Why Shawn Transitioned His Investments to Short-term Rentals

Shawn says he has been in full-time real estate investing for 26 years. His real estate journey began shortly after college, when he worked as a sales representative for a steel service company. He started with fix-and-flip properties, bought some long-term rentals, and in 2006, he bought his first short-term rental.

In 2008, the US housing market crashed. “We were struggling a little bit, except for this asset. The vacation rental home we had kept improving, and it continued to do so. And even though we lost value on the home during that time, we kept making more money on it,” Shawn underlines. So, noticing the potential of the vacation rental market, he fully transitioned his investments to short-term rental properties.

Shawn’s Approach to Building a Property Portfolio

Success in short-term rental investment isn’t about owning the most properties—it’s about building a portfolio that works towards specific financial goals and balances different property types and locations.

“We’re paying close attention to our return on equity as investors. So over the years, we've probably bought and sold 40 to 50 short-term rentals,” Shawn explains. “It’s always just been six to eight single-family homes that we’re constantly looking at maximizing and upgrading. Usually, we keep them for around five to seven years. And then we roll up the equity to something bigger and better.”

Their vacation rentals are located in Utah, Georgia, Florida, and Tennessee. “Normally, we're pretty spread out. Even the ones in Utah are not next to each other. They're in different areas,” Shawn points out. This approach allows them to have the diversification of different seasons. “If something happens weather-wise and shuts an area down, our entire portfolio is not impacted.”

Shawn says he only buys properties that he enjoys using, so he truly looks at them as lifestyle assets. “We look for those properties that we want to use, and I don't have any reason to use three properties in the same area. So that’s one of my motivators to have them spread out.”

Shawn also underlines that when it comes to choosing the market to buy an STR property, it’s crucial to make decisions based on data. “We really have to look at the investability of the market. We're crunching the numbers, and the key ratio we're examining is the amount of money consumers are spending. And how much are they spending on the type of property I'm looking at? And what is my acquisition cost? And that ratio has to be favorable.”

Making Your Property Stand Out

Shawn emphasizes that one of the most important things investors need to understand is that short-term rentals are a service-based business. “We might think we’re selling a property. We believe we are in the property business, and we try to put these beautiful properties out, and we furnish them like model homes, and all of a sudden, we think that’s going to be enough.

The issue is that our neighbor has the exact same proximity as we do, and they have another model home. Now that short-term rentals are as popular as they are in our market, there's really no differentiation. And so, what you have to think about is, if I am in the experience business, how do I enhance that? How do I create an immersive experience with my property?”

What Does Shawn’s Team Look Like?

Shawn doesn’t manage his own properties. Instead, he has property managers, and they have their own localized teams of cleaners and maintenance. “For those investors like me that don't manage our own properties, and we’re looking to scale our portfolio by buying more properties and then handing off the operations to somebody else, it is a painful process, to say the least, to try to find the right property manager or co-host. There are many great co-hosts with whom we team up on some of our properties. But it’s never shocking to me that the owner operators that do self-manage typically do a better job than a lot of the property managers out there.”

Shawn emphasizes the importance of utilizing property management software solutions that simplify the process of delivering a great guest experience. He points out that within their Vodyssey family of their mentorship program, they have a lot of self-managers, and many of them use Hospitable to manage their properties.