How to Build & Pivot Your Short Term Rental for Maximum Profitability

Stephen S. (00:03.387)
Welcome to the show where we interview the nation’s leading real estate entrepreneurs. Welcome back to the show. If you are coming in here for the second, third or hundredth time and welcome to it. If it is your first time, we are super excited today because I’ve got Gretchen Kornutik in the house and we’re going to be talking all about how she has navigated her real estate career.

and specifically how building and pivoting in the short-term rental market space has been her name of the game. just remember at Investor Fuel, we help real estate investors, service providers, and real estate entrepreneurs, 2 to 5X their businesses to allow them to build the businesses they’ve always wanted, to allow them to live the lives they’ve always dreamed of. With that being said, Gretchen, welcome to the show today.

Gretchen Kornutik (00:51.757)
Thanks for having me. I’m excited to be here.

Stephen S. (00:54.363)
I’m super excited for our conversation. We got to share some some pretty golden little nuggets here in the in beginning and you just have an absolute wealth of experience and knowledge in this space. so before we get really rolling into our topic talking about building and pivoting in the short term rental, midterm rental spaces, tell us how you got into real estate originally and what got you to where you’re at now today.

Gretchen Kornutik (01:18.812)
my gosh, right? I mean, that’s a 30 year journey, but the really short 30,000 foot view of that is I went into real estate kicking and screaming. I thought I was gonna be a pediatric surgeon. My husband was in real estate. He said, Gretchen, you’ve gotta get your license. This is back in the 90s. I’ve just dated myself. And you know, did what most realtors do, right? I thought I was big dog on campus. I thought I knew everything. I didn’t know shit about shit. And you know, I just.

thought I could continue being comfortable moving on. I partnered when the market started to crash, I partnered with some really smart folks. And so people who are out there and listening, partner with a mentor and be a mentor. It is so vitally important to the growth and scale of your business. It doesn’t matter what mastermind, anything like that, be a part of something bigger than you so that you can learn and grow. But I did that. I partnered with a couple of really smart guys who understood.

the financial pivoting and kind of the threshold of just predicting predictability in the market and understanding those KPIs. So we built a property management company. I was in charge of the acquisitions and construction. We were buying, many of your people who listen, three, 400 houses a day on the auction block.

We were throwing them into funnels depending on who the hedge fund was, who the buyer was, their buy box, etc. Understanding what their ROI capacity was and everything. Renovating them, stabilizing them and putting them into portfolios which we would sell to that hedge fund or that group and keep the management. That’s how we kept everyone fed in the house. And it was just a strategic move of pivoting, right? And many people did it.

We went, again, all the real estate stuff. We went from that to understanding then that construction costs were low. Some of the folks who have been on here will probably know me and our system, and we were alongside them at many of the IMN conferences when the build to rent platform kind of erupted from the scene. And so we did that, we did the development, and we were there before D.R. Horton and Lennar and all of those folks.

Gretchen Kornutik (03:29.513)
teaching them how we were building small developments for the purpose of renting and then selling them to individual investors before they even broke ground for pad ready lots. During that time, I had such a wealth of wholesalers and investors who would call me. I got this great call from a guy who said, hey Gretchen, I need you to get down to South Montevideo Beach. We got this house, bring your checkbook. Went down there, long story short, and it’s a very funny story for people.

to follow me on social media, because I do tell the story. But we renovated this crazy house. I bought it, we renovated it, and about pivoting, right? At the time, bought it in 15 minutes. I know people who have done this, lost a shit ton of money. The elevation certificate was a couple of inches too shy. Our insurance on that building was $50,000 every six months. We had to get it underwritten through Lloyds of London. And okay, we’ve got to get it off the books. We’ve got to churn this, we’ve got to make this work.

renovated it, got it on the market for sale, got it under contract, and a week before closing, Hurricane Matthew hit it. And so I sat on that deck and I cried, right? And so typical girly fashion, right? What am I gonna do? And you know, there’s always a solution. You pull up your big girl panties and you say, okay, this is what we’re gonna do. I went and I got another elevation certificate.

And I got one until I got what I wanted. We dropped that insurance down to $5,000 a year, which made it a perfect rental. And at that point, right, I didn’t know anything about vacation rentals. This is before Airbnb was a thing. They were still, you know, people in lofts in London and New York City and Seattle. They weren’t what it is today. It was the wild, wild west. So I went looking for a mentor and I was disgusted with what I found.

I could not find people who actually cared about the industry. And I said, screw it, I’m gonna do it better. So I pivoted at that point, handed off my acquisition rails to somebody else in the company and just dove head first into the short-term rental space. And it was a huge success. We built that company. Again, the bigger company that we had with some great, great partners and people and hedge funds sold in 2021. And so I started my own smaller company.

Gretchen Kornutik (05:50.368)
and started teaching people. I started primarily teaching realtors because I was in that space where I thought I knew what I knew and I didn’t know nothing. Realtors and a lot of real estate professionals, know, investors are going to them for help or first time investors are going to them for help and they just don’t know. They don’t understand that space. And of course, since that time, it is strategically involved.

And you’ve got midterm rentals and you’ve got companies like PadSplit and boarding houses and part-time rentals and the Augusta Rule and all of these things. And so that became my bucket right back in 2014, 15. And it has been my bucket ever since and it is the bread and butter. So I teach people how to do it. I teach them when they’re looking at properties for proformas, how to do it. Not everybody needs a property manager.

A lot of really savvy investors can do it themselves or put things in place, but there may be just a couple of steps that they’re missing. So that’s how I got here, right? I mean, kind of a crazy story.

Stephen S. (06:58.739)
That really is incredible. And so what is your main focus now today?

Gretchen Kornutik (07:05.378)
Yeah, my focus is really building a higher end portfolio, right? So people who have homes that are in the mountains, maybe they’re secondary homeowners that use those properties or don’t, right? They’re using it for a tax shelter. They don’t really wanna have crazy things in their house. They don’t necessarily want the traditional Airbnb model. I love those higher end properties where we can specialize and bring in some really high end things. We can do retreats at a very high level.

Not necessarily, right? Everybody says weddings. Weddings, sure, but there’s just so many other things that you can do with properties and specifically the part-time. So I partner with the PGA and the NFL to use owner-occupied properties for special events. And it’s a huge success and it’s another income stream, especially while this market pivots. We’ve got to have other sources of income and creative ideas as to how to keep it going.

Stephen S. (08:04.499)
Right. And it’s almost it’s almost a secret niche within a niche. Right. Because most people think Airbnb short term rentals, you know, whatever. And they think like, you know, the one hundred and fifty, two hundred dollar a night place you’re going to go and stay. But there’s also those places that you have to get when you have a.

you know, group of people that you do quarterly retreats with that, you know, you’re going to have 25 people coming in. Well, they need a property big enough to stay in and it’s going to probably cost three grand a night.

Gretchen Kornutik (08:28.162)
100%.

Gretchen Kornutik (08:35.454)
Yeah, yeah or more right and and so a hundred percent and so it’s also finding those properties working with those owners I am NOT looking to be the next Vakasa right? I don’t want to be what what they are doing. That’s not my model My model is really at this point right after selling a much larger company with property management bill to rent being a part of that whole thing And and kind of shifting over. I really want to be

Stephen S. (08:38.192)
Right.

Gretchen Kornutik (09:02.801)
very targeted on what I’m doing and then helping others grow and and and feeding in you know, I do that through profit share agreements and fee share agreements and and and partnering up with people and JV’s to really make it the best for everyone Looking for those houses that are currently sitting there vacant that are just stunning structures

Stephen S. (09:23.315)
Yeah, absolutely. And so what made you decide like when you got into this specific piece of it? Are you owning these properties necessarily? Are you doing more of the management side? Do you have a blend? Tell me a little bit more about like your actual structure.

Gretchen Kornutik (09:38.45)
Yeah, it’s a blend, right? It’s yes and. So my husband and I travel around in three states. We move our stuff, but we stay in our own houses. We have guest houses.

Stephen S. (09:50.195)
Do you literally move your stuff like you’re like, hey, we’re done staying in this state. We’re going to go stay in Utah for six months. And then you literally just have people come get all your stuff out of one house and move it to the next house. Is that what you mean by that?

Gretchen Kornutik (10:03.648)
Okay, so yeah, so that’s funny. Yes and we, you know, when I buy or get a house, I fill it, right? I fill it with all the things that I would want for guests. And then we don’t have a lot of stuff. When you think about stuff in a kitchen, it’s there for the guests, right? I don’t need to travel with that. I need to travel with some clothing.

Stephen S. (10:12.915)
I love it.

Stephen S. (10:17.517)
Yeah, right. Yeah.

Hmm.

Gretchen Kornutik (10:31.455)
some very basic things, couches and furniture and all of that, blankets and sheets and towels, that all stays. If you get…

Stephen S. (10:38.515)
So you’re saying you’re saying you actually almost stay in your properties that you own. Okay. If this isn’t like we own three houses in three states, it’s what house do we want to go stay out now? That’s awesome. I love that. That’s great. I just wanted to get some clarity on that because I was thinking I was like, man, that’s like that’s real wealth, y’all. You got three houses in three states. You’re just like, hey, get the couch. You know what I mean?

Gretchen Kornutik (10:45.532)
Yeah. Yes.

Gretchen Kornutik (10:53.5)
Yes. Yes.

Stephen S. (11:07.729)
That’s crazy. So tell me a little bit more about this stuff. This is so intriguing to me.

Gretchen Kornutik (11:13.104)
About what? Tell you about…

Stephen S. (11:14.951)
Tell me a little bit more about like how often you like move around and why you do it, what you do it. Sure.

Gretchen Kornutik (11:19.204)
Well, yeah, I mean, it depends on special events, right? So currently my stuff is in Woodstock, Georgia. The players tournament just happened down in, using this as an example, down in Sawgrass, Ponte Vedra Beach. So I went down there, right? So it was like, okay, they’re coming. We’ve got to get down there, boots on the ground. We kind of pivot. I don’t spend a lot of time working in my business, but when there are big, big events like that.

And we have the actual players staying in houses. We’re talking about four or $5 million houses that people are moving out of and staying in. But then we also have our typical short-term rental houses that people are coming in and spending a week, et cetera. But on those weeks, we’ve got concierges and we’ve got grocery delivery and we’ve got massage therapists and all the different things that players and high-end guests would need. And so we tackle that and the phones come to me.

It’s the same thing during hurricane time in Florida. When a storm comes and we’re evacuating everyone out of Florida, I get in the car and go to South Florida and I follow the storm because I’m the one who can sign off on the insurance claims. I’m the one who can immediately say, yes, get this done. And so it’s a little bit backwards, right? And so I pivot on that, storms, special events, and then…

Stephen S. (12:32.049)
Mm.

Gretchen Kornutik (12:43.182)
like, hey, do I want to go to the beach or do I want to go to the mountains? Where do I want to talk to people, teach people, do my Zoom classes and things like that online? It’s just, you know, it’s a running schedule.

Stephen S. (12:57.093)
What are some mistakes you think or not you think that you see people making like in this space that you’re doing? Which I’m sure there’s not as much competition, even though we kind of talked about that a little bit, but it’s not so much competition. There’s food at the table for everybody. It’s just a matter of how do you get a seat at the table?

Gretchen Kornutik (13:14.319)
There is food at the table for everybody. Well, so when you say that, do you mean ownership or like managers? Because I wear both those hats.

Stephen S. (13:20.819)
I’d say give me some for both, I guess.

Gretchen Kornutik (13:25.627)
Okay, okay, so on the ownership side, I think that the biggest thing is if you look at TikTok and these quick reels and everything, you think you can just buy a property, especially in 2019, 2020 COVID, you think you just get a property, set it, forget it, it’s gonna be passive income, there’s not gonna be an issue.

Stephen S. (13:43.507)
You gotta get the moany. I didn’t, I’m not naming names.

Gretchen Kornutik (13:49.186)
Everybody, right, most people got on that train. Prices went through the roof. People made a shit ton of money. Great, that’s amazing. But then all of a sudden, real life happened, right? Taxes and regulation and guests who weren’t happy and broken furniture or whatever it happened to be. So I think just doing your due diligence and understanding. I think an owner, especially if you’re an uneducated one in that space,

totally different, right? It’s hospitality versus real estate. Money is money, so numbers don’t lie, but on the hospitality side, are you catering to a medical tourism and insurance claims and a midterm rental, or are you catering to the vacation guests in a high vacation area or tourism area? You know, I think that they don’t think about that. I love when I get the calls and they say, Gretchen, just tell me where I need to buy something. I’m like, nope.

That is your vision, not mine. Tell me what your vision is. And so they don’t dive into that. They just wanna jump into the deep end and not do the homework. That’s absolutely the number one thing. You need a goal. We all say this, right? You get into an Uber, you don’t tell the Uber driver where you’re going 10 minutes into the drive. You do it at the very beginning. You’ve got to have kind of that vision set at the beginning. And we all know this in regular investments is that the acquisition,

the acquisition process, purchase price, everything, that’s where you’re gonna make your biggest mistakes. So slow down at that onset and make sure you’re onboarding correctly. So that’s that side. Property managers, I think that hungry property managers don’t do their due diligence and say, this is who I’m gonna serve, this is who my ideal client is, and actually name that person. They just say, yes, we’ll take everybody. Yes, I’ll take you. Yes, you’re gonna sign my property management agreement. Yes.

And then all of a sudden they’re running around with their hair coming out of their skin and just like crazy, right? Because they don’t have the steps in place. They don’t have the S &Ps in place and they don’t understand just making it a fluid system with a good team for the purpose of what they’re setting up. Again, it goes back to that vision, right? I just think that people jump into these things and they don’t think about what their mindset is and their vision. They’re watching TikTok or they’re watching what somebody else is doing and think they can do it without homework.

Stephen S. (16:13.363)
Absolutely. You talked a lot about goals and vision there. What does that look like for you now as someone that’s already having success? I think part of getting success then is to not get bored with the process, which is hard to get bored in real estate. It’s so fascinating. But what is the long vision, the long goal for you? What does that look like now?

Gretchen Kornutik (16:31.523)
Yeah.

Gretchen Kornutik (16:35.639)
The long, yeah, so that’s funny. So totally different. I’m gonna throw you for a loop here. I have had a passion. It’s so funny when you think about attainable, affordable housing, investments, things like that. Everyone blames it on the government. They blame it on prices, whatever it happens to be. It doesn’t matter, guys. It’s not, it’s the economy, right? We go in waves. People don’t understand the K wave.

And so, when the market comes down, which it’s starting to do, things will become more affordable. We’ll find those houses again. And the institutional investors might buy up some of that foreclosure market. I think mostly they’ll do the build to rent model. We’ll see. They’re a big machine that’s gobbling up a lot of the market. But because of that, and because I have twins that are 22, I want them to get in homes. And I don’t necessarily want them to get in homes that they live in.

Right? If we go back to the old adage that the home you live in isn’t an asset, it’s a liability. So get our kids, get our young people into properties that they can rent out, that they can make money from as a side hustle and build their wealth very early on. And that’s going to bring back our middle class. And one of the ways I would love to do that is through kind of, I say tiny homes, but cottage communities.

And so I have been fighting in Jacksonville, Florida, up here in multiple places. There are a couple of places. And I’m working with municipalities to get that Muni code in so that we can build cottage communities. I think that something like that is just a super exciting prospect. So my vision and my goal is always just to be watching what’s happening in the marketplace and pivoting toward it. I’m gonna continue to build my short-term rental management company.

Stephen S. (18:14.323)
Okay.

Gretchen Kornutik (18:27.252)
Again, I don’t want it to be huge. I love having great people who are aligned with me. And they can be small houses. I’ve got three twos in the middle of Marietta, Georgia. Got one out in the middle of nowhere, Fayetteville, Georgia, that is always full. It’s at 100 % occupancy. Some at the ocean, all over these different places. So that’s gonna continue to naturally organically grow. And then just kind of see what happens. Yeah, I do not wanna stop.

I want to run into the grave. I just want to dance and keep moving and meeting people.

Stephen S. (19:03.987)
So let me ask you this if you were to really put yourself it back in the beginning and You could go back and start it all over When you started but you could take all of the knowledge and the information the lessons the failures and everything you’ve you’ve experienced over You know three decades as you said not me You know, what would you do different? What would you do the same?

Gretchen Kornutik (19:11.602)
Okay.

Gretchen Kornutik (19:31.273)
so interesting. So I think I would have taken exactly the same path, but the structure of the money would have been different. I would have started with a C-corp because people don’t understand the taxes on a C-corp. I would have structured it much differently and I would have fed into immediately a self-directed Roth that was tax-free to do my transactions and move to that money a little bit differently so that it could go.

Stephen S. (19:39.987)
Hmm.

Gretchen Kornutik (20:00.508)
from that $5,000 or $6,000 that you’re putting in at the very beginning, two millions of dollars, completely tax free, and thereby being able to start a true family office and going in that direction. That was something I just didn’t have knowledge of. I was not the financial IQ girl back in the day, and it’s just not something you talked about during that generation. So if I could go backwards, I, gosh.

the structure of the money would have been entirely different. Because some of the money that I’ve lost in deals or taxes because of just really bad structure, I would have to do philanthropic things at a much higher level.

Stephen S. (20:46.643)
Man, I love that. That’s really interesting too, because I don’t think a lot of people have that in game in mind. Like you even mentioned family office. I think that’s a term that a lot of people don’t even know until they get to a certain level, right? What would be so important? What do you think that would really change for you in the last 30 years if you would have done that in the beginning or at least?

Gretchen Kornutik (21:05.871)
Yeah.

Stephen S. (21:15.507)
Somewhere in the middle, I’m assuming is when that would have made the most sense potentially, but what would that have changed for you, do you think?

Gretchen Kornutik (21:23.364)
think that some of the projects that I’ve tried to tackle, wouldn’t have to syndicate and find funding. I would be able to dive right in and say, screw it, if I lose a couple million dollars on this, I’m gonna make this happen on projects that I’m ahead of the curve on. And also just the give back. I really do believe in the give back in education and in setting things up for people so that they succeed.

that is where my heart is, right? At the end of the day, I am here to make fucking money. And we don’t talk about that enough, about making money and the structure of it and how people have their businesses structured and getting to that X level. And that’s what I would do differently, is I would have a lot more of those conversations openly and be able to then share that with others to set it up and quite frankly, you know, probably set up.

Trusts and things, although my vision has changed. Like I said, I’ve got twins that are 22. You know, there’s a lot of really amazing people, very wealthy people, you know, across the world who said, listen, kid, whichever kid it is, at 18 or when you stop school, that’s it. You’re not getting anything else. You have my name, my connections, but that’s it. You know, you can go on vacation with me, but I’m not paying for your house and your kids and giving you a trust fund.

But if you have all of that, you can give that knowledge, right? And to pass that knowledge generationally would be massive. And so I do require that of my own children. We have calls and we talk about money and they’re like, mom, seriously. And I’m like, you’ll thank me later. Let’s talk about this. Let’s talk about what this new law is. It’s great, because I don’t know everything.

But if I surround myself with people who are much smarter than me, I love it because it’s just a give and take constantly.

Stephen S. (23:30.341)
If somebody wants to get started with what you’re doing specifically, what advice would you give them getting started?

Gretchen Kornutik (23:39.486)
Yeah, so they don’t need a lot of money to get into it. There are so many things right now in our economy, and you know this, real estate money is easy. Money is not the hurdle, even though a lot of people think it is. You can get it pretty easily. just think, I think first steps is identifying an area or a vision, understanding that the money isn’t it, and then get with somebody who can mentor you through the process, you know, and it doesn’t matter who that person is.

but get with that person. Give them 50 % of the deal. Like give them money. That knowledge is huge. You know, I love people who are like, I don’t wanna be part of, and I’ll bet you guys deal with this, with I don’t wanna pay that dollar amount or whatever. Are you kidding me? Do you know how much that value is? It’s massive. So yeah, so first timers, find somebody who actually knows. Like don’t ask the question.

to somebody who hasn’t been successful. Don’t ask the business coach who’s never owned an investment property or has had a success. Don’t ask the poor person how to be rich. They’re not rich. Ask the right person and ask the questions. Don’t get timid and think that ego is all that.

Stephen S. (24:56.765)
Right, love that. Well, so Gretchen, if somebody wants to maybe learn more about you or see what you’re working on, where should they go for that to connect with you for more?

Gretchen Kornutik (25:06.319)
my gosh, so easy. So my website is allthingshorttermrentals. That’s it. It’s super easy. I still use my personal email address attached to, you know, so many different things, which is saltairkisses.gmail.com. But you can schedule a call with me. You can go to allthingshorttermrentals, see where I am, follow me on social media. And yeah, I’d love to start a conversation.

Stephen S. (25:31.987)
And so also, as kind of a final note here, what’s the biggest thing you’re looking for that you need that maybe one of our listeners might be the right fit? What’s something you’re needing right now in your business that we could help with?

Gretchen Kornutik (25:42.246)
Yeah, I I would love to connect with owners that have vacant homes, high-end vacant homes in specialty areas, beautiful landscapes, things of that nature, and build up that private portfolio of exclusive homes, exclusive adventures, scenarios, things of that nature. That is the bucket that I’m looking to fill right now.

Stephen S. (26:07.261)
Well, you heard it here first, folks. Gretchen Kornudek, thank you so much for being here, everyone. I hope you enjoy today’s show, and we’ll see you on the next episode.

Gretchen Kornutik (26:16.298)
Thanks.