Are you looking for a way to grow your sales in 2024? Would you love to learn how to add Airbnb investment sales to your business from agents who are experts?
If so, you need to listen to Episode 14 of the Host Coach Airbnb podcast where we talk with Jenn and Corrine of the Nash Gals Group. They share how to educate yourself on Airbnb sales and restrictions as an agent, and how to overcome the 3 common fears of short-term rental buyers.
After listening to this episode you will understand how Jen and Corinne set themselves up as Airbnb expert Keller Williams agents, and how you can too!
Topics discussed in this episode:
- How to grow your business selling short-term rental properties
- The best ways to provide value to clients with Airbnb investing knowledge
- How to overcome the 3 common fears of short-term rental investors
- Creative ways to work around Airbnb restriction laws
- How to leverage Airbnb income to help first-time home buyers qualify for loans
Host Coach Airbnb Podcast Episode 14 Show Notes:
I think what's great and unique about your real estate team is that you are not a large sprawling team. You're more of a dynamic duo. Is that how you would describe yourselves?
We are two best friends that are taking real estate by storm.
I love it. I love the female angle. I love your website shows that you are friends and you are fun and you love your city, and I think that's an amazing way to, to have a business where you're both enjoy being together and making money together.
How the Nash Gals Got Into Selling Airbnb Investment Properties
You told me a story one time about how when you were growing your business, you had a pivot that maybe started off as a survival pivot, and turned into a growth strategy by expanding beyond just selling single family primary residence homes.
How did that happen?
We tried to get creative with what we were selling. We obviously know there's a market. Everybody wants to buy a home for themselves, but finding a niche is really important as an agent and as you grow your business. So we really wanted to make that our niche was being experts in the short term rental aspect.
I'll also add as well, we both saw that as a goal of our own (buying at short-term retnal) and the best way to teach others is to learn about it yourselves and potentially do it yourself. So, that was something that we were both extremely interested in for ourselves and thought what a better way to help other people.
How to Acquire Short-Term Rental Sales Knowledge as an Agent
How did you acquire this short-term rental investing Airbnb knowledge?
A lot of education. We attended classes and did tons of networking. Networking is huge. Just talking to people that have sold Airbnb investment properties. In our market in particular, there's been a lot of interesting hurdles that you've had to get across. So we've just tried to educate ourselves as much as we can and provide that value to our clients.
Overcoming Short-term Rental Regulations
Nashville seems to get a bad rap from a regulatory perspective. Would you agree?
Yeah, people love to hate on our area.
But I was looking at AirDNA this morning before talking with you. There are 9,300 short-term rentals in what is defined as the Nashville greater market. So how do those two rectify? Can you explain the regulatory environment that you face?
So, we have a lot of restrictions on zoning. You can't just buy a single family home and rent it out anymore in under 30 days. So to combat that, they have built gigantic condo complexes to make sure that we have enough inventory to support the hospitality industry here. So, while people gripe about the regulations, there are still plenty of Airbnbs for sale and plenty to invest in because tons of investors have capitalized on the fact that now you just need commercial zoning, and they've bought it up and started building.
So, I could come to Nashville, buy a condo as opposed to a single family home in the metropolitan area and list that as a short term rental?
Yes, as long as it's zoned commercial which, are heavily marketed for STR purposes. If you don't see anything about an STR on the listing, it's 100% not likely able to do it.
Which is why it's important to connect with somebody that has the resources to just only send you STR applicable
That's news to me. Is that a pretty recent development in Nashville?
As of 2021/2022, they just recently changed legistation in Nashville. So, there was a boom. Everybody wanted to purchase their property before that restriction got changed. So we saw an influx of those investors and then prices started going up. Developers have started to get creative and they're building these specific buildings that have condos that allow Airbnbs, because even if you purchase any old condo, likely, the HOA won't allow short-term rentals.
So you really have to, you have to dig and make sure the property is legally allowed to be used as an Airbnb investment.
So what I'm hearing listeners out there, if you are an agent, it's incredibly important to understand the short-term rental legalese, and restrictions and possibilities in your area of expertise. And if you're a non-agent. It sounds like it's incredibly important to be working with a real estate professional who knows about short-term rentals, not just how to sell you a house, but how to make sure that you invest in a place that you can use as a short-term rental or an Airbnb.
How to Find an Airbnb Savvy Real Estate Agent
For those listeners, ladies, how would you suggest finding an agent that knows what's up when it comes to Airbnb investing?
Honestly, and this is how we've been found a few times, is there's Airbnb, Facebook groups of people that just connect and help manage write reviews for people, stuff like that. They advertise their own rentals, and people will ask, "who did you use to purchase your rental in Florida?" "Who did you use to purchase your rental in Nashville?" We've had a couple people shout us out there. If you know someone that's bought a rental already and it's successful, it would be wise to probably use the same agent that they recommend.
How to Overcome Short-Term Rental Buyer Fears
So when you two are talking to potential clients about an investment home, what are what are some of the fears that that you're hearing from them and how do you overcome or address those fears?
I think a really big fear is will my Airbnb cash flow. That's what everybody wants. They want to purchase these properties to make money. So I think really educating and providing value to the clients on the performance and understanding what it means to cashflow is very important. Because for some properties, it's a short-term rental, but you're in it for the long-term gain. Not everybody understands that.
Can you unpack that a little bit further? We all know what a short-term rental is. Why don't you explain to our listeners what the long-term gain might be?
So, I think a lot of this longing for quick cashflow comes from social media. You see all those people on YouTube and they're great resources, but just say, "oh, I made this much in my first year of my Airbnb." But, you don't know how much that person put down. You don't know how they paid for that Airbnb. You don't know how they're continuing to manage that property.
I think really diving in and not seeing what everybody else is doing and facing the reality of, Hey, if I purchase this property, it's not going to net me what I want this year, or maybe even next year. You're going to need to own that property for maybe 5 to 10 years, depending on the location. And I think it's really important to be honest with the clients about that. Because not every market is going to be for them.
I think that's a great point. The underwriting is such an important process, particularly here in 2024. In 2022 and 2023 we were in such a boom, right? People were just throwing money in any old property and being profitable. But now we really need to underwrite these investment properties. We need to know what we're paying.
We need to know what our budget's going to be for renovation. We need to have our metrics of success. Is it cash flow? And if it's just cash flow, is it $2000 a month or is it return on investment or return on cash invested? So really what I'm hearing is do your underwriting and know your goals as an Airbnb investor, and work with a professional who knows those goals or can at least help you ask the right questions as you investigate properties and look into an investment for yourself.
I'll add to that. We also work with a property management company. And they're the only ones that do their proformas like this: when they're writing out the expenses, they don't use the principal payment as an expense on the proforma. And so what it looked like to a lot of our clients was that they were cash flowing this immense amount of money, but they were only factoring in the interest payment on the mortgage payment and not the full principle.
And so it was a thought process that we had to work through with our clients of, "Is the principal payment an actual expense in your mind, or are we again, in the long game of, we're just trying to gradually pay this thing off and then sell the property and make money in 5 or 10 years?" "Or when your kids want to go to college, pay their college tuition off, or whatever your goals are."
Our first investment property is a little condo in Turks and Caicos, and it will be paid off two months prior to our son starting college. So, that was short-term win because I got to have a place in my happy place, but also a long-term win that it will cash flow more when we need more cash for college.
Are most of the second homes that you're selling, are they truly second homes? Are they people coming into Nashville wanting to make an investment? Or is are they Nashville residents who want to buy a place for cash flow, where they would travel for a long weekend?
I would say we get a little bit of both. We have Belmont and Vanderbilt here. So, a lot of parents when they come to tour the colleges with their kids, it pops into their mind and they think about having an investment home when they come to visit. But, I would say vacation home wise, more people like to go probably an hour or two outside of Nashville, closer to the lakes rather than downtown Nashville, which I think is very interesting because we are such a tourist town.
So that has been done, right? That rush into Nashville to invest in properties in downtown Nashville has happened. And now you're seeing people moving towards the getaway locations a couple hours away, mountains, lakes and rivers?
Yes, and again, downtown Nashville Airbnbs have just skyrocketed in price. So, a lot of our locals are sticker shocked, which has had them expand a little bit further out and get a lot more bang for their buck.
What kind of price per square foot are they looking at downtown?
Oh God. For an 800 square foot condo? $500,0000, and that might not have a washer and dryer. And so, it's that harsh reality in breaking that news of, "Hey, if you don't want to spend over $300,00 or $400,000 for a one bed, one bath condo, you're not looking at really anything under $500,000." And if you are, everybody else is too! So buying those properties is extremely competitive.
But that same money could be used a couple hours outside of the city and get something like in Dover.
Yes. We just sold an Airbnb investment property last year. The client had similar expectations, but then she was like, okay, I want an actual Tennessee cabin. And so we moved further outside Nashville and we closed on that for what, Jen $350,000? And, it was Airbnb ready, it was fully furnished, everything was ready to go. Turnkey - she started renting it out right after close. And that was a $350,000 investment.
Okay, so the deals are still available. You just have to know where to look for them.
Yes.
And following my question about fears when you're talking to clients, is it just cash flow or are there other things that are brought up as concerns?
Creative Airnb Finanacing
Interest rates and then also the type of mortgage product that you have to get, especially if you're investing in Nashville proper. If it's commercially zoned, a lot of them won't go conventional loan, and they definitely won't go FHA. You have to either do a portfolio loan or some other loan that is meant for investing.
And the interest rate on that is a lot higher, which then we're digging into our monthly cash flow at that point as well. And then refinancing is also a fear if rates will ever go down, we don't know on that end. So yeah, that's another element of education that we've had to work with is the mortgage product is actually not what you're used to.
With all of this going on, you strike me as really creative ladies. So do you do any creative thinking, like out of the box thinking to help your clients invest?
Corporate Airbnb Rentals
Yes. One creative thing we do is give them an alternative is there's something called a corporate rental, which I don't know how big this is in other cities. This is something I would actually love to educate myself on In Nashville, we have a pretty big healthcare industry, so corporate rentals are popular for traveling nurses.
And those rentals have way less restrictions and the mortgage products are a lot more conducive. So we say, "Hey, you might not be able to get a short-term rental, but will you settle for a corporate rental?" You rent the property out for 30 plus days, get it contracted for one month, maybe three months.
And then going back to the fears, they don't have the fear of, "oh, is my property going to sit empty for a week?" No. '=Because you have a contract in for three to six months or however long it is. So , that's another way we've been trying to get over client fears.
Yeah. There is a big movement into midterm rental products.
I'll also add on to that too for our locals. You can get a duplex here and rent out the other side Airbnb, no problem at all. And so if you're wanting to buy your first home and use an FHA product your investment value's going to be a little bit more of a sticker shock in the beginning, but analyzing the rental income on that side and providing that to your lender is going to help you get approved for that loan and property!
We've got a couple clients looking into that right now too, and it is really exciting because again, you get to buy a home residentially zoned and still garner Airbnb income from the other side.
We often say, buy an Airbnb that will pay its mortgage AND your primary mortgage. You're putting those under one roof, right? So an agent can use this as a tool to talk to first time home buyers. Or, first time home buyers, if you're listening, this is a idea for you.
Buy a duplex, live in one side, rent the other side, and let the renters pay the one mortgage on both residences. My future retirement dream is to have a place somewhere warm. Hopefully near or looking at water that has an ADU, an additional dwelling unit, that we could rent on Airbnb, our son could live in, or my parents could move into.
I would love having that extra property to cash flow or be used outside of our own home needs. I feel like the whole world is shifting in what living space is and what's desirable.
Advice for Real Estate Agents Looking to Get into Airbnb Sales
To wrap things up for our real estate professional listeners, if they've been listening to this and are inspired by you, the NashGals, to jump into adding Airbnb homes and sales as part of their business...
What is the first thing you would tell them to do? What should they end this podcast and immediately do?
What Jen and I first did is link up with the agent that already specializes in Airbnb investment sales. We took so many agents to lunch with our notes and our paper and paid for their lunch and just picked their brain for probably three hours
So for the price of lunch, you could start educating yourself! Do you think that'd be possible if for some reason you live somewhere where there isn't that agent, is that something where you could send someone a gift card and zoom with them?
What else would you do if you didn't have access to someone who was already an expert?
I would start networking with agents in different cities. But what's most important is to go to the county, because they're the ones that are actually going to restrict you in what you can do with short-term rental properties. So that was another thing that Jen and I were going to do, if we didn't find anyone that was an expert in Airbnb sales.
Go to your local county and take the permitting person to lunch and, because that's the guy that's actually slapping the yes or no on the permit. I'd buy him lunch and a drink!
I like it.
To add to that, we've met with many property managers too, and having that perspective, it really opened our eyes to a lot of the struggles that we didn't realize happened behind the scenes. So ,being able to educate your clients on the property management aspect of Airbnbs. I think is important. I also think it's extremely important for any agents that don't necessarily have a huge Airbnb market to educate yourself and make connections with agents in other markets because you can tell your client, "Hey, this might not be the best market for you, but you can go to XYZ market." That way you already have an agent on deck ready to help, and you're still providing value to your client.
And hopefully getting a referral as well.
Yeah, that too!
How to Find An Airbnb Investment
Okay. How about for our non-agent listeners? If you're listening to this podcast, you're hearing all this information, you're excited, you want to buy your first Airbnb short-term rental property, what would you tell them to, stop their phone, and do immediately?
I'll just shout out a couple of the Facebook groups that have been extremely informative. They always talk about what new market is next to invest in. A couple of them are STR Masterminds, STR, Homes for Sale, and Short Term Rental Success. We're a part of those just so we can stay in touch with the people that are actually involved in that market and where it's trending. And, be part of the discussion because there is another discussion too: of where Airbnb is going long term, is VRBO where we're going to go, what are hotels doing as well. So I would definitely join some Facebook groups just to sit for a couple hours with a glass of wine and peruse.
I'm part of all three of those groups, and I try to chime in when people ask questions that I can help with or that Culin can help with.
I would tell people to go read your Airbnb investing book.
Yay.
We actually sent a copy of Host Coach to one of our clients who owns a short-term rental in Nashville and he found a lot of value in it and really enjoyed it. Agents too, that's a creative way to gift to your clients knowledge. Send them a copy of the Host Coach book.
Thank you. Love the shout out! That was unprompted.
Yeah.
How to Connect with the Nash Gals
What's the best way for our audience to learn more about you, the Nash Gals, and to possibly contact you and learn more about buying short term rental lunch, and pick your brains about short-term rentals or buy a short-term rental from you or someone that you could refer them to.
We love lunch!
We'd be happy to go to lunch with anybody. Check out our website and we also have a TikTok and an Instagram that we're super active on @NashGalsGroup, which has our phone number. We answer our DMS regularly! we love to talk!
If you want to start Airbnb investing and simply need to know how to do it, that's what this podcast is for! Keep listening to the Host Coach Show. We're here every week to go over actionable steps to investing so you can get started and create your own financial freedom.