The Future of Short-Term Rentals: Insights from Peter Hartley’s Experience

Dylan Silver (00:00.92)
Hey folks, welcome back to the show. I’m your host, Dylan Silver. And today on the show I have Peter Hartley in St. Petersburg, Florida. Peter is a hands-on father of two boys, devoted husband who brings his genuine people-first philosophy to his work and short-term rental co-hosting. Peter, welcome to the show.

Peter Hartley (00:23.552)
Thanks for having me.

Dylan Silver (00:25.186)
I always like to start off at the top of the show by asking my guests how they got into the real estate space.

Peter Hartley (00:33.526)
Long story short, I owned a restaurant, which was not my passion and not something I was doing well in. And I sold that, didn’t really know what I wanted to do. And that was about the time where short-term rental arbitrage had become kind of that next big thing that started happening in 2018 or so. A couple of the bigger names started to promote that and I did not want to go work a job at all. So that’s kind of…

I didn’t have a lot of money either. owned a restaurant that wasn’t doing well. And I sold it, luckily did not lose my shirt from that deal. And then decided how can I get started in real estate without a lot of money? And that led me to rental arbitrage. I had known a couple of investors who were doing well and they even had properties that they kind of welcomed me out to try it because they were curious and they wanted to see how I would do and let me take the risk on that. So that’s kind of how I got started. And that was in 2018, like I said,

Dylan Silver (01:27.085)
Yeah.

Peter Hartley (01:31.348)
My wife and I got into a duplex that an acquaintance of ours owned and that’s kind of where we started and everything.

Dylan Silver (01:38.958)
Let’s talk a little bit about rental arbitrage. So as I’m familiar with it, people will go, they’ll go to landlords, maybe they’ll see a property wherever they see it, right? On the MLS, Craigslist, Facebook, and they’ll say, hey, I’m interested in renting this property. Would you allow me to sublease it out? And basically, that’s the pitch. Is that generally what you would tell people to do if they’re looking for their first rental arbitrage unit?

Peter Hartley (02:05.524)
Not in this day and age. No, I mean, I had done it and had a lot of success for a long time. To me, it’s a bit riskier than necessary when you can do things like co-hosting. I think that if you are really good at underwriting deals and you really know the market that you’re going to be in, I think arbitrage is still a viable option. But with what I do now, I’ve talked to so many people that are looking and calling me to bail them out. And if you

do a bad deal as most investors know, there’s nothing anybody can do to bail you out in a lot of circumstances. And that’s kind of what I’ve been seeing a lot of for guys getting into arbitrage. And a lot of times they signed up for $20,000 to be in a mastermind that guarantees them this stuff and they get into deals before they really understand the market and they think it’s just going to be easy. But the truth is now it’s been so competitive through COVID, what I noticed is how high rents raised.

the long term rents. So the spread got much tighter and it got and then the short term rental market kind of it’s not as it’s not flourishing like it was originally or back in those times I should say. So I think the numbers got a lot tighter. So can it work? Yes, absolutely. If you know, you know where to look. Is it a guarantee thing? Not not at all. You can lose a lot of money doing it.

Dylan Silver (03:28.046)
So the risk that people have is the amount that they’re paying monthly for rent, basically.

Peter Hartley (03:32.31)
Yeah, so when I had, I think we were up to 17 units or so, was paying about $25,000 a month in rent. And it was working well. But I was starting to feel the stress of what happens if something shifts on me. COVID was definitely the first time, but we made it through that fine. We didn’t really miss too much of a beat. Things slowed down a little bit, but we got longer term people in there and we’re able to make it through that. But yeah, there’s definitely a lot of…

A lot of risk involved when you’re taking on that kind of consistent just monthly payments that you gotta pay.

Dylan Silver (04:07.022)
Let’s talk about co-hosting versus arbitrage. And I’m not super familiar with co-hosting, although I do understand you’re not signing a traditional lease, if I’m not mistaken.

Peter Hartley (04:18.326)
Right. Yeah, so there’s a couple of different kinds of co-hosting or full-fledged property management. I’ve done all of it. I started a local property management company with a partner. And although I liked it, our network was primarily made up of investors who cared only about the numbers. And when we were charging them things like 20 and 25%, it just was cutting their margins so close.

And then they had to maintain their properties to a different level and keep everything to just a different standard that it gave them more work to do. And so they just didn’t get excited about it the way that we thought they were going to when they could go back to their long-term rent. That was easy, their comfort zone. So we had a lot of investor friends and acquaintances that were just like, you know, it’s making more money and in season, it’s great, but out of season it’s not, and it’s slower and it’s more work. And I’m just going to go back to long-term renting. And then.

As I was telling you last year, most of all of my properties were in Florida and we got the hurricanes that came through and flooded 17 out of my 17 arbitrage units with four and five feet of water in it. So I had already started the concept, mainstay hosts that I’m, that I’m doing now, which is to be a plug and play virtual assistant team. And that’s through co-hosting. I like to make it clear that it’s co-hosting. It’s not full management. cannot.

take your keys and you never hear from me again and we just operate your property. But we charge flat rate rate prices. There’s less risk for me because we just signed an agreement. I don’t do any long term stuff with anybody. We just want to work with people who want to work with us and we asked for a 30 day notice. But basically we go in and run all the day to day that we possibly can from remotely. So we’ll do all the advertising marketing, all the guest communications, all the we’ll

oversee all the cleaning, stocking the property. Basically anything that we can do remotely, we take over from you, which puts 90 % of the workload off of the owner and onto us. So it’s been less risk for me. It’s been more beneficial for owners. And that’s kind of the direction that I’ve been heading in ever since the storms.

Dylan Silver (06:38.136)
Okay, so let’s pivot a bit here, Peter, and talk about folks who may want to get into the co-hosting space. And on the outside looking in, maybe they’ve never owned an Airbnb, maybe they don’t own any properties, they haven’t done a wholesale deal. Are they gonna be able to get a co-hosting if they mentor, if they have the right mentorship, or do they really need to have the experience of…

doing an arbitrage or doing having your own property in their name for them to be an effective co-host

Peter Hartley (07:08.758)
I mean there’s a bunch of different ways to get into it. think that if you have a network or if you’re really trying to break into the world of real estate in any capacity, you just need somebody that’s going to take the chance on you and say, yeah, you can help me out for this. You might not be able to charge what some other companies can charge yet, but if you just get your foot in the door with one or two properties and prove that, you know, learn the systems, bring some value to people, I think that there’s definitely ways you can break into it without doing it, without owning a property or doing arbitrage.

Dylan Silver (07:37.537)
Okay, so.

If without giving away all the gold the gold here, let’s get a little granular You don’t don’t give away all the sauce here though Peter So if someone is on the outside looking in let’s say I’m in st. Pete right and I’m moving down there and I’m saying hey I want to go figure out this real estate game I’ve got my real estate license here in Texas, but I can’t use that in Florida So let me figure out you know a way to get some money up What would be kind of your your first you know month two months trying trying to get a co-hosting?

Peter Hartley (08:09.334)
think I would go to real estate meetups and groups and just start to meet people. And in a lot of those meetups, there’s some people that have several properties and they’re curious about short-term rentals and how they can maximize income. Or maybe there’s somebody who’s not doing well long-term rent or they’re tired of that and they want to go to the short-term rental world, but they don’t want to sit on their computer or phone and monitor messaging and they don’t know how to market that and they don’t know how to get up and going. So you can say,

been wanting to get involved with this and kind of try to get it going that way. But it would be networking.

Dylan Silver (08:42.83)
You know, think you made it seem very, simple. And I think it’s a testament really to your success and to the journey that you’re on. Because a lot of people, I think, view that as like this monumental task. I know when I was on the outside looking in, before I had done a single wholesale deal, before I had a real estate license, I was like, this, I was looking at cash for keys and wholesale at the time. I said, this seems like a whole lot of

Contracts I don’t understand and who am I is a lot of like this imposter syndrome, right? And so I always tell people when they’re on the outside looking in how to get into real estate I said similar to what you said Peter you got to start with the networking you got to start with going to a local RIA event or a local meeting of some kind and I tell people hey Say that you’re an aspiring investor that you’re looking to make connections with people

and would love to exchange contact information and just go from there because truly you don’t know what you don’t know and you don’t know how that next connection could change everything.

Peter Hartley (09:46.632)
Right. And I mean, for our first arbitrage stuff, I had no, no experience and I had no reason for anybody to trust me, but I’ve started just kind of calling people on my phone that I had a relationship with, told them what I was kind of looking to do. Hey, do know anybody with property that they’d be willing to let me try this in? And really that’s how I got an 11 unit and a two unit fairly quickly to operate out of. they just like the 11 unit, which I still run today.

They had like the worst tenant history I’d ever heard of. They had like six evictions in the previous year before they started turning over the apartments to me. And they were in a beautiful location on the water, waterfront right behind John’s Pass, which is a 120 vendor village on the water and a five minute walk to the beach. they had a terrible history with rental, long-term rent. And then when they came to me, they made more money. We made money and we’ve had a relationship now for

since 2018-19.

Dylan Silver (10:50.134)
It’s kind of remarkable, right? So the management of one of these deals can take something from being a giant headache to a big source of profit. I want to talk about going from the restaurant space to real estate. And do you see any similarities between the two spaces? Or are they totally different?

Peter Hartley (11:11.734)
The only similarity that I really relate is the hospitality aspect of it for me directly with the short-term rentals. We live and die by our reviews and by making people happy, which is the same thing that it was in the restaurant industry. So you get some thick skin over time because you work hard on something and you put everything into it. And when you get that upset guest or upset person coming to your restaurant, it is gut wrenching.

Dylan Silver (11:31.948)
Yeah, that’s for sure.

Peter Hartley (11:41.43)
But that’s just something you get used to and you learn from and you keep on going through that.

Dylan Silver (11:48.226)
You know, I think you said it exactly right. Gut wrenching. And you have to deal with, I would call these, you know, problems, right? And one of the things that I’ve seen unites all real estate entrepreneurs and effective real estate operators is they have the ability to look at problems from a solution oriented standpoint and not like this is a disaster, right? So like when you had the floods in your arbitrage units,

someone else might have been like, well, this is the end, right? This is it. I can’t move beyond this. there’s so many floods. So not all of them are literal floods, but you might have a market crash, right? Or you might have, in the case of Airbnb, maybe Airbnb can no longer be allowed in the area that people are in. I’ve heard that a lot before, right? And so what do people do? Well, you have to be able to solve problems. You have to be able to pivot. And I think that

ability to deal with kind of similar problems day to day in a restaurant space does prepare you for the similar types of problems that you might face or the similar anxieties you might face in a real estate capacity.

Peter Hartley (12:57.75)
Absolutely. Yeah. And with the storms, I won’t lie, I did feel like everything was over. Right after the storm, I was in there cleaning out muddy, dirty furniture and trying to do my part to just clear the property out so that the owners could do what they needed to do. And I did think it was over. I lost probably 70, $80,000 in furnishings that I could not ever find a real good way to insure. And I have obviously written off over the six years. So as far as the loss,

It was just a loss. There was nothing I could do. And the idea of getting everything cleaned out, rehabbed, and then starting over and putting all of that money back into it, knowing that I could lose it again in the following year just wasn’t really an option for me. But I have good relationships with the owners. They loved working with us and we provided a good solution to them. And so we just all pivoted and they’re in turn furnishing the properties and

rehabbing them and then I’m going to manage them and I am managing them for them in a different capacity so that I have less risk. I don’t make as much return as I did, but I have less risk. They get more return and it’s been kind of a win-win-win-win for everyone so far. So just got to pivot and keep it going.

Dylan Silver (14:09.582)
keep it going, man, that’s tough, man. But I’m wondering based on your experience going through that, if people are doing arbitrage at scale right now, is there anything that they can do to kind of mitigate that risk? Are there companies that will insure the furniture? Or is there some way maybe that they could write it into a contract where they’re not responsible for these type of things? Is there anything that people can do? Or is it arbitrage is just a huge risk?

Peter Hartley (14:39.51)
There’s, mean, a deal is a deal. You can structure it any way you want. I know people that have rented for a slightly higher rent, a furnished, completely ready to go place. I know that there are people who make deals with owners to share profit share so that they invest together in this stuff. And then the owners can actually place it under their insurance policy. And then I know that proper insurance is a company that will cover arbitrage.

just for me it was cost prohibitive for my specific setup and it might work for some, it just did not work for me and there might be some insurance options that are out there. Just by the time we grew to a certain size it just didn’t make sense at that point to really dig into that because we had already depreciated and written off all the furniture and we’ve been going for so many years. You kind of have that idea of, I know the flood’s a possibility but.

We’ve made our money off of this equipment and we’re going to be all right if it does happen. But when it does happen, you don’t feel that good about it.

Dylan Silver (15:39.182)
kind of red.

I mean, that’s it’s tough. was telling you before we hopped on here, you know, I’m not an Airbnb co-host, know, nor am I a landlord, but I had two tornadoes in when I’m out in North Dallas at a town called Denton. And one of them wrecked my car and it destroyed an ADU that we have on the ranch. And I was like, man, I don’t know how often we’re going to have to deal with these tornadoes. But, you know, thinking about floods, like just as just as difficult to deal with.

Peter, over the long term, when you’re looking at your trajectory as a real estate investor, real estate entrepreneur, you’ve seen, of course, going from restaurant to Airbnb arbitrage, now to co-host. Are you seeing any trends maybe in the next six months, year, in any of these spaces where you say, OK, this is where things are going to? Of course, no one has a crystal ball. But are you seeing any trends in these spaces?

Peter Hartley (16:40.47)
No, I think a lot of people are speculating on what’s going to happen. I do think that short-term rentals specifically are getting very, very saturated. I think only the best properties are making it. A lot of people are saying Airbnb and short-term rentals aren’t what they used to be, which is absolutely true. But only in the sense that if you can’t just throw on a regular three-bedroom, two-bathroom house and

furnish it modestly and make it work anymore. You really have to do next level, give a unique experience and it’s all about selling the experience now. So it’s a lot more difficult to just get going and make that money. But if you have an outstanding property, you can really crush it.

Dylan Silver (17:25.838)
Let’s talk about what next level entails. So I’m thinking like a specific design, something that’s eye catching, something where people want to stay there. And of course, why am I staying here versus staying at a Marriott? So what’s the wow factor? What can make an Airbnb next level for folks?

Peter Hartley (17:46.12)
I mean, for the higher end units, people are putting all kinds of stuff in there. They’re doing full on pickleball courts and basketball courts. They’re doing putt putt, fancy lighting throughout with professional designed and just the furnishing and everything is going to be professionally curated. People are doing murals all over their houses. They’re doing different fancy wallpapers. I never thought I’d see the day where wallpaper came back in, but here we are.

most of the successful ones I’m seeing are having fancy, really elaborate wallpaper and it’s all about the pictures. So whatever you can do to make the pictures pop and get somebody’s attention, because it’s just like social media and algorithms and different things, you need something that’s eye catching to catch people’s eye to get them to stop scrolling and click on that first photo that you have. But yeah, it’s the experience that you’re selling people and obviously you do have to have the location. mean,

Dylan Silver (18:36.824)
That’s true. You know that.

Peter Hartley (18:44.094)
Back when we started, you could start in the middle of St. Pete with nothing special and you could make some money. But now, pretty much those houses are gonna struggle and you have to minimum have a pool. And the closer to the beach, the better. Closer to downtown, you just have to have as much going for you as possible to be competitive in this time.

Dylan Silver (19:04.054)
As someone with a lot of experience in the short-term rental space, are you getting any investors coming to you, maybe without a property with these kind of next level amenities, right? Maybe it doesn’t have the wallpaper, you know, maybe it doesn’t have the pickleball court or any of these wow factors. Are you getting investors coming to you saying, hey, Peter, I’m seeing you in this space. What do you think about this property? You know, I have it, or should I get this on the contract?

and asking you for advice as far as is this going to be an effective short-term rental.

Peter Hartley (19:37.334)
Yeah, we see that all the time There are certain softwares out there now that you can gain pretty good insight into what a property can do and you can look at the comparables and that’s kind of where we turn to I either help them with that or tell them where to gain that information and you can actually pull up the competitors in that specific neighborhood and see what are their amenities what do they have and then you kind of have to be able to decide how much you can invest into

furnishing and all the amenities, hot tubs or whatever it may be to see if you can stack up to those to make the numbers work.

Dylan Silver (20:14.188)
You know, when I think about the Airbnb space in general, think, especially because we went through COVID and that still feels fresh in our minds. we, at least from my perspective, from the outside, looking in, look at, look, look at that COVID and say, well, this is kind of a great time to do Airbnb because people don’t want to be around people. So you have your own space in a lot of ways.

And so that’s kind of fresh in a lot of people’s minds. as a, you know, someone who might be an aspiring real estate investor, maybe they’re a teacher or they have another job of any capacity. Right. And they go and they say, well, this Airbnb thing is going to be cakewalk. Well, now it’s a different market. here in, your perspective is kind of, OK, well, you do have to have that next level type of look. You have to have the location. You also have to be prepared. You know, there could be damage, you know, there could be floods. So it’s

you do have to be ready for, know, we’re in a kind of a new age, new era with Airbnb.

Peter Hartley (21:15.486)
Yeah, and along with that, guests fully expect a different experience. It used to be an air bed and breakfast where you share your, you know, extra room in your house. They get an air mattress and they’re there and that’s fine. Now you pretty much, it’s a professional hosts game where, where guests expect it to be as cleaner, cleaner than a hotel. They expect certain amenities to be there. And if you have a main amenity that’s broken down, if you have a hot tub, which are notorious for not working, they

and the guests show up there, you’re going to be paying them money back for their stay. so the guest standards have risen to a level that is pretty demanding and you really have to be in it consistently to fight those battles and make sure people are happy.

Dylan Silver (21:57.743)
Peter, we are coming up on time here. Where can folks go to get a hold of you?

Peter Hartley (22:02.795)
Mainstayhosts.com, also on Facebook just under my name, Peter Hartley, and then Instagram at Mainstay Hosts as well.

Dylan Silver (22:12.014)
Peter, thank you so much for coming on the show here today.

Peter Hartley (22:16.278)
It’s been a pleasure, I really appreciate it.