wrong avatar, not the avatar that you know and you know how to serve. The property has been damaged. The next thing is you have complaints. You are issuing refunds. At 80%, we’re at a loss. We’re starting to lose money.

The 3 Cs of luxury travel are connection, convenience, and communication. Click To Tweet

When you look at those numbers, I spreadsheet the life out of it. 65% is our sweet spot. We drive the most revenue at 65%. There are a couple of things. The expenses are lower. Your turnovers are lower at 65%. You are leveraging a lot of linens for these properties. We put things in place, such as a refundable linen deposit. We use our linens and enjoy our linens, but we’re not going to rub all of the self-tanner. We’re not going to do our body with self-tanner and roll in the linens because we use natural fiber and high-quality sheets. They are expensive.

Those are expenses. The way we mitigate against those things are we add in additional fees. For pets, there is a fee. The cleaners, yes. The turnover, but these are passed through charges because as much as you’re charging the guests, you pass it along through to the cleaner. Anywhere from about 30% of your gross revenue is your expenses overall.

It’s no secret that we have rising interest rates and an inflationary environment. Some people might be skittish about moving into a luxury short-term rental market in case they feel that there is a recession on the horizon. People might not be interested in traveling in this way for a little while. What are you seeing from, in terms of your business and maybe even through the COVID time period, because I believe you were running this business before COVID?

I want to take it from two approaches. For instance, for those who are higher income W-2 earners, we leverage cost aggregation studies like multifamily for our short-term rentals. We’re at 100%. You can leverage 100% and have those write-offs against your W-2 income for 2022. By 2023, it’s 80%, and next year is 60%.

I’m a contrarian. I believe now is the time to buy. It’s always a good time to buy real estate, especially if you can run your numbers. It is the time to buy and leverage 100% cost segregation and 100% bonus depreciation if you can meet material participation. If you put property and service in 2022 and you are able to manage it, even for the end of 2022, I had members of our community. They put a property service in December of 2021.

They were able to leverage all of those savings, hundreds of thousands of dollars of savings, which I love. If you’re skittish about rising interest rates, think about that, too. Run your numbers to your evaluation, but think about the tax benefits that are available to you if you are still working at W-2 and you’re getting taxed significantly.

The second thing is that it is interesting, and it’s important to me. Members of my community know that when you’re putting a property and launching a property, the reason I say all you need is one to be highly profitable is we’re not going to launch a MEP property. We’re not going to launch a property that looks like anyone else’s property.

It’s not going to be boring. We’re not going to use grandma’s old furniture. We’re going to invest. We’re going to make it one of the top 10% to 15% of that market. If you’re in the top 10% to 15% of your market, you do not have competition. It’s not a race to the bottom. If you’re going to buy a middle-tier property, you’re going to be in that competitive realm.

I am okay with buying a property that needs a little bit of lipstick. All of our properties are going to need something because we’re not going to break the bank. Whether we need to replace the flooring, flatten ceilings, or create something, you can create a property that is at the top of the market. You get to create that. We have one of our properties where the ceilings are made of metal. It’s called my industrial glam. People want that ambiance. They want to go in and book our property to see what this game room or gym room look looks like in person with this metallic ceiling.

 

Do not launch a mad property that looks like everyone else’s. If you launch a MEP property, be afraid. You are going to be competing with the other 32,000 listings in that market. If you are in that top tier, there is a different demographic of travelers who purchase at that top tier. At that point, it’s you and maybe 1 or 2 other properties. It’s a conversation between you and the traveler, who oftentimes have lots of resources. One thing you don’t see the ultra-rich scrimping is their travel. They’re going to travel, and that’s whom we’re speaking to.

In the middle of the mass, it’s going to be between you and someone whose budget’s tight. That’s the reality of it. What is it that you can do to elevate that property? Can you see a vision for it? Even if I’m going into a property, it’s not there yet. My husband has said multiple times, “I don’t see it.” I can say, “I see it. I see something here.” Having that vision, painting that picture of what you think you can create, making those updates, and the value add is where you’re going to generate the revenue and get to financial freedom.

I’m listening to this, and I’m thinking, “Suppose I’m not someone who sees that in the property. You probably need to partner or hire someone who can help you with the staging and all that stuff so that way you can position the property for its maximum profit.”

One exercise that I do within my community is I have members who have the resources to go ahead and invest in a top-end stage. I didn’t have that when I was starting. I didn’t even know if this was going to be a good business model for me. The woman who set up our property for Netflix stages for HGTV. She is a coach in my community. She is available to give masterclasses and audits, but there are many resources out there, honestly speaking.

If you want me to give you a tactical resource, if you go in, there’s Wayfair, for instance. They have Wayfair by the rooms. You could look at a photo and look at what one bedroom looks like. If you want to go Mediterranean, Scandinavian, or French country, you pick a theme, and it’s almost like color by lines or color by numbers. There is a bed, and there’s a painting. It is simple. You look at the bottom, and there is a shopping cart of all of those items.

An activity we do in one of our modules is if you have no aesthetic design idea, what is a general thing you think you want to go with? Select it and look at exactly how that room is formatted. You have different options and imagine what your room looks like. You can select that way. How does that outdoor space look like? What can we add? That’s one of the components that we look at.

The second component that we look at is important. I am a spreadsheet girl. I look at the numbers. I’m all about the numbers, but once I identify the numbers, understand what’s going on, and I know this is a market I want to go to, the next thing I look at is the travel patterns of my customer. Who is coming to the area, and what do they want?

I look at the top-tier properties, the ones that are booked the most. I look at the most sought-after amenities. Let them inform you. Don’t go and put a property out there, and nobody wants it. You don’t want to put a property out there that no one asked for. Understand what the travelers have asked for. Understand what they want. What is great about Airbnb data is that it is like open source data. Rinse and repeat, but make it a little bit better.

This brings me nicely to my next question here, which is about mistakes that many people make when starting out.

Let the travelers inform you of what they want. Don't put a property out there that nobody asked for. Click To Tweet

From a design perspective, mistakes that many people make when starting out are going cheap on the design, going cheap buying furnishings that they are going to have to quickly replace sooner than later. I understand that you want to be cost-effective. When we started, we furnished an entire four-bedroom from an estate sale of a designer who is selling her four-bedroom home and moving to a one-bedroom condo on the beach. You are looking for high quality. If you can’t go into the department store and get a high-quality, look for high-quality moving sales in your area.

You are looking for sturdy, solid wood furnishings, but don’t necessarily go for cheap and flimsy because it’s going to be a waste of money. You think you’re saving money, but you’re going to waste money. Don’t go cheap. If you can, swing and invest a little bit more in the amenity or a design that you see is sought-after in your market because it will pay you back dividends.

What about the places that people choose, even markets or places in the city that maybe some new investors might choose to buy? They might come in thinking maybe one way but realizing that they probably should have considered it another way in terms of location.

That is a big mistake I have seen from an investment perspective. Because everyone else is going into a market doesn’t mean that you should go into that market as well. A big driver for me to go into a market is to look at rental demand. That is important to me. Another word that I hear floating around a lot is saturation. We need to understand that saturation is an economic and scientific term.

If there’s an increase in product, you have a lot of the product in a particular market, and you have a revenue increase in the overall market. The product increased by 30%, and revenue increased by 30%. That tells me, “This market is jumping. There is a demand.” Do not be afraid if the market has a whole lot of listings. You’re thinking there is saturation as long as the revenue is increasing as well. If there’s an increase in the product, but the revenue has decreased, the nightly rate is now lower, and the overall market revenue is lower, increase by 30%, a decrease of revenue by 20%, you’re at a 10% loss. That is a market that I consider to be not a thriving but a dying market.

That is the definition of saturation for me. Economic experts don’t come for me. I’m not an expert. I’m telling you about my experience. That is a big driver for me. Understand how that market is behaving. Just because everyone else is investing there, doesn’t mean you need to invest there too. Is there a demand for that market?

Some of the investors that I work with are a mixed bag, and that’s okay. You do not always have to invest in a property to get your 30%, 40%, or 80% gross ROI rate. Is this property’s purpose solely an investment property, or is it also a lifestyle play? I have a couple of 60 and 70-year-olds. They want a space that they can finally enjoy. If that’s the case, we’re going to do your numbers differently. Do not expect the highest ROI because of what we’re getting on the other end. How do you quantify that quality of life that you worked decades for and you so want to enjoy? It’s a balancing act, and it’s a lifestyle play.

The first thing you need to do is understand why it is you’re investing there. If you’re investing there because this is a place that’s near and dear to you, this is a treat for your grandkids. Some of the numbers may not all the way make sense, like, “We can do better over here.” If it’s tugging on your heart and if you can pull it off, do it. This is your life to live, but you still want to do it right because when you’re not there, we want to drive the revenue as much as possible. It is a balancing act, and I love that. I want everyone to have a piece of real estate that they can also enjoy, that can bring back revenue, pay for yourself, post a little something in my pocket and I can also enjoy it.

Getting data is my next question because what’s important about this business is probably doing the right type of research and collecting the right data in terms of the rental rates per night, being able to pull that information, and avoiding bad markets which probably have regulations that don’t allow you to operate Airbnbs. What’s your advice when it comes to doing the proper research to avoid things like that?

 

There are multiple tools that I use. I use about 3 or 4 tools, but the first free one that I use is called AirDNA. They have something called a Rentalizer. You can google it. It’s free. My first step in analyzing a market to identify if I want to go into a market I’m not familiar with is to pull up that tool and put in the address, number of bedrooms, number of bathrooms, and number of guests. My rule of thumb is anywhere from 3 to 4 guests per bathroom. For a three-bedroom home, that’s 9 to 12 guests.

What I’m looking for is not necessarily the revenue numbers because there’s a lot of nuance around the revenue numbers, but the occupancy rate. The occupancy rate overall for the last twelve months tells me whether or not there are travelers in that market. If it is less than 50% occupancy rate, run. That is a high-risk investment for short-term rental. I want the occupancy rate to be a solid 50% or higher. I can drive the occupancy to my 65% or wherever I want it to be.

I am setting up and marketing my property. If it’s 32%, that’s a big mistake. I do see a lot of members come to me and say, “Why is my property not renting? We just launched it.  Everyone says that within a day, they hear ding ding, but I’m not getting any bites.” The first thing I do is pull up that free tool, and I’m like, “It’s 30% occupation, and no one’s coming to that market. There’s new construction. Let’s see what they’re building. Maybe they’re building an airport. It’s a tractor supply. That’s doubling down. There’s nothing here.” It’s a true story.

Please understand the travel patterns of a market. If no one is coming to that market unless you have some secret that it’s going to be the new Hollywood of the south or something, all right, but if it’s less than 50%, I consider that high risk. You can do that for your home address if you want to. It’s a free activity to know what an occupancy rate is. It’s great exercise. That’s important to know the numbers. That is where I start, and I will go into a paid version for that market on AirDNA if I’m going to be putting some money down on escrow to do a deeper dive and look at that rental demand, look at all of the comps, pull those and see what those properties are generating in terms of revenue and month over month.

They are seasonality. I need to understand seasonality. I need to understand regulations, the growth, and your demand. What are the drivers of the revenue? Does it have to have a pool that is heated to drive that revenue? It has to have a pool that is heated to drive that revenue. You need to understand all of those nuances to make sure that you can set yourself up for success and not buy a money pit.

I have noticed people buying short-term rentals, and they go from short-term to medium-term. Instead of nightly stays, they’re doing 1 month or 2 months with nurses and stuff like that. It feels to me because of the way you have chosen to play in this space that you don’t end up having to go that route at all, or maybe I’m wrong.

There are different types of medium-term rentals, and I’m glad you asked that question. We bumped into a lucrative medium-term rental in a suburban area in Georgia. When it comes to travel nurses, a lot of people are talking about travel nurses, and as you can imagine, that’s their way of wanting to create some type of passive income stream. I call travel nurses the mythical creature of short-term rentals because a lot of hosts want to serve travel nurses.

My sister is a travel nurse there. She would rather sleep in her BMW than pay above-market rent when she was traveling. She has a whole mortgage. She had a child her whole life. You don’t travel to go out there and pay luxurious nightly rates. That is one big mistake. I see hosts are going to position their property and try to attract these travel nurses and still want to demand those higher nightly rates. It is not happening.

I tried it myself, and I finally broke down. I reach out to the nurses and say, “Why is my property not being rented out?” They were like, “At those rates, it’s too high. You have a big old 4 or 5-bedroom home.” That nurse wants a studio to themselves in their privacy. They are not wanting to share. I have seen it too, but it is not a lucrative strategy. You may get a little bit more than market rent, but I need to set the expectation that you’re not going to get your Airbnb nightly rates.

Don't go cheap and flimsy on design. You think you're saving money but you're really wasting it. Click To Tweet

It does help with regulation, especially in those areas like New York, where it’s heavily regulated, and you’re not allowed to do anything less than a 30-night stay. I have seen that position. What has helped us with midterm rentals has been the insurance policyholders, strangely enough. I have an article I published in BiggerPockets about this. I call it temporary housing, the secret sauce, or something like that for short-term rentals.

This is an article about us repositioning a property, and an insurance company reached out to say a big box, Allstate Farm. One of those reached out. Unfortunately, a member of our community’s home had burnt down. They needed a place to stay that was still within their same standard of living and same school district for their children, and they were willing to pay close to what we were asking for on the short-term rental side because we were at a two-night minimum. We went back and forth, and they stayed with us.

They booked for one month. They sent a notice to extend eleven times. They stayed for nearly a year at those rates. That’s my specific midterm rental strategy. My medium-term midterm rental strategy is specifically the insurance guests. We do house relocation guests to the area. We have a lot of guests coming in from California to do the filming.

There are executive directors of movies. I can’t say their names, but they are considered medium-term rentals. They are not staying for two nights. They are going to be there filming for months. They are looking to purchase eventually, maybe six months. They are going to purchase something. We have been hosting those individuals as well. Overall, we are a short-term rental, two-night minimum. If you get a couple of those a year, that covers the whole property and some.

That last bit that you said, you get a few of those. It ties nicely with one of the topics we were starting with. Less is more to get back to financial freedom. I want to close with this because you even mentioned it. Many people feel like they need to build this gigantic portfolio of long-term rentals, even short-term rentals, all this stuff.

One of the things that you share with people is that you don’t need that much. Can you talk about what that means? I feel like $8,000 to $10,000 a month is what a lot of people desire in terms of passive income. If they get more than that, they are super happy, but that is where they are at. Could you talk about whether that is even possible with the whole “less is more” strategy?

Let me give you a real-life example. We purchased a single-family home. It was $400,000. It was up there. We were able to leverage a vacation rental loan, and there was a local lender that we leveraged somewhere around 5% down. Overall, $20,000-something to get into this home. We did leverage some savings here and there and some revenue from another property we’re in.

The property was being rented as a long-term rental for $1,800 a month. We got the property. We updated about $30,000 of updates to the property, not too much. We furnished it for another $20,000, and we launched it. I used a dynamic pricing tool to price my nightly rates. Since we’re onboarding a new cleaning team, I decided to place it for a 30-night minimum stay for that first month to set it up with the cleaners and get everyone acclimated, but quickly, I knew I was going to reduce it.

When I turned on the dynamic pricing tool, which you do have to train, there was an AI associated with it. You got to get it going. Sometimes it overshoots, and sometimes it undershoots for what your nightly rate is. For the 30 nights, it calculated $28,000. I was expecting $8,000 or $9,000 for that market, which is less is more. $8,000 or $9,000 for a 5-bedroom home or a 6-bedroom home in certain markets is $28,000. I thought to myself, “This is outrageous. Let me turn it on to turn it back off.” It got booked at $28,000. The next month, it was booked for $15,000 and then $21,000. On average, it generates about $21,000 a month as a medium-term rental or a short-term rental, depending on who is booking it.

 

What would one property like that do for you? I was thinking, “What an anomaly,” until I met others in my community who are quietly doing the same. My friend Alex Savio is a respiratory therapist. He had two properties that generated $49,000 back in July 2021 in the Smokies. I started to look around for who else is generating 100-door types of revenue with 1 or 2 properties.

My mission is to show how less is more and figure out a way. If you want 100 doors, more power to you. I am with you. I fully support you. Me as a mom with a whole husband, 2 boys, and 3 dogs, I knew for me, I needed that time freedom as well. Managing and putting my all into 1 or 2 properties is more feasible than going after 100 doors.

I still get jealous when people say, “I have 100.” I get door envy like everyone. Pray for me. Count the cost. It’s feasible. It can be done. You need to go in understanding the market, understanding the types of properties that are generating that revenue, and identifying properties that may be close to it where you can add your juice to it to push it and squeeze the juice out of each property.

I squeeze every juice out of the property because I’m only aiming to have a few. You put your all into it. You squeeze the juice out of it. You add on amenities. You make great recommendations. You upsell certain things, “Would you like some fresh-cut flowers? We’ll deliver groceries.” All of those things can be automated and set up by your virtual assistant or your assistant to squeeze the juice out of the property. We’re not going to slap a whole bunch of properties out there. We need to make 1 or 2 profitable. That’s all you need. That’s my story, and I’m sticking to it.

Thank you so much. If my readers want to learn more about you because I know you still have a Facebook community for luxury rentals and short-term rentals, where is the best place they can go to learn more about everything?

A lot of people ask about the markets we are investing in. If you go to 75Gems.com, you are going to have access to my 75 cities with the highest profitability. You can reach me through my Facebook group, my Instagram, and all the other places you can find me.

That is the place to be checking out for sure. Thank you so much, Rachel, for coming on. It was a pleasure.

Thank you so much for having me, Lisa. It’s so much fun.

Awesome.

 

Important Links

• Rachel Gainsbrugh – LinkedIn
• Wayfair
• AirDNA
• BiggerPockets
• 75Gems.com
• Facebook – Short Term Gems
• Instagram – Short Term Gems
• https://www.ShortTermGems.com/

 

About Rachel Gainsbrugh

Rachel was born in Haiti with a drive to make a difference and not take her parents’ sacrifices for granted. She was raised in Miami, worked hard, became a doctor, and was left with over $500K in student loans.

So, she grinded hard to pay off her loans. When she found AirBNB investing, it became a game-changer for her where she was able to make 15X on short-term real estate rentals over long-term rentals.

Now, she’s a healthcare professional by day and a rental investor by night. She’s the owner and manager of 18 luxury short-term rentals with a lucrative cash-flowing rental portfolio, mom, wife, and real estate coach that was recently featured on a Netflix TV show showcasing one of her luxury rentals.

Rachel is passionate about helping professionals create a life they don’t need a vacation from through AirBNB investing.

 

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