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Tim Hubbard: Build Wealth from Short-Term Rentals

Are you looking for a rental property business? Do you want to start one?

Tim Hubbard is an international real estate investor, world traveler, and self-proclaimed digital nomad. He also owns and operates a multi-million dollar short-term rental business.

In this episode, Tim shares his expertise about how he got into the short-term rental business and what he is doing in a different location. He will tell us about where he is at and what he is doing from any location. Through trial and error, Tim developed a proven system and team on the ground, which enabled him to manage his entire rental portfolio from home (in Colombia).

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Tim Hubbard: Build Wealth from Short-Term Rentals

Hey, everybody, welcome back to The Real Estate rundown season two. And you know, we like to bring you all different kinds of aspects of real estate and all different entrepreneurs that are doing different things. This time, we’ve got somebody that’s coming to you with a different sort of a business, but definitely from a different location to guys help me welcome to the show. Tim Hubbard. Good morning, Tim, how are you this morning?

I’m doing fabulous. Thanks for having me, Shannon.

Tim, I’ve met you a several times we’ve talked briefly. And you’re doing the short term rental business, but you’re doing it from a little bit different location. Tell us a little bit about where you’re at how you came to be there and what your business is doing from that location.

Yeah, I’m in Brazil right now. I really just like living down here. I was traveling down here for years, and also to Colombia. So pretty much split the year between Colombia and Brazil. But you’re right, almost all my businesses in the US and real estate. And most of my properties are short term rentals.

Tim helped me understand you’re, what, 3000 miles away from your closest property? Where’s most of your property at?

They’re kind of spread –  California, Oklahoma and Tennessee.

Okay, guys. So Tim doesn’t like to do anything the easy way. Tim doesn’t know that in his life, right? So it’s not like he’s got them all in his hometown. He’s got them all over the US. And he’s 3000 miles away. And it’s a short-term rental. Tim, how do you manage all of this?

You know, I guess in a nutshell is coming up with systems and things. And so I’ve been doing the short term rentals for a long time and just learned a lot. I didn’t start out doing them from 3000 miles away, but it wasn’t too long before I realized that that was a real possibility. And so, yeah, you know, started, I started with long term rentals and converted a lot of them to short term rentals. And with the extra income, I just had more financial freedom and decided I liked live in in some other places. And so,

That’s funny that you say it like that, too. Because, you know, after going to Robert Helms’ Goals Retreat in January, and I thought I was a goal setter, I thought I knew what I was doing, I really began to understand what a lifestyle by design is. And it sounds like that’s what you’ve done is you’ve you’ve taken what Robert Helms teaches what a lot of people teach Tim Ferriss with the four-hour work week all of these guys teach you how to put a system together that doesn’t need you to do it. It just like I I almost get the vision of you doing the short term rental thing and go and look ma no hands, you know, increase the level of difficulty let’s move to South America and and just continuing to live that lifestyle by design, which isn’t that what we’re all trying to get to and quote unquote, retirement?

Yeah, I think those are all great influences for me too, by the way, four hour workweek and Robert helms goals, events, fantastic. And it really does get you thinking for me, I discovered early on that I really liked traveling, I lived with a family and Spain when I was in high school for summer, and I kind of just always wanted that freedom. So I was traveling a lot. And then I discovered real estate. So I sort of was trying to find a way to be able to do all that trial consistently and discovered real estate. And I discovered real estate is like the traditional way right like long term rentals. And somewhere along that line, I was staying in lots of short term rentals as I continued traveling whenever I could. And I was looking for properties as long term rentals while I was staying in a short term rental and I ran the numbers on the rental I was staying and you know what they bought it for and what they were getting and I’m like, Oh my gosh, what why am I not doing so? So then I started doing that. And I guess that was about six years ago, I started converting a lot of properties and buying properties specifically for short term rentals, too.

So when you’re buying properties for short term rental, and I can just imagine the aha moment, right? You’re sitting in somebody’s Airbnb going, Really, why am I not doing this? But, but and I have, I have aha moments like that also, where I’m just like, why wasn’t I thinking that? But when you’re sitting there doing it? Are you buying properties with a different thought process for short-term? versus long term? Or are you buying a property based on the same criteria? And just going short term doesn’t work out? I’ve done a backup of long-term. I mean, how are you going through that now that you are firmly entrenched in the short term rental world? What is your thought process with that?

Yeah, so I would say it’s mostly the same criteria is what I would look for with traditional long-term or multifamily properties in the US. But I would change two things. So one is I’m willing to pay a little more per unit for the property to be in a slightly better area. So an area where people can walk to restaurants are there at least close a quick Uber ride away from places they might want to see in that city or in that town. So that’s one difference. And then the second one, which is a really big one really important is, is our short term rentals even legal there,

That’s huge. That is true. So if they’re not, or if they don’t, sometimes the city doesn’t have laws out yet, that’s also a little more risky, right? Because they can come out with some that the changes, I think it’s best to find a place that already has a law in place where you can get a permit. So those are really the two big changes, but everything else pretty much the same, you know, so you’re going into, you’re going into markets that have identified that short term rentals are in fact, legal. You’re doing that due diligence, that’s really kind of, if I hear you correctly, that and you’re willing to pay a little bit more, because you know that your returns can be higher. And you also know that while they are short term rentals, you’re in it for long-term. So cashflow is really your focus not long term appreciation, or how that markets affected by those kinds of things. Am I hearing you correct on that? 

Yeah, you’re right. Yeah. When I, when I run the numbers, I always run them in two ways. So I’ll run them as a long term rental, then I’ll run it as a short term. So for me the at the point where I feel comfortable is, you know, if that property is at least breaking even, or at least making a little bit on the long term model, then I but I have a huge potential with the short term rental, then I’m pretty comfortable doing doing that deal.

Yeah. And and so when you’re going through, and you’re evaluating that, what are you really looking at as far as actual returns that short-term versus long-term can provide?

I would say, at a minimum, I would want the short term model to be doing three times what the long term would be otherwise, three times the amount of rent per month. So for property that was rented for $1,000 a month with a long term tenant, I would want the short term rents to be around 3000. And how is it you go about determining

That short term rental amount when you’re looking at it going? Yeah, this looks like a great deal. Rents are grand, I’m close to it meets all my criteria, then how do you take that next step and go, This is why it would be worth this much money.

Yeah, there’s a there’s a lot of tools now. So we’ve got companies like errdna.co, another one called mashvisor. A lot of tool companies that do pricing models that have really good information, they basically scrape all the data off the internet from Airbnb, and VRBO, and HomeAway. And these, these different OTAs, we call them online travel agencies that that list short term rentals. And so there’s a ton of data out there, you can pull up a zip code and purchase a inexpensive report that tells you average occupancy, seasonality, average daily rates, all those types of things. So I usually just use several of those tools and kind of combine them and as long as there’s they seem to be averaging out around the same numbers and that I feel pretty confident going forward.

You know, and that’s just that’s funny because as this business of short term rentals has expanded, so has the tools that come with it. That wasn’t around six years ago, right? I mean, they were like maybe just getting started but they they didn’t have data and all the areas you know, some cities, they had nothing. So yeah, it’s like every year there are way more tools holes in there were the year before just making it easier to analyze a property but also easier to manage, because there are tons of tools for that as well.

So what do you when you do that, I mean, you’ve gone through the selection process, you figured out that this is going to be able to make you money. Now you’re, I mean, obviously, you’re coming to town, you’re doing the closing, you’re setting it up, are you how are you finding your short term management partners that are going to be handling this like their own while you’re gone.

So there’s several ways it depends on how many properties you have in an area, like if you pick up one vacation rental, for example, it’s, you’re gonna have a really hard time, or you wouldn’t want to hire someone full time that to handle that right, you’re most likely going to find a professional, short term rental manager, which there’s way more than they’ve ever been. Or Airbnb has something they call a co host, which are easy to find as well, that’s someone that’s on Airbnb, they’re already familiar with the platform, and they are co hosting other properties. So if I have a few properties in an area, that’s a really good place to look to find a co host, because they make their money off managing. And we already know that they have housekeepers there, you already know that they have, you can tell if they’ve done a good job, because there’s reviews on their account. And you can tell how long they’ve been doing it because there’s because of the amount of reviews. So that’s a really good way, I think it’s a more inexpensive option two versus just hiring a full out property management company. But then the third way is hiring your own. So most of my properties I have in Tennessee, and I have enough there to sustain, you know, to have full time employees. And so in that city in particular, they’re helping with the furnishing, and the housekeeping and all of all of those types of things, those types, so they’re, you’re you’re really plugging into a system that already exists, you’re not creating your own system.

So I’m in three cities right now. And I do it a little differently in each city, because the amount of properties that I have in those cities. So if I only have a few units, then I’m going to kind of take the easy way out and hire a professional housekeepers and hire potentially professional manager. Right now we’re doing all that in house, the management side, but I’m looking at new markets. And when I go into the new markets, that’s where I’m going to start. So I’m going to start looking for coasts or professional managers. The cool thing about short term rentals is that there’s two pieces to the management side, we have, we have the virtual side where people are sending questions, and we can respond to those from anywhere. And then we have the on the ground side, which is maintenance and the housekeeping. So I have my own virtual team of receptionists that are in the Philippines, and I can have properties anywhere in the world. And that same team of receptionist is gonna be able to manage those properties perfectly from a from a virtual side from a guest reception side. So then I just have to find the on the ground pieces. So there’s really kind of two pieces to it.

And when you’ve gone through the process, I mean, when you talk about your receptionist, they’re the ones that are answering when somebody says when somebody sends you that midnight request, you know, and they’re, you know, drunk travel booking, right, they want to, they want to respond and they want to discount, they want all this stuff that is now outsource to a receptionist that handles that. And then you’re using an online travel or co host here in the market that you’re in.

So I’m actually managing all of my properties, myself or with my team, my my team is, but if I were starting a new market, that’s a really good option to go for a co host. Because you also when you have a couple properties usually can’t justify hiring a full time reception staff, you know, to handle questions and stuff 24 hours a day. So starting with a co host option is good, but I guess I’m at a point where we’ve got enough properties to justify having a whole team so yeah, per phone call comes in. If a message comes in whatever time it is, it’s going to who whoever happens to be on at that time.

That’s great. And you know, so as you’ve seen, you know, one of the questions I have is is like, a lot of fads, right. So, not saying that Airbnb is a fad. I know that it’s really seriously causing the hotel industry to totally rethink how it does things. So that’s not what fads do. Right? fads are like egging your jeans are wearing a mullet. Like kids are doing again. Right. I mean, not that you did that. Tim I’m not saying you did that.

Oh, no, of course not.

Anyway, if for instance, you did that would have been a fad because then it went away. And now it’s coming back, you know, 25 years later. But when you look at that, what do you see with the short term rental market? Do you see this as here to stay? Do you see this as oversaturated? Do you see this as people, you know, bad actors getting into it? How do you view the current short term rental market and the future of short term rentals? Because you have six years of experience in it? Yeah.

I think it’s just growing and growing. And for me, especially now, you know, with so many people working from home for a lot of people work and travel and life are kind of merging. Like we used to always go to work and so so people are staying in places. A lot of people don’t want to sign a year long lease millennials, for example, the biggest demographic in the US like, I’m a millennial, and we like that freedom a little bit more. So I I’m really bullish on short term rentals. I think it’s becoming just a new way actually, that Brian Chesky the CEO of Airbnb says that people are not just staying in Airbnb but they’re living in Airbnb is, and and their fastest growing segment are longer term stays. So I think it’s here to stay. I think it’s growing. And like you said, the hotels have noticed, obviously, that really impacted their margins. And so they’re building their hotels differently. Now, a lot of them were built like, you know, boutique hotels and have little kitchens and things like that. And they’re so tight, you know, and that’s changing. And that’s one of the things that I’ve seen, I mean, I’ve got a couple of guys that I do fairly regular business with, and I’ve checked in on them. And it’s amazing the places that they have been, right. I mean, everybody thinks, oh, it’s, you know, we’re COVID locked down, right? But not everybody is that way. And not everybody’s thinking that way that we need to be locked down. And so I’m checking in on these guys, and they’re in Europe, and they’re in Bali, and there’s all these different places, and they’re like, Hey, man, they’re not expecting me in the office until 2023. So I’m not sticking around, right? You know, and we’ve seen that a lot in New York. And Florida, you know that that coastal highway is now busy with people moving down because they realize that I don’t have to work in New York. But you know, when you think about it, the Airbnb or the short term rental, you know, Airbnb is like Uber, I mean, it’s it’s a name, and it’s one of them, but how you how you view that is totally changing as well, especially with where you live in Colombia, or Brazil, depending on who you owe money to, I think, but But you know, the reality is you have that mobility, right? I mean, back to the lifestyle by design, you’ve created a team, the team is the one that takes care of the thing, you’re now adding additional properties to the team, but the team doesn’t change you. Nothing really gets any different. So it’s, it’s, it is very easy to see where you’ve seen the value and the lifestyle by design and continue to create that. 

What would you say to someone that is looking to get into this? Is it, you know, convert all your rentals and do it all at once? And you know, how, when someone that that is in the long term game that wants to get into this game? How would you suggest they go about doing that now that we’ve talked about some of the resources that are out there, and some of the paydays that are there? How would you suggest they go about doing that?

I mean, I think if you already have a property that you think potentially might work as a short term rental, then you can check some of these data sources like AIrbnb to kind of confirm that. And if you do, I say, just try it out. I think it’s good to do your first one on your own, or at least start it up on your own so you can kind of see the process. And I’m sure what’ll happen like what happened with me years ago, when I put my first one up, the thing stayed booked, assuming it’s in a spot that works well as a short term rental. And it’s been booked sense. And the profit margins are just so much higher that that’s what I’ve been focusing on now. And one of the other nice things about having a higher profit margins is yes, there is some more work that goes into short term rentals. We have some extra pieces in there like guest reception. But if we’re making 345 times more what we were with the long term rental, we can totally afford to hire all the help we need to handle these things so that it’s not us doing all of these little tasks and stuff. So I looked here in my hometown while we’ve been talking, and I jumped on our DNA, and I looked in my hometown and in the first quarter of 2020 there were 120 active rentals. And today there are 181 active rentals. And it shows that the occupancy has actually increased versus 2020. So what you’re saying is actually check it out. I mean, I didn’t mean to fact check you right here. But actually his check it out that that, you know, 35% available full time is actually down from 42%. Available full time, a year and a half ago, right. Two years ago. So, so we’ve had increased number of units by a substantial margin. I mean, 120, to substantial in two years. And yet the the number of of actual availabilities has come down. So that’s amazing, amazing data. So Tim, tell us a little bit more about some of the other things you’ve got going I know you’ve got a podcast, you’ve got some other things that you’re doing, what are some of the other pursuits that now that you have that time freedom that you’re taking on with your Airbnb or with your short term rental profits?

Yeah, I, I mean, I still really like traveling and kind of diversifying into some other countries and stuff like that. In the States, I got a commercial property recently that outfitted for like industrial laundry. And so we’ve got some industrial sized laundry machines, and we’re going to start offering a pickup and delivery service, it was one to help facilitate all the laundry with my properties. But as soon as that’s up and going, we’re gonna offer it to other people. So that’s, a different business. It’s somewhat related. And I think it has huge room to grow. And then in Colombia, I’ve got a real good friend of mine who just finished a development, and actually short term rentals and 18, I think is a cool 10 story building. And we’re trying to negotiate and get a hold of a few other lots there to do something similar. So we’re kind of in the mix of that. So yeah, probably real estate related, I guess, but slightly found a niche that seems to afford you the freedom that you want, why why give that up. But I really love that, Tim, I love how you’re taking what you’re already doing. And, you know, finding other revenue streams inside that same venue, you know, I know that one of the things that people always complain about is in the Airbnb is, how do you get all the sheets done at once while the housekeepers there. So now you’re solving that problem making that profitable? And then moving to what’s next. I mean, that’s, that’s really kind of, you know, again, creating more revenue out of a single source, and then solving your own problem as well.

Yeah, yeah.

So how are you planning on running this – is your same team gonna run the laundry facility as well?

Part of them will help, I gotta hire new people for that. So they also have great software to facilitate what they call pickup and delivery service. So I’ve got the delivery van, I got the facility, I’ve got the machines, and they have software that can help coordinate all that, to where, you know, let’s say, you know, I’m starting with my properties, which are going to be bulk kind of loads, but I plan on offering it just to an individual. And I love that it’s also a residual income type source. And they say, you know, from the research I’ve done, if, if you do someone’s laundry twice or two weeks in a row, and they have a good experience, they’re very likely going to continue doing that service with you. So I think it can be another steady growth. And then yeah, totally helps with the short term rentals that the laundry piece is a big obstacle a lot of times with short term rentals.

Yeah, I know that in my life I have that same type of a service just for my personal dry cleaning. I don’t take my personal dry cleaning anywhere they come to me. And it costs a little bit. But you know, it won’t be long before Mr. Musk has it so that, you know, a driverless van shows up right and somebody, some little robotic things scurries out the back and grabs your stuff and scurries back in and, you know, there’s there’s gonna be no no person involved. But until then you’ll you’ll continue to be building that. What do you see? How do you fix? I mean, we all have blowouts, right. And this is the one thing that I think a lot of people ask is, oh my gosh, but how would you fix that? If your main person quit and you’re in Colombia? How would you how do you how do you deal with that?

So it’s really good to have backups, especially with housekeepers. So I always recommend having a couple, two, or even three names that you can call, because housekeeping is the biggest one, if you have someone checking in and you don’t have a clean apartment, then you have to cancel the reservation, you got to find them a hotel. So having backups are crucial. And I work with professional housekeepers, and I have my own team. So it’s nice to work with professional housekeepers, because they have a lot of staff, usually, depending on the size. So if someone on our team isn’t available, we have someone we can call the last minute.

And so what we’ve got boil down out of this, is that even with all of these other people involved, all of this virtual team, these extra boots on the ground, all of these things, you’re still able to generate three to five times the revenues that you could get out of long term rentals. And you’re still profitable while you’re traveling to 70 countries and counting. And doing it from a minimum of 3000 miles away. Tim, what would you say is your number one reason that all of this success is happening for you?

Um, I guess maybe from the beginning, I stayed in lots and lots of short term rentals before I started doing it myself. So I knew a lot of the things to add, and then also just researching, you know, so before actually launched my first one, I was reading and listening to podcasts and YouTube videos and meeting with people. So just educating ourselves. Really, I think that’s, the biggest barrier between us doing anything really is just educating ourselves about it.

That’s great. So when people want to reach out to you, how and where do they find you? I mean, obviously, a permanent address is not something you own Tim, so let’s not, let’s not kid anybody with that. But how do they how do they reach you in the world wide web?

So yeah, I have a podcast also started a couple years ago. It’s called short term rental riches, and it’s on all iTunes and all those. And we also have a website called rest methods.com that has a bunch of the resources I use for free, they can also get a an ebook that talks about what what I look for in short term rentals and get that for free on there as well. And then they can contact us through there too. So

That’s awesome. In fact, guys, we’ll put that in the show notes, rest methods.com. And then I would suggest I do listen to I’ve listened to several of Tim’s episodes. Because as you may not know, Tim, my wife has started doing some short term rentals in some of the new build apartment complexes that we have. Because you know, when you open up an apartment complex, you got 24 units and you have you know, everybody moving in at the same time, they’re all you know, they’re all renewing at the same time. So we always put a couple in there to kind of offset, plus, you know, we kind of know the landlord, so we know he won’t throw us out for doing short term rentals, right? We know that we’re approved good. But guys, if you want to find him, those are both great places to find him at rest. methods.com And then you can check out his podcast, which is short term rentals, short term rental riches. And then once you do that you can play Where’s Waldo with Tim and try and actually find where I he is in the world as I mean, do you even know where you’re gonna be next month? Tim?

I mean, I would say for the most part, I’m like half, Colombia, half Brazil. So those are the best bets.

Like a college student, he has no idea where he’s gonna wake up next month. It just knows that we’re organized, but I gotta be taken care of. Right, right. So Well, Tim, I really want to thank you for stopping by the real estate rundown and sharing your knowledge. It’s definitely something that people love to hear about.

Yeah, thanks for having me, Shannon. It’s been great.

So guys, if you enjoyed this episode or some of our other episodes, be sure and subscribe to the real estate rundown here on YouTube or Spotify. Also, leave us a comment, like us, share us with your friends. We’d love to hear your comments and we’d love to know what topics you want us to talk about next here on the real estate rundown. So once again, guys, thanks for joining us and hope you have a wonderful day.

That’s a wrap for today’s episode of The Real Estate Run Down. Let these newfound strategies pave the way to start a successful career or a profound rebranding. If you loved everything you have heard, listen to more conversations at www.shannonrobnett.com And be sure to leave a rating, share it with your friends and subscribe. Until the next episode.

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About Tim Hubbard:

Tim Hubbard is an international real estate investor, world traveler, and self-proclaimed digital nomad. He also owns and operates a multi-million dollar short-term rental business. At the beginning of his real estate career, Tim worked as an investment broker selling multi-family and commercial properties in Northern California. And then he realized the high returns that could be made from converting properties into furnished short-term rentals and renting them by the night. Through trial and error, Tim developed a proven system and team on the ground, which enabled him to manage his entire rental portfolio from home (in Colombia). Today, Tim manages thousands of guests through his team … PASSIVELY! And he’s sharing his hard-earned experience and expertise with fellow investors.

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