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How Kyle's Barndominium Makes $300,000+ a Year

Written by:
Jeremy Werden
December 23, 2024

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Reveal any property's Airbnb and Long-Term rental profitability
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Quick Summary
Jeremy and Kyle discuss strategies for building a highly profitable short-term rental (STR) business by leveraging unique property features, smart financing, and targeted branding. It highlights the importance of identifying underserved markets, creating standout amenities, and delivering exceptional guest experiences to maximize profitability and scalability.
Key Points
- Target flyover markets close to major metro areas with minimal competition for large group accommodations. Prioritize "blank canvas" properties with space to add standout amenities like mini-golf, arcades, pools, and slides to attract premium bookings.
- Use dynamic pricing tools like PriceLabs, but constantly monitor and adjust prices to maximize revenue.
- Leverage social media, viral content, and media features to drive bookings and brand recognition. Develop a recognizable brand (e.g., Big Sky Barn House) to build trust and loyalty among guests.
- Use email lists and direct booking websites to secure reservations outside third-party platforms and retain more profit.
- Work with local banks for flexible financing and build strong relationships with contractors and vendors to execute projects in rural areas. Engage property owners and local stakeholders to identify and support property improvements.
- Add high-ROI amenities and entertainment spaces that appeal to large family groups, bachelorette parties, and event guests. Continuously improve offerings by studying competitors and finding ways to stand out.
Full Transcript
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Jeremy: We are live with the Short-Term Rental Pros Podcast. I'm here today with my guy, Kyle, who has one of the coolest, most unique, and most profitable properties—probably in the entire United States, if not the entire world.
Uh, I've had the opportunity to, you know, grow a relationship with Kyle, um, initially from kind of far. Like, uh, Kyle reached out for loan connections when he was under contract on this property we're going to talk about later, and I looked at it and I was like, "Oh my goodness, this might be one of the most high-potential properties I've ever seen in my life."
Uh, but I was like, "I really hope this guy—I really hope that he knows what he's doing because, if he doesn't, this might go very wrong, or it has potential to go very right." And I'm happy to say that Kyle absolutely knocked it out of the freaking park.
We're gonna go into, you know, that property. He also has other properties in his portfolio, like the one he's sitting in right now. So this is going to be a super fun, fun episode. You guys are going to want to stay tuned because, you know, we're going to go over Kyle's plan in the future and talk about like really specific, tangible action steps that—that we're taking, uh, in order, you know, to make sure that he's growing his portfolio as efficiently and profitably as possible.
So, Kyle, thank you so much for coming today.
Kyle: Yeah, thanks for having me, Jeremy. Excited to be here.
Jeremy: So first of all, Kyle, tell everybody where are you from and also where are you—where are you currently?
Kyle: Yeah, I'm from Chicago, and I'm currently in Smoky Mountains, in Sevierville. That's our property up in the Smokies.
Jeremy: Gotcha. And how did you get into, you know—what do you do for a living, and how did you get into the short-term rental game?
Kyle: Yeah, so bulk of my career—I spent the last 10 years or so working for CPG companies, so food and beverage companies like Coke, Nestlé, Twinings. And, uh, most recently, I work at a consumer behavior, uh, market research company. I sell software. And, yeah, I got into real estate a few years ago, um, just looking to invest and make our money work a little bit harder for us when we're not paying attention to it.
And, uh, got into some LTRs, and, you know, through research, started getting into some short-term rentals. The property I'm sitting in here in Sevierville and the Smokies is our first short-term rental. And, yeah, thanks for, uh, you know, speaking a little bit to our newest property. Super excited for our barn house that we just got up and running, uh, west of Madison in Wisconsin. It's been, uh, a whirlwind getting it up and running, but I'm super excited to scale and work with you on getting to the next level that we want to get to.
Jeremy: And—and let's just—let's just lay this out. The cabin you're in currently, you know, I don't want to say it's like a classic cabin, but, you know, it's—it's unique in the sense that it is a cabin. However, the barn you have is just unique, and, you know, it makes—the word 'unique' is an understatement in my opinion. Uh, just kind of explain, you know—I want to—I want to go into kind of what was the, like, thoughts behind, you know, that—that property. How—you know, how did it come to be, and what was, like, going through your head when you saw it? Uh, like, what—what was the potential you saw, and kind of, like, why? Like, why did you think that?"
Kyle: Yeah, yeah, great question. So the plan was—about a year ago—was to enter markets in the Midwest that I, you know, obviously identify as void markets, where, for large group stays—accommodations of 20-plus folks—you know, in certain zip codes, there's just only one or two options.
And, you know, avid listener to the podcast here. So, you know, obviously, all—all the free knowledge that you guys share on—on this pod definitely helped with some of the strategies that we implemented. Especially, you know, going into markets with little data, right? It's like the cabin I'm in here in the Smokies—it's like your quintessential Smoky Mountain cabin. We got, you know, four beds, five baths, and, you know, I'm competing with 10,000 other cabins here. Like, the market is saturated. It's a real thing, you know, especially in markets like the Smokies and Gatlinburg.
But, you know, pivoting a little bit, you know, re-redefining our strategy was, you know, kind of looking for—I guess, fly—come fly-over states. Just Midwestern markets that are close to a major metro within a one-hour drive and, you know, can sleep 20-plus guests and just have absolutely dominant amenities to the comp set. You know, any—any—any one of our comp competitors, they have, like, hot tubs and fire pits. But it's like the nine-hole mini golf course, slide off the deck, and, you know, the inground, uh, indoor pool and things like that, you know, we made sure were in place.
This property that we found—it was like an 1800s old dairy barn—and the old owner, you know, did an awesome job renovating it and kind of bringing it back to life. But they just really used it for personal use. They never used it as a rental or anything.
So, it—they tried to sell it. It was a commercial property. It never sold. It kind of listed when interest rates were skyrocketing last year, and we found it earlier this year when they weren’t on market. I saw some press that the realtor got on realtor.com and Insider.
So, you know, naturally—I saw the potential immediately. Just, you know, found the White Pages, sitting, typed in the address, found the owner’s name, and just called up every number till I found the owner. I was out there later that day and had a handshake deal before he left the property, and that was it.
Also, awesome bonus too—it comes with a duplex that we haven’t gotten up and running yet either. That we haven’t even talked about. So, could be STR or potential shop, or, you know, lease to a business—corporate lease. So, haven’t figured that part out yet because it’s been a ton of work getting the barn house up and running.
But yeah, we’ve been listed on Airbnb for about three months, and we’ve had a few viral posts on Instagram kind of take off. We’ve had over three million views, and every weekend’s been booked through October next year. I think we’re sitting at around 70 to 75% occupancy just three months after listing.
So, the initial excitement out the dates has been strong, and we’re looking to scale and kind of get to two, three, four, five—10 barn houses here in the next year or so.
Jeremy: So tell—so tell me about the—the numbers on this particular deal. And actually—yeah, you didn’t even—you didn’t even mention to me that—because I was think—I honestly thought that the—the duplex was, like, in your listing. So—so this property—it’s unique in the sense where it’s like two separate—actually, it’s like what? Three separate buildings, technically?
Kyle: Right, technically, yeah. There’s the—the 6,300 square foot barn house, which accommodates, you know, 20 sleeping. The first floor has the nine-hole mini golf course and arcade. The second level has some bedrooms, the movie theater, the kitchen, and, you know, two bathrooms. And then if you go up—and the workout room—then you go up to the third level, we have two lofts on each level of the house, um, that each sleeps six guests.
We also have the indoor mini basketball court and hoop on the third level as well, with another lounge area with four games. And then there’s a fourth level to the barn house. It’s kind of like a lookout loft, and there’s two twin beds up there. So it’s technically four stories, 6,300 square feet. That’s the first building—that’s like the actual barn house.
Across from that is the—what we call the party shed. So, no sleeping accommodations in this, uh, building, but it’s about 2,500 feet. It has a sauna, an inground lap pool, double-size hot tub, and also has, you know, our tiki bar, flat screen, ping pong, pool table, darts, cornhole, and it’s heated and cooled. So it could be enjoyed, you know, through those harsh winters in the Midwest.
And then the third building, to your point, is, uh, the duplex, which was—you know—it’s just kind of vacant right now. But we plan in the spring to kind of get up and running. And like I mentioned, you know, corporate lease or LTR, STR—we haven’t really figured that part out yet.
Jeremy: Got it. Because—yeah—when I—I mean, I’ve looked—I’ve looked at this—the listing, and I just—there’s—it just keeps going. So many photos. I assumed the duplex was, like, part of it. I—I assumed that’s where the bedroom space is, but now I’m learning that this place has even more dimensions to it than—than I—I—I previously understood.
So, even regardless of the fact that, you know, there’s—there’s a duplex, like there’s—there’s another property on the building you can rent out. Just tell me, if you could, just give the kind of the high-level numbers of the deal. And again, keep in mind this is only part of the property. So, for the part that you currently have rented out.
Kyle: Yeah, absolutely. So, I mean, we got it under contract just under 800,000 at 775, and you have a commercial loan with a small local bank. Obviously, it doesn't qualify really for conventional funding through, you know, some of your traditional lenders, which is why we couldn't work with, uh, Huntington and our guy Brian over there.
Jeremy: Shoutout Brian.
Kyle: Because, you know, it has to be—because of, you know, the multiple buildings—it had to be a commercial product. So, went to a couple local banks. Some told me no, couple told me no. Uh, one of them saw the potential, and they work with, you know, entrepreneurs and local businesses and a couple different VBOs already in their portfolio. So, got it under contract, commercial loan. You know, we have 272 nights booked since we’ve listed in the fir—in the first three months. So, just broke 300K gross, uh, this week actually.
So, we're celebrating that with 100 total books. I think we'll finish somewhere around, you know, end of 2024—just looking at projections—somewhere around 80% occupancy and somewhere between, you know—if you exclude the duplex—we’ll finish around 70 to 75% C on cash, uh, return. With the duplex, I’m hoping it gets closer up to that 100—100% mark.
Jeremy: Guys, think—and think about that. You know, we—we hear, uh, everybody talking now, "Oh, high interest rates, like high price environment." Kyle's gonna get potentially a 100% cash-on-cash return in year one. You know, he went through a commercial bank, got a—a commercial loan, which the terms are not normally as good as conventional financing. So, got a high-interest rate loan, but still, you know, due to his sheer—in many ways—like, his sheer, his sheer will, his intelligence, and obviously, you know, his willingness and eagerness to, like, learn all the best practices there are out there for things like this, he's hitting a home run.
He’s hitting an absolute home run. And, you know, you think that's good? Kyle's not stopping there by any means. He’s under contract on another potential home run property. Uh, we'll—we’ll get into that one in a minute. But what I want to do is just kind of break down, like, things you just said because I, you know—folk listening—like, when I'm doing this pod, I’m just trying to think, what are the most, like, specific tangible ways to, you know, to succeed in this game?
So, breaking down—just digesting a couple things that Kyle said: one was, like, the local commercial bank. You know, he, uh—he called up a bunch of banks. He didn’t just, like, call one bank, get the no, and be done with it. You know, how many com—I mean, if you were going to, you know, estimate, how many banks did you reach out to?
Kyle: Six.
Jeremy: Six. So, he had six different conversations with—with banks. He didn’t—he didn’t settle for one no and say, 'Oh, looks like this isn’t gonna work.' He—he—he really put himself out there. Two, he saw this property, he got in his car, and he drove out there. Uh, he made it happen.
And—and I want to—I want to put a parallel. Like, uh, Matt, you know, in our—in our Mastermind, he—you know, we talk about home runs. In 2023, people, you know, make excuses. You know, I’m personally closing on a house Friday, so I’m—I’m not, uh—but he got a—he got a Midwest lake house for 170 grand. Uh, and this house looks incredible. It's like a five-bedroom lake house, like two hours from Chicago. You know, we think honestly it could gross—could gross like 90 and—and be another, you know, 100% cash-on-cash—you know, maybe—maybe even more, uh, cash-on-cash situation.
So, but the thing that both—both what you did, what Kyle did, and that Matt did is they got in their damn car, and they went, and they met the owner, and they made it happen. You know, uh, and just talk about that. Talk about the, you know, the—the meeting the owner, and, like, kind of building a relationship directly with them, and, you know, how that may have helped you get better deal terms.
Kyle: Yeah, 100%. I mean, we were able to do an off-market deal with no Realtors. So, not to bash any Realtors, um, right now, but, you know—and shout out to all the Realtors I work with—um, but, you know, we were able to, you know, obviously negotiate a lower price, you know, not paying that 6% fee, and, um, flexible on, you know, the terms and the close date and all that.
And he's actually still my neighbor. He lives a few doors down. So, it's great to have a local—a local guy who not only renovated the place but knows a ton about the area and was able to kind of help with introductions to the team that I hired out there.
And I know you talk about it all the time. You know, it was—it was challenging getting the team hired. Took over a month getting cleaning, maintenance, landscaping, all of our contractors that, you know, we work with on a weekly basis. But I think you’ve talked about—PRI prior—you know, building the moat with your team in markets that are kind of like those fringe markets.
So, we have a moat, but, you know, we have a team that’s been super reliable and super involved with the process and the success that we've had so far. But—and I know—I know the other part of that too, Jeremy, is, you know, if you were to go on AirDNA today and type in this address, I think the projection is like 43,000 for this specific address. So, it's like…
Jeremy: You’re going to go into BNBCalc and search it.
Kyle: Yeah, you read my mind. Shout out BNBCalc. For real, I mean, we've used BNBCalc for every deal analysis that we've ever—ever analyzed. And, you know, I think—you know—taking the M, it is—it is a higher risk when you go into markets where there aren't comps, right? And you have to expand your radius, maybe outside of 20 miles. Maybe you're going to, like, 50, 70 miles at some extent in some of these more rural markets in the Midwest.
But, you know, seeing the potential and kind of reading between the lines, and, you know, not just looking at some calculator and the number it spits out and making an investment decision based on that, right? You know, the higher-risk, you know, investments sometimes have higher rewards if they're underwritten properly and you're using BNBCalc to its fullest.
Jeremy: Yeah, absolutely. And you—and I will say I probably invest in the unknown more than, like, most people, you know, talking about short-term rentals online. And I guess I've gotten comfortable. You know, I've just seen the results, and, you know, obviously you're seeing the results. So, I'm sure—I’m sure you were a little, like, you know, your stomach—maybe you—were you a little nervous, you know, getting this crazy property that, just for all sakes and purposes, you know, people would—I'm sure you probably had people in your family or someone who would have had to have called you crazy?
I mean, I remember seeing this, and I was even like, 'Wow, this is—this is crazy.' Obviously, you know, I—I've seen it happen before, but I was—I'm still like, 'This property is crazy.' Uh, but were you—were you nervous kind of investing? Like, like the cabin you're currently in—sure, it's a four bed, five in Gatlinburg. Like, you get—you know, there’s—there’s a thousand of them to compare yourself to. You know, you can get a pretty accurate idea of, like, exactly how much you should make, maybe with, you know, 5% margin of error. But with this property, like—were you just, like—were you nervous?
Kyle: Yes. Like, short answer, yes. You know, but I think you have to see through, like, reservations. And, you know, the—the potential outweighs the concern, I think. You know, and at the end of the day, for the—for the right decisions, you know, yeah, I had a couple family members tell me I'm absolutely nuts and—and crazy for going into this market.
But I think, you know, the unique format of it, and the sleeping accommodations, and the multiple buildings, and being, you know, within a 45-minute drive to an awesome major metro like Madison, Wisconsin, and, you know, so many great local attractions—you know, you're not going to find a lot of comps to justify it. But it’s—it’s like—you know, not to be cliche, but it’s—it’s really like looking for that diamond in the rough or needle in the haystack.
It takes a lot of time and a lot of research. But, you know, through practice and through trial and error, like, when you find that diamond, like, you know it’s a diamond. You know what I mean?
Jeremy: Exactly. And so—so—so, Kyle, he got up this diamond. He got it listed. He also did a great job leveraging social media. Uh, he had a Business Insider article. Tell us—how did this—how did this article come to be? And then, like, what happened when you went viral on social media and that article came out? You know, what happened?
Kyle: Yeah, so, part of the—the way that we got in touch with Insider was—I think I previously mentioned—but in 2022, when the owner tried to sell, they couldn’t hit traditional MLS outlets like Zillow or Redfin. So, the realtor that he hired at that time had to get a little creative and reach out to press, uh, publications like realtor.com and Insider and land.com and different you know outlets to kind of spread the word for the property that was for sale because they could only market on, um, commercial websites and local areas. So, they were limited in terms of reach.
So, that's actually how I found the property. I looked at the old Insider article, and the luxury real estate journalist Amanda Go had written it. And, you know, I thought—you know—we brought it to this, you know, new exciting level of fun once we finished everything, and why not reach back out to Amanda in Singapore and, you know, try to get another feature, like a before and after?
So, that's kind of how we came back in touch with the journalist over Insider and was, you know, happy that they linked the listing to the Airbnb. So, we've had a lot of consistent flip traffic to the website from—from that list—from the Insider feature.
And then—yeah—I mean, the, it’s crazy. The post that got the 3 million views, you know, which we were not expecting—which is part of the reason our calendar filled up so fast—was, I mean, it’s really—it’s really just a slideshow of, like, the first 10 pictures highlighting all the amenities. Like, that's really all the post was. It was nothing special—some stock image song and just our first 10 pictures from the listing, just a slideshow.
But, I mean, it was shared over, like, 50,000 times, viewed over a couple million. So, I think, you know, using that—utilizing platforms, you know, the right way—can definitely benefit, you know, your—your—your properties.
But, like you and I have talked about, you know, the next step is really to get into that direct booking website so you’re not funneling people to Airbnb and then also paying them that 3% fee. You know, you're bringing them into your own website.
Jeremy: Yeah. So, Kyle, you know—Kyle was very excited—rightfully so, rightfully so. You know, these posts went viral, the article went viral, and his Airbnb calendar completely filled up. And, you know, he's talking—he has 300 grand on the books. Uh, however, he has 300 grand on the books of potential future income.
When I say potential, obviously it’s—it’s income, like, you know, as long as, you know, the property’s still there—knock on wood—you know, and every—and the guests come, and everything’s good, that’s kind—that's—that's going on to get a payout. But that payout is going to come when the guest stays there or after the guest.
Uh, who has that money, you know? Who has that money in the—in the interim? Kyle’s Business Insider article linked directly to the Airbnb listing. That article essentially put probably 200 grand into Airbnb's bank account, where they're probably making—you know, I'm sure they have a 5% high-yield savings account somewhere.
But that’s money that goes directly to them. Kyle is under contract on a new property, and I want to get into that in a second. You know, tell us about the new property, where it is, kind of the hypothesis, and whatnot. But, you know, he—he essentially has built the traffic to his listing. Like, sure, people go on Airbnb and—and have found it, but a large chunk of that—that, uh, future income comes from, like, his inputs, like the effort he put in.
So, when that happens, that money should go to Kyle’s pocket, you know, right away. He’s under contract on another deal. You know, this deal is going to be capital intensive. Uh, you know, we've talked about fundraising mechanisms. However, if he had that extra 300 grand in his pocket, he probably wouldn’t need to raise as much money. He could have just recycled, uh, the earnings—the future earnings—from this first property into the second deal.
So, let’s—let’s—let’s start talking about the second deal, and then we’re going to get into, like, the specific things that we’re going to do so when this property gets listed, you know, it has that flywheel effect.
Kyle: Yeah, 100%. And, you know, before we move on too—I mean, there were mistakes made along the way. I know you and I talked a little bit about the pricing, right? We—we've had to increase pricing quite mins, and we—you know—hindsight’s 20/20, but we didn’t list at the correct price.
Like, we had some weekends being booked at 6–700 a night, but, you know, we just had last night, July 3rd and 4th, booked at, like, 2,800 a night. So, we probably missed out…
Jeremy: Maybe that was too low. That could have been five grand a night potentially, right?
Kyle: Right. I mean, you know, making sure your pricing is fine-tuned, especially when you're charging over—you know, you're getting into, like, the thousands per night. You know, one small mistake on Price Labs and not monitoring it, and, you know, making sure that you're priced accurately, you know, could be a 30–40,000 dollar mistake in the matter of a few weeks.
So, we'll get it back next year, but I think, you know, definitely looking back, you know, the pricing piece was something that we needed to—you see all these bookings coming in, you get excited, and you're like, 'Wait a minute. I shouldn’t be getting 10 bookings a day. I’m not priced right.'
So, going back in and making sure that's accurate. And, you know, you know, you talk about this all the time, but Price Labs—it's not just like you set it and forget it. It's an art and a science. You got to constantly monitor it and, you know, test things and go up, go down, set your base, and then, you know, set your baseline for what you want to go below and above.
And, you know, I think that piece was a huge learning component for us in this deal. And, you know, to your point—moving on to the property in Michigan that we have under contract—we’re going to be priced right when this one launches.
Jeremy: Yeah. So, tell us—tell us about this property. And, you know, I’m excited for it, but why are you excited?
Kyle: Yeah, it’s a—it’s a monstrosity of a property. It’s, again, you know, the barndominium. Um, you know, we’ve started a chain that we’re looking to build called Big Sky Barn House. Our first location was in Wisconsin. Big Sky Barn House is now coming to Michigan—Southwest Michigan—only about a two-and-a-half-hour drive from Chicago.
So, you know, you're pulling from a lot of different major—major metros. You’re close to South Bend, close to Grand Rapids, you’re close to Indianapolis, Chicago. And it’s a—it’s really a great vacation market, but it’s a little bit more inland than some of those traditional markets like Benton Harbor, Holland, and Grand Haven.
So, you know, it’s 20 acres. It’s got some wooded area. We’re going to put a great walking trail in—I know you and I were just talking about that the other day. But—but it’s—it’s got the inground pool and the hot tub outside.
On the inside, you know, the part that I love most about it is it’s not even the finished part. Cuz, like, the finished part of the barndominium—it’s about 5,000 square feet, 3,000 of that is finished already. And, you know, the—what—you know, we’re getting it fully fin—f—fully furnished, and, you know, the finishes are just, like, top—top of the top end, you know. Completely luxurious—Butler’s pantry, quartz cab—uh, quartz countertops, you know, high-end furniture, fireplace—you name it.
But the part that I’m most excited about is, you know, what I call the blank canvas. You know, it’s got a 2,000-foot unfinished garage where—that’s where we’re going to make, you know, the most impact in that space.
So, we’re putting up, you know, a few murals. We’re putting in a golf simulator. We’re putting in an arcade. There’s a 12- to 16-person sleeping loft above the garage. There’s going to be a rock climbing wall, an indoor pickleball court, an indoor half-court basketball court—which our graffiti artist actually just upsold me. We’re going to be doing a graffiti court for both of those on the inside as well.
And then a few mini golf courses. And then, obviously, the signature, uh, Big Sky Barn House slide coming down from the arcade down to the mini golf and pickleball court area.
So, it's going to be amazing, and we're super excited for it. It's going to take about the month of January to get it up and running, but we got our contractors locked and loaded, and we're ready to close at the end of the year.
Jeremy: Gotcha. So, even in this—so, and—and I want to go back to one of your earlier points, talking about that—the moat. You know, being in a rural area where there's just not a lot of service providers, and you're doing crazy stuff, like, you know, you're—you’re adding, you know, graffiti artists. And I know we t—on it—one of my favorite things to do is, like, to look at a floor plan and kind of, like, reconfigure it in order to, like, maximize or optimize it.
So, you know, you're essentially going to do—you know—reconfigure the floor plan too. So, you're doing, like, some pretty extensive projects. How do you go about, like, finding these contractors in these very rural areas?
Kyle: Asking the owner, Google Maps, Thumbtack, you know, I think Thumbtack is a great resource. It doesn't work in some rural markets, but, you know, crowdsourcing bids for projects instead of, like, going one by one on Google and typing in keywords and contacting people and getting singular quotes. Like, I think the idea of an app—Thumbtack—you know, I—I prefer it over Angie.
But, I mean, that's definitely one of the main tools we use to interview and hire out our teams that are going to be in place. But, you know, obviously, word-of-mouth referrals too. So, the—the—the listing agent, the owner, you know, just local folks in the area, neighbors—you know, getting those referrals are definitely a big part of it too.
Jeremy: So—and—and something that you're doing a great job at—getting in the car, going there, talking to people, talking to the neighbors, talking to the owners, telling them what your plan is. Seeing, 'Hey, do you have folk who can help?' And, you know, really you're gonna—you know, you're probably going to be—like, you might even be a percent or two of this, like, city’s, you know, like, tourism. Uh, honestly, probably even—maybe even more than that.
So, like, you're gonna really help that local economy. So, I think you're doing a good job of, like, getting people—you know, like you said—the old owner of the property, like, getting folk to kind of, like, buy in and, uh, to what you're doing and—and—and help you out and see it as in their best interest. Uh, and—and building rapport on a local level.
Second—second moat we’re going to talk about is that custom branding aspect. Big Sky Barn House, you know, it's currently one property, but it'll be—it'll be more than one. So, folk who stayed at Big—Big Sky Barn House in Wisconsin, who love the experience but go, 'Oh no, we wanted next July 4th, but looks like it’s booked. Do you have another property?' Sending them to the new one.
And—and they trust Kyle. They trust, you know—they trust you, and your—your wife as well. They know you guys are going to provide a great experience. So, yeah, tell us kind of how—what—what is the plan to, like, leverage the unique branding and marketing and use that to your advantage?
Kyle: Yeah, absolutely. And it’s like—as much as, you know, we want to scale, I would say at this point, like, we need to scale. Like, we have three to five, sometimes as much as seven or eight people reaching out almost daily, you know, asking why the calendar is not open yet. And it’s—the calendar is open, uh, just most of the dates have already been booked.
So, I—you know—we have—we’re building out a pretty extensive email list right now, you know, for when we launch not only in Michigan. We’re also looking at Kentucky and Indian—Indy—Indianapolis and other markets as well, where we're, you know, converting what used to be barn houses or barndominiums into these, you know, extravagant 20-plus sleeping accommodations—just dominant amenities.
So, yeah, I mean, the goal is to grow the Big Sky Barn House franchise, enter new markets, and utilize that same platform that we’ve already built. I think we have over 11,000 followers now on Instagram, close to 10 on TikTok, and, you know, continue to use these unique, uh, marketing avenues to generate excitement.
And, you know, just really the end goal is providing vacation destinations and experiences that are just going to be lifelong memories for people to come and stay at our properties.
Jeremy: Yeah, and you can even get into—we haven’t talked a lot about this—but just, just an idea. Uh, but like, let's say, you know, Kyle right now—he’s hands-on, he’s putting all the deals together, he’s—you know, it's pretty intensive and, you know, very impressive. But let’s say, you know, someone does it in—I don’t know, I’ll just give a random state—South Dakota or whatever. Someone does it there and says, 'Hey, like, you know, we know you already. Like, you’ve proven that you have this direct marketing channel, and, like, you can get us more money than we can get ourselves through your distribution channel and your brand.
Like, your brand has so much value and so much trust that, like, really you could—you know, if you prove this out and—and you are, like, the go-to place as well as just the trusted brand in this very, very unique, uh, line of accommodations—like, there’s ways where you don’t even—even need to put money into deals. You know, like, you have that physical—you know—or that digital infrastructure that just has so much value that you can capitalize on.'
Not really posing a question to you—just really kind of, like, an idea or thought I could have. Uh, that, you know, I think in the long run, you know, could—could be an avenue as well. Uh, so I don’t know, maybe what are your—what are your thoughts on that?
Kyle: Yeah, the snowball effect is real. I know—I know it’s a strategy you utilize too. But I think, you know, the—one of the reasons that I love working with small local banks in the markets that we go in is, one, you know, obviously they love to work with folks that are coming in, you know, boosting the local economy.
But two, we’re not taking over existing properties that have income on them. We’re taking, you know, a barn house or a barndominium that doesn’t have any income. And through the commercial loan product—it’s very different than a residential or conventional loan product—so you’re able to force the appreciation when you’re generating income.
So, if you’re getting 300,000 plus in, you know, gross revenue, you go back to that same bank in one or two years when you got a couple tax returns under your belt. That appraiser is going to take into consideration that gross revenue that you’ve generated and force that appreciation up.
So, now you take out your equity, and you go do it again. So, you know, building that snowball and the velocity of the snowball, I think, is critical for growth and scale for the next level that we want to get to—you know, the five—five barn house, 10 barn house plus.
Jeremy: Yeah, and—and—and not saying you should or shouldn’t, but, like, one day—let’s—like, why wouldn’t—oh Kyle, like, these houses are—sorry, not even houses, these compounds—are making so much. Why wouldn’t an institution come in and, like, do the same thing?
Well, guys, like, it’s a lot of—a lot of work to do one of them, and it’s not worth it. Even though Kyle’s, like, property—he got for, you know, under a million, and it’s pulling in, you know, 300K—I think we—we’ll come up with some goals and KPIs for next year. But, you know, potentially for maybe pushing closer to the 500. I mean, we—we’ll see. Uh, but they’re not gonna buy just one. They’re just—it just won’t do it.
But if Kyle has 10 of them, you know, and, uh, already has the operation set in stone, uh, each one—let’s say they’re doing—let’s just say, like, 175 or 200 in net operating income. You know, institutions buy businesses at cap rates. So, right now they’re—you know, an institution’s—they’re not just going to buy one, you know, property at, like, a six percent cap rate. It’s not worth it for them.
But if you have 10 of them, they’ll buy 10 properties. Uh, and—and I’ve seen a couple other, uh, you know, folk in the—in—in the space successfully do this. You know, they’ll buy—you know, there’s a decent market to—to buy 10 of them at, like, a five or six percent cap rate.
So, I mean, we don’t have to work out the math, but essentially, you know, if these businesses are—you know, you’re buying them for 7–800, but then just based off, like, you know, net operating income—I mean, yeah. Just—how much—how much NOI is—is your current property gonna, uh—the initial Big Sky—the OG Big Sky Barn House—expecting to do this year?
Kyle: The OG—love it. You know, we—we break even. You know, we leverage some equity that we had in other properties that we have. So, we have, obviously, the—the mortgage on it with the small local bank, and then the payments of the equity that we leverage from another property.
Jeremy: But even just net operating income, which, like, disregards the mortgage—you know, just the—the revenue minus, you know, minus the—the operating expenses—probably, probably a couple hundred grand.
Kyle: Yeah, it’s in the 200 range.
Jeremy: And then—so, then the cap rate is your net operating income, uh, you know, divided by the purchase price. So, a 5% cap rate at 200 grand of—of NOI—that’s $10 million right there. Like, so you could, you know, really make the argument that you just created a $1 million business, you know, which is absolutely insane to think of.
But frankly, that is how real estate, you know, investors, uh—you know, especially like those who do commercial and, uh, you know, multifamily and whatnot.
So, yeah, sure, maybe a business wouldn’t want to buy—or an institution wouldn’t want to buy—one of them. However, if you can—if you can sell 10 of them and you have, like, unique branding, you know, you have that, you know—and—and let's say you're able to copy and paste what you did, multiply it by 10—I mean, that’s—that’s a hundred million dollar-valued business there.
Which, again, that’s absolutely insane to think of. But is my math wrong? I don’t want—I don’t want to butcher this math. Maybe not 100M. All right, sorry, let’s backtrack. I’d like to be accurate with my numbers. If it’s 200 grand of NOI, what is, uh—you know—multiply that by 20. Sorry, 20, because it would be a 5% cap rate. That’s a $4 million business.
Ignore what I just said. I’m going in circles here. But essentially, you—you have a very valuable business, and you’ve been able to force, you know, potentially, like, 400% appreciation in your asset value in one year. So, first of all, kudos to that. But second, yeah—how do you think, like, long-term in terms of, like, the—the—the opportunity there and upside?
Kyle: Yeah, absolutely. And I think, you know, you nailed it on the head. I think, you know, getting to—you know, once we have Michigan up and running, you know, identifying the right markets—you know, you want to scale, and you want to grow, but you don’t want to do it too fast.
So, I mean, the analysis piece and leveraging that deep data—you know, just way, way more levels beneath what calculators are going to spit out to you when you type in an address. You know, like, really getting down and using other methods to really understand, you know, what the opportunity is and what the right market is to enter.
I think, you know, once we have that fine-tuned list, then you can go in hypergrowth mode and, you know—you know—focus on scaling because you already know that the market and the property make sense.
But that—you know—that is the goal, to grow the Big Sky Barn House name and keep the same 20-plus accommodations, you know, in flyover states close to Metro—major Metro hubs.
Jeremy: Absolutely. So, for this next property—I know we talked about earlier—you know, your article came out, you got excited, you in hindsight were like, 'My pricing is too low.' What’s the plan for listing and posting this next property?
Kyle: Great question. Still being fine-tuned at the moment. And, you know, I—I think, you know, making sure that this property is going to be similar in the sense of space and type of amenities and close proximity to, you know, what you can do in the area.
But I think, you know, making sure that we learn from our mistakes that we made from, you know, being optimized to the full extent from pricing with this one. So, utilizing Price Labs—and I know we’ve talked about this—not just getting into Price Labs and setting it and forgetting it. You know, making sure that you’re in there and you’re manipulating those prices and making sure that you’re at the right price point so that you’re not making that $30,000 mistake on the next property.
So, you know, really being in—you know—in tune with your pricing, I think, is a key strategy that, you know, I think we’re all learning about. But I think, you know, leveraging, you know, your knowledge and working with you and your team, you know, has been, you know, hugely monumental in that—in that realm for sure.
And I think, you know, there’s a ton of data sources out there that you can utilize—you know, whether it’s Rabbu or Awning or AirDNA or STR—STR Insights, you know. But for specific deal analyses—I’m going to do another BNB Calc shoutout here—is, you know, it’s—it’s the main metric system to underwrite properties.
And I like to run performance three ways: a good, better, best. So, even though you confidently feel it’s going to do X, you know, you’re—you know—doing one below that and then two levels below that. And then you’re giving yourself that delta to make sure if you do have a mistake, that it’s still going to work. And, you know, the interest rates are irrelevant.
You know, and it's like everyone gets scared about the interest rates, and it's like—if there's one asset class that can combat interest rates during this time and day and age, it's short-term rentals.
Jeremy: Exactly. And—and I get—I like to give—like, again, I'm—I'm a numbers guy, and I know you're—you're very—you know, you're—you're—you're very analytical as well. But it's like, all right, you know, we talk about—let's say 3% interest rates versus 7% interest rates. All right, I might have a mortgage on a property that—if it was 3%—it'd be $2,000 a month. At 7%, my mortgage is, you know, 3,800 or four—you know, four thou—I think probably 4,000 a month, whatever.
But the property’s making 12. You know, if the property’s making 12 or making 11, you know, it’s—it’s all right. Your seven grand a month of profit is now, like, 5,200 a month. Like, you're still profiting very well. For you—I mean, that 800 grand house—I mean, do you mind sharing kind of, like, what your monthly mortgage payment is, kind of, like, what your interest rate is?
Kyle: Yeah, we locked in with the—the small local bank. I think it was seven and a quarter with, you know, principal interest. We don't escrow with the—the small local banks, so taxes and insurance are separate. But principal interest—it’s around 4,500 a month.
Jeremy: 4,500. And guys, he just got a booking at $2,800 a night. So, his mortgage being 4,500, or, you know, 3,200 versus 4,500—like, in the grand scheme of things, like, it's not that big. But keep in mind, you know, Kyle has a super property. Like, he has a property that nothing else in, you know, a multi-hundred-mile radius really compares to.
And, like, I personally, at this point, am growing, you know, a portfolio of, you know, what I would consider super properties. Not the same exact, you know, concept as Kyle being—being these massive barndominiums, but houses that can sleep 20 people, where you're going to have four families coming together.
And I—I also want to go into—and just another thing I hear a lot of—like, why is someone—Kyle, why is someone going to pay $2,800 a night to stay at your—your barn? You know, why would they possibly do that?
Well, guys, Kyle's property can house Grandma, Grandpa, their three kids, and their three kids' three kids. So, they can have nine grandchildren, six children, and Grandma—the patriarch—M matriarch staying under one home.
Let’s say they were going to have a family reunion in Chicago in the middle of the summer. They would have to get, you know, what—8 to 10 hotel rooms or something? So, that would be, you know, in the middle of Chicago, you’re—you’re probably paying, what, $400 or 500 a night for a hotel room. So, they're paying four or five Gs a night just on accommodations anyways.
Also, you got to pay for activities. What are you going to do in the middle of Chicago? Uh, you're going to go—you're probably going to go, you know, to lunch, go to dinner—I don't know—catch—catch a Cubs game. Like, you're going to be paying thousands of dollars a day just in activities, too.
So, Kyle has it all bundled for you. You can go to his property. You've got the pool, hot tub, mini mini-golf, probably, you know, 20 other amenities that we could just list off. And you're getting great value. You're going to leave there and be like, 'Wow, that was a high-value vacation. Like, that was a steal.'
Like, the people who have stayed with you—like, I know you probably—you know, Kyle initially listed and was like, '$600 a night—like, wow, like, this is crazy, you know. Like, that—that might be too much. Like, I feel uncomfortable charging.' Meanwhile, the people who stayed at $600, $700—they were like, 'Wow, this was a steal.'
You know, we just—we just—like, you guys—so—so I—I like that you're kind of, you know, your—your mind has switched or—or adjusted, and you understand, like, the value that you are creating, uh, for these guests.
So, let’s just get into it. So, this next property—you’re going to list it, you’re going to have your direct booking channel built out, and, you know, when—you’re going to leverage. So, right now, what are you doing? You know, you have—you have—you said you have seven or eight people reaching out a day. You're getting emails. But, like, once—why are you getting emails? Like, why is that important, and what are you going to do with those emails?
Kyle: Yeah, so, it'll be—basically before we launch to the public and, you know, post all over social media and, you know, start our new marketing campaigns for the doors opening in Michig—Mig. You know, the email list is kind of like the—the first look, right?
So, everyone that gives us, you know, the email to stay updated with, uh, the Michigan Grand Opening—they're going to have first access to the calendar and the dates that they want. And they'll have a small discount for doing so.
And that list is growing by the day, and, you know, we're excited to get it up and running and, you know, provide accommodations for the people that would love to attend, you know, the Wisconsin property in, you know, the middle of summer, but those dates have been booked already.
So, a lot of our guests are coming from Chicago, so it's just two and a half hours east instead of, uh, two and a half hours northwest. So, a lot of the same draw and the same people are coming from both directions outside of Chicago.
And you mentioned this a little bit already, Jeremy, but, you know, you nailed it. I mean, the—our target market is that three-generational stay, is what I call it. So, you have, you know, the grandparents, and then you have the kids, and the kids' kids. And sometimes you have aunts and uncles or, um, cousins or friends coming.
But really, the—you know, the grandparents, parents, and the kids—you know, that—that's who we've designed our properties for. I'd say 75% of our guests are that market. Inevitably, our second market is, you know, bachel—bachette parties and—and wedding guests.
Whether you like it or not, you know, just making sure you have your rules in place and making sure that they're respectful of rules and it’s, you know, the right fit for everyone is key. But, you know—and then the—the third market I would say, in that la—last five to 10 perc bucket, would be just people going out for a vineyard or brewery tour or just, you know, hunting, ski, golf trips, you know, girls’ getaway—things like that.
Jeremy: Oh, skiing? I didn’t know that was an option. All right, I’m—I’m in. I’ll pay whatever. Um, awesome. Cool. Well, so what are—so, obviously, you know, you’ve—you’ve built this. You know, I think it’s cool that you kind of went from, you know, probably—I mean, frankly, you know, you’re probably online last few years doing research, and, you know, you heard, 'Oh, the Smokies are, like, crushing it.'
You know, well, the Smokies is a great place. You get—you need to buy a cabin, uh, like a four-bedroom-plus cabin. That’s what you did, and you were like, 'All right, the results here were—I don’t know—okay. You know, fine.' Like, let’s say you hit, like, a base hit.
And you’re like, 'All right, I understand. This is real. Short-term rentals is real. I’m going for a home run next. You know, like, I’m—this next one is not going to be a—be a single or double.'
So, I guess, what was, like, going through your mind when you were like, 'All right, I got to do something big and big and crazy?' And I guess what advice would you have for anyone listening who’s kind of, like, you know, thinking the same thing—'Oh, I’ve heard you need to do X, Y, or Z.' Uh, what—what would you tell them?
Kyle: Yeah, that’s a great question. And, you know, the Smokies are a great market. I mean, Sevierville, Gatlinburg, Pigeon Forge—even on the other side, and your neck of the woods, North Carolina—there’s some great markets there too. It’s safe, you know.
There’s 10, 12, 14 million people that visit every single year and come to the park. And the—it’s—the regulations are super favorable for investors, you know. It’s not really risky to add to a market like the Smokies, you know.
So, what d—what drew us to kind of redefine our strategy was, you know, competing in markets where there’s just less saturation. So, instead of, you know, competing with a thousand other cabins within a one-mile radius, you know, I’m competing with two—maybe three—20-plus properties in a 100-mile radius.
You know, and you mentioned, you know, those large groups. There’s not as many as the six to 12 or maybe 14 size groups. But the groups that are 20-plus—they don’t want to stay in hotels and take up 80% of the hotel rooms. It’s—it’s not really accommodating for a fun stay, you know, an entertaining vacation for the whole group.
So, I think, you know, going back to your original question—you know, what I really look for is the blank canvas and property. So, uh, space to add the amenities. You know, this cabin is great here in the Smokies.
But it's like we don't really have space to add amenities. A lot of the cabins are on top of each other. You don't have that three-car empty garage. You don't have the extra couple acres of land to do something on the outside. You know, having that space to turn into the entertainment spaces for your guests is definitely key.
And, you know, there's other ways to get around the rates. I mean, everyone always fixates on, like, "What—what's the rates? What are the rates? What are the rates?" And it's—you know, do you really want rates to drop to below 3% again and then go compete with 50 other people on the same home? Or would you rather take a hit on a little bit higher rate, but maybe be able to get the seller down 50 grand or 75 grand and have no competing offers and have that leverage as a buyer?
So, I think, you know, looking through that lens and just making sure that all decisions you make are, you know, rooted in deep data and research. You know, you got to put the work in, but if you do and you—you know—follow the path that, you know, is laid out there, I think, you know, you can still make great investing decisions that aren't just safe.
Like, you know, that’s in the Smokies. You know, it's—it's riskier to go into markets where, you know, you don't have the comps to prove. But that's where the—the greatest return on investments and, uh, the greatest opportunities are—in those markets where you're not finding a ton of those comps.
So, I think, you know, we've talked about this before, but, you know, be the comp I think is a great strategy. It's risky, but it's leverage, right? You know, there's a lot of—you know—returns to be had in that realm.
Jeremy: Yeah, something that Kyle also said during our—our conversation, because we talked about, you know, why short-term rentals is a fun game—like, why do we both get excited? And something that he said—he reminded me of something that I said, but I was like, "Yeah, that's actually—I love that. I'm gonna keep—I'm gonna keep saying that." Like, uh—but he said it.
And it's your inputs define your outputs. So, you know, Kyle likes that blank canvas when he can—he can put his—you know—he can put his spin on things. He knows, like, what he's capable of doing, and he knows that, you know, the more, you know, time he spends, like, curating, uh, the more, you know, research he does—looking at different properties, seeing what they're doing—and then the more, you know, the better he executes on it.
Building those relationships with the local vendors, uh, you know, building a relationship with a graffiti artist and making a better property, then defines the output. You know, that is what puts the money in his pocket.
So, yeah, I guess it's—to me, it's a fun game. I know to you—and that's why I love these conversations. But what are—what are you excited about, uh, in short-term rentals moving forward?
Kyle: And, yeah, just to touch on that too—I mean, if you were—you and you were I to both, you know, put money into Berkshire Hathaway stock today and wait 10 years, and we both took it on the same day, 10 years from now we're gonna have the same exact identical returns on that same stock.
Jeremy: R.I.P, uh, what's his name—Munger?
Kyle: Uh, Charlie. Legend. You know, I think if, you know, Jeremy were to go buy a house in North Carolina, and I were to go buy a house in North Carolina one mile away—identical bedroom, square footage, same layout, same market—we're both going to have very different returns in 10 years. And it's going to be different.
So, I mean, you know, really hitting on what—what your—your—your outputs really are your inputs. And, you know, I think that's what's most exciting about it. You have the ability to change the future of what the property produces and how successful the investment is.
Which, in other asset classes, you just don't have that flexibility. And that's in addition to, obviously, all the other amazing things—like the tax benefits, someone else paying your mortgage down, the appreciation, and being able to leverage that—that tax-free and, you know, use the snowball effect. You just can't do that in other asset classes.
Which, you know, that's what excites me the most in this space—being able to utilize some of those tactics. And, you know, the world's your canvas, and you're able to kind of paint it how you will.
Jeremy: Awesome. Well, Kyle, it's been so great having you. We're gonna have—we're gonna have Kyle back. And—and I—and I say this kind of to hold ourselves, both of us, accountable. But, you know, Kyle's gonna launch his next property. When he does—you know, remember, he got all excited when he—you know—the articles came out, his social media post went viral, and his 70% occupancy for the next year.
Which, you know, I was like, 'Oh, I—I've been there.' Not—I haven’t had a Business Insider post, but I’ve had, like, a calendar fill up too quickly in advance. And, you know, I referenc—uh—I—I gave the example of, you know, the boat rental business I had and why doing a boat rental business was eye-opening for me.
Because, you know, when I rent boats out, that money goes directly to me. You know, it doesn’t go to Airbnb. It doesn’t go to any, you know, boat rental platform. It goes to my bank account. And I use that—what I call—what I call it, and actually, this is a Warren Buffett terminology, so we’re going to talk about Berkshire Hathaway here—uh, getting paid on the float.
But essentially, when you are the platform, you get pa—you get paid directly. So, insurance companies—the reason why Warren Buffett loves to buy insurance companies is because—think about it like insurance. You get paid, you get fronted the money, and then, if something happens years down the line, you then owe the client.
Uh, so that’s what Kyle is going to do. He’s becoming the platform. He’s going to get paid on the float. So, that’s just something I want to hold—you know—us—hold you accountable for. So, next time, you know, we have Kyle back on, he’s going to have launched the Michigan property. He’s gonna have posted it.
You know—hey—and if you guys—first of all, anybody listening—Kyle, how can they get on your email list?
Kyle: Yeah, find us on Instagram or TikTok. It’s just Big Sky Barnhouse, and the link to the email list is right on that page in the coming soon tab.
Jeremy: Exactly. So, we’re going to have Kyle back once that happens, once the property gets posted, and just to kind of see what—you know—see what the result of kind of this—you know, again, your inputs define your outputs. So, the work we’re putting in today—we’re actually—as soon as we hop off this—we’re gonna kind of hop on and continue our war map session.
Which, just for—for some context, the war map is—you know, for folks I—I work with, like—like Kyle—as part of our Mastermind. What we do is we have a session at the beginning. You know, Kyle and I have already talked several times, but this is kind of like the formal session where we just come up with, like, a very, very concrete plan, uh, with specific action items. And then, you know, over time, we get it done, and we keep, you know, evaluating and moving the ball forward.
So, we’re going to hop on to that. But I just wanna—you guys listening today—holding us accountable. Next time Kyle’s on, he’s gonna have the results of this experiment to share with you.
But yeah, Kyle—I know—so, Big Sky Barnhouse. But, yeah, for those who want to, like, keep up with your—you know—your personal story, what’s best for them if they, you know, they want to get in touch with you or, you know, hear more about you?
Kyle: Yeah, absolutely. You know, any—definitely accept, uh, you know, any outreach through—you know—you just send it to our company email address. It’s just jackpinepropertiesyahoo.com.
Jeremy: Beautiful, beautiful. Awesome. Well—yeah—and—and what—the last thing I’d like to—to end off with—what is your pro tip for—for anybody listening?
Kyle: Pro tip? I don’t know if I have any, but I would say off the top of my head, you know, just focus on the separators and keep it clean and simple. You know, focus on the separators. You know, once you’re looking at your—your comp set and you’re finding who your competitors are and where else your guests are considering, you know, look at every single picture and every single description of every single comp. Put it in a spreadsheet, memorize it, study it, and then focus on the separators. What can you do to separate yourself from that comp set?
Jeremy: Beat the competition, guys. Study. Obsess—I’m gonna paraphrase—obsess over the competition in order to—to beat them.
Kyle, man, absolute pleasure having you. Thank you so much for coming today.
Kyle: Thanks for having me, Jeremy.
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