Episode #13 : Turnkey Vacation Rental Investments with Steve Schwab

 
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Have you ever gone somewhere on vacation and absolutely fallen in love? Not just “I love being on vacation,” but full-on, “I could buy a house here and come back every year.” If so, you’re not alone, and you might have stumbled upon a perfect investment opportunity if you play your cards right. A turnkey vacation rental property can be a great way to visit your favorite place regularly while making some money in the months you’re not there.

Joining us to talk about the possibilities of turnkey vacation rental investing is Steve Schwab, the founder and CEO of Casago. Casago is a total property management and vacation rental company headquartered in Scottsdale, Arizona. Casago manages more than 2,300 units located in more than a dozen communities across the Southwestern USA and Mexico, and has served more than 3.2 million guests to date.

Steve and I talk about why he loves working with homeowners to manage and book vacation properties all over the country. He shares some of the most important things to keep in mind when deciding on the best place to buy a vacation property and what you need to know to get plenty of bookings. We also discuss how you can evaluate the market in your desired area and how to keep the peace with neighbors in your short-term rental’s community. Steve also makes a super-generous offer, which you can find out more about below!

In this episode, we’re discussing…

  • How Steve started Casago and why he loves helping homeowners make the most of their turnkey vacation rental properties.

  • What potential buyers should keep in mind when choosing a place to buy a vacation home.

  • What you can do to increase the bookings at your turnkey rental property.

  • Why you should look at the inventory of your area thoroughly before buying.

  • Tips for building a good relationship in your community and making your turnkey rental property an easy experience for neighbors, visitors, and you.

Steve’s Top Tips:

  • It’s all about location - make sure you buy a vacation rental in a place you’re going to want to visit year after year. That way you can invest in the neighborhood, community, and overall feel of the place, making more of a home for you and a better experience for your guests.

  • Consider your proximity to attractions – guests like to go on vacation so they can be close to whatever it is your vacation town has to offer. Consider buying closer to the beach, lake, mountains, or whatever it is that draws people to your vacation spot. It might be a bit more expensive up front, but you’ll get a lot more bookings.

  • Make sure your neighborhood is vacation-rental-friendly – check that the homeowners’ association isn’t planning to ban short-term rentals anytime soon, and invest in good relationships with your neighbors and surrounding community. It’ll make things safer and smoother for everybody.

Resources:

 

+ Read the transcript

Have you ever gone on vacation and loved the place so much? And you thought to yourself, hey, what would it be like to own a vacation property here? This would be a place I could come visit when I wanted to. And then I could rent it out. So maybe it's kind of an income property at that point. But then maybe you started thinking yourself, Well, how am I going to manage this property when I don't live in that location, and I'm busy with my full time job. Today's guest is Steve Schwab. Steve is the founder and CEO of Casago. So Casago is a very large vacation rental and property management company, Steve's company represents more than 2300 properties in 15 cities across the southwestern us and in Mexico. Steve absolutely knows this space. And that's why I'm so excited to have him on the show today. Steve, welcome to the show.

Well, thanks for having me. It's great to be here.

I'd love for you to kind of share a little bit about your background, and how and why you created cast ago.

Well, you know, originally coming out of high school, I was an Army Ranger, spend some time with the military, went to college and decided to take a break in Mexico. And just by chance, I ran into a couple that was running a beach home company, through some illness, one of the owners passed away. They asked me if I wanted to take it on. And I did. And I found that I had a passion for it. And I loved it. I love dealing with the homeowners and making the guests happy. And so it's been my only adult job now for the past 19 years.

So you started with that smaller property. And then it just word of mouth just kind of grew from there.

Yeah. So started with 19 properties from the company that had been there before called Cindy's vitro models, and worked hard as 28 years old, called up a bunch of people that were there on the beach, told them, I really didn't know what I was doing. But if the unit shot and make sure to make it right, and a lot of people took me on. And then we had the largest company in that town went bankrupt and shut down overnight, I was able to walk in to start taking care of those homeowners. And through that reputation and word of mouth, that I was out there, making sure those homeowners were well cared for the company grew, and then the vision of taking it to other cities came on. And that leads us all the way up to today.

Oh, that's a great background in it. I think you're talking about you know, having a good reputation for really supporting the property owners and, and helping them be profitable and have good experiences. It's It's a fantastic story to share kind of how you've grown. Tell us a little bit about what does castle go actually do for your clients. And what are kind of the range of services that you provide?

Well, Casago is, you know, a property management and vacation rental company, like you talked about in the intro. And really, we're there to take care of homeowners. And when we take care of renters and take care of everything else, that's always to take care of that homeowner. So a lot of homeowners who purchase second properties in cities that they don't necessarily live in, they have fallen in love with that destination, they want to come and enjoy it. And they also want to be able to use that property for income. And that's really where we stepped in, unlike a long term rental where, you know, it's just a pure investment, you put somebody in there for, you know, months or years at a time, you don't really get to enjoy the property. So the vacation rental rental industry is something that allows you to unlock the potential of the unused time and your property to for investment purposes. So we're there to make that turnkey, you know, we're there to market your property on over 200 different websites, you know, VRBO, homeboy booking com costs ago hotels.com, you know, all the major booking channels, we bring it into our proprietary software, to make sure there's no double bookings, we do a background check on everybody that comes through making sure that we're bringing the right people into your property, then we clean it, we inspect it, you make sure there's no damage, we set it up to the hospitality ready, or those your renters are coming through. And then once they've checked out, we go back and do a complete inspection to make sure there was no damages or items missing, and prepare for the next printer, we send you information on all that. And then we also maintain it your bills, and they send you a check every month for your proceeds

are you handling I'm just curious the reviews of the property or getting that information to the the owner so that they can respond to hear how's that?

We respond to all the positive and negative reviews ourselves for the homeowner. But when there's negative reviews, we make sure to take that and pass those along to homeowners, for instance, maybe a homeowners had a property for five or six years. And that couch is just starting to look a little dingy. Being able to take that review from that renter, let that owner know, hey, by the way, you know we have this comment on this couch been dingy, only put workload and get this thing clean. Or maybe we recovered. Or maybe we take care of it. But making sure we maintain that reputation for that homeowner and making sure that we respond to those reviews. And keeping those renters please, is really our job where the agent that is handling both sides of that transaction.

You know, it's funny as you - not funny, but you've described all these pieces, it's it's really sounds turnkey, as a homeowner, there's, you just maybe block out the week that you want to go or the timeframe. And other than that, you just kind of described sort of super, that's all of the pieces you could be hands off unless you need to make a decision about that couch, as you described, right?

You know, and that's our job, you know, a lot of people who could afford second homes, they're out with great careers making a living and doing so well that they could afford second and third properties, to come back and try to put that time into checking reviews and making online reservations just really doesn't fit their time value. And that's where we stepped in. And there will be some homeowners that want to do it themselves. Maybe they're retired, and maybe they live local. And that's absolutely good for them. And they should, but for those homeowners who don't have time to manage a second or third property, or the time value doesn't work, when it comes to the amount of amount of work that you put into it compared to their job. That's where we're really where we step in.

So in the beginning, I talked about, you know, 15 different cities and a lot of different properties. So you have a lot of experience to just kind of understanding the overall market. What would you recommend someone's maybe they went three places, one, I'm here. And they are trying to decide between Mexico and you know, I don't know, maybe somewhere in Colorado? What would you kind of advice would you give them to start when you're looking at buying one of these properties,

you know, I would tell them first, it's all about the location and where you love, before you buy it, make sure to try that property going back there and get to know the locals, get to know the the other people that live there, if you're going to Mexico, go and meet some of the expats in town, listen to their advice, get their opinions, or go and meet other people that are in those communities. If you're in the United States, making sure that it fits your expectations of what it's going to be like, if you're going back year after year after year. You know, once you buy a vacation rental, you've really locked yourself into going back to that destination often make sure somewhere you truly love. That'd be my first piece of advice, though that you know, two or three years down the road, you're like, Ah, I'm tired of going there, I will try something else, you know, so. But if you find something that you love, and somewhere that really is special to you, that's the time to start looking into Is this a good vacation rental place? And is this something that works for me?

Got it perfect? What are some things that an investor could or I guess you actually would say a homeowner I say investor be in the real estate world. But what are some things a homeowner can do? So you talked about the couch, but what other things could they do when they're when they're when they're buying this property and furnishing this property to increase the bookings?

Well, you know, just like investors in real estate, they always talk about, you know, I've heard the saying over and over that you, you really make your money when you buy not when you sell. So when you're going into look at where to buy in a city that you want to a second home, make sure it's got a close proximity to the attractions of that destination. For instance, you know, people go to a beach town to be close to the beach. If you're buying away from the beach where you can't see blue, you're not going to have as many rentals people going there for the attraction of being close to the beach or ski in ski out. Now those properties cost more. So you have to decide what's in your in your budget, but always consider your proximity and your access to the attraction of that destination. That's number one. Number two, take a look at the inventory that's currently being offered in that city. How many one bedrooms are there? How many two bedrooms? How many four bedroom single family homes are there, two pools matter. For instance, in Sedona, where we have several properties, interestingly enough fireplaces matter, that's a big thing for Sedona. However, here in where I'm at right now, in Phoenix, swimming pools are everything. A home with a swimming pool, as opposed to home without the swimming pool is a 30% difference in vacation rental nights throughout the year. It matters, you know, being in Mexico, if you're going to the beach destination, how are you going to sell that to somebody who's coming down site and seeing well as through pictures and pictures of the ocean, which is the main reason that going they're matters. So looking at that inventory, and where the inventory sits, and what makes that inventory unique. And how much demand is there for the type of property, your mind will really determine how well your property rights. And then above and beyond that, then enter your amenities matter how well decorated is the property? What sort of amenities Do you have inside is a modern, you know, these things will come into play, we start taking photos of your investment property and your vacation will put them online because you're really selling that property to somebody sight unseen, to come rent it. And you're competing with everybody else that's in your same community.

Such a great point, you're selling sight unseen, this isn't like someone going and looking at a house they have to trust and they're going to read the reviews to write. I know I absolutely do and trying to make decisions about things. And it's a great feedback to around you know, I live in Phoenix too. So I know the pools are important, but 30% increase and you know, the revenue is huge. So big factor there. What are the overall key trends that you're seeing right now in this kind of vacation rental industry?

Well, the industry is booming right now is growing exponentially. And that's because there's a lot of large players now in the field. Airbnb bringing a lot of attention to our markets. VOB Oh is big player, there's players now rolling up a lot of the different technologies into larger companies, there's a lot of money being put into the industry as a whole, a lot of excitement about it. On the other side of that there's a lot of regulation coming down, because suddenly, we're not just an alternative housing or an alternative lodging anymore. We're becoming mainstream. You know, hotels are pushing back because they want legislation against, you know, these homes that aren't paying not necessarily paying lodging taxes and transit fees like hotels do. A lot of neighbors are pushing back you're seeing because unlike 10 years ago, where it was mostly property managers like myself, who had to sure that we're being responsible to the homeowner, and to the neighbors for our own reputation, and for our own business, you're finding a lot of homeowners who maybe they're in trouble with their mortgage, or they just don't care about their neighbors, and they're coming in and being irresponsible with their single property, and on parties that things go on. So we have a lot of pushback from Hoa days and from neighbors. So it's important that when you do this to reach out to your neighbors, make sure that when you're purchasing that your Hoa isn't restricting short term rentals and checking with them, make sure they're not considering it. We've had a homeowner who purchased a property for the idea that he would come down, stay a few weeks time he would leave he rented out for the rest of the year. And a few weeks after he purchased Sure enough, an HOA had a meeting and decided no more short term rentals nose will blow for him, you know he because he had bought it for that purpose. So making sure that the communities you're in our vacation real friendly will matter. Because the trends that we're seeing, there are restrictions on on vacation rentals in many places. So just be compliant.

is interesting. You mentioned compliance. But the other piece that I really liked is you said reach out and get to know your neighbors. in my neighborhood we have several Airbnb SR, bb oros, or Cassie, whatever the man I shouldn't even call it that. It's just the short term rentals. How about that? We have several and not once Has anyone reached out and said, you know, because it you really could you could kind of knock on doors, maybe around that vicinity, you could say, Hey, I own this. Here's what my standards are going to be when I'm, you know, booking people to come and stay here. If there's any concerns that you have, here's how you can get in contact with my property management company, just something to help people because I see people complaining on some of the neighborhood apps about you know, here we go again, and why are there so many rentals in our country short term rentals. So I think that's a great, a great way to get the neighborhood on your side.

You know, being the responsible one makes you the hero. So they have noise instead of calling the cops and creating a big hassle for you. Just calling you directly. So you're calling your manager, you know, somebody like me, who's managing a property calling us directly. And that's coming out and taking care of it. Suddenly we become heroes to them, we become responsible to them. It's great for your own reputation, and it's great for the industry.

Yeah, such a good point. And you definitely you need that you need to have a good relationship and be able to use that property in the way that you plan to. Are there any other resources that you'd recommend for someone looking to get started and buy their first vacation property?

There's a few books out there actually, I wrote a book on buying your first vacation property, any of your listeners are listening or would like to copy of it, I'd be happy to send them one for free. Or if they don't want one for free. They can always buy it on Amazon. com. Email me, I'd be happy to send them a free copy.

Oh, that's fantastic. Okay, so where should they email you?

Go ahead and email me at Steve at Casago.com and just put the title free book is send us your information and and mailing address, we'd be happy to send you a physical copy of the book.

Oh, that is fantastic. Okay, so you shared how they can get in touch with you because they can send that email at any other places that are listener could get in touch with you, obviously, your website casago.com and?

Email's the best way to get old man, probably not a good idea to put my personal phone number out. But I'd be happy to reach out to anybody through email anytime.

Fantastic. Well, thank you so much for coming on the show. And we'll catch you next time.

Appreciate the time. Have a good day.

Hey, everyone, thank you for tuning into this week's episode, I wanted to share with you that Steve did send me a copy of his book. It's called the ultimate vacation rental guide. And it's really clear from the book that both Steve and the folks that his company cast ago that they know this space really well. And also that they're helping vacation homeowners at scale. And example of this would be on page six, there's a graphic that shares all of the marketing they do for a property. And they're not just posting to Airbnb or VR Bo, they're posting to very large number of sites that I didn't even really think about or realize could be leveraged for marketing your property, including booking, com expedia.com, etc. And then I don't know if you caught on the episode, but Steve talked about how they have a proprietary software that handles all the backend scheduling. So you don't get duplication of stays when someone booked on Expedia. And then someone else booked on brb. Oh, the other piece is that cast ago being so large in the vacation rental space, their own website gets seven and a half million hits per month. So there's a lot of money getting that comes out of that for your property as well. I think ultimately, what I like about the castle grow approach is they're really bringing a turnkey solution for you. So you can just continue to work full time, do all the things that that are occupying the majority of your time, then go enjoy your vacation rental property. And then the rest of the time, get income from that property without you really having to be very involved at all. And when I say turnkey, what I mean is marketing, they handle all the professional photo shoots, they handle setting rates, which do fluctuate greatly in the short term rental space. I know this as a hotel owner, and then also people that I've spoken with that have properties in this space. It's something that you're constantly have to be on track of. And the good news for you is if you use a company like Casco you don't have to worry about that. They also handle operations renderer communication, and then maintenance of courses, you're not having to deal with a call at two o'clock in the morning for something that went wrong at your property. The other piece that I really enjoy is they go into the detail around wear and tear and what you can expect for the property. And on page 22. There are descriptions for linens and specifically, you know, sheets, towels washcloth, how many stays before those need to be replaced, which is cool because then you can budget and kind of know what some costs would be there. And then finally, there's an appendix which talks about the minimum recommended furnishings and accessories. And this is good to for you as you're building out your analysis of buying this property, how much you could make, but also what you need to spend to fully furnish it, etc. So if you are interested in the book, go ahead and send an email to Steve at Castle ego calm and then in the subject line right free book and then give it a couple of weeks for that to arrive. Best wishes if you look to move forward with vacation property ownership.

The information, statements, comments, views, and opinions (collectively, “Information”) provided in this podcast are not intended to be and should not be construed as financial, economic, legal, accounting, tax or other advice.  For our full disclosure, click here.

Steve Schwab, Casagao CEO and Founder.JPG

ABOUT STEVE SCHWAB

Steve Schwab is the Founder and CEO of Casago, a property management and vacation rental company headquartered in Scottsdale, Arizona. Casago manages more than 2,300 units located in more than a dozen communities across the Southwestern USA and Mexico, and has served more than 3.2 million guests to date. Steve is a 20-year industry veteran and self-described "Property Management Nerd" whose dedication to his customers led him to create a simple software solution to help property owners manage bookings, maintenance, payments, and more.

As a graduate of New Mexico State University and former member of the U.S. Army Special Operations community, Steve has a unique understanding of what it takes to establish delivery systems that are goal focused. For the vacation rental property management industry, this means putting the right people and processes in place to ensure that all of a property owner’s needs are met in a timely, transparent, and exceptional manner. 

Steve is also dedicated to the communities that he works with, having founded the Mexico Children's Foundation sixteen years ago to help children in Mexico get the medical procedures, education, and support that they need to build healthy and prosperous futures. To date, the organization has directly benefited hundreds of local children, while indirectly helping thousands more through supporting other local organizations, foundations, and orphanages. 

 
 
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