Why Luxury Airbnb Properties Still Fail in LA | Brad Greiner on Reviews, Ranking, and Revenue

Brad (00:00)
Yeah, I mean, that’s exactly true. And now we’re relying on algorithms more than ever. You you started to see it with Google, but now you’re seeing it with Airbnb as well. Like they’re tracking 700 different metrics to see where to place you in the search results in real time. And so, you know, a lot of the work that we’re doing nowadays is just getting to the top of the search results.

Dylan Silver (00:28)
Hey folks, welcome back to the show. Today’s guest, Brad Greiner is the founder and CEO of Open Air Homes. They’re a premium property management company for short term and monthly rentals in Los Angeles and Palm Springs. They help homeowners rent their properties intelligently, stay fully compliant and maximize long-term revenue without the hype. Welcome to the show, Brad.

Brad (00:48)
Thank you Dylan, thank you for having me.

Dylan Silver (00:50)
Now, when we talk about this segment of the short term rental space, oftentimes people think that, okay, you I have this luxury property, you know, I’m going to really stand out from the pack. But at the same point in time, it becomes tricky because now you’re competing against everyone else who may have that same level of luxury. And so now it’s almost like the standard for everything is ratcheted up a notch.

Brad (01:17)
I mean, that’s exactly true. And now we’re relying on algorithms more than ever. You you started to see it with Google, but now you’re seeing it with Airbnb as well. Like they’re tracking 700 different metrics to see where to place you in the search results in real time. And so, you know, a lot of the work that we’re doing nowadays is just getting to the top of the search

because you’re right. There are so many luxury properties out there. There are so many people that are deciding to monetize their home. ⁓ You’re going to get lost in the shuffle if you’re not optimized, even if you have like an incredible property.

Dylan Silver (01:48)
When we talk about that specifically, one of the things that investors say is you make the money on the acquisition side, right? So when you purchase a property, you gotta buy it for the right price. But if you’re looking at a short-term rental, mid-term rental, right, and it’s on one of these platforms, the management of the property itself is critical. And from what I understand, reviews drive everything.

Brad (02:10)
Yeah, and you know, I tell homeowners all the time, like you can manage yourself. and there are a lot of people out there that are managing their own property. Airbnb makes it very easy for you to do. ⁓ I think the difference is it’s like, we’re doing it now for 75 properties. So like we have learned all the things that you would need to learn to get into it. But yeah, they make it very easy to do it on your own. And really it’s very simple. If you price it properly and you have great reviews, you’re going to probably have success. ⁓

you really just need to make sure that the guests are taken care of and that’s how you’re gonna lead to success. But yeah, the maintenance of it, you don’t wanna give people any reason for leaving a bad review, because a bad review will cost you thousands of dollars in future bookings.

Dylan Silver (02:52)
One of the things that I think people underestimate is the amount of communication that they’ll be receiving, especially if you’re in this segment, this luxury segment, because if there’s any small thing, the wifi, where to take the trash out, hey, this one thing isn’t working, right? People want an answer in like 15 minutes.

Brad (03:13)
Yeah, yeah. So what we do, so we have our guests, we have their, text them. So like what I learned from boutique hotels is like, it’s so nice to be able to text the front desk and be like, Hey, I need toilet paper or whatever it is. So we, we apply that same standard for our guests. So, you know, we’re switching to 24 hour a day communication this month. We were going almost 24 hours, but now we’re 24 hours because like, you know, a 3 a.m. lockout, like we don’t, that causes a lot of stress for people. So, you know,

The thing you’ll see in all of our reviews, literally nearly every single one is like, wow, they got back to us really, really quickly. that’s just, for me, that’s the standard moving forward. It should be what people expect, but it’s hard to do if you’re, you know, if you’re running, this is where it becomes hard. If you’re running just your own property, you know, you want to go to bed at midnight or whenever and not have to think about it. And you know, if you’re managing one property, like it can, really can lead to a lot of stress.

Dylan Silver (04:09)
Yeah, I think, and correct me if I’m wrong here, but especially if you’re just starting out, one bad review can really have a huge impact.

Brad (04:19)
yeah. Like if your first review, this happened to us. If your first review is a bad review, you should probably just restart the listing to be quite honest, because you’re trying to climb up a hill that’s, you know, we had a break in on a first stay in a brand new home. And it’s like, there’s literally no way of coming back from that. You’re just climbing up a hill ever since. ⁓ you know, nothing that we necessarily did wrong with the house. was just like extremely bad luck across the board.

⁓ so yeah, so a bad review is, know, listen, once you have 10 or 15 positive reviews, everybody has a different sense of like what luxury is or what nice is and things can go wrong. Like in a house, many things can go wrong. So,

you know, don’t aim for perfection or aim for perfection, but realize that there’s going to be that occasional guest. You know, I can have the exact same home. Nothing’s changed. The first, first guest loves it, thinks it’s the best home they’ve ever stayed in. The next guest can think it’s the worst thing that they’ve ever seen.

The exact same house.

Dylan Silver (06:04)
Now, when we talk about that difference of opinion, right? Is there like an on-ramp to when you’ll start to see some consistency? Like, okay, we’re now seeing repeat bookings or maybe not repeat, but consistent bookings. Is it like three months? Is it six months? Do some people right away start bracking up reviews? Is there a specific strategy people can take?

Brad (06:27)
Yeah. So Airbnb thinks about it through, and I speak through the lens of Airbnb because they’re the juggernaut. They continue to take over market share. VRBO is also, you know, hopefully they catch up at some point in time. ⁓ you know, momentum and velocity are kind of the two words that they use. And we see it in our listings all the time. If it’s a brand new listing, you have to take that first booking and then you start to build momentum from there because it signals to the algorithm that people want this home, that they’re enjoying their stay.

And so, you know, that probably happens. It depends. If you’re doing monthly rentals, it takes longer to build good reviews. But if you’re doing short term, you know, within the first month, you can start to build that. And by month three, you should be, if you’re doing well, you know, you’ll start to see all your metrics go up. You’ll start to see way you you’re way outperforming the market in terms of views, in terms of conversion rates. And then you can start to see more success from.

Dylan Silver (07:22)
Pivoting a bit here, Brad, you know, a lot of times I’ve heard of people buying ⁓ these types of investment properties because they personally have an interest in an area. Is that a strategy where you feel like there can be profitability there? Or if people are gonna be, you know, potentially using it for a quarter of the year, is that gonna drastically impact their ability to be successful the remainder three quarters of the year?

Brad (07:47)
Yeah, you know, the first thing I’d say with interest rates so high and the price of houses have gone up so much. When a homeowner comes to me and they haven’t purchased yet, what I try to tell them is like, listen, I don’t know if I’m going to be able to make you money from the beginning. But if you’re thinking about this, like this is a vacation home that I want to use, that I want to come to.

and I’m going to work with you to offset the cost of home ownership for the first maybe five or 10 years until I can refinance or whatever happens. You know, that’s the lens at which I would think through if you’re buying a home today, to be quite honest, in the California market. You know, every market’s a little bit different, but we’ve just seen the price of homes continue to go up. And so I don’t know if that answers your question, but like, I love it when a homeowner comes to me and they’re like,

Dylan Silver (08:29)
it does, certainly, yeah.

Brad (08:34)
I want to offset my cost of home ownership because it takes the stress off of my play because like I can’t control the market. Like our Palm Springs market, all of a sudden there was a huge oversupply and less demand about two years ago. Everybody jumped into that market. You know, there was some like Wall Street Journal report about the best short-term rental market to invest in. Well, everyone invested and all of a sudden the supply was huge. And, you know, I can’t control market dynamics. And so what I’ve seen that works best is it’s like,

It’s a different philosophy for your real estate investors, which is like, no, I think I might want to retire in California. I want to buy this home because I love it. I might break even on it. might make money. Some of our homeowners from the moment they buy, they are making money on it. But I would think more through the lens of offsetting the cost of home ownership because you want to own that home for a long time, maybe pass it down to your kids or whatever the kids may be as opposed to strictly as a business. And that’s just

That’s just my market. I don’t know about in Texas, all of a sudden, you know.

Dylan Silver (09:36)
No, I mean, I think when people talk about offsetting the cost of home ownership, especially for those first, let’s say year, two years, I think that’s realistic, right? For you to come right out of the gate swinging and hitting home runs, I think is gonna be less likely wherever you are.

But especially when we’re talking about the level of competition that exists out there, it’s tough to say like, hey, we just putting this online, it’s going to be as successful as one that have been there for years, right?

I do want to ask you, I haven’t asked anybody this question in the short-term rental space. When people go to sell their property that is, let’s say Airbnb, right? And it’s doing well on Airbnb.

Is there a specific market or strategy for selling that to where it’s more valuable than just the home itself because it’s got this BNB cashflow tied to it?

Brad (11:09)
Yeah, I mean, oftentimes when our homeowners are selling, especially like in the Palm Springs market, like we just share data with the real estate agent that’s working on it of like, this is exactly how the home’s doing. You know, what we’ve seen is oftentimes the home will sell the person that’ll buy it might buy it furnished. And then we keep the listing with our company and then, you know, we can just continue to work for the next person that comes in. This has happened many times for us. I wouldn’t necessarily say that, you know, it’ll drive up.

the purchase price significantly because you can really turn any home into, there comes a moment where if you have 500 reviews on your home, I think some people look at that and go like, 500 people have stayed there. Even though people go to hotels all the time and there’s been thousands of people that have stayed there. So there’s a part of it that’s like, the nice part is that you can just hit the ground running. We’ve sold homes and like,

they came to their own home for maybe three days and then we took another rental. So it’s like, there’s no downtime. It’s just, if you buy it furnished, you’re just off to the races from the very beginning.

Dylan Silver (12:14)
Now, when we talk about ⁓ the elements of the Airbnb itself physically that are important, when the property may already be luxury, is there a design element that goes into this that is critical? Is that something that you would assist with or that you would at least make recommendations with?

Brad (12:32)
Yeah, definitely. ⁓ I took over the sales position at our company about two years ago. what I found, the reason I did that was because the algorithms are driving, you know, the top homes to the top of the search results. I tell, I tell homeowners know all the time that we can’t work with them in its current state for one reason or another. I mean, I’m not like, it’s not really through the lens of like,

a specific design. It’s more about like, I walk into a place and I’m like, our guests going to be happy here. Are they going to be comfortable? Is this home well maintained? ⁓ Factors like that. you know, I, what I’ve found is that like unique designs tend to do better than just like these generic boxes. Like, I don’t want to call it a competitor, but there’s one competitor where it’s like every single home.

they’ve used the same couch, the same this, the same this, and it’s just so lame and so boring. And I like that all of our homes have like a unique style and like vibe to them. I actually think that those do better than ones that are just so generically average. And so that’s really what we’re looking for is, you know, you don’t have to have every single guest that stays there. Well,

Dylan Silver (13:25)
Right.

Brad (13:45)
at every single guest that’s like shopping on Airbnb, you don’t need to have every single one of them love it. You need to have one or 2 % of them like really like it. So you can take choices, you can take chances and risks and do things that are not just like, very generic and boring, at least in our market.

Dylan Silver (14:03)
Now, one of the risks that I’ve noticed as someone who stays at B &Bs is, know, potentially things break. And especially if there’s a changeover coming up, if there’s another guest that’s coming in the same day that you’re leaving, I’m imagining not every guest is 100 % forthright about what broke. You know, how does that get managed? And has there ever been times where there’s been some major issue where, you know, potentially things had to get moved around?

Brad (14:29)
yeah, so our cleaners and our property managers are taking photos. Those are time stamped. They live on our backend. We’re really organized digitally, which is really important in this space as well. So those photos are time stamped. If someone leaves and there’s damage, we have like a before and after of what the damage was. We’re filing a claim.

I mean, it really depends on what it is. If it’s a broken base, like it’s not going to affect the next guest stay. ⁓ If there’s like a huge party and complete damage everywhere, know, sites like Airbnb have been really great at like,

we give them a call and it’s just like, we’re going to have to move these people. There’s just no way. Like, you know, it happens so rarely at our company because like we’re hosting longer stays. We’re hosting people that need families. Like we’re really particular. Like we don’t want, we’re the anti-party company, but

It definitely does happen, but we’ve done a great job of being paid out when there is damage. It’s not a perfect system, but it definitely does work. You know, we try everything to not have to move people, but you know, a flood in a house, you’re going to have move people.

Dylan Silver (16:12)
Yeah,

that’s right. And I’m thinking about all the other kinds of wacky things that can come up.

When we talk about Airbnb and the short-term rental space, what I’ve also seen, I’m a Texas licensed realtor, is I believe it’s Dallas. They made it so you couldn’t do short-term rentals any longer, but people were doing monthly stays. And I’ve actually done this myself, and I’ve realized, I wonder how many people are utilizing Airbnb to find monthly and longer-term stays. Is this a segment that you see growing?

Brad (16:44)
Yeah, about 40 % of our portfolio in Los Angeles and maybe 20 % in Palm Springs are monthly rentals. Maybe those numbers are even a little bit higher at this point. So whenever there’s regulations that come in, at least in the state of California, it might be the same in Texas, 30 day rentals are considered legal. So it’s like a workaround. It’s considered a long-term lease. so oftentimes, I was just on a call with a company that owns like,

hundreds of buildings. And you know, at least in Los Angeles right now, they’re having a hard time renting out some of their units long-term. And so, you know, they’re considering putting on, like they have a multifamily, considering putting on one unit that can’t be rented short-term as a monthly rental. And we’ll just stack rentals back to back to back.

I think it’s a good way to diversify. Like I know you have a lot of real estate people that listen, you know, that would be a really good way to diversify. Let’s say you have 16 unit building, you know, you could turn one of them into a monthly rental and just test that market. That would be a very easy, simple way to start testing that market and see if it’s something that like might work for you long-term. I think part of this is like a lot of people have uncertainty about our world right now. You know, digital nomads are not going away. Like

There’s a segment of people that can work from anywhere and they literally just hop around the world. And we are set up to cater to these people and it’s not slowing down. ⁓ What I’ve seen, least in our market, you’re not gonna necessarily make too much more money because like there’s Airbnb fees. There’s different fees that it kind of averages out to right around maybe a little bit more money you’re gonna be making. And then as we start to gain success, then we can raise the rate over time. ⁓

We’re doing really well with monthly rentals. Our guests are staying on average on Airbnb, like one to three months is typically what we see. Over three months, yeah, one to three months is typically what we say for the monthly. ⁓ Over three months, like, you know, might want to list on Zillow and Redfin as well. You’re paying some pretty heavy Airbnb fees if you’re gonna stay for six months in an Airbnb. So.

Dylan Silver (18:34)
Well.

Yeah, longer than that,

I echo that and as someone, I consider myself a digital nomad, I’ve looked at that and I’ve thought, you know, there’s gotta be other people that are like-minded who are looking to Airbnb and I’ve been looking on Zillow as well and you realize that you don’t automatically think that Airbnb and Zillow would kind of have any kind of, you know, overlap but there does seem to be at least a little bit of that.

We are coming up on time here though, Brad. Any new projects that you’re working on and then as well, what’s the best way for folks to reach out to your team?

Brad (19:22)
Yeah. So, ⁓ the thing I’m most excited about, I’ve been using Claude, Claude code to rebuild our booking engine. You know, I’m looking through the lens of software and how I can just replace things that I’m paying for. So replacing Salesforce with our own custom CRM. And the next thing that I’m working on is our booking engine. So I’m, I’m about ready to launch that. And kind of to your point of monthly rentals, I, I’ve been concerned that the rate, the price continues to go up and up and up. And so I’ve built a whole booking platform.

that allows people to pay by like instant bank transfer. And so this is gonna start to bring down the cost of these monthly rentals because I see the same problem that you’re talking about, which is like, okay, Zillow is like, you pay a monthly rate and you pay a security deposit, whereas the short-term industry is you pay a rate and then you pay insurance and you pay all these other things and it starts to just balloon out of control. So it’s something that we’re thinking about as well, ⁓ how we can reduce that rate to be.

not necessarily exactly in line with the market because there should be a premium charge if you’re renting furnished for three months. But ⁓ it’s the major thing that I’m focused on at this point in time. And for anyone out there, Claude is the best thing that I’ve ever used. We have a whole company brain built out. It has leveled up our business to a point where it’s just remarkable, to be quite honest.

Dylan Silver (20:33)
for

Brad, thank you so much for joining us today. Thanks for your time.

Brad (20:47)
All right, thanks Dylan.