Real Estate Rookie Podcast Episode Summary Episode: 20+ Rentals in 2 Years but “Stuck” with the Wrong Strategy? (Rookie Reply)
Release Date: December 20, 2024
Hosts: Ashley Kerr and Tony J Robinson
Source: BiggerPockets

Introduction

In this engaging episode of the Real Estate Rookie podcast, hosts Ashley Kerr and Tony J Robinson delve into real-world challenges faced by emerging real estate investors. Filmed live in Southern California, the episode focuses on addressing listener questions sourced from the BiggerPockets forums. The primary discussion revolves around overcoming strategic stagnation after rapid portfolio growth, ensuring landlord anonymity, and optimizing short-term rental exposure and pricing.

Listener Question: Navigating Strategic Stagnation After Rapid Growth

Timestamp: [00:05] – [03:28]

Question Overview: A listener and their fiancé recount their journey of achieving substantial growth in real estate investing over two years, accruing over a dozen flips, 20 rental units, and two self-managed Airbnbs. Despite this progress, they feel directionless and are struggling to identify the next steps to scale further effectively.

Key Points Discussed:

1. Clarifying Investment Goals
   Tony J Robinson emphasizes the importance of defining clear investment goals:

   "What are your actual goals? It sounds like he said his fiancee is already full time in the business. He's still working his day job. So it's the goal to also get him out of his day job." [03:43]

2. Evaluating Current Strategies and Equity
   Ashley Kerr suggests assessing the equity within current long-term rentals to leverage 1031 exchanges for scaling:

   "I'd like to see... how much equity is actually in those rentals to do that." [04:38]

3. Focusing on a Singular Strategy
   Tony J Robinson recommends concentrating efforts on one strategy to enhance performance:

   "Maybe part of the reason that none of these have really struck... is because you have your attention divided in so many different areas." [05:14]

4. Enjoyment and Sustainability in Strategy Choice
   Both hosts stress the significance of enjoying the chosen investment path to maintain motivation and effectiveness.

Notable Quote:

"It's actually a good problem... because in the last 24 months we tried all of these different things. They all seem like viable options. We just can't decide which one we want to go down." – Tony J Robinson [07:57]

Listener Question: Protecting Personal Information as a Landlord

Timestamp: [14:59] – [25:32]

Question Overview: A listener inquires about methods to return security deposits via certified mail without disclosing their personal return address, expressing concern over maintaining anonymity from tenants.

Key Points Discussed:

1. Utilizing P.O. Boxes and Virtual Mailboxes
   Ashley Kerr recommends opening a P.O. box or using a virtual mailbox service to obscure personal addresses:

   "You can use a virtual mailbox where... you can have another address that you can use as a return address for like a security deposit." [17:02]

2. Implementing Separate Phone Numbers
   The hosts discuss using services like Google Voice or Open Phone to manage tenant communications without revealing personal phone numbers.

   "Open a Google Voice number... or consider Open Phone for more advanced call routing." [20:34]

3. Leveraging LLCs for Anonymity
   Tony J Robinson highlights the advantage of forming an LLC in states offering greater privacy, such as Wyoming or Delaware, to shield personal information:

   "If you're really worried about that, then open up your LLC in a state where there's a little bit more anonymity." [19:51]

4. Digital Communication Tools
   Transitioning to email or text-based communications can further minimize direct contact, enhancing privacy.

Notable Quote:

"You can keep a lot of communication with residents through email, through text messages, where you don't even have to talk to them on the phone, even if you don't want to." – Ashley Kerr [22:42]

Listener Question: Enhancing Airbnb Listing Exposure and Optimizing Pricing

Timestamp: [28:02] – [35:35]

Question Overview: A new short-term rental host reports low visibility of their Airbnb listing on the platform's map and seeks advice on boosting exposure. Additionally, they inquire about effective pricing management software beyond Airbnb's Smart Pricing.

Key Points Discussed:

1. Understanding Airbnb's Pricing Algorithms
   Tony J Robinson explains that Airbnb tends to prioritize cheaper listings to remain competitive with hotels, which can inadvertently suppress visibility for higher-priced listings:

   "Listings with lower prices tend to rank higher. So they're pushing the cheaper listings on the platform." [30:25]

2. Adopting Third-Party Pricing Software
   The hosts advocate for using specialized pricing tools like PriceLabs, Beyond Pricing, or Wheelhouse to better manage dynamic pricing based on various data points:

   "We use price labs... it's going to give you so many data points to help you make the right decision around what your price should be on different days." [30:25]

3. Hiring Revenue Managers
   For hosts managing multiple listings, Tony J Robinson suggests employing revenue managers who can intricately handle pricing strategies, especially when scaling up the number of properties:

   "We just hired a revenue manager... they're running everything for us." [33:26]

4. Balancing Pricing Strategy with Market Demand
   The importance of aligning pricing strategies with market demand and seasonal events is highlighted to avoid having to undercut prices as events unfold:

   "They are pushing the cheaper listings... you have to somewhat move with the market." [32:43]

5. Investment in Pricing Tools vs. ROI
   Tony J Robinson underscores the value of investing in pricing software even for single-property owners due to its low cost relative to potential revenue:

   "The software? Yes, 1000%. Even if you only have one property... like 10 bucks a month." [35:12]

Notable Quote:

"If you're struggling with how to price your short term rental, really look into some of these different avenues to kind of outsource this and kind of take it off your shoulders." – Ashley Kerr [35:35]

Conclusion

This episode of Real Estate Rookie offers invaluable insights for novice investors grappling with rapid portfolio growth and strategic indecision. By emphasizing goal clarity, strategic focus, safeguarding personal information, and leveraging advanced pricing tools, hosts Ashley Kerr and Tony J Robinson provide a comprehensive roadmap for sustainable growth in real estate investing. Whether managing multiple properties or finetuning a single listing, the advice shared equips listeners with practical strategies to navigate common pitfalls and optimize their investment outcomes.

Additional Resources Mentioned:

• Revenue Management Services
• Pricing Software: PriceLabs, Beyond Pricing, Wheelhouse
• Virtual Mailbox Providers
• Communication Tools: Google Voice, Open Phone

For more episodes and resources, visit BiggerPockets Real Estate Rookie.