Puerto Rican Paradise, Arctic Abodes, and Building “Dream” Vacation Rentals

Ashley:
This is Real Estate Rookie, episode 205.

Kelly:
Honestly, when I write copy for any of the places that we have, when I talk about meeting baby octopus when you’re out snorkeling or going for a walk along the beach and having a bunch of wild horses run past you, those things, when I’m making copy for them, they make me tear up, and I’m hoping that any guests that I invite into these houses have the same situations. There’s just so many ways to design a vacation that’s not about doing the same thing as you do at home on a beach.

Ashley:
My name is Ashley Kehr, and I’m here with my cohost, Tony Robinson.

Tony:
And welcome to the Real Estate Rookie podcast where every week, twice a week we bring you the stories, the motivation, the inspiration, the education you need to kickstart your real estate investing journey. Ashley Kehr, my lovely co-host, let’s get into some boring banter before we bring her on today as amazing guest. You were supposed to be in Coeur d’Alene this weekend, and then I see some videos, you’re out on a boat which is not in Coeur d’Alene, so what happened? What was going on?

Ashley:
Yeah, going on a boat was two hours of my whole weekend. There was way more not fun things that happened when I was supposed to be on vacation. Yeah, me and the children were supposed to go out to Coeur d’Alene and watch my good friends, Brandon Turner, Nate Robbins, and Brian Murray compete in a triathlon. And so we were supposed to leave Friday. My one son got sick right before we were supposed to go to the airport, so we’re like, okay, let’s see what’s going on. And he ended up being fine, so I re-booked our tickets for Sunday morning.

Ashley:
We get to the airport at 4:00 AM and we’re about to go through security. I start to pull up our tickets, and I had done their reservation separate because I used points for their tickets and paid for mine. I get mine pulled up and I go to look for their reservation and I’m like, wait, why does it show that I have all my points still? Oh, where are their tickets? I must have never hit confirm or process or whatever that last button is when you are checking out for your airline ticket because they did not have tickets.

Ashley:
I go to book and they are completely sold out. I had that mindset, okay, this is what will happen. You know what? Most problems can be solved with money. I’ll throw some money at it. I was perfectly prepared to pay $600 each for their tickets just to get them there, and there wasn’t even any tickets available. I was like, “Oh, you know what, kids? Okay, I was so sorry.” And my son, my six year old, he was just like, “It’s okay, mom. It’s good thing you didn’t mess up our tickets from Crasharama last weekend,” this demolition derby race we went to. That’s all he cared about was that we at least got to go to that.

Ashley:
They were great sports. I was the one that was really upset. At that point, I was only supposed to stay till Wednesday, so waiting to fly until Monday, and there was no other great flights to get out there. We were already going to be there for such a short time anyways.

Ashley:
Came back home, went on the boat. And I’ve actually been working on some rehab at my one property. It’s a little A-frame cabin in the woods, and I decided to fire my contractors two weeks ago. And sometimes in my life, I get to this point where I get very impatient, and I’m just like, you know what? We haven’t got new contractors in there. I’m just going in and do it. My schedule has been cleared because I was supposed to be on vacation. And so I just went and I started doing it rehab in there. I started doing the primer and everything.

Ashley:
And then of course, once I start working in there, Darrell feels bad that he’s not working in there, so he came in last night. We tiled the shower and all this stuff. And so today we finally got contractors and there, and they’re doing the flooring right now. But just every time I’m in there, I’m finding something that our original contractors did wrong, and so I had a little meltdown in my car today just thinking about it. I was like, “Ah, I have no idea what I’m doing. Why didn’t I listen to my gut when they would tell me something and I would be like, “No, I know that’s not right.”” And didn’t stand up for myself. So many lessons learned on this A-frame, so we’ll have to do a rookie reply on it.

Tony:
A peply for sure. Well, let me ask this one question. How did you find those contractors? Had you worked with them before? Were they a referral? How did you guys connect?

Ashley:
Yeah, they were actually a referral from two different people. And right away there was red flags, but I was too preoccupied in the fact that they could start when we wanted somebody to start, and that they were referrals. That was what I was really hung up on. And I didn’t see the other red flags.

Ashley:
This is almost embarrassing to say because I know that I never should have agreed to this. I knew I shouldn’t have to pay them hourly, to pay that hourly wage instead of doing what I usually do and do a scope of work and they give me a price for the labor of it. That right there is the biggest mistake that I made was that it was hourly. Not everything was done wrong. There were some things that were done good and good ideas they had and stuff. But yeah, just a lot of lessons learned, money spent, and-

Tony:
It’s only a matter of time. As a real estate investor, it’s not a matter of if you have to fire contractor, it’s just when and maybe how many times. I feel like every real estate investor I’ve known has had to fire at least one contractor.

Ashley:
And I think part of my meltdown today was just I did this to my myself. I didn’t listen to my gut. I didn’t stand by my operating procedures of don’t do hourly, and other things too that I didn’t stand by that I usually would with a contractor. If you guys want a great visual, just picture me and my new car fully reclined, some sappy ’70s love song playing and tears just streaming down my face with my sunglasses on and my hands on my legs telling Darrell, “Get out of the car. I just need a minute.” There’s a nice visual for you guys.

Tony:
Yeah, we all got the visual. I love that. Yeah, I’m sure our rookie audience appreciates the transparency. Even though we’re podcast hosts, we still have all the same struggles that every other real estate investor has too. I had to fire a contractor on one of our recent rehabs as well. Earlier this year, I fired a contractor after he finished the job. We had his last payment. And I just told him, “Dude, I’m not paying you.” I was like, “You’re probably one of the worst contractors I’ve ever worked with. I did 90% of your job before you. I’m not paying you.” Anyway, yeah, I haven’t had to fire new contractors recently, which is good. We’re just still super busy. We’ve got a few properties that we’re taking life here shortly. We’re actually dealing with some policy changes in Joshua Tree, so we’re trying to navigate our ways around that. Maybe we’ll do a reply on that too, but-

Ashley:
As far as the county or the town, as for short term rental policies you’re talking about?

Tony:
Yeah. The county that Joshua Tree is located in, they recently passed some new ordinances around how many short term rental permits one person can have. And if you had more than that limit beforehand, you get grandfathered in, but moving forward they’re talking about putting a cab. We’re just trying to make sure we have the right information, and we can game plan on how we move forward. Always a joy, always a joy.

Ashley:
Well, what do you think about going into… I think it was Avery Carl, when we her on, she talked about how she likes markets where there are strict ordinances because you already know what they are instead of waiting to change. What is your opinion on that?

Tony:
Yeah, I totally agree with that. I think some of the places that are so new that they haven’t figured out what their short term rental permits are yet, those are the dangerous places. I use this example a lot recently, but Atlanta, they just recently made a bunch of big changes to their short term rental permits, and something like 4,000 listings were out of compliance. Ithaca, New York, they recently passed some ordinances earlier this year in April that said if you don’t have a lakefront property, you can only rent your short term rental out for 29 days out of the year. And before, there was no cap. I try and go to places that already have it figured out because my entire financial livelihood is based on my ability to rent out these properties so I need to make sure that I’m in places that I know are going to allow me to legally operate.

Ashley:
Yeah. My properties are in very, very rural areas. You probably go to the code enforcement officer, short term rental. Why would you do that here? This isn’t a vacation destination. That’s just something that I’m at risk at is if there ever were something that was put into the ordinances of these small, rural towns, that something could come up. And I think that’s a good position to be in. The one that I have operating now, all the rest are in rehab, but the one operating now is actually my arbitrage, my short term rental arbitrage. That one, if for some reason, okay, no more… You can’t do it anymore, that’s where I go to the owner and say, “Okay we have to figure… I have to get out of my lease,” which it’s month to month anyways. And we have a great relationship; that’s the only reason I’m doing the arbitrage. And so I think that’s my safety net there is, okay, worst case scenario they say no more. I terminate the lease, and I put a long term tenant in there for him.

Tony:
Well, that brings us to today’s guest. She had some really cool stuff going on in the short term rental space. Today we got Kelly Cronin on the show. And Kelly, just first and foremost, she was a super poised and just an amazing speaker. I was hanging on every word as she was telling her stories. Her day job is in veterinary medicine, but if you didn’t know any better, I would think she was a marketer or a copywriter the way that she sold me and Ashley on her property. She just has an amazing backstory.

Ashley:
She gives us her website, Cronin’s Castles where her listings are. She’s doing direct booking. And I’m going to have to go in there and copy and paste her paragraphs and just change out where it says, “White, sandy beaches-”

Tony:
Puerto Rico.

Ashley:
… to ashy fire pit or something like that. Do what’s that? The ad libs thing where you’d fill in the verb at the top.

Tony:
Different word.

Ashley:
But yeah, Kelly is super interesting story. She saved 50% of her income to be able to start investing in real estate. And she has properties in very random locations, and she talks about why. And I think my favorite part of this is right in the beginning, she opens up about how she actually found these markets, the steps that she took. And you can go across the whole country, and it’s like where do you even begin to start analyzing a market? She went through her thought process when she found the markets that she did. And also, before we bring her on, just so you guys know, me and her do talk about our beaver so make you listen to that part as to what is happening and what is going on, what nuisance we both have.

Tony:
Kelly, welcome to the Real Estate Rookie podcast. We are so excited to have you on. Before we dive into your store, just give us a little bit of the backstory about who you are, how you got started in real estate investing.

Kelly:
I’m Kelly Cronin, and I got started in real estate investing by falling into it. We couldn’t sell a house that was just a random house out in the middle of nowhere on actually Indian owned land, and found out that renting it was the way to go, and that catapulted into loving, loving real estate. And we’ve just found individual properties that are incredible and interesting and places that we want to be.

Tony:
Kelly, you say we. Do you have a partner? Who you doing this real estate investing with?

Kelly:
Yes. I have a partner who is 11 years old. Her name is Izzy Crorin. She is my daughter and an amazing human being. And we’ve now roped in my significant other as well, and so he’s joined in full-fledged. He actually went from full-time to part-time so that he could start renovating some of the properties because getting a contractor off grid is one of the hardest things that you’ll ever do in the entire world. And I know you’re feeling me, Ashley.

Ashley:
Yeah. Yeah, before we even hopped on the show, I start crying about a contractor issue today, so that’s all my eyes are all bloodshot and watery. But-

Kelly:
I promise you’re beautiful. It’s all good.

Ashley:
Kelly, before we move on, just give us a little snapshot of what your portfolio looks like today.

Kelly:
Currently, we have one rental that’s up and running, short term rental on Vieques island in Puerto Rico. And that’s the Vieques sea house. And we’re really loving that one. It was just a dream purchase and an interesting property.

Kelly:
We have another one that we’re actually running up to on the 9th of July to do some rehab, a very off grid dome house up in Alaska, Kasilof, Alaska. And then we have a tiny house that we’re currently working through some issues, because apparently 200 square feet does not even constitute a house in the eyes of Utah, so that’s fun. Also, it was built on a lot line and all of that was not disclosed, so lots of entertaining things there.

Kelly:
And then we just bought 80 acres in Ladysmith, Wisconsin, and so we’re currently prepping that to have just a bevy of different places to stay; some glamping experiences. We’ve got bell tents underway, and we’ve got some vintage trailers that we’ve identified. And we have a school bus, a midsize school bus that we’ve been renovating that’s going to actually go on that land as well to be able to rent.

Tony:
Kelly, I just want to recap what I’m hearing right now. You’ve got one in Puerto Rico.

Kelly:
Yes.

Tony:
You said an off the grid dome in… Where was that? What location was that in?

Kelly:
Kasilof, Alaska.

Tony:
In Alaska. Okay. Then you’ve got a tiny house in Utah. You’ve got 800… Or 80 acres in Ladysmith. What was the state? Ladysmith what?

Kelly:
Wisconsin.

Tony:
Ladysmith, Wisconsin. And then you’ve got the school of school bus you’re working on. Okay, so my mind’s spinning right now. First thing I want to say is that the strategy that you’re taking with the off the grid dome, the school bus, the tiny houses, that is exactly what platforms like Airbnb and Vrbo want to see right now.

Tony:
For those of you that are listening, Airbnb recently announced that they’re giving away, I don’t know, I think it’s $10 million in total, but each person can get up to $100,000 to build these unique experiences for guests to stay in. And the reason they’re doing that is because what really separates Airbnb from a traditional hotel is that I can’t go to Marriott and get a school bus, or I can’t go to Hilton and get a tree house. They know that that’s the competitive advantage that they have. And they’re pushing that.

Tony:
When people ask me about, :Hey Tony, how are you dealing with saturation or competition or X, Y, and Z?” And it’s about building better experiences than the competition is doing in that same market. And I think you’ve nailed that. Just what you’ve rattled off so far has been really, really cool.

Tony:
Anyway, all that to say, two questions for you. First, how did you land in so many different markets? Because I think that’s a big question that people have when they get started is, hey, what market should I invest in? Second, what led you to these more unique experiences over the traditional types of properties?

Kelly:
Great questions. First and foremost, how I landed in the markets is I approach it a little bit differently than other people. I come from veterinary medicine, and anyone who comes from veterinary medicine knows that for the vast majority of the time that we’re in veterinary medicine, we just don’t make a lot of money. As a licensed veterinary technician, a veterinary technician specialist in emergency and critical care, just not made a ton. And I’ve always saved about 50% of that income, so my entire life savings to invest in these properties has been about $110,000.

Kelly:
And what I’ll say is that I did a lot of research into what I could get within that that would give me the most wide range of properties that I could lean on, because I just didn’t want a situation where I put all my eggs in one basket and then unfortunately found out that something changed and I couldn’t rent it or that there was a problem with it or that a hurricane came through and damaged the house, or something along those lines.

Kelly:
And so with that, what I did was actually go through Zillow and realtor.com and just set my settings to a certain amount, in my case, it was $50,000, and looked for the most interesting vacation rental possibilities that I could possibly find for that amount money. And then really did my research in terms of AirDNA and in terms of overall rentability and how much I could get done on those properties for the least amount of money to try and make my money stretch as far as I possibly could.

Kelly:
And it’s led to some really, really interesting finds, and it’s led to some interesting ways of stretching that money even farther in terms of doing owner financing and in terms of doing land contract deals and things like that. Really thinking outside the box to try and give myself as best a platform as I possibly could, and then choosing places that I would want to go so that I could really invest 100% of what I say about those places.

Kelly:
And honestly, when I write copy for any of the places that we have, when I talk about meeting baby octopus when you’re out snorkeling or going for a walk along the beach and having a bunch of wild horses run past you or going for a dog sled to your house or laying in bed and watching the northern lights from your 360 degree windows, those things, when I’m making copy for them, they make me tear up. And I’m hoping that any guest that I invite into these houses have the same situations. I get goosebumps just thinking about the fact that, no, there’s no TV in our Vieques house, and we have no intent on putting one. And you know what? This is your excuse to turn it off, walk outside, sit on your porch and eat a papaya with our iguana. There’s just so many ways to design a vacation that’s not about doing the same thing as you do at home on a beach.

Ashley:
Kelly, I know you’re busy doing a podcast recording right now, but could you send us the links? Because I think you sold us to come and stay at one.

Tony:
Yeah. Yeah.

Kelly:
I hope so. I hope everyone gets that experience. It’s just so fun.

Tony:
I’m not even sure where Vieques is, but I’m down. Wherever it’s at, I’m booking the ticket. I’m ready.

Ashley:
Yeah, it was Alaska for me, the dome and looking up at the 360 degree view. You did a great job of just explaining things that you looked for when you tried to find a market and area, talking about, okay, your price point, $50,000 or less. The rent a price ratio, was there value in doing a short term rental in that market? And then also choosing places that you would actually want to travel to and go to.

Ashley:
The one thing I want to dig into more is how did you actually start? What was the first thing? Was it going to Zillow and setting that 50,000 and just having the whole country blown up and then going, oh, you know what? Alaska sounds cool. Then zooming, zooming, zooming and moving around. How did that work?

Kelly:
Well, so we started, I think, most by… We had that house in New Mexico. And it’s almost impossible to sell a house on land contract. It means that the person who owns that house actually contracts the land from someone else. It generally happens on reservations. And so when you do that, you’re contracting that land from the Indians. And it’s very, very difficult to actually explain that to other people, that, “Hey, the Native Americans have provided these land contracts. It’s perfectly legal, it’s perfectly safe.”

Kelly:
And so it was really difficult to sell that house. And we really struggled being able to rent it while we were trying to still figure out how to get that sold. And so that led to thinking, gosh, this is a really good way of setting up our lives and making sure that we’re really doing as much as we possibly can to create a retirement and to certainly create some security.

Kelly:
And so when I got to Wisconsin, we actually found a foreclosure house, a 5,000 square foot historical home foreclosure house that was listed for about half of what it’s worth today. And we were able to buy that and do some renovations and actually create another rental space that actually houses a long term rental. And so those got me really thinking and going.

Kelly:
When Izzy and I, my daughter and I, took a trip to Puerto Rico… We do this the less you plan, the more you live type of vacation. And so we had no hotels or anything booked. We booked the hotel in the taxi on the way to get her car. And we were staying on a beach in Condado, and we met just the best family you’ve ever met in your entire life. She had a blast with a 10 year old. And they said, “Gosh, it’s really too bad that we’re going to Vieques tomorrow, otherwise the kids could stay and play.” And I said, “Well, we don’t have any hotels. I don’t know where Vieques is, but it sounds great.”

Kelly:
And so we hopped a taxi, we went down to Vieques, we hopped the ferry for $2, went over to this amazing island where the horses outnumber the people. 9,000 horses, 4,000 people. The beaches are empty and beautiful and clean and pristine, and the water is the bluest you’ve ever seen in your entire lifetime. And we fell in love. And then we started walking around and started seeing se vende day signs. And I had to have someone translate, but that means for sale.

Kelly:
And when I thought about it, gosh, could you imagine owning a place in some place this pristine, this amazing, this immaculate? And then I started looking, and they’re not that unaffordable. Our house, we were able to get the Vieques sea house for $75,000… $73,000, but it was half on owner financing. And so we were able to get just a super, super cute two bedroom, partially off grid, little round island house. It survived more than one hurricane. And is pretty amazing. Comes with pretty good size yard and fantastic neighbors. And do it all for something that I could afford, which is amazing to me.

Ashley:
I need to know what are the differences of buying something in Puerto Rico besides the US? Is there a ton of differences between the sales transaction?

Kelly:
Yeah, there is. One of the biggest differences is that you cannot use a US lender for most Puerto Rican properties. Obviously, if it’s not attached to the real estate, it’s a little bit easier.

Kelly:
The other thing to think about is that in a lot of places in Puerto Rico, the titles are not clean. For example, the title for the Vieques sea house, I’ll have to have that for a couple more years before I can apply for a full title there. There’s involvement of attorneys, there are real estate bonds. There are different hoops that you have to step through in order to get real estate purchased in Puerto Rico. But what I’ll say is that everything that’s harder in Puerto Rico because of the multitudes of red tape that you step through, every time you step onto a beach where you’re the only person and the waves are beautiful and the sea is calm is worth it.

Ashley:
Did you hire somebody to help you through this process? Or did you just do research as to what it was like?

Kelly:
If you find a good realtor, which I will say they’re not super easy to come by in the States. They’re pretty hard to come by in Puerto Rico. You can definitely get one that will walk you through the process. What I’ll say is that Gustavo, if you’re listening, shout out to you, man. You are the best realtor on the island for Vieques. Definitely find a good realtor, find one that’s responsive, one that doesn’t work on island time.

Ashley:
I can already see the look at Tony’s eye. He’s already got a property picked out on Zillow.

Tony:
I literally have the map open in Zillow for Vieques right now, so I’m trying to see what’s what’s going on out there.

Kelly:
It’s hard to get to, but amazing to be at.

Tony:
Kelly, my mind’s spinning with a million different questions. First, you said something that I thought was really impactful. You said, “The less you plan, the more you live.” That reminds me of you a lot, Ashley, because your whole thing is trying to create spontaneity in your life. And I’m more of a planner. We’re going on a trip to Europe in a little bit, and I’m trying to balance between having every minute of everyday scheduled versus having some free time.

Tony:
Would you have ever found this opportunity had your schedule been so regimented and that level of spontaneity wasn’t there? I wanted to highlight that first. But going back to the buying process in Puerto Rico, a couple questions I want to dig down into. First, from start to finish. What was the total time? Is it a typical 30 day escrow? Or is it like a New York escrow where it could be two years before you close the property?

Kelly:
You ready for mind blown?

Tony:
Yeah.

Kelly:
I had it purchased before before I saw it, and then I signed the paperwork within one week of have gotten there.

Tony:
No way.

Ashley:
Wow.

Kelly:
We had a three day window in order to get it done. I had three days on island in my one week of vacation.

Tony:
What?

Kelly:
And I almost didn’t make it because the ferry was full, and so I had to convince a nice, nice gentleman at the window of the ferry office to pretty please let us get over to see our house. And then I will tell you, the next step was finding our Airbnb, which was not easy, by the way, folks. If you have an Airbnb on an island off an island with no street names, pretty please, pretty please, do a Google pin. Actually, it always works out because finding that place actually helped find my contractors and introduced me to some people on the island that I couldn’t have gotten here without.

Kelly:
And then the next step was actually finding our way from our Airbnb to the house, which involved multiple hills and actually led us to know where near the house, and our realtor had to come pick us up from God knows where and take us to the house for the closing. It’s not worth it, but anything… Or it’s not really easy, it’s definitely difficult to do, but anything worth doing is hard.

Tony:
Let me ask a follow up question. It sounds like this was… It’s on the fly decision. Did you do any research on Vieques specifically as a short term mental market before you tied this property up? And if so, what did that look like?

Kelly:
Yeah, I did. I’m the queen of spontaneity for a lot of things, but I’m also one of those people who analysis paralysis on the backside. Try and find that mix is tough for me, so I generally make big, rash decisions and then validate them on the backside, which is my favorite method of operations. My validation was going through looking at all of the rentals in the area, looking at AirDNA to actually find out what their occupancy rate was, what their high season, their low season was, making sure that I could hit my marks in terms of my daily rental rate and things like that. And then really reaching out to some folks on island to make sure that I was validating with correct numbers for utilities and water and some of those things, because you never quite know.

Tony:
Yeah. You’ve talked a little bit already about networking with the folks on the island and your realtor playing a big role. Now that you’re back here in the States, what has your process been for remotely managing? And honestly, I guess this goes to all of your properties, because you’ve got stuff pretty much all over the… Everywhere. What has your process been for building your teams and remotely managing these properties?

Kelly:
I think the biggest thing is that networking is key. You never know who you need until you need them. And to be entirely honest with you, one of the fastest ways to network is to make sure that you entrench yourself with the local folks to that property.

Kelly:
And also, just reaching out to your own network. You have no idea who until you reach out and find out that you know someone there. And so for example, Alaska is a really good example. I started looking at the dome house. And I had lived in Alaska for about three years, and so I knew some folks that way, and I knew some people in the veterinary community. And I really, really fell into quite the best situation. When I was looking at it, I just made mention on Facebook, “Hey, I’m looking at this place in Alaska.” And then about two, three hours later, I got a video back of the place. Someone had walked out there, walked the entire property, took a video for me, and said, “You really need to think about this.” Well, love her to pieces, I met her at a conference. We’ve met exactly once in person. However, here is this amazing human being who went and checked out an hour away, no less, a property for me so that I could purchase it and feel good about it. And it’s all about having networks and having met her.

Kelly:
And what really worked out well is that after the fact, I needed to winterize the property. There was just no way that my busy work schedule is going to allow me to go up there and winterize the property. Well, her husband is a construction manager, and so he was able to winterize the property, make sure that everything’s okay, put a keypad lock on the door, make sure that we were situated. And so we have really just fallen into some of the most amazing connections by making sure that we treat everyone as well as we possibly can, and making sure that we network, and making sure that we tell everyone what we’re doing. And that’s worked out. Same thing has happened in our Utah property. We have a technician in Salt Lake City who has done a lot to make sure that the property’s still standing and that life is easy.

Ashley:
Kelly, talking about networking, building your team, I want to talk a little bit about networking, I guess, per se, with the seller of that Puerto Rico property. How did you negotiate seller financing with them?

Kelly:
The big thing that I would say for seller financing or owner financing, I should say, is you’re never going to find it. It’s not listed. And if it is listed, be wary of what that deal looks like, because a lot of times when owner financing is listed, it’s a property that you don’t want. It either has no easement or it has no access or no electric or no potential of actually getting to it or it’s too dry to have a well, things like that. People who are generally advertising a lot of owner financing are looking to make that money off of the owner financing, so it’s not going to be necessarily an owner financing deal that’s going to work out in your favor, so just be a little bit weary there. But when we’re thinking about all of these off grid properties, these properties that have been sitting for a little while, a lot of times if we just start thinking in terms of the WIIFM principle we guys ever heard of the WIIFM home principle?

Ashley:
I haven’t, no.

Kelly:
It’s what’s in it for me? And so it’s really putting yourself in the place of whoever is on the other side of the negotiations table and saying, “Gosh, if I was going to write a deal that would actually serve them, what would it look like? And how can I make it serve both of us in equal ways?” And so for example, a lot of times you can talk to them about making sure that they’re covered for all their closing costs or making sure that they’re covered for whatever they have into the loan so that they’re free to do that or making sure that they actually get it sold and they don’t have to do the upkeep on the property anymore. A lot of times, if it’s been sitting on the market for 360 days, or if it’s been sitting on the market for a long period of time, those people are getting weary of taking care of that property while they’re trying to make that sale. And obviously, there’s something that makes it a little bit tougher to sell, whether it’s how it’s listed or how it’s up kept or whatever that might be. And so if we can really look at what that seller needs out of that and really discuss how can I create a situation that’s useful to both of us?

Kelly:
And so I knew that in this case, Peter just needed off island. He needed to be onto the main island so that it was a little bit safer for him health wise. I knew that it had been on market for quite some time. And I was able to just talk through my realtor, Gustavo, to really discuss how can we set this up so that Peter is taken care of but so that I can really stretch what my cash flow is doing for me?

Tony:
Kelly, can I ask one followup question? What was the purchase price on that Puerto Rico property again?

Kelly:
$73,000.

Tony:
That’s amazing. Just ballpark, what do you think that property will gross in one year?

Kelly:
Well, what I’ll say is that it depends a little bit on whether there’s an actual hurricane or not. We see a pretty big swing. We’re currently seeing about $1,500 to $1,800 per month.

Tony:
Gotcha. I can’t do that math fast enough in my head, but that’s what-

Kelly:
It’s safely into the 1.5% to 2% range.

Tony:
Yeah. That’s awesome. That’s amazing.

Kelly:
I will say that that’s calculating in a fair bit of time for us to be there.

Tony:
Yeah. And that’s amazing. And this is what gets a lot of folks into the short term rental space to begin with is even if I can just break even, but if I can have a vacation home and all these amazing markets that I love vacationing to, what is the downside? I was just curious on… That’s fantastic.

Kelly:
We’re not looking to make a million dollars. We’re not those people who are looking for 300 doors. We’re the folks who are looking to eventually have a little bit more freedom from our jobs, have a retirement that we’re setting up and working towards, and who can create good and reasonable relationships in the community with sustainable properties. We want to do a little bit better in the world, and we want to give people a little bit better option than going to a Hilton.

Tony:
Yeah. And you mentioned the idea of building up for retirement and things that, and it reminds me of something you mentioned earlier where you quickly glossed over this, but it was a pretty impressive statement is that you were living off of only 50% of your income. That’s a pretty impressive feat. I think for a lot of folks that are looking to get started as a real estate investor, access to capital is something that hold holds a lot of folks back. Obviously not everyone’s going to be able to say 50%, but what would your recommendation be? How were you able to achieve such a high savings rate? And if someone wanted to replicate that, what steps should they take?

Kelly:
I think that the biggest thing is to really think in terms of gamifying your life, because when you look back at my entire savings and at what I’ve done over time, when I started in veterinary medicine, I was making $9.15 cents an hour. That was post-graduation of a four year degree. Actually, a couple of four year degrees. And for most of my time in veterinary medicine, I was never getting to that six figure mark, so you have to understand that a lot of that is gamifying; making sure that, because I wanted to travel, that I set up my life so that my travel was paid for by getting my veterinary technician certification in specialty in emergency and critical care so that I was able to speak at different conferences and get paid to travel to conferences.

Kelly:
Recently, not too long ago, found out about travel hacking. That’s an amazing, amazing thing. If you guys haven’t heard or talked about travel hacking, it is absolutely what has really set us off the map in terms of being able to work through some of these issues and working through some of the remodels and things like that. And that’s just a matter of opening new credit cards and using those opening bonuses to actually afford you a chance at additional travel miles. And given the fact that the first year that we travel hacked, we did 19 flights for $370, it’s well, well, worth it to try and figure it out. Just amazing things. But if you Google travel hacking, you will find a plethora of information about that.

Kelly:
And then just thinking in terms of how I could bring down my mortgage. For example, I had multiple different ideas about it, but having that bonus space and having a long term rental in that space, making sure that, actually, when I found a very large house that I utilized my first floor so that my parents could actually live there to make sure that I didn’t have any childcare expenses… And that’s especially important because I travel so very much for my day job and certainly setting up the rentals. And so just really thinking in terms of how can I create a situation where everything that I do is leveraged as much as I possibly can? Can I own an older car because an older car means that more of my money can go into investment?. Can I set up a situation where instead of bonuses, I ask for a portion of the companies? Or can I figure out how to have side hustles that make sure that I’m able to put a little bit more away that isn’t directly responsible for me living day to day?

Ashley:
I want to say, first, that I hope my mother is not listening to this episode, because she’s going to say, :Ashley, why don’t you do that? Let me move in. I’ll take care of the kids all time.”

Kelly:
You’re like, “Here’s this nice [inaudible 00:38:50] in our backyard.”

Ashley:
Yeah. Kelly, this is great. And along with you are busy, you have a full-time job, you are traveling all the time, whether for work or just for personal, how are you self-managing your properties? And what I really want to know is are you doing anything you unique to provide that Airbnb unique experience to your guests?

Kelly:
I think one of the things that we are doing is every time we walk into our rentals, we are thinking in terms of what don’t I have to pack but still have to have? What are the things that are going to ruin my trip? What are the ways that we can make sure that you can go through airport security easier? What are the ways that we can make sure that when you get to the beach, you have a way to wash off your feet? The little things. It costs me absolutely nothing to fill a couple of one gallon jugs in the back of our truck rental to allow people to wash off their feet at the beach. There’s no place to wash off your feet. It costs me very, very little to provide a couple of beach chairs and a couple of beach towels so that you don’t have to worry about whether there’s comfort at a place that’s so pristine.

Kelly:
And on Vieques, it’s incredibly hard to… They sell out really quickly for car rentals, truck rentals, things like that, so we actually provide, for an extra fee, a truck rental that you can utilize that takes some of the worry out of that as well. And it’s just all about creating that situation where the pains of vacation don’t rear their ugly heads, where vacation is simplified to the point where all of the negatives are taken out of it, and all you need to do is focus on the memories that you’re making with the people that you’re with, or the know people that you’re with.

Kelly:
We just had someone stay all by her lonesome for five days. She said it was the most amazing thing ever and that it was just a perfect stay. Come and be alone, come and bring your friends, come and enjoy it. Come and bring your dog. We are a dog friendly, so we have a fair number of people who bring their dogs. And frankly, if you bring your dog, you’re expected to send me a picture. There is not a negotiable in that. And so just trying to make sure that when we’re talking to somebody who has a dog, you don’t have to figure out where that dog is going to be or who’s going to watch it or how to make make all that work. Trying to make it all very, very easy.

Kelly:
And then making sure that all of that is automated as well. And so we make sure that we have a cleaner checklist that has all of those items in it. Those things are ready to go for you. We have amazing caretaker, Odie and Isabel, They come in and they make sure that the truck is clean and they make sure that everything is ready for you. They make sure that the water jug in the fridge is full. Who does that? They’re just incredible people. And we hire them because of what care they put into it, how much they care about what they’re providing.

Kelly:
And then we make sure that, in terms of everything else, that everything as easy as we possibly can. The welcome message is an automated message. And in that welcome message, it has a link to a turn-by-turn video to get to the house because there’s no street signs in Vieques. We’re working on that, but there’s no street signs in Vieques. And it has a Google pin so that you can set your GPS. And it has a situation where we’ve done those enough times and we’ve used that Google pin enough that we know that, hey, at this point, it’s going to tell you to go right, but please don’t do that because you will end up in a cow field. And we try and make sure that all of those things are in our automation so that people don’t have to worry about things like that.

Ashley:
Kelly, I loved how you called them your caretakers, the caretakers of the properties. That stood right out to me. It’s not, “Oh, my maintenance guy, my cleaner,” this is the caretakers of the property. And so now I’m thinking about that 80 acre property that you mentioned in the beginning. I want to hear more about that. And are they the caretakers for that property? Or was this another one you were referencing?

Kelly:
They are caretakers for our Vieques property. Okay. And we don’t have caretakers for Ladysmith yet because we just purchased. We’re currently putting a driveway in, and we are trying to train some beavers that they don’t really want to create a pond in the middle of the land. Those are our big projects.

Ashley:
Wee talked about even before we started recording how many things we have in common. I have a beaver problem, too. I have so many beavers. They’ve turned two ponds into four ponds. Well, three ponds and a swamp. Please share with me, what can I do to get rid of them?

Kelly:
Well, live trapping is our current route. And we were thinking that they would do no harm up in Alaska, so we might cross those beavers across state line. We’ll see.

Ashley:
Yeah. It’s not trapping season here, so we have to wait it out for that at least. But, yeah.

Kelly:
What I’ll tell you, though, is that if you apply for a nuisance license, you can trap them anytime.

Ashley:
Okay. I’ll look into that.

Kelly:
Thankfully in the veterinary community, we do have some good connections to some wildlife rehab and to… Yes, so there have been discussions. You let me know and we’ll offline connect on what we can do with your beavers.

Ashley:
Okay.

Tony:
Kelly, I’m I’m curious, though, what are the plans for, for the 80 acres? I know you’ve mentioned that you guys are refurbishing a bus. What else are you all planning to do with all that land?

Kelly:
So what we’re envisioning is we’re envisioning, actually, tiny pods for different places to stay with a central shower area, because mama don’t play that way in terms of sleeping on the ground and mosquitoes and not showering. I needed a out in the woods experience that was not going to give me hives before I even got there.

Kelly:
And so thinking in terms of these little pods, we’re creating some decking, and then putting some bell tents in a few of them. We’re using some vintage trailers for a few of them. And then I haven’t gotten Steve completely signed on to this, but I really want an A-frame over a river. And we have made a connection with someone who does amazing tree houses. In fact, wrote a couple books on tree houses, Derek Diedricksen. My hope is that he will be able to come help me build a tree house as well. I envision one that opens on one side to the sunrise and one side to the sunset, and then closes back up when you need it to. We’ll see. Lots of big plans.

Ashley:
Do you know what the ballpark pricing is on a tree house at all? I’m sure it varies a ton, but just-

Kelly:
I will say that his ballpark is pretty close to what my ballpark can be, but I know that some folks go from all the way from $30,000 to $100,000. And I think that he very much runs in line with what we like to do, which is reusing and recycling and making sure that we pay homage and try to keep things as eco-friendly as possible. My hope is that we can keep it towards that $15,000 to $30,000 mark so that we can make sure that it’s both doing well in terms of what it is, but also doing well in terms of allowing us to get it done for a reasonable price point.

Ashley:
And when you turn this into operation, are you going to run it off of Airbnb? Are you going to do your own platform? What will that look like?

Kelly:
We do utilize Airbnb. We utilize a few different platforms all connected through our backend booking site. However, predominantly we try to get most folks to actually look at and book from our website. I think that you get the most information. It’s certainly the least expensive for our guests. It’s certainly the most profit for us.

Kelly:
And I worry always about sending someone to real estate that’s not my own. And so Facebook is not my own, Airbnb is not my own. Sending someone outside of what I have control of really makes me very nervous so I try very hard to make sure that, as much as possible, I’m guiding everyone back to us to that end. I ask for pre-booking emails, I ask for emails at booking. I just try and make sure that whatever I can do in order to capture that guest information or that potential guest information or early signup guests too, we’ll take some early signup guests prior to the property even being available so that we can really build that database and send them back to our website for all of their information and to book. And that way, I have a lot more control and I also am just able to make sure that I can get repeat guests without losing them to the Airbnb nothingness.

Tony:
Yeah. Kelly, I’m so glad you mentioned the direct booking piece, because we actually just got our direct booking website built out, so we’re about to launch ours here shortly as well. And just if you guys are looking for a direct booking website, I had mine done by a guy named Mark Simpson. He’s based in the UK. I think his Instagram handle is [inaudible 00:48:50] UK. Anyway, he did a phenomenal job with our direct booking website, but it’s [inaudible 00:48:54] UK, Mark Simpson. What’s the URL for your direct booking website, Kelly? Get that-

Kelly:
Ours is www.croninscastles.com.

Ashley:
I like that.

Kelly:
Thank you. Thank you. And that’s Go Daddy and a little elbow grease, actually. And then our back end site that we use is Hostfully currently.

Tony:
Okay.

Kelly:
Yeah.

Tony:
Yeah. Well, one other followup question before we move off of this 80 acres. How are you planning to finance all of the projects that you want for this land? For the buses, you just buy the bus cash? Are you renovating with cash? For the tree house, is it cash for that, too? Or what’s the game plan?

Kelly:
Owner financing is the best thing on this planet. And what I’ll say is that we were able to get owner financing on that at a pretty low rate and a long run time. And so we got those 80 acres for $90,000 on owner financing. And we’re able to keep a lot of our cash free in order to utilize it for the improvements. And so I did a HELOC to actually pay for, or to free up some cash for some of the individual, the vintage trailers. And the dome tents are incredibly cheap anyways. They’re only $4,000 or $5,000 a piece. And so it’s not a lot of outlay, and then a lot of it’s elbow grease.

Tony:
One last question. Ladysmith, Wisconsin; what was it that drew you to that market?

Kelly:
Well, what I’ll tell you is that every project up until now has been me. Every single one of them has been a place that I’ve loved or I wanted to go or I wanted an excuse to go back to. And Ladysmith has actually, come to find out we knew this, a little bit about my partner’s, about his family. His family is all from Ladysmith. We had an incredible summer vacation up in Ladysmith when we first met.

Kelly:
And what I’ll say is that we found out that my family is from Ladysmith as well originally. And so it was more of a situation where we knew we had to find some parking for the bus. We knew that we eventually wanted some acreage somewhere. We had all of these plans in terms of, gosh, it’d be nice to have some glamping experiences. Where should we do that? We did try to do that in New Mexico, but unfortunately found out that that had a dirty title, so we weren’t able to do that one. And so when this came up in Ladysmith, we were pretty quick to jump on it and get that situated. And that was really more of Steve’s baby because I’ve had all of the fun so far.

Ashley:
Kelly, is your plan as maybe in five, 10 years to go and take off the glamping tents, take off the bus and build your deam home on this 80 acres that’s going to be paid off from people renting it for the past several years?

Kelly:
I would say yes in a heartbeat because it’s beautiful up there and it’s incredible, but I think that there’s something to be said for the ability to travel around. And that’s really what has driven us. The reason that we want places in different places is to have an excuse to change up when it’s too hot in Wisconsin or to change up when it’s too cold in Alaska or to really chase the experience at the experiential best time for whatever we want to do.

Kelly:
And granted, there are people who want to be in Alaska in the middle of the wintertime. They want to sled dog and they want to see the lights, and that’s cool. And maybe we’ll want to do that come winter as well. But I think that the freedom to be wherever we want at whatever time we want is why we bought the bus in the first place. That’s the end goal is to not go bigger or not to go better, just to downsize and move around at our will.

Kelly:
Izzy has her own plans. She intends on going to France for free college through the DELF test because she’s in a French immersion program, and so at that point we’ll need to be traveling around France a little bit while she is going to college for free and using her college money to buy a house in France that will be paid off by multiple renters there, too.

Ashley:
That’s amazing. And I love that she’s already excited about that plan, too. Does she have any little jobs or tasks that she is in charge of to help assist with running your portfolio?

Kelly:
She is an incredible marketer, actually, and she has been dabbling a little bit and making some of the videos. They tend to be a little bit more neon and flashy than what I usually do, but we’ve utilized them, and she’s had an awful lot of fun doing it. And then when we’re on property, she’s renovating with the rest of us. She will paint, she will hammer, she will nail. She does epoxy with me. You name it.

Ashley:
That’s awesome. That’s great. Okay. Jumping into real estate investing, did you have any expectations set that you realized were not reality? And how did that affect your investing going forward?

Kelly:
The biggest expectation reset that I had was just the idea of leaping before you look, because honestly I could get stuck in analysis for a million years. And I think that I was stuck in the idea that I had to have a ton in order to get started, that I had to have a safety net, that I had to have a bunch of money to buy a better property or no one would want to come rent from me. And the truth is that people are as happy to come stay in a 250 square foot tiny home with a cowboy hot tub in an outdoor kitchen as they are to stay in a five story McMansion on the side of a mountain. You can’t judge for someone else what they’re going to want to do and what experience that they want, so you have to create an experience that you would want and then market it to the people like you.

Tony:
Love that approach. Love that approach, Kelly. Yeah. I think another way that we look at, okay, what should we offer in this market? is by seeing what’s already working. And it’s like, yeah, sometimes it is going to be that luxury say, but to your point, a lot of our properties are 391 square feet, and those are some of our best performing properties. Everyone’s going to have a different, I guess level of expectation and desire, depending on what market they’re in and what they’re into. Love that advice.

Tony:
On that note, Kelly, I want to continue to pick your brain, but I’m going to take to our rookie request line, that way our guests or our listeners can pick your brand as well. For those of you are listening, if you want your question potentially answered on the podcast, you can give us a call at 8885-Rookie, and we might play your question. Kelly, are you ready for the request line question?

Kelly:
Let’s do it.

Tony:
All right. Today’s question is from Charlotte, who is from Charlotte, North Carolina. And her question is, “I have an Airbnb that is a two bedroom, one bath, and I’m profiting about $1,700 per month. I know there are so many variables when analyzing a deal for short term rentals, but I was wondering, does the profit really exponentially grow if you have big properties to rent? It’s a three bedroom or a four bedroom, but in a similar market. Or are the expenses just eating up the extra profit that you’re making? Thanks so much.” What are your thoughts on that, Kelly? Would you say that there’s maybe any value in going bigger? Or is just staying small the right way to go.

Kelly:
It really depends on the rental market because, honestly, going bigger in some places is fairly inexpensive where going bigger in other places… Say going bigger in California; it can be a deal breaker because of the fact that going from a two bedroom casita to a four bedroom giant house in California absolutely breaks the bank. But when you think about going bigger in other places, for example, Milwaukee, Wisconsin, going bigger and going into one of those larger historical homes that can potentially sleep a lot of people can drive up your ability to rent significantly.

Kelly:
I know a lot of families who would be very open to renting a much higher number of beds and heads type of property, and those don’t necessarily cost you much more because a lot of times, you’re actually moving into houses that are potentially a little bit more depressed in terms of overall price point. Certainly when we’re talking about any duplex in the city, those duplexes tend to actually be significantly less expensive than single family home in most areas, and so it really depends a lot on the deal itself. And so I would very much consider looking at the deal by deal individually as opposed to really thinking in terms of a blanket strategy one way or another when you’re looking at a rental deal.

Tony:
Kelly, that’s a fantastic answer. And we’ve seen the same thing in our markets as well. When we first started investing in the Smoky Mountains, we identified that four and five bedrooms had the best return because at the time, if you look at their prices relative to their gross revenue, that was where you got the best return. Now things have shifted in that market. I don’t think that four and five bedrooms are necessarily the best play. But in Joshua Tree, we’ve noticed that our smallest houses so far have performed really well in terms of return. Every market is going to have different price points and varying gross revenue numbers. Charlotte, to answer your question and to piggyback on what Kelly said, I think you really have to take it on a market by market basis to identify what that sweet spot is.

Kelly:
One more point to that is definitely look at the occupancy rates because if you have too large of a house, sometimes if that’s unrentable because somebody doesn’t need the space or doesn’t need that larger number of people staying, sometimes that can actually drive down your overall profit as well.

Ashley:
Kelly, I’m going to take us to our rookie exam. I know you did a bunch of schooling, got a bunch of degrees, but this is going to be harder than anything for veterinary school. But question one-

Kelly:
Love it.

Ashley:
… what is one actual thing rookie should do after listening to this episode?

Kelly:
I think explore some things that you wouldn’t normally look at. Be a little bit open. Be a little bit open in terms of where you’re looking, be a little bit open as to the type of properties that you’re looking at. Look at a property that you just don’t know how you even get there just once and think about whether you could create a situation where that’s actually an experience. Hey, you have a property that’s on an island off an island and you have no boat. Could you make this something that someone would actually pay extra money to try and get to?

Tony:
All right, question number two, what’s one software system or app that you use in your business?

Kelly:
I think probably the biggest one that I use is realtor.com. And I use that app prodigiously. But I guess to give just a little bit of love to it, I use the Facebook Meta app like nobody’s business, and I schedule out all of my posting so that I can really leverage my social media. And I use my social media to actually drive information setting for the house, just expectation setting, making sure that people know that Puerto Rico is not quiet, making sure that Alaska’s not the cheapest place to fly to, making sure that they know some of the information so that when they’re going there, eyes wide open.

Ashley:
Can you explain to me a little bit more what you just said? What is the Facebook Meta app? I have no idea. Is it just you have your page, a Facebook page that you’re going and sharing about the properties you have?

Kelly:
Yep. Facebook Meta is actually the backend business app that goes with Facebook and Instagram. And it allows you to post to both as long as you have an applicable page on each. And it allows you to time all your posts so that once a month you can go in and you can set up all your posts for an entire month and you don’t have to think about it again, or it’ll allow you to tag things, to hashtag things. It’ll allow you to turn off things that are potentially something called post stomping where they’re coming out with new information but you have something that’s doing really well with your Facebook groups. And it’s just a way of making sure that you’re able to grow your social media and you’re able to leverage that social media. You’re not just growing it for no good reason, you’re growing it so that you can control the story about your rental property.

Ashley:
Very interesting. Cool. Okay, and our last question is where do you plan on being in five years?

Kelly:
In a bus. But where? That’s a tough one. I’m not sure where. I do think that in five years, we’ll probably be in France hanging out with my kiddo, but otherwis, just not quite sure where. But I will tell you that it’ll be something interesting, someplace extraordinary, and we will be watching the sunrise. And you’re welcome to come join us.

Ashley:
Yeah. What do you see for your goals set for yourself? Do you see maybe you’ve acquired three more properties, or anything like that?

Kelly:
I think probably more than that because I tend to get a little bit antsy as soon as we get one situated. And so I think that organically, we’re going to grow probably a little bit more than that just because I enjoy adding to what I can offer people and adding to some of the things that I can offer to our family as well. And so I think that we’re probably going to have quite a few more than that.

Kelly:
But again, making sure that we grow intentionally. Making sure that we are doing enough to make each property individual, unique and extraordinary each and every time that we go from one to the next. Making sure that we’re developing local connections like [inaudible 01:02:54] paddle board tours and Crystal Clear Vieques, who does amazing snorkeling, and Cologne horseback riding on the beaches, and just making sure that we’re able to bring everyone up with us and continue our intentional journey.

Tony:
Yeah. We appreciate that. Kelly, I’m going to take us to our rookie rockstar before we wrap things up here. If you would to be highlighted as a rookie rockstar, get active in the Real Estate Rookie Facebook group. It is one of the most active, the most engaged real estate investing Facebook groups out there for new investors. Get active in the bigger pockets forums, or we can slide into mine in Ashley’s DMs.

Tony:
But today’s rookie rockstar is Luke Nelson. And Luke says, “My wife, Katie and I, are excited to be live with our second short term rental in the Smoky Mountains area.” They said they’re just a few minutes from the Smoky Mountains National Park. Luke says, “This property needed extensive remodeling and exterior work. A two week renovation project quickly escalated into a six week roller coaster. Challenges ranged from bad contractors that we fired mid-job to a septic tank that was buried under a concrete slab, but we got through it and our calendars are starting to fill up.” Luke, congratulations to both you and Katie.

Ashley:
Well, Kelly, thank you so much for joining us and recording with us today. Can you let everyone know where they can find out some more information about you and reach out to you?

Kelly:
You can find us on Facebook In a Nutshell, Alaska, at Elevated Solitude, Utah, at Vieques Sea House, and at Cronin’s Castles. Or you can find us on Instagram at Cronin’s Castles. You can find us on the web at www.croninscastles.com. You can find me at LinkedIn at Kelly Lynn Cronin. And I love connecting, so if you have any questions or need anything or just need somebody to poke you in the butt and get you going, you let me know. I’d be happy to.

Ashley:
Well, thank you, Kelly. That’s awesome. I’m Ashley at Wealth from Rentals, and he’s Tony at Tony J. Robinson on Instagram. And we’ll be back on Saturday with a rookie reply. We’ll see you guys next time.