348. How to Turn ANY Airbnb into a Money Machine with Taylor Jones

Summary

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Episode 348: How to Turn ANY Airbnb into a Money Machine with Taylor Jones

Podcast: Tax Smart Real Estate Investors Podcast
Host: Hall CPA
Guest: Taylor Jones (Mr. Jones STR, STR Search)
Date: October 7, 2025

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Episode Overview

This episode dives deep into the strategic and data-driven approaches to making short-term rentals (STRs)—like Airbnbs—profitable investment vehicles, not just tax plays. Host Hall CPA interviews Taylor Jones, founder of STR Search, who shares actionable insights on market selection, property evaluation, amenities, maximizing returns, and the importance of objective, numbers-based decision-making in the STR market.

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Key Discussion Points & Insights

Taylor Jones’ Background & Approach

• Data-Driven Mindset: Taylor’s background in analytics (baseball stat lover) led him to prioritize unemotional, numbers-focused decision-making in STR investing.
  • “Anytime you allow personal biases or emotion to get in, you start skewing with the profitability… For us it's very non emotional, it's very numbers driven and that allows us to make very high ROI decisions with our clients.” — Taylor Jones [02:08]
• Track Record: STR Search has helped clients purchase over 256 STRs, using data to inform every aspect: market, property, amenities, design, and operations.

State of the Short-Term Rental Market

• Hyperlocal Nature: Short-term rental success is highly dependent on local market dynamics.
  • Some markets are growing, some are flat, and others declining post-COVID.
• Demand-Driven Markets: The key strategy is prioritizing high-demand destinations—urban-adjacent vacation spots, national parks, and areas with perennial draw (e.g., near major metros or natural attractions).
  • “You could be giving out gold-plated bars to people at check in, but if you don't have enough demand of people walking in the front door, it doesn't even freaking matter...” — Taylor Jones [04:39]
• Avoiding One-Horse Towns: Markets reliant on a single demand driver (e.g., Disney in Orlando) pose outsized risks if that driver falters.

Winning Strategies in High-Demand STR Markets

• Amenities & Design: “Elite design and great amenities” are critical differentiators, especially as baseline supply rises.
  • Amenities matter in nearly every region (coastal, mountain, urban). Pools, pickleball courts, playgrounds, etc., can vastly increase revenue and guest satisfaction.
  • Example: In coastal Florida, being 5 vs. 15 minutes from the beach has little revenue impact; what matters is the amenities the property offers.
  • “Pickleball courts are the ultimate cachet right now… A home with a pool vs. without will typically yield $30K–$70K in revenue difference on a per-bedroom basis.” — Taylor Jones [09:00]

ROI Realities for Short-Term Rentals

• 4 Core Return Pillars:
  1. Tax Savings (e.g., bonus depreciation)
  2. Cash Flow
  3. Loan Principal Paydown
  4. Long-Term Appreciation
  • “You don't get all four perfectly… If it was, every investor would exploit it and it would quickly not become a great market.” — Taylor Jones [12:34]
• Tailor to Investor Goals: Some markets yield better appreciation, others offer higher cash flow or greater tax benefits due to lower land values. Individual goals should dictate market and property selection.

Headwinds & Industry Evolution

• Finite Opportunity: STR is maturing, with supply eventually restricted by regulation or market conditions.
  • Regulations often mean stricter requirements (e.g., parking, safety) rather than outright bans.
  • “There is a finite amount of A-level short-term rentals… It is a race to accumulate as many as possible.” — Taylor Jones [16:46]
• Professionalization: Shift from casual, first-time operators toward more experienced, multi-unit owners; parallels seen in self-storage and multifamily.
• Institutional Involvement: Not yet mainstream due to scale inefficiencies; large funds can’t easily deploy capital “brick-by-brick.”

Getting Into STRs: Timeline & Practical Advice

• Acquisition Timeline:
  • Working with STR Search: Average client under contract in 32 days. Full close to listed property: 8–18 weeks (depends on renovations, design, and furnishing).
    • “We’re pouring over 250 to 300 deals a day across, you know, the top 30 high performing vacation markets…” — Taylor Jones [23:57]
  • Furnished vs. Unfurnished: Buying ready-to-go furnitured properties accelerates timeline, but may sacrifice A-level quality unless overhauled later.
• Seasonality: Try to launch before peak season for best initial performance, but strong properties will perform over time regardless.
  • “Buy a really good asset. You're not flipping this inside of 12 months.” — Taylor Jones [27:56]

Tactical Year-End Strategy for STR Tax Benefits

• Year-End Tax Play:
  • If aiming for 2025 tax benefits, act quickly—by late September, it’s already tight.
  • If out of time, consider buying a furnished B-level property to secure tax savings, then rebrand & renovate to A-level in the following year.
  • “You can buy a B today, turn it into an A. That's probably your best strategy as we sit here in late September recording this…” — Taylor Jones [30:56]

STR Operations for Max Results

• You must excel at all three pillars:
  1. Buy the Right Property
  2. Design & Amenitize for Market Demand
  3. Operate Effectively (pricing, listing optimization, guest service)
  • “You do need to buy a good property in good market. You also need to renovate and design it well. And you do have to operate it.” — Taylor Jones [35:41]

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Notable Quotes & Memorable Moments

• On Entering High-Demand Markets:
  “At the end of the day, you could be giving out gold-plated bars to people at check-in, but if you don’t have enough demand… it doesn’t even freaking matter.”
  — Taylor Jones [04:39]

• Demand Risk Example:
  “When your entire investment thesis is built around one thing… that carries risk and you’re actually seeing it in that exact market right now… attendance numbers drop, which naturally means there’s less people visiting the area.”
  — Taylor Jones [06:25]

• On Amenities & Investment Logic:
  “From a consumer standpoint, if you have to drive five minutes to the beach, you still have to load the car… whether you drive five or 15 minutes is completely irrelevant.”
  — Taylor Jones [08:46]

• On Professionalization:
  “It’s definitely not 2020 where it was the wild, wild west. But we’re still early enough [in STRs], second or third inning.”
  — Taylor Jones [19:56]

• On Buying the Right Asset vs. Timing:
  “Buy a really good asset. You're not flipping this inside of 12 months.”
  — Taylor Jones [27:56]

• On Pillars of STR Success:
  “This is a three pillar business… If you only do two out of three pillars, you can still not make money in this asset class.”
  — Taylor Jones [35:41]

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Timestamps for Key Segments

• [02:08] Taylor’s background and numbers-driven STR approach
• [04:08] How to select a winning STR market
• [07:58] Winning strategies: amenities vs. location
• [09:00] Impact of pools and pickleball courts on revenue
• [12:30] The four return pillars in STR investing
• [16:46] Macro headwinds and the finite window in STRs
• [19:06] Professionalization & rise of “multi-unit” retail STR owners
• [20:19] Why institutions aren’t dominating STRs yet
• [23:35] Timeline: How long it takes to get into an STR
• [27:36] Seasonality and timing mistakes in launching
• [30:56] Year-end “tax save then upgrade” strategy
• [34:12] How STR Search supports investors and next steps
• [35:41] Why all three pillars (buy, design, operate) are essential

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Learn More / Take Action

• STR Search
  For data-backed STR investment services, content, and resources: strsearch.com

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This episode is a must-listen for any investor considering STRs, with actionable advice on underwriting, executing, and optimizing Airbnb investments for both long-term wealth AND tax efficiency. Taylor Jones’s no-nonsense, numbers-first approach provides a clear path for turning any STR into a money machine.

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Transcript

[A]

You're now listening to the Tax Smart REI Podcast, the number one tax podcast.

[B]

For real estate investors.

[C]

Your source for all things real estate, accounting and tax. Here we reveal our secrets that can save you thousands in taxes, streamline your accounting process, and help grow your business. Stay tuned to hear insightful interviews with industry experts, successful real estate investors, and current clients on what strategies they use to grow their business and how they steer clear of Uncle Sam.

[B]

Thank you for tuning into this week's episode of the Tax Smart REI Podcast. Today we're joined with Taylor Jones, also known as Mr. Jones STR. He helps people through his company STR Search get into short term rentals. He sees a lot of different things that's going on in the marketplace. It's a lot of experience in this area. So super excited to have him on to help us navigate this short term rental market that we're seeing. And we'll be diving into a lot of fun stuff including the state of the short term rental market. What to be looking for when you are choosing a market when choosing a property, what does the rest of 2025 look like? What does 2026 look like? We'll be diving to all that in just one minute.

[A]

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[B]

All right, and we're back.

[A]

So Taylor, thank you so much for joining us.

[B]

If you don't mind just starting. You know, I know I just gave you kind of an introduction prior to the break, but just kind of a quick overview on your background, kind of how you Got involved in the short term rental space.

[D]

Yeah, appreciate you having me on. Like anybody who gets attracted to numbers, I'm a washed up baseball guy. So staring at numbers and making non emotional decisions is kind of what that background is. I always joked, you know, your, your batting average is your batting average. You know, you might want it to be higher, you might think emotionally you're better, but at the end of the day the numbers are the numbers. And so when it comes into making strategic data backed investments, this was just really a natural carryover. So got into the space about five years ago like most people, was working a different job and you know, dabbled in the space. Did not have nearly the intellect data insights that we do now, but you know, kind of had a little bit of a baseline to figure out, you know, where should I go, what should I buy. And really once diving into space, I got addicted, immediately bought a second one four months later and was off to the races. So didn't take much on that piece. But you know, what we've grown into is building out a data backed firm to help investors buy profitable short term rentals. Last four years we've helped investors buy over 256 of these as we sit here today recording this. So for us, everything's data backed as far as where to go, what to buy, what amenities, how to design it, how to operate it, it's all just numbers. For us. When we take emotion out of it, we can make a very informed and strong decision and that leads to really strong results. I think anytime you allow personal biases or emotion to get in, you start skewing with the profitability of it. And so that, those are big traps that, you know, I see in the places, you know, people just let their biases kick in. And for us it's very non emotional, it's very numbers driven and that allows us to make very high ROI decisions with our clients.

[B]

That makes a lot of sense. And you know, being the tax Smart ROI podcast, we have a huge listener base that does acquire short term rentals mainly for tax advantages. But we always try to let them know, hey, this is an investment first and foremost and the numbers have to make sense. The ROI has to be there, the investment metrics have to be there. So if we're taking a look at the overall short term rental market now, what does that look like from your perspective? I know you kind of, you have a kind of a broad understanding of what's going on.

[D]

Yeah, I mean this is definitely like any piece of real estate, very hyperlocal some markets are seeing drastic shifts, others are flat, others are up. You know, I think what it boils down to is some pretty straightforward things is, you know, what kind of a market are you? So there was a lot of markets that came out of COVID as like emerging markets was the category. And what this is is markets that maybe didn't have a lot of demand pre Covid, but when everybody's working remotely.

[E]

In times shift, I would say the vast majority of our clients prefer to.

[D]

Invest in a high demand market. You know, at the end of the day you could be giving out gold plated bars to people at check in, but if you don't have enough demand of people walking in the front door, it doesn't even freaking matter what you're providing on the backside. And so that's the biggest risk. It's kind of like the field of dreams model. You know, build it and they will come.

[E]

That carries a lot of risk. If you're right, you're the only guy who quote unquote built it and they will come.

[D]

But if you build it and they.

[E]

Don'T come, you're absolutely screwed. And so most investors will take the.

[D]

Surefire piece and that's demand. And so a lot of our core investment strategies involve being in high demand markets. Because if I understand a market of like where people want to go, well.

[E]

I can understand how to win within that market. So becoming better than the competition is.

[D]

Never a complicated strategy. But you can't just make demand appear out of nowhere.

[E]

And so you take a lot of.

[D]

The common thesis might be be within a two hour drive of a major metro. So think Atlanta, Charlotte, D.C. manhattan, Austin, Chicago, et cetera.

[E]

Like there's a lot of great vacation.

[D]

Towns within a two hour drive of those major metros because you always have demand close by. People want to leave their 300 square.

[E]

Foot shoebox apartment for the weekend and.

[D]

They want to get out in nature and go to a vacation.

[E]

You also take the national park thesis.

[D]

Which obviously again you know, no shocks here, but you know, you have built in demand. They're not getting rid of that national park. I don't know that Yosemite or the Smokies are going anywhere last I checked. So you have obviously these built in demand drivers and those are things that people look for.

[E]

There's also demand risk.

[D]

Take a market like Disney there in Kissimmee Orlando area when Disney closed during COVID there is nothing else to do in south Orlando. I could tell you as someone who was born in north Orlando, there is Nothing to do in South Orlando except go to the theme parks.

[E]

So when your entire investment thesis is.

[D]

Built around one thing, if you have market demand or market shift on that one thing that carries risk and you're.

[E]

Actually seeing it in that exact market right now, cost of tickets has soared.

[D]

You know, whether that be inflation, whether it be other in factors, you can't.

[E]

Take a family to the theme parks.

[D]

Now for under four or five, 6,000 bucks.

[E]

And so that's hurting it.

[D]

And you're seeing attendance numbers drop, which naturally means there's less people visiting the area.

[E]

But supply is still high. You know, a lot of those people.

[D]

Didn'T sell their houses and no one's really signing up to live in South Orlando. Last I checked, you know, you're right in the tourism heart there.

[E]

So those are things you have to.

[D]

Look at when understanding a market. But at a preliminary basis, I would say we really tend to lean towards high demand markets and then figuring out what is the best path to win and be a top five, top 10% in this market. That's kind of the core thesis that a lot of our clients have held onto.

[E]

It doesn't carry as much risk as.

[D]

Going into a emerging market where you're hoping demand is sustained. Are you hoping demand comes? That could cost you a lot of money because at the end of the day you just can't charge a premium enough to cover your, your, your monthly nut.

[B]

That makes a lot of sense, right? You have any follow up questions for that?

[F]

Yeah, I was going to ask. As you're talking about kind of winning in a high demand market, what does that look like for you guys and what you recommend for people you work with, clients. I can imagine you might say something about amenities and adding amenities, but we'd love to hear if there's more than that or if there is just mainly that right now, if it's kind of an amenity play, what is that specifically and is there just more you could add into that? How do you, how do you guys win?

[D]

Yeah, as a whole, amenities and design are what is winning right now as we sit here in, you know, 2025 recording this. So you have to have, you know, elite design and great amenities. Location will only carry you so far. And it also depends on your segment now. Sure, you, you know, if you're super close to Fenway park, and that's the thesis, great. But you know, again, in some of these more non traditional vacation markets, location's gonna play. But let me take coastal Florida for example, and this is a really Good lesson. I like teaching people.

[E]

Whether you're a 5 minute drive or.

[D]

A 15 minute drive to the beach does not affect the revenue. So you gotta think about this logically. From a consumer standpoint, if you have to drive five minutes to the beach, you still have to load the car, get the umbrella, the cooler, a beer.

[E]

The kids, and lug everything. And so whether you drive five or.

[D]

15 minutes is completely irrelevant.

[E]

Number two, no one spends 100% of their Florida vacation at the beach. You're only there for X amount of hours. Then you go back to the house and sure, everyone has a swimming pool, but the kids can only swim for.

[D]

So long before they're bored.

[E]

So if you have a traditional Florida.

[D]

House where it's the swimming pool three.

[E]

Feet and then the fence, those kids.

[D]

Are bored very quickly.

[E]

Mom, what else can we do? Hey, I'm bored. And I'll tell you, I would rather be 15 minutes away with a huge quarter acre lot and have a playground, a miniature golf, a pickleball court, a cornhole, a giant chest, and the swimming pool versus being five minutes away and not having that. Because I will be able to charge an insane premium for the same exact experience. And what you'll notice also is when you're a 15 minute drive to the beach, you're also paying several hundred thousand lesson basis. So at the end of the day, your debt matters. You got that debt payment every month while whether you rent out that property for a dollar or a million. So it's being priced as though it's the consumer livable side. Oh well, I'm five minutes away from the beach. Yes, that carries more cachet if you were moving into the house. But when I'm looking at this from an investment piece is why would I pay 700 grand when I could be 10 minutes further away from that house and buy for 500 grand with a significantly cheaper debt payment? And then, oh, by the way, the houses are bigger, bigger lots. You get closer to the beach, the lots are smaller, the houses shrink up. It's just basic real estate unit economics. But people don't think about the practicality side. So this is where you, when you mix personal biases again, you're not moving in. Now there is a difference though between walking to the ocean and driving. Yes, that, that is a difference. But if I've already eliminated that walking piece of it and I've taken those pieces of data out of the comp set, driving five minutes is verse 15 does not freaking matter. And so that's really what you have to Start looking at certain amenities are going to win in certain markets. Pickleball courts are the ultimate cachet right now.

[D]

They carry a lot of weight.

[E]

Swimming pools are huge. Depending on the market, a house with a pool versus without will typically yield.

[D]

Between 30 and $70,000 in revenue difference on a per bedroom basis. So again, obviously in places like Arizona, Texas, Florida, they're worth their weight in gold.

[E]

But even in the non vacation markets.

[D]

Take like a mountain market, you have a rare amenity that not a lot of competitors have. So depending on the market, yeah, home with a pool in Miami versus not.

[E]

You'Re going to see somewhere between a.

[D]

30 and $70,000 revenue difference on average. So again, you just have to understand what works, what doesn't. You know, pickleball courts are worth a lot. You know, we see markets where having.

[E]

One in your backyard versus not is.

[D]

Somewhere between a 30 and $50,000 revenue difference. So you know, there's places where straight up, if I don't have room to.

[E]

Put a pickleball court in the backyard.

[D]

I won't even freaking buy the house. Just not worth it.

[E]

So it's just understanding the data, you.

[D]

Know, and the unit economics for that market, who's traveling there, what's the demographic and ultimately, you know, giving them what they need to, to, to have a.

[B]

Good trip, that's phenomenal. So, you know, a lot of people tune into this podcast, a lot of people who, who come to our, our world, if you will so to speak, here at the Taxpayer REI podcast, they're often looking at short term rentals as a tax strategy. And it is a really effective tax strategy. And 100 bonus depreciation is back. There's no changes in the pipeline that anybody could foresee for the STR regulation. So continue to be effective tax strategy. But you know, we're always investors first and foremost from an ROI perspective and I know debt matters and what people can get financing wise, but you know, what are some returns on investments that you're seeing? Like, I guess like, you know, what is a common ROI or what's a reasonable roi, you know, however you want to articulate that, that metric for people to expect when they're jumping into this space, if they want to look at it beyond just the tax play and want to look at the actual investment, investment opportunity of a short term.

[D]

Yeah, I always tell people there's four core elements here. So we got tax savings, we got.

[E]

Cash flow that we put in our.

[D]

Pocket, we got principal pay down on our loan, and then we got long term wealth Building a lot appreciation, you don't get all four perfectly.

[E]

There is no low land value, high depreciation, high appreciation, mega cash flow.

[D]

There's no market that exists like that. If it was, every investor would exploit it and it would quickly not become a great market.

[E]

So you have different levers you want to pull. So let's just take a great market.

[D]

Like South Florida for example.

[E]

High appreciation, but not great on the tax efficiency because the land value is high. So since we can't depreciate land, it's not a tax efficient market to go into South Florida. But you have year round demand, high cash flow, high appreciation. So what do you care about as an investor?

[D]

At the end of the day that might make sense for you.

[E]

Now you go to rural Vermont where the land is worth three nickels, you're going to get a lot of depreciation, same dollar for dollar. But it's not year round demand, it's not high appreciation. So ultimately figuring out what you want.

[D]

To solve for is where it is.

[E]

I mean, we have had naturally clients who are like, hey, I want to buy a multimillion dollar high depreciation and it's okay if it breaks even. You're going to pay down on a loan that says you're going to pay down 10, 12, $15,000 a year in principle. And if it's in a luxury high growth market, it's probably going to appreciate 70, 800 grand a year. So if you break even to some people, that's a win. Now on the flip side, we got other clients who are like, hey, I'm kind of miserable at my W2 and.

[D]

Want to quit or obviously you know, they won't be like, hey, I want.

[E]

To retire my spouse. Well then we need to make sure that that Airbnb is making 2, 3.

[D]

4, 5Gs a month in free cash flow.

[E]

We need to almost figure out how do we buy an ATM machine. I don't really care if it's in a tax efficient market, like whatever the land value is, like I'm still going to get tax savings and depreciation. Sure, because it's there. But I'm maybe not maximizing for the tax efficiency. So depending on the client, that's what.

[D]

We'Re really going to pursue is like.

[E]

Hey, do you need this to be a glorified ATM machine and spit out 2, 3, 4, 5 GS a month in free cash flow? Okay, well there's going to certain markets that we're going to need to focus on certain property styles, certain areas do you want to hold really good real estate for the next decade? Well, you're probably better off doing that in Miami, Florida than Sheboygan, Wisconsin. You know, like, I mean, it just, let's just think logically about this or go into Tupelo, Mississippi. So you know, really it's like, what are your goals? You're going to hold this for two years or 20? Because that would also affect where I would personally want to recommend, you know, you go. So really we do treat this as.

[D]

A very individualized basis with clients because.

[E]

To say, oh well, what market makes the most sense? I always kick it back to, well, it depends how much cash you have.

[D]

What do you like, what do you not like? You know, again, you can't buy a single family home in Miami for under 1.25 million. So budget will eliminate Miami for you very quickly. Even if you have a desire to want to be there. Budget will eliminate markets first. Then you get into preferences. Do you want coastal, mountain, lake, urban, small, big turnkey, value add?

[E]

All those different things are going to.

[D]

Be different per market.

[E]

And so you just need to figure.

[D]

Out what aligns with your goals and interests. But that's the good news about studying 359 markets across the country from a data perspective is you kind of already know what makes sense based on the input someone gives you.

[A]

After talking with clients and fellow real estate investors, one thing was clear. There wasn't a newsletter that delivered real market insights, concise decision making info and relevant tax strategy all in one place. So we created it. REI Daily delivers real estate news that won't put you to sleep. Real and concise market, market insights that aid in your decision making, Legislative updates that actually impact your investments and tax strategies sprinkled in because the IRS does not need a tip. If you're a real estate investor who wants to stay sharp without shifting through all of the clickbait or fluff, this is for you. And to celebrate the launch, you'll have a chance to win a free one on one tax strategy call with one of our top real estate experts. No pitch, just strategy. Subscribe now by visiting www.therealeestatecpa.com. subscribe again. You could subscribe. Subscribe now by visiting www.therealestatecpa.com. subscribe. We'll see you in the inbox. But now right back to the show.

[B]

Yeah, absolutely. Makes a ton of sense and data is always key. Quick question around that. From a macro perspective or like just from a broad perspective, not talking about specific markets, do you See any headwinds in the short term rental space that would make it in the foreseeable future that would make it not an attractive investment opportunity.

[D]

Yeah, I mean I always say there's a finite amount of a level short term rentals at any given point in the United States, like there just is. And I think it is a race to accumulate as many as possible. And the reason being is twofold. Things like regulation will restrict supply, and regulation doesn't necessarily restrict supply. So let me take that. Bans will restrict supply. Regulations could just be rules you have to follow. Parking minimums, noise requirements, fire extinguisher safety, those are regulations, those aren't necessarily bans.

[E]

So if any given market restricts supply.

[D]

In the broader United States, then naturally there's just less to even buy. And then you go into a market, there's going to be A level properties, B level properties, C level properties, D. Well, there's only so many that you can buy at the right price to make them really solid investments. And unless there's a major US real estate crash, which again, show me an indicator that points to that, you know, I, I can't find one. Not, not an emotion of oh, we.

[E]

Got the crash coming.

[D]

Like, just show me a leading indicator please. Because the smartest people out there can't do it.

[E]

Well, naturally home prices are going to continue to rise.

[D]

And if revenues do not grow at the same clip, which they are not historically, then naturally you can't have as much great yield. So to me I think this is definitely a race to go grab as many A's as possible. Because at some point in the distant future, you know what's considered acceptable? Shrinks. I mean, look at any other real estate asset class that's more mature than short term rentals. Look at self storage, look at multifamily. Those rates have compressed down to mere pennies and single digits that Blackstone, Starwood, KKI are all knife fighting over. And with short term rentals, it's still early. But if you look at what self storage was, let's just say in the 90s, early 2000s, before the dot com boom, you know, there was insane yields, very mom and pop driven has a lot of similarities to short term rentals.

[E]

Then professionalization kicked in, then institutions, SOP, standardizations and all kicked in. It's really what you're seeing is the.

[D]

Shift in 2024 and 2025 in this asset class was a professionalization of this asset class.

[E]

And when you actually look at the new supply numbers, what you're actually Seeing is a lot of the new supply isn't new retail. Like Bob the Dentist just bought a new Airbnb for the first time. What you're seeing is Johnny, who has one successful one, just bought a second one. You're seeing more of that happen now. And it's because again, the professionalization cream.

[D]

Is rising to the top.

[B]

Yeah, no, that makes a ton of sense. Like, you know, we definitely seen that in all these other asset classes you mentioned where the point where it just becomes so professionalized that the margins just shrink down and it just becomes that much more competitive. And yeah, right now, I mean it's, it's definitely happening in the short term on the market to an extent. It's definitely not 2020 where it was the wild, wild west. But to your point, like we're still early enough, but you don't want to like drag your feet on getting into the game.

[E]

Basically we're, we're second or third inning.

[D]

You know, it ain't the top of the first. That would, that would have been really great. But no, we're still second or third inning.

[F]

Do you foresee Taylor, that? So as you're kind of going along there, I feel like you were kind of saying pretty soon here, like we're going to start to see some of the big institutions buying up a lot of these short term rentals. Are you guys seeing that, like as you're helping clients, are you competing against any, like, yeah, any of these big institutional people right now?

[D]

No, you can't write the check big enough. It's too small. So, you know, no institutions getting in bed to write a 25, $50 million check. You got to look, and this is a brick, bridge by brick business. This isn't tech, this isn't SaaS. You can't scale this. It's not multifamily where you go get 250 doors, you know, just like that. So there hasn't been a way to deploy. I mean, think about it. Like, let's just say you were going to go on the small side of institution, like, hey, I'm going to go deploy a hundred million into short term rentals. Great. Where are you going to start?

[E]

So you could go into development, which.

[D]

Is the obvious choice. But now you're in a completely different space.

[E]

You can't buy a hundred million dollars.

[D]

Worth of short term rentals in one check. You're going to assemble that brick by freaking brick. So until portfolios scale to that level, which there is some groups that are doing that, like they would rather like Typically, you know, institution is buy versus build.

[E]

They'd rather just pay the premium for ready to go than to spend 100 million. It's too slow. Rather than like 100 million, you could buy self storage or multifamily portfolios tomorrow with one swoop.

[D]

So no, that's the good news about the protections. This asset class is the unit economics on an individual level are preventing big traditional institutions from coming in here. So you're really just competing with more sophisticated retail people.

[A]

Hey, real quick, if you've been a long time listener to the show, then.

[B]

You know we give everything away for free from how to use the real.

[A]

Estate professional status and the short term rental loophole to save tens of thousands of dollars on taxes to upcoming tax changes including, including the potential return of 100% bonus depreciation. We don't hold anything back. And the only way we're able to help more real estate investors is if you rate, review and share the show. It just takes 15 seconds to leave a quick rating review or share with a friend who may find this information useful on their real estate journey. That's all for now. We'll dive right back into today's episode.

[B]

Yeah, you know, as we're thinking about this, I'm actually invested into an industrial fund, believe it or not, that that's doing a roll up right now. It seems like this is like an opportunity if you're really a sophisticated investor to acquire a bunch of these a properties that you're mentioning, build this massive portfolio, make it really efficient, then flip it potentially. I haven't looked into this. This is what we're talking about here right now in a second and then flip it to a PE company later on. Like it seems like it's ripe for a roll up. That's what I'm saying.

[E]

Yeah, you got to get the right person at the helm. But yeah, you could see it.

[D]

Take a lot of mom and pop stuff, roll them together. But then you get into things like geographic and so it's like, okay, well you don't want to just buy 50 across the country. It's like, well could I get 20 in Miami and then, you know, 20 in Austin and 20 over here in Phoenix. Like you do want some economies of scale in density and markets, but you still want diversification. You don't want 100 in Miami because you know, one hurricane might put you offline for a month or two months. So you know, if you're too spread out, then you don't get the economies of density. So it's the Density versus diversification. Age old debate all over again.

[B]

No, for sure, for sure. Shifting gears just a little bit here, getting maybe a little bit more tactical into the tactical side of things. One of the major questions that I've been getting recently from probably literally hundreds of investors at this point is how.

[A]

Long would you say it takes to get into this?

[B]

Like say okay, today I decide, hey, it's, you know, I'm going to decide today I want to get into a short term rental, how long? And I'm ready to go. I have my financing, I have the money, I am ready to, ready to move. How long does it take to go from 0 to 100, so to speak.

[D]

So assuming you're going to try it yourself, I mean I've had people tell me I've been looking for two years.

[E]

Looking for six months.

[D]

You go with a professional firm like ours, our average client goes under contract in 32 days. So I would say four weeks. So from onboarding call, where we'll dive into, you know, what's your budget, what are your preferences, what do you like, what do you not like, what's your risk tolerance, et cetera.

[E]

Once we know that we can start.

[D]

Looking at deals right away, that's easy. You know, we're pouring over 250 to 300 deals a day across, you know, the top 30 high performing vacation markets in the country.

[E]

So that's easy. Now do you like the first deal? Maybe you do, maybe you don't. Do you like the second one? Do you like the fifth? You like the eighth? Maybe you do, maybe you don't. But it's okay because you know, getting feedback will get us a little bit.

[D]

Tighter and closer to that right deal.

[E]

So statistically I'd say four weeks.

[D]

Obviously if you're picky, choosy, could be six, seven, eight.

[E]

If you're super efficient, you really like.

[D]

One of the early deals, you could be under contract and you know, we've done as quick as three days. So that's, that's the current record holder there from looked at the first batch of deals, liked one of them, wrote an author, went under contract. So let's call it four weeks.

[E]

Average real estate transaction in the United.

[D]

States is four and a half. Now again, depending on if you're all cash, your financing, conventional DSCR could be.

[E]

Shorter, but plus or minus, you're about.

[D]

Four and a half weeks.

[E]

So you decide, hey, I want to have these professional data guys help me get a short term rental to hey, I'm under contract is four weeks to hey, I Have the keys to my Airbnb eight and a half weeks later. Now, depending on what you buy from close to live on Airbnb actually making money, you're realistically eight to 18 weeks. Now, if it comes furnished, sure you.

[D]

Could in theory relist it the next day, but you're buying an existing short term rental, which could be good or could be bad. So if you're buying somebody else's B.

[E]

Or C level property, well, if you don't make any changes, you now own a B or C level short term.

[D]

Rental and you're going to get B.

[E]

Or C level results, which maybe those.

[D]

Are good enough for you, maybe you.

[E]

Hope they're better, but you know that's what you're buying.

[D]

Now.

[E]

Is there a lot of A's just dangling for sale? Well, I'd argue maybe, but not at a B level price point. You're going to pay a very A level premium for that short term rental, which again would compress the results. And if they're still acceptable for you, then great. But everybody has a different level of acceptability.

[D]

So I can't say whether that is or it isn't a good deal for you. You would be the one to make that final call.

[E]

But let's assume we bought a house that is in a vacation market.

[D]

It's zoned for short term rentals, but.

[E]

It'S not currently one we're going to turn it into. Well, again, ordering the furniture, assembling the beds, bed frames, couches, getting the deep clean, the photographer, adding the hot tub, the pickleball court, the sauna, ripping up carpet paint, installing LVP new bathrooms, you're 8 to 18 weeks depending on what you buy. So once you have that done, it's like cool.

[D]

Here's the keys to the property.

[E]

Now, depending on the market and when.

[D]

You launch, you have seasonality.

[E]

So if you're launching in slow season, for example, doesn't mean you're not going.

[D]

To get any bookings, but you might not get peak.

[E]

On the flip side, if you catch that early booking lead time, you could.

[D]

Kind of ride the train. So, you know, right now, let's just say you launched your short term rental. It would be ideal if you were.

[E]

In per se, like a ski market.

[D]

That had a really good December, January.

[E]

February, you're going to capture that booking.

[D]

Lead time as we go.

[E]

And if you invested in beautiful North Carolina or Tennessee right now, the fall leaves changing, bro. All the people already booked a couple of months ago, so you're just getting all the last minute Ones. And don't get me wrong, it's peak season right now, but you're capturing all the last minute travelers versus the heavy planners. The heavy planners will always pay a premium. So you're maybe capturing those lower adr.

[D]

You're still making money. Like I said, it's not. You're losing money.

[E]

But you would have to wait around till next year, which ain't bad. You're going to build up your reviews. Your listing is going to get more traction. Listings that have a lot of traction.

[D]

The OTAs like Airbnb and VRBO like you, they're going to feed you up higher on page one.

[E]

And then next year you'll have insane high ADRs. You've got 15, 20, 25 reviews built up. Your listing is hot air quotes. You know, the algorithms love you. You're going to do really well next year. So again, you have to look at this holistically.

[D]

You can't pick when you launch.

[E]

It is what it is. You buy the right property. Terrible idea to time the calendar because if you think you can do that, you might as well go into equities and time the stock market. It's cheaper, quicker, more efficient. So if you think you can time something, please don't buy a short term role in time to launch it in peak season. Buy a really good asset. You're not flipping this inside of 12 months.

[F]

Yeah, that's good. I think. Just one thing I would add that I think a lot of people forget is I think most people understand. Okay, yeah, it's going to take me some time if I'm at zero to identify a market, identify a property.

[B]

Great.

[F]

Then from there you've got to have a 30 day, let's say window from going from under contract to actually close. Okay, so already a month or two in. But then on top of that, as I talk to people on a daily basis who ask me the same question, it's like, okay, are you buying something that's literally ready to go, like you said, completely furnished, ready to go, or do you have something that's a big fixer upper, you're going to gut the place. That's a very different timeline. Like you said, More so the eight to 18 weeks in time frame. So just as we're at the end of the kind of, you know, end of the third quarter, I guess we're at coming into the fourth quarter. People listening to this. We are at a point in the year where if you're trying to do this for 20, 25, it's not something that we can just sit around and twiddle our thumbs and hope something just falls in our lap. We can work with someone like Taylor and your team at STR Search to help accelerate that. But it's not something that we can continue to sit around till the holidays and say, oh, what can I do for year in tax savings? So it's way too late, right? Even here in September when we're recording this, it's already getting late and it's going to be really tight to be able to do this.

[D]

So you're in essence, like, let's just, let's just do some math here, you know, for people at home. Let me start with a vacant property. Okay, so we're sitting here on, you know, late September, recording this. Let's just say you're like, okay, cool, I'm going to sign up for these professional guys. They're going to start feeding me deals right away.

[E]

Let's just say you have an average client journey.

[D]

You find the one you like in late October.

[E]

Now you close on it in late.

[D]

November, four weeks later.

[E]

Okay, so you have the keys to your Airbnb. That is vacant.

[D]

Now.

[E]

Let's assume it's not. You know, the floors are great, the kitchen's great. There's no physical renovations, but you got to furnish it. Lead times for couches, beds, dining tables, chairs, rugs, et cetera. You are four to five weeks.

[D]

Talk to any designer.

[E]

Now, sure, you could Craigslist this thing to get it ready quicker, but that's the results you're going to get. So just literally trying to order furniture. You're four to five weeks. Then you have a week of two to three dudes assembling all the beds, bed frames, couches. Assuming you don't want to do it.

[D]

I mean, again, my very first one.

[E]

Went up to North Georgia. I'm a Floridian. And I was like, oh, me, me and the wife, we'll bang this out over the weekend for our little three bedroom cabin. Had to extend the trip, call off work. You are not assembling everything in a weekend. You are all of five to seven days to get everything prepped ready. Then you got to get it clean, then you got to get the photographer in there, then you got to get the photos back. So you see how we got a little bit of a math problem. If I buy a vacant house now, again, you know, could you put air mattresses in there? And you know, no one's judging the quality. It's the kind of. The good news about the tax savings is no one's judging the quality of how good of a business person you are to go get those bookings. But, you know, you're in a time crunch, so it really flips you to plan B, which is buy something that's furnished.

[D]

And then that just goes right to what you said is like, well, is it any good?

[E]

Are you buying somebody else's scraps?

[D]

Are you paying a premium now?

[E]

Maybe you're like, hey, screw it, I'm buying somebody scraps. But there's opportunity to make this an A. And so I'm just going to list it now. 2025 is just tax, just tax, not really caring about cash. Then I'll close down on January 1st. So after, you know, the New Year's Eve guests kind of shake off their hangover and check out, I'll close down brand new furniture, get the designer, add the hot tub, add the pickleball court, do this, and then go relaunch it. February, March, new photos. And now, now you're cash flowing strong. And it's a good A level asset. So you can buy a B today, turn it into an A. And that's probably your best strategy as we sit here in late September recording this is getting the tax benefit for now. You kind of got to buy someone else's stuff, deal with it, and then overhaul it in Q1 and then again long term, hold this asset for the next two to five years. Now you're an A level product. You have good design, good amenities, good features, and you're dialed in, ready to go.

[F]

Yeah. Cause in Airbnb, can't you do like a duplicate listing and then get, like.

[E]

If you change it, you can always relaunch. So maybe you don't have great, you know, the plaid drapes with grandma's curtains that you inherited? Like, you can scrap that listing once.

[D]

You redo it, you don't have to keep it.

[E]

So, yeah, that you can have like a 2025 listing. And then you're like, okay, cool that, checked the box and let me rebuild it with my new stuff. New photo next year, 100%.

[F]

Because I could see some people objecting or being concerned about like, well, am I going to get a bunch of bad reviews? Well, if your whole thing is a tax savings, do what Taylor just said and then relaunch with zero reviews. A new one next year.

[E]

And remember, just because you got carpet and old furniture doesn't mean you're going to get bad reviews. Now if you try to price it like the Ritz Carlton, you're going to be in trouble. But if you pr, if you own the Motel 6 and you price it as a Motel 6, people are like, great. This was great value. They it checked a box. So you kind of got to know like, are you the Holiday Inn? Are you the Four Seasons? You kind of got to know what you are. And again, you can't price yourself above otherwise. That's where you'll get crushed on reviews. But just because you have a, what we might call an uglier outdated product doesn't mean necessarily you're going to get bad reviews. Now if you price it as an outdated product, then sure, it matches expectation. You only get bad reviews when expectations aren't matched.

[D]

Pretty, pretty simple.

[B]

Yeah. Price has to deliver value, right? And a great way that you just said it like if you're charging a premium price, you have to deliver premium value, otherwise you're going to get better views. It's just, it's a good business sense. But yeah, no, this is all phenomenal advice. All phenomenal.

[A]

So basically it sounds like if you're.

[B]

Trying to finish 20, 25 strong here, you want to make sure you're buying in the right market because real estate's all about location. Unfortunately, you typically can't move the property right. Where you buy the property is usually where it stays. So that seems like the most important in part because you could always, you know, get the stays in there, price it appropriately for what it is today and then, you know, rebrand and re execute, you know, redecorate next year and turn it into that a product that we're talking about here today. Having said that, you know, Taylor, we know that you guys at STR Search, you guys literally are like the cream of the crop when it comes to helping people get into STRs that are actually viable investments. Right. How can investors, you know, learn more about what you guys have going on and if they did want to, you know, work with, with you guys to get into a short term rental, how could they go about doing so?

[D]

Yeah, I mean we try to put out a lot of great content, you know, str search.com so, you know, we've got, you know, really a full slew of videos, educational, so you know, stuff with, you know, you guys on tax savings, how data works. You know, we're, we're pretty transparent. You know, we'll show you exactly how the sausage is made. And if you want to scroll Zillow and try to find something like great, go for it. But if you want to hire a professional who can kind of white glove, handhold you through the entire process and someone who's done it 256 times with other investors, then that's kind of what we're here for is, you know, making sure people are making high ROI decisions. Because I think the last thing you want is you buy a short term rental.

[E]

It's like, oh sweet, I saved 50 grand in taxes.

[D]

And then your Airbnb loses 25 GS a year and now you just have a time problem because here in a couple years, you're now underwater on that house. Air quotes. From an investment standpoint, it doesn't make sense anymore.

[E]

It made sense in year one. You know, you say 50 grand, but then you lose 25 grand, you're still net positive. You know, we want our clients to not only save 50 grand, but put 25 grand in their pocket. Now it becomes, you know, something you're like, okay, great. And so all of that's just like I said, data backed.

[D]

Having a team of data analysts to, you know, dive into markets, look at properties, understand what amenities, having, you know, good boots on the ground, help from a construction and design standpoint. And then lastly is operating in it really freaking well. You can't just list a property anymore. You have to list it strategically, optimize for SEO like we talked about, dialing in your pricing strategy.

[E]

Those are things we're going to help.

[D]

Our clients with so that they can be successful. Because this is a three pillar business. You do need to buy a good property in good market. You also need to renovate and design it well. And you do have to operate it. If you only do two out of three pillars, you can still not make money in this asset class. So just having the keys to a beautiful looking property isn't enough. You still gotta deliver at home on pillar three, which is operations. So again, being able to execute on all three is what we want to make sure we're doing with our clients. So get head over to STR Search. We keep a calendar right on the website. We're happy to talk through anybody's individual situation, can look at how it can work, what you're interested in and see if it's a great fit for what we can help with.

[B]

All right, awesome. So we're go ahead and drop that into the show notes for anybody who does want to take that next step. You know Taylor, thanks again for joining us today. It's always, always a pleasure having you guys on and working with you guys on various things. So you guys heard it here today. Short term rentals, a long term investment strategy, not only a tax play. So thanks again for tuning in and we'll catch you on next week's episode of the Tax Smart REI Podcast.

[A]

The Tax Smart Real Estate Investors Podcast is for general information purposes only and is not intended to provide and should not be relied upon for for tax, legal or accounting advice. Information on the podcast may not constitute the most up to date legal or other information. No reader, user or listener of this podcast should act or refrain from acting on the basis of the information on this podcast without first seeking legal and tax advice from counsel in the relevant jurisdiction. Use of an access to this podcast or any of the links or resources contained or mentioned within the podcast show or show Notes do not create a relationship between the reader, user or listener of the podcast and the host, contributors or guests. Any mention of third party vendors, products or services does not constitute an endorsement or recommendation. You should conduct your own due diligence before engaging any vendor. For more information, reference the show notes or description of this episode.

[C]

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[E]

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[C]

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