Podcast Summary
Zoning and permitting are crucial factors for commercial real estate success: Prioritize zoning and permitting during due diligence for commercial real estate investments, focusing on increasing net operating income, and considering real estate as a business opportunity can lead to higher profits.
When investing in real estate, particularly for commercial ventures such as RV parks, glamping sites, or short-term rentals, it's crucial to prioritize zoning and permitting during the due diligence process. These factors can significantly impact the viability and success of your business. Additionally, considering real estate as a business opportunity, rather than just passive income, can lead to increased value and higher profits. By focusing on increasing the net operating income (NOI) and evaluating properties based on their commercial value, investors can potentially multiply the value of their investments. This episode of the Bigger Pockets Podcast with Heather Blankenship provided valuable insights into these topics and more.
Opportunistic private credit strategy in real estate investing: Investors can capitalize on current market challenges through Fundrise's new private credit strategy, providing high-demand bridge financing on high-quality assets with creditworthy borrowers, securing funding for top investors and generating healthy interest rates for investors.
The current market environment, characterized by high interest rates and a liquidity crisis, is posing significant challenges for real estate investors. However, an opportunity exists for investors to capitalize on this situation through Fundrise's new opportunistic private credit strategy. This strategy provides high-demand bridge financing on high-quality assets with creditworthy borrowers, allowing top real estate investors to secure funding while investors receive a healthy interest rate. With over $500 million in completed private credit deals and an average net interest of 10.8%, Fundrise is leading the way in this unique market window. For those interested in learning more, visit fundrise.com/pockets. Additionally, during the podcast, Heather Blankenship shared her personal success in real estate investing, which includes a diverse portfolio of RV parks, mobile home parks, boutique motels, glamping properties, and section 8 multifamily units. She emphasized the importance of being adaptive and taking advantage of market conditions, as she has seen significant opportunities in the current market.
Institutional investors driving up RV park prices: Institutional investment is causing RV park prices to rise, with nonrecourse loans becoming scarce and requiring large down payments
The RV park industry is experiencing significant growth due to institutional investors entering the market, leading to increased prices. Nonrecourse loans, which allow borrowers to give back the property without personal repercussions, are becoming increasingly rare and typically require large down payments. Heather Blankenship, an RV park owner, shared her perspective on the market, expressing concerns about rising prices and the impact of gas prices on travelers' decisions. Meanwhile, Rob discussed the short-term rental market, noting a return to regular seasonality after record-breaking travel numbers during the pandemic. Despite some decreases in bookings, overall the market remains strong.
Last-minute bookings in short-term rentals: A challenge for hosts: Hosts should focus on quality accommodations and excellent customer service to attract desirable guests, rather than relying on excessive discounts for last-minute bookings.
Booking lead times in the short-term rental industry have significantly shortened, with a large percentage of bookings coming in just a week or two before the intended stay. This shift can make it challenging for hosts to plan and adjust their operations accordingly. While it might be tempting to lower prices to secure last-minute bookings, it's crucial to consider the potential impact on the guest experience and overall profitability. Pricing in the short-term rental market is an art rather than a science, and finding the optimal price point to attract the right guests is essential. Hosts should avoid offering excessive discounts, as they may attract undesirable guests and negatively impact their business in the long run. Instead, focusing on providing high-quality accommodations and excellent customer service can help ensure a steady stream of bookings from a desirable guest base.
Focusing on unique designs and experiences for vacation rentals: Investing in design, photography, and marketing can help hosts remain competitive and successful in the vacation rental market, despite platform changes and increased competition.
As the vacation rental market evolves, focusing on unique designs and experiences has become increasingly important for attracting bookings on platforms like Airbnb. With their recent redesign, Airbnb is prioritizing visually appealing and distinctive listings, making design and high-quality photography essential. However, this shift may leave simpler listings at a disadvantage. Some hosts are considering shifting towards direct bookings to mitigate the effects of platform changes and increased competition. While direct bookings require more effort and resources, they offer greater control and potential cost savings. Ultimately, adapting to these changes and investing in design, photography, and marketing can help hosts remain competitive and successful in the vacation rental market.
Diversify booking channels beyond one platform: To mitigate risks and increase bookings, consider using multiple platforms and creating a direct booking website with property management system integration and affordable insurance options.
In today's market, it's essential for short-term rental property owners to diversify their booking channels beyond just one platform, such as Airbnb. This is because redesigns or other factors can impact the performance of these platforms, leaving hosts vulnerable if they rely too heavily on them. Additionally, advances in technology now offer more affordable options for creating direct booking websites and integrating them with property management systems. Another key consideration is insurance, as specialized companies now offer relatively affordable coverage per stay. With the rise of these options, even large-scale hosts with hundreds of units can create their online travel agency (OTA) relatively affordably. The integration of various types of properties, such as RV parks, glamping sites, and boutique hotels, into one ecosystem depends on the specific circumstances of the host. Some hosts may choose to optimize all listings, while others may take a more wait-and-see approach, especially during their busiest seasons. Ultimately, the decision to consolidate listings onto one website depends on the host's goals, resources, and the level of data and analysis they have at their disposal.
Securing necessary permits and utilities crucial for business expansion in real estate industry: Proper due diligence is essential to ensure all necessary permits and utilities are in place before expanding a business in the real estate industry to avoid costly relocations or rebuilds.
When expanding a business, particularly in the real estate industry, securing proper zoning and permits is crucial. This was emphasized during a discussion about expanding a motel portfolio and a glamping operation. Ignoring these requirements can lead to significant financial losses. For instance, building structures without proper permits may result in the need for costly relocation or rebuilding. The same applies to utilities, which are also essential for the successful operation of a business. Therefore, thorough due diligence is necessary to ensure all necessary permits and utilities are in place before making a purchase. Additionally, hiring experts in branding and naming can help alleviate the pressure of creating a unique and effective name for a business.
Creating a profitable glamping business: Invest in infrastructure, permits, and Instagrammable outdoor amenities for a unique glamping experience, valued by cap rate rather than home appraisal.
While glamping, or glamorous camping, can be profitable, it requires proper permits and significant investment in infrastructure. The difference between a successful glamping business and a typical short-term rental lies in the attention paid to the outdoor space, which functions as an extension of the small indoor living quarters. This means investing in amenities that make the outdoor area Instagramable, comfortable, and functional. Properly executed, a glamping business offers a unique blend of cash flow and appreciation, as it is valued based on a commercial property's cap rate rather than a single family home's appraisal. Overall, the success of a glamping business hinges on careful planning, permitting, and investment in the outdoor living experience.
Heating and Air Conditioning are Essential for Glamping Success: Investing in mini-splits for heating and air conditioning increases the number of months glamping properties can be used, and hiring work campers for staffing needs can be a solution for remote locations.
Providing heat and air conditioning is crucial for success in the glamping business. This was a key lesson learned from staying at an Under Canvas property. While some glamping sites offer alternative heating methods like wood-burning stoves, investing in mini-splits for air conditioning and heating can increase the number of months these properties can be used. The operations of a glamping business are similar to those of traditional cabin rentals and RV parks, requiring hospitality and short-term rental skills. However, hiring staff, particularly cleaners and maintenance personnel, can be more challenging for remote or less populated locations. One solution is to utilize work campers, groups of nomadic RVers who travel around the country and work at various RV parks and campgrounds in exchange for living arrangements. These work campers often have skills in cleaning, maintenance, and other areas, making them valuable additions to a glamping business. Facebook groups and websites like Workamper News are excellent resources for finding and hiring work campers.
Effectively staffing glamping operations and RV parks with work campers: Work campers bring unique skills and experiences to glamping and RV park operations, but managing their nomadic lifestyle and potential for higher turnover rates can be challenging. RV parks offer a hybrid model of both glamping and mobile home parks, providing various revenue streams and making them an attractive investment opportunity.
Hiring work campers for glamping operations and RV parks can be an effective way to staff due to their unique skills and experiences. These individuals often have diverse backgrounds and can bring valuable expertise to the table. However, managing them can be challenging due to their nomadic lifestyle and potential for higher turnover rates. On the other hand, RV parks offer a hybrid model of both glamping and mobile home parks, providing various streams of revenue such as rental sites, laundry services, golf cart rentals, food services, and more. The difference between RV parks and mobile home parks lies in their purpose, with RV parks functioning as outdoor hospitality and mobile home parks serving as affordable housing. The potential for significant equity growth and portfolio expansion makes RV parks an attractive investment opportunity.
Investing in an RV park boosts property value with rental income: Investing in an RV park can increase property value through rental income. Capital expenses can bring in more income via new amenities or upgrades. Occupancy rates vary, with luxury amenities potentially increasing nightly rates. However, maintenance costs can be substantial.
Investing in an RV park can significantly increase the value of the property due to the revenue generated from renting out spaces. Every capital expense made in the business often comes with an opportunity to bring in more income. For instance, adding new amenities or upgrading existing ones. The occupancy rate, which varies greatly depending on the location, is also considered differently due to the seasonality of the business. While a normal RV site might rent for around $45 a night, luxury amenities can push the price closer to $100 a night. However, the maintenance costs can be substantial, especially for properties with intricate utilities. It's crucial to consider these factors carefully when investing in an RV park.
Investing in luxury RV rentals at RV parks: RV parks offer ease of entry for luxury RV rental investments due to permits and zoning, catering to both affordable and luxury markets, and potential for RVIA certification for tiny homes.
RV parks offer an opportunity for investors to add luxury accommodations, such as super luxury Airstreams, and rent them out for a higher price. This can lead to a profitable business model, especially for those who have already purchased the land and gone through the entitlement process. The added value comes from the fact that RV parks often have the necessary permits and zoning for such additions, making it easier and faster to get started compared to other types of real estate developments. Additionally, there is a demand for both affordable and luxury RVing options, catering to different markets. RVIA certification for tiny homes is another advantage, as it eliminates the need for additional permits and zoning. Overall, RV parks can be a worthwhile investment, particularly for those looking to convert smaller, outdated properties into glamping sites.
Technology streamlining real estate investing: DealMachine simplifies lead management with data and filters, while Relay eases business banking setup. Creative negotiation and alternative financing methods can secure deals despite market challenges.
Technology is revolutionizing various aspects of real estate investing, from data collection and lead generation to banking and financing. DealMachine offers investors access to high-quality, reliable data for off-market deals, making lead management easier with features like filters, people flags, and color-coded phone numbers. Meanwhile, Relay simplifies the process of opening a business bank account for real estate investments, allowing for online sign-up and collaboration with team members. Both companies aim to save investors time and effort, allowing them to focus on growing their businesses. Another key takeaway is the importance of creativity and effective communication when negotiating financing deals. While traditional loans with no money down may not be readily available, alternative financing methods like seller financing can be successful if approached in a thoughtful and persuasive way. It's essential to understand the benefits for the seller and present the offer in a compelling way to increase the odds of securing the deal. Lastly, it's important to remember that every deal and situation is unique, and there's no one-size-fits-all approach to real estate investing. By staying informed, being creative, and staying persistent, investors can navigate the challenges and find success in their real estate endeavors.
Navigating unexpected challenges in real estate investing: Leverage persistence, adaptability, and resources to overcome obstacles and grow your real estate business
Being a successful real estate investor often involves navigating unexpected challenges and learning from experiences. Heather shared her story of taking over an RV park and evicting tenants who weren't paying their fair share. Despite the controversy and personal challenges, she learned valuable lessons about commercial real estate and financing, ultimately turning the property into a thriving business worth $15 million. Her lender played a crucial role in her success, helping her refinance and expand her portfolio. This experience taught Heather the importance of persistence, adaptability, and leveraging resources to overcome obstacles and grow her business.
Making Decisions Quickly and Effectively in Real Estate: Successful real estate investors make decisions swiftly and positively to turn challenges into opportunities. Read 'The Ruthless Elimination of Hurry' for efficiency and 'The Gap and the Gain' for a positive mindset.
Successful real estate investors have the ability to make decisions quickly and effectively. This was a common theme during the discussion, with both guests emphasizing the importance of being decisive in order to succeed in real estate. One guest recommended the book "The Ruthless Elimination of Hurry" to help people eliminate distractions and make decisions more efficiently. Another guest emphasized the importance of having a positive mindset and turning challenges into opportunities, as outlined in the book "The Gap and the Gain." When it comes to hobbies, both guests shared their passion for real estate and empowering others. The guests also touched on the idea that people who struggle to make decisions may benefit from setting time limits or forcing themselves to make decisions quickly in smaller areas of their lives to build up the habit. Ultimately, the ability to make decisions quickly and effectively is a crucial skill for anyone looking to succeed in real estate.
Focus on the benefits of making a choice and learning from mistakes: Don't get stuck on making the perfect choice, focus on potential benefits and learning from mistakes to progress and succeed.
Making decisions and moving forward is crucial for personal growth and success. Heather Blankenship emphasized the importance of not getting stuck on the idea of making the perfect choice, as it can lead to indecisiveness and missed opportunities. Instead, she suggested focusing on the potential benefits of making a choice and learning from any mistakes made along the way. Comparing one's choice to the perfect choice can create unnecessary stress and hinder progress. Additionally, committing to an area of interest and getting good at it, even if it may not seem initially appealing, can lead to unexpected rewards. Rob Green shared personal experiences of dealing with indecisive people and emphasized the importance of making decisions and moving on. Overall, the conversation highlighted the importance of taking action and embracing the imperfections that come with making choices. To learn more about Heather and Rob, follow them on Instagram (@Heather Blankenship X3) and (@Rob Built), respectively.
Sharing excitement for influential guests on Bigger Pockets Podcast: Find an investor-friendly agent and listen to Bigger Pockets Podcast for valuable insights on real estate and finance.
The Bigger Pockets community, through their podcast, aspires to bring in influential figures like Matthew McConaughey and John Mayer to discuss their perspectives on real estate and personal finance. The hosts, Brandon and Heather, share their enthusiasm for these potential guests and reminisce about past interviews. They also encourage listeners to check out episode 413 featuring Matthew McConaughey. Additionally, they emphasize the importance of finding an investor-friendly agent to help navigate the real estate market and move towards financial freedom. The podcast serves as a valuable resource for educational purposes, but it's important to remember that investing in real estate involves risk and consulting with qualified advisors is recommended.
