Ep. 8 – Investing in a Caribbean vacation home, the rise of real estate prices in 2021 vs the 2008 Bubble, and buying property at auction.

Matthew Maschler:
Welcome to the Real Estate Finder podcast. I’m Matthew Maschler, the real estate finder, and with me as always,
Staci Garcia:
Stacey Garcia. Also a real estate finder,
Matthew Maschler:
And you can find us on realestate finder.com, Facebook and Instagram. I’m Matthew Ashler on most of those platforms.
Staci Garcia:
And I’m Stacy’s Mail, S-T-A-C-I-S-M-A-I-L pretty much everywhere. Or Stacy Lynn Garcia on Facebook.
Matthew Maschler:
So I’ve lost count of how many episodes we’ve done where we’re cooking with gas on the Real Estate Finder podcast. I hope everybody’s enjoying it. I actually started a second podcast. It’s about to drop, actually, it’s probably dropped by the time this podcast airs. That’s called the Matthew Mania Podcast. It’s not real estate related. It’s where I can talk about other things, not real estate related. Also, we won’t have Stacy on that podcast.
Staci Garcia:
That’s good. I don’t know anything about wrestling.
Matthew Maschler:
Wrestling and other fun things. Disney, Vegas, other fun things, but yeah, personal stuff. So it’s like, like you have your Facebook personal page and you have your Facebook business page. So this is my business real estate, and that one’s going to be a little bit more fun and recreational. Today we have an interesting episode for you. We have our mutual friend Steve Krupp. I was thinking, is it crop or croup? I pronounce a crop and I froze. So then I was like, maybe Stacey introduced me to him several years ago. So maybe Stacey could
Staci Garcia:
Introduce him here. Yeah. Okay. So I met Steve a couple of decades ago. He came into my office when I was doing an different industry, and he had an incredibly hilarious T-shirt on. I think it said, what did it say?
Matthew Maschler:
Non-employee of the month.
Staci Garcia:
You might’ve said that. I think it was World’s best underachiever. World’s best underachiever. So anyways, he’s a computer expert. So at the time he fixed our computers and we became friends and we’ve stayed friends since. Now he’s a piano tuner and also into real estate. So that’s kind of why I brought him on. I thought it would be interesting in a topic that we kind of touched on last lastly,
Matthew Maschler:
And that’s how I met Steve as well. I needed help with my computers. In fact, I got into a very zen mentality. I said, if I go to my therapist once a week and give him $150, and I tell him all my problems, I don’t think he solves any. But if I get Steve to come once a week, give him $150 and tell him all my problems. If he solves two or three and after six months, you’re ahead. I was totally cured. I was cured. Everything on my computer list I either gave up on or fixed. And Steve, thank you for helping me with all my computer issues.
Steve Krupp:
I couldn’t have got through that without Stacy’s bit of advice when she introduced me to you and she said, just be quiet. Listen to Matthew and then say, and how do you feel about that? How
Matthew Maschler:
Do you feel about that? What do you want? We got everything working. It was great. And he’s on my vendor list@realestatefinder.com. And a funny thing about the miscommunication when you put things into the database sometimes like garbage in, garbage out. So I wanted him in my vendor list under two spaces, computer help and piano tuning. And I literally had a category created on the vendor list called computer help and piano tuning. And I’m like, it’s really two subjects. That’s not usually what somebody looks for. Two subjects, it’s computer help two group and piano tune separate subject.
Steve Krupp:
Yeah, it’s a lot of times people say, what do you do? And I struggled to answer that question because it depends on how they met me or what they expect. But some people have talents in many areas, so like yourself,
Matthew Maschler:
But as real estate experts in Boca Raton, we need vendors. We need people to recommend and we need good people to recommend. And one of my clients wants to move a piano or says, do you have a good, if my client is moving a piano and I said, I’m able to suggest a piano tuner or if they’re looking for a piano tuner, having that resources, I’ve definitely sent Steve more computer customers than piano tuning customers, but I’m sure I sent them both. But we’re not here today to talk about either of those things. That’s right, that’s right. We were just talking about what we’re here to talk about and what did we come up with? Short-term rentals, short-term rentals. Steve has become the king of short term vacation rentals in Florida.
Steve Krupp:
Well, I don’t think I’m a king, the prince more like a pawn, the pawn, but I fell into it. We ended up buying some properties in northern Florida for our own personal use, and I didn’t really, I bought a house other people 20 years ago. I bought a house 15 years before that I bought a house. It wasn’t like I really was in the real estate business like you guys. And so I approached it the same way when I buy a house in an area that I wasn’t really sure of. So I called a real estate agent like you and Mary Poppins. We made a list, which is really important I think if you’re looking for property, because if you’re a couple or I mean even an individual, the things that are most important, rank them up and put ’em on that list. And then we gave that to the agent and she ticked off all the boxes.
And you can see the ocean from every window, but it’s not in my lap. So you got to compromise a little on all that stuff. But then you end up, and we got very lucky finding this three bedroom, three bathroom condominium right on the beach. You don’t have to cross a one A, you can go from the door to the ocean with a short walk. And she mentioned you can rent out the room. Actually when we bought it, there was a young man living in the, it’s a three three with a lockout door. So you have a two bedroom, two bath and a studio apartment attached to it. And so we enjoyed it for the better part of a year. And then we started thinking about, hey, we could make some income, let’s rent it out. And so we engaged the services of a property management company At the time,
Matthew Maschler:
How did you find the property management company?
Steve Krupp:
So I kind of do research on anything I’m interested in learning. And I started looking on the internet for different management companies. I think I had about a half a dozen at the time while I was doing my due diligence. One of them swallowed the other, and Casa bought Tru Key, who still advertises as a separate entity. So if you do do business with either one, they’re actually owned by Casa. What does that word? vi va? Yeah. Victor Apple, Charlie Vi, Casa Vic Casa. V-I-C-A-S-A, VI Casa Va. V-A-C-A-S-A.
Matthew Maschler:
Like vacation Casa. Yeah.
Steve Krupp:
Oh, I got you. Vi Casa to come. So they were the most expensive of all of the different companies. I had looked up on the internet and every company I looked at had really poor reviews. No one seems to be happy with any property managers that they use, but I like to make my own opinion. So you know what, let me give them a shot because you could read into the reviews some people, another one which we just started with Evolve also had some poor reviews. But in those reviews you could see it was because perhaps the people that had engaged their services didn’t understand the limits of what they were paying for. And so that was where the issue came in of their unhappiness or their complaint. So I have a whole realm of experience with Casa who we decided to ways with, if you want to talk about that or go on with what we’re doing with short-term rentals.
Matthew Maschler:
Well, I think before we get into the problems, I think we want to tell us what you’re doing. If we have time, we’ll circle. Yeah,
Steve Krupp:
Sure. So we decided, okay, let’s see how it goes. Renting it out. And we went live, the first weekend was the end of May, I forget the holiday memorial day I believe. And we spent a whole couple of months before that painting and putting down windowsills and just making sure that everything was a hundred percent so that whoever checked in there was no complaints. I also didn’t want any excuses from the manager. Well, it was never really good to begin with. So everything was top shelf as much as we could do it. And the furniture was brand new. In the first three months, we got about $12,000, which was 28% less than was actually collected. So that condo, which was in the area of around 300,000 when we bought it, kicked off 12 grand in three months in cash.
Staci Garcia:
Did you decide then we’re not going to just live here, we’re going to rent this place
Steve Krupp:
Out? Well, what happened is when we finally made the decision to rent it out, because it just didn’t have enough closet space for all our stuff. Oh, that’s important. My wife was like, we can’t live here. We’ve been there nine months. I was like, all right. So I drew a circle from there, a half an hour around by car. And then we looked in all these different neighborhoods in Jacksonville, in Palka, in Palm Coast, and we ended up buying a house in Palm Coast. We could within 30 minutes drive to this condo. So we felt if we were going to manage that and take care of it and rent it, we’d be close enough to be hands-on. And that was the reason. So we ended up with two properties up there. And then again, when we bought the property, both of them, we didn’t really have this focus on the next one, which we will of get a property that has a separate unit that you can rent. But that seems to be a key plus in getting into a short-term rental business because it gives you the ability to sort of be there and rent it at the same time, so you kind of have your cake and eat it too, so to speak. And so we’re developing the Palm Coast single unit for rental. Now we’re going to add some kitchen stuff, and we’ll probably rent that one to traveling nurses and professionals who usually look for properties on a website called furnished finder.com. So as a
Matthew Maschler:
Furnished finder.com. So as
Steve Krupp:
A property owner, you might want to list your property there. And that’s not a short-term rental in terms of days and weeks. That’s a short-term rental in terms of months, you could rent like a three month it seems. These traveling professionals will have a 90 day contract and then they’ll extend it so you can rent your property, but they don’t move in a normal tenant with furniture. And so it’s not an issue that becomes problematic in terms of them leaving or not paying a rent perhaps because they’re on assignment.
Matthew Maschler:
That’s interesting. And I haven’t heard of that one, and I can see that fills a need, right? VRBO or Airbnb, it’s vacations. It’s a couple of nights a week, two weeks
Steve Krupp:
A month
Matthew Maschler:
Maybe, but it’s not. And typical leasing, what Stacy and I do as real estate agents would be a one year lease or close enough to it or seasonal. We seasonal lease, but there seems to be a need for longer than a vacation, but less than a full-term lease.
Steve Krupp:
Sometimes it’s the property, people are shopping for property themselves or they’re waiting for the house to be built and they just need three or four months until they move in or close, or they’ve sold it. But now they haven’t. Stacey tell said this to me when I was looking for the product, she goes, you did the hard part. You bought the new place first. Now it’s so much less stressful to sell the old one. And so you may need a place to stay in the interim because of that. Another reason you can just rent for short
Staci Garcia:
Term so that it has furniture, it has coffee, it has deodorant, and people walk in with their suitcase and they’re good to go. It’s like
Steve Krupp:
A hotel. In fact, the Palm Coast, we’re actually going to do it both ways because there’s a seasonality to the house is right on a canal like the canals in Fort Lauderdale down here. So we can rent it in the summertime to people who are on vacation for a week. They want to be on the ocean, they want to go paddle boarding and canoeing and whatever, hiking. And then in their winter months where it may not be as popular, I can rent it for three or four months to people who are, there’s a new hospital going up a mile from the house, which would be open in two years. So that was a real stroke of luck for us.
Matthew Maschler:
So getting back to the property manager’s role, let’s talk about the different pieces you have to put together if you want to get into short-term rentals. Yeah, that’s a great question. Certainly the first step is you own a unit. So you go out and you buy a unit. Now you own it. You hire the management company. There’s different pieces. Who is in charge of occupancy finding
Steve Krupp:
People? That’s a great question because that was what I was facing when I decided to do this short-term rental. Okay, now. And you hear all about Airbnb and VRBO and all these different websites. And as a computer expert, I understood all those pieces and how to implement them and realize how much time and effort all of that takes. It’s a full-time job.
Matthew Maschler:
If you list the property for rent on Airbnb or VRB, okay, you’ll get the customer, you’ll get the booking. You
Steve Krupp:
Got to respond to every message and every inquiry and every email. And then if you don’t respond in a timely manner, they’re like, what’s,
Matthew Maschler:
But you still have to check the people in, check them out, and maintain the property
Steve Krupp:
And collect the credit cards. You have to be responsible for the credit card numbers if there’s an issue financially, you have to have whatever laws you got to follow with. I didn’t want to get
Matthew Maschler:
Involved. Airbnb do the credit
Steve Krupp:
Cards. Well again, and that’s where it comes in with the manager. So there’s this whole array of services that other third parties fill, and some companies offer only a few, only some most. And that was why I started with sso because they covered it all. Allegedly, allegedly, allegedly. They covered it all. And so I felt, well, this way I can learn all the different pieces and see perhaps where I may change down the road to different companies to do different pieces of what I’m doing, which is where I’m at now, having left them and moving on to evolve. And so I think the major thing for people who are getting started, which is probably the focus of this podcast would be the hardest part, is getting the photos taken. I mean, that’s like listing a regular property for sale. It is almost as if you’re selling your property over and over and over
Staci Garcia:
Again. Absolutely. You have to have it clean and it has to be sterilized now, right?
Steve Krupp:
And you have to present it in a way that people are going to look at that and say, Hey, I want to spend a week here. This looks great. So it’s just like any other sale of property only. It’s continuous. And then the list is listing fees, there’s taxes. You have to find out in your jurisdiction what laws you have to comply with. And so these companies like Evolve or VE Casa or Tru Key or whichever other ones are out there, there’s a new one I think I keep seeing on Facebook, Google Future Stay or I’m not quite sure the name of that one, but it’s another one I haven’t looked into.
Matthew Maschler:
I’m going to put my lawyer hat on for a second and talk about the taxes. Taxes. The rule in Florida is there’s no tax on real estate. If you buy real estate, you don’t pay a sales tax. If you buy a computer, you pay sales tax. If you rent real estate, you don’t pay a tax. So there’s no tax on real estate. If you go to a hotel, you pay tax, sales tax, it might be a hotel tax, but we’re talking sales tax here. So when Airbnb and VRBO and all these things came up and all these short-term rentals came up, the question became, what is it? Is it a product? Is a short-term rental more of a product or is it more real estate? And they came up with short-term versus long-term. And the rule is six months in a day, six months or less, you’re paying sales tax and it changes in each county.
I think in Palm Beach County it’s 8%, but every county is a little bit different in Florida. So six months, if you write a lease for six months, or if you rent a property for one day, you’re paying sales tax six months in a day, you’re not paying sales tax. Certainly people cheat those nine month rentals, okay, there’s nine month rental. But certainly people don’t often write six month rentals knowing that a seven month rental would save tax. And then certainly the way people cheat, I don’t recommend it, is you take the six month rent and divide it among seven months and create the fiction of a seven month rental. So people get cheeky on that. I don’t engage in that. I won’t write a lease for six months and two days because it just looks ridiculous. But that’s the borderline on taxes.
Steve Krupp:
Well, everybody hates taxes, but when your house is on fire or you call the police, it’s nice that they show up.
Matthew Maschler:
They are the price we pay for living in a society.
Steve Krupp:
So I’m whatever the lease is, the lease is, I’m with you on that. And I don’t know if it’s sales tax or occupancy tax, but again, the nice part of it is the company that you engage, if you’re starting out and you don’t want to go through all of this investigation, they do it for you and they get it set up. I got a letter in the mail, you’ve been registered, blah, blah, blah, here’s your number. And so very happily scan that, put it in my file, good to go. Now that I’m switching and I need that, I already have it. So that was an advantage, and that’s why I started with somebody that covered everything so I could see where they dropped the ball, where I needed to fill it in, even though they said they did, and they got me started, they got us up and running, they got all the bookings, they did all the emails and stuff.
But there was a disconnect between me and the guest. At first I wanted that, maybe I still do, I don’t know. I’ve had that much interfacing, but I did meet a couple of the guests when I was on property, and it was quite pleasant. There were people on vacation, they were happy to meet me, and I showed them where the room was because they had arrived early. And I was like, that’s okay, you can go in. There’s no one there. So it’s a rewarding business to be in if you’re a social type of person. And my wife, Lauren does it with me. We’re kind of like in our golden years. So the two of us together are doing this to, and so she likes being friendly and talking and engaging. It could
Staci Garcia:
Be a double-edged sword though, right?
Steve Krupp:
Oh
Staci Garcia:
Yeah. If someone doesn’t have a good experience or there’s just not nice people
Steve Krupp:
And it, it’ll have to be that because we’d go out of our way to make sure they have a good experience.
Staci Garcia:
I
Steve Krupp:
Got you. So we just bought the extra chocolate candies at Costco along with the K-cups to leave for people when they get checked in, which was a problem with the management company. In the beginning, I wanted to give away all these free goodies. You get to a place you want a can of soda, a cup of coffee, a snack, great, let it be there. These guys couldn’t even get rubber bracelets from one room to the other. How’s that going to leave them consumable? So
Matthew Maschler:
If I’m platinum on Hilton, then I get the two bottles of water in the room. And the crazy thing is if I’m going to book a Hilton instead of a Hyatt where I have no priority, because oh my goodness, well, when I get to Hilton, they take care of me, get the bottle of water in my room so I can take my pills in the morning. I have one pill, I take one pill, I got two bottles of the water,
Steve Krupp:
But it makes you feel good. And I
Matthew Maschler:
Won’t book Hyatt, not the fact that they lost the sale over that $5 bottle of water.
Steve Krupp:
If I know it’s someone’s anniversary, great. It’s $4 for half a dozen roses at Aldi. Is that the big deal? And they walk in and they’re like, oh, how nice that was. It’s something you remember for a long, long time.
Matthew Maschler:
Well, earlier you were talking about reviews and those management companies tended to have bad reviews. And I started thinking, nobody goes out and makes a good review. What’s the prompt to make a good review? But when you’re mad and you want to make a bad review, so the management companies, if they just do their job, no one’s going to make a good review. But if they don’t do their job, that’s not true. I know, I know. But those roses or candy or those extra touches, that’s the trigger for someone to go out and make the good review,
Steve Krupp:
Right? No, of course. And of course your property itself, the one good, we only got I think two or three before I left them. And the very first one, which excited us was the guy said, what a great location. Now that’s something that has nothing to do with the management company.
Matthew Maschler:
They gave the management company a great review nationwide management company because Steve picked the right unit. You’re
Staci Garcia:
Welcome. So what did you end up learning, actually?
Steve Krupp:
Well, so they took care of that administrative burden that I wasn’t interested exploring at the beginning. And then they listed us on all the major rental sites, which was, it’s kind of exciting and thrilling. And then you see people are renting your place and you’re wondering who’s there. And because we lived close, we were able to pass by and use. Another nice thing about the property is because it was a timeshare resort that sort of became semi-private, it has resort facilities, three swimming pools, two hot tubs, a tennis court. In fact, we’re listed on VRBO and Matthew will have the link. So if you guys want to take a nice vacation in St. Augustine, feel free to book my place.
Matthew Maschler:
Do you want to plug it?
Staci Garcia:
This is your spot. Knock it out of the
Matthew Maschler:
Park. I’m new to podcasting. If my producer was here, I didn’t know if there was a mute button. I’m trying to whisper like Steve, do you want to plug it or are you trying to be anonymous?
Steve Krupp:
So I don’t want any Facebook friends, but I’m happy to let you share the link. Okay.
Matthew Maschler:
So contact me if you’re interested in, do you want to say what city it’s in?
Steve Krupp:
Yes, it’s in St. Augustine. It’s in Augustine in St. Augustine. It’s right, just right north of Butler Beach happened to be on the nicest part of the beach. The beach there is this sugary white sand. It’s a very low density population. So the beaches are never crowded. They don’t have six story condominiums. There’s nothing more than three stories anywhere, and they won’t let them build it up any higher. So you don’t get that in Fort Lauderdale. Now you got to pay $6 a day to park for an hour and a half at the beach. Or you don’t, you can even drive on the beach.
Matthew Maschler:
You can drive on the beach. You can drive on the beach like a Daytona. Yeah, it’s St. Augustine is beautiful. I think it’s the oldest city in America, like continuous, continuous occupancy. It’s a beautiful, beautiful city. And I didn’t go to the beach when I went. We had a family vacation there a couple years back. We did a Florida road trip and it was really nice. The home of the Fountain of Youth?
Steve Krupp:
Yes. And then I think one of the world’s oldest jails or something, they also have a tour.
Matthew Maschler:
Well, you’re going to need that old city old
Steve Krupp:
Jail. We enjoy, enjoy being there because the condo’s only about 20 minute drive right into the city. And so we frequently go there and just sit and have coffee and watch all the people walking by. And it’s that whole feeling of like, you’re on vacation, all these are around, you’ve got all this restaurants and attractions and things to, and then you can just go back and chill on the beach and go in the hot tub. And so it’s wonderful. And we can use all of that without and still rent it out.
Matthew Maschler:
Who is responsible for the bookings? Is the management company doing all the bookings? Are you doing any of your own bookings? So
Steve Krupp:
What happens is you have this calendar with whoever your management company is, where you can reserve owner spots. And so if I have personal friends, family people, I can reserve those out. And then the other calendar openings are therefore your management company and typically whatever company you’re with, one’s exclusivity. And so they’re going to say you can’t advertise on your own outside of them, but they’ll certainly respect you. There’s no hard fast in the contract currently, or the previous ones I read, there was no percentage of how many nights have to be open or not. I guess that’s something they’re still figuring out.
Matthew Maschler:
If a friend or a family member of yours wanted to use one of your units, are they treated like everyone else or do you then call the management company and say, Hey, I’d like to put this person in? Well,
Steve Krupp:
It’s not like a hotel where you have daily housekeeping. I suppose that could be arranged, but
Matthew Maschler:
I was thinking more in the booking process.
Steve Krupp:
So in the booking process, I have nothing to do with it. Even with the second management company, you would tell
Matthew Maschler:
Your sister or uncle to go on Picasso?
Steve Krupp:
Yeah, just go there and book the unit. I mean, my sister’s going to just come through a owner reservation, an
Matthew Maschler:
Owner reservation,
Steve Krupp:
But someone who doesn’t personally know me. Yeah, you go in and you book it, and there I’m going to get email. So I’ll have an idea of who’s coming. I don’t know. With the new company, I hope I’ll actually get all the communication. If they are coming to stay for a special event, I can give them a little gift or some welcome to our place. Would
Matthew Maschler:
You tell them to go to Vac Casa or Airbnb or VRBO or does it not matter where they go?
Steve Krupp:
It actually does. What happens is, the reason I shared the VRBO link with you is it’s a much shorter link and it’s easier to click the link from Evolve, which is the second company I’m with is a much longer one. And I wasn’t able to even get that directly myself then. But all of these companies add a fee. So Evolve has this fee, then VRBO has everybody’s sticking in a fee somewhere, right?
Matthew Maschler:
Because if it evolves a management company and someone’s booking on V rbo, now you’re paying VRBO and you’re paying Evolve. And if you were pushing the customer, if I told you I wanted to book it and you were pushing me to evolve directly, do you avoid some of the fees? And if so, that’s probably where you’d want to push people
Steve Krupp:
To. And the other thing that you discover as a new player in this market is that these management companies are actually taking advantage of your naive because they’ll push your rates down because all their fees make the price higher. And so now you’re getting less per night, which is disconcerting. And you’re like, wow, they’re charging so much, how come I get so little? So at the end of the day, they’re almost making as much as you are on the property that you, and they have no stake. It’s not like they pay any of the bills or the expenses and their behavior in terms of managing the property or being responsible left me with bad experience, which is why I moved away from them. And so
Matthew Maschler:
You may have a minimum in your mind of what you want to make at night. Their minimum could be a lot lower because they’re making all the fees, but you have the hard expenses and the wear and tear of the unit.
Steve Krupp:
And there were things I learned, we happened to stay in one side of the unit while we rented the other side. And I knew that I needed to keep an eye on what was going on to learn and to see where I might be being taken advantage of or to learn what was going on. So I experienced the guest staying there with the door open all night and the AC running, realizing that my compressor was now going to be replaced because they were going to ruin it. And it was one of those old terms stats that I didn’t have a chance yet to update where you could just put it on whatever you wanted. So I spoke with the property manager and he was like, yeah, I’ve been looking for something to help me figure that out. I’m not as useless. And so I found what would figure that out. And so for anyone who owns some property, echo B is a wonderful thermostat that’s wifi, programmable and controllable from your iPhone and other devices. They also include a door magnet so that when your property’s doors are open and closed, and the best part is if it’s open more than five minutes, it shuts off the air compressor so that you don’t burn out your AC unit. When somebody wants to light the fireplace, have the air conditioning running, keep the doors open all at the same time.
Matthew Maschler:
That makes a lot of sense. A lot of times you go into a hotel and if it has a patio, when the sliding glass doors open up, it shuts the air
Steve Krupp:
Conditioning. And for people like us, it’s like how do they do that? That’s like a magic trick. So I found where the magician story is by the EEE products, they’ll help you pull that trick off. If you’re handy, you can just swap out your thermostat. And now not only that, you can now set the daytime temperature, the nighttime temperature for guests. It also keeps you from having a ridiculous electric bill. They also sense when people leave the apartment so that they turn, the echo bee turns the AC off while people are out. If they’re out for the whole day, you’re not burning AC all day. And when they walk in, it turns on. It’s
Matthew Maschler:
Like when you walk down the supermarket and the lights
Steve Krupp:
Go on and the intersection. So that was something I learned from the failure of my management company and I solved that problem. And then I said, okay, you guys have been relieved from that responsibility. Even their cleaners, they went, they cleaned my unit, they leave. I come in a day later and the AC is at 68. I’m like, what the hell?
Matthew Maschler:
68. Well, the more you put it down, the faster it cools the apartment, right?
Steve Krupp:
Yeah. And then when you leave, the faster it drains my bank account.
Matthew Maschler:
When you leave, it doesn’t really matter what the,
Steve Krupp:
Of course not, because vasa is not paying that bill, right? Hey, it’s like a hotel room. It doesn’t matter
Matthew Maschler:
What’s always given me difficulty. A couple of weeks ago we talked about some vacation rentals I looked at in Orlando, and sometimes you look at the fees and it’s like, okay, at the end of the day, is there enough left to make this investment worth it? How many rental units do you have now?
Steve Krupp:
So the first condo became a double for us because it had that lockout door. And again, I learned something I didn’t expect the smaller unit rents more often than the larger one. The larger one has its own washer, dry washer, dryer, private machine that you don’t have to go down to wash your clothes. It has the full kitchen, but for whatever reason, the studio seems to be the one that rents more often. It’s
Matthew Maschler:
Less money.
Steve Krupp:
Yeah, less money, but it’s smaller space. So it may be that more people are traveling as couples or smaller groups. I did notice they made me the condo board president a month after I bought the unit. Not they made me coerced, but they were like, oh, would you be interested? And I was like, sure, I’ll go to get voted in. And there was no vote. They just told me one day, okay, you’re president. And I’m like, oh, really? So the other units, I started to see who is renting with what and an interesting way of packaging your unit to make it more rentable. One of the people who rents it, he includes tickets to the local attractions with his rental. So I don’t know all the details of what he does, but he kind of packages it together. And I noticed that he has a high percentage of occupancy and it’s always families because he’s given stuff for the kids and they’re looking for the discount. And so he’s constantly rented. So I thought about that, but I’d rather keep my furniture new and maybe not have the constant traffic.
Matthew Maschler:
I was thinking about that when you mentioned ST advocacy, the Fountain of Youth, and I was wondering, I’m like, that could be a good package. It could be book the Fountain of Youth. You get the condo and a ticket to go in there,
Steve Krupp:
Right? Well, there’s so many different attractions. There’s that, the bus that goes around the whole city. So he includes stuff like that in his rental per night. And it must be working because I see they’re always busy.
Matthew Maschler:
I’m working on a deal for a vacation rental in Miami, and when you build a tall condo building, every higher floor is more money. But if it’s the same stack, all the units look exactly the same. So I thought to myself, if I’m going to be putting this in the rental pool, in the hotel pool, why would I pay more money for a higher floor if the exact same room, the person books the room, the floor doesn’t, it’s the same. It’s the price per night.
Steve Krupp:
Well, if the view is the same,
Matthew Maschler:
Well, if it’s a 40 story building and we’re talking about one stack, right? Maybe the top three floors will get a little bit of a premium. Maybe the bottom two. I don’t even know how you discount. When I book a room at a Hilton and I see the room types, it never tells me the floor unless it’s the exact same room, higher floor, it’s 15 bucks more. But if the 20th floor and the 40th floor is a significant price difference, that $15 more for a high floor is not going to move the needle. So I thought to myself, I’m going to get the stack I want, not pay more for the floor because I want to, because I’m not going to get that money back on the rental price. And then as far as size of the unit, what you said, I didn’t go for the bigger unit because I wanted my unit rented.
And in a hotel it may be a small increment, $20 more for if this room is 200 square feet and this room is 220 square feet, it might cost hundreds of thousand dollars of dollars in the purchase price, but be tens of dollars in the price difference in the room. How many people just book? If you’re going to book the Hilton and it’s 2 99, they just book the cheapest room without looking down that list. So I went with low floor starter unit because I wanted it rented often, and I wanted the highest rate of return. I return. And it was weird for me because that’s not what I would’ve want to live in.
Steve Krupp:
And that’s the category they call lifestyle investing where you’re buying it so that you can get an income from it and rent it out, but you also want to enjoy it at the same time. So by having the unit that we could split, the more expensive side, which may not rent as often has its own washer dryer in a full kitchen so that when we go to their use, it’s convenient for us because it’s like being at home. And there are some renters who they’re just looking for budget and it’s a short vacation, so they don’t need those facilities. The bigger unit tends to rent for the week time, the longer periods of time where people want a kitchen and a washer dryer, then for us, it’s not just an investment from a purely financial point of view, it’s both. We want those.
Matthew Maschler:
How often can you go for an owner’s
Steve Krupp:
Period? Well, you can reserve it anytime you want. So I guess it depends on your circumstances of how free you are as a person to take advantage of what you’ve got.
Matthew Maschler:
Does the management charge you anything when you go in as an owner? So
Steve Krupp:
If you want the cleaning company to clean up after you. And so in the beginning, like I said, I took the Cadillac with every aspect covered. Give me all the insurance, give me all the programs, give me everything so I can see how it all works. So we started with the linen program, and so because of that, we didn’t have all of three sets of linens and six sets of towels. So when we were done staying, we had our family stay for a week. We paid to have it cleaned, so they charged us a reduced rate for the cleaning. So that was an expense as an owner that you had to pay to use own place, but fine. I pay for someone to clean my house anyway, there you go. When my lovely wife doesn’t do it.
Staci Garcia:
So then you moved on to getting a different property After the first one.
Steve Krupp:
Once we stopped living there and we decided to buy something within the close distance so that when we were renting it, we could be on top of it, which was a smart decision. And someone else advised me also, if you’re going to get into this business and start buying and renting properties, try and keep yourself local because in order to be on top of it, you don’t want to be running back and forth like a ping pong ball on the way gas is going. It makes it worse. So we bought that house, and again, we didn’t start out, it was the same thing. We were looking for a place for ourselves. We bought it, we love it, we enjoy being there. And then the same company said to me, why don’t you rent that house? I’m like, well, you keep chasing me out of every house I buy to live in. Because you’re like, oh, that’s a great house to rent. Well, that’s why I bought it. We like being on the water
Matthew Maschler:
Take. If you wanted it to live there, you’d have to take all your stuff out.
Steve Krupp:
Well, I learned that lesson from the first condo. So this time in the house, I only put the things that I don’t mind leaving behind. So the rest of our house is going though in storage. And then once we finished developing that small apartment, so then we’ll have three rental units, then we’ll go ahead and look for a replacement house for the house that we’re selling in Boca, which we’re listing with you because you’re the number one real estate agent in South Florida. And I wouldn’t want anyone else to list my house. But Matthew, national signature real estate, you can’t go wrong. Awesome.
Matthew Maschler:
Well, that’ll sell before the podcast drops, so don’t get excited. But Stacey, should we plug the house? Should we just
Staci Garcia:
It, it’s an awesome house in West Boca. It’s got five bedrooms upstairs and a huge master and a beautiful office downstairs on a huge lake. And it’s right by Slam Boca, which is a private charter school that anyone could go to for free high school. It’s from sixth through 12th grade.
Steve Krupp:
And then you have the elementary school right next door. So it’s a walk to school
Staci Garcia:
House. Yeah,
Steve Krupp:
Literally. I mean, I always thought about how nice that would be to walk my children to school
Staci Garcia:
And the school’s brand new and I sit in the car rider line for quite some time looking at Steve’s house. So I know that there’d be a lot of people that would want to live there.
Matthew Maschler:
When I sit in the backyard of Steve’s house, Steve’s house, what am I looking at?
Steve Krupp:
A lake.
Matthew Maschler:
It’s a beautiful, beautiful
Steve Krupp:
Spot. Straight. Yeah, we to, we got the right in the middle of the long view of the lake, and then across the street you’re looking at the swimming pool in the tennis court,
Staci Garcia:
And he’s got it right across the street. So you don’t need your own pool when someone else is taking care of
Steve Krupp:
That pool. Well, my first house in Boca, I had the pool and then the second one, I didn’t want the expense, but I still wanted the pool. Right. That’s another great reason. With the short term, we wanted a pool, but again, I didn’t want to have to deal with the pool guy. I have three pools, two hot tubs and a tennis court and I don’t know a single vendor. There
Matthew Maschler:
You go.
Steve Krupp:
That’s the way to own
Staci Garcia:
It. And you don’t have to pay for
Steve Krupp:
Them. I just use them when I want to. I have to share them with other people, but there’s generally not that many people when I go.
Matthew Maschler:
So speaking of sharing your pool with other people, this isn’t related to you, but I don’t know if anybody’s seen this app. You know how you have Uber and all these apps and Vbrs. I saw one the other day where you could rent your backyard pool.
Staci Garcia:
I think I’m on that.
Matthew Maschler:
Have you ever rented your backyard pool?
Staci Garcia:
No, because I have a thing about people using my bathroom.
Matthew Maschler:
That was a
Steve Krupp:
Stagger point for me. That was what my wife said. I was going to rent the dock in the backyard, go to the bathroom like, well,
Matthew Maschler:
The dock,
Steve Krupp:
Yes, we have a dock on in the Palm Coast house in the
Matthew Maschler:
Back. So why would you have to be worried about a bathroom
Staci Garcia:
In case somebody had to go to the bathroom? Someone would put their boat in the back of his house and possibly ask to use the bathroom
Steve Krupp:
If we were going to rent the dock in the back of the house for $300 a month, because people pay a lot more at a marina. So I don’t have a boat yet.
Matthew Maschler:
I don’t think that Not having a bathroom on your dock is a deal breaker.
Steve Krupp:
Not for me, but my wife was like, you can’t do that without letting people use the bathroom. I don’t want them in the house, but
Matthew Maschler:
They should go before they leave the house or they could go on the boat.
Steve Krupp:
Well, I could rent it with that condition and say there’s no bathroom, but when you got to go, you got to go. And then it’s just in the backyard, so I don’t really want to go there.
Matthew Maschler:
Well, you’re not envisioning a person living on their boat in the dock. No. So most days they won’t even be there. And on days that they’re there,
Steve Krupp:
What happened was I got caught up in the, I want to do every single internet app I can. Yes. No, really, I bought the house through Zillow. I listed it with Casa, and then I put the doc up with neighbor.com or whatever that
Matthew Maschler:
Is. I think you’re leaving money on the table with the doc if the issue is bathroom, because I don’t think that that’s deal breaker for someone who wants to save a hundred or $200 a month on their dock because you’re not spending time on your dock. It’s not that it needs a bathroom, and the boat might have a bathroom. So if the boat, that would be a head right on a boat. It’s that. But you leave your house and you go to your dog, you get on your boat and you go, and the condition is you leave me the F alone. Right. The condition is don’t talk to the people that live in the house and for any reason they can’t use your phone, they can’t use your bathroom, they can’t use your tv, they can’t use your kitchen. And I don’t think that’s unreasonable restriction.
Staci Garcia:
That makes a lot of sense. On a neighbor where you would rent a space for a boat, it doesn’t make as much sense for the pool app,
Matthew Maschler:
The pool app, the pool app. That’s what I couldn’t figure out. And unless you had a full bathroom cabana bath by the pool by the pool, and you can lock it out from the house. If my house is vacant and I’m renting out the pool, not letting people in the house, and I’m not putting porta-potties out
Steve Krupp:
There. Also, those things are a little problematic too, because you’ve got insurance issues. I have insurance on the condo for guests, and when they stay through booking the V RBO O and the other sites that insurance is paid for. In fact, that was another reason I was not happy with v Casso because they were sneakily billing me separately for double coverage. They would bill a guest, you’re covered for insurance. Then they would make me pay $8 a night, which in effect became almost an 8% charge on top of the extra 10%. I was paying them for their management, which was poor to begin with. So that insurance you may not have when you rent out your pool. Now I know as an Uber Lyft driver, my friend does that and he says he’s covered when he picks up the passenger by the people they book through. But when you’re booking your pool to, I don’t know. I don’t know. I never booked a pool though. But be careful with that because if someone gets hurt at your pool, you’re on the hook and then your insurance company say, well, we don’t cover you for commercial purposes. And so that could be a real Pandora’s box that you’re opening. And so I’d be very Do your due diligence to check before you go renting the space. That’s another reason I
Matthew Maschler:
My auto insurance now, whenever I add a car, one of the questions it asks me if I would be ride sharing it. Right.
Steve Krupp:
That’s very important to,
Matthew Maschler:
Because they want to get you on the record. If you say yes, they want to charge you. And if you say no, they want to exclude.
Steve Krupp:
But it’s actually always smarter to be honest with your insurance company. Yes. Yeah. That’s the way to operate.
Matthew Maschler:
That’s why you have insurance. If you lie to your insurance company, it’s not going to happen. And they reject your claim. What was the point of having insurance?
Steve Krupp:
There you go. In the first place. Yeah. I tried to explain that to my son when he was delivering pizza
Matthew Maschler:
In his
Steve Krupp:
Car.
Matthew Maschler:
So you wanted him to let him know that the car,
Steve Krupp:
I wanted to let him know that our insurance company didn’t insure him for commercial driving, and so that he now had to get insurance somewhere else. So he realized that it was maybe better to get a different job, a different
Matthew Maschler:
Job,
Steve Krupp:
Or drive that guy’s car, which of course, that’s why the guy in the pizzeria was like, no, go ahead. You drive.
Matthew Maschler:
You pay for your gas, you pay for the wear and tear of
Steve Krupp:
The tires, pay for insurance, everything
Matthew Maschler:
Like that, and take a $3 tip.
Steve Krupp:
Yeah, exactly. But insurance is important, and it’s certainly a consideration whenever you’re renting out your property to make sure that you’re covered. Because I put these silly alarms on the Palm Coast doors just in case they open. Because I imagine that if this with child and there’s water in the back, and I want to do everything I can to make sure that nothing happens, and at least I did what I could.
Staci Garcia:
I feel like it’s a lot of responsibility. And those companies that are supposed to take the stress off of you, if they’re not doing their job, then that’s a major
Steve Krupp:
Well, you have to remember, at the end of the day, nobody gives a shit but you,
Staci Garcia:
Right? Yeah. And you’re only the person responsible for everything.
Steve Krupp:
The buck stops here as somebody once said a long time ago.
Staci Garcia:
So if you’re considering a short-term vacation rental as an income, and also I wonder how many do you have to have in order to make it worthwhile?
Steve Krupp:
Well, one of the comments that the managers, when I met and sat down and they said the first two are the hardest. Once you’ve got those going, it’s easier to start to scale. Right? And that’s what we’re discovering now where we got rid of the backend. These companies are split between the front end, I’ll call it, which is the booking and communication and getting the client to the doorstep. From that point on, they’re done. Now, you Vac Casa was a company that picked up that other half and managed everything, but they didn’t. They dropped the ball continuously. Would
Matthew Maschler:
You consider self-managing and just using Airbnb and VRBO?
Steve Krupp:
Well, once I decided to get rid of the first manager, I said, how much of this do I want to take on? And so really, I kind of analyzed it and said, all right, I’m paying a lot for the coordination of the cleaning and then inspect, I’m a realist. I know I’m only going to get around 80% from anybody. So instead of expecting somebody to be more than what is reality, I’ll take reality and then I’ll work it so that I get what I want. If it takes more than what other people would do, but I get it done the right way. So instead of trying to find the perfect cleaner, I’ll find people who can clean and then I’ll find someone who can inspect it and fix those small deficiencies that they overlooked or whatever it is, so that I get the a hundred percent, because I’m a hundred percenter. I like it a hundred percent.
Staci Garcia:
So we actually had a conversation, Steve and I. He said, Hey, maybe I should buy a kayak and stick it at my Palm Coast house on the dock. And then people could rent that as well. And then I said, Hey, maybe you should stick a car there and you could buy a car, stick it in your Palm Coast house, and you could rent it on Toro. It never ends really. Right? You could rent.
Matthew Maschler:
I think Toro would be a good thing for you to put it in your portfolio. You’re familiar with it.
Steve Krupp:
That’s what you rent your car, you rent your car.
Matthew Maschler:
It’s like every Airbnb for your car. And it’s the alternative to the car rental companies. And I’ve rented cars on Touro. I don’t do it when I’m traveling on vacation from the airport because I need the consistency. I’d be nervous. But if I need a big SUV or a convertible for the weekend, you go on Touro and you find out if one of your neighbors is willing to rent you the car. I think that would be interesting. And you could even offer the car
Steve Krupp:
To your guests. Well, I thought about the offering and the packaging, and so I realized if someone comes for a vacation, they want to enjoy the water, they want to do the hiking or the bike ride. Palm Coast happens to have the most miles of bike trails in Florida. I believe that city wins that award, whatever. But certainly whether they’re number one or whatever, there’s a lot. And so people enjoy the whole outdoor aspect of it. But the one thing that happens is when you go on vacation, you’re like, where’s the rental company for the bikes? Where’s the rental company for this and that? And so by having all of that conveniently located on property for use to reserve what before you even come, that’d be great. In fact, I thought about a great way to own the boat, which is why I don’t have it yet.
If I buy the boat and then I offer it to my guests to rent, now it’s an expense of the property for the rental. So I can write it off against the income because it’s legitimately there for the use of the guests. If I happen to use it myself at the same time or whatever, that’s great. And then I’ll pay someone to be Captain Bob so that the guests come out and drink whatever they want and catch whatever fish kill, right? I caught a fish. My dog was the first one, and I made sure I had gloves and a wire cutter so I could let the fish go because I didn’t want to kill the fish, and I don’t want to have to beat one. I saw somebody catch a fish once, and it all seems really cool when they pull it in the boat until they start beating it with a bat. And then that’s the part where you’re like, wait a minute, why are you beating that fish with a bat? And it’s like, well, we don’t want it to jump back out of the boat. I’m like, okay.
Staci Garcia:
They’re just, they’re beating it like a chicken farm.
Steve Krupp:
I mean, I grew up in Brooklyn, so I get it, but it was like, did the fish really deserve that?
Staci Garcia:
What did he do to you? So as part of the amenities, let’s say you bought electric bicycles, right? Yes. And is that extra?
Steve Krupp:
Well, we haven’t actually rented anything at Palm Coast yet. And in the condo, there are no extra amenities on the site. But these are the plans I have. I keep thinking about Simon Cowell every time I think about renting the electric bike and somebody just flipping right off the back of it. So maybe I’ll start with the water toys, because if you fall off of those, I don’t think they would hold me responsible if an alligator bite you, because I didn’t make the alligator bite you. And I’ll put a big sign with a picture of an alligator. Alligators in the water are
Staci Garcia:
Alligators.
Steve Krupp:
Yeah. I tell my wife that she’s a cru te on a cracker for an alligator every time she goes on the paddleboard. And that’s why I want the kayak, because when you bite the blow up paddleboard, I can just imagine it going pop. But the plastic kayak seems a little sturdier,
Staci Garcia:
But there’s a lot. Yeah, I think you could probably never end on all of the things that you could offer, or all of the apps you could apply to all of the things that you could rent.
Steve Krupp:
Right. Well, that was why it was like, okay, I’ll try this one, I’ll try that. And then when somebody contacted me, a neighbor and became real, wait a minute, and then I was still up in the air with what we were doing with, are we living here? Are we renting it? And so I was like, you know what? Let me hold off. So I pulled the listing on Neighbor for the Dock, but I may go back with it, but I don’t think I’ll rent my cars. I want my own fingerprints on the steering wheel.
Staci Garcia:
I have my house on Neighbor for boat space.
Steve Krupp:
Oh, an important distinction between the VRBO and the Airbnb when I looked into it, the Airbnb is really to rent a room within your house more so than renting the premises or the property.
Matthew Maschler:
I think it’s started that way, but I don’t know that that’s still what it is. The BB, right. I’m renting a room in my house, but I don’t, it still is. I doubt most of what I see on Airbnb is whole house rentals. It’s competing with hotels. What I’ve seen is a lot is what I’ve rented in Park City, that what the owners tell me is the people that come in through VRBO are usually people with families, whereas the people that come in on an Airbnb are like the college kids. So maybe it goes to a different market. Couch surfing. That’s even more than what you said about Airbnb. That’s like people just looking for a place to crash.
Steve Krupp:
In case I want to rent my garage, I could lift it on Airbnb, throw a con there, there’s a window I’ll put in a temporary AC
Staci Garcia:
Unit. The way things are in real estate right now, it might be popular. There’s nothing available.
Steve Krupp:
I think the biggest obstacle or challenge is a better word with the short-term rentals is, and I can see it now, how hotels operate. It’s the housekeeping because that’s where you have to rely on a third party and then they have to show up. And then if they don’t, ultimately, like I said, you’re responsible. So Lauren and I are ready to clean the place in case somebody doesn’t show up when they’re supposed to.
Staci Garcia:
Yeah, that’s stressful.
Steve Krupp:
That’s what I was trying to avoid. And eventually I’ll work out relationships with multiple people where I won’t have that stress because I’ll know that they’ve been there in the past and they’re not going to just disappear. If something happens, they’re going to contact me.
Staci Garcia:
I would imagine that the person in St. Augustine who has the most units rented, probably has someone full time that they use.
Steve Krupp:
Well, that’s the problem of scaling up because until you get big enough for that and then one person really isn’t enough either because one person can always one link, that’s your weakest link. So I think you should always try and work where you have teams because then at least there’s somebody in case someone else drops out. And that was my approach to replacing the first management companies, trying to develop this network of vendors and people to work with so that we can cover, get everything running smoothly and actually go on vacation.
Staci Garcia:
You got a bunch of vacation rentals and you can’t actually enjoy any of them. They’re all dirty and you’re stressed out. Sounds
Steve Krupp:
Interesting. We’ll avoid that.
Staci Garcia:
That was awesome.
Matthew Maschler:
Alright, I think that is our show for the week. Happy to have Steve Croup
Steve Krupp:
Here. Yeah, this was wonderful. Thanks for the invitation. Talk
Matthew Maschler:
About short
Steve Krupp:
Term.
Matthew Maschler:
Sorry, I took over. You we’re talking about short-term rentals and everything. Florida real estate on the Real Estate Finder podcast. I’m Matthew Ashler, the real estate finder. Realestate finder.com. And
Staci Garcia:
I’m Stacy Garcia, also a real estate finder.
Matthew Maschler:
All right. Have a good weekend and if you’re looking to buy or sell or rent or a short-term rental that you want to own or rent on vacation in Florida, let us know.
Speaker 4:
The future looks bright and the stones pass by the sky’s dark blue when it’s almost that time, light shows cameras flash when I pass. Living in the moment, forget about the past. They save the best for last. Matthew Mania. We about to make a splash. Life is a marathon full of sharp turns. Got to keep pace while the hands on the clock turns high. Stake five star. I run a show. You could tell the center plate electricity energy if vibrate. I’m always on time. Even if I’m late, I make dreams come true. Living my life. Hope the same for you. My sights got a real clear view. If you don’t know the time, I give you a clue.
Speaker 5:
You know what’s on. You knows you know what? You know what sound. You know what on. You knows. You know what you know. It’s know what, what’s it?
Speaker 4:
What time? Whose time? It’s, you know what time it’s man. You know what time. You know what? Got him? Shook, scared. Can’t look. We’re not afraid of a big bad wolf.