Short-Term Rental Tips : Humberto Marquez’s Strategy

Humberto Marquez (00:00)
a lot of national, a lot of the calls that I take on, we do a lot of online lead generation. And, you know, in the intake forms that we have, I mark down, you know, what’s your current situation. And as soon as I see them marking down using property management dash national, I know what kind of call it’s going to be. It will be about, you know, their listings.

you know, on Airbnb, VRBO not being updated for years. They’ll talk about the property, like there could be an issue with a guest, right? And just because they’re pushing their profits and not necessarily having the right operations team behind them, whenever there’s an issue, they’ll just give in to whatever guest request there is.

Kristen Knapp (02:11)
Welcome back to the Real Estate Pros podcast. I’m Kristen and I’m here with Humberto Marquez, is the founder of Surge, short-term rental company, white glove service from beginning to end. So I’m excited to get into it. Thank you for being here.

Humberto Marquez (02:22)
Hey, Kristen and thank you for having me today. I’m excited to talk to you guys about our company and, you know, get to tell the people about what we do.

Kristen Knapp (02:29)
Amazing. Well, let’s start from the beginning. How did you get into real estate?

Humberto Marquez (02:33)
Yeah, I started in real estate in 2019. Actually, late 2018 was when I really, really started. Before this, I had a logistics oil field delivery company with my brother. And I decided to get out of that. It was a little bit too stressful. The margins were very low and regulations were growing and growing. Insurance costs were growing and growing. So I left that. I took about a year off and I was wondering, you know, how can I?

make a lot of money, make a lot of wealth. And I didn’t know anybody in real estate, but I thought, you know, after doing a little bit of research for a couple of weeks, I was like, okay, real estate is the way. And I decided to get my real estate license. And, you know, from the very beginning, I was like, you know, like most people, what brokers do I sign up with? I ended up connecting with some individuals just through networking in the Houston area, introduced me to wholesaling and from wholesaling, I was able to go into all.

sorts of other investment strategies, models, and go from there. But yeah, since 2019, being a licensed agent, four years after that, becoming a broker is how the journey’s gone, and it went very, very quickly. As soon as I was able to become a broker was whenever I went and took the test and got it taken care of.

Kristen Knapp (03:40)
Yeah.

That’s amazing. Wow. You have a lot of well-rounded experience in the industry.

Humberto Marquez (03:44)
Yeah, yeah, I didn’t plan for it to go this way, but I don’t know. I guess that’s just the way things went and opportunities came out.

Kristen Knapp (03:51)
Totally. Do you remember that first deal where you actually thought to yourself like, wow, I can actually make this my career?

Humberto Marquez (03:57)
Yeah, yeah, you know, for your listeners, I’m not sure how many are from the Houston area. The first one was actually in Conroe. It was a MLS deal, I remember. It was, at the beginning, I only did wholesaling. It was an MLS deal off of the, it was off the golf course, I remember seeing it. It was outdated, just like typical wholesale deals are. Had been on the market over 100 days and.

you could tell the agent wasn’t doing a really good job marketing it. And at that point I was pretty new too. So I reached out to the agent. I think I negotiated for like two weeks and I was able to get it. I believe it was around $40,000 under list. I resold it for about a $23,000 fee if I remember correctly. It was 2019 so I don’t remember too much. It was about a $23,000 fee plus the 3 % commission that I negotiated in the deal with the agent. So I did take the commission as well.

That was another 3%. And yeah, I was able to find a buyer within 24 hours, I believe. It was such a deal. I probably left some meat on the bone. Now, not knowing that. Sometimes when deals are too easy, I think I’m leaving too much meat on the bone. But yeah, it was a great deal. I still go back. And every time I’m in the area, I’ll drive by there and take a look at it. So actually, I do that to most of the deals that I try.

Kristen Knapp (05:02)
Mm.

Yeah, I mean having that first deal be so simple, it’s kind of a blessing and a curse because then you expect that moving forward like, yeah, this is easy.

Humberto Marquez (06:08)
Yeah, yeah,

definitely when things seem too simple, it’s a little bit odd and you’re like, man, am I missing something or something along those lines?

Kristen Knapp (06:13)
Yeah.

And then when did you start getting into short-term rentals?

Humberto Marquez (06:20)
Short-term rentals was, so I started my real estate career in 2019. Short-term rentals was around mid 2021. So I was wholesaling pretty actively, buying and selling my own deals, farming my own deals, different things like that. And through that, obviously whenever you’re trying to wholesale a real estate transaction, you’re looking at it in all sorts of different angles.

And because of that, I started learning how to analyze properties for different strategies. And I was reached out to by a company out of San Francisco. They’re not around anymore, but they were helping investors with other investment strategies. And they reached out to me. They said, hey, we saw that you’re familiar with different investment strategies. Can you come and help us pitch some of our properties? And I was like, OK, I’ll do that. Well, like most startups do,

they ended up becoming a, starting to analyze short-term rentals to reach a bigger crowd. And so that’s where I got my first sort of taste into it. I was completely new. And then all of a sudden that company turns into a short-term rental manager. And then they start having me pitch their short-term rental services. And then I realized that there was a big sort of lack of quality managers in the industry, especially at the national level.

Kristen Knapp (07:27)
you

Humberto Marquez (07:28)
So when I lived there, I believe I was there for about a couple years. When I left there, I decided to launch Surge and offer that turnkey product where we’re able to source properties for investors, again, based on their goals. We’re able to fully design, furnish, and assemble properties anywhere in Texas, and then also be able to ⁓ completely full service manage, and a true full service management where they don’t have to be involved, they don’t have to be answering.

calls or messages at any time of night. But yeah, that’s kind of how the short-term rental strategy came along. Again, just out of opportunity and out of seeing a need in the industry for better managers.

Kristen Knapp (08:05)
Absolutely, and can you kind of talk about the difference between like national property managers and how they’re not really able to give the same services a company like search?

Humberto Marquez (08:14)
Yeah, definitely. a lot of national, a lot of the calls that I take on, we do a lot of online lead generation. And, you know, in the intake forms that we have, I mark down, you know, what’s your current situation. And as soon as I see them marking down using property management dash national, I know what kind of call it’s going to be. It will be about, you know, their listings.

you know, on Airbnb, VRBO not being updated for years. They’ll talk about the property, like there could be an issue with a guest, right? And just because they’re pushing their profits and not necessarily having the right operations team behind them, whenever there’s an issue, they’ll just give in to whatever guest request there is.

If a guest requests a full refund for their entire state, that’s not coming out of the property manager’s pockets, that’s coming out of the property owner’s pocket. So they’ll just say, hey, yeah, sure, they move along.

and the property owner suffers. And then also in the quality of the turnovers of the states. So a lot of these national property managers, are just getting a cleaner out of online, whether it’s a Facebook group. There’s a lot of different services that are popping up for finding cleaners. And they’ll just assign them to the property, not necessarily give them a good scope of work of what they need to be doing, what they need to be checking for, what they need to be reporting.

So a property owner could hand over a property to somebody, to a national manager, and then go back to it in three months. And all of a sudden, there’s all these little things wrong with it, like a broken towel rack, a doorknob that’s loose, a bunch of light bulbs that could be gone. I’ve actually taken over properties from national property managers. I’ll ⁓ tell you a couple of those situations.

One of them was in the Humboldt area in northeast Houston. And I went to go see the property. As soon as I walked in, it had been cleaned, but it wasn’t clean, if that makes sense. The counters were sticky. There was like spilled things in the room. The sheets were dirty. The grass was about a foot tall. And the pool was green. So it was really, really bad.

I think that client I onboarded about a year and a half ago today, we’ve been able to do, I think, 10 more deals since then where they’ve gotten the entire White Glove service. I say only managed in Texas, but I took on a property in California as a favor to a client that was using the National Property Manager. And when I got to the property, this is a different situation, there was a beehive inside the walls. I actually flew out there.

to take care of it personally. There was a beehive inside the walls. The air conditioner hadn’t worked for I don’t know how long. It was missing a bunch of items that needed to be stocked. The landscaping was horrible. They were dealing with a lot of pest control issues as well. And yeah, that property has actually, I was having a discussion with this customer about that property. And I met with him on Monday. yeah, he brought it up and he said, it’s actually been one of our greatest.

successes now that we’ve been able to take over. Again, national property matters. For whatever reason, the properties just fall into disrepair because they’re prioritizing profits rather than good operations teams.

Kristen Knapp (11:38)
Right, that if, I mean, if you’re posting your property on Airbnb or VRBO, like that really affects your rating and that could really hurt future rentals.

Humberto Marquez (11:46)
Yeah.

Yeah, exactly. I always tell, I always try to prepare the clients. We want to keep the rating as strong as possible. We want to be proactive rather than reactive about problems as much as possible as well. There will be those situations. I also tell my operations team this, where we’re just not going to able to satisfy somebody. They’re going to go in there looking for a problem. It’s kind of a pandemic going on in these. ⁓

vacation rental channels where these guests are going in there looking for a refund right away looking for something and doing a full home inspection. You know, in the beginning, just trying to find something to complain about. But yeah, we that being said, you know, we want to keep the reviews as high as possible. We’re going to have some bad ones. There’s no way, you know, doing this and growing, adding more listings. We’re not going to run across bad apples. And if we do, you know, where we respond to the reviews so that other guests can see, you know,

our side of the story and that typically helps. We’ve seen sometimes a bad review and if it gives us a good chance to respond to it might be even better than a good review. If we respond with what we did or why maybe the guest was overreacting or what could have been better.

Kristen Knapp (12:50)
Yeah, yeah, because I know Airbnb in particular is very liberal with the way they give refunds to customers. Is that right?

Humberto Marquez (12:59)
Yeah,

yeah, no, definitely. It definitely feels very, very guest sided. They’re trying to keep the guests as happy as possible. And I understand. try to, every time we talk to their support teams, if somebody complains or anything like that, then, you know, we try to deliver facts rather than emotion, anything like that, and keep it as, you know, keep the resolution as straightforward as possible.

Same thing with bad reviews or with refunds, like you said. They also do the same thing with guest damages. ⁓ That’s also a pretty big problem. With the approach that we have, I think we’ve been OK at it.

Kristen Knapp (13:30)
Okay.

Humberto Marquez (13:36)
But it’s also why we invested into a guest damage insurance in our company. So anytime that there is any type of guest damages, have a zero to $500 deposit from the guest. That covers almost everything. And then anything from $500 to $3 million in guest damages, it’s covered by that third party insurance provider that we have. So what that does is two different things. It keeps things moving along. It keeps the property in really good quality. it doesn’t matter if something costs us a dollar.

we can claim a dollar. Obviously we’re probably not going to go through that, but let’s say it’s somebody’s stained some sheets or whatever it is. Even if it’s $15, it’s not coming off of the owner’s bottom line. We document it, we have timestamped pictures, and our entire team takes care of, submitted that claim on their behalf, and it gets taken care of. So that’s been able to help us not make so many air cover claims and have to go through.

Kristen Knapp (14:13)
Right.

Humberto Marquez (14:27)
sort of that issue that you’re mentioning, which a lot of people complain about, where it’s very guest-sided.

Kristen Knapp (14:32)
Totally, and I think that’s even more reason why you it’s in probably in your best interest to hire out the management because that sounds like so much work for just the average person who’s maybe doing multiple short-term rentals.

Humberto Marquez (14:45)
Yeah,

yeah, definitely, especially when time with any insurance claim, you know, regardless if it’s a vacation rental or your car or whatever, time is of the essence and you want to submit it as fresh as possible.

There’s no time limits, right? But you still want everything to be as fresh as possible as as early as possible so you can document and provide your proof.

Kristen Knapp (15:44)
Right.

Right. And then I’d love to talk about, because you guys don’t just do management, you do sourcing and furnishing as well. How do you go about sourcing the best opportunities? What are some things you look for in a short-term rental?

Humberto Marquez (15:57)
Yeah, the first thing I do, I have an idea in my head of what I look for, But I’ll try to work with the clients and see what their overall goals are. If they’re just looking to park some cash and hopefully have it break even and they don’t necessarily care about making a lot of revenue, then we know, we can be a little bit ⁓ more flexible with the type of properties we offer.

I’d say about 75 % of the clients that we come into though, they want to make money like everybody else. And what we look for is an experience, property that’s actually going to stand out and be attractive. Because, you know, in the Texas markets where we primarily operate, if you go and get a three bedroom, two bathroom home in a normal subdivision, that’s not going to stand out. It’s not going to be, it’s not going to over perform.

Based on better management and things like that. It’s gonna be average the entire time You have three bedrooms two bathrooms a living room, you know people aren’t running and lining up to to book it but if your book if you’re Finding something like I just pitched the property to one of my investors today. It’s in Houston. It’s it’s about a $900,000 purchase price and Five bedrooms. It’s a very nice looking home with good curve appeal big long driveway

It has a very attractive looking pool, an outdoor kitchen, it has a basketball court, and a few other amenities that I can’t remember right now. But with that type of property, if somebody is going on Airbnb and they want to be within 15 minutes of downtown Houston and stay in a very nice home, that’s going to be a property that’s likely standing out as a guest favorite on Airbnb or something of that sort. We definitely want to capture it on the pictures, of course.

Kristen Knapp (17:26)
Mm-hmm.

Humberto Marquez (17:30)
We have to do our job in presenting the best product to the guest. That property that I mentioned there, once I ran it, I believe I did the analysis at 25 % down payment, a 30-year mortgage, 7.5 % interest rate, conservatively. And it was cash flowing about $900. That’s after maintenance, that’s after capex, that’s after the pool maintenance, after the landscaping, after the management fee.

whatever utilities, whatever else I’m right now. So that’s, we’re probably going to end up submitting an offer for that one, you know, at some point later today. But that’s what we’re looking for an experience factor that will outperform whatever’s around it.

Kristen Knapp (18:05)
great.

Yeah, I imagine those outdoor amenities are really important, like the pool and the outdoor grill.

Humberto Marquez (18:13)
Yeah,

yeah, no, definitely. ⁓ I should say another pretty important thing that really does make a difference in getting these properties to our performance is also the calendar rules that we’re setting. Not just the pricing, but the actual calendar rules when we’re allowing people to book, how we’re incentivizing longer reservations, different things like that are a big part of that performance, not just the experience.

Kristen Knapp (18:36)
How do you incentivize longer stays?

Humberto Marquez (18:39)
For example, each of our properties has a different pricing model based on how it’s the actual performance that it has. But a very common one, sort of the way we deliver version one of a pricing model on a property is any reservation that’s you know, 100 days ahead of time, we require them to do at least five nights.

Kristen Knapp (19:02)
Got it.

Humberto Marquez (19:02)
And

if they’re doing at least five nights, then they’re getting 10 % off or something of that sort. Once we get within 75 days, we might lower that to four days and so on and so on. So we want to incentivize, we want to the calendar up with the longer reservations. And then once we start getting closer to the actual stay, people are able to book it for one night, two nights, have as much visibility as possible. And it’s how we’ve been able to maximize revenues without

having to drop our prices too much. Most of the reservations that we’re booking right now are coming in about 63 days ahead of time. So that’s about the sweet spot and that gets us about three to four day reservations, which is pretty average for Airbnb.

Kristen Knapp (19:31)
Yeah.

Nice. We’re running out of time really quickly, but I want to ask about the furnishing. How do you approach furnishing these Airbnbs? Do you do it based on what the client wants or is it budget conscious?

Humberto Marquez (19:54)
Yeah.

Yeah, I mean, a little bit of both. We want to understand their vision for the property for sure. But if their vision isn’t correlating to their budget, we have to have that conversation with them and let them know. And we also have to let them know, if let’s say they go out and buy a property, but they want to go really basic on the furnishing and decor, the property is not going to perform the way it should. ⁓ But yeah, our

Kristen Knapp (20:16)
show.

Humberto Marquez (20:18)
Our design team is the one that goes through that with them. And then they’re also able to select, if maybe their budget is tight, maybe what we’ll do is we’ll just design and furnish it and they’ll assemble it, which honestly is the biggest part of the work. If they’re a little bit more flexible with their budget, we’ll take care of everything. So there’s different ways. We’ve had people before just take our design, then they go out there and source the furniture and they keep it lower.

Kristen Knapp (20:39)
interesting.

Humberto Marquez (20:42)
Sometimes they’ll even just get inspiration for a design and go from there as

Kristen Knapp (20:47)
Wow, cool, it sounds like you’re really able to customize what you’re looking for with Surge.

Humberto Marquez (20:52)
Yeah, exactly. Exactly. You’re able to, I mean, if you just want to transact a property, if you just want to furnish a property or if you just want a property managed or all three of them.

Kristen Knapp (21:02)
Wow, and then so how can people find search and how can people find you?

Humberto Marquez (21:05)
Yeah, so as far as finding search, www.gowithsurge.com is our website. They can just inquire, set up a meeting, discuss the financials of their property. A lot of times the meetings aren’t necessarily based around property management. They just want to know, hey, is my property manager not doing a good job, things like that. So I always have those conversations there. And then as far as finding me, I don’t remember my Instagram name, but let me check it.

Kristen Knapp (21:20)
eight.

you

Humberto Marquez (21:27)
It’s H Marquez 11. I don’t post too much, but I am planning on getting more active ⁓ on Instagram.

Kristen Knapp (21:33)
Amazing.

Yes, well thank you so much for being here. I encourage everybody to go check out search. It seems awesome in the Texas area. So thank you for being here today. And thank you everybody for listening and we will see you back next time. Bye.

Humberto Marquez (21:43)
Yeah, thank you so much, Kristen.