JF1596: Creatively Purchasing Short Term Rentals & Scaling A Management Company with Zeona McIntyre

Zeona got her start with real estate investing in 2012 with one AirBnB property. She never looked back, purchased more short term rental properties, and even started a management company where she manages other investors short term rentals all around the world. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

 

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Zeona McIntyre Real Estate Background:

  • Travels the world for half of each year using and teaching a variety of tactics for others to do the same
  • She owns six Airbnb’s and manages 15 properties and teaches others how to invest and set up automates Airbnb business’s
  • Based in Boulder, CO
  • Say hi to her at https://www.zeonamcintyre.com/
  • Best Ever Book: Never Split the Difference

 


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TRANSCRIPTION

Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any of that fluffy stuff.

With us today is Zeona Mcintyre. How are you doing, Zeona?

Zeona Mcintyre: I’m so good, thanks for having me on.

Joe Fairless: Well, it’s my pleasure, nice to have you on the show. A little bit about Zeona – she travels the world for half of the year, using and teaching a variety of tactics to help others do the same. Specifically, she owns six Airbnbs and manages 15 properties and teaches others how to invest and set up and automate their Airbnb business. Based in Boulder, Colorado, and she’s now traveling the world… With that being said, Zeona, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Zeona Mcintyre: Yeah, so I grew up in Hawaii, which is not really an entrepreneurial market; I think that’s kind of a place that they don’t really encourage that sort of behavior… But luckily, I found my way to Boulder, Colorado. This is just like a startup frenzy, super-passionate entrepreneurial place, so I’m just thriving here, I’m loving it.

But yes, I got started with Airbnb in 2012, and I haven’t really looked back. I started with just a room in my house, in a place that I was renting, and blew it up into owning six properties, managing about 15-20 around the world, and I think it’s super-accessible for anybody just wanting to get into real estate. So yeah, I’m excited to share that.

Joe Fairless: Where are the six properties that you own?

Zeona Mcintyre: I own one in Colorado Springs, one here in Boulder, and then four in St. Louis.

Joe Fairless: How did you end up in St. Louis?

Zeona Mcintyre: I had a friend who moved there, that we were friends from Hawaii, and after about five years I went to go check it out, and just kind of heard how affordable the market was, and then decided that I would come back and buy something. I had a place a month after I visited.

Joe Fairless: And how have the St. Louis ones compared to Boulder and Colorado Springs?

Zeona Mcintyre: Well, Colorado is more hyped. We do have a huge summer here, and the prices are a lot higher, so you can charge more… But because it’s so affordable in St. Louis, the margins are way better.

Joe Fairless: Hm, okay. Factoring in vacancies, you make better cash-on-cash return in St. Louis with Airbnbs than Boulder and Colorado Springs?

Zeona Mcintyre: Yeah, heads and tails more, because you can’t buy anything in Boulder under maybe 300k, and my cheapest property I ever bought in St. Louis was 52k.

Joe Fairless: Okay. And what are those returns that you’re getting in St. Louis?

Zeona Mcintyre: It’s about 20%-22%.

Joe Fairless: And what about the Colorado ones?

Zeona Mcintyre: Wow, I actually don’t know right off the top of my head. Yeah, that’s interesting…

Joe Fairless: But not 20%-22%.

Zeona Mcintyre: No, no… Monthly, in St. Louis, these homes – they’re gonna do $1,600 to $3,000/month, and they’re all under $100,000. And then in Colorado the condo I have here was $162,000, which now is $350,000, and that maybe does $4,000/month in summer in the height-height; otherwise it’s about $1,600. It’s just a huge spread there on what you can get and what you can make.

Joe Fairless: What type of financing did you get on each of the six?

Zeona Mcintyre: When I started in Boulder, I just knew that I probably couldn’t qualify for a loan after having done Airbnb for a couple of years… And that was early days, when — even now it’s still hard to qualify for a loan; they just don’t see it as traditional real estate income. But before, it was even worse, because nobody really knew what Airbnb was.

I asked a friend and he gave me a private loan, kind of under the table. I was able to pay that off pretty quickly, so that one is without a loan currently. Then I use that property to leverage my first one in St. Louis through that same private lender. It was kind of like a HELOC sort of deal; you just put a lien on the property. I did that kind of cash.

Then the other couple – the next two in St. Louis I bought at the same time, and I used cash for both. One I paid for myself, and then the other one I split with a friend. The last St. Louis one and the one in Colorado Springs – I did mortgages, but I have a friend who gets the mortgage and we’re partners on it.

Joe Fairless: How resourceful is this?

Zeona Mcintyre: [laughs] You’ve gotta be, right?

Joe Fairless: Wow… I’m glad I asked that question. There was not one traditional way of financing those purchases.

Zeona Mcintyre: Oh, no… I still don’t know if I qualify for a mortgage, honestly. My finances are so wild. I’ve got seven bank accounts, and Airbnb pays you on the day someone checks in, so I have hundreds of payments… It’s all over the place.

Yes, I have a lot of money that comes through my accounts and that’s great, but it’s so much easier when you’ve got a friend who’s got a W-2 job that’s super predictable. If you can get someone else to get the mortgage and then you just sit on the sidelines – way better.

Joe Fairless: When you split the one deal in St. Louis with your friend, how did you structure that?

Zeona Mcintyre: I had it where he paid for it upfront just cash. That house was $60,000. I took 60% equity, he got 40% equity, and I do all of it. The thing he helped me with was furnishing at the beginning, and then I do all the management going forward the whole time. I think it’s a pretty fair deal. He doesn’t even know the house is still standing; he hasn’t seen it in years. I’m the one who goes and makes sure everything’s good, and works with all the cleaners, and does all the turning over, and he’s just happy looking in the bank account that we’re doing great.

Joe Fairless: Is every dollar that is profit split 60/40, or…?

Zeona Mcintyre: Yeah.

Joe Fairless: Okay, so he doesn’t get his first 60k out, and then 60/40; every dollar is 60/40.

Zeona Mcintyre: Yeah.

Joe Fairless: Cool, okay.

Zeona Mcintyre: And equity gains, because it’s appreciated a lot. It’s been a double win. Generally, the Midwest is pretty flat.

Joe Fairless: What’s it worth now?

Zeona Mcintyre: It’s about 100k now. But we’re probably going into a recession coming up, so I’m not betting on that money, because I don’t intend to sell at all. I’m just happy with cashflow.

Joe Fairless: When you looked for the Airbnbs in St. Louis – and I’m more interested in St. Louis than Colorado Springs and Boulder because I feel like it’s easier to get a good Airbnb in Colorado Springs and Boulder, but in St. Louis my assumption is that you’ve got to be more particular or selective about where you go, in order for it to be a good Airbnb location.

Zeona Mcintyre: Yeah… I mean, I actually think it’s backwards. I think it’s so much harder to find something good here, because the prices are so–

Joe Fairless: Well, okay, sorry – prices aside, which is obviously a big variable… I’m just saying as far as the area for where people wanna Airbnb – I feel like Colorado Springs and Boulder you could just throw a dart at the city map and you’re probably okay with Airbnb, whereas with St. Louis, if you throw a dart, you better make sure you’re directing that dart to a certain area, is my guess…

Zeona Mcintyre: Sure, yeah.

Joe Fairless: So how did you pick the location for St. Louis when you were picking your Airbnb?

Zeona Mcintyre: I knew that Boulder being a college town did really well, so I sort of was betting on that. I thought “Okay, let me talk to a few people in St. Louis, see what they say about neighborhoods”, and I did a lot of research just online, which I think is a great resource. I didn’t actually go and visit the home before I bought it, and if you can’t do that, I’m pretty sure now with all my experience that you can do 99% of it online.

With that, I was looking for the biggest college in St. Louis… Washington University is their biggest school there. They’ve got about 15k students. And with that, it’s got a really strong medical program, so people come all over for treatments there, and then also just to interview for the medical school… I knew that was gonna bring parents, students, traveling instructors, traveling nurses… So that was just a great hot spot.

Then in that location in the university area it’s 15 minutes from the airport, 15 minutes from all those sports fields, the Convention Center, downtown… So I thought that that seemed like a really good hub. But yeah, I think you wanna know that the location has something that’s bringing people there. You can’t — I mean, you can, but being just in the suburbs is a lot harder to make it work.

Joe Fairless: Agreed. So you focused on — Washington University I think is an Ivy League, too… Aren’t they?

Zeona Mcintyre: I actually don’t know.

Joe Fairless: I think they are. Well, either way…

Zeona Mcintyre: Maybe they’re private, or something… I mean, it’s a beautiful school; I don’t actually know for sure, but it definitely has helped us… And also being in a student area, because I started kind of early days there and I wasn’t sure what the climate, how friendly people were gonna be towards Airbnb – students generally don’t care about people coming and going and all that, and they’re gonna [unintelligible [00:10:32].01] maybe an older neighbor, or something… So I sort of knew that that would be a good bet, as well.

Joe Fairless: So when you are doing the research, you look for the college town, which makes sense… Or the area which the college is located in that city, and you find a place that’s close by. It makes sense. What are the other characteristics of a property that you need to see in order to purchase it for an Airbnb?

Zeona Mcintyre: Now you can look on Airbnb and put in specific addresses and kind of see what people are charging around you. It doesn’t give you a whole story, because prices change based on the seasons, but that does tell you a little bit.

I like using Google maps to walk down the street. Again, it doesn’t tell you everything, but you can see how nice the cars are, you can see if homes are boarded up, and you can get a general vibe of “Is there trash in the yard? Are homes taken care of?” that kind of deal.

I use Trulia for crime maps… St. Louis does have a bit of crime, and it can really be street to street, so the crime maps are pretty helpful. That university area in general is just very low-crime, but again, there are some neighboring areas that are not as good, so I really had to kind of rely on things like that.

There are lots of tools, and then I’d say lastly AirDNA is a website that does analytics, and they have some basic stuff that you can see for free, and then you can buy based on the area that you’re looking to invest… But you can actually put in your address and how many people, how many beds, and it’ll tell you what it thinks you can get per night, what your occupancy rate is, and what you would make a year.

Joe Fairless: And as far as the actual property itself – number of bedrooms, your [unintelligible [00:12:19].11] anything like that, if that’s relevant… Is there anything that is a go or no-go that you always look for and would cross off the list?

Zeona Mcintyre: Yeah. I generally stay away from condos, because I don’t want an HOA… Or even homes with an HOA. I don’t want an HOA to tell me what I can and can’t do, so I stay away from that. I end up with older homes, just because they’re more affordable… But yeah, if you can get something brand new, that would probably be more attractive, but I try to play up the character of an older home. I don’t go for pools there, but if you live in Florida, that’s a definite; you need a pool kind of deal. So that depends market to market.

I would say bedroom size — this is kind of a new thing I’m playing with, but in the market of Airbnb, it kind of grew on the backbone of one and two-bedrooms, and in urban markets with condos. So now there’s a flood of that and a lot of competition in that space. But if you can have a home that’s 5-6 bedrooms, there’s not that many other homes that can sleep 10 or 15 people. So all of a sudden you’re in a different pool where you can charge a lot more because there’s a lot of people and they’re all sharing that… But it doesn’t actually cost you that much more to get a couple extra bedrooms. I’ve found that that’s a nice that’s growing a lot. And yeah, there are a lot of people that travel in groups for weddings, family reunions, all that kind of thing, where they wanna stay together.

Joe Fairless: Switching gears to now managing properties… You said at the beginning of our conversation you manage 15-20 around the world – how do you manage those properties? Give us some perspective of about maybe where are some of these properties, just so we know what you mean by “around the world.”

Zeona Mcintyre: Yeah. I have one in Spain that we manage, we’ve got in Seattle, New York, Colorado… They’re kind of all over and they pop up in different areas, because we’ll manage for a time, and then sometimes people are changing their plans… So yeah, we’ve had them in Florida, Atlanta… Just kind of all over.

Wherever people hear from me – because people will find my blog or hear me on a podcast, and then they call me up, and they could live anywhere. I’ve even managed in Greece, in South Africa… So it can definitely be done anywhere, and what’s great about it is it just takes a very small team.

I had to learn this with St. Louis, because I don’t live anywhere near there, and I only go maybe once every year and a half, so I had to figure out a way to make it work long-distance. What I discovered is that if you have a couple of good cleaners, that are really reliable, and then you’ve got a really good handyman or two, then you’re great. That’s pretty much all you need. Because the cleaners you could pay to go check up if there’s some sort of emergency, but otherwise they just go and they’re checking on the home everytime they clean, and they’re very familiar with it, so they’ll tell you if there’s anything out of place.

Then having a really good handyman that’s kind of a jack of all trades – that’s great. And if we need anything else specialized, we just google for it. It’s not really rocket science, but when things go wrong sometimes you can feel helpless being far away, and that’s just part of something I have to get used to.

Joe Fairless: Where there is something that is special that goes wrong and you have to google it, what would be an example of that?

Zeona Mcintyre: I guess if it’s more involved – plumber, or some kind of maintenance like vent cleaning, or just something that he might not have the tools for… But in general, it’s all kind of just regular maintenance, and I’ve also found that the more we’re on top of scheduling, maintenance based on the seasons rather than just waiting for something to go wrong, it can be really good preventative, and then we have less things to call him about.

Joe Fairless: Who meets that plumber at the property.

Zeona Mcintyre: Nobody… If it’s our regular handyman, he knows how to get into the property; he’s got the code, and all our homes have door codes, so that’s fine. But if it is somebody who requires that, then the cleaner will meet him, and we’ll just pay her extra for that.

Joe Fairless: Okay. How much do you make on a property when you’re managing it?

Zeona Mcintyre: We charge 20%, and then there are a couple percentage points that are taken off based on services that we have. I have a property management service that does 24-hour receptionist, and it automatically schedules cleaners, and does a bunch of back-end things for us. Then we also use pricing software, that optimizes day by day, and just really makes that hands-off for us, because pricing is a huge part of it.

Joe Fairless: What’s something that’s gone wrong with Airbnb rentals of yours?

Zeona Mcintyre: I think as this is becoming a bigger and bigger industry, there’s a lot more room for fraud. Working with Airbnb, they collect all the money for us, but when you work with other websites like HomeAway, VRBO, Booking.com, some of them require that we collect the money. So we’ll use a third-party like Stripe, that does the credit card processing, and we’ll find that people are using stolen credit cards, that people are sometimes making a double listing and trying to rent that listing to other people… There’s a lot of crazy stuff that’s happening out there.

Yeah, sometimes things go wrong and sometimes we’re not able to recoup the money, but I think it’s just part of doing business. Sometimes you just have to write certain things off.

Joe Fairless: What are your thoughts on finding a house that is for rent, and then talking to the owner and saying “I’m gonna rent this out to someone else via short-term rentals, but I’ll give you a premium for whatever the rent is” and just scaling your business that way?

Zeona Mcintyre: I think that’s a great way to go. That’s called master leasing, and really with Airbnb I feel like there’s three paths. You can be the owner of the home, which takes the most effort; you have to have a big down payment, and furniture and everything. You can manage someone’s home, which takes almost nothing. So if someone’s just starting out, you don’t have to have the furniture because it’s someone else’s home, and you don’t have to put anything down. You just go and you’re getting 20% just creaming it off the top.

The real good middle ground is master leasing. It’s someone else’s home, but you have to pay for the furniture, which could be 10k-15k upfront, but going forward you’re gonna make a bigger percentage. People say that they average around 60% rather than 20%. So that is a really good way to go. And if it doesn’t work out down the line, you just fill up the U-Haul and you move it to the next property.

Joe Fairless: What’s your best real estate investing advice ever based on your experience?

Zeona Mcintyre: I think the best thing is just to get started, and what I love about Airbnb is that you can. I think for a lot of people that I talk to in real estate it’s like “Oh, I’ve been listening to all the podcasts and reading all the books, and in two years maybe I’ll be ready to finally buy.” There’s a lot of saving and getting ready. I think with Airbnb what you can do today, tomorrow, is list what you already have. Most people live somewhere. Even if you live in a van, you can list that for rent. People list a tent in their backyard, a furnished basement, an extra room, the couch in their living room. So it gives you opportunity to get experience now, and then you can see “Okay, I like what I’m doing here. Let’s see about managing” or “Let’s see about master leasing” and then eventually buy. I think it makes it so much more accessible for people that don’t really have money or experience.

Joe Fairless: What’s a van go for a night?

Zeona Mcintyre: [laughs] Oh, I was like “What’s a Van Gogh…?” It depends how you have it set up. If you have an Airstream or a van or something in your driveway and you’re giving them access to the bathroom, but it’s not something you can drive around with, it’s $75-$100 a night. And if you can drive around with it, maybe it’s more like $200 if you’re renting kind of an RV sort of setup. But it really depends on the place where you are.

I was just looking at some vans in Hawaii, and they’re old vans. We’re talking like ’80s vans. But if somebody is maintaining them and they can buy them for a couple thousand and then rent it for $200/night, heck yeah. You’ve just gotta be crafty.

Joe Fairless: Yup. We’re gonna do a lightning round. Are you ready for the Best Ever Lightning Round?

Zeona Mcintyre: Sure.

Joe Fairless: Alright, let’s do it. First, a quick word from our Best Ever partners.

Break: [00:20:35].15] to [00:21:43].16]

Joe Fairless: Okay, what’s the best ever book you’ve recently read?

Zeona Mcintyre: I love Never Split the Difference by Christopher Voss. It’s all about negotiation, and I just think it’s got so much good information that I could just keep re-reading it, because it’s really dense… But negotiation is everything, even in Airbnb.

Joe Fairless: Where does it come up in Airbnb?

Zeona Mcintyre: A lot of people ask for discounts. I think a lot of people think that the price that you see is what you get, but it’s not. So much of it is fluid. On that end, just kind of getting the idea of not naming a price first, and really seeing what somebody’s got in their mind, and going back and forth, and giving people a discount just so they feel happy that they got a discount sometimes gets you the booking.

But also, if you’re negotiating with landlords to master lease, that’s definitely a lot of back and forth, and it’s not just money, but it’s sometimes terms. But I think it’s a great  skill.

Joe Fairless: Speaking of Chris Voss, episode 1244 I interviewed him, so Best Ever listeners, if you want to listen to that episode, it is episode 1244. What’s the best ever deal you’ve done so far?

Zeona Mcintyre: One of the homes in St. Louis. I bought it for $52,000 and it was listed on the market, I didn’t have to do any sneaky finding… And that house continues to make me around $2,000/month, so between $1,600 and $3,000… And it’s paid off, and very low expenses on a double lot. It’s a beautiful place.

Joe Fairless: If you were renting it traditionally, what would you be netting?

Zeona Mcintyre: I’d probably only get $800-$850 a month.

Joe Fairless: Net?

Zeona Mcintyre: Well, my expenses — all I pay a year in taxes is like $1,000… Not even $1,000. So monthly it would be $800 or $750 or $780, something like that net… But with Airbnb you have more expenses, because you pay all the utilities, so it probably costs $300/month, that house.

Joe Fairless: Is there an expense ratio that you use for Airbnb?

Zeona Mcintyre: No, I just have a spreadsheet, and when I’m gonna look at buying a home, I figure out what all the utilities are gonna average, and I put everything down there so I sort of have an idea of what the net is gonna be each month… And I look at things on a month to month snapshot.

Joe Fairless: What’s a mistake you’ve made on a transaction that we haven’t talked about?

Zeona Mcintyre: That house in particular I bought with somebody else, and it blew up in my face. I bought it with a friend, and I kind of had this whole idea that “Oh, we’ll make some contracts, but we don’t really need to have them. We’re friends, and we’ve got an idea…” But the guy never brought money to the table, and I was asking for very little. So after a year of never receiving any money, and him thinking that he was a half partner, we had to split ways, and we didn’t go to court, but he sued me, and it was just super-messy. I got out with the house, and didn’t have to pay him that much, but it was just a painful process. I learned a lot through that for sure.

Joe Fairless: Best ever way you like to give back?

Zeona Mcintyre: I love to give back with time. I think what I love about Airbnb is that it’s so easy to automate that I have a lot of free time, so I can babysit someone’s kid on the fly, I can help them move, I can go for a walk in the middle of the day, I can cook someone a meal… I’m kind of the person in town that people call when they need something, and I like being there.

Joe Fairless: And how can the Best Ever listeners learn more about what you’re doing and get in touch with you?

Zeona Mcintyre: My website is the best way to get a hold of me, and that’s zeonamcintyre.com.

Joe Fairless: Well, Zeona, thank you so much for being on the show and talking about Airbnb rentals that you have, how you finance them – I found that incredibly interesting – and also the types of returns you’re getting, where you look in different cities (you look for a college, in particular), then how you research the locations without visiting the locations, and then also how you manage them, and some tips there.

Thanks again for being on the show, I hope you have a best ever day, and we’ll talk to you soon.

Zeona Mcintyre: Thank you.

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