This is episode #428, and my guest today is Travis Baucom out of Waco Texas.

Today we talk about how to operate a successful Airbnb Business. There are a few prominent trends that have happened for real estate investors over the past few years, and short-term rentals through Airbnb is one of those trends.

As investors in a competitive part of the market cycle, it’s only natural that we start to look for ways to generate higher revenue out of the same houses that we might otherwise fix and flip or keep as a rental, to make up for the fact that finding deals is more difficult now.

If you’ve considered jumping into Airbnb as a business model for your real estate investing business, you’ll learn a lot from today’s show.

Please help me welcome Travis Baucom to the show.

Highlights of this show

  • Meet Travis Baucom, Waco Texas real estate investor.
  • Learn how to operate a successful Airbnb business.
  • Join our discussion on the opportunity to generate dramatically more in rents than traditional rental properties.
  • Listen and Travis shares his “5 C’s” to operate a successfil Airbnb business.

Resources and Links from this show:

Listen to the Audio Version of this Episode

FlipNerd Show Transcript:

Mike:This is the flipnerd.com Expert Real Estate Investing Show, the show for real estate investors, whether you’re a veteran or brand new. I’m your host, Mike Hambright, and each week I bring you a new, expert guest that will share their knowledge and lessons with you. If you’re excited about real estate investing, believe in personal responsibility, and taking control of your life and financial destiny, you’re in the right place.
This is episode number 427 and my guest today is Travis Baucom out of Waco, Texas, a little bit south of the DFW area. Today, we talk about how to operate a successful Airbnb business. There really are a few prominent trends that have happened for real estate investors in our industry over the past few years, and short-term rentals through platforms like Airbnb is definitely one of those trends.
As investors in a competitive part of the market cycle, it’s only natural for us to start to look for ways to generate higher revenue out of the same houses that we might otherwise fix and flip or keep as a rental to make up for the fact that it’s harder to find those deals right now. If you considered jumping into Airbnb as a business model for your real estate investing business, you’re going to learn a lot in today’s show. Let’s go ahead and get started. Please help me welcome Travis Baucom to the show.
Hey, Travis. Welcome to the show.
Travis:Hey, Mike. How are you doing?
Mike:Good, good. Good to see you, my friend.
Travis:You, too. You, too.
Mike: Yeah, it’s been a while. So, I’m excited to talk about this. We started talking about what we were going to talk about today here just before we started recording, and got on the topic of Airbnb, and it’s actually something that . . . there’s obviously a lot of buzz around Airbnb for investors, a couple of infotype products that are out there.
And I think it’s all due. It’s something that we’ve been looking at a little bit here lately. Specifically, you know, my family likes to travel and we’ve started thinking about, “Why don’t we just buy properties in the areas we like to travel to, and then Airbnb them out when we’re not using them,” which is like most of the year, right?
Travis:Right, right.
Mike:And so, when you said, “Hey, this is something we could talk about today,” I got intrigued myself. So, I’m excited to talk about it today. For those that are listening in, we’re going to be talking about how to run a successful Airbnb business. Specifically, Travis has kind of come up with five C’s, like, five things you have to do really well to run a successful business. But, hey, before we jump into that, Travis, for those that don’t know you, tell us a little bit about your background and yourself.
Travis: Yeah. So, you know, I live in Waco, Texas, and we buy kind of a 2-hour radius around Waco, buy about 9 or 10 houses a month, and we’re by far the largest house flipper or house buyer in Waco right now. You know, there’s not a ton of competition. There’s a decent amount of small little Tommy the house flipper, Johnny the house flippers going on that are kind of getting in the way.
But, yeah, we’ve been doing it for six years. You know, started off like most people back in 2012. There were these deals on the MLS. We bought those until we couldn’t buy them anymore, and then we had to learn how do you get the good deals left. And, you know, so we were part of a group. We’ve recently left that group and doing everything on our own. And, yeah, it’s been great. Just, you know, I never knew until a few years ago that you could buy houses at such a high volume rate. So, it’s been a fun journey and a great experience, and it’s just been a completely life-changing business for me.
Mike: That’s awesome, that’s awesome. And for those who don’t know, Waco is about an hour-and-a-half, two hours south of the Dallas-Fort Worth market kind of between here and Austin. In fact, up until I knew you, obviously, for several years now, for us, Waco was just kind of the halfway point between Austin, so we never really stopped for, like, “Okay, if we’re in Waco, we’re halfway there, right?” But, it’s a great little city, and it’s obviously changed quite a bit over the past few years because of Chip and Joanna, I guess, huh?
Travis: Yeah, well, three years ago, there was really very little . . . there’s very few things you’d want to come to Waco for, and now, because of the Silos and because of Magnolia’s, like, hit TV show, all these little tiny other businesses have come around that are kind of need to go check out. And it’s just become kind of like an interior decorating mecca. It’s blown most of us away.
Mike:Yeah. Well, that creates opportunity, right? And that’s kind of what we’re going to . . . I mean, you’re doing something very specific in Waco, but I think people will see that there’s opportunities like this all over the country. I think you probably agree with this, the Airbnb model, and I have friends that are doing . . . they turn houses into assisted living facilities.
Like, there’s a lot of things that you could do with houses that aren’t . . . like, you and I come from the cloth of . . . we’re wholesaling, rehabbing, and keeping those rentals, and that’s kind of one tool on your toolbelt, the traditional path. And, in market where it’s harder to buy houses than it has been in a while, it’s more competitive, it’s only natural for this evolution to start happening with, like, how can I create more value on back-end if I have to pay more to get it, right?
Travis: Right, yeah. And that’s it. It’s, like, okay, if the market is saying we have to pay at 78% to 82%, and then we are netting, you know, it’s costing us 10% to sell, we’re looking at margins of 8% to 10%. So, in our market, that’s about a profit of about $15,000 to $18,000, and you have to do a lot of houses to make a good living doing that with a staff of 4. But with these Airbnbs, what we’re finding is, you know, traditional rentals, you know, you’re making about $200 a month.
However, with Airbnbs, you know, a house that you would typically flip, you can make the same amount of money that you’d make flipping it on an Airbnb if it’s ran well and if you hold it for a good year. So, our first one that we did, it’s like a $550, maybe a $600 rental type house. We went in there and made it look really shabby chic, made it look real cute. And, I mean, that thing rents out . . . So, in June we had three vacancies, and I’m sure we could’ve filled those up if we would had lowered the price to, like, 60 bucks or something, but it was almost 100% full. And we’re getting $150 to $200 a night on average. I think in June, our projected revenue is 57,000 bucks, that’s gross revenue, and our expenses are about $12,000.
Mike:Okay.
Travis:So, you know, we’re looking at three to four grand net profit, you know, on this model. So it’s been great. Currently, you know, I would say the app or the company Airbnb.com has made the vacation rental space hip, cool, not creepy, whereas, you know, vrbo.com is, like, “Man, I’m staying in some dude’s cabin.” You know? It’s just, “I don’t know this guy.” But Airbnb makes it just feel a lot more safer with the app and that sort of thing.
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Travis:”I don’t know this guy,” but Airbnb makes it just feel a lot more safer with the app and that sort of thing.
Mike: That’s awesome, that’s awesome. So, you know, for those that are listening, I mean, I can’t imagine there’s anybody listening right now that isn’t familiar with Airbnb. But, effectively, instead of renting at a hotel, if there even is hotel space available, there’s people that are renting out houses. And what happened is I think it started with like, “Hey, there’s a spot on my couch,” like, that’s how Airbnb kind of started, like, “I’ve got a spare bedroom.” And it’s kind of evolved into renting houses, sometimes luxury homes.
Travis:For sure, for big parties and frat parties, that sort of thing.
Mike:Yeah, and it’s enabled investors . . . what’s happened over the last few years is it was just people with, like, extra space or, “I don’t need that house anymore,” or, “I live here, but I’m travelling for the next three months, so let me just kind of sublease my house while I’m not there.” And it’s turned into, really, a business model, right, with investors that were doing something else saying, “Hey, instead of turning this into a traditional rental, I can turn it into an Airbnb.” And because you’re able to rent it at, like, more of a nightly rate, you would get more than you would if you were on a monthly basis.
Travis:Yeah. Our worst month, we still netted over 700 bucks, and that wasn’t bad then. And we’ve been able to set up an automated, you know . . . So, Airbnb can be managerially intensive if you don’t set up the management correctly. And so, we’ve got a drycleaner . . . we get a lady that at 11 a.m., she comes, she makes ready the house, she fills the toiletries up.
One thing is you can get toiletries online, you can get a bulk of 100 shampoos or 100 soaps for $8.35. At first, we were buying them at Target and spending a ton of money, like, 50 bucks a month. Now, we’re getting a little smarter. But, yeah, you know, if you think about it, like, so Baylor is in Waco, a family comes down, they can get three or four hotel rooms for $200 a night, $300 a night, you’ll get 800 bucks to 1,200 bucks for a hotel room, and you still don’t have a common place to meet. Or you can rent out a nice, big house for all your whole family can sleep there and there’s communal areas, that’s where the TV is to watch. So, you can have sort of like a . . .
Mike:Kitchen.
Travis: . . . a party, or you at least have everyone in a centrally located area. And, it’s going to be half the price of staying in a hotel, typically speaking.
Mike:Well, let’s get in, because I think a lot of people, they understand the concept here. I think people that are watching right now, if they’re not already doing it, but let’s talk a little bit about what it takes to run a successful Airbnb business. And I know you have come up with kind of 5 C’s to cover for what it takes to run a successful Airbnb business.
It’s funny because, you know, a lot of people don’t realize this. This is episode number 428. I am such a student of this business, and just business, and business people, an entrepreneur that, honestly, I’m the host right now, but I’m excited to talk about . . . because you’re going to see me taking, like, notes here, so bear with me. But let’s kind of jump into it.
Travis:Yeah, sure. So, I would say the 5 C’s to do a successful Airbnb are as follows. Comfy beds, and I’ll come back to that and explain what I mean by comfy beds.
Mike:Just kind of list them, and then we’ll come back to them.
Travis:Yeah, I’ll do that. Comfy beds, clean . . . so, clean house, cute, coffee, and conveniently located. So, in Waco, that would be within five minutes to, you know, Magnolia, or a campus, or downtown, which, you know, Waco is kind of a small town, so most things are that close. But our Airbnb is 1.7 miles away from the Silos, so it is always full.
But to go back, so let’s start with the first one, comfy beds. My wife has been able to make this just perfect. So, one thing that a lot of people don’t think, you know, house flippers are like, “Oh yeah, we do this house. We’re done. It’s going to cost $30,000 to fix up.” But if you want to make it a Airbnb, you got to add another 10 bucks per foot for the stuff on the wall, and the beds, and the toiletries, and etc. etc.
Mike:Of all the of furnishings, yeah.
Travis:Yeah. So, what we do is we go . . . you can get everything on Amazon. So we go to Amazon and we get a bed frame and it’s 89 bucks, it’s black, and it’s tall, it’s foldable, and that keeps you from needing the box-springs, which is great because when you have less things that, you know, stuff like bed bugs can get into, then . . . You know, you got to think about stuff like that as well.
So, we’d get that crate or that bed frame, we put a $200 mattress that we get at, like, a mattress wholesale place and the key, so that’s 4 inches. The key is . . . on top of that, we get a four-inch memory foam topper on it. So, that’s eight inches. We wrap that with, like, plastic linens so, like, soil . . . things don’t get on it [inaudible 00:13:32]
Mike:Let’s make a list of the things that could get on . . . No, I’m kidding.
Travis:Yeah, so, like, mainly . . . Yeah. I don’t know [inaudible 00:13:40]
Mike:But you have to think about, right? It’s, like, a rental. Sometimes you do rental-grade repairs and you think about the maintenance, like, “What if I have to replace this tile,” or . . .
Travis:Right, right.
Mike:You’re thinking about, like, kind of the durability of this so you don’t have to . . . Instead of it just looking nice and having no durability, you got to think about what it’s going to take to maintain it, right?
Travis:Yeah. So, once you put the plastic on it, if you did it the way we do it, it costs you about 300 bucks for a king-sized bed. So, that means a twin bed is smaller. So, we have 74 5-star reviews, and I think a good third of them talk about our beds, and it’s literally the cheapest bed that you can make. Me and my wife bought one of those really fancy, you know, Silicon Valley mattress startup companies, they’ll ship it to you in a big roll, and the whole thing was, like, 1,500 bucks. We could’ve just, you know, spent 300 bucks and had a nice Airbnb bed. So, yeah.
Mike:The comfort of beds are important. You got to think about, like, the experience. Let’s be honest, you’re thinking about the experience. You’re trying to create testimonials, right? I mean, when you’re in that business, you’re like a hotel. You got to think about what will people say when they leave here, right?
Travis:Yeah. It’s a mini hotel, and you’re kind of in a vulnerable position. So, if you don’t, you know, like, if the AC breaks, like a typical rental, you’re like, “Okay, well, I can get my AC guy out tomorrow.” No, you get him out in 30 minutes or you’re going to be at risk of getting a crappy review, which really affects your search ratings and really it affects your overall production and occupancy rate.
Mike:Yeah.
Travis:So, I think the key . . . so the second C would be clean. Obviously, you got to keep it a clean property, but the way to do it is really, going back to the managerial-intensive nature of an Airbnb, finding someone like a stay-at-home mom who can go and clean for two hours for 30 bucks. You know, our house is about 700 square feet, the one I’m referring to is, and she cleans it. She takes all the linens, puts it in a green bag, takes it to the drycleaner, picks up the other linens, brings it back with the linens that she dropped the day before or the last time she was at the drycleaners.
And then, she installs that, she turns on a diffuser, like, an essential oil diffuser, and it’s ready for the next guest. And so, essentially, the guests walk in to a clean house with nice smelling linens, and, you know, you get an essential oil diffuser going, so it’s very peaceful, kind of like a spa-like experience. And man, I would say it’s one of the more fun things we do just because it . . . because we get to add to people’s experiences of Waco, and it’s a town that we really love. And so, it’s great to see other people love it that are from Indiana, or Massachusetts, or whatever.
Mike:And for stuff like that with cleaning, so typically, with Airbnb, the renter, I guess, is typically paying a cleaning surcharge, right?
Travis:Yeah. There’s a cleaning fee that Airbnb charges, and it’s anywhere . . . well, Airbnb doesn’t charge it. The host charges it. And so, we can [inaudible 00:16:58] charge plus 35 to 40 bucks.
Mike:Okay.
Travis:We pay our cleaner . . . I think we pay her $12 an hour. So, it takes her about two hours, so 24 bucks, and, you know, it works like clockwork. She’s turning over 3 times, 4 times a week, and so, you know, that ends up being about 100 bucks extra for her and she’s got it down to science, it doesn’t take her long at all.
Mike:That’s great. And because of that surcharge that’s getting mostly paid, it doesn’t sound like you’re having to subsidize it much, do you things like take sheets to get laundered instead of, like . . . you know, sometimes people, in all areas of real estate, try to do the cheap route, right?
Travis:Oh, I know.
Mike:So, they’re bringing them home and you’ve got your wife washing other people’s sheets and stuff like that.
Travis:Linens? Right. Oh no, that’s how we started it.
Mike:Yeah.
Travis:I remember after, like, the third month in, I just remembered telling my wife, I’m like, “I think the washer and dryer are constantly running. Is that correct?” And she goes, “Yeah, it’s because we’re always doing linens for the Airbnb.” And I was like, “We need to fix that.” So, that’s where we came up with the drycleaner idea. I think that’s the only drycleaner in town that was interested in helping us out of about five or six calls.
Mike:But you start to . . . you know, what we’re talking about here is how you can start to get efficient, right? And you start to get systems and processes in place, and solutions for things so that you don’t necessarily have to do them.
Travis:Yeah. You know, it goes back to, like, the whole reason why most people are in real estate is they just want passive income. You know, it’s like real estate is almost like the lazy man’s game. We sit around, we wait for the end of the month, we could get some rent, and then we kind of . . . you know, if it’s enough, we kind of live life however we want. If it’s not, then we got to do some wholesales and flips and that sort of thing.
Mike:Yeah, yeah.
Travis:But it fits right in there on the, you know, passive income. And the great thing is there’s some people, they’ll, like, rent out an apartment. We haven’t done that. We like controlling our assets, and the whole reason we actually like owning the Airbnb as opposed to just renting it, and then Airbnb a leased-out property. We don’t want our nice furnishings to be thrown out on the curb if we piss off the landlord, you know? It pushes out cash, that’s for sure.
Mike:Yeah. So, with the cleaning part, though, you have a process where the woman that’s cleaning it, she knows exactly what to do, probably is kind of eyes and ears so you don’t have to go there to say, “Hey, if something looks like outside of the scope of what you do, just let us know that there’s an issue.” I assume that person is kind of like your eyes and ears for you, right?
Travis:Yeah. She definitely has ownership . . . like, she takes ownership in the property. And so, there’s been a few times where she’s been out of town or something like that and she’ll have to get another cleaning lady or a couple to come in and take care of it. And she is extremely protective of how it comes out. So, we’re very anal about the quality and so [inaudible 00:19:57]
Mike:Yeah, and on the cleaning side with Airbnbs, so most people are not getting the linens changed daily, right? It’s like probably after each stay. Is that typically how it’s done?
Travis:Yeah. It’s not like a hotel where they come in and change it daily. We have a two-night minimum, so they come, they stay Monday, Tuesday. We clean it Wednesday, Thursday cleaning, that sort of thing. Yeah, there’s no expectation for you. It would probably be extremely awkward if you went in and tried to turn down the beds every day.
Mike:Yeah, right. Cool. And people don’t expect that because it’s more of a home versus a hotel, so they’re kind of, like . . .
Travis:[inaudible 00:20:31]
Mike: . . . “No one does that for me at my house,” right, “So, I don’t expect it here.”
Travis:Correct, yeah. For sure.
Mike:Okay. So, the third C, you said was cute. So tell us a little bit about that.
Travis:Yeah. You know, the goal is to not go overboard. It’s amazing what, like, some old wood that you found on the side of the road, if you put the right phrase on that old piece of wood, you can sell it for 50 bucks or whatever. So, you know, we got most of our stuff at Hobby Lobby or some, like, junk stores, you know, like the people that refinish furniture, that sort of thing. That’s where most of our furnishings came from. You need to make it look really appealing. So, our goal was to make it as Magnolia-looking as possible . . .
Mike:Yeah, that’s your audience, right?
Travis: . . . [inaudible 00:21:16] a money. Yeah, yeah. That’s the whole reason people come to Waco, because they want to see the old, cute houses that Joanna’s done, and just the cheap, old houses, basically.
Mike:Yeah. I know some people that have some Airbnbs near Cowboys Stadium, and, you know, you want to probably make them feel like you’re in town to watch a Cowboys game, because that’s what most people [inaudible 00:21:37] for.
Travis:Yeah. You probably have some cool Dallas Cowboy memorabilia, that sort of thing, on the walls.
Mike:Yeah. So, just kind of replace what you’re doing, the cuteness of it, like, trying to make kind of a Magnolia fiat, right?
Travis:For sure.
Mike:For folks that are listening right now, hey, if you’re doing one in Vail, like, you should probably have pictures of skiing on the walls and stuff like that. Like, whatever kind of theme is of why people are coming there.
Travis:Yeah, because you’re essentially . . . you own a mini hotel is what you’re really owning.
Mike:Right.
Travis:And so, you want to make sure that guest has the best experience as possible, which is really the . . . you know, the traditional rental model is a model set up for aggravations. Someone is not going to be happy, generally speaking. You don’t pay me rent, I’m unhappy. I don’t fix something, the tenant’s unhappy, you know. Where this is like, “Hey, we want your experience to be amazing.” And so, it’s a lot of kind of hospitality, which me and my wife love. And so, it’s a lot different and a more pleasant asset to own. So, it’s just a lot of fun, not a lot of aggravation at all.
Mike:Yeah, that’s awesome. That’s awesome. So, the fourth C you had was coffee. So, that one seems like the “What is the one thing that doesn’t fit here?” and it’s [inaudible 00:22:58] about that?
Travis:Well, you know you got to stick with the 5 C’s. You know, coffee, and we do cinnamon rolls. You know, so the Silos Baking Company, we know the actual person who makes those cinnamon rolls, so we just go to get it from her bakery and we provide those every morning. That’s kind of just an extra step we do to really kind of bring it home. Those cinnamon rolls are heavenly. They’re so good. And so, the coffee, we get the Keurig and we make sure that thing’s stocked, and it gets used. You don’t really have to have stuff to make a meal. We don’t even have an oven, like a range, in our Airbnb. We’ve got, like, a toaster, a blender, and a convection oven, like one of those little ovens that you [inaudible 00:23:42] . . .
Mike:Yeah.
Travis: . . . little tiny things in.
Mike:So, you actually remove the oven then, right?
Travis:Yeah. We’re talking about a 700-square foot three-bedroom one-bath house. So, it’s pretty small. The other two that we have under contract that we’re going to make Airbnbs, those are bigger, so we’ll have an actual full kitchen. But, you know, we were thinking we’re either going to have a dining room table or an oven range. We’re like, “People aren’t going to cook when they’re here,” so, most part.
Mike:So, the coffee thing is just back to the experience, right? Like, make them feel comfortable there.
Travis:Sure. “This is home. Oh, this is the same Keurig pot that I use when I’m at home.”
Mike:Yeah.
Travis:It makes you feel warm inside. Warm inside equals five-star reviews when you’re done.
Mike:And what you’re trying to do there, I presume . . . So, I know somebody else that I had talked to before and they’re like, “I always leave a bottle of wine in there,” and kind of a little welcome note like, “Thanks for coming here.” But it’s just, nobody expected that. You’re just like, “Oh, wow. This is cool. I didn’t expect that in.” Just helps you to get more towards a positive experience and positive review, ultimately, right?
Travis:For sure, for sure.
Mike:Yeah.
Travis:The last C, conveniently located.
Mike:Conveniently located. That one is a little more intuitive. Well, let’s talk about it.
Travis:Sure, sure. So, you know, if you pull up the map for where all the Airbnbs are, the ones that are full the most are in a zip code that the Silos are in. And so, the ones that kind of have . . . You know, I would imagine a mediocre Airbnb would still outperform a conventional rental, but it might be a little nerve-wracking if your Airbnb is only rented out twice or three times a month but it’s on the weekends, but you’re still getting $1,200 to $1,500 on a house that, you know, would only make you, like, 800 bucks traditionally.
So, I would say, if you’re looking to get into the Airbnb industry, you know, you’re going to need to get a place that has a little transient scene, has a little tourist vibe to it. And so, you know, obviously, beach locations, mountain locations, that sort of thing.
Mike:Okay. So, let’s talk a little bit about the actual management of them. Like, maybe share your thoughts on what happens day-to-day. Obviously, you have property management and maintenance, I guess, in terms of, like, keeping the lawn mowed and keeping the house looking good. How do you kind of operationally get that down to where you’re not having to do it?
Travis:Yeah. So, it starts at the beginning. If you go on airbnb.com right now and you pick a random place, there’s about a 50% chance that it’s going to say that the host has to approve you. Well, we’ve learned . . . we’re trying to eliminate ourselves, and so, most people that get Airbnb aren’t going to be serial killers. And so, we just allow them to autobook. If they start asking us some real weird questions, then at that point, we’ll probably say, you know, “There’s . . . “
Mike:Right, right.
Travis:You know, whatever.
Mike:”Is there a woodchipper in the backyard or . . . ?”
Travis:Right, right. Yeah. Yeah, we [inaudible 00:26:57] those people. So, allowing autobook on Airbnb, allow a guest to autobook and all of a sudden, you’re printing money. My wife sends out a copied text message. So, it’s the same text message that goes out to every single guest. She does that to . . . you know, if check-in’s at 3, she’ll do it around 2. “This is where you park, this is the lock box code,” you know, “There’s going to be cinnamon rolls here, that’s how you cook them.” “This is what to do when you’re done,” “When your stay is over, this is what you need to do to not get charged a small cleaning fee,” or that sort of thing.
And so, you know, having a lock box indoors so we don’t have to open it for them. And then, at that point, we kind of explained it, after the guests checkout, we get our cleaning . . . we get Cammie over there to take care of everything else, and she kind of just takes ownership at that point and does a typical turnaround, makes sure toiletries full, that sort of thing.
Mike:Yup. And how about just stuff like maintenance and things? Does the guest usually lets you know or maybe your cleaning person lets you know that there’s an issue and they know what to do about it?
Travis:Yeah. The guests, you know, our house just . . . you know, we’ve had the AC go out, we’ve had the shower knobs just stop working, they broke, and then we’ve had the epoxy coming up on the tub. And so, you know, it’s not that there’s no challenges, it’s that the challenges are a little different. And once you get them, you got to take care of them immediately because they have to take hot showers. They got to get, especially, in Texas, air-conditioning is on 80% of the time. So, yeah.
Mike:And does it make sense to . . . I know you guys have multiple Airbnbs and are looking to add more, so do you think for folks that are listening right now, it gets easier with volume? Like, you can start to develop more systems or have the cleaning . . . it’s not any harder for you to ask the cleaning person to clean one more or five more?
Travis:Yeah, we’ve actually . . .
Mike:[inaudible 00:29:04] efficiencies you might get when you scale up.
Travis:Yeah, we were talking. We’ve talked to her and she’s ready and willing to do some more for us. Our goal is to have 10 by January 2019, so we got another 6 months. And we have three now, so pretty much instead of flipping a house, unless we just need the revenue, we’re Airbnb-ing it out because it just has substantially more upside consistently. It’s like getting paid on a flip every month automatically.
Mike:Yeah. And I know you had mentioned to me, so the thing with the Silos and all the Magnolia stuff, it’s hot right now, but it might not be forever, like, that might die off. And if that happens, I mean, I think some people that are . . . when you’re an entrepreneur, you know that not every opportunity lasts forever, right?
You’re kind of like, “I’m going to ride this out for as long as I can and then we do something else.” And there’s nothing wrong with that. Of course, some people that are naysayers are like, “Well, yeah. But someday, this is going to happen,” and you’re like, “Well . . . ” And for you, you’re like, “Well, we’ll just deal with it,” right? But for them, that keeps them from doing things, right? So, let’s talk a little bit about if you’re in a market where things change, right? Like, something is hot, but then it’s not, and what you’d do then.
Travis:Yeah, well, to kind of hit on the fear piece, you know, fear is the biggest liar ever. And the truth is, like, by not pursuing your dreams, you’re basically sabotaging yourself. You’re saying to yourself that your comfort and your fear is stronger than your dreams. And so, let’s just hit on that, you know? My first house I bought, I remember getting in the car and freaking out going, “What did I just do?” You know? I was thinking I just, like, made the biggest mistake in my whole life. And like, the truth is, like, once I got over that panic attack . . . like, one of the best rentals I’ve ever bought was my first ever house. And so, what I would do is just, you know, taking action is key. And after going in that rant, I can’t remember exactly what your question was.
Mike:Well, it was more of just, like, if things change, like, if you’re . . .
Travis:Oh, okay. Yeah.
Mike:Let’s say people are buying stuff near a sports team, and then a sports team, like, moves on the other side of town, right? [inaudible 00:31:12] I mean, that stuff is going to happen, but how you kind of plan to just roll with it.
Travis:Yeah. So, our goal is to not have our properties over-leveraged, so we want to be around 70% LTV or less, you know, on a debt position so that if that does happen, we can get out of it. And the goal is to make money every month, not to juice that equity as much as possible. And so, we want to be around 50% to 70% loan to the value of the property.
And then, if things dry up, you know, I still think it’ll outperform a regular rental, but if it doesn’t, then we can throw in traditional tenants in there that houses are . . . they’re in C plus to B minus areas, but the finish-outs are A plus. You know, you got marble, you got hardwood floors, you got granite, you got quartz, and butcher block countertops, that sort of thing. So, I’m pretty sure they would still rent out at a premium, but at the same time, you know, you could always sell them. That’s the glorious thing about real estate is it produces cash and when it doesn’t, you just sell it off, and you can take that money and put it in something else.
Mike:Yeah, especially single-family houses. They’re pretty liquid, right?
Travis:Correct. Yeah, everybody needs a house.
Mike:Cool, man. Well, if folks wanted to learn more about you or some of the stuff you got going on, where could they go?
Travis:Yeah. You know, you can reach out to me via email, my email address is travis@texas-trust.com. And, you know, we buy houses all over Texas. You know, I do some coaching. I just do some kind of private coaching. You know, I think the biggest gift of my time would be a website that we use to analyze Airbnbs, and it’s a website called airdna.com. It essentially takes the Airbnb data, which, you know, right now data is huge. Everyone is making decisions off of data.
It takes the data, it filters it, and then it communicates a few things . . . or it communicates a lot of things, but, you know, if you want to see like, “Hey, is Tulsa, Oklahoma or Bentonville, Arkansas a good Airbnb area?” You know, one would assume, “Probably not.” You know, but we’re not in the tourist industry, but you can pull us up and it would give you a market grade. So, Waco, of course, is an A plus because we have such a high demand right now because there’s no hotels and over 1 million people come here.
It will tell you the average daily rate. It will tell you the occupancy rate and what you should get for revenue. It will tell you who your competitors are and who’s kicking tail the most. And, you know, you can really analyze a lot of that data and, you know, obviously, analyzing data correctly helps you make your decisions.
Mike:Yeah, that’s awesome. That’s awesome. I’m going to check that out myself. Cool. We’ll add a link.
Travis:The coolest thing is you can put an address in there and it will tell you everything about that one property.
Mike:About the property of an Airbnb property or your property?
Travis:Yeah. So, my Airbnb, 2104 Columbus Avenue, Waco, Texas. I can put that on AirDNA and it will tell me what I should be renting it out for, what the demand is, and my competitors, and my zip code, which is great.
Mike:That’s awesome. Yeah, I think for Airbnb, I mean, I told you, we’ve been thinking about doing this. So, that was always one of the big questions, it was like, “Well, how often is it vacant?” I don’t know. “How often would it be vacant? What could you actually rent it for?” I don’t know, I’m just going to be guessing. I mean, before you had mentioned this product, I knew we could go to Airbnb and try to find something close by and see what it rents for, but you don’t get a whole lot of the story there other than what they’re asking for rent right now, right?
Travis:For sure.
Mike:Yeah, that’s awesome.
Travis:Yeah, and the thing is, like, you see these houses and you’re like, “Man, these things are just raking it in.” And then, you realize like, “Oh, actually they’re not. They just don’t have the availability.” And so, like, it looks like they’re full, but then you realize, “Oh, you know, the family’s staying there Monday through Friday.”
Mike:Yeah. That’s interesting, yeah.
Travis:[inaudible 00:35:11] people on the weekend. And so, if you’re looking at making a major purchase and then you’re like, “Oh, wait a second,” like, the data I was looking at on Airbnb that I was just kind of guessing at is actually not true, that can keep you from really taking a hicky on a property.
Mike:Yeah, yeah. That’s awesome, man. That’s a good share. Appreciate that. We’ll add a link for that down below on the show notes here for those of you that weren’t able to write it down, but, awesome. Hey, Travis, thanks for being with us today. Great to see you, my friend.
Travis:Yeah, you too. Thanks, Mike. Take care.
Mike:Yeah, awesome. Hey, everybody. This is episode number 428 with Travis Baucom. If you haven’t yet, please subscribe to us on Stitcher Radio, iTunes, Google Play, wherever you listen to us at, even on YouTube. Or, of course, you can watch all of our shows, over 1,500 shows across on your podcasts on flipnerd.com. Those ratings kind of give us the fuel to keep moving forward here and keep bringing episodes at you, so awesome. Everybody, we’ll see you on the next one.
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