JF2034 : Short Term Rentals Pivoting During Coronavirus With Daniel Purcell & Jessie Campora
Daniel and Jessie are engaged and have been investing in real estate for the past 3 years. They are also the owners of OACP Property Management, together they own 7 units and manage 5 others through OACP. In this episode, we discuss how the coronavirus has impacted their business in short term rentals as this is the majority of their revenue. Daniel and Jessie have decided to cater to the traveling nursing demographic which has been helping them stay afloat during this pandemic.
Daniel Purcell & Jessie Campora (Fiancé) Real Estate Background:
- Owners of OACP Property Management
- 3 years of real estate investing experience
- Owns 7 units and manage’s 5 others through OACP
- From New Orleans, Louisiana
- Say hi to him at www.oacppropmanagement.com
Best Ever Tweet:
“Stay flexible, don’t be caught in a fixed mindset. There is something out there that you’re able to do to help your situation or others.” – Daniel Purcell & Jessie Campora
Theo Hicks: Hello, Best Ever listeners. Welcome to the best real estate investing advice ever show. I’m Theo Hicks, today’s host. Today we’ll be speaking with two guests. We have Daniel Purcell and Jessie Campora. How are you guys doing today?
Jessie Campora: Doing great, how are you?
Theo Hicks: I’m doing great as well, thanks for asking, and thanks for joining us. Today we are going to be talking about the Coronavirus and how it is impacting different investors’ business. Dan and Jessie were graceful enough to talk about what they’re going through, some of the changes that they are making to get through this… But before we get into that, their background – they’re the owners of OACP Property Management, with a total of three years of real estate investing experience. Currently they own seven units themselves and manage five others through their property management company OACP. They are both based in New Orleans, Louisiana, and you can say hi to them at OACPPropManagement.com.
Before we get into the Coronavirus, can you tell us a little bit more about your background? And we can start with Dan.
Daniel Purcell: Hey, Theo. Sure. So I’m originally from Cleveland, Ohio. I moved to New Orleans about ten years ago now. My past work – I actually worked in the front office of the NBA team here in New Orleans. I did that for nine years. After Jessie and I met, we kind of had the same goals when it came to how we wanted to keep pursuing wealth from a passive income standpoint and just a future standpoint. We kind of took of from there.
Theo Hicks: And Jessie, what about you?
Jessie Campora: My background is in hospitality management. I actually got my degree in hotel and restaurant tourism from UNO, and I’m kind of a serial entrepreneur. For many years I did a mobile personal training business, and I got my first house when I was in my early 20’s. When I met Dan, we kind of decided to pursue real estate. We both agreed that it’s the best way to long-term wealth. So we leveraged my first house, that I’d had for a while, to multiply it into what we have now.
Theo Hicks: Okay. We said that you’ve got seven units, and then you manage five others. What is the breakdown of the units? Are they all single-family, multifamily, short-term, long-term rentals?
Daniel Purcell: It’s a combination of all of it. We try to diversify our real estate portfolio. Of course, as you get into the short-term rentals there’s a lot more risk, as the Coronavirus pandemic has showed us… So we’ve tried to hedge our risk with diversifying.
We have a couple units that are full-term rentals, and then we have the other ones that are short-term. We felt it was a smart idea at the time to just mitigate risk; it’s not minimizing risk, but I guess mitigating risk as best possible, just in case something like this would happen.
Jessie Campora: So we have our first house that we bought together – it was a triplex when we bought it, and then we converted some utility space into a fourth unit. My original property is a single-family, and then we have another double that we just acquired. The other units that we manage are also doubles… So mostly multifamily units is what we have.
Theo Hicks: Let’s talk about the full-term rentals. Now, it might be too early to tell, but is the Coronavirus impacting those at all? Do you know if the tenants are gonna be able to pay rent this month, things like that?
Daniel Purcell: Yeah, so far so good on that front. We actually have one great tenant who pays us ahead of time, so we’ve actually already recovered that from them… But otherwise, I think all of our long-term are in a position where they’re gonna be okay.
Jessie Campora: Yeah, I think our long-term tenants are pretty secure in their jobs. Right now we have two of those, so everybody should be okay in that scenario.
Theo Hicks: Is this something that you know based off of your history with them, that they have their jobs, or did you actually contact them and ask them “Hey, is everything okay? Are you gonna be able to pay rents on time?” Was there any communication with them, or you just know based off of the background that they’re gonna be okay?
Jessie Campora: It’s an interesting situation, because our second long-term tenant we just inherited with the property last week. So Dan’s been in communication with her, and his initial interactions with her were also sort of in dealing with this strange situation that we’re all in right now.
Daniel Purcell: Yeah, and they were positive. She was very positive. They didn’t give us any hint that it was gonna go wrong, or they’re in trouble at all. We were also lucky in our other full-times, because our other tenant – she’s pretty secure in what she does as well. She does a lot of remote business as is, so her workflow hasn’t been compromised at all.
Jessie Campora: We haven’t spoken to her specifically since this happened, but we have a really great relationship with her, open line of communication, so… Of course, if there comes a time where she’s also affected, we wanna do whatever we can. We’re all in this together right now.
Theo Hicks: I have thought of something… So you guys self-manage, basically… And on the other end of the spectrum there’s people who are the owners, but they have a third-party management company managing all their properties. You guys are also managing other properties as well, so I was just wondering, do you think in a situation like this it’s better to self-manage than to not self-manage? And the reason why I ask that is because it sounds like you guys have some level of relationship with your tenants; you understand what they do for a living, which is pretty helpful in a situation like this… Whereas if you have not been in constant communication with your tenants and you don’t really know much about them, because it’s all going through a third-party, I feel like this situation would be a little bit more stressful. So I just wanted to get your opinions, since you guys obviously do both.
Jessie Campora: I totally agree with that. Really more from a short-term perspective – and I’m probably kind of shifting here, but our latest property management client that we acquired has some other units, and she’s been with a larger property management company and is under contract with them. And we have a couple of her other units that she just recently acquired. And I was talking to her and just giving her some ideas on how we’ve been able to pivot, and some other sources of income, while Airbnb is pretty dead right now… And she’s in a strange position because she doesn’t really have access to her own listings. It’s all through the property management company. So from that perspective, she’s really kind of stuck between a rock and a hard place right now as far as what she’s able to do with her properties.
So to circle back, it definitely makes a tremendous difference to be hands-on and have the ultimate control over your own properties and have these relationships with your tenants, and be able to handle directly all these cancelations that are happening on Airbnb right now. There’s a lot to be said for that.
Daniel Purcell: To piggyback on that, I guess we’re small in terms of property number compared to a lot of people. I know people that own 150 units, 200 units, they own apartment buildings and complexes… And it’s hard to be personable when you have that many units. That next step for anyone is when you choose a property management company, what is their level of access for you? If you wanna be hands-off – fine, that’s great. You can probably find somebody that doesn’t. But the part that you’re risking is not only the lack of control that you have over your own properties, but you’re risking your own capital at the same time, and it’s hard especially when these black swan events happen, like Corona and whatnot, to kind of recover from that. You’re just kind of sitting there on your hands.
So I think the more you can self manage, the better off you are. I’d agree with Jess on that 100%. I know it’s not feasible for everybody, so if you’re listening to this and you’re saying “Okay, well I have 50 units. I can’t go door to door, it’s gonna take all my time up” – I get that. It’s just having a good relationship with the property management company and setting terms… Because although a lot of property management companies have these steadfast rules and whatnot, they’re still working for you, and I think you have to do your upfront work, so when these events do happen, you’re already covering yourself, if that makes sense.
Theo Hicks: Oh yeah, one hundred percent. I think that’s obviously something you can’t necessarily do right now; it’s gonna be hard to change management companies right now, but… Starting from today, this is something to start thinking about for your business moving forward. So I think this is timeless advice that you’re providing.
Okay, let’s transition to the short-term rentals. You mentioned then Airbnb business is basically gone; you said you’ve got people canceling… And we talked a little bit beforehand about what you’re doing to generate income with those properties. So again, maybe just kind of walk us through what’s going on with the Airbnbs at the moment and then what you guys are doing to pivot away from Airbnb and transitioning into something that is gonna allow you to continue to make money while that business is drying up.
Daniel Purcell: Yeah… Just to give a little background for those that aren’t familiar with New Orleans – of course, everybody knows it’s a big tourist town, right? It’s also a huge short-term rental town, and these months are probably the most crucial for any short-term rental owner, because this is peak season in New Orleans. The Mardi Gras through July 4th Essence Fest time – that’s where you make the majority of your money. You’re sold out 25 days out of the month up to 30, it’s increased rates…
So this really hurts the whole short-term rental market in New Orleans. I’m sure it does all around the country as well, but this is just a big time in New Orleans, so… How many days and nights were we trying to think of things, and reading articles, and seeing what other people are doing, and… Kind of what we did after these massive cancellations, and of course, with countries getting locked down for 21 days, three weeks, months, we had to do something. We just can’t let them sit there, because at the end of the day there has to be a way for this to work.
Something we came up with was traveling nurses, and I’m sure it’s not a new idea that we just thought of out of what we were doing, but for us it’s been working. It’s a good transition, because it’s short-term in the sense of you’re not having to sign a year contract with — most nurses are between 30 and 60 days, and that’s a really good timeline for where the experts are saying this virus and this pandemic is going to end, or at least be under control, to where the travel industry starts to come back, and the tourism industry starts coming back.
Jessie Campora: Yeah, we just tried to pivot and think of some creative solutions to this big problem that we have right now, and there were some various things that popped up. A lot of the universities here were telling their students that were on campus housing to go… Just “You’re evicted. Leave”, so that was one avenue we kind of explored, if there were students left here that needed a place to stay… And then we also got onto a website that’s specifically for travel nurses and other travelers who are looking for furnished housing.
So that’s kind of the angle we’re pursuing, and we’re not averse to even potentially long-term renting some of our units. However, we can ride out the storm, and just tackle our overhead is what we’re trying to do at this point.
Theo Hicks: So for the traveling nurses — there’s just websites like that are like the Airbnb for the traveling nurses?
Jessie Campora: Yeah. There’s one that was recommended to us, and then I think I’ll probably list our properties just on a site like Zillow, just for anybody that might be looking for a shorter-term rental. Like Dan said, they’re here for 30 days, 60 days, 90 days, so it’s a great way to get some income flowing, but not be committed for a super-long period of time.
Daniel Purcell: Right. And also, just to finish that thought, we’re lucky that all of our properties that we manage and that we own are near major hospitals. One of our units on the double we’ve just acquired – it’s literally one block from a major hospital that these nurses are staying at. So we kind of got lucky, but at the same time understood where we were, what we were doing, and how it worked. So we’re just trying to add it all up, I think just like anybody who owns houses that are vacant right now, just units in general – trying to just be flexible and trying to find different ways… And hopefully, we help somebody out there that is struggling to find ideas. Maybe that’s hopefully what we did here.
Theo Hicks: I think the traveling nursing idea is something that someone could implement immediately. After hearing this, they can go find the websites and post to Zillow and Craigslist, assuming they’re near a hospital. But depending on what state you’re in, figuring out what are the essential business people who are still allowed to travel, and then target them would be your best bet.
Daniel Purcell: [unintelligible [00:13:56].18] nurses that are gonna be fighting this chronic pandemic, and also people from the Red Cross, and non-profit organizations are gonna be looking for housing for their people, because the World Health Organization is setting up things… I’m not saying in New Orleans, I’m just saying around the United States, around Canada, and whoever is out there listening to this… But there’s options for you, and hopefully this can give you a little headstart into just opening another world if you haven’t already.
Theo Hicks: What about from a reserves perspective? Do you guys underwrite in reserves when you’re buying these short-term rentals? Because your long-term rentals are fine, but what about for the short-term rentals – do you have a reserve saved up, or is it just continuing to lease these out to travel nurses to cover your expenses?
Jessie Campora: It’s kind of like feast and famine, and that’s what’s really interesting about this whole thing – we made a lot of house musical chairs; we were living in our quadplex and we made the decision to move into my single-family house that’s in an area where Airbnb is not allowed, in an effort to generate some income in the “busy season”.
So if you save up in the busy season to be able to weather the slow season… And we kind of had the rug pulled from under us. We furnished a unit, we did a renovation, we moved out, banking on the busy season being so great… And then it kind of crashed and burned.
So to answer your question, we definitely have reserves, we’re prepared to ride this out for a little bit, but I think a lot of people, especially here in the city, this is what people were counting on to build up their reserves, this 4-6 month period of time where we have festivals, and Mardi Gras, and all these great things that bring people to the city.
Theo Hicks: Okay. So is there anything else that we haven’t talked about as it relates to preparing for crisis, things that you guys are doing right now to combat the Coronavirus, or just general advice that you have for other real estate investors out there that we haven’t talked about already?
Daniel Purcell: Yes. Stay flexible. This is the only way I can weather the storm, this is the only way I can help people… You know what I mean? There is something out there that you’re able to do to help either your situation or someone else’s situation. At least something that Jess and I have talked about is “Well, heck, if no one’s renting it (this was a week or two ago), why don’t we volunteer one of our units up for the Red Cross, or whoever that is?” Do they need help? If there’s something to do — the worst that happens here is that you help someone else. If you’re gonna lose money, you might as well not be vacant. You can do something. It always doesn’t have to revolve around money in these cases.
So if you can find a way to generate revenue, do it, absolutely. But if you can’t and you feel stuck – well, I’m sure that there’s people that are helping other people get better, and you’re gonna be able to help.
Theo Hicks: I really like that advice. That’s definitely the best ever advice that someone could follow right now. Dan and Jessie, thanks for joining us today and being willing to talk about things you guys are doing on the fly to combat the Coronavirus and how it’s impacting your portfolio.
We talked about that you have a couple of longer-term rentals, and then you’ve got the rest of your portfolio as short-term rentals… For the long-term rentals, because you guys are yourself managing, you have more control; this is really for both… You have more control over the leases, you have a better understanding of the people who are currently living in your long-term rentals, so you know if they’re able to pay rent or not… And it sounds like for your long-term rentals everyone is gonna be able to pay their rent on time.
Then you have people who pay ahead of time. There’s someone who works remotely and [unintelligible [00:17:41].08] The new person at the property you’ve just bought you’ve been in communication with and they’re also able to pay their rent… So we’ve kind of overall talked about some advantages of self-management during times of crisis like this. You gave an example of someone you know who is working with a large property management company and they really are kind of sitting on their hands, because they don’t have access to their own listings.
Then we went into the short-term rentals and talked about the fact that short-term rentals is very popular in New Orleans, and we are just entering into the peak season of short-term rentals. You guys received a lot of cancelations and you had to pivot, and you guys spent some nights brainstorming, thinking of ideas, and the one that you landed on is the traveling nurses… So 30 to 60-day leases.
You guys also had the idea of renting out your units to university students who were asked to leave campus… But for the traveling nurses you said that you wanna post your short-term rentals to nursing websites, places like Zillow and Craigslist… Potentially think about signing long-term leases on your short-term rentals…
And then really your best ever advice was if you can’t figure out a way to make money and generate income, use it to help out other people. Volunteer it up to someone at the Red Cross, or someone to live in… And I liked the way you said it, “The worst that happens to you is that you’re helping someone else in that case, as opposed to just sitting vacant.”
Again, thanks for coming on and sharing what you guys are doing. I think this is gonna be a very powerful episode for now, but even long-term advice and things that people should think about when they are buying real estate for these Black Swan type of events.
Thanks for joining us, Dan and Jessie. Stay safe out there. Best Ever listeners, thanks for tuning in; stay safe as well. Have a best ever day, and we will talk to you tomorrow.