How to Find Short-Term Rental Deals in Stale Real Estate Listings With Luke Carl

Luke Carl (00:00)
Properties that have been on market for eight to twelve months. they’re getting overlooked as kind of like they’re— they’re spoiled, like damaged goods. And I think that this is the perfect time to be contacting that type of a seller, you know, get an agent, get a good agent, of course. If that’s what we do, we’re a team of real estate agents, not myself, but my team. And make an offer, you know. I mean, this is— this is a place in the market where you can throw out a ridiculous offer on something and what are they gonna do? Say no? It’s been for sale for eight months,

Scott Bursey (02:09)
Welcome back to the Real Estate Pros Podcast powered by Investor Fuel. I’m your host, Scott Bursey. And today, pros, we’re joined by Luke Carl, the founder of The Short Term Shop. Luke is focused on how investors approach vacation rentals, helping many people build wealth through short-term investments, and is also an investor himself in multifamily. From mastering market selection to systemizing guest experiences, he is a sharp mind in the space. Pros, you can expect a clinic today on how to identify high cash flow markets and the operational secrets to staying profitable in a competitive environment. Luke, welcome to the show.

Luke Carl (02:49)
It’s my pleasure, sir. I’m very happy to be here.

Scott Bursey (02:52)
It is awesome having you here. And to help our listeners get up to speed, please give us the front row seat, if you will, Luke, on how your career ignited and where you’re pouring your fuel now.

Luke Carl (03:03)
Yes, my career ignited in the great state of Tennessee and came from wanting to get a better life for myself. As simple as that, like much— much like many Americans, and came from a very humble upbringing and— and one day I just said, “You know what, I’m gonna work my rear end off and— and make something of myself,” and ended up in real estate, and there’s a long story there. I mean, the short story is that we moved, my wife and I, from New York City to Tennessee and all of a sudden it was like, “Wow, we can buy a house in this state.” That’s really weird. And so we did, and then we got hooked on it and now we’re talking many years later and lots of gray hairs later, and I’ve got anywhere from two hundred to three hundred units with no partners at any given time.

Scott Bursey (03:42)
Mm-hmm. Well, thank you for highlighting that, Luke. It’s incredible to see that type of trajectory. You know, what really caught my attention about you was the way you’ve been able to turn the complex world of vacation rental property management into a scalable plug-and-play model for so many investors. That takes a lot of dedication. Dedication and commitment, no question about that. And Luke, let’s dive right on in this morning. And curious to know, when you look at your current portfolio, what do you see as the biggest strength in this shifting economic climate?

Luke Carl (04:23)
Rents are good right now, especially with the short terms. You know, Im— I have my hands in all sorts of different real estate. As it goes with a lot of real estate people, we end up kind of, you know, wandering around through this beautiful business. And with the short terms, which is my bread and butter, we do that every day. Beach houses, mountain houses that people rent on an overnight basis, they— the rents are good. They are. People are traveling. So we’re— we’re finding that fill our calendars is— is not that difficult. It— it’s different than it was in the COVID. You know, you had a lot of people that got into the— into the short-term rental space during the COVID years and they— it was— there was like kind of a lot of get-rich-quick type of things going on and th— and that type of a deal. And— and you could actually. You could because nobody was flying, everybody was driving on their vacations and they also didn’t really want to be in a hotel because everybody’s wearing a mask, if you remember correctly. You know, if it— so it was a weird time. But you know, now things have changed a little bit and everybody understands this asset class, and it’s not some weird thing that, you know, because you gotta also remember Airbnb’s only been around since like two thousand and eleven, you know, twelve. It’s not that old. Now, VRBO’s been around since the nineties, so it’s not like this concept is— is foreign, but long story short, I am finding that one of the strong points in the— in the space right now is— is rents. Now, finding a deal, that’s a whole ‘nother story. If you can find the right deal, yes, okay. But rents are— are probably my— my least pain in the rear end right now.

Scott Bursey (06:50)
Okay, well, thank you for highlighting that. We appreciate it. And we’d love to hear this from you. What do you consider the biggest weakness or perhaps bottleneck in the current short-term rental industry that most investors are overlooking?

Luke Carl (07:07)
I think people are getting in their own way right now because of the interest rates and the overall kind of stress of the economy. It is— it it’s a— it’s a stressful situation. You know, every day you look and the— there’s red and then the next day it’s green and the next day it’s red on the stock market, you know, and you know, in general, it’s very— it’s doing very well, but the uncertainty is— is fairly stressful and— and people still have not gotten in— used to these interest rates, the six percent, six and a quarter. And I don’t think they’re going anywhere—I mean, now there’s chatter of maybe go— maybe going up possibly by the end of the year—I don’t see that happening either. I think interest rates are gonna stay flat, and I think that people are either— there— there’s a chance that people can miss the boat right now. People that have been on the sidelines waiting and waiting and waiting because of what happened during 2022 and— and 23 where things just went through the roof. You know, we’ve got a lot of people sitting on the sidelines, and some of them will stay there. But this is a great time to jump in, for sure, because there’s— there’s— not a lot of those people are just sitting there waiting and waiting and waiting. But there’s something to be said that a lot of those folks are just never gonna do it, you know. And— and then— and then you see these folks, you know, I love it when you see these type of people on Facebook complaining that, you know, they’re making up this excuse, that— that excuse about, “This is why I’m never gonna do this,” and then, “I—” or, “This is why I— I— this is a horrible time to do this.” And those people are just never going to do it, you know. And so, like the great David Lee Roth says, “You— you just keep on raining and I’ll be the parade.”

Scott Bursey (08:40)
Well, thank you for that perspective. We’re interested to understand, Luke: what opportunity are you seeing right now that you think is flying under the radar for, you know, most retail investors?

Luke Carl (08:55)
Properties that have been on market for eight to twelve months. they’re getting overlooked as kind of like they’re— they’re spoiled, like damaged goods. And I think that this is the perfect time to be contacting that type of a seller, you know, get an agent, get a good agent, of course. If that’s what we do, we’re a team of real estate agents, not myself, but my team. And make an offer, you know. I mean, this is— this is a place in the market where you can throw out a ridiculous offer on something and what are they gonna do? Say no? It’s been for sale for eight months, know. And feel good— feel free to say no. What do I care, Mr. Seller? You know, I mean, you— you’re the one that’s gonna be stuck with this thing. And as far as I’m concerned, the market is whatever the hell I say it’s going to be right now because you don’t have any other offers. Here I am looking around for all these other offers and they’re not there, you know. So I— I think that— the— don’t sleep on these properties that have been for sale for eight, ten, twelve months. When they first came on the market, the seller was not ready, you know. And this goes for all asset classes, invest— multifamily, vacation homes, doesn’t matter. The sellers were— the sellers were not ready, period, between 24 and 25 in that era. maybe even parts of 23. 23 was still pretty hot, right? But for that two-year period, the sellers weren’t ready. And I think they’re finally getting there. and the opportunity lies in those— those properties that have been forgotten about and the seller has already had like three or four offers that they were insulted by and shot down. And now I think that you’re gonna finally find some folks that are like, “You know what? It’s time for me to move on from this thing.” So let’s go ahead and— and just take that— whatever— whatever offer’s next, you know.

Scott Bursey (11:15)
Luke, I’m keen to get your thoughts on the biggest threat to the vacation rental model today. Is it, in your view, regulation, saturation, or something else entirely?

Luke Carl (11:27)
So, you know, regulation is a— not really a thing anymore unless you’re trying to do an overnight single-family in some area where it’s not normal. I think at this point people realize that, this overnight single-family thing, there are places that that’s all there is, like Branson, Missouri, you know. And that’s what happens there. And these people need these places to take their families to go on vacation, go fishing for three days, and then go back to Kansas City or wherever they’re going. If— if you’re trying to buy a house in Cincinnati and put it on Airbnb as opposed to putting it on Zillow to, you know, truly a hot pass to get a long-term tenant in there for a year or two years, that’s where the regulation becomes a problem. And that was also kind of a hot thing, again, during COVID, where people were like, “If I just put it on Airbnb, I can make the numbers work, you know,” and— and well, let’s, you know, I mean, what— what’s your backup plan? Course, in a mountain town or a vacation town in general, you don’t have a— you don’t have a backup plan. The backup plan is to make sure the numbers work and— and and rent it out overnight. and you’re basically competing with a hotel. But in Cincinnati, when your neighbors all live there, that’s when the regulation becomes a problem. You know, when you’ve got a neighbor that is not happy that you’ve got kegs of beer in the backyard and people like, getting a little out on a bachelorette party or whatever, that’s when you have to deal with regulation. So I think we have matured as an asset class. Short-term rental has definitely matured to the point where people realize that the— you know, because you also have to understand Airbnb started out as a room-share platform where, you know, it was like literally some guys that lived in San Francisco wanted to rent their— the room in their house while they went backpacking in Europe for three months. And that’s how they started. And they’re still sixty percent room-share today. You know, it’s— it’s 60% rooms for rent versus homes for rent on Airbnb. That’s just their thing. Whereas VRBO is slightly different. They only rent the whole house and they gear towards families and that kind of a thing. So the Airbnb culture was definitely like, “Hey, let’s just throw anything we can find our— you know, get our hands on on Airbnb and— and see if we can make a couple of bucks.” And I think that we— again, we’ve— we’ve matured as an asset class, and people have started to realize that. To a certain extent, nobody reinvented the damn wheel here. There are people that want to go on vacation and stay in a house rather than a hotel.

Scott Bursey (13:50)
Thanks for keeping it real. And Luke, let’s dig into the idea of scale. What’s the biggest challenge you’ve faced in scaling a team to support your assets?

Luke Carl (14:01)
The hardest way to s— the hardest part about scaling is money. You gotta have money to grow, right? Buying real estate is— is expensive. I always make the— I always say, you know, my— some— some girls like diamonds; my wife likes real estate, so it costs me a whole lot more money than the diamond guy, right? But I’m just kidding. But you know, being realistic with the fact that— that this stuff is expensive and— and that this is, you know, it’s a wealthy person’s game. But again, there’s many— there are many ways to do it. And there’s many, many— there are many jobs available in real estate. That’s another thing that people don talk about enough. So if you get hooked on this and you want that— the no-glass-ceiling that I— that I got into this for, you can find that. There’s a million jobs. There’s a million jobs in real estate. And you can take all that money and— and put it into the— into your next deal. So that— that to me is— is one of the most beautiful things of this whole thing.

Scott Bursey (14:54)
And Luke, speaking of jobs, what is one piece of advice you’d give to someone struggling to hire their first property manager?

Luke Carl (15:43)
Excellent question. I can talk about this all day. I have my own management company. We manage the— the short terms in-house. So I have a lot of experience with this. And back in the day when I first got going, I did my long terms in-house as well. And I did until I hit something like 25 doors. And then actually, what happened was I moved. And we were getting ready to have a child and we were further away from these homes, and I said, “This is the perfect time.” So we put with a manager, and it is a pain in the rear end. It is. mostly for me because I am a property manager. So it’s kind of like the cobbler’s son goes shoeless, if you— if you know what I mean. The— the fact that I know— I know enough— I know enough about property management to be dangerous and annoying. But I let my managers know that, you know, and— and I just tell them straight up going into it, I’m like, “Hey, I’m a full-time property manager and I have a podcast on property management, and I’m probably gonna be annoying.” But the good news is—and I’ll get to your— I’m gonna get to your question, I really like this question—but the good news is a guy like me, I don’t play around. Like, if a house needs something, it’s gonna get it. you know, like if it needs a new HVAC, I’m gonna put that new HVAC in there in the morning. And that tenant is gonna be glad to have me as a landlord. Here’s a funny story for you, Scott. I got a funny story. I— I— I was driving around in one of my towns where I have single-families. I’ve got something like 60 single-families in this house— in this town, with also I have a duplex community there, and I don’t have any full-on multifamily there, but just a great little town in the South. And I was driving around one day looking at units and the— how— their houses, and I drove past this house that had like seven cars on the grass, and that’s one of my pet peeves. I do not want tenants parking on the grass. You have a nice driveway. Please use the driveway. Don’t park on the grass. It’s trashy. Okay, we don’t need to do that. And— and I— and I do— and if I see a— if one of my driveways is junky, I will put— I’ll send my asphalt guy over there and— and do an overlay on the driveway. That way, it’s— the tenant is proud to park on that damn driveway, you know. my— my— my guy, I got a guy. I just texted him. Im like, “Here you go, I need this,” you know. He’ll— he has a minimum of four addresses. He won’t bring the truck out for less than four addresses, but you know, you build systems and processes. Anyway, drove past this house, was leaving one of my houses, and I drove past this house and had seven cars in the grass. And I thought it was mine. And I said, I— so I got on, I pulled over, got on the spreadsheets out, got— called my office, called my guys, and I was like, “Is this our house?” And turns out it wasn’t. So from that day forward, I called my property manager and I said, “Here’s what we’re gonna do: we’re gonna paint all my front doors bright pink.” All right. That way, when I’m out running around looking at houses, I don’t have to like, constantly stare down at my spreadsheets and figure out addresses and this and that and the other. I— pink door, that’s mine, I’m going check this one out, you know, and that— this one’s vacant, I can go in, that kind of thing. So it’s funny because years go by, and the other day—it was last week, actually—the property manager, that property manager sent a text and they were like, “Hey, we had— we had two really good tenants turn down this house for rent because they didn’t like the pink door.” And I said— I said, “Guys—” I said, “Guys, you’re thinking about this all wrong. first of all, if they’re complaining about the color of the door, they’re gonna complain about everything. So I did you a favor, you know. And second of all,” I said— I said, “when you check out a key to a house with a pink door, I need you to understand that that’s the best house you’ve got. I’m a better landlord than everybody else that you have. And you need to be proud of that pink door and say, ‘Wait a minute, these keys go to a pink— pink door house. You’re gonna like that house. We’re proud of that house.'” So ever since then, I haven’t heard any more about the pink doors. But anyway, when it comes to hiring a— that story had nothing to do with your question, but when it comes to hiring a property manager, it’s a difficult thing because property management is one of those things that people get into it and they don’t realize how hard it is. Cause it is hard. you you’re getting— you’re getting negative reactions all the time from both homeowner and tenant. Tenant doesn’t like you. Homeowner doesn’t like you for multi— for opposite reasons, right? The tenant wants a new fence. The homeowners use are— you know, most of the time they’re pretty cheap and don’t want to put a new fence and that kind of a thing. So you’re like stuck in the middle getting both ends of it. And you have to be very indifferent and just bulletproof—just let things slide. You gotta let— let things slide. And I feel that when people first get into this property management thing—and I see it all the time with short-term—a lot of times they don’t even realize that they’re property managers. They just got into real estate and this is where it took them. and they can be— they can be very excited at first. And then after four or five years, property managers sometimes they tend to lose their luster and they’re not as excited about it as they used to be. so that’s one thing to keep an eye on. And also, number of units: how many units does that property management company have? And some people— some— some management companies can handle 1,500 units, 2,000 units. And some people— some property management companies can’t handle— can’t handle 50 units, you know. and that’s a question to ask them. And I think when you’re asking that question, you’re really just trying to analyze: are they getting too big for their britches with too many units? And— or are they— are they never gonna go anywhere with this thing because they’re stuck at 20 units and just don want any more, you know? So I would say, in general, I’m looking for somebody that’s got 500 or 500 to 700 units, is a pretty good property manager. once they get over a thousand, things can get a little weird. But I do have one that’s— she’s rather new to me. She’s the lady that’s— is the lady in charge. She’s— she’s, I mean, very sharp individual, very dynamite, and she’s got like fifty— fourteen, fifteen hundred units and keeping it together, you know. So to answer your actual question, Scott—because you know, management’s what I do all day, every day; I do— I— I deal with the toilets and the tenants and the termites, as they say, and the— and the guests and the reviews and all that stuff—and to answer your actual question: you can’t just call a property manager that somebody recommended to you, put your properties with them, and forget about it. You can’t do that.

Scott Bursey (22:05)
Okay, well, thank you for that, Luke, and thank you, Luke, for adding a tremendous amount of color to the Real Estate Pros Podcast today. For those of our listeners that want to keep the conversation moving, stay in your lane, or collaborate with you, Luke, what is the best way for them to reach you?

Luke Carl (22:21)
You know, I’m— I’m on Instagram. I like the Instagram. I have fun on there. I got a little bit of a following. It’s Luke Cashflow Carl. And then my company has a— a pretty large Instagram, which is The Short Term Shop on Instagram. And you can— you can email me anytime, [email protected]. I love— I absolutely love when people reach out and say, “How did you do this?” I will literally like, give you every single step of the way from where I, you know, first learned about how to do this and to where I am today, taking down, you know, large apartment buildings and things like that. I— I just love— I love helping and— and giving back, I do.

Scott Bursey (23:07)
Awesome, Luke, and Luke, this has been just tremendous having you on the show today. Thank you so much.

Luke Carl (23:13)
My pleasure, sir. You’re— you’re wonderful.

Scott Bursey (23:15)
And to our listeners, you’re wonderful. We appreciate each and every one of you. If you received value from today’s episode, please subscribe. We’ll be filling your tanks with a lineup of elite guests just like Luke Carl, who are accelerating and setting the pace for the rest of the industry. Until next time, keep your standards high and your vision clear. We’ll see you on the next episode, everyone.