Show Summary

Join me for an interview with Avenue West CEO Kimberly Smith, as we disucss the Corporate Housing and Furnished Housing rental business. The rents are much higher than you may think. Avenue West is adding franchisees across America to put in place high quality property managers of a new breed – that perform a higher level of service, and get paid 3X or more the typical going rate for property managers. Kimberly’s model and forward thinking are cutting edge, and it’s a show you need to check out!

Highlights of this show

  • Furnished Corporate Housing can expect 3X or more the typical rental rates for unfurnished housing.
  • Avenue West is adding franchisees across the country to enable savvy business people to take advantage of an exciting niche that is huge, but gets little attention.
  • CHBO (Corporate Housing By Owner) is Kimberly’s other company, which helps enable owners that want to manage their own properties.

Resources and Links from this show:

Listen to the Audio Version of this Episode

FlipNerd Show Transcript:

Mike: Welcome to the FlipNerd.com podcast. This is your host, Mike Hambright, and on this show I will introduce you to VIP’s in the real-estate investing industry, as well as other interesting entrepreneurs whose stories and experiences can help you take your business to the next level.
We have three new shows each week, which are available in the iTunes store, or by visiting “www.FlipNerd.com” So without further ado, let’s get started.
Welcome to today’s FlipNerd VIP show. Today I’m joined by Kimberly Smith, who’s a successful woman entrepreneur. She’s a CEO of AvenueWest, which I’ll let her talk a little bit more about in a second.
Before we get started with today’s interview, let’s take a moment to recognize out sponsors.
I’d like to take a moment to recognize our featured sponsors,

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Please note, the views and opinions expressed by the individuals in this program do not necessarily reflect those of FlipNerd.com or any of its partners, advertisers or affiliates. Please consult professionals before making any investment or tax decisions as real estate investing can be risky.

So Kimberly, welcome to the show.

Kimberly: Good morning, how are you today?

Mike: Good, how are you?

Kimberly: Having a great New Year, can’t complain.

Mike: Awesome. Everybody’s excited to get the year started, so…

Kimberly: We are.

Mike: …great. Well, I know we got a lot to talk about today. I didn’t realize until just a few seconds ago you had a new book out, so we’ll come back to that here in a little bit.
Why don’t you tell us a little bit about AvenueWest, and maybe a little bit about your story of how you came to this point?

Kimberly: You know, the idea of “FlipNerd”… I’ve actually never flipped a house, but I am a real-estate nerd. It comes down to a lot of the details. I’m happy to say I’ve never had a year where I lost a couple hundred thousand dollars, or anything like that.

Mike: That’s good.

Kimberly: I think there’s a great way of summing up my investment philosophy, and there’s two different things. There’s the product that I deal with, and then my own philosophy.
The product I deal with is corporate housing, which is furnished monthly rentals. Which sort of sounds simple, but you do have to understand… you have to be a little bit of a nerd, and play the game, and understand how the pieces on the chess board move around.
My philosophy is residual and sustainable. So, I think that’s one of the reasons I don’t flip. You can make a lot of money, but you have to keep doing the same thing over and over again, and get bored with repetitive tasks. So I like to do the tasks, set up the system, and then I like to get paid for it over a longer period of time.
I think what I’m talking about is a great compliment to those people who have been doing real-estate flipping, and perhaps are looking for a different compliment to their real-estate investments. There’s different cycles, and as your life evolves your return on investment… your philosophy changes.
The key things for my return on investment, is I like to pick my kids up at school every day. So, it’s not about how much money is in the bank at the end of the day. It’s money, plus a lifestyle that I put together.
I started buying investment real-estate by sort of mistake. I was offered an internship in San Francisco, and the owner of the company said “Hey come live in my basement for free, and I’ll give you a marketing internship at a real-estate brokerage. And, we do this thing called corporate housing.”
My boyfriend thought it was a lot of fun, so he came out and we started making money living for free in San Francisco. As a college kid, that’s about as good as it gets. But, the rental property…

Mike: Is that room still available by the way? It might not be so bad as an adult?

Kimberly: That is not available, but you never know. It doesn’t hurt to ask. There was no bathroom attached. You had to walk outside and upstairs, and enter the office, and share the bathroom with everybody else in the office.

Mike: So not quite as glamorous, but not bad for a college student.

Kimberly: Yeah. In 1995, real-estate in San Francisco was just starting to rebound. There was developer who had these leftover condos. He didn’t know what to do with them. He was trying to give them away, was giving two years of free home owner’s dues.
I’m like “I’ll buy one of those for $89,000.” First time home owner loan, put down 2.3%. It was a great deal for a person whose living for free in someone’s basement.
If you ever read my stories, that turns into about a half million dollar piece of property, and that $89,000 studio gets rented out on a regular basis for $3900 a month. So, I’m…

Mike: Do you still own that?

Kimberly: I sold it, because it was one of the tools… I had spent 15 months building a primary residence, and September 11th happened. I was ready to move into this new house I had been building for 15 months, and I couldn’t sell my other primary residence. I could either walk away from the house I was building, or find some down payment somewhere else.
And even after September 11th, that 400 square foot studio in San Francisco at $500,000, $400,000 was the cheapest thing you could buy and I sold it in a week.
It was a tool, and that’s I describe real-estate for me, are different tools in my toolbox. Some I want for residual income, some I want equity increase. I don’t want income today, because I don’t want to pay taxes on it today. I want it to pay for my kids when they go to college.
Some properties I’ll take a 15 year mortgage on, so knowing that mortgage will go away as soon as I have to start paying for college.
So, I use each one very differently.

Mike: Well, tell me a little about AvenueWest. You’re essentially… it’s a property management company and you’re a franchisor, so you bring on franchisees, and you teach them how to manage corporate housing. Is that… in a nutshell, is that it?

Kimberly: Yeah. AvenueWest at its core, is a real-estate brokerage that does furnished residential property management. Which means, we count the forks, and we work on the remote controls, and we make sure the bedding’s happy and all that good stuff.
My original company did about 5 million in gross rents on an annual basis for about 125 rental properties.
Last year the corporate housing industry was at $2.7 billion industry. Real-estate is… AvenueWest is one of the only players that uses investment real-estate in that arena. I think it really has a great opportunity.
The difference between typical property management, is a consumers to consumers transaction. One person has a property, and one person has a need.
In corporate housing, I go out and I make a relationship with a business who made… you know, eBay spends $17 million a year on corporate housing. So if you land the eBay account, then you have that sustainable residual income, and you supply the properties for them.
It’s a good match for the investment owners. We made “The Inc. 5000 Fastest Growing Business of the Year” three years in a row. We said it will happen, we expand. Everybody wants us to manage their properties. That would mean I’d have to have 50 real- estate licenses, and I can only take so much continuing education.
So, franchising was the best bet for us to be local, and offer our services. So we now have offices in eight different cities.

Mike: Awesome. So, does that mean eight franchisees?

Kimberly: Mm-hmm.

Mike: Okay, awesome. Do you… is there are a consistent theme with where your type of product works, you think? Is it higher dollar markets? Is it more of business centers… any kind of trend there on where the best fits are?

Kimberly: Yes and no. One of the things about the AvenueWest business model is it’s great about filling in the cracks.
A smaller market like in Fort Collins… there is a lot going on in Fort Collins, Colorado. There’s universities, there’s big Fortune 500 companies, all of those things. The typical corporate housing doesn’t service them.
An AvenueWest franchise can have 30 furnished units, and do a million dollars in rent. That allows you… you now have relationships with 30 investment owners, who may want to buy more investment owners, more investment properties. You have a relationship with people that are relocating to your neighborhood, they may want to buy a new property. So from that million dollars in gross rents, from just 30 properties, you’re then able to get that residual income from other real-estate transactions along the way.
There are [no-brainers], like Chicago and Washington D.C and San Francisco, where there are thousands of corporate housing rentals. But, sometimes the AvenueWest are great at filling in the cracks.

Mike: Yeah. I picked up on something you said there. Are your franchisees, your markets you’re serving… are they primarily serving investors that are buying properties, or are they serving somebody that has a nice property that would like to sell it, but they can’t sell it right now just [one offs], or is it primarily focused on investors?

Kimberly: We’re primarily… our definition of investor I think is different than your definition of investor. We’re all about the “mom and pop.” So maximum, my people have one to three units that they have purchased and put into my inventory, and I also try and limit that.
If you’re buying stocks in the stock market, you want to diversify portfolios, same thing with your real-estate. It sounds so exciting to make ten thousand extra dollars a year on a furnished rental, but there are cycles. So, use this as your extra cash flow. If you have 10 rentals, make seven of them unfurnished, where you get rent on the first of every month regardless of anything. Take three of those, get your higher returns on that corporate rental.

Mike: Okay. How about a consistent theme with… because, I have a portfolio of rental properties myself, that they tend to be… I don’t think of them as a fit for corporate housing, they tend to be kind of B and C class. Really for the most part, first time home buyer homes.
Can you talk a little bit about what the fit is there, from the type of home, the value of home, the number of beds and baths… you know, just roughly speaking, what really is a fit for your model?

Kimberly: You just become a different product, and you’re the by owner product. If you look at the larger industry, it’s extended stay lodging. You can stay in an extended stay hotel for about seven days is the average stay. You can stay in typical service departments, which are furnished apartments, and people generally stay about 80 days. In an AvenueWest property, you’re staying about 100 days, because it’s more residential, it’s not transient in nature.
Then there’s this other thing, called the “By Owner Segment,” which are primary residences, homes of all shapes and sizes. And last year, 18% of those clients stayed for a year or longer.
They’re furnished properties. You could be doing insurance claims… someone’s house has burned down, and they had to rebuild from scratch. Mold… it could be that there are about 100,000 traveling nurses in the country. It could be two or three nurses that want to split a house. Actually, the choices are endless.
One of the newer things that’s a trend is test-driving the neighborhood. Where in the old days, we took for granted buying real-estate… “Oh, we’ll just buy here. Two years from now, we’ll buy something different.” We have to be a little bit more committed. So, you want to figure out “Do I really like this street? Do I really like this neighborhood?” Some people might furnish rentals for six months to test it out.
The other trend we’re just finishing, it’ll come out next week, is the “By Owner Annual Report.” We’ve seen a much bigger trend of people taking their primary residences, and wanting to be flexible with it. “I’m going to go take a job in Germany for six months, so I’m going to rent this out.” So people don’t think of their primary necessarily as a home, they think of it as a business, and this gives them that flexibility.

Mike: Yeah. Do your franchisees… are they trying to network with local companies and things like that to find people that might, I know you said other people that maybe have had a… it sounds like there’s a number of people you could do business developments with.
From insurances companies that maybe need a short term place for somebody that lost a house in a fire or something like that, from somebody that’s relocating employees for their company one way or the other. Is that really a big part of the focus, is trying to find those customers? Which may be more of a B… a B to B play, I guess, right?

Kimberly: So from an AvenueWest perspective, absolutely. And then, there’s the fun ones. There’s the movie crews that come into town, your professional sports guys that come to town, there’s all sorts of different levels.
The people who really have fun with corporate housing normally love the people they get to meet. Sometimes, we get this new CEO when the old CEO is getting kicked out, and it’s all top-secret, and we got to figure that all out, those types of things.
So, the key is finding the right connections. With the AvenueWest, we go out and we make those relationships, and it’s… people do business with people they like. So, there is some good old fashioned “get out there, pounding the pavement, take them to lunch and have fun with it.”
On the By Owner Segment, we’ve got corporate housing by owner which is a web platform, which has been around for eight years, and we really work to develop that relationship with the employee relocation council, and other types of things.
We’re there for you, as opposed to you just listing your property on a Craigslist, and hoping at some moment in time the right persons going to find you when you’re at the top of the list.

Mike: Let’s talk about the investment part of it, or the opportunity I guess. Because when I heard you speak last year at Andrew Wade’s leadership event, you talked… I mean, that was a big part of what you talked about… about what a lot of the excitement was, how much more you could rent these properties for.
Of course, there’s more upkeep and more expense associated with it, but talk a little bit more about the opportunity side.

Kimberly: Again, return on… ROI, return on investment, really you have to look inside before you just count the money. You have to figure out what are your priorities. Again, you may not want it to cash-flow, until the future.
Phoenix is my favorite example, because Phoenix before the real- estate crash… downtown, it was trying to be redeveloped. It was over-built from a condo standpoint, there’s a lot of condos for sale. They’re generally renting for about $600 a month, unfurnished for a one bedroom. And yet, a furnished corporate housing unit is renting anywhere from about $2100 to $2900 a month, according to the corporate housing industry statistics from last year. So, huge difference in price.
So you’re talking on a one bedroom condo, you’re going to furnish that from $5,000 to $10,000. Your utilities are going to be included. And, you have… what corporate housing offers you is that opportunity. You know, is it… do you like the idea that you could possibly have $10,000 extra in your checking account at the end of the year. Or, worst case scenario is you went out, and you did all this shopping, and set it all up, and you’re making exactly the same. But, if you tie into the right clients, you really do get those repeat residual people.
And then, with the by owner CHBO, you’re doing reviews, and you’re building up your reputation. You keep your property there for a 12 month period of time, and that just again… “Oh it’s empty, let me try and find it.” You are developing relationships with your community.

Mike: Right. And from an opportunity standpoint for your franchisees… I had a couple questions about that. Are these typically people that maybe already have a property management business, and this is something they’re bolting onto that?

Kimberly: We have not found that successful yet.

Mike: Okay.

Kimberly: We are high-energy people. We like to do deals, we like to meet new people. A lot of times people who are in unfurnished property management, they sort of have been doing it the same way over and over again, and they don’t quite get the excitement of networking the way the rest of us do.
Sometimes who people come from a relocation background, sometimes people who come from a corporate housing background, even real- estate franchising… you have people who are used to this sort of higher pace. You never know what your day is going to be like. It’s fun, and exciting. If you like to shop, that’s a good thing. You buy 50 to 100 couches a year, and you get to decorate.
You have to have a certain flair for the real-estate, and how to prepare the right property for your clientele.

Mike: Yeah. Now, one of the things I thought was also interesting… I don’t remember the numbers, so I’m interested to hear what you have to say here. A typical kind of rule of thumb in most markets I’m aware of that a property manager collects, tends to be around 10% of the rent. In your instance, what’s more typical?

Kimberly: It slightly depends on the market. We’re looking at anywhere from 30% to 35% on market property management based on the gross rent. If you were doing unfurnished vacation rentals, sometimes that rent’s as much as 50%.
But, we are there 24/7. Literally if your cable goes out at midnight, you’re going to call me and tell me. We’re trying to make sure everything works for you.
It’s a good match. The investment owners making more money, and they’re tapping into you, the property management, for two reasons. You have property managers taking care of all the details, but you’re also delivering them the relationships.
The by owner segment is nice, but there really is a whole level of business of a much higher price point when you’re truly doing a business to business transaction.

Mike: Yeah. And for your franchisees that need to be on call, you talked a little bit about life style. I don’t actually manage my own rental properties and never will, just because of the lifestyle that I choose to live or don’t want to live.
Do you as a franchisor, do you have services… central services places, where if those customers are calling for some sort of maintenance issue or something like that, where it starts from there? Or, are your franchisees truly on call needing to plunge toilets and deal with… you know, they can’t get on Cinemax at 10 o’clock at night, or whatever it is?

Kimberly: One of the things about each of our franchisees chooses, sort of what role they want to play. Are they all about the property investment side of it? Are they all about the tenant side of it? Or, are they about the operations? And then, they just hire based on what they want to do.
A typical office will have a minimum of three people in it, so if you happen to like to plunge toilets, then you’re the operation person. I can honestly say I’ve never plunged a toilet. I’ve been doing this for 20 years, I’ve done a lot of things but that’s not one of them.
You just sort of build… but you’re talking about a professional environment. When you’re dealing with businesses you’re working Monday through Friday, nine to five, and you may have a maintenance company that’s on call for you, but you’re not doing property tours on Saturday or Sunday. It’s a business, so it’s Monday through Friday, nine to five.

Mike: Right, okay. Well I… something just… and I hadn’t thought of this until we were just talking, but… and I’m not too familiar with it, but I know that it’s making a lot of waves right now. Tell me what you think about Airbnb, and how that kind of fits into your space?

Kimberly: It’s a great question, and there’s a huge evolution both with the home away product and the Airbnb. The fees are huge, if you actually look at the percentages that they’re charging just to be your bank.
[Helmaway] is a publicly traded company, so we can see their numbers. Airbnb is not a publicly traded company.
So they’re doing all of these things, the question is can they actually sustain it and make it profitable? Have they grown enough that the millions and millions of dollars invested can turn-out?
Airbnb is originally a product that was designed so you can sleep on my couch. So, it’s completely a different clientele then what I’m dealing with, with the CEO with your company.
I think what they’re tapping into is private owners want somebody to process their money for them. Now the question is, at the end of the year when the property owner looks at their bank account, and they’ve paid all these fees just to have someone process their money, but they’re not there plunging the toilets, it may get old after a while.
It’s nice because it’s a large platform, and it’s got great notoriety. It’ll definitely be an evolution to watch. I’m not going to be renting someone’s couch anytime soon.

Mike: Yeah. Now, and I really don’t know… I mean, I’ve been on their website recently just because I was curious, but I spent maybe two minutes on there. You can rent entire units, right? But, who’s responsible for the maintenance and all that? Is it the actual owners, or Airbnb, do they have any role in that?

Kimberly: One of the reasons… no, currently as far as I know, Airbnb doesn’t have a management system or a certification system.
On the by owner segment of CHBO, we have what’s called CHBO Complete. We present an entire program… this is what a corporate housing expects, and this is how you can [sortify] your property, so you can really attract the true business traveler.
One of the things, reasons that major businesses like in eBay want to work directly on a business to business transaction with AvenueWest, is quality control. I am putting my entire reputation on the line. If I mess up one rental, I could lose a $17 million account. So, it is very important for me to walk it, to prep it, to have it on certain standards. And you’re not going to find that through Craigslist, or online portals, or anything like that.
There’s a huge difference when you rent a vacation rental, and you don’t mind seeing Aunt Jenny’s pictures on the wall. When you’re a business executive, and you’re making $500,000 a year, and you’re in a new city for a new stressful job, you want that flat- screen TV to work, and you want everything to be perfect.
That’s why we’re getting the higher fees. That’s why we can provide what we’re doing, is that quality control that you’re not going to get through an online portal.

Mike: Right. So tell us a little bit about, just to clarify here, you really have two primary businesses, right? AvenueWest, and then the CHBO, which is you kind of enabling people to do this themselves, rather than have, say, a property manager. Is that right?

Kimberly: Exactly…

Mike: Tell us a little bit about the CHBO… go, tell the story .

Kimberly: … right. The… once AvenueWest had been in business for about four years, and we we’re getting five to 10 calls a day from property investors saying “Can you help me? I’ve got this residential house, it’s a B property.” Or, “I live in Phoenix, can you help me?” And we would just say “No, we take class A properties in downtown Denver, this is all we can do.”
So, we got tired of saying “no,” so we created an entirely new company to get people off the telephone. We took everything that we could think of.
And really, what marketing research has shown, is people want choices. There are times when you want the full service, AvenueWest business to business transaction. But there are sometimes when you say “Hey, I just need a place to stay.” And that’s where the by owner segment comes in. So, we’ve done a couple different things.
This book is called “The Corporate Housing Handbook,” and you can read it for free on CHBO, or you can buy it on Amazon. We tried to walk through what a private investor would want to know about preparing their property.
And then what we do on an annual basis, and this will come out next week, is “The Annual Report.” We’ve studied the entire by owner segment, and we’re teaching property owners what they need to do.
One of the things… as I mentioned, 18% of the by owner tenants stayed for a year or longer last year. That’s mind boggling. Only 9% of the property owners that responded to the survey said they weren’t profitable last year. So, everybody… 91% of everybody said they were making money on their real-estate. I don’t think if you talked to 10 property owners that they could say the same thing. And 26%… 22.6% said they’re going to go buy some new real-estate this year.
So, we created our own competitor, but we felt by creating the two different products, we were better serving the industry.

Mike: Yeah, that’s awesome. You know, I’ve always thought… I’m not aware of anybody… I know a number of property managers… you know, traditional property managers, and I’m an idea guy, so I always think of new things. But you know, I drive my wife nuts if I say I’m going to go do something, so I have to be careful on what I say.
“This is an idea, but I’m just thinking about it.” That’s our rule, I have to say “I want to tell you about an idea, but I’m not planning to do anything about it,” and then we can talk about it. Otherwise, you know, I drive her off the deep end.
But, there really don’t appear to be many, kind of a la carte property management companies. They’re either full service, or they’re not.
One of the things that a lot of real-estate investors that own rental properties that manage them themselves hate the least… there’s components. There’s the payment piece, the eviction piece, the [make readys]… all those things. I just don’t know anybody that’s kind of a la carting that, for people to pick and choose to say “If you don’t want to deal with the calls at midnight, because a toilets backed up or something like that, than for X amount a month, we’ll deal with that for you.”
So, I think there’s a model there for anybody that’s listening, you know… But, I absolutely agree with you that… most of the guests that I’ve talked about that own businesses, have multiple businesses. They’re kind of [bolt-ons], they run in parallel to each other, and they just saw a need for doing this, and this is an obvious thing that we need to do as well, to serve more people, or build our business. So…

Kimberly: Yeah, no… and we talk about… I was listening to some of the other webcams this morning, and I think one of the things that we have to focus in on when talking about real-estate…
I love this idea of script changing. You have an opportunity to change the script of your life. If you don’t like where you’re going… I do think that there’s some blood, sweat, and tears involved in that process. And people go “Oh, you know, you’ve been really successful doing that. I’m going to follow you.” And then, they don’t quite get that bigger picture.
I think all of the things we all talk about are all successful. But you have to focus in on it, and you have to get out there and pound the pavement. Then, put them all together…
My thing is I like solving problems, so I drive my staff crazy. But, they try and walk me away… “No new products this week.” So, I try and hire…

Mike: That sounds very familiar, that sounds very familiar.

Kimberly: I try and hire the right people who can take care of those details for me. But, there really is a need… there was something last year like 63,000 corporate housing units in the United States. There’s that billion dollar, almost $3 billion worth of rental dollars. How do we translate that into residual income for real-estate people?
Typical corporate housing, they’re leasing unfurnished apartments and putting in rental furniture. So, the clients prefer staying in a property management product. If we can certify it, if we can provide it in the right way. You can’t just go furnish a unit and go put it on Craigslist, and go “Well, Kimberly told me I can make more money.”
The biggest problem I actually have, is people believing when I tell them the rental rates. The typical corporate housing industry does a huge annual survey every year, and when I say people are getting $2900 a month for a one bedroom in Phoenix, most people don’t believe me because of their past experience.
And that’s one of the challenges with unfurnished property managers, is their experience tells them they get $600 a month for it, period. So, they don’t understand… they can’t believe there’s another side of the curtain they’re not looking at.

Mike: Right, right. And in reality, most people that are paying those rates are not comparing it to what they could get an unfurnished house for. They’re comparing it to what they’re paying a hotel, is that right?

Kimberly: Exactly. It’s a [fur bed] situation, so when I’m talking to investors… “What are you going to buy?” Go buy the 700 square foot one bedroom, not the 1000 square foot one bedroom, because it’s the price per bedroom, not the price per square foot. Absolutely.

Mike: Awesome, awesome. Well, why don’t you share with us the other book you said is hot off the presses here? You need to send me links to all these things, too.

Kimberly: Yes, “I am officially a complete idiot.” So, the Complete Idiot guides, there’s a whole series of them. This is making money with rental properties.
What I love about the book is it’s written in a paragraph form, with big headings, and bold… so, if you say “Hey, I want to know what it means to do a [make ready],” you flip to that paragraph and you read it. If you say “Oh, what do I need to know about getting a background check, or a credit check?” You just flip to that. “What do I need to do for evictions?” “What do I do when my tenants are arguing?” And you can just flip to that.
The book hit the market yesterday. The first run sold out at about 3,000 copies. So, they’re doing [and back ordered]. Yesterday, there was still 17 on Amazon, but they’ll do another run of that in the next week or two.
It’s a great resource. It talks about some of my stories. It also talks about how to integrate furnished housing and furnished rentals into the industry.
I always try and take as much out of my brain based on my experiences as possible, it makes me sleep better.

Mike: Yeah, good. Good, well make sure you send me links for all those, and we’ll put them on the site for others to access. You know, your books, your information, obviously both your businesses so they can learn more, and maybe inquire.
Tell me a little bit about what your plans are for the year ahead in terms of growth. Are you trying to… I know you’re trying to go into new markets. Are you trying to grow your existing franchisees, help them expand their businesses as well? What do you see happening with your businesses over the next year?

Kimberly: Couple different things. Corporate Housing [Vienna] gets a new website this year. So, 12 months in the making. It’ll be new, and fresh, and gives us that flexibility. Also, gives us the ability to really target market a lot of those clients that are property owners [asking for]. And property owners are always asking for more resources, so we’ll be able to have a little bit more hands on control with the new site.
Right now we’re looking at adding about six new franchises. We haven’t been able to profile what we would consider that perfect person to come into our system. So, we’re working on building a gigantic magnet, so that the needle in the haystack comes to us. We’re targeting specific cities, such as San Diego and Chicago, as well as the state of Florida, where we know there’s a specific high population need for corporate housing.
The AvenueWest brand is very strong within the corporate housing industry. We’ve won “Corporate Housing of the Year” from the industry. Corporate Vienna has also been a “Supplier Company of the Year” within the industry. So, we’re very much keen on not just growing to be big, but growing and making sure the brand stays strong.
One of the things we offer our new franchisees is the relationships we’ve built up. So, if I bring in a franchisee who can’t really handle the business, then that damages it. So, we’re… you’ll see us grow very slowly, but we’re excited to add those things.
Corporate housing is… a year ago I served on the employee relocation council advisory council. So, everything that has to do with relocation in the United States. And at that point, they really felt that new hire relocation had bounced back, but talent management relocation had not bounced back.
I really think as the hiring pool gets small, we’re going to start seeing companies going back to the tried and true moving qualified employees from one seat to another. I think we’ll see an increase in relocation. All of that is good for business.

Mike: Awesome, awesome. Well, anything you want to add before we end the show today? Obviously, you have a tremendous amount of information in a space that a lot of folks don’t talk about. In fact, I’m not aware of anybody else that’s talking about it, so…
It’s pretty exciting stuff though. When you start to hear that as a manager you could make 30%, 35% versus 10%, it seems… I’m probably, like you said “A lot of…” in all honesty, when I hire new people in my company, my home buying company, I typically find people that have no real-estate experience because I know they’ll have preconceived notions about “This is how we do it,” or “This is how this is supposed to be done.” Sounds like you’re similar there, but…

Kimberly: Well, we’ve always functioned in the corporate housing arena, and we would just say “Hey, we’re different.” We eventually named ourselves, so we do managed corporate housing.
This is actually our sort of first year or two of really trying to connect with the real-estate world. We had to be real-estate agents to do what we do, but we really never connected with them in appreciating how many opportunities there are to share new ideas.
One of my… I’m taking my real-estate broker exam in California. It’s a five hour exam, so two and a half hours, lunch, two and a half hours. Having lunch with two guys, one guy in his 20’s, one guy in his 40’s. We’re talking 2006, so real-estate’s still really hot in San Francisco. I said “Well you know, I just bought this condo in Colorado Springs for $150,000, and I’m cash flowing it on day one.” The 40 year old guy said “That’s the coolest thing ever, I didn’t know you could actually buy real- estate and cash flow it on day one. Can I [buy] one of those?” I said “Sure.”

Mike: Yeah, that’s hard in California.

Kimberly: That’s ridiculous. Why would I buy a piece of property for $150,000? The mortgage on that is less than what I pay on my credit card billing. He’s like “I buy investment real-estate in San Francisco for a million dollars at a time, and I make it a cash flow for months at a time, because I know I’m going to be able to flip it for an extra $100,000 in a couple of months.” So well, don’t real-estate cycles scare you? He’s like “Nah, I’ve never seen one.”

Mike: Yeah, right.

Kimberly: So I think, again, talking about diversification and balance. Corporate housing is something that is a great tool, a great resource. You need to know what you’re doing, and really if you read all those books you’ll get about as much information as I can possibly give you.
But, you have to take it seriously. It’s not a hobby. I think that’s one of the things people try to do with real-estate investment, is “Oh, so and so did it, so this is my new hobby.”
And you have to know the ins and outs. If you’re flipping a house, you have to know the cycles, and how it all works.
Same thing if you’re doing corporate housing rental. If you’re going to go buy a pink couch, it could literally lose you tens of thousands of dollars, because you thought pink was an in color and it wasn’t. Sometimes, those dynamics make all the difference.
Ask lots of questions. It’s a real thing, do your research. Check it all out. And, I’m sure we’ll be talking again, and I’m always happy to answer questions as well.

Mike: Absolutely. Well hey, thanks so much for your time today. Thanks for joining us on the show. We’ll add links for those watching, for all of the stuff we talked about today. To get a hold of Kimberly, learn more about AvenueWest, and corporate housing by owner, access to her books, all those great things.
Appreciate your time and information, and sharing with us, and I hope you have a great week.

Kimberly: Yeah, have a wonderful 2014.

Mike: Okay, take care.

Kimberly: Talk to you soon.

Mike: Bye.

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