Why Short Term Rentals And Self Storage Still Work With Jay Bowman | 646

MORI 646 | Short Term Rentals

Despite everything going on right now, are there still opportunities to invest in short term rentals or self-storage. These are just two of the asset classes in real estate that are relatively recession-resistant. In this conversation, Jay Bowman joins Chris Miles to give his insights and share where he sees the best opportunities. If you’re looking to continue producing cashflow even though housing prices are at a record high, you definitely need to tune in.

Chris Miles Bio

Chris Miles, the “Cash Flow Expert,” is a leading authority on how to quickly free up and create cash flow for thousands of his clients, entrepreneurs, and others internationally! He’s an author, speaker, and radio host featured in US News, CNN Money, Bankrate, and Entrepreneur on Fire, and he has spoken to thousands getting them fast financial results.

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Why Short Term Rentals And Self Storage Still Work With Jay Bowman

This is Chris Miles, your cashflow expert and anti-financial advisor. This show is for you and about you, those of you that work so hard for your money. You want your money to start working harder for you now. You want that freedom cashflow and prosperity now, not 30 billion or 40 billion years from now, but right now, so you can live that life that you love with those that you love.

Most importantly, it’s not just about getting rich. It’s about living a rich life, because as you are blessed financially, you have the ability to create a ripple effect through the lives of others. That is exactly what I’m here to do. Thank you for allowing me to express that through you and be able to create a ripple effect in your lives as you not just learn this stuff, but you take it, apply it, and change your lives.

I brought on a special guest here, somebody I’ve known for the last few years. We were in the same mastermind group together three years ago. He’s got a lot of good stuff going. We’re talking about this before when he went on air on how some of the strategies he was doing with going under the radar, and now everybody wants to know how he has done it. As a result, we brought Jay Bowman here.

Jay is out in Kentucky. He has done everything from single-family. Like many of you, he started out doing that. He’s married with two kids and is living out there, but now he has even transitioned into things such as short-term rentals and now even self-storage, which I know are two hot topics of types of investments that people are looking into, including my own clients. For that reason, I want to bring Jay on. Jay, welcome to our show.

Thanks for having me, Chris. I appreciate it.

Help me fill in the gaps here. Tell us a little bit more about you and who you are.

I lived here in Kentucky for fifteen years. I’ve done pretty much anything you can think of to do in real estate. I started off as a realtor. I still have a small web-based brokerage here in town. I did mortgages for a while before the crash. After that, I started buying a small portfolio of single-family rentals and acquired and acquired. A few years ago, I began to purchase short-term rentals here in Louisville, Kentucky. We have about twenty million visitors a year to the city to drink our brown water, as I like to tell everybody. I began to transition from single-family and short-term rentals into self-storage about a year and a half ago.

Why did you make that transition? I know with the group we were a part of with, that mastermind group in Collective Genius, most guys stay with typical fix and flip, wholesale, and that kind of thing. You eventually transitioned away from what the majority of those people were doing.

It’s a crowded market. When you deal with wholesale or buying and rehabbing to resale, you are sprinting with a lot of other sprinters. At the time, short-term rentals were still very much under the radar. People were buying them but not at the speed that they are now. Quietly, I began to acquire properties strategically here in Louisville that was in popular areas where people would want to stay. We started decorating them and getting them going in.

The cashflow on those crushed anything that I could do in the single-family. For instance, you could buy a single-family. At the time, the minimum that I wanted cashflow was $300 a month on a single-family house here in Louisville in a B-Class area, maybe high C. I was looking at a minimum of $300, and that was becoming a bit of a challenge to find those before the pandemic. When I started acquiring short-term rentals, they would easily toss off cashflow for the size I was buying, anywhere from $1,000 to $3,000 a month.

Even with what you’re seeing today, do you still see opportunity in that place? Do you feel it’s too hot and too many people are in it now?

Absolutely not. When we speak about short-term rentals, it’s very area specific. The laws and the rules that apply to Jefferson County or the Louisville area do not apply to Cincinnati, Chicago, or other cities. You have to know what your city allows or doesn’t allow. Louisville had already been through two rounds of rule-making. They determined short-term rental laws five years ago, and then it took off like a rocket. There are lots of complaints from citizens. They came up with the second round at that point in time. I feel that it’s pretty settled at this point on what they’d decided to do. I know those laws, rules, and the areas where people want to stay.

MORI 646 | Short Term Rentals
Short Term Rentals: When we talk about short term rentals, it’s very area specific. The rules that apply to Jefferson County or Louisville do not apply to Cincinnati or Chicago.

I’m happy to pick those up as they come along and stick with those. It’s good. I still do it occasionally when the right one has to come up for me to take it down. Even though housing prices have increased, you can buy a nice house in a nice area, and it will cashflow with short-term rentals. Before short-term rentals, that wasn’t a possibility.

MORI 646 | Short Term Rentals

The most recent purchase was a $460,000, 5-bedroom, 2-bath house. We had to put a little bit of work into it, maybe $5,000, to get it where we needed to go, but its expected gross is $120,000. You are not going to get that. If I rented it, I might be able to do it to traveling nurses and make $60,000 gross, or if I just did it as a regular long-term rental, maybe you’re talking $30,000. It would barely cover the mortgage on that size of the property.

The good thing is you’re analyzing numbers from both directions. The one risk I see with short-term rentals is the government, especially the local municipalities. If they ever change the rules on you, where they say, “Only long-term,” you could always do month-to-month short-term rentals, which there are plenty of those opportunities available, but it’s nice to know you can also switch it back to a long-term rent if you had to. You can always get back and forth.

The rents on long-term rentals at this point would be enough to cover the mortgage. We wouldn’t make anything on, but it would help out. There’s a time, even three years ago, when I started doing this, I was always looking for a back door exit. If the government came in and shut something down, we always had another way out. We’ve been fortunate that it’s worked out well for us and Louisville. It’s somewhat warm and welcoming to short-term rentals. As long as you play within their rules, they’re happy to have you.

I love the fact that you have multiple exit strategies. Every investor needs to always have that in mind. Even if they’re a passive investor, they need to make sure whatever they’re doing has more than one way to exit out of it. Otherwise, if that door closes, you’re trapped. Tell us more about some of the self-storage stuff you’re doing too.

MORI 646 | Short Term Rentals

Keeping in mind that I was exiting the long-term rentals and short-term rentals while on solid ground. The ground always shakes a little bit when it comes to those asset classes. I was getting burned out on construction. I had an opportunity to speak to a friend of ours that we know together, Fernando Angelucci. He spoke glowingly of self-storage. I had to talk to him about it because he’s charismatic when he is speaking of it.

At the time, he and I had a long conversation. I was intrigued because I was tired. The construction aspect of housing can wear you down. I had long conversations with him. I partnered with a friend of mine here in town who had already bought one facility himself. With tactics and the things that I had learned and what he knew, we came together.

We started our dating relationship, which is what I always like to call. We bought a facility in the middle of Missouri, a little country town. At the time, we bought it for $300,000 for 150 doors. Today, that looks like a marvelous deal. We learned a lot on that first one. We looked at each other and said, “We can make a go of this.” We formed a company and got some VAs set up. Since then, we’ve acquired another three facilities with a fifth one under contract.

Congratulations. That’s fantastic.

I appreciate it.

What are things you’ve learned along the way that you thought, “I didn’t realize this is going in, but now I’ve got it figured out and got my rhythm?”

I always knew it. We’re always raised with the mentality of, “How do we do this?” I had dug into the book, Who Not How, and I started to take myself out of those equations. Once you put the right butts in the right seats, you can watch how that takes off. That was one part. The second part that we learned was the financing. It can be pretty intimidating to people when they can look at a house and go, “There’s a $100,000 house, and I’m going to need $20,000. I can make the go of that.”

That’s all good, and then they can rent that out. When you’re looking at a $2.5 million piece of property or business, you think, “I’m going to need to bring a minimum of $500,000 or more to the table.” There’s another level of complexity in closing that type of finance. You need to learn how to be able to raise cash effectively. That’s been something that Eric and I have worked on in that amount of time as well.

That team is key. It’s funny that you mentioned Fernando because we had him on this show as well. He had dealings with Scott Meyers. We both know he’s been in the game for a long time as well. It’s good to know you have those people you can always talk to or even sometimes exchange business with. Fernando shared a deal where he sold the property to Scott. They both end up getting a win-win out of that situation too. It’s about that network like you said, the Who Not How. You even have some deals available for passive investors too.

That’s correct. When we have a deal, we always look at the financing side of things. As Eric and I may be doing, we can’t always be stroking $300,000 and $500,000 checks. We are using our systems and groups that we belong with to bring other passive investors into our syndications when we purchase.

Do you do them just with self-storage? Are you doing them also with short-term rentals? What deals are you doing?

It’s just self-storage now. We’ll bring them in there. In my short-term rentals now, I have another partner in that. We can swing the down payments on those, but now it’s just the self-storage we have that we bring in investors for.

It is not a bad thing too. If you have a relationship with them, you can even do non-accredited money as well.

Absolutely. We look at all aspects. Every deal is completely different. The preferred return that we pay out can be different. Sometimes they’re heavy lifts. They’re a little riskier. We pay out a little more. Sometimes they’re easy, not as complicated. It also depends on what that investor needs. We have a long conversation with those people trying to find out what they want. Some people want to be in and out in a year. For our deals that don’t work, it takes a long time to be able to mine these syndications and release the equity and the power behind them when we’re doing those investments.

That’s great to know. If people want to reach out or know more about what you’re up to, how would they best follow you?

You can find us online at GoBeyondStorage.com. They can find me online on Twitter, Facebook, and LinkedIn.

I have one last question for you. Of all the things you’re seeing out there now, trends-wise, what do you see coming up, even opportunity from possible implosions, chaos, or whatever it might be? Where do you see the opportunity now for you?

For me, we’ll stick with storage moving forward. Moving forward, there are few areas the short-term rentals and popular rural areas or tertiary markets will begin to gain a little more traction. Make sure that your cities have their laws set, or help your cities set those laws because they don’t know what they’re doing. I like small office space as well. Everybody is out of big offices.

The short term rentals in popular rural areas or tertiary markets will begin to gain a little more traction. Click To Tweet

Louisville Downtown is still predominantly empty, but they have a lot of office spaces moved to smaller spaces outside of that downtown area. There are a lot of possibilities there as well. As syndications begin to take off, you’re going to see the democratization of capital start to grow quickly in the next few years. There’s going to be a lot of opportunity for people to invest in good deals that are going to be coming down the line as the rates change and the world shakes out post-COVID.

I agree with that. The interesting thing that always ends up happening is that the best deals when we’d start looking in hindsight at 2020, were the ones that nobody was talking about or was even encouraging. They’re even saying, “Don’t ever do this.” That’s usually the time you want to do it.

I started thinking about office about six months ago. I was like, “Nobody’s talking office.” They were like, “Everybody’s going to work forever from their homes in front of their computers.” Human beings are social creatures. That is not going to happen. It may have a blended look in the future, but I fully believe that we’re going to find ourselves back in offices and that people are going to want a good community like that in their workspaces.

Like you said, offices aren’t necessarily downtown. They could be something that’s more in the suburbs that people can more easily go into and have lower costs. Jay, this has been very valuable. I appreciate your time, expertise, and wisdom. It’s good stuff. I appreciate the time that you’ve spent with us.

Thanks for having me, Chris. I appreciate it.

Everybody else, as we already said, it’s not just about reading this. It’s not about being a hero of the words. It’s about being a doer as well. Anything you’ve gleaned from this conversation, if it’s sparked something in your head saying, “I need to do that,” act on it. Stop saying, “I need to do something,” and do it. That’s the key. Guys, I appreciate you being here. Make sure you go and make it a wonderful and prosperous week. We’ll see you later.


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About Jay Bowman

MORI 646 | Short Term RentalsJay lives in Louisville, KY. Married with two kids. Started his career in single family rentals, and has since transitioned to Self Storage.