Real estate has been around for a long time. Just when you think all avenues have been explored, someone around the corner comes along with a brand-new idea. Subleasing and short-term rentals are nothing new, but how you make it happen can make a big difference. Co-owner of Pillow and Coffee, Rebecca Slivka, tells the wonderful story of how she got into the real estate industry with her confidence and wit. In this episode, she joins Athena Paquette Cormier to give a sneak peek into her secrets to making it big in real estate without actually having to own any property. Learn from the mistakes and realizations Rebecca shares and be inspired by her innovations and the way she thinks outside the box.
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Short Term Rentals: The Hidden Art Of Sub-Leasing With Rebecca Slivka
I have the great pleasure of chatting with Rebecca Slivka. She is the Founder and CEO of Pillow and Coffee, which is an awesome name. She has a unique business model, which she doesn’t own the real estate, but she gets the cashflow from the real estate. That’s exciting and quite nice. We would love to learn from you, Rebecca. Thanks for joining me. Why don’t we get started about getting to know a little bit about you, where you’re from and what family you grew up in? Did you have genius financial parents that’s why you’re so genius? Tell us a little bit about how you grew up.
I’m originally from Cleveland, Ohio. My mom worked in a factory and worked with awnings and things like that so she didn’t make so much money. My parents divorced and my mom raised four of us off of $27,000 a year. My dad didn’t hold a job well. Jobs weren’t for him. We were a low-income family and eventually went off to school in Connecticut through a scholarship program, which opened my eyes because I was like, “I didn’t know people can live this way too. What is this?” That’s a little bit of my background.
When you went to school, did you get a bachelor’s or master’s? How high of education did you end up getting?
When I moved to Connecticut, I moved there for high school and it’s through a program called A Better Chance. It takes inner-city scholars and puts them into better school districts. I lived in Connecticut and on vacations and stuff like that, I would go home. There are eight girls in the house that we all live together in each grade level. We had a house mother that lived there as well and we went to school there.
You were in a boarding-school type of situation?
We were the only ones boarding but yes. That opened my eyes up to a lot of opportunities and possibilities that I didn’t see growing up in Cleveland because that didn’t exist in Cleveland and those opportunities weren’t there. When high school students came to school with their BMWs, I was like, “How can they afford that? How do I do that?” After that, I ended up going to school at USC in Southern California and that’s where I got my Bachelor’s in Public Policy Planning and Development. I got my Master’s in Urban Planning with an Emphasis on Social and Community Development.
Your Ohio world and your Connecticut world were different. Those states are different. Of course, the social-economic thing is different. Blue-collar versus professionals probably. That gave you the opportunity to get to USC. Was that on a scholarship too?
That’s far. You went from Ohio to Connecticut to California before you were twenty-something. Why did you choose those degrees in urban planning?
I went into USC undecided and was trying to figure it out. I was interested in business. I knew that, but I didn’t know what business. I ended up getting into urban planning because one of my friends was already in urban planning. She was studying or something and then there were a bunch of maps and things like that. I was like, “That looks interesting. What’s that?” She told me about her class and I was like, “That’s super interesting.” Learning about how cities are developed and that was a cool thing to understand. I ended up talking to our guidance counselor about it and she told me more about the program. I started taking a couple of classes and I enjoyed learning about different things in urban planning. I was interested in understanding how cities were built and why they were built a certain way. It connected architecture, which I love. It connected urban planning and it connected the urban built environment. That’s what attracted me to that.
Was there any engineering? Urban planners sometimes are engineers. They shift over. Did you take engineering classes too?Focus on your strengths and build a structure for that. Click To Tweet
Not for urban planning.
When you got out of school, what did you do?
Before I got out of school, I got into real estate. I paid or I worked for my whole education at USC. I never saw an option for my mom to take out loans, that’s great. She doesn’t have loans. She doesn’t even use a credit card. She goes to the bank to get money and she got a checking account. She’s a super old school. I didn’t think that was an option for her to take out loans for my education. I put myself through USC through scholarships, work-study, and working. I’ve always worked since I was thirteen. I got my worker’s permit early. I’ve always learned how to make money.
When I was at USC, one of my friends, he had an apartment all to himself. I always had roommates because I couldn’t afford to live in Southern California and go to school at USC at the same time. He had his own two-bedroom apartment for himself. One of the rooms was full of his shoes. I was so confused on how he was able to do that. I knew one of the places he worked, and I was like, “There’s no way.” I asked him, “How do you live like this? How are you doing that?” He was like, “I work for a property management company and they gave me my housing for free.” That tweaked something for me and I was like, “Interesting.” I wouldn’t call him the sharpest tool or whatnot. He was more of like a laid back not a great type of person. I ended up meeting the property management company. They were small at the time and I interviewed with them. I was like, “I want to be your intern. I want to do this. I want to learn it.” That same management company, I ended up building out that management company with them and becoming a partner with them.
Over how many years is that you worked with them and built up their portfolio?
I started that when I was in grad school, that was back in maybe 2006. As I was interning there at the time, I was seeing all these problems with how they were running their business. I was like, “This makes no sense. Why don’t we do this?” They were like, “Try it and let’s see.” I would do it and then it would work, then we would create a system out of it. I ended up changing a lot of the infrastructure of how they leased their apartments to students. I was a student at the time and I was like, “This is how I look for student housing. Why are you guys doing that?”
At that time, they had maybe five buildings or something and less than twenty doors. As I was working with them and growing it, then we started to have discussions of, “Let’s pick up more buildings or let’s do this.” At the same time, I was in my grad school years, I ended up interning a different summer for the city of Richmond which is up in the Bay Area in urban planning. When I was doing that, I realized that it wasn’t the right environment for me because I’m a go-getter. Everything I would want to do, they would be like, “No, you can’t do that.” I’d be like, “Why? That makes sense. It’s with the code. It’s with this and this.” They were like, “In the city, we like to keep it easy.”
It’s like, “Keep it simple. We don’t need to think outside the box too much.” It was a huge turnoff for me. The director of economic development sat me down one day towards the end of my internship and he was like, “If you want a job here, you are more than welcome to take it after you graduate.” He was like, “I don’t know if this is a good fit for you because you need something more than this. I don’t think you’re going to last here because you’re going to want to do more than what is here.” It’s like, “You’re welcome to work here, but you’re probably going to be over it in 1 or 2 years.”
That’s nice of him to point that out because when you’re young and you want to get your first job, you sometimes don’t see that. You just want to get going and start your career. That’s a good lesson. You decided not to take the job there. What did you end up doing?
I didn’t take the job there. That was one of the summers before my last year of grad school. While I was still in grad school, I was building up that management company and then we came to a point where I was graduating, they were well aware, I was graduating and I was deciding, “Do I work there up in the city in urban planning as what I studied for or do I start working with them?” For me in my head, I was like, “If I’m going to stay with the company, I want to be a partner and I’m going to be an equal partner.” If they didn’t offer me that, I was going to walk away. I wasn’t even going to negotiate. I was going to leave and say, “Sorry, that’s going to be the end.” That was already in my head because I knew that I had made their job much easier. They’re real estate investors managing their own portfolio and looking to grow it. I didn’t realize at the time how much value I brought to them. They sat me down and they were like, “We’d love for you to be a partner and we’ll offer you 1/3,” because there were three of us. I took it. I was all in building up and at that point, I was like, “We need a team. If we’re going to grow this, we need a team and I can train them.” We’ll put together the company piece by piece because at the time, it was just them too. That’s how it all started.
You needed structure so that you could grow something on a team structure.
If we’re building it, it couldn’t just be us three doing it. We’re going to need to hire a bookkeeper at the least, then a CPA and all those pieces. They had been just focused on acquiring property prior.
Was that all student housing then? I read in your bio that you mainly did student housing there.
It was only student housing. My strength was in marketing and leasing and they had been doing the property management side and they’re doing an okay job at it. I was like, “Let’s focus on the marketing and leasing and building that structure and system for them.” I built up that whole side of the business and got to understand the student market and understand the specific student cycles that are in student housing at USC. I built up that company over a seven-year time period. It’s only seven years because I didn’t realize how to get out of that partnership. I would say, 4 or 5 years in, I realized it wasn’t a good partnership anymore. Our values and ethics didn’t match anymore. I thought I was building a good student community and then I realized that my partnership, their ethics were a little different. I was like, “I don’t want to continue building this. This isn’t what I thought it was.” I had never exited out of a partnership before. I didn’t even think that was possible. I was so young so I hadn’t had that experience yet nor did I have any mentors at that time to say, “If it’s not working, you can get out of it. Because you’ve built that, it doesn’t mean it’s your baby forever.” I learned that lesson over a two-year period of being in a bad partnership and finally saying, “I’m out of this.”
When I did that, I was clear with, “If this, this and this doesn’t happen, then I’m going to have to leave because this is a bad thing that’s been pulled along for too long.” When I left, a couple of the clients found out I left and they were like, “We need your help. Can you still work with us? You know our portfolio so well.” At the time, I was willing to take on one client or whatever if they had a good enough size portfolio because I wanted to help them. That’s when I started the second management company, but this time on my own with different partners. People that I’ve worked with before and knew that we would get along and we had the same values.
We built that company up and my other company still exists, the one that I’ve exited out of. They’re still one of the top three largest companies around USC, as we’ve built them up to be. At that time, I had not gotten involved in real estate as far as purchasing a property. I was well versed in managing the property at that time and understood how to talk and work with owners because we eventually not only acquired new properties, but we also acquired new contracts as well. As I was growing my new little management company, I had every intention of keeping it small and not having too big of a team. It caught the eye of another management company and I would say about a year to a year and a half after that, I ended up merging my company with theirs.
Are you not involved in that property management anymore?
Not anymore. The last company I was with, I had opportunities to buy into properties with them. I started buying the real estate that I was managing as well. I again built up that whole leasing and marketing side of the business because by the time we came on, they had lost their last employee. They were shaky meeting people. I had already known how to run that business well. They were new players in the market, maybe 3 or 4 years. They were still learning in trying to understand USC’s student housing market. When we came on, we built that company up and because I had been in student housing at that point, for 7, 8 years, I had every intention of building it up and then being able to exit.
I knew I wanted to be able to build a team. I knew I could do that, I could build the company and then I wanted to go on to other things eventually. That was always my goal. Once we started to build our leasing team, marketing team, and the property management side as well, I started getting more into the construction of the new buildings we were acquiring. We were acquiring between 68 properties a year at that point. All housing and then rehabbing them and getting them up specifically with students in mind. All these buildings we were purchasing and rehabbing were purpose-built, remodeling them.
When did you exit that management company?
I exited that a few years ago. I started the short-term rental business a year before that. The reason I started the short-term rental business was because I ran out of cash to continue to buy in Los Angeles. That was what provoked this whole thing. I’m at this management company helping with the acquisition and construction. I’m able to participate in purchasing the properties. I don’t have a huge cash reserve. I’ve been putting maybe $25,000, or $10,000, or $50,000, depending on the properties, putting that into the new buildings that we’re buying. At a point, I was like, “I’m not going to be able to keep doing this because I’m going to run out of money.” I didn’t know how to fundraise at that time, so that wasn’t an option for me. In my head, I was like, “I’m going to need to make money somehow outside of this, and it’s going to need to be easy and not time-consuming.”
Running out of money wasn’t a big deal to you. You were like, “What else can we do to make this happen?”It is important to work with people who you know have the same values as you. Click To Tweet
In my head, I was like, “I need to continue to invest.” That’s what I was thinking originally.
You were in charge of acquisitions and remodeling these units. $25,000 doesn’t get you an apartment building in Los Angeles. You were just getting shares to get income off of that. You were participating in the cashflow as part of your compensation.
There’s much more money involved in real estate because it is Los Angeles, but that was my portion in.
Years ago, you’d think, “I’ve got to get some money and I’ve got to do it ethically so what can I do?” Where did you get the Pillow and Coffee name? Tell us how this all came about.
How it first started was through one of our vendors. We were doing new construction and we needed to clean it and do like construction clean. That’s a little bit more detailed. We’re getting vendors out there to bid it. One of the people that was there, I recognized him and I was like, “You have a cleaning company. That’s awesome. How are you doing that?” I ended up meeting him at his office because before we hired some of them, I wanted to see like, “Can they handle it?” If they can, then we have a lot of projects for them. I saw his office and I was impressed by it because it was in Venice. It was a nice office and I was like, “How is he affording this with the cleaning company?” He’s living in a nice place.
This isn’t adding up for me. I asked him. I’m a person that asks a lot of questions. If I don’t understand something, I will ask a question until I understand it. He was like, “I run a couple of short-term rentals, and that’s where all of my living money comes from.” I was like, “That makes sense.” Once he told me that, immediately I was like, “I need more money. The short-term rentals aren’t taking him a lot of time clearly because he’s running this other company and he’s spending his time there.” I saw some for rent signs next to my apartment, not in the same building, but in a neighboring one. They were below market rent, which was crazy. I was like, “Low risk. It’s not going to be that expensive and also it’s close to me. If this doesn’t work out, then I could definitely release this at a higher rate and get out of my contract if I needed to.”
I knew how to talk to owners by this point because I had been talking to them. I was like, “They’re just people. That’s all they are.” I know a lot of times we psych ourselves out when we’re meeting somebody that is new or whatever. We’re like, “They’re so important I feel this way.” Especially coming from a lower-income class. As a woman, I sometimes don’t feel like I belong. Something I’ve taught myself was to be like, “Everybody’s just a person and they go through their own thing.” I’ve approached it that way and they allowed us to do it. We put it online and at that time, we didn’t know how to run the business yet. We were like, “All right, let’s furnish it. Let’s put some stuff in there. Let’s take some photos and let’s get this thing up as quickly as possible.” We did that and we ended up renting and having our first guest book within 30 minutes.
If I heard you right, you live in an apartment. You have a place to live and you think, “Next door, there’s a place for rent. I could rent that out. Even though I have a place to live already, I’m going to sign that lease too.” They wanted to charge a certain amount and you figured, “I can make more money renting it out week by week,” instead of the long-term rent.
We did a little bit of research. We honestly didn’t dive so deep into the research. We were like, “Let’s look online. Let’s see what people are getting.” “If we can do this, and even if we’re not perfect at it, we’ll still make a lot of money.” We still have that unit and it’s one of our better performing units. It’s incredible.
You started with one, got it rented fast. You said you had to furnish it. How much would you guess you spent on putting all the stuff in there?
I would say $3,000 and the reason it’s so cheap was the first units that we’ve put up, we got lucky. We went to a yard sale where there was this young woman that was moving out of LA, and she wanted to sell all of her stuff. We’re like, “Let’s get there early.” We looked at the pictures and were like, “It’s cute and good quality furniture.” We went there early and we’re like, “We want to buy everything, your garbage cans or shower curtains.” We ended up buying all of her stuff. She was happy to get rid of all of it because she was like, “I’m done with my yard sale in one hour.” We were able to get our unit up fast because of that. We made money through the first month and then we started being in the block so we started being profitable and paying back all of our investment and stuff within 3 or 4 months.
When you lease the place, you’re doing a year lease? Is that what you’re doing or longer?
We did year leases. A lot of our growth has been with a few owners. Whenever they have another vacancy, they love our model so much that they’re like, “I have this other one, will this work for you?” It’s come to the point where before they’ll purchase a building, they’ll say, “I want you to tell me if this building works for you.” We’ve even walked buildings or given our advice on how they could remodel it.
I saw your pictures online and you guys have great taste. It looks great. They’re all different styles in a sense, but nicely done. I too, would call you and say, “Am I on the right track here?” Do you lease just apartments? Are there condos? What types of properties are you doing your business through?
We don’t do condos at all mainly because of the HOAs, but we have apartments and houses.
Is it an even mix or more houses?
There are more apartments than houses. All of our houses, so everybody knows, are small because the bigger the house, the more likely you’ll have party people. That’s not our audience. That’s not who we want to serve so that’s why.
It seems to me there would be more risk in having more people in the house and maybe they destroy or might wreck things.
People in the short-term rental business have to figure out who you want to serve because people that rent party houses, they do well. People that rent to business travelers and smaller families going on vacation like we do, we do well in that. I don’t honestly want to serve people that are going to party in the house and not have any regard for the property or disrespect the neighbors. I don’t want to create that environment, that’s why we don’t do bigger houses.
This was a few years ago that you rented this first property. What size is your portfolio?
We’re over 80 units and a lot of that growth was in a twelve-month time period when we grew 50 units.
That begs the question, who’s on your staff? That’s a lot of signing leases, seeing property, buying stuff, getting it online. Who’s part of your team to make this happen?If you don’t understand something, make sure you ask a lot of questions until you understand. Click To Tweet
We have customer experience representatives. They’re the ones who do all of the communicating with our guests and cleaners and different people. Anything that you can do online or on the phone, they’re doing that. We also have managers. We also have what we call runners, let’s say, a person needs more coffee. We have them bring them more coffee. Ideally, they’re not running out of things, but if that happens, they’re doing that. We have first response maintenance and what that means is, instead of sending a contractor over right away, which can be costly, we have a person that if somebody’s like, “The toilet’s not working properly,” we’ll have them go over first. It’s within either minutes or maybe an hour where they’re addressing the issue. At least the guests know that we’re addressing it. If they can fix it, they’ll fix it. If they can’t, then we’ll call a plumber out. A lot of these things are small maintenance-related things. We have a cleaning staff. They’re all independent contractors.
We work with a designer that designs and furnishes all of our units because there’s no way we were going to a yard sale every weekend, and that ended quickly. We also have a linen company that we work with that professionally, and commercially launders all of our linen just like a hotel would. Once you get past a couple of units, and you see the amount of laundry that needs to be clean, it’s amazing. We have our bookkeeper and our CPA definitely. I have a coach and mentor as well. That’s extremely important as you’re growing, especially in an industry that’s been here for a while, but it’s showing itself in a new light. There are a lot of things that aren’t for this industry yet. A lot of resources and things that aren’t here. I can’t speak more highly of having a coach, mentor, or somebody that you can bounce ideas off of or talk through things and things like that as well.
Is that someone who’s in the industry and understands your industry, or is it someone who’s a good business person who’s helping you troubleshoot things even though they’re not in the business?
My coach, his name is Jay Massey. He’s been in real estate. I met him through my old business partners because I was like, “I need to learn how to fundraise.” That was my first step. They were like, “You can use our coach who coaches us, but we don’t know how to use him well so why don’t you take a session with him?” They didn’t know how to use him properly. You normally would prepare for questions for the coach. They let me have a session with him and this was when I was in student housing. I was like, “I need to learn how to fundraise because I’m going to run on money. I know that time is going to come soon because of how quickly we’re buying buildings.”
I was learning. I didn’t get how to fundraise. I didn’t have the network that I thought I had and didn’t know how to ask questions properly. My coach, he got into short-term rentals when we were about 10 or 15 short-term rentals in and that’s when I left my company. I was doing it and at the same time, he asked me some simple questions. It’s funny and comical, but I had a call with him outside and I was like, “I’m trying to figure out this business.” He was like, “Which one makes you more money? Your short-term rentals or your property management and owning those properties?” I was like, “To be honest, my short-term rentals.” He was like, “Which one takes you less time to do?” I was like, “Definitely my short-term rentals because I spend all of my time in my company.” He was like, “Which one is going to give you the lifestyle that you want?”
I wanted to be able to travel and do all these things, and live in other places. I was like, “To be honest, my partners, even though I replaced myself, they wouldn’t like that I’m not in the office because one of them is workaholic.” Since they’re there, they feel like everybody else should be physically there. I didn’t agree with that. I was like, “I built the business.” His question to me was like, “What’s your question? Your hobby is giving you more cashflow. You’re spending less time and it’s going to give you the lifestyle you want. I don’t get it.” I was like, “Now my question is, how do I get out of my partnership?”
Compared to the first time you didn’t have a clue and struggled on how to tell them that the relationship was over, but round two in your second business, you had a coach who helped you to know how to get out.
He helped me realize that it’s okay to move on and you’re going to be able to build something much bigger and you’ll be able to purchase a lot more real estate on your own without having a small sliver of that. After doing that, we met up. I showed him and I was like, “I make this much off of it and we’re making this much money from these.” He was like, “A month?” I was like, “Yes.” We didn’t know what we had at the time. We were doing it and we were growing and he was like, “We need to meet. Let’s meet.” We ended up meeting and then he was like, “I need to do this.” This is too good for his audience at the time to not have the opportunity to get into. Once he started doing that, then he’s like, “I’ve got to teach people this. This is crazy. This is absolutely insane.” He stopped building his portfolio and started teaching people this. He’s been in real estate and owned over 1,000 doors and everything. He’s stopped all of that and he’s full-fledged in short-term rentals.
It’s true that sometimes the student teaches the teacher.
We didn’t know what we had until he was like, “Wait a minute,” and then we still didn’t know what we had until he was like, “You understand that what you guys are building will allow you to buy real estate in Los Angeles if you wanted to. However big you build your portfolio will dictate how often you could buy your own buildings, with your own money, not needing to fundraise because you don’t like doing that anyway, for some reason, on your own. Monthly, quarterly, whatever you want and these are apartment buildings.”
Apart of your team, you have a beautiful website with lots of great pictures and all that, and easy to navigate. Do you have a person doing that or have you retained doing that yourself since that’s your background?
As far as the photos and everything, we hire professional photographers every time. They take awesome pictures and bring the properties to light to understand the experience we want to create. Our website runs through one of our management platforms in a way. We’re looking to upgrade it and improve it even more.
Can people book online? Everything goes through that website.
Do you have a certain percentage that they may want to sell? Maybe they don’t want to do it anymore? Do you have a certain percentage that doesn’t renew or do they all renew?
All of the owners that we work with all renew. They love us. They see what we bring to the property. For example, in our properties, we’re a better management company than they are because we always have eyes on the property. Whenever our cleaners go in, if there’s something damaged or anything like that, we fix it right away because that’s our business. If there’s a leaking faucet, we fix it within minutes or hours of when we find out about it. Whereas if that happened in a normal rental, the renter may not say anything and then now you have a leaking faucet for months or years.
Maybe there’s mold or something happening from something that they think is their fault or whatever, they may not bring up issues. For us, we have our maintenance teams going there immediately to resolve whatever issues are happening and we don’t have food in our units so there’s unlikely they have pests and things like that. A lot of times, we’ll even upgrade the unit, painting it. We’ve even done remodels for the owners, given the owners alone to do it, and did it because we know, “In this building, we can get this much rent as long as it’s up by this point.” Maybe the owners didn’t have the contractors at the time, so we’ve been we’ve gone into units and remodeled them fully. That’s not a normal thing, but we’ve done that too. Most of the time, we’re going in putting a little bit of paint on the wall because we want a certain color in there or whatnot. We’re ready to go.
When you sign a master lease, they’re fully aware that you’re going to be subleasing it to these people and that it’s going to be short-term? Do you guys take daily people or only weekly? What’s the term you let people stay?
On average, our stays are about 7 or 8 days. We do get people that stay a couple of months. We also get people that stay 1 or 2 nights.
The 1 or 2 nights that get time management, that’s a lot of turnovers. Where are all your homes? Where do you have the properties?
They’re all in the city of LA. We choose the properties specific to neighborhoods that we think are cool, trendy, and where people want to be.
People visiting LA would choose a sub-neighborhood, depending on how the deal is. You talked about how you choose the properties because you’re looking for smaller homes, apartment buildings and cool neighborhoods. How do you think the regulations are around short-term rentals? Some people hate them, lots of people love them, but it seems like government entities are trying to get their hands in it or trying to mess with it. How do you see these regulations are or this deal about short-term rentals affecting your business going forward? This is going to create the lifestyle you want so you’ve got to protect your business model too. How do you feel things are rolling or where they might?Surround yourself with people that are smarter than you and take action. Click To Tweet
With short-term rentals and the legality around it is interesting because for us we can we pivot to where we have 1 month or 2 months on stays, it wouldn’t be a problem. It’s something that we can’t control. The cities are doing a lot of the regulations because they don’t understand it. They’re seeing the 0.01% that are having parties and pulling apart neighborhoods. They think everybody that comes here are going to throw a party and it’s going to tear apart these things. In reality, we’ve served over 10,000 guests. Of those people, we probably had 3 or 4 bad apples. That’s it. Every single time when that happened, we’re able to get in front of it fast enough so it doesn’t become a bigger problem. I don’t think the sharing economy is going anywhere at all. The cities will eventually adapt to that as well, but it’s newer for them. They’re trying to balance and understand it better so they’re putting regulations in place. As they do that, they’ll probably change over time as well as they start to understand them better. We will have to go with the flow of what the cities decide.
If you’re in Los Angeles, you’re subject to rent control, but it’s the original owner who’s in the subject to rent control. Them making rent control all over the place doesn’t affect you because it affects the original owner.
It’s definitely going to affect the owners, but for us, when we go to rent those properties if they had a lower rent because of it, it’s just a lower rent. It impacts the owners of the properties much more than it impacts our business.
Because you’re not the original. You’re not the owner of the building, you’re renting. You’re the client on that side and you don’t care if they control your rent. If the rent cuts down, that’s good for you.
For us, we have an advantage because we’re coming in as a corporation. That’s treated a little bit differently than if we were a person coming in. We have our entity structure that we’re like, “We’re coming in like this.” It can benefit the owners as well because we’d be willing to pay market rent.
If you were to do things all over again, what would you do differently from how you did it?
If I were to do things all over again, in real estate in general, the first things I would do is to learn more of the aspects of it because when I went into the student housing, I was in student housing for like eight years before I purchased my first property with partners. I never learned how to leverage money. I built up so much value for the owners and I didn’t understand it. If I were to do it over again, I would have learned and gotten a mentor earlier and then took action and purchased real estate a lot earlier. That would have led me on a much different path. With the real estate market having these other opportunities like short-term rentals, you can get into this business with $5,000, maybe not even. We got into our first unit with $3,000 and we rolled that and kept rolling that to having over 80 units. Learn, get a mentor, surround yourself with people smarter than you, and take action.
What do you think your biggest disappointment was through all of this?
My biggest disappointment was not understanding my value. Women specifically do this more often than men, where they don’t understand their value or they cut themselves short. I wish I would have invested in real estate earlier and not been afraid to do that. I saw my business partners doing it, but I never asked the questions at the time of, “How are you doing this? Can I be involved in the next deal? How can I be involved in the next deal?” I know I bring value and I just didn’t understand my value until much later. I would say that’s my biggest disappointment was not getting involved as early as I could have.
It has something to do with that feeling of like, “I don’t belong,” or “That’s them but that’s not me.”
Breaking out of that and saying, “No, I deserve this, too. I’m the one that has stabilized and built up this whole company. I am smart enough to purchase real estate.” Understanding that. I feel if I would have done that earlier, I would have been in a different position much earlier. Not that it’s late or anything like that.
It’s never too late. It sounds like if you had the mentor or people smarter than you, they would have helped you to see and help push you. People see something in you that you don’t see in yourself, they’ll push you towards the thing that they see because you don’t have it in you yet to do that. Getting mentors sooner in life is an idea. What would you give as advice to someone who’s maybe reading this and thinking, “How do I do that?” What advice would you give someone starting in real estate, and perhaps maybe that wants to get into this business that you’re in?
I would say, learn just enough and then take action. Taking action and failing quickly, you’re going to fail. If you’re owning a business, you’re going to fail. Accepting that and being able to get up fast enough and continue to move forward. It’s great to have a lot of education but if you don’t take action, it’s useless until you take action.
It’s like those people that keep studying and there are all the books on the shelf, but they don’t own anything. That’s great advice. How would someone get in contact you? What’s the website if they want to check out your website and how your business works and what’s available because they might be traveling to LA?
Hopefully, we’ll have you live for one of our women and investing conferences. People have been asking about that. It’s because women also need to help bring each other up and present an awesome picture of what success looks like. That would be great if we can do that soon. Do you have any parting thoughts?
For everybody out there that’s interested in short-term rentals, it is a low barrier way to start getting into real estate and understanding how real estate works. The master lease concept works well. When you do start, I would say the most important thing is to understand who you want to serve. Are you wanting to serve small families, or are you wanting to serve business travelers or just vacationers? When you can figure that out, everything else becomes easier because that way you know how to design your unit. How big of a unit you need. How to talk to your guests. To figure that out for us, it was our own avatar. Start with something you know, like yourself. If we were going to serve families, we know things like strollers and high chairs and things like that would be a nice thing to have in the units, especially if they have small children. Knowing who you want to serve is going to put you light-years ahead of people that are just getting into the business and don’t know who they want to serve because then it makes everything else much harder.
You’re saying put yourself in the shoes of those travelers or visitors then try and imagine what they would ideally want in their unit that they’re going to rent?
If you’re like, “I want to serve a business traveler,” know that Wi-Fi is extremely important for them. Having a desk space is also extremely important. For example, when I travel, I’m more of a casual traveler so I like to be in cool neighborhoods, which is why all of our units are in cool neighborhoods because that’s who we’re serving. It will dictate how you’re going to build your business and what you put in your business. You’ll know who you’re serving so you’ll like the people you serve.
It seems if the unit looks like what you would want, you’re attracting more than any fancy hashtags or whatever. If it looks like something that that person would want. You’re attracting the person. That’s an amazing insight. Thank you so much, Rebecca. I’m so glad you could join me. I’m sure you’ve inspired a lot of people with your story but also that your down to earth way about you is awesome. Thanks for sharing time with me. I’ll see you soon hopefully.