$50K/Year Cash Flow from ONE Rental by Beating the Market

Toni:
Today’s guest has mastered the art of blending wilderness with comfort, creating a truly unique and highly comfortable Airbnb business by offering guests a taste of the great outdoors without sacrificing the luxuries of home. They’ve carved out a niche that’s as innovative as it is successful. Get ready to hear how this strategy is changing the game in the short-term rental market. Welcome back to the Real Estate Rookie podcast. My name is Tony j Robinson. I’m here at Solo, but Ashley will be back before you know it. This is the podcast where every week, three times a week, we bring you the inspiration, motivation, and stories you need to hear to kiss Start your investing journey. And today’s guest is Garrett Brown. And if that name sounds familiar, it’s because Garrett recently joined BP as a full-time content creator, so you’re likely seeing him across all of our various BiggerPockets channels. So Garrett, welcome back to the Real Estate Rookie Show.

Garrett:
Glad to be back. Always fun when we were getting to top chop shop on some short-term rentals.

Toni:
Let’s start at the beginning, Garrett, I guess, what were you doing when you first started your career in real estate?

Garrett:
I actually was, so when I first kind of backtrack, I went to school for hotel and restaurant management, but I thought I was going to work in restaurants. I was waiting tables. I had a little bit of hotel experience, working front desk and things like that, but I always thought I was going to go further with restaurants and that kind of hospitality business. Fast forward a couple years, I ended up deciding to get my real estate license, became an agent in Houston. I was a real estate agent for, I still have my license active, but I’ve been active for about seven years. I realized that the agent side wasn’t necessarily for me. I started working with a couple investors. I had one, I’ll never forget this day. I got an email. I just started getting my license, got an email asking, Hey, do you work with real estate investors?

Garrett:
And at the time I was just so happy that somebody was reaching out to me. I just say yes, even though I had no idea what to do, I got online, found BiggerPockets. I was so thankful for that. I dove in, learned so much and that email never led me to a deal directly with that investor, but that opened my eyes to see what other avenues are out there in real estate. I started working with a few investors. They were doing fix and flips. I was working with buy and holds and then I started to realize like, hey, I’m using a lot of the tools that I have and all the skill sets that I’m learning and I’m making these investors crazy returns and other things like that. That kind of a typical story you may hear from a lot of agents that turned investors that I was like, I need to put my hand into this and start to see what I could actually do. And I ended up flipping my first house and it was my most successful flip because then after that a few of them didn’t really work out as well. But that’s the beauty of real estate is I was learning and I was kind of figuring out what strategies I really wanted to go into and yeah, now I am here today and couldn’t be more excited to actually be going down this investing journey instead of just a flat out real estate agent.

Toni:
Let me ask Eric, because as you mentioned, there’s a lot of people who make that transition from agent to investor, but do you feel that it’s a requirement for a Ricky no experience to go out and get their real estate license first?

Garrett:
No, I don’t actually. There’s so many ways now to learn online and to just ingrain yourself working under other people or finding somebody in your community that’s a mentor or going to meetups. There’s so many other ways out there to get this type of knowledge. There are, if you want to be in the real estate agent space, there’s a lot of great positives that come out of it and being an investor with it, but it is not something essential because a lot of the things I learned in real estate and real estate agent school have nothing to do with real life real estate in the real world. So people can definitely skip that if they want to. But there are some positives to it though. There’s pros and cons to everything in real estate.

Toni:
My wife recently got her license here in California and it’s a very rigorous process here in California and listening to some of the questions that she had to practice for this exam, I’m like, when are we ever going to use that? I’ve never asked my agent that question before. So yeah, I think there’s definitely a lot that goes into it that maybe doesn’t translate. But you said that you were working with these investors, Garrett, and you’re kind of seeing some of the deals that you’re doing. At what point did you realize, okay, maybe it’s time for me to take the leap and actually invest myself?

Garrett:
It actually, I started to tell myself, alright, I’m going to find a deal. I started saving some cash. I probably had a little bit of analysis paralysis. I was trying to overanalyze everything, but then fate just kind of took over. One day I was showing a client of mine a house in a neighborhood that I knew kind of well, this one thing I always tell real estate investors is the areas you’re probably going to have a lot more opportunities specifically for you. You’re going to know people, you’re going to know the neighborhoods better and X, Y, z. There I was showing a client a house in a neighborhood that I knew pretty well, grew up near it, we’re driving around, we’re leaving. I see a for sale by owner sign outside. And that was one of my things that I always did as a real estate agent was if I saw a for sale by owner side, I was going to call them.

Garrett:
I hate cold calling. It is not my forte at all, but sometimes you have to make yourself a little uncomfortable to get to that level of comfortability that you’re looking for. So I saw the for sale by owner side. I gave him a call right then pulled over. The owner was actually inside the house, answered the phone and I was asking, Hey, I’m a local real estate agent. I saw your house for sale. What are your plans? Kind of just diving in into seeing what their pain points were and he was like, oh, we have a few houses. We just kind of want to get rid of this one. I’m in here right now if you want to come check it out. And so I was like, absolutely. We walked in. I knew the neighborhood very well. It was something that I grew up knowing and my area of expertise and then asked him what exactly he was looking to get out of it.

Garrett:
He wanted the property to sell for one 15, which I already knew at that price and that neighborhood as just putting it on the market, you could probably sell it for around one 50. So I gave him both options. I said, Hey, I didn’t have the funds. I kind of bluffed it a little bit. I was like, we can buy this cash right now for your price or we could list it and probably get closer to this. And I gave him both options and he said, I don’t want to deal with back and forth and I just want to get rid of it. We’re trying to keep going onto this next, they were trying to go on a vacation or something and I ended up calling a buddy. I was networking with a lot of people. I had gone to a few meetups. I knew he dealt in the hard money space.

Garrett:
I called him and I said, Hey, I just got this deal. I don’t really know much about it. I know it’s a good deal, but I’m about to dive in and see. He goes, oh, awesome. I’ll come meet you right now. Came and met me. We partnered on the deal. It was the easiest flip because after that they were not as easy, but we ended up selling it. We put about 50,000 into, we ended up selling it I think for two 40. And that kind of really jumpstarted my investment career that gave me the, I was brave enough from then on to really take myself serious when I saw something, an opportunity to come to me sometimes I’m just going to figure it out. I became a very like, don’t dwell on the problem, find the solution. And once I started really leaning into that in my investing journey, it kind of took off in a lot of good ways. But not every deal worked out great after that, but you learn from every single one. And those were just the stepping stones to really get me started and give me that fire in my belly to take on a lot bigger projects than I thought I could handle.

Toni:
Yeah. Garrett, you touched on a few things there that I want to circle back on for the rookie audience because there’s a lot of little nuggets there. But one of the first things I want to focus on is you talked about the growth that happened on that first deal, and I think that’s the piece that a lot of people fail to realize is that if you look at a few real estate investors and the first person has zero deals done, the second person has one deal done and the third person has maybe 10 deals done. The knowledge gap between zero and one is so much bigger than the knowledge gap between one and 10. And although this first deal for you was a pretty solid deal, really the goal was just to give you that confidence, like you said, to be able to go on and proof of concept for yourself. So just an important point I want to call it for the rookies because I think we put so much pressure on this first deal that it has to be this perfect home run of a deal when really that’s not the goal. The goal of that first deal is give me the confidence to do my second deal.

Garrett:
That’s why I always is when I give that story, I always tell people, not all the deals worked out that good. I got very, very lucky with that one working out well. I had put a lot of time in to have the opportunity to make that work well, but you’re a hundred percent right. The things I learned just jumping into it and going forward with more deals now, the same mistakes that I made on that or other ones that may not have been as profitable or we lost a little money, I’ll never make those mistakes again every single time. If I can just get one to 2% better on every deal or every deal I analyze, that’s the goal because then you’re always going to be progressing forward and those incremental gains are eventually going to take over that when you’re four or five years in those type of deals, you’re not going to make those small mistakes again because you’re taking the time and just having the trust in yourself to just make it happen.

Garrett:
And a lot of people, they sit on the sidelines waiting for that, oh, this is going to be the slam dunk deal of all time. And that very rarely happens, especially in today’s climate. But you are starting to get those singles and those base hits and they eventually add up that you’ve scored nine or 10 runs and you didn’t ever have to hit a home run. You just kept chucking away at it and just kept going along. And I always try to tell people that I got lucky on that first deal, but there were several deals after that I didn’t and I just learned a lot. And now luck is nothing but preparation and opportunity and that’s the things I’ve been trying to capitalize on.

Toni:
Alright guys, it’s time for a quick break, but when we get back, Garrett will tell us how he transitioned into investing in short-term rentals. Alright guys, welcome back to our investor story with Garrett Brown. Now one of the other things that you mentioned was this seller had a property and you told him, Hey, we can list this and you’ll get one 50 or we can buy this today and I’ll do it at one 15. So he took a pretty significant cut on what he could have potentially received on the market because the overall price to him wasn’t as important as the convenience of getting the deal done. And I think for Ricky’s, that’s a piece that’s often misunderstood as well is that we always just assume that sellers are motivated by getting the absolute best price. Now while it’s true that there are a lot of sellers who are right, there are some who are maybe even unrealistic about what their property is worth, you only need to find the one that is maybe motivated by something other than the maximum price.

Toni:
And you have convenience. How much work do I actually need to put in to get this property sold? And you have speed, that’s another one that people are very concerned about. It’s like, Hey, I just need to get this property sold by next Wednesday because the moving truck is taking me to my place clear across the country for my new job on Friday. So I got to have this place sold. So how did you uncover that? Was it literally just presenting both options to him and then he said, here’s important to me, or were there some probing questions you asked to kind of uncover that information

Garrett:
So you hit it spot on. So in that time I was still a little newer and I was studying a lot of sales and different things like that. And one of the main things that I was taking away from it was you always just need to dive in to figure out what their pain point is. All sellers will have some reason they’re selling and price is always in there, but there’s other people always think like, oh, we got to get down on the price somehow. That’s the main thing we got to talk about. But sometimes if you can just figure out what exactly the seller really wants out of the deal along with the price, you can have a slam dunk that actually happens. Even not long ago, I still run my agent business, but this is a great example. I had a client that was a buyer.

Garrett:
She really wanted a property. We were talking to the seller, we found out, and as an agent I would never let my sellers divulge this type of information if I’m an agent on the side. But the seller told us, he was like, Hey, I have to get to Illinois for a new job by X, Y, Z, and I need a three day lease back. The whole thing. He wanted somebody that would give him the three day lease back and my client came in, I think it was about $5,000 under, but she was fine with doing a three day lease back to the seller and he took the lower deal just because they were more flexible on the terms that they were actually allowing. And so sometimes you just need to ask, Hey, what’s your reason for moving? Or what is your biggest problem with this property?

Garrett:
Or what’s your biggest problem in general right now that we can help with? And sometimes it is like they need help on the, I’ve seen, not me, but I’ve seen other people that I’ve worked with too or the seller was worried about if they were going to be able to clear trash out of the garage or something and they were worried that they were going to have to do all the extra work and pay somebody come do it. And I was like, no, we’ll pay. We’ll get the trash out. I’ll bring a dumpster right now and get it. That’s the holdup done. So I always just tell people, get to the bottom of what exactly you can help them with. Come from a helping perspective and figuring out what their pain points are and you’re going to be able to, it’s a people business in the end. We’re dealing directly with people a lot of times there’s some emotions involved and if you can just figure out how you can make them feel more comfortable and help them in that situation, a lot of the times those scales are going to tip in your favor if you just pay attention to those small details.

Toni:
We interviewed Lee Lee Thompson on the rookie podcast, and this was quite some time ago, but if you guys go check the archives rookies look for Lee Lee Thompson, but she was doing some wholesaling work in Oklahoma and she found this killer deal from this lady who had lived in this house pretty much her entire adult life. And the reason she went with Lee Lee over some of the other sellers was because she needed someone to help her move and she told, she said, I’ve never moved before, and just the idea of packing up all this stuff is overwhelming for me. And LE’s like, look, I’ll hire the moving company for you. And that’s how she was able to secure that deal to kill her price. So everyone’s motivated by different things. He’s got to find that motivation. Gary, you knock out this first deal with the flip and it kind of gives you that confidence to move forward. I know you did some more flips afterwards to mixed success, but at some point in your investing journey you make the transition over to these short-term of the Airbnb industry. Walk us through kind of the decision point of like, Hey, maybe let me try out this new strategy as opposed to continuing to grow your flipping in your agent business.

Garrett:
I had a few flips that did not go as well. Had one, I thought it was going to be a killer deal under contract where five or six days before closing and then a long lost brother comes out of nowhere and puts a claim on the title and we couldn’t close. And there was another one where we had it under contract and then I was working with a new hard money loan lender and they decided that my a RV wasn’t actually correct, and then they ended up going from, we’ll give you 80% to 60%. It just wasn’t my personality. I come back from the hospitality background and I was always a really good waiter. I wanted to care about people. I cared about customer service and the guest experience. And so I had an investor that this is why stories always have long tails to them is you never know where you’re going to end up.

Garrett:
I had an investor that I was working with, he owned three small condos in one particular building and I was doing long-term rentals for him and he wanted 70,000 I think for each one of them. And I go, Hey, would you sell them to me if I bought all three? And we made a deal with it. He seller financed a few of ’em to me for 60,000 each. And then I started to being like, all right, Airbnb was just kind of getting going in short-term rentals. And I was like, I’ll maybe try that and see how it goes. We were getting 120 a night, 130 a night, and it was going solidly. And then obviously the pandemic hit and things kind of took a curve. A lot of people started to get onto the short-term rental wave and condos were being bought up everywhere. And at that point it was just a race to the bottom of who had the lowest price.

Toni:
And Gary, let me comment on that really quickly because I think you bring up a really important point specifically about the Airbnb industry. But I wrote a stat, and this was, gosh, maybe a year ago now, but at that point about 50% of the listings on Airbnb have been created after the pandemic. So you’re seeing a massive influx nationwide of new listings coming into supply. Now during that time, demand for Airbnb has significantly increased as well. And there are definitely markets where the rate of supply has outpaced the rate of increase of demand, and that’s when people talk about saturation. It’s those markets where even though demand has increased, there’s been more supply. Now on the flip side, there are also markets where the rate of increase of demand has outpaced the rate of increase of supply. Now usually those are markets that are maybe somewhat secondary.

Toni:
You’re probably not seeing that. And some of these super established vacation rental markets like the big bear in California, the Smokies, Destin, some of these markets, you’re probably not going to see that kind of growth there. But in these secondary markets, I think that opportunity still arises. But the reason I bring all that up is to say that you said, Hey, it’s a race to the bottom. And I think it’s super important to look at the underlying economics of these markets before you jump in because either A, you’re going to have to invest an incredible amount of money to really try and find a way to make your property stand out if even possible because in a condo setting, there’s only so much you can do, but a single film, you only have some more leverage or you’ve got to go into a market where maybe the level of competition hasn’t yet reached that point where everyone’s kind of going gangbusters. So I just wanted to call that out. You mentioned that it’s a very important point for people to understand.

Garrett:
Absolutely. And it kind of drove me into what I ended up doing with some of my glamping sites. And that’s when I really noticed, I was like, all right. I started researching on YouTube and really kind of diving in how can I take this concept? And I’m a real creative person. I’ve made music for a long time. I’ve always been very, very, I’ve wanted to showcase my creative side. And it was kind of tough in the real estate field because especially being an agent, it was just so just kind of, I don’t want to say vanilla, but it kind of was for the most part, I was selling residential homes, new constructions. So I got into the short-term rental space after I saw this decline coming, but I saw where the opportunity was lying and that was in something very, very unique. I’m from Houston, Texas, which it goes back and forth between the third and fourth largest city in the United States. And I started researching and I was like, there’s nothing very, there’s no unique stays really in the area, which blew my mind. This was 2021. And I was like, all right, I think I’m ready to try something. And I heard about land hacking and things like that, and I was like, all right, I think that’s actually what I need to do something different. But there’s so much demand, but there’s a lot of supply of just cookie cutter listings. So what could I do to stay

Toni:
The same stuff but define unique stays? Because for folks who maybe aren’t familiar with that, what do you mean when you say unique stay?

Garrett:
That’s when I kind of dove into like, alright, there’s in the glamping niche or any type unique stay I want to provide. And unique stays can mean can be different to a lot of people, but when I think of it, you’re providing an experience that a guest is not going to be able to get in 99% of the other places that are there. And one of my unique stays that I have, my first one that I built is called a geodesic dome. It’s a very unique structure. It’s something that if you’re scrolling on Instagram, you’re going to see it and you’re instantly going to go, what is that? And then you’re able to make those amenities within it. You don’t even have to go above and beyond with your amenities. I always recommend having solid outdoor amenities, but if you can have somebody that is scrolling on Instagram and they see a property and they’re like, what?

Garrett:
They stop because it’s so unique to them. It’s something that is, you’ve got to think outside the lines. And there’s a million different types of unique stays now. There’s tree houses, mirror houses, yurts, there’s, you can build a unique cabin with just, there’s all types of things. People put Airstream trailers and safari tents. There’s so many things out there that could be a unique stay, but when I think of it, it’s something that people are scrolling and they stop because they’ve never seen something like that particularly. And then the amenities and the design you add to it is what’s going to make them book it when they actually go into your listing and they’re scrolling through the first few pictures and they’re like, wow, this is an experience that I can get pretty much anywhere else outside of this particular place. And if you’re near, I have something that’s called a 60 30 10 rule is kind of what I call it, where if you’re 60 minutes from a major city, I say 500,000 people or more 30 minutes from a state, national or regional attraction and you’re 10 minutes from some type of civilization like a gas station or Dollar General or something along those lines, there’s a good chance that that market will have a solid supply of people looking for some type of unique stay.

Toni:
Alright guys, we have to take a final out break. But first a quick note, if you’re enjoying the show, we want to hear your opinion, just a glamping short-term rental sound like a fun vacation for you. Submit your answer in the Spotify or the YouTube app. Alright guys, we’ll be right back after a quick word from today’s show sponsors. Alright guys, thanks for sticking with us. Back to Garrett’s conversation. I want to make sure the rookies don’t gloss over what you just said, but you packed up and moved and bought 10 acres as your primary residence to help fuel this dream that you had of building this unique stay. Now, had you ever done any type of building anything like that before? So you really kind of went all in and bet on yourself on this first deal, which I think takes a ton of guts, man.

Garrett:
I did, but it came from all those years of learning, well, not an overnight success at all, but it took me eight to 10 years to become an overnight success where I was learning all these things and then I had the guts basically to take it on because I had seen these examples in the market that I could dominate if I just put something out there. And I think other people were scared to try it, but I knew that the population and the tourism was going to be there. And that’s one of the main factors of when you’re looking into a market is can it actually sustain tour and the amount of travel that are going to come there to support these unique stays. You hear people putting them two or three hours away in the middle of nowhere thinking, getting cheap land and they think it’s going to take off. But if you’re not really near something that has a pretty decent population, people traveling over there, you’re just not going to get that rate of tourism that you’re looking for that is possible when you pick the right market.

Toni:
How far was that land from Houston?

Garrett:
About 45 minutes. That was one thing I made sure, because the lake is massive and I was looking all over the lake and I took about seven or eight months before I picked the house and the land. And the one thing I noticed from that is one advantage to being a real estate agent is I could go up to that area and see properties whenever I wanted. I didn’t have to wait on a realtor, I wasn’t at anybody else’s time that I had to rely on. So I was constantly going around to that area on weekends when I was not working and seeing different areas and I was casually checking things off the list. At first I thought I only needed five acres, but then as I saw a few of the properties, I was like, I think I actually need to find something with 10 acres.

Garrett:
So my buy box started shrinking. Then I noticed on one side of the lake it took you an hour and a half, two hours to get to that side of the lake from Houston versus this one particular area that was only 45 minutes because of just how big the lake was and how the roads worked. And so I knew that, I was like, that’s something that’s going to draw people in. You can market that as, hey, we’re only an hour or 45 minutes away from Houston, as opposed to saying, oh, we’re two or three hours from Houston even though it’s on one particular lake. So there was little things that came to my realization as I didn’t move too fast, but I kept just gradually realizing what are some small things that I know I need to take off my list so I don’t keep wasting time looking at properties that are not going to fit what I’m looking for.

Garrett:
And sometimes you can only do that from being diligent and doing your due diligence and going up to actively check out different properties and seeing what you think as how would you feel as a guest driving out there and driving on the road? That’s something people don’t think of. You see reviews all the time that are bad for some places that are like, oh, the road was terrible. And another tip on top of that is I was going and staying in different yurts and geo domes and I traveled to Arizona to stay in some places and I traveled to Austin to stay in some unique places and people ask me all the time, how did you decide on a geodome for your first one? And it was because I stayed in a lot of these different places and I just took as my guest opinion, what did I think was the coolest, what do I think does the best and what did I like about certain things? And there were certain things I didn’t like about yurts. There were certain things I didn’t like about shipping containers and the pros and the cons outweighed on the geodesic domes and I only knew that from going staying in them. And that’s truly only one of the ways you can find out about some of these unique stays is to don’t be afraid to go out. Yep. Go out and check out some of the competition basically.

Toni:
So if we kind of sequence this out a little bit, Garrett, it’s like you had the idea first of the unique stay from there. You did a lot of call it market research where you’re staying at different other types of unique states to get a sense of what’s working. You kind of land on this is the type of unique stay that I want from there, you narrow down on a market within a certain readies of a major city and you end up finding a piece of land. So a couple of things that I want to talk through here as we kind of think through these sequence of events. As you were shopping for land, you said that you realized you had to go from five to 10, but I guess what was it specifically that you were looking for in the land to say, okay, this would actually be a good candidate to build this type of unique stay?

Garrett:
So one thing that’s awesome about land hacking is, and people all the time will think, oh, I’m just going to go buy raw land. And one of the hardest things when you’re building anything, and I found this out from tons of research, is getting the utilities usually to the property, getting permits for some of those utilities and then also the road infrastructure. People don’t realize how much road infrastructure actually can cost during the build and how important it is to the guest experience and your contractors and all these things like that. So I started visiting some of these properties and I was looking at raw land sometimes, but then I realized just how much those utilities would eat up my cost. And so I started going, okay, I have to have some type of house on it. And so that’s when I started with a house and maybe five acres.

Toni:
So how many units do you have on the property right now?

Garrett:
Right now we have three. We’re building a fourth pretty soon, and then we also already in the process of permitting for a bigger portion of data fifth than sixth. But then at that point we’re going to cap that property out and then look into the next area that we’re already already doing a lot of market research on and pretty sure where we’re going to go next with similar concepts. Now that we’ve learned so many things with this, we can take that same concept and take it to other areas and apply it and do some of the same things we did, find our team, find our contractors, learn the permitting system and all those things that now we’re going to be able to really crank ’em out even easier because I know all those steps and I don’t have to take two years to learn that same process, but it was a learning process while I was doing it.

Toni:
Let’s go back to the steps you talked about. So you had an idea of what the property needed to look like because you had a business plan in mind. Once you identified the property, do you already have an idea of what the permitting challenges are going to be? Have you already maybe talked to the city or the county about, Hey, can I build on that? Do you have plans that you’ve given them? Walk us through the sequence of actually understanding, okay, I found a piece of land that looks good, but how do I know from a code enforcement perspective that I can actually build here?

Garrett:
Yeah, so it’s exactly, it was, I don’t want to say it was an issue, but that was one of my dilemmas when I was going, because there’s two counties in particular in the area that I was going to that I was looking in and I started calling those counties. A lot of these smaller counties, especially if you’re buying somewhere that’s a little more rural, that’s always a tough word to say rural, there’s usually only two or three people that are in the permitting department and they’re pretty simple to at least get in touch with somebody there. So I started sending out some emails and saying I would reach out to the counties and go, Hey. And I’ve always honest, that’s the one thing I’ve always told people is don’t lie to them. Don’t say, oh, I’m thinking about is it okay to have an Airbnb and then you don’t tell ’em you’re building a yurt or something like that.

Garrett:
I always was super honest. I go, Hey, this is what I’m bringing. It’s a geodesic dome is what I want to do. The company that I bought the geodesic dome from has architecture plans that are stamped and you pay a little extra for. That’s one thing that I liked about the company I bought from. Then I brought ’em to these counties and I go, Hey, this is what I want to do. Is this possible? And both counties had no glamping knowledge and one county was like, Nope, absolutely not. That’s not a permanent structure. We can’t do that. Just didn’t even try to think about it with me. The other county goes, we’ve never done that and I’m not sure, but we’re open to hearing about it. Tell us more. And so that I pretty much instantly knew like, okay, I’m pretty sure I know what county I want to talk to.

Garrett:
But then I even took it a step further though I was also researching contractors at the same time, and there’s not many contractors in these type of areas that are at least good. I was one through local Facebook groups and Google were two ways that I always find really good contractors from referrals and things. But I asked the contractors, I go, Hey, county A versus county B, which one’s more strict on their permitting? You’ve built in both counties? How do they go? Every single contractor was like, oh, go to the other county that county’s okay, but this one you’ve got a much better chance. And then, oh, my county isn’t watching this. I always have to say that I feel like, but one of my contractors actually goes, yeah, my aunt works in the permitting department at this county. You’re good. This is the county you should do it in.

Garrett:
But that’s what happens in small towns. So yeah, from doing my research upfront, I figured out pretty quickly which county was going to be the most lenient. And then I also was just, I would call them once or twice a week and I’d go, Hey, if I had a question and if I didn’t get the answer I wanted, I would call back and try to talk to somebody else and go, Hey, this is where we’re going with this. What do y’all think about this part? Is this okay? Or are there extra steps I need to take with the electrical? And they were very, very happy to do it and I always made sure to remind them like, Hey to, I’m going to employ a lot of local people. We’re going to bring a lot of tourism to this area. I said it a much prettier way to that way.

Garrett:
It also you’re like, Hey, this isn’t just a one-way relationship. I’m hoping to build something beautiful in your area. And also I’m able to develop what I want and we build a symbiotic relationship that y’all have really good tourism activism coming in from me, tourism dollars coming in, and I’m able to operate in the way that I know and while I’m being safe with my regulations and how we’re building. So I’m just a big fan of always being super honest and don’t be afraid to make relationships with that permitting department. I send the permitting department in my area cookies at Christmas every year now because even after they pushed through my first geodome, I went and dropped off cookies. I was like, y’all are awesome. I really appreciate it. And now I can pretty much get anything permanented that I want because they also know I have systems in place and I’m working with reputable contractors and things like that too. So the Permiting department is going to be some of your best friends if you pick the right county.

Toni:
How did you actually fund the purchase of the build out? I know you said you got a 5% down owner finance, or not owner finance, but owner occupied loan for the actual home and the acreage, but what was the cost to actually build out these zones and how did you finance that piece?

Garrett:
That is one of the toughest pieces that I tell people when you’re building glamp sites is there’s not a whole lot of financing out there for you, especially for something really unique like a geodesic dome, which I’ve learned a lot going forward. I funded it with cash, I saved up. And so that was my mom was my business partner basically, where she went 50 50 with me. I did all the work. I put up a lot of cash myself too, and for about a hundred thousand dollars and people think I’m crazy when I say this number. We developed the geodome. And the other big tip that I always give to people too is even when I was, I wanted to build an 800 900 square foot geodome, but then I sat there and I was like, I probably shouldn’t go that big on my very, very first one because anything I screw up is going to be double the cost or so I went and was like, actually, we just need a 426 square foot geodome.

Garrett:
We changed our plan some, and it was one of the smartest things we did. We made some mistakes on our geodome, but they weren’t super costly because if we, I am trying to think of what’s the specific one, but even just how we built our deck, I wish we’d have done it a little differently, but I didn’t spend a ton of money on a massive deck that I didn’t necessarily fully love because I didn’t go just all out on my first property. You’re going to learn, it was kind of what you touched on earlier, that zero to one I learned so much, but then one to 10, now I have so many steps in place that I’ll never make those same mistakes and I can go bigger now. I can really kind of max out my vision because I’ve taken those small lumps in the beginning to now set myself up going forward to doing bigger things with that.

Garrett:
And the geodome itself, I love it. I’m so happy to have built it. I’m so happy to, it’s one of the most profitable ones we have. But I also learned now a lot more about like, oh, banks aren’t going to lend on that. I probably need to find stuff next time that maybe banks actually might want to lend on to help with the equitable side of it. But you don’t know these things when you’re first starting. So if I would’ve built a 200,000, $200,000 geodesic dome, I don’t know if I would’ve been able to fund the next things I wanted to do because then after that, now that I have proof of concept, I’ve been able to bring on partners. I’ve been able to have all types of investors wanting to work with me because I’ve proven a lot of different concepts. But when you’re starting out, it’s very hard.

Garrett:
And there are some, you might be able to get some USDA financing. That’s an option that a lot of people use in this kind of route. There are some local banks are great in this. I actually am working with a local bank for, we’re building an A-frame right now and that’s helping work with us on that. But it all came from proof of concept and also an A-Frame is much more equitable than a geodome. So I personally would never build another geodome, but it was a good way to get started. So I would never tell another person to build one. I would build a cabin, a very unique one, but I love my geodome and it is already paid for itself in a year and a half. So

Toni:
That’s what I was going to ask. What kind of profits do you actually see on that a hundred thousand dollars investment in year one or year two? What does that look like for you?

Garrett:
So I always tell this to people to just remind them that I love Air DNA, I love mizer. All those places give great data. They said we were going to make 30,000 a year if we put a one bedroom, one bath in the area that we did. I think we did 96,000 our first year in the geodome. And I think this year we’re going to definitely passing a hundred thousand. I haven’t looked at the exact numbers, but we provide 50% income on that too. I think we made $50,000 the first year. So we had a 50% cash on cash return just in the first year alone. And so these data sites, they’re great for a lot of things, but sometimes when you build a really unique property and you understand some marketing things to it, you’re going to be able to crush those numbers. And that’s exactly what we did. And even our next place became even more profitable than that. So each one, we’ve just dwindled down on it and now it’s all in one piece of property too. So my insurance is lower, my taxes are lower, my cleaning team is much easier to deal with. My handyman is he can show up to one place and doesn’t have to drive all around the town to come fix properties. For me, it’s all in one area and it just operations wise is so much smoother for me, especially working full time and things like that with it.

Toni:
One last question on the finance and peace gear. Could you potentially, I don’t know what the zoning of the land is, but could you potentially go out and get a commercial loan and maybe get this appraised based on the net operating income as opposed to a comparable sales approach? Is that an option on that property?

Garrett:
So going forward, I didn’t explore that when I was first doing it. I kind of talked to a few people, especially banks and stuff, and they were kind of like, no way. We’re not lending on a geodome and all these things. I was like, okay, I’ll figure it out myself. But now that I’ve proven concept, I’ve learned a lot with the equitable side. I can get an SBA loan if I wanted to, and we’re working on things like that. The USDA, they kind of have a commercial side of it as well too. And now that I’ve proven my numbers, it’s much easier to get a commercial lender involved with me if I wanted to. It would depend on the structure. And then also your expertise probably, and I don’t want to say proof of concept because the concept has been proven, but there’s a lot of numbers they’re going to dive into more, but you could easily get commercial lending on some of these and some of the things we’re exploring going forward with what we’re doing.

Toni:
So you knocked out the park, obviously, Gary, with this first one, you did an amazing job, man, and I’ll be curious to see how the finance and P shakes out for you. But I think one of the things that’s unique about you and your journey is that you also decided to document this process on social media. I guess first, what led to that decision to document and share?

Garrett:
It goes back to me just being, I like being creative. I’ve always made content. I’ve always liked explaining things to people. And the one thing I think I saw in this space when I was watching a lot of content is some people were actively doing it. Those were the people I really, really appreciated a lot that I was doing. But a lot of people weren’t showing the journey as it’s happening. Some people were claiming they’re gurus in the space and they didn’t even own a property or never have done the journey before. And so I think the one thing and why my content was resonating so well with people is I was documenting my mistakes. I was documenting the things I think I was doing right, but then people online were telling me I’m doing them wrong, and I was learning small things and you take it all with a grain of salt.

Garrett:
But that not only led me to start getting some progress in the social media landscape, but then it built a connection with guests too that even when I launched the property on Instagram and things, we got a ton of followers pretty much overnight from the first time because I’d already built that relationship with a lot of people that wanted to see how progress had came out. A lot of people want to be involved in the journey. There’s a million different things people can feel invested in. And if somebody is going to consistently come back to your place and book it year over year and feel like there’s a reason to give you their hard earned money for a unique stay, they also want to feel like they’re behind something that they can support. We’re a family owned operation. We support mental health awareness, and those are the things that we really try to push out.

Garrett:
And at the same time, I was showing people that this is not a perfect journey and we’ve made a lot of mistakes and you can make this happen too, and it’s not always going to be sunshine and rainbows, but in the end, it can work out for any investor if they just stay patient and they’re able to not dwell on the problem and figure out solutions as they happen. So people like seeing the documentation of being in real time, and I noticed that and I just kept constantly learning from them and seeing what content people really wanted to see and just doubled down on that going forward.

Toni:
It’s a great strategy and I think we are in the age right now where everyone has the ability to build a platform for themselves. And you already mentioned you have people now reaching out to you wanting to partner with you on the next version of this, and I would assume that maybe a lot of those people found you through the content that you shared online. So there’s a massive benefit if you’re looking to scale your business beyond your own financial means to share your journey and start building a connection with other folks who may have an interest in working with you. So dude, I absolutely love hearing that, Garrett. Now last thing I want to ask you, man, is when people hear short-term rental, I think they immediately associate that with Airbnb. And while Airbnb is the dominant player in the space, I’m just curious what if you have an idea of what percentage of your bookings come from the various sources that are out there?

Garrett:
So Airbnb is definitely pretty dominant, but we actually do about 65% direct bookings on most of site from a lot of Instagram, a lot of TikTok, all those things. It comes from documenting it and just constantly making content around it and knowing what people want to see with the unique state. But we also have a pretty big influx, and they’re not my favorite platform, but even booking.com has probably taken about 10 or 15% of our bookings recently. And I even doing research for BiggerPockets a couple of days ago, I didn’t even realize this, that booking.com, I think they have close to 500 million visitors to their website a year versus Airbnb has 82 million and VRBO has 40. And so booking.com isn’t obviously only unique stays in things, but when you have 500 million eyeballs on a platform, verse 80 and 40, you need to be on everything you can.

Garrett:
That’s kind of what I get into the end is there’s some platforms out there that people are like, oh, I’ll just be on Airbnb to be on as many platforms as you can. And then the direct booking is kind of our sweet spot because then from there on, we can market to guests. We control the guest experience from start to finish. There’s no extra fees added on and all these things like that. And then once they actually leave our property, we have their data to remarket to them and send emails and send discounts and coupons. And you can do that on Airbnb as a sort. But if you really, really want to have the best guest experience possible, you need to be able to curate that guest experience from start to finish. And so I’m a major advocate of direct booking, but a lot of that comes from social media. Social media and Google are two of the most powerful searches. Probably way more people on those than booking Airbnb and VRBO probably combined too. So that’s a thought for that.

Toni:
Yeah, dude. Dude, fantastic. 60% is amazing. Our single family portfolio, definitely very reliant on Airbnb and vrbo, our hotel, we’re about 50% direct right now. And booking, I think is the second biggest one. Or maybe it’s like 40. 40. And then there’s the other 20% is all those other websites. But yeah, direct is definitely a big thing, and I think there’s a bigger focus on that moving forward. Dude, amazing conversations today. I’m sure you’ve inspired a lot of Ricky’s who are listening to this, so maybe want to get in but don’t want to follow the traditional path of just buying a condo in Houston, but maybe want something a little bit more unique. But before I let you go, man, you mentioned you were doing some research for BiggerPockets. Just quickly let the audience know what exactly is it that you’re doing in the BP world these days?

Garrett:
Yep. So I joined BiggerPockets, which is a complete honor back in July. I am their short-term rental expert in the area. We put out a weekly newsletter called Bigger Stays on Wednesdays that is free for subscribers. That dives into all the short-term rental news for the week and data dives. And then we’re really building out the space and the STR community over here to really empower a lot of people to take the steps that they need to be successful hosts and win on the real estate front and the hospitality front. So we’re super excited and we have some really, really big things coming. So it is definitely an honor to be over here and working with some amazing minds that are all over at the company.

Toni:
Yeah, dude, you’re doing a fantastic job over there, man. And I’m sure that the folks are enjoying that content. Well, Garrett, dude, I very much appreciate you jumping on the Rookie podcast with me today and Ashley’s abstinence and getting to dig into your story a little bit there, man. I’ll be sure to put Garrett’s contact information, the show notes for today’s episode. We’ll link out to his social, we’ll link out to the content he’s writing from BiggerPockets, so be sure to check that out. But guys, that is it for today’s episode. I appreciate all of you hanging out with us today. And look, if you are a fan of The Rookie podcast, if you’re getting some value from it, I’ve got two quick asks. Ask number one, be sure to subscribe and whatever platform it’s you’re listening to, if you’re on Apple Podcast, Spotify or wherever, if you’re on YouTube. And we’ve also got a goal of getting to 100,000 subscribers on YouTube. So if you haven’t subscribed there, please take a quick second subscribe, hit the bell for notifications. And guys, we will see you in the next episode of Real Estate Ricky.