Mar 11, 2022
Can vacation rentals allow you to quit your day job?
Kirby Atwell will definitely agree because he’s experiencing it firsthand. Formerly a military officer, he decided to invest in real estate, believing that it could help him take control of his time and spend more time with his family.
That’s when he realized that he was wrong and he only wasted five years of his life without gaining anything. Eventually, he found himself investing in short-term rentals and never looked back.
He will share his story in this episode, as well as give a sneak peek into his daily experiences as a short-term rental investor.
[00:01 - 02:32] Opening Segment
- Kirby Atwell tells us how he jumped from the military to real estate investing
- What he realized in his first five years as a real estate investor
[02:33 - 07:15] Investing in Vacation Rentals
- Kirby only discovered short-term rental properties by accident
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- Here’s what he learned from this discovery
- Their business model thrived during the first year of the COVID-19 pandemic
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- Kirby tells us how
- The power of automating your business according to Kirby
[07:16 - 12:57] Doing Market Research for Vacation Rentals
- Can you leave your regular job with vacation rentals?
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- Kirby shares his experience
- Kirby explains how they found out the demand for vacation rentals
- He reveals how they’re doing market research, which is important for their business
[12:58 - 16:14] Building a Business That Supports Your Lifestyle
- How to manage your involvement in the day-to-day operations of your business
- The biggest problem that aspiring real estate investors face
- Make your business work to support your lifestyle, not the other way around
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- Here’s how
[16:15 - 19:26] Closing Segment
- A tool or resource you can’t live without
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- Microsoft OneNote
- Any notetaking app
- Pen and paper
- A real estate mistake you want our listeners to avoid
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- Not having a clear outcome
- Plot your life goals to draw a clear picture of what you want
- Your way to make the world a better place
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- Providing memorable experiences to their tenants
- Teaching investors how to buy their first short-term rentals
- Reach out to Kirby
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- See links below
- Final words
Tweetable Quotes
“The more unique the experience [in your vacation property is]...the higher you're going to get paid.” - Kirby Atwell
“I think a lot of people get into real estate investing in general without understanding what the clear outcome that they're after and I think that's the biggest problem.” - Kirby Atwell
“If you don't sit down and actually plot out what you want your life to look like, you will never get there, you're not going to just accidentally end up at an ideal lifestyle, and it's never going to happen.” - Kirby Atwell
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Email kirby@greenvethomes.com to connect with Kirby or follow him on LinkedIn. Sell your house fast in Northwest Indiana with Green Vet Homes!
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I love helping others place money outside of traditional investments that both diversify a strategy and provide solid predictable returns.
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Want to read the full show notes of the episode? Check it out below:
Kirby Atwell 00:00
I think a lot of people get into real estate investing in general without understanding what the clear outcome that they're after. And I think that's the biggest problem. You know, that's how I lost five years, flipping properties really, in that getting ahead, financially speaking, because I didn't have a clear, I just was kind of doing what other people who look successful were doing. And I thought, well, this is going to lead to success because, you know, I'm flipping houses and people are telling me I'm successful, and we're making money. So it's gonna lead me somewhere successful.
Sam 00:34
Welcome to the How to Scale Commercial Real Estate Show. Whether you are an active or passive investor, we will teach you how to scale your real estate investing business into something big.
Sam Wilson 00:42
Kirby Atwell is a former military officer who achieved financial freedom through vacation rental investments. Kirby, welcome to the show.
Kirby Atwell 00:50
Sam, it is awesome to be here today.
Sam Wilson 00:52
Hey, thanks for coming on, man. It's always good to interview. Well, I'm now a former Hoosier, I guess I can say I lived in Indiana for 30 years. But now a fellow Hoosier. That's a good time, there's three questions I asked every guest who comes on the show in 90 seconds or less, can you tell us where did you start? Where are you now? And how did you get there?
Kirby Atwell 01:08
Yeah, so I kind of went through a big transition in 2011, I was serving in the military. And I'd gone to West Point and decided that I no longer wanted the security of the paycheck on the first and 15th. And I was going to jump in real estate full time and figure this thing out. And I would have all this success really quickly and kind of underestimated how long it would take to get rolling with that. And so I started a flipping company, initially, and I partner with two partners, and we flipped over 70 houses around the Chicagoland area, because I thought that was the way to make quick money, you know. And what I realized about five years later, is that we had built a treadmill that we were on with accumulated no assets, we had made a lot of money. And then we put the money right back into the business, hiring staff sending out 10s of 1,000s of dollars in marketing, all the stuff that you do when you don't realize, you know, the impact it's going to have. And so, five years later, I was sitting there in the exact same position I was when I started financially speaking, you know, obviously, we had learned a lot created some really great relationships. But that's when I really got into rental properties at that point in 2016.
Sam Wilson 02:14
That's interesting. Yes, you're telling a painful story that I know all too well, personally on the flipping thing where you're like, wait, I'm five years ahead. Yeah, I paid for my life. Yes, I've learned a lot. Yes, I put some money aside, but I'm not really further ahead. So what was the next step from there? I mean, you know you're doing what, tell us what you're doing now.
Kirby Atwell 02:33
So initially, I got into long-term rentals. From there, I started accumulating a portfolio of 26 properties, mostly single family homes. And it was great. But in 2000, end of 2017, 2018, I discovered short-term rentals kind of by accident, because we moved from Chicago to Northwest Indiana. And we're rehabbing this house on Lake Michigan. And we're like, you know, we've got this walkout basement, and I keep hearing all this stuff about Airbnb and how much money people are making. Let's just convert this unfinished basement into a one-bedroom apartment, you know, spend an extra $30,000 doing it and see what happens. And so we did that. And the first three months, it was right before summer that we finished. That first summer, we made about $22,000 on that one-bedroom basement that was really small. And I was like, you know, there's something to this, if I can scale this, there's some money to be made here. So that's really the turning point for me when I really just slowly started focusing on vacation rentals.
Sam Wilson 03:31
That's fascinating. So what did you do to educate yourself on the short-term rental space?
Kirby Atwell 03:36
Not as much as I should have? Probably I can learn the hard way. You know, we just jumped into it. We tried it ourselves on that first one in our own property. Several years later now, I look back at that experience. And I realized we could have made probably double what we made that summer, the demand was just super high. We booked up almost immediately for the whole summer. So we were charging way under what we should have been charging, even though we were ecstatic with the results. So so I kind of learned as I went, that was it was kind of on-the-job training. But I wish I would have educated myself more because I, we could have done a lot better more quickly.
Sam Wilson 04:12
Yeah, that's really interesting. Tell me about you, so you guys got into short-term rentals. And what, where do you see it going from here? Is there still opportunity in short-term rentals?
Kirby Atwell 04:22
Yeah, we got in, you know, just prior to COVID. Really, I mean, a year or two prior to COVID. And, and you know, when COVID happened, we're like, you know, is this just not going to work anymore, because everything was vacant immediately. What we found then, just you know, a month or two later, all of a sudden we started booking up like crazy on the summer of 2020. And it really kind of helped our business if anything. I know there was you know, Island destinations and stuff that just got crushed. But for us it was people from Chicago, Indianapolis, Detroit saying, “Hey, we just canceled our Florida vacation. We still want to go somewhere. We want to stay in a house. We don't want to stay in a hotel.” So in a lot of them, they're like, this is our first time using Airbnb. And so they got a whole house for the cost of what they're going to pay for a hotel, right. And so they're not going back, you know, to use in a hotel. And so the demand just shot through the roof after that happened because people were kind of forced into using it. But the supply didn't shoot up like that. So it's starting to a little more, you know, more and more people are getting into it. But there's still this huge supply and demand differential. So the cash flow is just not even in the same hemisphere as a long-term rental, same property, you know, I'm buying in affordable locations, Michigan City, Indiana. And you know, it's three, four times or plus three, four times plus the amount of cash flow.
Sam Wilson 05:42
Right, which is absolutely crazy. Operationally speaking, your short-term rentals are complex. So where are you guys, unit count-wise? And then what have you done to really kind of reduce that operational burden?
Kirby Atwell 05:55
Yeah, they certainly can be it's more hands-on we, it's kind of funny, though, I think it's easier to automate, because there's so many online tools, and it was designed around a remote platform. So there's so many aspects that you can do remotely. So we have a great, we have two key people on the ground that do everything on the ground and our properties or a half-hour away from us. So I can go there. Initially, I did. And I think it handicap me, I wish I would have started with something remote because it would have forced me to think like a business owner quicker. But now I treat them as if they're remote, I haven't been to my properties in a while because we have a great cleaning team. And we have a great handyman. And between all the underground tasks, between like, you know, refilling the supply closets, cleaning the properties, you know, touching up the properties between guests, it can all be done by those two individuals. And then in Florida, we've got a really great guest relations person who's never been any of our properties. But she responds to inquiries immediately, she answers guest questions, she knows our properties better than we do, I think. And so she handles the ethical side of it. So today, you know, we have six or seven turnovers, and I'm not involved with any of them. But still, you've got that higher cash flow. So we have 13 listings now that we own. And we really, it's pretty much all automated at this point.
Sam Wilson 07:16
That's fantastic. At what point in time on it again, I know for everybody, this will be different. But at what point in time that the number of units that you own pay for your daily living expenses.
Kirby Atwell 07:26
When we sat down initially and started looking at it, my wife and I decided at once we get to eight vacation rentals, we were, feel really comfortable with me leaving my job, she was already staying at home with our two kids. And so, you know, we were kind of roughly “guesstimate” or estimating based on the couple that we had in the beginning that we could get, you know, at least $1,000 of cash flow. Since then we've been able to do much better than that, after all our expenses and set-asides on each property. So we, you know, estimated that at eight, we should be more than comfortable to for me to leave my job plus that freed up so much more time that allowed us to keep buying more of them. So I was the CFO of a nonprofit as well while I was growing my rental business. And I left about a year ago when we were kind of at that inflection point.
Sam Wilson 08:15
Right. That's really, really cool. Talk to us about what you guys are doing. You know, you live in Northwestern Indiana, you got 45 acres there that you're on, and you're doing some really cool stuff with us. Tell us about that project.
Kirby Atwell 08:26
Yeah, so the first property that was talking about where we put Airbnb In the basement that was on Lake Michigan. It had no yard. And we also didn't have kids really we just our first son was just born. So we didn't realize how impractical it was going to be once we started having kids to be living right on a lake with no yard. So we realized that we wanted more space. And also we wanted to expand what we had in our basement that was working so well and scale it a little bit. So we started looking for some land. And we found this old farmhouse on 45 acres that had several outbuildings that we could rehab as well. And so we bought this land. And also my parents bought another 10 acres next to us and that house so they were able to move over from Illinois as well. So the plan here, we rehabbed the house first and we actually rent our house that we live in on Airbnb sometimes. So we'll leave for a long weekend and throw it up on Airbnb. And we're just shocked at what people are willing to pay for, you know, to stay on this land. It's pretty nice. And so since we rehabbed the house, we moved in here, we rehabbed this barn in the back where my wife's putting an antique shop that she runs. We also put an Airbnb or residential one-bedroom unit there with a loft that can sleep six, and then on the back of the barn, there's this covered patio area where we can host events. We also have an antique barn that we, it's over 100 years old that we rehab, and we could have you know, small events in that barn as well. So we think it's the best of all worlds because our land pays us and this is just the starting point. I mean, we could we're talking about putting you know air streams or Airbnb, tiny houses or cabins out on the other acreage, that sort of open land, but this is just kind of the first phase of it, and the land’s paying for us to live here. And we get the benefit of being able to use the land, you know, we have 20 chickens out here, we get to grow, you know, all kinds of fruits and vegetables, and the kids just run wild. And so we love it. It's definitely a lifestyle business for us.
Sam Wilson 10:22
Yeah, that's really, really intriguing. How did you determine what the demand would be for that product? I mean, to go out and rehab a barn, it's not a small endeavor, you know, ad unit to do everything you've done to it, just to see if it works?
Kirby Atwell 10:35
Yeah, that's a good question. It definitely has taken more than I initially estimated, because I hadn't ever rehabbed the barn before, and hadn't done a project of this scale. But basically looking, you know, at competitive properties, you know, I review the comps on Airbnb the same way people review accounts on the MLS. And I look at where, you know, I can see the previous reviews of other properties in the area. And I can see what their booking calendar looks like, or they booked out for the next several weeks or months. And I can see, yeah, there's a lot of demand here. And I can see the price point that our competitors are asking. And also, we kind of did our own market research going to other experiential type stays where, you know, we went glamping last year at this place in Michigan, where it's, you rent a tent for $350 a night. But it's like the most luxurious camping experience you've ever had, you know, and it's on land similar to ours. And so why can they charge $350 a night for a tent when you know, others are charging, you know, $50 a night. And so it's understanding how to market it. And that's what it's all about. And Airbnb loves it. They are pushing experiences like crazy. You can search on Airbnb Treehouse stays, you can search here, so you can search all these unique stays. And the more unique the experience, the better, the higher you're going to get paid. So we were able to kind of see what others are doing here and start to run the numbers. And when you have 20 tents that are paying you 350 a night, you start to run those numbers. And this is insanity, how much money they're making.
Sam Wilson 12:04
Right. Yeah, absolutely. That's really, really intriguing. You guys did market research. And I'm assuming that's part of the Airbnb platform as a host that you can use to go back and do research.
Kirby Atwell 12:14
Yeah. So there's a platform called AirDNA that is sort of the leader, I think in data for short-term rentals, you know, they can collaborate, they compile all the data for, you know, you can search an area and see, what's the average price point, you know, nightly rate, what's the average occupancy rate? How many are there in that area? So that's a starting point, I look at that as like the 20,000-foot view of an area. And then I'll drill down to the actual comps right around me, you know, within a mile or if you're more remote, you know, within 10, 20 miles, you know, who else is renting? What types of properties? Are they renting? How much are they asking per night? And so you can get a really clear picture of how much you can expect to make just from those two sources.
Sam Wilson 12:58
Right? That's really, really intriguing. What about I mean, again, using your property, go back to the operational complexity, you know, because that's one of the hurdles that keeps, well, in commercial real estate, it keeps prices high, the more or lower, excuse me, relative to the amount of income it makes, in the sense that you're, the more operationally complex it is, the higher the cap rate it trades at because it's just, it's more work. So when you look at this business, how are you going to intentionally build this on your own property, such that it doesn't just tie you to another long-term job?
Kirby Atwell 13:29
Yeah, it's a good question. I think we are a little more willing to be involved here. I mean, my wife's vision, she would love to just, you know, sell off the Michigan City properties which are a half-hour away and just have our own, you know, rentals that we manage, and are a part of that guest's experience, we like, you know, interacting with our guests. Some people don't like that, you know, and they don't have to do that. But, so I think we're going to be a little more involved with the units here. But in the same vein, we can use the same systems that we have in Michigan City, you know, the same cleaners, since all of our properties are within the same area, you know, driving distance to each other, we have great economies of scale. So the same cleaners, the same handyman. So when our guest relations person is managing, you know, all of the guest inquiries and the bookings, and, you know, issues come up throughout different stays, she's reaching out directly to the handyman to come and, you know, fix something or, you know, line up the cleanings in between the guests. So, again, it's I don't think we're going to be significantly involved unless we want to be so it's one of those where you can kind of set your own involvement if you want to.
Sam Wilson 14:39
Right, that's interesting. What advice would you give to somebody who may be interested in getting into their first short-term rental?
Kirby Atwell 14:45
Yeah, I think a lot of people get into real estate investing in general without understanding what the clear outcome that they're after, and I think that's the biggest problem. You know, that's how I lost five years, flipping properties really in that getting ahead, financially speaking, because I didn't have a clear route, I just was kind of doing what other people who look successful were doing and I thought, well, this is going to lead to success because, you know, I'm flipping houses, and people are telling me I'm successful, and we're making money. So it's gonna lead me somewhere successful. But now, I totally did a 180. And we got super clear on what we want our life to look like. So there's a lot of opportunities that come across my plate that would make money that I turned down all the time, because we're super clear about our goals now, and what we want our lifestyle to look like. And that's how we based all our decisions, and it's led us to be able to both leave our jobs. And, you know, I work with my kids right outside the door here outside of my office. So, you know, I see them all day long throughout the day. And it's a lifestyle that we absolutely love. So it's not just about the money, get clear about what you want your lifestyle to look like, and then start investing in properties that are going to support that lifestyle.
Sam Wilson 16:00
Right. That's absolutely brilliant. And well, well said, I love that. Cool, man, this has been great Kirby, thanks for taking the time to jump in today. Let's jump into the final four questions. What is one tool or resource think, you know, as it pertains to your business in particular that you find you can't live without?
Kirby Atwell 16:15
It's kind of elementary, probably. But Microsoft OneNote is something that I have used for the last probably six years, and I've got each year separated. And then within each year, I've got my notes, my goals, ideas, and then properties, you know, I have all my properties listed. So notes for those individual properties. So you know, all the stuff that before that was kind of a jumbled mess in my head, now I organize and I have a way of capturing the ideas and thoughts that I have in a cohesive way. So that's kind of been a game-changer for me. And it doesn't have to be OneNote. It can be any sort of notetaking, either pen and paper. For me, it's just easier because it's always on my phone, it syncs with my computer as well. And so wherever I'm at, if I'm listening to a podcast, I can just write down ideas in that.
Sam Wilson 17:00
Yeah, that's absolutely brilliant. I love that. Question Number 2 for you is, what is one mistake you can help our listeners avoid and how would you avoid it?
Kirby Atwell 17:07
I would say again, going back to getting super clear on your outcome, setting your goals, taking the time to do it. I know you can listen to people talk about, you know, goal setting and understand goal setting, conceptually, but if you don't sit down and actually plot out what you want your life to look like you will never get there, you're not going to just accidentally end up at an ideal lifestyle, and it's never going to happen. So get super clear about that. And that will help you make so many decisions in your life that you're going to labor over Should I take this job, should I move here? Should I date this person? If you're clear about what you want your life to look like, those decisions become much, much easier.
Sam Wilson 17:46
Right. Yep, absolutely. Question number three, when it comes to investing in the world, what's one thing you're doing right now to make the world a better place?
Kirby Atwell 17:52
I would say, you know, there's really two things that we do. One is provide amazing experiences for our guests. So if I'm having a bad day, I just go on Airbnb, and I start reading our reviews. And it is awesome to hear people just rave about the properties. And you know, they're like this made our whole vacation. This is awesome. Like, we're definitely coming back. So I think that's super satisfying compared to some of the tenant issues that I had in the past with long-term tenants. You know, it's kind of night and day difference. And then also we teach people how to get their first vacation rental. So you know, I see people's lives changing buying these high cash-flowing assets that allow them to, you know, eventually leave their jobs as well.
Sam Wilson 18:34
Right. That's super cool. Kirby, if our listeners want to get in touch with you or learn more about you, what is the best way to do that?
Kirby Atwell 18:39
Livingoffrentals.com/start is the best place to start. So Living Off Rentals is the platform I started several years ago. It's kind of a community that's grown over the years and that's, you know, the best place to get more information there.
Sam Wilson 18:53
Thank you for your time today. I do appreciate it. It's been great to have you on the show and look forward to connecting with you soon.
Kirby Atwell 18:58
Awesome. It's been great being here. Thanks.
Sam Wilson 19:00
Thanks, Kirby. Hey, thanks for listening to the How to Scale Commercial Real Estate Podcast. If you can do me a favor and subscribe and leave us a review on Apple Podcasts, Spotify, Google Podcasts, whatever platform it is you use to listen, if you can do that for us, that would be a fantastic help to the show. It helps us both attract new listeners, as well as rank higher on those directories. So I appreciate you listening. Thanks so much and hope to catch you on the next episode.