[00:00:00] Katie Lyon: When I see the number of agents that are not investing or not utilizing midterm rentals or any type really of rental or investment strategy, I'm like, Oh, but you're right there. You're like 90 percent of the way to the finish. Like you guys have all the knowledge that us. Non agents like we buy the books like we're like trying to get all of the knowledge That's in you guys's heads and like you have it, right?
[00:00:27] Katie Lyon: So it's all you're right there It's truly it's also a strategy that's easy to pivot in and out of if you need to right if you take a Long term rental and you want to try it as a midterm rental like try it you can always Transition it back if you decide you don't like it, but I bet you won't.
[00:00:44] Intro: If you're a real estate agent earning 200, 000 a year and you want to grow your passive income, this show is for you.
[00:00:52] Intro: Learn secrets other agents use and hear from experts in our field who will guide you on your journey to investing in assets like apartment [00:01:00] communities. So you can take your commissions and turn them into cashflow. Here's your host, Randall. Let's dive in.
[00:01:07] Randal McLeaird: Hey, welcome back. I have an awesome guest on today.
[00:01:09] Randal McLeaird: Her name is Katie Lyon. She is the marketing director for Furnished Finders. So we've talked about Furnished Finders multiple times on the show in passing when I've been talking to short term and midterm rental operators. And I wanted to bring somebody on from the company to discuss the company and kind of what they offer and some of the things that they do.
[00:01:27] Randal McLeaird: Because it's a pretty awesome program. And if you're not investing or not familiar with midterm rentals, then let your ears perk up and learn a little bit today. I know you're going to get something out of the show. So if you would go on rate and review, leave us a comment and the stars is fantastic. But the comments help us a ton to get great guests like Katie on the show.
[00:01:44] Randal McLeaird: Just a quick bit of background. She spent over 10 years in real estate and marketing industries. She's currently marketing director for Furnished Finders. She's a landlord herself. We talk about her properties that she manages and how she's come across those. So we talk about the investing. Cool little note that [00:02:00] she touches on just briefly.
[00:02:01] Randal McLeaird: She served as the advertising chair for Honda and EdVenture, leading a team in developing and executing an integrated marketing campaign for the 2008 Honda Accord Coupe. So anyway, we have a great conversation again. If you're getting something out of the show, go on right in view. Appreciate it. Let's jump into the conversation with Katie.
[00:02:18] Randal McLeaird: Hey, Katie, thanks for joining the show. Let's go ahead. I wanted to ask you about your marketing experience, but before we do that, why don't you just tell us a little bit about what furnished finders is for those who don't know what furnished finders is. Like I said, I was a noob and I didn't know how awesome you guys are, but now I do.
[00:02:34] Randal McLeaird: So go ahead and tell us what you guys do.
[00:02:36] Katie Lyon: Yeah, so Furnished Finder is an online marketplace where tenants can find furnished stays for 30 days or more. And on the flip side of that, landlords can post their properties for 30 days or more. The main difference between us and say an Airbnb or a Vrbo is that we are not a direct booking site.
[00:02:53] Katie Lyon: So it's a lead generation site, so we are heavy believers in direct booking. And we give landlords [00:03:00] all of the leads that come in for their area. We also give tenants the opportunity to connect with landlords directly. And then between the two of you, you get to, do a tenant screening, sign a lease, collect a deposit, all of those amazing things, but it's all 30 days and up.
[00:03:16] Katie Lyon: So our focus is on midterm, so less than a long term, but definitely more than your traditional Airbnb short term rental stay.
[00:03:26] Randal McLeaird: Okay, a couple questions. How do you monetize that? Are you guys a advertising platform essentially? So if I want to list my property as a landlord, then you I'm paying you regardless of if it books or not?
[00:03:36] Katie Lyon: Yep, so there's an annual subscription fee.
[00:03:39] Randal McLeaird: It's
[00:03:39] Katie Lyon: 149 per year to list the property and then you can get as many bookings As you want, right? It's up to you what you do with those leads and how you use the platform. But we've got millions of travelers every year on there searching and sending out housing requests.
[00:03:56] Katie Lyon: We call them where they're essentially saying, here's where I want to stay. Does [00:04:00] anybody have something that can fit my needs? But yeah, we keep it one flat fee to put your property on there.
[00:04:05] Randal McLeaird: Okay. As a traveling nurse, I need to find a place in Boise or whatever the heck I'm going. Do I have to pay the platform for the right to look?
[00:04:14] Katie Lyon: No. And as a traveler, you can look on there and you can search the map and you can connect directly with a specific landlord. They can search the map and they can say, Oh, Joe Smith has this property. I want to be there. They can message you, text you, email you, call you. We don't restrict communications just to the platform.
[00:04:31] Katie Lyon: It can be however you want or are comfortable. Or you can put out what's called a housing request. Whereas you might say, Hey, I'm going to Boise. I need a three bed. I have a pet. Here's my budget. Here's my dates. And then we will send that to all of the landlords who have properties that are within the realm of those needs to see what can be a fit.
[00:04:53] Randal McLeaird: Got it. Yeah, that's cool. That's a good system. The other question I had is. Is there a trend, like what's the majority of the tenant [00:05:00] base? What are you guys seeing? And who is the, is it corporate housing partially? Is it, traveling nurses? Our
[00:05:08] Katie Lyon: focus was a hundred percent travel nurses. That's actually what got us in to the midterm rental market, but that's changed significantly, especially after COVID.
[00:05:16] Katie Lyon: So we've got, still a good chunk are travel nurses, but you still have corporate housing. You've got academics, professors, you've got digital nomads. So You have relocating families. You've got even down to things like grandparents who want to be close to their grandkids for the summer, right?
[00:05:34] Katie Lyon: Insurance claims in this market, you get a lot of families who are. Maybe they sold their house, but they're not ready to buy yet or, it's taking them longer to find whatever house that they're looking for, things like that. So there's really all sorts of use cases. Personally, I actually have 9 midterm rentals with my family after I started working at Furnished Finder.
[00:05:55] Katie Lyon: I realized how cool this all is and jumped in as a landlord. And we have a lot of [00:06:00] smaller properties, so we do have a lot of traveling medical professionals. But then we also get. People going to visit family or students, interns, there's all sorts of use cases, even though you might not. Think about it for the 30 days and
[00:06:14] Randal McLeaird: up.
[00:06:15] Randal McLeaird: So I want to talk about that in a second because I want to break down the unit types and like what you recommend, but let's go back. I want to talk about Katie. So you're in marketing, right? You are the head of marketing for furnished finders. Is that correct? Yep.
[00:06:28] Katie Lyon: Yeah. I'm the marketing director.
[00:06:29] Randal McLeaird: Marketing director. Okay. So how did you go from like your background? I know you worked on the 2008 Honda, right? Okay. So you went from that the corporate world into real estate and still working in the marketing side of things. Just give me the, 30, 000 foot view of how you got from just marketing into marketing and real estate.
[00:06:48] Katie Lyon: Yeah, sure. So I went to school for marketing, started out just doing marketing in general. And then I ended up working at a private equity commercial real estate investment firm for about 10 years and did [00:07:00] marketing there, but also ended up learning real estate one on one, but from a commercial real estate perspective, which has a lot of similarities, but also a lot of differences as you can still know.
[00:07:10] Katie Lyon: And then I had the opportunity to join the furnished binder team. And that seemed like a really great fit since I was familiar with real estate in general, but also really liked working with companies that are. On a big growth path and have a lot in their future, right? Like a lot of possibility and potential.
[00:07:27] Katie Lyon: And just since then, I've really gone into the deep end with the real estate, right? Like I said, like we've gotten all these rentals. We've had one long term rental for a few years as well. So it's all just felt like a very natural fit. And it's felt getting to know the residential real estate side has felt Very natural to me, I think, since I had all that experience in the commercial side, but this just is so much more customer oriented and you're working with these travelers and stuff.
[00:07:56] Katie Lyon: So it's been a really great fit. I love combining [00:08:00] the two because I think the core right. Marketing and real estate is you're serving people, right? You're solving these problems. You're trying to figure out how to make things better and things work for everyone. So I really enjoy combining the two.
[00:08:15] Randal McLeaird: Nice. All right. Thanks for the background. I have to ask that on the CRE side. So you work for a PE firm and what kind of assets were they going after?
[00:08:23] Katie Lyon: So it was mainly strip malls.
[00:08:24] Randal McLeaird: Strip mall. Okay.
[00:08:25] Katie Lyon: You
[00:08:25] Randal McLeaird: didn't work for a strip mall guy, did you? Nope. Is that the beginning of that, guys?
[00:08:30] Katie Lyon: Nope. It was, it's a small firm in Denver and they, they did some great things, grew really big.
[00:08:35] Katie Lyon: Yeah. Not really big, but really fast. Yeah. But yeah, I just, I saw the potential here with Furnished Finder and just loved it. Seeing what they were doing.
[00:08:42] Randal McLeaird: Yeah. The only reason I asked selfishly on the commercial side is like what was working, I know this is some time ago, but for private equity they were you're marketing for the investors, correct?
[00:08:52] Randal McLeaird: Correct. To come into the fund or to invest. Correct. And then you're also marketing for the properties and which side were you on when you were
[00:08:58] Katie Lyon: both.
[00:08:59] Randal McLeaird: Both. Okay. [00:09:00] Yeah. Yeah. So I was on
[00:09:01] Katie Lyon: both and yeah, it's very different 'cause you're marketing out to really high-end investors. Trying to get them into the fund and then, yeah, for the property side as well, making sure that those kind of maintain their quality and occupancy and things like that.
[00:09:15] Katie Lyon: Yeah.
[00:09:16] Randal McLeaird: Okay. Yeah, we don't have to, we don't have to dive too deep into that. I could geek out on that a little bit, but let's move on to the furniture. Okay. So you're, you were with. And then you moved into First Finest. When did you actually buy your first property? How did that come about?
[00:09:28] Katie Lyon: Our first property was a little bit of, it was our primary residence.
[00:09:34] Randal McLeaird: Okay.
[00:09:35] Katie Lyon: And then we went to build the house that I'm in now. And part of the contract with the new build was that you had to have your old house on the market within seven days of signing the initial contract. Which meant
[00:09:48] Randal McLeaird: for the loan.
[00:09:49] Katie Lyon: Yeah. As a part of the contract to buy the house. And so essentially that meant that you had to live in an apartment or some sort of temporary housing for the [00:10:00] nine months to a year that it was taking to build the house.
[00:10:02] Katie Lyon: We have two young kids, we've got pets, and we were like, that is a hard pass for us. Now, I didn't know about Furnished Finder at the time. This would have been the perfect use case for Furnished Finder because we could have found a furnished place. But we ended up finding a little loophole in their contract where if you leased, if you kept your house, your residence, and you leased it out, all you had to do was show a signed lease within seven days of closing.
[00:10:25] Katie Lyon: So that meant that we could stay in the house.
[00:10:28] Randal McLeaird: Lease it to yourself or something.
[00:10:30] Katie Lyon: No, we actually, like we had a lease just, it was for after our move in date here.
[00:10:34] Randal McLeaird: Got it. Got it. Okay.
[00:10:35] Katie Lyon: And that turned into our rental and everybody told us we were crazy. What happens when the toilet gets plugged at midnight or something breaks or you have bad tenants.
[00:10:44] Katie Lyon: And we were like, listen, it's going to be fine. And it was, it's been amazing. We've been renting that house for coming up on three years now.
[00:10:53] Randal McLeaird: That's
[00:10:53] Katie Lyon: our only long term rental, but it's been great. And that kind of was like our foot into the door of Hey, this landlord thing is [00:11:00] doable,
[00:11:00] Randal McLeaird: right? So this was 2020, give or take 2020
[00:11:05] Katie Lyon: right around there.
[00:11:06] Katie Lyon: Yep.
[00:11:06] Randal McLeaird: Okay. So that was your first in and now you have what? Nine doors is that what I heard? Now we
[00:11:10] Katie Lyon: have technically 11 but one of them we're working on doing a seller finance deal on. So I just call it 10.
[00:11:16] Randal McLeaird: Okay. Yeah. We'll talk about that too then. I like selling finance. We'll do, we have a whole crowdfund set up to do on finance deals.
[00:11:22] Randal McLeaird: Oh, nice.
[00:11:22] Katie Lyon: Yeah.
[00:11:23] Randal McLeaird: All right. Okay. So you bought that or you, the way you guys, you moved in, you did a deal.
[00:11:28] Katie Lyon: A little bit of a reverse house hack or something. Yeah.
[00:11:30] Randal McLeaird: Exactly. Yeah. And so that's your long term rental. And then you have, Nine other midterms, essentially. Yep. We've got
[00:11:37] Katie Lyon: nine midterms.
[00:11:39] Randal McLeaird: Yep. So look, let's talk about when you transitioned from your long term, why did you go to the midterm rental?
[00:11:46] Randal McLeaird: Like, how did you even come about that? Did you start buying your midterm rentals once you started working for Furnace Finders? Is that how that came about? Yeah.
[00:11:53] Katie Lyon: Initially we wanted to, and I say we, because it's me, my husband and my family, my mom, [00:12:00] brother and sister, we all do this together.
[00:12:03] Katie Lyon: We wanted to get a short term rental because we wanted to get, more cash flow, things like that. So that's actually was the intention that we bought. A house in Florida with that's now the one that we're working on a seller finance deal for, but then we ended up not furnishing it. And then simultaneously, I was getting started at furnished finder and becoming aware of midterm rentals and.
[00:12:27] Katie Lyon: The whole time we were planning on doing a short term rental with the Florida property, we were a little intimidated, right? Because we were like, this is going to be a lot of management. It's going to be a lot of turnover. The risk feels really high and we were all okay with it, but it just wasn't like ideal, right?
[00:12:42] Katie Lyon: And then I'm starting to work at Furnished Finder and I'm starting to realize all the potential of midterms. And I was like, why are we not doing this? It felt like a much better fit, because all of us have full time jobs. We all can't sit and be managing short term rentals all the [00:13:00] time. It felt more stable.
[00:13:02] Katie Lyon: It felt like you still get good cashflow because it was feeling really hard to find a long term rental that was, that would cashflow. So it just, it felt like the perfect fit. And I was seeing it day to day, like all day. When I would be at work. So we started got our first property as an arbitrage.
[00:13:21] Katie Lyon: And that one did really well. And then we just literally have not stopped since. So all of our midterm rentals are in the Midwest where my family's from. They're the boots on the ground for us, but it's just, we've literally just been like, okay, we did this one. It's killing it. Let's go again.
[00:13:37] Katie Lyon: And we've been able to really systemize things and furnished finder has kept us full. Like we have tenants in every property. I don't know our occupancy rate per se, but like when we have an opening, it's for a couple of days.
[00:13:52] Randal McLeaird: Actually solid for that.
[00:13:54] Katie Lyon: It's awesome. I actually had over the winter, I had people who were waiting for one of my units and I put them in another [00:14:00] unit.
[00:14:00] Katie Lyon: To hold them. There was like a waiting room game. So yeah, it's been really cool because now not only do I get to, work at Furnished Finder and talk about the product and work on it, but I get to see it as a user, right? So I'm like, I'm sitting here using it day to fill these properties and it's doing the job, right?
[00:14:22] Katie Lyon: So it's just really great.
[00:14:23] Randal McLeaird: All right. I'm like 30 questions popping up, right?
[00:14:26] Katie Lyon: Yeah, that's good.
[00:14:27] Randal McLeaird: All right. Let's go in and just high level sounds one, like you either know the property type that you should be buying. That's one question. What makes a great midterm rental property, right? You mentioned nurses maybe gravitate towards a smaller condo or something that's easier to manage.
[00:14:45] Randal McLeaird: So if you could break down maybe those either the property types or maybe what you have done specifically that keeps you cool all the time.
[00:14:53] Katie Lyon: Yeah. So I think it's all about. Your approach and your kind of investment theory, [00:15:00] right? What me and my family have decided is that we want to go about it like a pyramid.
[00:15:05] Katie Lyon: Like we're going to build a base of smaller properties that all have lower costs. And that way, if we do have a vacancy, it's less of a hit. And then slowly build up to larger, more expensive properties, because then if we have a larger property that's vacant, we have these smaller ones on the base that can financially support it.
[00:15:24] Katie Lyon: So it doesn't feel like as big of a hit. I know a lot of people that don't do that because they want to have the maximum amount of cash flow per property, and they go straight for the larger properties. There really is demand for every size. I always say to think of it, coincidentally, like a pyramid where if you have your studio, one, two baths, one, two bedrooms, you're going to have the most inventory of those on Furnished Finder and kind of inventory rentals in general.
[00:15:51] Katie Lyon: You're also going to have the most demand. As you get higher and higher but say you reach the point of a four bed, five bed, there's a lot less inventory. There's also a [00:16:00] lot less demand, but they really correlate pretty well. It's just the use cases are different, but I think next up, we're going to be trying more of a larger property.
[00:16:09] Katie Lyon: And I'm excited for that because it will be, more cashflow, less work because it's a larger property, but it just depends on what tenant type you're going for, right? Traveling medical professionals. They don't need a whole ton of space, a relocating family, an insurance placement, someone who's waiting to close on their next house or still house hunting.
[00:16:30] Katie Lyon: They're going to want a larger property. So it just depends on what you're going for, what your market is and how you see yourself fitting in that puzzle.
[00:16:40] Randal McLeaird: Okay. And are you marketing these properties only on Furnished Finder and if so, then what are you doing? Because I don't know the rating system.
[00:16:50] Randal McLeaird: I should have gone on and actually taken a look, but are there metrics for the landlord similar to AirDNA, right? Like, how do I know as a landlord if I put my four bed, [00:17:00] two bath on, what am I going to be able to lease that thing for?
[00:17:03] Katie Lyon: Yes, there are. So let me answer your first question. I actually, I do have my properties listed on Airbnb more for kind of research purposes, but I think about, honestly, all of my current tenants right now are from Furnished Finder.
[00:17:15] Randal McLeaird: Okay.
[00:17:15] Katie Lyon: It's so much less expensive. I don't pay any fees or commissions when I get a booking and the traveler doesn't either. And what people don't think about is like on Airbnb, the landlord pays. Three to 5 percent commission to them, but the traveler also has a separate fee. When you're going on vacation and you go to the checkout and there's whatever they call it, the fee, it's a lot and a lot of them have to include that in their budget.
[00:17:42] Katie Lyon: So even though that's not directly coming out of your pocket as a property owner and investor, it really indirectly is because the traveler has to budget for that.
[00:17:51] Intro: Yeah.
[00:17:51] Katie Lyon: So that. Has become huge for me and my business. I'm like, I want to book direct, like when it's at all humanly possible, but on [00:18:00] furnished finder, we have a stats page.
[00:18:01] Katie Lyon: It's furnished finder. com slash stats. Okay. You can get there through the navigation too, but you can put in your market and get some basic data points. But I always tell people as well, like midterm rental research is a lot more Sherlock Holmes than it is. Data, right? It's getting into the map, go into Furnish Finder and search the map as if you were your ideal traveler, right?
[00:18:27] Katie Lyon: If you're going for digital nomads and medical professionals, Look at, okay, what are the studio one or two beds in your area? Do they appear to be available? Do they appear to be booked? What's the price like? What are the furnishings like, get in there and like really connect some dots and same thing, if you're looking at a bigger property.
[00:18:48] Katie Lyon: So I always do that. I use the stats page a lot, but there's also just like a lot of inferences and dots you can connect with looking at the map.
[00:18:56] Randal McLeaird: Yeah. Yeah. No, I just didn't know because it's [00:19:00] self booking. Then that data isn't, it's self reporting if it's reported at all. So it's there's no sold comps or rental comps.
[00:19:08] Randal McLeaird: Exactly. It's all active on the market that you're looking at. Yeah.
[00:19:11] Katie Lyon: So I'll go on the map and I'll look and I'll say that, okay, if I see a property that's in a similar location and it's similar price, similar furnishings to what I would have. You'll see the availability date and I'll say, Hey, if the availability date isn't for two months, it's a safe assumption for me that there's a tenant in there.
[00:19:26] Katie Lyon: So I'll use that as a good comp. So you just got to get a little more creative with it.
[00:19:31] Randal McLeaird: Yeah, no good advice on how to use the system. So let me ask you this then. So with your background in digital marketing and what tools are you using? To not just market, but I guess on the other side, now that you have tenants, like what tools are you using to book them, to manage the property, to collect rents, break down some of that so that anybody listening would be able to go and replicate what you've done.
[00:19:54] Katie Lyon: Yeah. I will say one of the things that intimidated me about short term rentals was [00:20:00] how there's 400, 000 softwares out there and they all do, different things are all the things and it. Was a part of the feeling of overwhelm for me. What I like about midterm rentals is it's like way, way simpler.
[00:20:16] Katie Lyon: Furnished Finder has the sister company called Keycheck that I use, and that is for tenant screenings. Renters can get renter's insurance through there. You can get customizable leases through there. So I always refer to it as like the landlord's toolbox, because sometimes with a direct booking, like Especially if you're new to it, you can say, okay, Hey, I found the tenant.
[00:20:38] Katie Lyon: Like we agreed on the dates, the price, the deposit, all these things. But now what do I do? And we're. Don't want to leave you lost in the woods. So we give you a key check as a tool. There's, the prices on there for the tools are very reasonable. But a tenant screening for midterm rental is standard.
[00:20:54] Katie Lyon: I always tell my tenants or tenant leads that it's the equivalent of an application fee. And then I like the [00:21:00] customizable leases. I get an actual digital lease for every tenant that I have. Because again, it's it's not a weekend. It's the average stay is like 90 to a hundred days. And sometimes it's a lot longer.
[00:21:11] Katie Lyon: So it's nice to have those documents. But as far as the management, like I'm a big proponent of keeping things as simple as I can. So I use, an Excel spreadsheet or a Monday board, but these tenants, when they get in there, They make themselves at home, right? Like you're not going to be dealing with requests every day of, oh, the towel is dirty or I don't know, all the things that pop in my head.
[00:21:34] Katie Lyon: If you have a short term rental, like they come in, they might need help getting settled a little bit and then They live there, right? They're not visiting, they're living there. So most of my tenants, I don't really hear from and not, and just because they're good. So it's just, it's like a whole different level of management.
[00:21:53] Katie Lyon: We have a tenant tracker within. Once you're a Furnished Finder customer, you get a landlord dashboard with all your tools. [00:22:00] We have a tenant tracker there as well that's really nice to just keep track of, who's where, move in, move out, things like that. But it just, it doesn't have to be crazy complicated, which I really like, because it just makes the barrier of entry feel so much lower.
[00:22:14] Randal McLeaird: Yeah. Alright, so then let me ask you this, if, because I've got rentals, right? And I've had rentals, I've got, So turnover is always a thing, right? You lose money every single time I have a tenant turn because you're painting, you're doing something right. So again, going back to the types of assets that you're buying and acquiring, are you buying new properties that need very little maintenance or are you fixing them up fully right when you buy them so that you have no issues or hopefully you limit the amount of capital expense that you have going forward?
[00:22:45] Randal McLeaird: What are you doing in order to mitigate that? Some of the turnover costs, yeah. You have more turnover happening on an annual basis.
[00:22:51] Katie Lyon: Our portfolio has a mix of everything. We have everything from arbitrage properties where when something, when the fridge breaks, [00:23:00] I don't have to pay for it. I literally call the other landlord.
[00:23:03] Katie Lyon: Yeah. And we've found some really great partners for that. We have a three bed, three bath townhouse that we bought. It was built in the sixties. It had recently gotten new carpet and paint, but it needed it didn't have a microwave. The door handles were like crazy shiny gold. It needed all new light fixtures.
[00:23:21] Katie Lyon: It needed new bathroom vanities, but it was like very much like a surface level facelift. We didn't knock it down any walls. We just made it a little bit more in this millennium. And then we have a condo that. Was built in the nineties and is totally fine. We don't have anything. We haven't bought any like new construction for rental purposes, but it could totally work.
[00:23:44] Katie Lyon: What's nice is you can get in there every three, four or five months, right? Sometimes shorter, it just depends on the lease time. But what I like about that is twofold. Like my cleaner, when she goes in there can give me a heads up on something before it becomes a big deal, right? My tenants also will [00:24:00] let me know Hey.
[00:24:01] Katie Lyon: The AC is starting to struggle or whatever it is. So I hear about things before they reached the point of being a lot more expensive typically. And I also don't have people moving furniture in and out all the time, which helps.
[00:24:16] Intro: And
[00:24:16] Katie Lyon: then on the flip side, compared to a short term rental, I don't have people who are just not as careful with the property because they don't care as much, they're there for a weekend for vacation and they're harder on the property just by nature. So there's. a good enough amount of turnover for me to feel really comfortable as far as knowing what's going on in the property. And I don't have surprises, but the wear and tear is very manageable.
[00:24:40] Randal McLeaird: Got it.
[00:24:40] Randal McLeaird: Okay. You mentioned arbitrage.
[00:24:42] Katie Lyon: Yeah.
[00:24:43] Randal McLeaird: So for people who don't know arbitrage, what you have an agreement with the owner of the property or are you the owner and they have an agreement with you? Yeah.
[00:24:51] Katie Lyon: Nope, they are the owner.
[00:24:52] Randal McLeaird: Yeah. Yeah. You can break it down. Go ahead. Explain it.
[00:24:54] Katie Lyon: Yeah. So they are the owner and they, I rented from them and they know [00:25:00] exactly what I'm doing.
[00:25:01] Katie Lyon: I told them, like very transparently. But you're renting on a
[00:25:04] Randal McLeaird: Long term, right? Yeah. Yeah.
[00:25:06] Katie Lyon: So we have a two year lease and then we furnished it. And then we present it as a midterm rental to tenants.
[00:25:13] Randal McLeaird: Awesome. Okay. So
[00:25:14] Katie Lyon: it's a win for them because We pay on time every single month. Like we're taking really good care of the place.
[00:25:20] Katie Lyon: I gave them copies of the professional pictures they can use. They know it's getting cleaned by a professional every few months. And the particular one we're partnering with, they really like that we're able to help some of these medical professionals in particular that are coming to serve their community.
[00:25:35] Katie Lyon: And it's great for me because I don't have to have a down payment, get another property, right? It's a lot easier to grow the portfolio quickly.
[00:25:42] Randal McLeaird: Yeah. All right. So then let's talk about this. You have. What's the cost of furnish standard like and does furnished finders actually have a, Hey, here's the, your itemized list of things you should probably have in a property, or is there any kind of resource?
[00:25:55] Randal McLeaird: I'm sure there's a resource like that out there.
[00:25:56] Katie Lyon: There are resources. I would suggest everybody, [00:26:00] Google it. There's some great people out there. I know Sarah Weaver has a list, but also you can literally take a list for a short term rental and just pare it down because you don't need.
[00:26:10] Katie Lyon: It. The board games and the puzzles and the seasonal decor and things like that, you need extra blankets and extra sheets and you need, like a baking pan and I like, I have my own list that we've used time and time again and what I like, like, when we were making it, I would just go through my day and I'm like, okay, what am I touching that if I were in a rental, I would expect to be there, right?
[00:26:32] Katie Lyon: Like a desk. I would want a desk to be there. Kitchen utensils and things like that. I was like, okay, what would I expect to be there? And what would be like a plus? The other nice thing is I always tell my tenants when they're moving in, I'm like, Hey, if there's something that you use on a regular basis that I don't have in there, let me know and I'll get it for you.
[00:26:49] Katie Lyon: Cause if you use it regularly, someone else would probably use it regularly as well. I think I've had a toaster come up and a teapot and I'm like, cool. I'll send them to you on Amazon. Like it'll be there tomorrow. Cost [00:27:00] wise, it's definitely less than short term because like I said, like you don't need all the frills.
[00:27:06] Katie Lyon: It's, I would say for a studio apartment, I typically spend about. 4, 000, maybe 5,
[00:27:14] Intro: 000.
[00:27:15] Katie Lyon: And then just scaling that up are three bedroom, three baths. I want to say cost probably eight, but I also don't like. I don't do a lot of extra frills, but I want to make sure there's a really good mattress in there, and you need blackout curtains, and I want to make sure that the kitchen is like, you've got everything you need, so it's more about quality than quantity, because these travelers too sometimes, if you think about a family who's in between homes or on an insurance placement or something, they're probably going to come with some suitcases, Right?
[00:27:49] Katie Lyon: Like their kid's gonna come with their favorite blanket and some of their clothes and you're spending more money on like clothing storage than decor, right? [00:28:00] So yeah.
[00:28:01] Randal McLeaird: Okay. Yeah. That's good to know. And obviously the TVs and couches and basic furniture. That sort of stuff. That's going in there.
[00:28:06] Randal McLeaird: Yep. So four to eight. All right. Yeah. That's interesting. We have on ours. I talked to somebody I'd interviewed here on the podcast and then talk to them. And then through some other people that like, okay, I have this property. I'm thinking about moving out. We're going to move into this new house.
[00:28:20] Randal McLeaird: Here's my address, gave it to them. And then they gave me an estimate of what it was going to run for. And it was like three times what I would have gotten on a short term or like a normal lease, like a long term lease. Yeah. And so that's the other question what are you seeing typical, if you had to rent any of your properties out on a long term lease, obviously you're making money in an arbitrage deal.
[00:28:41] Randal McLeaird: So you know what the long term would go for and you're making money on that. So what are you seeing is average, perhaps, increase over what long term rentals would go for?
[00:28:51] Katie Lyon: It's very market dependent.
[00:28:53] Randal McLeaird: Okay.
[00:28:54] Katie Lyon: And you have to look at your specific market. My goal with an arbitrage is always to double the [00:29:00] rent that I pay.
[00:29:00] Katie Lyon: And I get close to, if not match that every time. But part of a midterm rental is you cover utilities. So I'm going to double the rent, but then I'm paying utilities and paying internet. But that is my goal. My personal investment goal is always to double it. Now in some markets, that's not quite possible.
[00:29:21] Katie Lyon: I tell people as a rule of thumb to go with 1. 5 to two times long term rent.
[00:29:27] Intro: Okay. Now,
[00:29:28] Katie Lyon: if you get like an insurance placement or you have a much larger property, You might blow that number out of the water. You might get three to four times, right? Because those are high needs and low inventory. So they're going to pay more.
[00:29:41] Katie Lyon: If you have a small property somewhere where rents long term rents are really high, you might not reach that number. And that's okay. So it just really depends on the market, the size of the property, and also What amenities do you have with it? Is there free parking? Is there, are you pet [00:30:00] friendly?
[00:30:00] Katie Lyon: Those are all things that people are searching for.
[00:30:03] Randal McLeaird: Yeah. All right. Good to know. So then let's tie it into the agents, right? So what advice would you give to real estate agents who, we have line of sight into properties all the time. You've invested in multiple markets. So just in general, what advice would you give to real estate agents who may be thinking about dipping their toe in the water and getting started?
[00:30:23] Randal McLeaird: In midterm rentals,
[00:30:24] Katie Lyon: my biggest thing is it's not difficult to get started, right? Like it is very much not difficult, especially if you have market knowledge and you have, like you said, line of sight into properties day in and day out. Like it's very attainable and there are so many tenants that are searching for places to be.
[00:30:45] Katie Lyon: It's so much less demanding than a short term rental. And there's just, there really is like, So much potential there. When I see the number of agents that are not investing or not [00:31:00] utilizing midterm rentals or any type really of rental or investment strategy, I'm like, Oh, but you're right there.
[00:31:07] Katie Lyon: You're like 90 percent of the way to the finish. Like you guys have all the knowledge that us. Non agents like we buy the books like we're like trying to get all of the knowledge That's in you guys's heads and like you have it, right? So it's oh you're right there It's truly it's also a strategy That's easy to pivot in and out of if you need to right if you take a long term rental and you want to try It as a midterm rental like try it you can always transition it back if you decide you don't like it, but I bet you won't. So it's just, there's so much there, and I am always shocked at how many agents are not just giving it a go, right?
[00:31:52] Randal McLeaird: Yeah, go out, do it. Yeah.
[00:31:53] Katie Lyon: Yeah.
[00:31:54] Randal McLeaird: Okay, so that's awesome. I want to ask you one more thing about your podcast.
[00:31:57] Randal McLeaird: So I know you're host of the [00:32:00] Landlord Diaries podcast. Awesome. You should go check it out. And so I want to know, obviously you have talked to a lot of landlords on that. So what are some of the most valuable lessons that you've learned from some of the conversations that you've had there?
[00:32:11] Katie Lyon: Yeah, so on the podcast, we talked to midterm rental landlords of literally any size so if they have a room they rent out in their house, or if they have a portfolio of 100 rentals, we just discuss and I think one of the main lessons that I take away from it personally, as an investor is Like you can analyze something all day long, but sometimes you have to just try it, right?
[00:32:34] Katie Lyon: And you can pivot and you can figure it out. And the other thing is that there's a lot of resources out there for midterm rentals. Like it's not always thought of firsthand with real estate investing, but once you dive into the land of midterm rentals, there's so many resources and so many people that are supportive, like for each of my properties, I only need on average three or four tenants a year.
[00:32:56] Katie Lyon: So I'm like, I don't need to gatekeep. I don't need to protect any [00:33:00] like trade secrets. Like it's, I like it if I have other people that I can point to I don't have vacancy with that person. But yeah, I think also at its core, we talked to a lot of guests that reminded us that it's still a hospitality and a service business, right?
[00:33:12] Katie Lyon: Like you're trying to solve these people's needs, particularly with midterms. People are traveling because. of a need much more often than a want. So you're working with them and you get to create really good relationships and say okay, how can my problem help? I have a tenant right now who's staying there because her mom is on hospice and it's really close to the facility.
[00:33:32] Katie Lyon: And it's okay, how can I help you in your situation? A traveling medical professional. Okay. How can I use this property as a tool for you? And all the way up to large properties. So it's just remembering that frame of mind and like that you're serving these people in somewhere where they've got this need to fill.
[00:33:49] Katie Lyon: It puts your mind in the right direction.
[00:33:52] Randal McLeaird: Yeah, that's solid. Thanks. Yeah, I'm often curious about that to see how much of a hospitality business it is and how [00:34:00] many calls you're getting and that sort of thing. But it sounds as though it's a lot less and you're not the only one that said this.
[00:34:05] Randal McLeaird: I've had conversations with other other operators who own their properties and they say the exact same things. It's like on a comparative basis, if you're looking at a short term rental compared to midterm, I'm not getting the calls about. X, whatever it is, it's a lot easier deal to do.
[00:34:20] Randal McLeaird: All really appreciate you jumping on, sharing your knowledge with me. Yeah. Catching up, telling me about furnished finders and what you're working on these days. If you would like to catch up with Katie, I'm going to leave all your contact information in the show notes. So by all means, reach out and go check out Furnished Finders, but we'll catch you guys on the next episode.
[00:34:37] Randal McLeaird: Did you know that 80 percent of the agents we speak with got into real estate in order to gain passive income so they could obtain financial freedom and become work optional. If you want to stay up to date, the best way is to make sure you're subscribed. So if you haven't done that, go ahead and do it now.
[00:34:51] Randal McLeaird: We'll catch you on the next episode.