Property Management for Long and Short Term Rentals: Challenges and Strategies With Craig Stevens

[00:00:00] Welcome to Alex and Annie, the Real Women of Vacation Rentals. I'm Alex. And I'm Annie. And we are here today with Craig Stevens, who is the c e o and founder of Short-Term Rentals. Craig, welcome to the show. Thank you're having me, Alex and Annie. Absolutely. Pleasure to have you on. And you know, we've, we've kind of stumbled into a conversation a couple months ago and, and I've had the pleasure of getting to know you and, and your business a little bit better.
And I think we wanted to have you on today because you make up a, a really good representation of the newer group of people who have gotten into short-term rentals that, you know, had other. Did, did other property management experience but have gotten into short term rentals. You've done quite well with it, but you've also learned that it's a lot harder than it, it seemed at first, right?
Absolutely. Yeah. So what, what you, tell us a little bit about your background and kind of how you got into rentals in the first place, and then we can go from there. [00:01:00] Sure, sure. I, I was a senior executive working in the financial services industry. I was heading up financial reporting for different entities.
And I was excited about what I was doing in my day job, but I didn't want to do that for the rest of my life. So I started to kind of come up with some ideas as to how I wanted to pave my future and, and I decided that real estate investing was going to be that path. So I started about 10 years ago buying up properties myself in the New York area and some in Indiana.
And creating a property management company to manage those properties while I was working my full-time job, absolutely exhausting. You know, I'd buy a, you know, a couple multi-family properties here and there every year. I ended up to the point where I had nine properties at and 35 tenants, and I was.
Really developing and understanding the process around property managing. I had people helping me with it. I was an accountant c p A, so I was able to do the finance aspects of it, and then I'd have handymen and [00:02:00] other individuals help me on a part-time basis from a contracting perspective. One property that I bought was in New Jersey on the shore, and we were buying it for our personal use, but also wanted to rent it out.
And that's when I kind of came across the concept of renting out. Properties for short-term purposes and also managing them you know, I was managing that property myself as well. That's when I started to realize that there was a larger need for that in our locations on the Jersey Shore. Mm-hmm.What, what is the landscape like on the Jersey Shore for other property managers? I'm not super familiar besides the TV show, which I'm sure you get that all the time. I'm not super familiar with with Jersey Shore as far as the, the actual rental atmosphere there. But is there legacy operators there or just not, not really a whole lot or they're very market specific.
Mm-hmm. So there's a lot of different towns kind of across, up and down the Jersey Shore. And you may have a few kind of smaller, medium size property [00:03:00] management companies that manage very small specific areas. And, and then you'll have a few mom and pop setups that manage just five or six properties, you know, five to 10 properties on their own, but not largely marketing themselves as property managers.
So it's, it's pretty diverse. The largest providers of support, there are their local real estate agents that list your properties. But generally don't provide that full property management support. So there's a lot of good listing support for relatively high fees. But they, when it comes time to actually managing your property, a lot of owners decide to just kind of take that upon themselves and stumble through that process.
Mm-hmm. Interesting, interesting so how did your experience in the long-term rentals, how did that c carry over into short-term? Has that been very helpful or would you say it's been kind of learning a whole new language in this side of it? Definitely a little bit of both. It, it was, yeah, a a way for me to understand how to generally manage a property, [00:04:00] how to get the right vendors in place, you know, the importance of having a good team behind you to be able to manage the properties.
But then it, you know, and I was able to have the financial systems and the processes set up that would be able to apply to the short-term rentals. However, now that I'm in this process of managing properties and listing properties for short-term rentals, I'm finding that it is a different language altogether.
You know, there are a lot of different aspects from a regulation perspective, from a legal perspective. Taxes and, and managing the high turnover of short-term rentals, that is extremely different from what I experienced with those long-term renters on my, my other properties. Yeah, right. You probably have a lot less chaotic Saturday turnovers with a long-term renter than you do with the Exactly.
So what, so what, what would you say, like from your, when you started, like what, what do you, what did you, what were like the biggest things that you learned quickly? Like things that you thought were gonna be the, the same that you quickly identified were not. [00:05:00] So with the, with the long-term rental process, you know, once you get a property set up and you get a tenant in you, you're kind of done with the financial reporting process.
They pay their rents online and it ends up in the financial system and it just flows through simply. With the short-term rental process, I think that having the systems in place that are different than long-term rental systems was really critical. And it took me a little while to understand that I initially started by thinking I would create my own online booking systems and my own platform to process cash and, and leases.
Yeah. And I found out that that was gonna cost me a ridiculous amount of money. So I started to look at, you know, third party vendors and boy, that that process of having this third party vendor providing the services. Software perspective, right, is extremely important with all pieces of short-term rentals Yeah, and I think, I mean, just being able to make those decisions is a very hard thing and we, we hear that a lot from our listeners that are newer within the industry and. [00:06:00] They need help making decisions on essentially everything. I mean, what property management system, what booking engine, what email marketing program, what insurance.
I mean there's so many different things that you can line up. And at the end of the day, you know, we're this is a small margin business for the properties that you're managing on behalf of the other people at least. And you know, the more things that you add on, the more that really is just chipping away at, at what your profits are.But how, talk us through how you make decisions on software, you know, without really being in the. Based, like, have you relied on any sources or information or do you have mentors or anything like that that have helped you? A lot of research on my own, you know, just going out and actually looking at different softwares that are available, doing the research on those.
Looking at other short-term property managers and what softwares are they using, how do I like how it looks on their sites. Maybe speaking with some of them about their experiences listening to podcast books, of course. Mm-hmm. The, the really important thing was to get [00:07:00] kind of free trials, get my hands dirty in some of these things, get walkthroughs of their software packages.
I, what I found was that, that maybe I didn't think about in the beginning was the integration aspect. So making sure that although here's this third party software, how easily does it integrate with other softwares that are out there that you might want to use that aren't their core system, right?
Mm-hmm. From a banking perspective, a background criminal check perspective. Email processing perspective, CRM tools, those types of things were becoming more evident to me as I got more experience. So do you mind me asking who you actually settled on? Like for your property management system, who are you using for that?
Yeah. Currently I'm using Logi. And I'd, I'd say they're very well catered to kind of individuals that are listing and managing a few properties, but maybe not to a larger scale. So as we're starting to grow and wanting to get out to different platforms, we're finding out that it's probably doesn't have all the tools that we're looking [00:08:00] for from like A C R M perspective and, and other aspects.
So, In, in talking to Alex and learning more about Streamline, that's kind of our next target is to possibly move from Logy now over to Streamline because of the larger breadth of capabilities within Streamline. Yeah, I, I've worked with a lot of partners over the last six, seven years that have used streamlined, and it's one of those that it, you know, you have 10 units or 10,000, like it's scaled very well, and they're doing a really good job with integration.
So I think that if you do, you just do decide to go with them. They're somebody that you're gonna be able to scale with and stick with for a little, you know, for the long run. That's what I found. I've had a few yeah, walkthroughs of the system and, and good and been able to take a look at it. Looks fantastic.
Good. So where, where was your bookings coming from? Craig? Are you mostly VRBO or Airbnb? We're, we're mostly Airbnb and, and vrbo. We're starting to probably get more bookings from VRBO than we are from Airbnb. That makes up about 70 to 80% of our bookings. We're also doing a lot of advertising on Facebook and [00:09:00] different Facebook groups.
We're we're, we're trying to get out there from a marketing perspective to make our own site, you know, more. Preferable for, for guests to book through and obviously saves them fees and US fees as well through that process. Right. So we're, we're, we're slowly expanding. I mean, we started out just about a year ago and, and now we're up to about 15 rentals that we're managing.
That's great. That's great. Interesting. Good. That's a good, that's a good size portfolio cuz you can kind of fine tune your, what you want to do before you move to a new platform and then you can really, really scale up. I'm curious I talked to operators. It was actually a conversation that I was having this morning on LinkedIn and I've had it several times with small operators.
In the need for engaging kind of in the local market from a a marketing perspective to kind of build relationships so you can create either packaging opportunities or referral services. Is that something that you found or that you're doing? And if you are, if you found that to be value, we are starting to do [00:10:00] that.
So initially we just kind of jumped out there and, and had our blinders on and we were gonna set up a property management company. But now that we're seeing, there are a lot of other avenues of being able to reach out to people and, and kind of. Get customers through those relationships. But also potentially collect some type of referral fees if we refer to other businesses outside of our space.
Yeah. What I've been doing is attending some of the Chamber of Commerce events. I think the Chamber of Commerce are, are fantastic in, in most locations and it's a good way to meet people that you might not think could be partners of yours someday. Yeah. So absolutely. We made a, we've made a partnership with a couple of photographers, a and as they're out there, you know, doing photographs of either a house to rent out.
You know, they can refer us. If we have guests love being at our place, we can refer them and say, Hey, you want some beach pictures while you're here on your visit? Right. Oh, that's great. Photo photographer, every time I met a photographer, I would think immediately, you know, this isn't gonna be of, of a benefit for us to have this relationship.
We're [00:11:00] completely different fields, but there is, and then mortgage bankers as well, so developing relationships with them. As they start to sell a house to someone. Right. Or as they're providing the financing for a home. Mm-hmm. If the person is talking about renting it out, they can refer us and Yeah. Some of our owners are planning to buy, right?
We can refer them as well. So there's a lot of good kind of cross-selling opportunities that's really, really smart. And I, I mean, you hit the nail on the head. This is, it's such a ref, it's a relationship business, and there's so many moving parts to it, and. You wouldn't necessarily think that all these things could tie in together.
I mean, all sorts of different vendors. I mean, from, you know, restaurants to attractions, there's, there's an endless list of types of relationships you can form that will end up being a, a big part of how you differentiate yourself within the market. So that's great to hear that you're doing that. Yeah, really smart.
Really smart. 
So what's next for. Your growth plans. I mean, this, we've, we've seen with a lot of these newer operators that have come in the last couple years, they've [00:12:00] ridden, you know, the waves of high revenue and lots of bookings and I, I'm not sure what this year, next year's gonna gonna be, but I mean, are you trying to continue to grow the inventory?
How are you looking at what's going on in the economy as far as those plans go? Since we have also have this real estate investing side business, right, where we bring individuals into large real estate opportunities to invest in apartment complexes. We keep our ear to the ground and, and stay informed about the economy and what's going on.
Obviously there's a lot of shaky situations going on right now. We don't expect from a short term rental perspective that that's going to change a lot of travelers' s on taking their vacations. Right. You know, we could end up in a, in a worse situation from an economy perspective, who knows right where we'll end up in a recession, but people are still have these vacations that they want to take.
It's something important to them that they find every year. I think during covid, that's even solidified more. So [00:13:00] in, in, in those families, right, to have that as, as part of, of their experience with us, we're expecting to see a, you know, about the same vacationers coming in. We're planning to grow we're seeing a lot of new owners coming in and buying new properties on the Jersey Shore to rent 'em out.
So we're hoping to add to our portfolio, we're gonna try to stay a little bit more focused and concentrated. In, in certain towns as opposed to maybe taking a look all across up and down the Jersey shore to start. So we're gonna try to have a focus in, in better local communities. Once we get strong in those areas, then we'll expand over the coming, over the coming years.
Yeah. Yeah, that's, that's, that's smart. And we were, Annie and I were just talking about that earlier actually, how there's a lot of operators that feel that they can just have a couple properties here, a couple properties there, and that's how building their own, you know, massive short-term rental empire.
And I mean, maybe it works for some that way, but I think with your goals to, you know, be a brand and to be a true property management [00:14:00] business, like Ryan said on one of our calls, you know, the riches are in the niches. And when you really, when you focus on an area, You're, you're gonna, you're gonna have so much better success doing that, versus you can't scale yourself, right?
I mean, you can't be going to these Chamber of Commerce meetings and all, you know, a bunch of different areas. But you've, you've gotta really focus on an area. And I think in our industry, there's a reason that you don't see multiple. Or many multiple market vacation rental businesses. You just don't. I mean, there's, there's V trips and there's, there's V Casa and there's casa and all three have done things very differently and some more, but they're, you don't really see the local vacation rental company in Myrtle Beach that now just goes and starts company in another market and it works great.
And now they go do it in another market. Works great. Because it's, it's complicated. Each market has their, has its own nuances and ways of doing business and politics and it's it's, it's, I feel like a lot of people think that it's easier said than done. So I think you're [00:15:00] taking the right approach and doing it methodically.
I agree. It, it's, it's enticing though cuz you will get calls from owners that are outside of your market. Sure. And it's, it really takes a lot of responsibility, business responsibility to turn down a really good. Property that might be of your market that could earn you a lot of money if you managed it well.
Yeah. Yeah. But you have to think about the long term goal of your business and where you really wanna stay focused in making sure that you're developing good relationships with owners and maintaining those properties and creating a name for yourself, and then hopefully someday you can get to that other owner.
Yeah. That, that came to you as an opportunity.
 How, how do you go about hiring? I mean, what, what's workforce look like for you? We, we like to list on platforms like on, on Google Ads or on Indeed. Sometimes I'll list on LinkedIn as well for people. I, I love LinkedIn, right? There's my network is is the, are the people that I know if I can get referrals through my network.
That's just a, a fantastic way to get the right hires. [00:16:00] Indeed.com is probably one of the bigger ones that we use u usually to list for job opportunities that we have. Have you had challenges though, finding like the teams that are actually, that are cleaning the properties and doing the maid service and stuff, have you had challenges with that, that that's tough.
Right? There are some larger players in each of our markets, but they're not always the best ones, you know? Yeah. Sometimes it's the mom and pops that actually can do a better job, and those, those have been the ones that have been hard to find. So usually if we can find a, You know, someone that's well connected within the community.
Say it's a handyman or a contractor. Mm-hmm. Something like that. They may know of individuals that also are neighbors nearby that have yeah, ha have those abilities to do those types of activities for us.
 All this conversation. Alex, it just reminds me of the conversation we had with Steve Schwab about you can only be a local in one place.
And those local connections are so important, not just from like just building your business in terms of like, you know what you can offer a guest, but [00:17:00] thinking about what are you gonna do to staff up? I mean, if you don't have those connections in the local community, you're missing out on because people don't wanna work for someone that they don't know and they don't.
Trust, especially at that, like that line level of like a housekeeper or a maintenance guy, they wanna know that they have like stable job. This person's not a fly-by-night individual. And so you being local, again, that's, that's a smart, that's a smart way to approach it. And then I would ask you like, you know, for the owners that you do, do you have the owners that ask you to manage out of town?
Do you have a referral system set up with other property managers? Like do you network with property managers outside your market? Not yet. We have sometimes we're partnering with other property managers, so we do take them on, we have taken on those ones out of our market as long as we have a good property manager that's willing to partner with us, and we can kind of split the fees in that respect.
Sure. But we are still taking ownership, maybe using our systems and processes to do the bookings and, and having them, you know, just make, be the boots on the ground. I, I think that's the next step, Annie, is, [00:18:00] is to really make sure that we are developing those relationships where you hate to just lose someone and say, we can't help you, right?
Yeah. Instead, let's refer them to someone that we can, you know, expect and they can do the same. Yeah, absolutely.
 Tell us a little bit about the other side of your business. So the, the multi-family and the apartment complexes and, and how you kind of tie everybody together, that you get the properties and the, and the investors and but if you're investing in it, you don't have to be the one that's actually doing the work, which is nice.
Yeah. Tell us a little bit about that. I, I have a company called Groundbreaking Real Estate and, and this entity is, is helping to helping investors. To go into investments on large, large department complexes or other commercial projects as a limited partner. So you're going into this entity that is holding the transaction.
You're investing, usually it's a minimum of around $50,000. You get to participate in the returns of the rents and, and net cash flows that are coming out of those [00:19:00] properties. And they're usually value add transactions where we're improving 'em over time and increasing the rents. And then we're gonna sell it, say, three to seven years down the line and, and get some extraordinary returns once we finally sell 'em.
So I go out and I find partners that are looking to raise capital for large transactions. These are usually a hundred to 300 unit buildings. And I, I'm a capital raiser. I help to raise money for those transactions. So I bring my friends and family to these deals. I review the transactions, perform the financial analysis on them.
I go and visit the properties and we're, we're getting great returns. So I spend something that's been a, a fun opportunity for me to utilize my network and give my friends and family and ability to invest in those transactions, get great returns. Usually 15 plus percentage annual returns a year.
Wow. Wow. That's, I love that. Yeah. And I think obviously your financial background makes perfect sense that that's, that's something that you're probably really good at being able to assess, you know, the, the, the financial side and the, and the, the [00:20:00] deal at hand. But have you so have, have any of the properties sold yet?
Or are they still in that growing phase? Yeah, I've been, I've been investing in these as a limited partner for quite some time for about six years, and I've had a couple of transactions closed. You know, one was, was not as strong as they, as we expected. It was a 12% annual average return, which was still fantastic, right?
Yeah. But we were projecting it to be closer to 17%. And then on the other end of things, I had an apartment complex in New Jersey. I. It was a 16 unit building. That one closed for 22% average annual returns. Wow. Over about a five year period. So it's been we have had a couple of them close and we work with partners that have also had transactions that have closed as well.
So, you know, together we've, we've had a number of, of good, good deals go through. I have a question related to apartments and just, I live in Florida and well, we had a hurricane that came through a few years ago, so all of our short-term housing was pretty much wiped out. So I think we lost almost [00:21:00] 10,000 units, so they had to rebuild.
But now we're seeing this like It feels like over-building of these, like, they're almost like resort complexes, but they're, you know, they're low-rise apartments, but it's like pods of 'em. So like there's one in my development that's like six pods and there's probably 50 units per pod and it's heavy amenities and those type of things.
But I wonder at what point it, it becomes overdeveloped or short-term. And I would guess the question would be, not short-term, but for these long-term studies, do you, do you see that there is a need for more of this type of. Housing versus res single family housing because people can't afford it, or that there's just people that are hedging their bet that maybe at one point they built these complexes and they can turn 'em over to be short term or maybe a combination of the two.
Yeah, it's, it's a good question because it is a supply and demand balance, right? That you're looking for. Yeah. So I, we think that there's been a fair amount of pent up. [00:22:00] Demand to for people to move, but they're not able to now go out and buy their, buy a home. Instead, they're, they're looking to rent a property.
So because of the high interest rates and maybe the increases in valuations on properties, they're not able to go out and buy their first home so that they're in a lot of markets. There's an increased demand for rental properties. We expect that to continue on. Also, during Covid there was not a lot of mobility, so folks were not moving as much within their markets.
They were just kind of staying put to see where things were headed. And that's also created an opportunity now where people are starting to finally move and wanting to rent a new place. So you do have this kind of shift in the market where there's gonna be an increased demand. In some markets though, I would absolutely agree, it's very market specific and there are markets that are probably being a little bit overdeveloped.
We're seeing supply that is exceeding demand now, and they might not be able to fill that so we could see some increased vacancies. So we ha have to be very careful about particular markets and where we see the growth in the markets [00:23:00] from you know, employment perspective and and rise in in the economy.
Yeah. Mm-hmm. And so from a developer, like if I was a developer, what is the, what is the indicator that you look at to say like, okay, yes, I can build 350 new apartments in this particular area? Is it just about what the per, like, the scheduled growth is based on maybe a business coming into the community or, or just, I gue I guess there's always forecasts of growth for a community, but what, what does that look like from an investment standpoint?
Yeah, we're, we're typically looking for, for good strong population growth markets that exceeds the national average. That indicates that there's gonna be a, you know, influx over the coming years and expectations around an influx over the coming years of a, a larger population. We're looking for employment growth, so our new employers moving into the market, you know, this area that we're in here I live in North Carolina right now, and, and it's, it's a much more, you know, fastly developing [00:24:00] area where there's a lot of new employers coming into the place.
And then finally we're looking for growth in employment and, and also income. So, you know, are, are those indicators strong to show that we'll have, you know, this increased population and increased income that we're gonna be able to provide housing too. Those really have to be in place to, to make sure that we have a good market that we're heading into.
Okay. Yeah, good question. Yeah. Yeah. I, I was just actually at a, a Myrtle Beach Chamber event the other day, and we were talking about the short term rental bill and the, the no ban issue that we've been talking about in, in all of South Carolina. And one of the reasons that a lot of the associations do not want to participate in this or that they don't want support, support, it is because of investors coming in and buying up a co.
Apartment complexes, turning them into short-term rentals, taking out the a availability or the inventory you know, for. You know, lower income [00:25:00] housing or just affordable housing really for the workers and that, you know, in, in big destinations, you know, like where Annie is and, and where I am. That that's, that's an issue.
I mean, there's, there's only so much land that you can build on. And I think the investment side of things is, is making things a little bit more complicated. Yeah. Are, are you see, are you seeing in Jersey Shore, like are there, are there issues there, I mean, regulatory issues that you're having to be mindful of?
I I, I've seen over the last 10 years on the Jersey Shore, a large growth in the short term rental. There as, as we're, as are the same for other markets, right. There's been a higher purchase of second homes by individuals for investment purposes only, you know? Yeah. They may even live out of state and not use it at all for themselves.
And this has created. Probably a bit more headaches for the locals and, and more headaches at times for the regulators there. And, and I have seen some [00:26:00] changes where they are requiring a minimum number of nights stay. Yes. And making it kind of complicated from an inspection perspective. So we do have one town that they require an inspection from the town after every single stay.
Oh my goodness. How do they manage that? Ends charge $75. So, so that's half the town is going out to inspect the property. Yeah. That you have to file a, a form and ask the town to go out and inspect the property after every stay. I, I think that, like, what do they think is happening? That's bizarre. Yeah.
Really that's their requirement. But I think in practice it probably does not happen as much as they would like. Yeah. But if you, if you call them and you speak to 'em, that's a requirement. And I'm seeing talents that are shifting from my own number of nights. You know, it might have used to be three nights stay, now it's seven nights.
Stay minimums. It, it's starting to, you know, towns are starting to come up with different things that are making it much more complicated and I, I think that's only gonna continue start to see other [00:27:00] towns coming up with crazy ideas that towns will share with each other. Yeah, that's the craziest one I think we've heard to date.
That's, yeah. I mean, it was like this conversation last week with them and I couldn't believe they were saying this. And what is their, do you, do you have any idea like what that. What, what was the root cause of them going this ex, because that's pretty extreme. I mean, and, and I'm guessing that there's not a lot of rental, so it's cuz it's, it's not manageable, like Yeah, it's, it's, it's actually property we decided not to take on, I'm sure.
Yeah. This area it, it's, you know, it, it really is probably a, a revenue growth opportunity, so it's an additional revenue income if the town is able to implement this. It is an opportunity to have their hands more closely tied to these properties and making sure they have a close connection to these short-term rentals and that they're keeping 'em safe.
You know, their view is if they go in and they inspect it and the fire extinguisher is there and the fire alarm is working, then they know these properties are gonna be safe in their towns and they're not gonna have these types of issues. So I, [00:28:00] it's, it's probably a couple of different decisions that came to this point.
But it is making it much more complicated for owners to rent out their places and, and more difficult. Yeah. Yeah. That's insane. Definitely. And, and really it's like, you know, is, are the, is the, are the cities, are they, or the area, are they more concerned about renters or even the people that live there? I mean, they're not going out and inspecting people's regular homes.
Why are they so worried about where somebody's on a vacation? I mean, yeah. Yeah, it's the devil, you know, versus the devil. You don't, I guess, right in that situation, right. Yeah. Yeah. Yeah. Oh my gosh. Interesting stuff. Well, Craig, it's been a pleasure hearing a little bit more about what you've got going on up there, and we wish you nothing but the, the best of luck and I still wanna keep hearing more about the investment side.
I think there's, there's a lot to that and I'm sure some of our listeners would be interested to hear about that as well. So what is the best way to get in touch with you? Sure. Reach out to me on at info@shoretermrentals.com, S H O R E, term [00:29:00] rentals.com. They can reach me on LinkedIn as well to find out about both my businesses groundbreaking real estate, which is the investment business, as well as short term rentals.
They can see Craig Stevens on LinkedIn and, and connect with me there. And I'd love to catch up with anyone about either short-term renting or long term. Yeah, all the above. Awesome. Well, if anybody wants to contact Annie and I, you can go to Alex and Annie podcast.com and be sure to subscribe to the show.
And if you're enjoying it, we'd love to hear from you. If you wanna leave us a review, that would be great. And until next time, thank you everybody. Thanks guys. Thank you.