0 to 20 Properties Co-hosting and Buying with Mike Reilly

Quick Summary

Jeremy and Mike Reilly provides insights into building a short-term rental (STR) business through property ownership and co-hosting. It emphasizes leveraging strategic partnerships, maintaining strong client relationships, and streamlining operations to scale efficiently. The key focus is on balancing growth with a personalized, boutique service approach to address gaps left by larger STR management companies.

Key Points

• Co-hosting allows entry into the STR business with minimal financial risk, earning a percentage of revenue without the need to own properties. It’s ideal for building experience and generating income before purchasing your own properties.
• Focusing on personalized communication and optimizing property performance can attract clients leaving big management companies.
• Utilize virtual assistants to handle routine operations like guest communication and maintenance coordination, enabling focus on growth.
• Systems like dynamic pricing tools (e.g., PriceLabs) and parent-child listings help automate processes and maximize revenue.
• Strong relationships with property owners and transparent communication about market performance are key to maintaining long-term clients. Quarterly updates or performance reviews build trust and demonstrate professional competence.
• Adapt listing strategies for larger properties by offering segmented rental options to optimize occupancy during slower periods. Use niche marketing strategies like targeting listings managed by large companies for acquisition or conversion to co-hosting agreements.
• Working with experienced mentors or joining mastermind groups accelerates learning and provides valuable insights for avoiding pitfalls. Continuous personal development through coaching for skills like mindset and business strategy enhances overall performance.

Full Transcript

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Jeremy: We are live with the Short-Term Rental Pros Podcast. Today, I am here with my fellow North Carolina guy, Mike Riley, who has grown a very impressive co-host business as well as purchased several properties of his own. Uh, so he is full-time—a former Googler. Googler, right?

Mike: Yeah, yeah, former Googler. Zoogler is what they call us.

Jeremy: And now, now full-time STR guy. So, super excited for the episode today! We're going to talk about, you know, some of the tailwinds that are helping folks right now in the co-host space, specifically at the demise of some of these big property managers, such as FASA. And we're just gonna get into a lot of the exciting things that are going on right now and allow Mike to share, you know, things he's learned in the last several years going from Google to being his own boss.

So, Mike, thank you so much for coming today.

Mike: Yeah, man, happy to be here, fellow North Carolinian.

Jeremy: Yeah, and just, just for some context, guys, Mike did go to my rival high school. Uh, I think he only went for a year or two, so maybe I don't hold too much against you.

Mike: Yeah, had to get out as soon as possible, that's for sure.

Jeremy: Yeah, I don't think he liked it there. So, but I would say maybe we were rivals in one lifetime, but now we are friends.

So, but yeah, Mike, tell me about yourself, other than coming from North Carolina. Uh, give me your background. And also, I want to get into—after that, I want to go into—you know, we can obviously talk about the good all day and, you know, the trends that short-term rentals have had on your life. But we also—you know, I like to talk about, you know, the bad. Uh, you know, give us your background, and then I would love to hear your Airbnb horror story.

Mike: Yeah, yeah, for sure. So, grew up in, uh, North Raleigh, and I played tennis. I mean, that was—that's pretty much all I did growing up. So, like from the age of 12 until 22, that was pretty much all I did with my free time. So, uh, ended up playing tennis at Penn State. Came back down to North Carolina, like, as quickly as possible after I figured out I wasn't going to go pro in tennis. And so, I just got a job in Raleigh doing tech sales, uh, for one of the bigger companies in, uh, in the Raleigh area.

And ended up taking a new job about three years later, in 2018, in Nashville, Tennessee, and was traveling all the time for that job. It was with another software company. And I was making good money—I was probably 25 at the time, making really good money—but I knew there was something that needed to change, kind of the direction of where my now-wife and I were going. And so, you know, read Rich Dad Poor Dad, just like everybody else getting into this. This is probably mid-2019 at this time. And so, I was like, hey, I gotta find a different income stream and figure out, like, you know, what I was doing.

And I was actually getting into network marketing at a time. Somebody had sold me and talked me into getting into network marketing, and me and my wife—

Jeremy: Yeah, I haven't heard of that one as, like, the get-rich-quick…

Mike: Right? Yeah, so, I mean, the guy, the guy who, like, kind of got us in, he sold us on, like, the big picture of, like, being your own boss and, like, building your own business on the side and just doing it through, you know, being—he gave me—he was the one who actually gave me Rich Dad Poor Dad, which I thought…

Jeremy: Is network marketing the same as, like, affiliate marketing?

Mike: Pretty much. It's like a pyramid scheme. I mean, at the end of the day, it's kind of what it is. It's like, you sell your stuff, you sell the Amway stuff, and then you recruit more people. And then you recruit more people, and then they recruit more people, sell stuff, and then—

Jeremy: Passive, right?

Mike: Yeah, it's passive income, is what they sell it as. And, like, there's—I got respect for people in that industry. There's a lot of people that make good money doing that. But my wife and I were like, this is not for us. Like, we don't want to be selling, like, skincare products and, like, you know, toiletries and stuff like that to our friends. So, ended up—I was like, all right, we gotta do something else.

Started listening to Bigger Pockets, and, uh, and then I was like, all right, I need to go down the long-term rental path. Like, I need a hundred units in the next year, like the Joe Fairless stuff. And then I listened to a podcast with my buddy John Farberg and Mike Shogen. And Mike was talking about Airbnb, and that's something my wife could get behind.

She was like: yeah, let's get a mountain house. Let's get one in Western North Carolina. So, ended up, uh, joining a mastermind, joining Mike's Mastermind, and late 2019, we bought our first property in, see, April of 2020. We weren't even married yet, but really the whole goal and the whole why behind it was to get my wife to leave her job.

And that first property that we bought is in Bard, North Carolina. It was about seven hours from where we lived in Nashville at the time, and that thing—we bought it for 260,000, and it grossed 98,000 in the first year. So, our eyes were like, oh, this, uh, this works. Airbnb stuff, this actually works. And this was during COVID when, like, people are like, H, do we travel, do we not travel? And so, interest rates were 3% at the time. So, we're like, all right, let's go buy another one.

So, we bought another one in my wife's hometown in, uh, in August, and then that got us to about 6K a month just in, like, six months. And so, my wife was able to leave her job, do real estate full-time, run our business full-time. And, and that's when we were pretty much out of money and started co-hosting. Started co-hosting for friends, family, telling everybody what we did.

And then I, I made a job change to Google at the time, which was like my, you know, dream job in, middle, yeah, mid-2020. And then had, had more of a realization there of, like, I still have a boss. Yeah, I work for Google, but, like, this is not what I want to do. Like, I would look at my boss, my boss's boss, and be like, man, they're like 40, 50 years old. I do not want to be doing that in 10, 20 years. So, that's when we went full-time, pretty much growing the co-hosting business.

And now we, we own nine properties. We manage another 16 properties—so 25 total. And, uh, I got two guys that work for me that pretty much run 90% of the operations. And, and I play a lot of golf now. I'm always looking for new investments, and, uh, I do some coaching as well. So, that's, that's kind of the, uh, the shortened-down three-minute version of, uh, of our story.

Jeremy: And guys, we, we had to reschedule this because Mike is serious about the golf. It's okay, I forgive him for that too.

Mike: I'm not good, but I, I love the play.

Jeremy: Got it. So, again, this all sounds great. You own nine properties. Seems like, obviously, you've ran the numbers, and they're doing pretty well. You've got your operations in a smooth place, having two, two full-time guys. I'm assuming—overseas virtual assistants?

Mike: Yeah, yeah, they're in the Philippines. They both used to work for Airbnb, and, yeah, just kind of train them up on our systems and properties, and they run the show.

Jeremy: Yeah, it's actually because, yeah, I have, I have 25 listings as well. And I have two because people ask, like, what's the right number to have? And I'm like, I don't—I mean, I need, like, to study every single person and see, you know, everyone's exact portfolio.

And to, I have two, and it works. But, so, it's good to—it's reassuring that with the same number of listings, you have two, two team members as well.

But okay, so, yeah, so tell me about, you know, all this sounds good, tell me about the bad. What's the worst, you know, or most horrific situation you've had in the last, I guess, last three, four years?

Mike: Yeah, I'll start with, uh, the property that we bought. So, we bought another property in Bard in late 2020. Yeah, it was like—we closed December 31st, 2020. And we bought it at that time. We got an investment home loan, conventional loan for 2.8—yeah, 2.85%, which we.

Jeremy: Golly, investment loan for 2.85%.

Mike: And it was, uh, it had a view. It was a—I think it was like a $300,000, maybe $360,000 house. I can't remember now. And we bought it from, uh, forsalebyowner.com. Like, at that point in late 2020, there was nothing on the market. Like, there were no new properties coming on. So, like, I found this one, I guess technically off-market, but, like, she just didn't want to use an agent to list it, the seller. And, uh, her name was Gypsy Anna, and I found out that the house was cursed.

Jeremy: Not just by gypsy magic?

Mike: Yeah, I don't know. I mean, I, I—there was kind of a red flag at the beginning. I was like, you know what? I'm not gonna—I'm not going to think about it.

In the end, we, we moved into the house. We're getting it ready. Three days in, the property's on a well, and the water—there was no water in the house after, like, three days. We drained all of the water. We were supposed to get a hot tub in and everything. We were supposed to get up and running in, like, two weeks. We had to—we had to dig an extra, like, 600 feet just to hit water again. It was like an extra $15,000 that, uh, that I didn't plan or budget for.

At that time, like, I was pretty much drained in our savings account just to, you know, just to buy the property, just to put the 20% down to buy the property. So, that took us—that took us about three weeks to fix. And, uh, and the lesson learned: I will always get a well inspection every time—a well and septic inspection on every property.

So, that was kind of the first biggest, like, uh-oh. I know it's not an Airbnb story. I mean, I was, before we got on here, I was thinking about some. And, you know, I've had some properties flood, which, you know, really, it's not too big of a deal. Like, you gotta get—you gotta get the mold people in, and you're just out for, like, two weeks. But if you have the right insurance plan, you have the right damage protection plans, like, you can get through a lot of that stuff.

Like, I've had AC go out, heat go out. I've had, you know, people claim that the property was, you know, infested with bugs and bees and stuff like that. But nothing, like, too horrible.

I did tell this on a podcast, like, two years ago. One of the houses that we bought here locally, where I live in New Bern, North Carolina, uh, we bought a four-unit. And the next-door neighbor, once they found out we were turning one of the units into Airbnb, cussed me and my wife—my pregnant wife—out, and, like, told us that we were just doing a get-rich-quick scheme, like we were making the neighborhood terrible. Like, cussed us out three or four different occasions.

And, and ended up—like, we had—like, she was cussing out our guests too that were coming into the house. So, like, that, that alone was the second property that we bought. I mean, we were kind of freaked out at that time. We were like, all right, do we need to pop the brakes on, like, on doing this if, like, everybody hates it?

So, ended up—took some advice from, uh, from actually my dad. He was like, you know what? You know what you need to do? You just need to print out a one-pager of, like, who you guys are, what you do, who you serve. Because we were—it was an Airbnb, but it was mainly for, like, traveling nurses and, like, for people that worked at the hospital.

So, all we did was print that out. We did a little write-up of what we do, gave it to her, and then we actually moved three doors down as well, than her.

Jeremy: So, like, she's still—so you can show face?

Mike: Yeah, I mean, we, we see her all the time. And now she's like, "Oh, sweet!" and all, like, "Oh my gosh, let me see your kids, and they can call. I can babysit anytime." And we're like, "Absolutely not, not, no." Like, I don't—I don't want to have anything to do with you.

But, uh, yeah, so that was—that was another thing that scared us off a little bit when we were getting into this early. But, you know, what I tell people is, like, you can get through anything. It's just, if your why is strong enough, you can get through, you know, any Airbnb horror story that's there.

Jeremy: Exactly. And, yeah, it takes a little bit of, you know, a little bit of grit, you know, to get over those first situations. But I like to, like, compare it to, you know—let's compare it to your previous job. Does that—I'm sure you got emails out of nowhere that maybe didn't have curse words on them but weren't the kindest things. Probably, maybe a little bit more professional, yeah?

But, you know, how do you—you—you just showed here. Uh, and that's what I always recommend to people: show face to your neighbors. Like, show face early on during, you know, if you're going to renovate the home or, or whatever. Like, make sure you're there, and, you know, if there's construction going on, let the neighbors know. Tell them, "Hey, if you have any issues, like, give us a holler." But that's really the best way to remedy neighbor issues.

And, like, I've definitely—you know, once you get up to, you know, one, two listings, not that profitable. But the more and more and more you do, like, the chances just compound.

But also, it's kind of funny. The, uh, the Western North Carolina well story—I literally have practically that exact same story. Uh, we bought one off-market. It was actually on a, uh, on a, uh, underground spring. So, it wasn't on a well, and the water pressure was terrible. Like, so we put in a pressure pump. We put in a second holding tank because we were like, "All right, you know, maybe it's not going to fill up fast enough, so we need two holding tanks because, you know, Airbnb guests are going to go through the water. They're going to take 40-minute showers."

So, we thought that that could do it, but then one—like, actually about this time of year, I guess, in Western NC—it goes from rainy season in the summer to, like, the dry season right now, I guess. So, about actually at this time last year, it just stopped. You know, it just—no water was being replenished, and we had to, literally, had to get a service. Uh, we called—there's not a lot of, like, water because, you know, this time of year, it's like the busiest time in Western NC.

Which actually, I do want to get to in a second—how you're pacing in Western NC—uh, because I'm curious as someone who operates in the same region. But, yeah, we had to, like—I called, like, every possible place on Google to try to find, like, a, like a, a service that would fill our tanks, our water tanks. And I found, like, a fill-pool, like a service that literally fills pools out of Asheville, and begged them. I'm like, "Please, please drive—like, this is like a $3,000 October booking—like, please come and, like, I'll pay you whatever. Just, just come to fill our tank."

And the guy's like a 70-year-old guy. Like, he came, but then he had to go up a hill to get to the tank, and he was like, "Hell no, like, I'm not walking up this hill to fill the tank." Fortunately, the guests were really eager for the water, so they walked up the hill for him.

And then, as it turned out, somehow our cleaner's husband owned the local water delivery service, uh, totally. And he owns, like, seven other random small businesses, and, you know, he didn't advertise on Google. Purely, you know, kind of Western NC—that purely word-of-mouth, like, no Google advertising. So, fortunately, had him be able to come in, you know, over the next, like, three months. Because it takes a while to get a well permit—I don't know if you experienced that—but, like, they can't just come the next day and drill.

Plus, like, Western NC—I mean, I tell people, like, if you go to rural places, expect service providers to take longer for anything. But they were—the well service was also booked out months in advance in addition to having to get a permit. So, that was, L, that was like—we literally put a—we, we put a measuring gauge on our tank, on our two tanks, so we could see when they were full, when they were not full, in order to predict, like, how many times we would need to fill it in a week.

So, in hindsight, that was, like, a really funny, funny time. But then we got the well and…

Mike: Good.

Jeremy: You know, once you get the well, at that point, like, what can go wrong? As long as it's deep enough. But that's really funny that, you know, we've had, like, very similar experiences there.

Mike; We, yeah, we had the Ring camera looking at the holding tank for a while, just to make sure that, like, the holding tank was actually filling up.

Jeremy: Oh, so it was above ground?

Mike: Yeah, yeah, so the holding tank was above ground. We had the one obviously in the ground, but then we had one above ground. Yeah, and we had the Ring camera, so I was, like, pulling it up all the time just to check on it and make sure it was working.

Jeremy: Yeah, that's actually—that's like—yeah, we should have put our second holding tank above ground because we have to—sometimes we would lose service to the receptor that would tell us. So, we'd be like, "All right, we need to get someone over just to go and, like, open the tank and, like, look." Otherwise, we have to pay, like, $500 to fill it. So, we'd rather pay someone a hundred bucks just to go use their eyes.

Mike: Yeah, but, yeah, tech is, like, so behind for, like, hot tubs for whatever reason and for plumbing. Like, the tech on, like—they're, they're claiming this IoT, Internet of Things, like, "We can put sensors on anything." But for stuff like this, which is so essential, they're so behind, so behind right now.

Jeremy: And compounded with probably not as good of internet service in Western North Carolina. So, it's like—sometimes internet goes out too, so you can't do anything about that.

Yeah, but—but tell me, how is your Western NC properties pacing? Because we, we—so, we got our prop—or we have two in Western NC. One of them we got in, uh, February of 2022, right as, like, rate hikes were about to happen. So, when we—they were going to uncouple the second home loan from, like, the primary home loan. So, we, we were aggressive at that point in order to, you know, get a three-whatever percent interest rate, 10% down. And we actually, like, had a really great winter—like, an incredibly good winter.

Uh, like, very, very happy. And then this fall just hasn't been pacing as good as last fall, uh, for us. And yeah, I was just wondering—I haven't actually asked anyone else in the area what, what they're seeing.

Mike: Yeah, uh, so my places—I'm, I'm basically operating two different places. There's Bard, where four, four properties. And then in, like, the Banner El Boon area, properties up there. That area up, like, Banner El Boon area, is just—well, it's okay for me. I haven't updated the properties in a while. They're, they're two properties that I manage or co-hosted, so they're not, not mine that I own. The one in Boon's still doing well. The one in Sugar Mountain area—you know, in 2020, 2021 even—it was crushing it. But now, 2022, 2023, it's just—the weeks aren't getting booked. The weekends are getting booked, and it's just—there's everybody brought properties up there in that area.

Yeah, Airbnb. So, it's a lot more for my bedroom count. And then also, for the design of the property, it just needs to be updated. Yeah, so that area is not doing as well. But Bravard is still—I mean, year-over-year, we're pacing well. The only thing that has dropped off is, uh, the lead times. So, people were booking, you know, in 2022, and especially 2020, 2021—they were booking two, three months in advance for my two-bedroom room and for my three-bedroom. But right now, it's 30 days. Like, it's, it's shrunk. Thirty days or less is my average for the, uh, the Bravard properties.

So, it's still looking good. You know, September is always light in the mountains just because people are going back to school. But for whatever reason, this month—this past month—was really good. October is good as well. November is good. December's—the rates are a little bit lower than they were last year that they're booking at. But, like, nothing for January, February right now.

Jeremy: Got it. Okay. And yeah, I just—I asked this, guys, this was kind of personal. I, I want to know because I have our property there. And, and just to, you know, give some context—you know, like, we got this place for 429. And, like, it was pacing to hit 100K year-over-year, like, based off last year's fall and this year's, you know, January, February, March, up until July. So, I was super excited because that's, you know, an insane, uh, you know, purchasing peak of prices in 2022.

Uh, so now I've had to kind of taper my expectations there. It won't be bad. You know, we might hit 88K or 90K or something, but not…

Mike: What’s the house?

Jeremy: It's a, uh, it's a four-three-and-a-half, but it sleeps 12. So, that was kind of my buy box. And actually, I'm curious, kind of, what your buy box is. But my buy box has always been—I like the multi-generational family travel. Like, put three families in a home, give them a game room. Uh, guess what, what has, has yours been?

Mike: Yeah, I, I've got two, two different. So, one's the vacationer. And I think what a lot of people are seeing right now—and I'm seeing it as well for my five-bedder place—is the family. They're traveling on the weekends during the off-season. In the summer, it's great, and then holidays is great. But the off-season—so, in Bravard, let's say September, October, January, February, March—the bigger properties that sleep 12-plus aren't getting booked during the week.

So, we've had to kind of pivot and offer, like, different listings for different guest counts.

Jeremy: Oh my goodness, so you, like, offer a floor or something?

Mike: Yeah, so—

Jeremy: Wow, that's interesting.

Mike: My biggest property is a five-bedroom. It's got the main house, and then it's also got, like, a garage and then two rooms in that, like, garage house. So, it's detailed. So, right now, we have three listings: one for, like, the whole property; one for just, like, the main house; and then one just for the, like, garage house, just to maximize occupancy. So, I've been telling people, for the bigger houses, if you can do that—like, create multiple listings for, you know, you can lock a bedroom off or something like that so your cleaning fees are a little bit less.

But for the bigger properties that aren't getting booked during the week right now, try and figure out if there's a way that you can just block off a couple rooms or block off something so that you can up occupancy.

And we only do that, like, 30 days in advance. We'll open up just the main house, which sleeps eight, and then two weeks in advance, we'll open up just the garage house, which sleeps four. So that way, you know, people are booking, you know, just the garage house, like, 90 days out, and then it just kind of ruins my entire week or weekend for, for bigger, uh, bigger groups.

So, that's my strategy right now just to combat that. But, uh, but overall, I think, like, Western North Carolina's growing. I think the property values are only going to grow as well with everybody from the Northeast wanting to, to move down here.

Jeremy: And Florida—a lot of Florida in Western North Carolina.

Mike: Yeah, for sure.

Jeremy: That's interesting. Yeah, I called that strategy the duplex strategy. I've used it, you know, for, for properties. There's actually an arbitrage duplex where I, I, like, I rent it, and I, I list out the top floor and the bottom floor separately, but I also list them out together. And the reason I—just my thought process behind there—is just three listings versus, versus one. So, it's just, if you're searching, there's a higher probability that it's going to show up.

So, it's interesting that you've kind of taken that strategy, but you've, you've created another use case for it. So, definitely. And I'm curious, the logistics of how you do it, but I'm sure you've got your two guys in the Philippines. They just—they know it because I don't know of any automation software that'll open a new listing and close it. Uh, maybe—how do you—I'm curious. Maybe people listening aren't as interested as I am in terms of the logistics of how you do that.

Mike: Yeah, so this is part of the reason why I love Hospitable. I brought this use case up to them three months ago because I'm doing it manually right now, and they're actually building out a way to do this. You know how they've got, like, their parent-child listings? Now they're going to have, like, their grandparent-parent-child listings. They're all going to be separate. So, there's going to be a way to automate that through Hospitable going forward. They're finishing development on it, I think, this week, and then I'm gonna start testing it in a couple weeks.

Jeremy: So, got they—parent-child listings are relatively, relatively new too, because Airbnb had the parent-child. And for my duplex, it was such a pain in the butt because, like, Airbnb would automatically block something, but then Hospitable wouldn't really understand what was going on there. So, Hospitable wouldn't block two, so you'd end up double-booking on VRBO. And now, recently, I just, like, I don't even—like, I just, like, VAs figure it out, you know, like. Uh, so recently there's been other issues, but now I'm going to tell them about this whole parent-grandparent thing and hope we can figure it out.

Okay, cool. So, that is interesting. Definitely taking some notes there, and I use Hospitable as well.

Uh, so something Mike and I were talking about before the podcast, uh, like trends that we're seeing. You know, every time I talk to someone before, I'm like, "Hey, what are you seeing in the space? You know, what's interesting?" And Mike talks about how he's seeing a lot of, uh, a lot of homeowners, you know, who own their vacation homes, second homes, going away from Vacasa and Evolve, which are the big, you know, property managers that have thousands and thousands of listings across the country.

So, when have you seen this, like, trend start to accelerate? Why have you seen it, and, and what are you doing to kind of capitalize on this?

Mike: Yeah, so everybody bought a, a second home, vacation home, really, in the last two years. Like, a lot of the high-net-worth people, they figured out, one, there's great tax reasons for it, and then, two, property values are still low, and interest rates were low right until the last, like, 12 months. So, what did they do? They're like, "All right, cool, this Airbnb thing. I can throw it on an Airbnb. I can hire a property manager." And if you go into any market and Google "property manager for Airbnb,"

Jeremy: They're running ads.

Mike: Exactly.

Jeremy: With Evolve and Vacasa showing up at the top.

Mike: Yeah, so Vacasa's, you know, claims, uh, they're more regionalized. So, like, what they did is they came in and bought up different realty groups all around the country that were running vacation rental, you know, programs and had hundreds of listings. And they went in, they bought those companies, and so that's kind of how they, they expanded. And so, they charge 30 to 35%. They claim that they do everything, but they have a very lean staff in almost all the markets. And a lot—they're having trouble, like, keeping staff and keeping people.

So, the vacation homeowners, they build relationships with the people, and then all of a sudden, they turn over, and they turn over, and they turn over. And, like, things go missing, things get damaged. And Vacssa's, you know, publicly traded—I think they're on the NASDAQ. They just did a reverse stock split because their stock was, like, I think, like, seven cents a share. And they just did a reverse split. Now they're back in, um, back in okay standing with NASDAQ.

But, uh, but anyways, they're, they're just—they're hurt, and their clients feel the same way. So, you know, a lot of people are moving off of Vacasa for a lot of different reasons I just mentioned. And then Evolve is kind of, like, on the other side of it. You know, Vasa says, "We'll take care of everything." Evolve says, "Hey, we'll only charge you 10%, but, you know, we'll take care of the permitting process for you and, like, we'll do a front-end marketing plan for you. We'll create your listing. We'll take the pictures for you. But you do everything else."

Like, you message the guests, you message the cleaners, you do all the damage protection, like, you do everything, homeowner, but I'm only going to charge you 10%. And so, like, that 10% is really for nothing, honestly. Like, it's—they, they give you a website, that's pretty much it. And, uh, they don't, like, run ads. They don't market your property at all. They just take pictures and say, "Good luck."

People are getting frustrated with Evolve as well because, one, they're paying 10%, but they're not doing anything either. So, you know, the homeowner is like, "Man, this is a lot of work, and I'm supposed to be paying Evolve to do this." So, those are the pain points that I'm hearing.

And, you know, if I'm, if I'm somebody who wants to grow a co-hosting business, what I'm, you know, looking at is like, "All right, where in the Vacasa properties in my market that fit my, what I call, buy box?" Like the properties I would want to manage. So, you know, if you're in the Bravard market or even, like, I'm close to Atlantic Beach, North Carolina, I would look at every single property that Vacasa manages, every single property that Evolve manages, try and get the addresses for those properties, and then the contact information for those owners. And then start reaching out to those owners, whether it's email campaigns, text campaigns, like cold-calling campaigns, because a lot of them are hurt.

And that's something that I've seen—it’s worked for me, and it's worked for, I mean, dozens of people that I've coached and worked with on, like, "How do I grow a co-hosting business?" It's like this is the lowest-hanging fruit. They're already short-term rentals, the pain points are the same across the board, and there's just massive opportunity for you to come in and add value to, you know, these big, big companies.

And I think my mentor said it—called it like two years ago when somebody asked them, "Hey, what do you see for the future of property management with Airbnb?" And I totally agree with it. He said, "The big players in property management are going to get pushed out by the boutique short-term rental operators, the professional hosts like you and I."

Because the big, the big guys just aren't going to be able to, a, scale. And, you know, we—in order to run a good living with, like, 60-70% profit margins for a co-hosting business—you don't need that many properties. You know, 20, 30, 40, 50—I mean, you're making—you're definitely making six figures at 20 properties, right?

So, you get 50 properties, you're making $250K a year, and, you know, you got two guys, two VAs working for you—that's a pretty good living right there.

It's, it's relatively passive. I wouldn't say it's, it's like fully passive at all, like, uh, a lot of people claim. But, so, that's, that's what I've been seeing recently is like the Evolve and Vacasa—they're falling off. There's low-hanging fruit there to grow a, uh, a co-hosting business and, and a pretty simple way to do it too.

Jeremy: I think, I think it's interesting—the progression—because Evolve and Vacasa bought the boutique property managers, uh, and they would buy them at, like, uh, four to five times EBITDA or four to five times, like, annual revenue. And now you can buy these same boutiques—or not, not the same ones. I mean, there—definitely the M&A has, has slowed down—but it's selling at, like, one to two times EBITDA. And because, you know, the market has found that keeping the clients is difficult because a big part of the management aspect is the relationship with homeowners.

You know, you're not only serving the client or the guests—you are also keeping the homeowners happy. And sometimes it's, like, rational stuff. "Oh, you know, I'm making less money than I made last year." Sometimes it's the homeowner who wants to vent about something, and you're just going to talk to them, you know, versus, "Hey, like, fill out this form here on vacasa.com to submit your complaints."

So, yeah, I've definitely seen in the co-host space—yeah, growing a 5, 10, 20 co-host business running great margins. But definitely getting up into, like, the multi-hundreds is extremely challenging. I mean, the same thing, same thing for arbitrage. Like, uh, it's, it's extremely challenging to kind of get past—I mean, I, I said this the other day. I was like, I mean, I have, you know, I got super host at—you know, I have 25 listings. Like, the percentage of people who get super host is small. The percentage of people who get super host and have, you know, more than 10-20 listings is extremely small. Like, it is—it is very challenging to keep.

Yeah, just like you said earlier, just even knowing, like, what do we have in the house? Like, what have we missed? What have we lost? You know, just kind of keeping that, like, attention to detail at scale. Especially, you know, if you're doing a co-hosting business. Like, it's hard to have them all, like, in one place, you know? Especially if it's vacation rentals, like, they're just not going to be—unless it's like, you know, a beach market in North Carolina or something and you started 30-40 years ago. Like, and you're starting today, like, you're, you're gonna have to probably kind of spread out geographically and just take opportunities as they arise.

And, yeah, if you have seven properties in seven different places, it's just—it’s challenging to know that every little thing is there all the time. So, yeah, you're definitely—and, and I want to take this into—so, you know, you, you joined a community, uh, in 2019. And now, and now you, you know, help lead the community as well.

So, I guess, how did that accelerate, you know, your growth, and, uh, you know, what was that experience like for yourself?

Mike: Yeah, I think—I mean, growing up playing tennis, you always had a coach, right? Like, you always had somebody that had done what you want to do. Like, you played basketball, right? You always had a coach, and that coach always played basketball and had success at a high level.

So, like, I just did the same thing, you know. After college, you know, 99% of adults don’t have a mentor or a coach, and the ones that do are usually also in the 1% of earners as well. So, that’s one thing my, uh, my great uncle told me. He said, “You know, whatever you want to do, whatever your passion is—if it’s sales, like, you know, you’re working at Google—find a sales coach. Find somebody who can push you and who can show you, like, here’s the next step, here’s the next phase of Mike.”

And so, found that in short-term rental, and I tell everybody, like, whatever you want to do, if there’s something that you’re really passionate about, find a coach that has done what you want to do. Hire them, pay them whatever, make sure you resonate with them too because that’s honestly one of the biggest things. Work with somebody you like and you, you know, can trust. Don’t just, like, work with somebody that you just met, right?

Jeremy: Throwing out a, a super flashy, you know, Instagram post or something, like, you know.

Mike: Doing ads on top of Ferraris and stuff—or Rolls-Royces. But, uh, but yeah, and it—it’ll just accelerate your growth. And so, same thing—I’ve got a golf coach, I’ve got a fitness coach as well, I’ve got a mindset coach. So, it’s just—it’s just kind of the easy path to getting what I want.

And, and so, that’s typically what I tell people. And now, you know, my mindset coach two years ago, she was like, “Hey, if, if you had all the money in the bank, what would you enjoy doing? Like, what would you do on a daily basis, hour by hour?” And I had to think about that for a long time, and I still think about it a lot too. But, at the end of the day, I was like, “I’d spend most of my time helping people. I don’t know what I would do, but I would spend most of my time helping people.”

Now, that’s what I do. You know, I help people find properties, grow co-hosting businesses, make it relatively passive for them, and do sht that actually matters. So, that’s, uh, that’s what I enjoy doing now. And also, play a lot of golf. I’ve got two little kids too, and I’m going to tell them the same thing. It’s like, whatever your passion is, find a coach, work with them, and surround yourself with other people too that are doing this. You know, it’s huge.

Jeremy: I couldn’t, I couldn’t agree more. And yeah, I would say, as someone who definitely for years, like, pushed off—like, kind of had that, “Oh, I can do everything, like, myself” mentality—and definitely realized that that is not the way of thinking.

I—you can, but, like, just what you don’t know is going to be bigger than what you know. So, someone who knows what you don’t know is, like, the ultimate way to, like, fill in the gaps and, and figure out, you know, the puzzle of what you’re doing also.

Like, getting a coach in my way is like committing to something. So, like, there's so many things you can do on, like, a daily basis. Like, for me, you know—and probably for both of us—we have relatively passive, uh, businesses, you know? Like, we probably have a lot of time to, like, choose what we want to do, and, you know, there's too many choices.

But, like, when you say, "Hey, this is something I want to do," I've got a coach—that's like, that is then committing. For me, at least, that's like committing to doing it. And whether, you know, you pay them, you know, that's putting your money where your mouth is, or it's just accountability, there's, like, no better way to actually commit and decide and choose to actually do something and actually do it unless you get someone there, uh, to coach for it.

So, I couldn't agree more. And then also, just breaking back what you said earlier—I just want to circle it—it is kind of funny what you said, uh, the Vacasa trend, because actually one of my—one of my—actually, my first mentee ever, he just picked up, like, a duplex in Oak Isle that was previously managed by Vacasa.

And, uh, he said it was, like, the process of getting them to, like, send the bookings and, like, send the money over was, like, such a complicated and slow process.

So, I guess I'm curious, yeah, if you pick up a Vacasa client, like, is there—is working with them—or is that something you've seen, like, working with Vacasa to get them to actually give over, like, the keys, like, pretty challenging?

Mike: Yeah, it's—it can be. And North Carolina, the state of North Carolina, makes it a lot more challenging.

Jeremy: Will all the escrow—the escrow accounts?

Mike: Well, that's a big piece of it too. But the North Carolina Vacation Rental Act for the vacation rental act—it was done in, like, the '80s—basically says six months. If the property owner cancels, you know, the contract, or if for whatever reason, you know, the property sells or anything, the guest who books that stay, their booking has to get honored for six months.

So, what Vacasa can do is they can put that booking in a similar listing of one of theirs, or Vacasa can keep—they can keep it. Like, there's a law in North Carolina, for whatever reason, that for six months, they can keep it. So, and Vasa is not going to, like, hand over bookings or anything like that because it's their client or whatever. But, yeah, I had—for six months, I had to work around their bookings. They wouldn't move any of their bookings.

So, I took over for a client. For six months, I had to block the calendars. I had to make sure the property was clean and everything. Vacasa never responded. They did an awful job cleaning and just were very, very difficult to get in touch with. And it was just the same issues that the property owner that I was working with was having previously and why he moved to me.

Yeah, to sum it up, that Vacation Rental Act makes it a lot more difficult. But then, just, like, communicating with Vacasa to begin with is, uh, can be a huge pain.

Jeremy: And that's—and that's why the owner went with you in the first place—because of the communication issues, which is interesting. So, that essentially, at least in North Carolina, it's six months of pain in order to have everything finally run smoothly and, and, you know, integrated into your systems.

Mike: Yeah, 100%.

Jeremy: Got it. So, what are some other ways? So, guys, if we're listening, we're looking to start a co-host property management business in 2023. And I do tell people—because people ask me all the time, like, "What's the best strategy?" Or, like, "I get sent deals all the time, like, is this a good deal, is this a bad deal?"

And, you know, "Oh, this isn't the exact dollar amount or exact percentage that I need to make in order for this to, like, hit, hit what I need." I'm like, "All right, well, first of all, you know, there's definitely a lot of unknown." Like, I can't perfectly predict numbers. I don't know how you're going to operate the property. I don't know how you're going to design it. You're definitely—you know, there's a little bit of shooting off the hip in this game.

But if you're worried—co-host, like, there's—like, if you're worried, you know, it doesn't matter if you make another $100 or, you know, another $10,000 or lose $10,000. With co-hosting, uh, because you're just taking a percentage of that topline revenue, there's no cost involved.

So, that being said, yeah, I guess, do you see co-hosting as, like, just the best, you know, best no-risk way to get into the game in 2023? And then also, what are some tips and tricks you have for folks looking to, you know, get their first co-host client?

Mike: Yeah, for sure. I think it is like—if you have one listing, it just makes it easier. Like, if you own a property and you want to get into co-hosting, it just makes it easier because you have proven concept. But, you know, to land the first co-hosting client, there's a lot of different ways you can do it. You're gonna have some sales skills or at least have some at-bats with clients.

So, typically, what I tell people is, like, start with—have your elevator pitch of what you do. Like, what does your company do? And it can be as simple as, "I help investors 2 to 3x, you know, their rental income through STRs." Like, something like that. Or, "Hey, I help vacation homeowners manage their property and make more profit." Like, something like that.

But go tell your family, friends, loved ones what you're doing. Start with people that know, like, and trust you. And just say, "Hey, I'm starting a co-hosting business, and essentially what that is, is I'm managing property for other people and running it as a short-term rental. The benefits are more revenue, and you also get personalized care from a boutique company like mine. We're going to help with listing optimization, pricing optimization, and revenue management, and make this as passive as we can for the homeowner."

Something like that. And just, like, see where those conversations take you. Call 10 family, friends, loved ones in two days. Check in with them. "Hey Jeremy, how are things going, man? You doing good? Like, what's new? How was, how was Italy? You know, how was San Diego?" All that's cool.

Okay, cool. And they're always gonna ask you, "Well, how are you doing?" And at that point, that's for, "Hey, I just started this new business." And then see, you know, if they're in real estate—great. "Hey, do you have any, you know, long-term rentals? How's that going for you? Ever thought about Airbnb? You have any friends that do Airbnb?" Like, just open up a line of communication. And then, a lot of the time, they will refer you to, "Hey, you know, Bobby's got—Uncle Bobby's got a place at the beach." Or, like, "You know, there's a lake house that I've been looking at buying. Can you help me run the numbers for it?"

So, start there. Get your elevator pitch down. Start with family, friends, loved ones. The Vasa and Evolve strategy is obviously really good. You can also look at Zillow listings that are for rent…

Jeremy: Furnished, predominantly.

Mike: Yeah, they're furnished. That definitely helps. And yeah, I mean, just pitch homeowners on it and get as many at-bats as you can. It's a numbers game at the end of the day, but it's also, you know, how dialed in do you have your pitch and your value proposition based on their pain points.

Jeremy: Yeah, and I think—I heard—I listened to your podcast, I think. Mike, Mike—yeah, I listened—I do my, I do my homework. And, uh, something that you said that's, you know, also something that we do that's extremely helpful is just saying if you're looking for, like, a mentor in the short-term rental space—whether it be, like, arbitrage or co-hosting—I would definitely recommend this be one. I mean, this is probably the most valuable thing.

If you have no listings and no experience, but, like, someone who's able to, like, lend their portfolio and credibility to you. So you can say, "Hey, I've worked with Mike," or, "Mike, you know, might even hop on the call," or, "Jeremy might even hop on the call and say, 'Hey, like, you know, I can vouch for this person.' You know, in a way, helped, you know, me with, you know, these 25 listings that I have." Or—I don't know the way you really phrase it.

But yeah, I guess, is that something you do? And that's something you've seen be helpful?

Mike: Yeah, yeah, for sure. I think it just adds credibility. So, like, people ask me to hop on, you know, client calls with them, and I just come. Yeah, just essentially help, help close the deal and bring some credibility. You know, Mike's got three hotels and 20-some properties, and then I'm—you know, I got 20-some properties too, so I can come in and just be like, "Yeah, they, they're following our systems, and it's, you know, it's verified too. Like, we've got many good reviews and property owners that work with us." So, it's just a good way to leverage your network and just leverage the people around you to help grow a business.

Jeremy: Exactly. And yeah, getting that first listing—like, like, just showing—being able to show listings. So, like, obviously, showing your own is the best way. So, however you get that first one. Sometimes arbitrage, you know, getting that first one—it's a lot easier to get an arbitrage property because you're effectively bribing the landlord. I mean, really, you're, you're paying that. So, it's—that's the easiest human way there is to, to get something, you know, get a desired outcome, is to give someone money for it.

So, getting—maybe getting that first—or, I mean, get, get that first listing through arbitrage, and then they go the co-host route, and they have, like, their properties to show for it. But if you don't have that, then, like, you know, being creative and, you know, obviously not lying, but, you know, showing someone else's experience. So, I saw—I thought that was a really cool parallel, and I thought that, you know, that value there is, like, obscene.

So, yeah, so we're hitting, uh, the time here. But what I want to get into is, you know, what is your big, you know, 2023—you know, uncertainty and all that—what is, like, your biggest, like, pro tip to help folks succeed, uh, you know, nowadays?

Mike: I mean, I always tell people this, but be yourself. Like, if you're, uh, if you're working with a guest or working with a homeowner, working with a lender, like, don't try to be something different.

Like, be yourself and just know that, like, the person that you're trying to become—let's say you're trying to hit 10K months to leave your job like I was, or try and hit 20K months to be able to retire your spouse or even, like, retire your mom or something like that—think about that person and, like, what your why is behind that and just be yourself.

That's kind of the mindset shift of, like, you don't have to be anything different than you are. You just have to step into that new identity, that new person that you want to become. But you don't have to change your morals, your ethics, or anything like that.

I think a lot of people are scared to step out of their comfort zone because they feel like, "Oh, what are people going to think of me?" It's like—they're still going to think of you well. And if not, like, that's okay. They're probably not important to you. So, be yourself.

And then the other thing I'll say is, uh, when you're growing a short-term rental business, keep your clients updated on what's going on in the market. So, we touched on it a little bit earlier—like Vacasa and Evolve, they don't communicate well with their property owners. But if you can—what we do is we send out a quarterly report. And I'm in six different markets, so I just do a two-minute video of, like, "All right, here's a Q4 report on Banner Elk. This is what I've seen."

So, we had a good summer—not a great summer. Occupancy was down about 6% in the entire market. Your property was up 8% year-over-year, so that's good there. Here's what I see coming in the future: I see it's, you know, it's going to be a cold winter, unlike it was last year—it was very hot. And so, the ski slopes are going to be a lot better, more active. I think there's going to be a lot more people coming to the area.

So, what I'm going to do is I'm going to raise prices a little bit for right now and see what happens. And just give them, like, a quick update. Doesn't take very long. You got to do a little bit of research, which you probably should already know about your markets. And then, if you deliver that once a quarter, you're going way more above and beyond than any other property manager would.

That's my more tactical, uh, tip for everybody out there growing their short-term rental businesses.

Jeremy: Gosh, and as you say these things, I have so many questions, but I want to be mindful of your time. With pricing—I was wondering—you use PriceLabs?

Mike: Yep, yeah. I haven't checked out their new, uh, algorithm yet though.

Jeremy: Got it. Because, yeah, that's been, like, my thing the last few weeks is trying to get data points of who's—because I actually, uh, was at the STR Nation Conference in San Diego, and PriceLabs was there. And they were going through my listings, and, "Oh, have you considered the new local or whatever it's called? Like, local hyper-local algorithm?" And I said, "I have no idea what that is." And they showed me.

And, like, it was actually kind of funny because they, they have a feature where they'll show you your pricing spec with their algorithm. And, like, I do so many manual adjustments that, you know—so then they looked at mine, charted, and it was like, "Oh, this is actually..." They're like, "Damn, this is actually pretty similar." So—and I—and I maybe because I, I don't know, I was doing, like, the whole hyper-local is, like, to essentially, like, the edge cases, you know, the big events and whatnot, uh, to accurately, you know, reflect those.

Because before, it was, like, looking at a whole market, and some event, you know, in Banner Elk might not drive dollars for my property in Silva. So, I don't know—it was interesting there. But okay, when you find some people who have switched to it, let me know. Or maybe I can have them on, and we can just do a deep dive of the effect of that.

But really, Mike, thank you. I mean, this has been—this has been so great. Uh, how can folks find you if they're interested in following your journey?

Mike: Yeah, it's just @mikereillync—Instagram, Twitter. Those are probably.

Jeremy: NC baby, let's go. Yeah, where'd you go to college, by the way?

Mike: I went to Penn State. I actually did—I did two years at UNCW, played down there, and then, uh, transferred up to Penn State.

Jeremy: Awesome. We're gonna have to play, uh, play tennis sometime. I—I did not play in college, but I, uh, I played growing up. So, maybe, uh, maybe next time I'm in the New Bern area, we'll definitely have to. I can't play golf as well as you, so—but maybe I could rally a little bit in tennis.

Mike: Well, you can kick my butt in basketball, man.

Jeremy: Hey, all right. Let's, let's do it. But awesome, Mike. Thanks so much for coming today, man.

Mike: Yeah, man, thanks for having me.

Jeremy: Awesome, guys. Well, I hope everybody enjoyed today's episode. Stay tuned for next time. This is the Short-Term Rental Pros Podcast.