On today’s episode of Mariette’s On The Move we have a very special guest! @thekevinbay comes on today and we talk about ‘Rental Arbitrage.’ It came from a conversation we were having about ‘robustness’, which is part of my FRED Framework (physical strength) when it comes to moving, and he mentioned something about how he’s doing rental arbitrage. I was like, ‘time out- what is that??’ I had never heard of it, have you??
It’s when you do a long term rental agreement with a landlord to rent out that place short term. It’s a great alternative to buying a place and rent it out on a short term basis, but there are some pros and cons.
Rental arbitrage is a business strategy where an individual (the arbitrageur) rents a property from a landlord and then sublets it, usually as a short-term rental, at a higher price. The arbitrageur aims to profit from the difference between the rent they pay to the landlord and the income generated from subletting.
Pros of Rental Arbitrage
- Potential for Higher Income: Arbitrageurs can often charge more for short-term rentals than the monthly rent they pay, especially in high-demand areas or tourist destinations.
- No Need to Own Property: This strategy allows individuals to enter the rental market without the significant capital required to purchase property.
- Flexibility: Rental arbitrage can be more flexible than traditional renting, as the arbitrageur can adjust prices and rental terms based on demand and season.
- Market Testing: It provides an opportunity to test the rental market and gain experience in property management without owning real estate.
Cons of Rental Arbitrage
- Legal and Regulatory Risks: Many cities have regulations regarding short-term rentals, which can change frequently and impact the viability of rental arbitrage.
- Dependency on Lease Terms: The arbitrageur’s business depends entirely on the terms of their lease. If the landlord decides not to renew or changes terms, it can disrupt or end the business.
- Market Volatility: Income from short-term rentals can be inconsistent, fluctuating with tourist seasons, local events, and broader economic conditions.
- Operational Challenges: Managing short-term rentals
Kevin’s a former college and professional athlete who owns a fitness business called Hybrid Performance Center in Peoria, AZ where he trains all levels of baseball players from young high school kids to players that play for major league baseball team. Catering to the baseball industry, Kevin plans to teach others how to successfully do rental arbitrage in the future. For all questions, DM him on Instagram!
Want to check out some of my favorite things from the show? Here are the links that you can find on the favorites page on Mariettesonthemove.com: Silk & Sonder planners, Jesse Carroll Voiceover Coaching (use code MOTM for 20% off!), Savvi clothing & lifestyle products, Monat skincare, makeup and haircare products, apply for The Free Website Guys help you with building a website, Riverside.fm and their amazing recording and editing products.
Mariette Frey (00:06.909)
Welcome to the show. Super excited for my guest today because we are talking about something that I had never heard about until we recorded a few weeks back and I was like, wait a second, timeout. What is this? Today we are talking about rental arbitrage and I have my friend Kevin Bay Anderson on the show with us today. So I know Kevin from high school. So we go, not that far back. I’ll just, you know, we’ll say a little way back.
Kevin Bay (00:31.63)
It’s way back.
Mariette Frey (00:34.725)
Kevin and I have known each other a long time. I was a cheerleader with his sister, Nikki. We just stayed friends through the years. Kevin has a lot of things behind his name. He is a fitness professional. He runs a gym called Hybrid Performance where they train professional baseball players all the way down to junior high kids. There is some elements that we’re going to talk about, but when we recorded last time, he brought up rental arbitrage and I had never heard of it,
I’m not going to do your bio as much justice as you would, so give a little introduction, Kevin, and welcome to the show. Good. I know, you’re welcome.
Kevin Bay (01:11.286)
Hey, how are you? So glad you had me on, thank you. So yeah, I go by Kevin Bay. It’s a little bit easier. You don’t have to go into why, but it’s just a lot easier to go by Kevin Bay.
I have, like she said, a gym in Peoria, Arizona. We do professional baseball players all the way down to Junior Heights, a baseball-focused facility. We recently opened a new location inside of a beautiful, beautiful baseball facility in Orange County, Costa Mesa, California. It’s called the Clubhouse, but Hybrid is inside of there doing the same thing that we do out in Peoria.
But I got into the rental arbitrage business as a pivot, more or less. I had a real estate company with my ex-wife, and after we had separated, I needed to find another way to get into real estate without having to worry about a giant down payment.
20 percent, you know, the rates are high. So it’s just it was tough. And I fell upon from research rental arbitrage. And what that is basically is you find an owner that owns a unit that is renting it out long term, say a year or two years or whatever.
and you go and talk to them, explain the value of what you do. This is the very abbreviated version of it, but you basically tell them how you can help them have secured leases for them, and you then in turn short-term rent it on the other side. So you can usually make between three and 10 times the rent or the mortgage from…
Kevin Bay (02:56.854)
doing short term as opposed to long term. And then you can scale that because you can get into a place for as cheap as, you know, 500 bucks or $,2000 bucks. And just it’s, for me it was kind of a no brainer. It’s difficult. It’s not like lightning in a bottle or something. It’s not a gold rush. But if you put in some work and find good places and do your homework, it can be really, really good.
Mariette Frey (03:24.909)
Well, let’s like start from the beginning. So rental arbitrage, it’s basically long-term, right? So you are signing a lease, right, for a year or two years or whatever they’re requiring. You take on that risk of potentially not, like you’re paying that rent regardless of whether you rent it out. But how do you, like what do you say to a landlord that you want to do this? Because there are all kinds of things like you, you know, that you have to be able to do short-term leases in that area, right? Sometimes there’s permits involved.
Kevin Bay (03:27.489)
Sure.
Kevin Bay (03:36.375)
Mm-hmm.
Kevin Bay (03:41.518)
Mm-hmm. Crap.
Mariette Frey (03:54.903)
things like that. So talk me through that because I know on the last, when we first started recording, we were talking about this, you were telling me that in the area that you’re in California, there are some restrictions there. So let’s talk through like what that looks like from the very beginning if somebody wanted to get in because it is really expensive to buy a house, right? You’ve got closing costs. You typically you want to put five to 20% down, like all of these things and it’s not feasible for everybody, especially if they just want to rent it out, right?
Kevin Bay (03:55.139)
Right.
Kevin Bay (04:23.822)
Correct, correct. So for me, buying is almost out of the question now because I personally, my rule is I don’t like paying PMI. I will not pay PMI. Basically, it’s like burning money. So if you can’t put 20% down, I’m not buying it. So what I did with this is, so my first place I found was, it was almost luck. I found a really good rented cost place in Newport Beach. And
turns out that the owner had four units, all the same price. And I was like, well, I was like, so you have to be research driven to do this because if you pick a bad place, you’re going to be stuck with a money pit because it won’t get rented and you’re just going to be paying the rent every month and nobody’s going to be in there. So I take.
weeks to figure out if the places that I found is going to be the one. I don’t rush it. I don’t be, oh there’s a great one. The wrench cheap, I got to grab it. And then all of a sudden I’m kind of screwed. So I’ll cut the story a little bit shorter. So we agree over time to take all four units, okay? I go through the pictures, I do all the stuff, I go to put it on AirBnB. I also agreed and did a deal with them to
Mariette Frey (05:23.619)
Right.
Kevin Bay (05:46.358)
buy at least one of them as like a for sale rent to own, which is a sub two, it’s something that we kind of talked about earlier, but it’s too long we’re going to, but I potentially was going to buy one of the four at least. Okay, and so I go through the process of AirBnB and all this stuff. I got a city, a state permit to do rentals and a county.
Licensed to do rentals, which is what I thought I only needed well Long story short I get to the end of listing it and AirBnB asks me for my permit number And I didn’t know what that was and it says in the link, you know, you must have a permit number for this zip code Here’s the link go on their city website and grab it. So I went on there go through the stuff I feel everything out turns out Newport Beach only allows 1,550 rentals short-term rentals, which is 30
under 30 days. They only let 1,550 at any given time. So you have to correct in the whole city. And if you look on the map, every single I mean, it’s littered with, with rental, you know, short term rentals, it’s just everywhere here. Obviously, it’s honest, from what the research I did, which is why I loved it is the number one place to live in the country period. End of story, like
Mariette Frey (07:09.86)
It’s beautiful.
Kevin Bay (07:10.398)
As far as economic growth, there’s no land does not go down, equities built. Every, even during recessions, everyone wants to live here. It’s the weather’s bananas. It’s great here. Um, it’s clean. I haven’t seen one homeless person here in three months. It’s just crazy how nice it is. Anyway, so.
Mariette Frey (07:30.625)
Yeah. Oh shoot.
Kevin Bay (07:32.622)
1550 I go set up for the waitlist. I said, okay sure boom. I’m number 500 on the waitlist So I call the city and I was trying to figure out what’s going on. They tell me it’s a between a five and ten year Wait for the permit to come through and I’m now on the hook for four units So this is kind of trial by fire like I’m giving people Ways to do things without getting it like themselves in trouble kind of like what I did
Fortunately, the owner was an awesome lady. I helped her son with baseball. He was in high school and blah, blah. So we became, you know, friendly, at least, at the very least, friends to friendly, you know? So I call her up and I tell her about this. She had no idea about the permits either, which was great. She’s like, okay, yeah. And so it goes by address. So I can’t say you have, say you had a permit. You can’t sell me the permit.
Mariette Frey (08:19.52)
Wow, and she’s a landlord.
Kevin Bay (08:29.81)
It’s attached to the address no matter what. So you’d have to sell me the house with the permit. So that makes them even more valuable. So if you find somewhere that’s for sale that has a short-term rental permit, they never add that value to the cost of the house, which is crazy, because I found four, and the time being I found four on the beach. That’s a whole nother story, but let’s, it’s.
huge. It’s priceless to me. It’s priceless because short term rentals in Newport is like printing money. It’s just they do 10x of what the rent is daily, you know.
Mariette Frey (09:04.889)
Well, and it’s a pro for the landlord because it fills the vacancy. If she had four units and they were vacant, like she’s losing money as well because she still has to pay that mortgage.
Kevin Bay (09:12.93)
Correct, well, not them, but normally, yes. They owned everything free and clear here. It was a great situation for them. So she goes, okay, you know what? We’re going to squash the other three. I go, I’ll take one. I’ll do a midterm rental, which is 30 days or longer, and I’ll see how that goes. And if I get that one rented, I’ll take another one, and we’ll rinse and repeat for the midterms.
So that’s how I have the place in Newport now. It’s a 30 day midterm rental. I do have it rented out for two years, but the amount of money is a fraction of the cost for a midterm that I’ll make as opposed to if I could short term rent it. So my number one rule for anybody that’s doing this is make sure you do the due diligence all the way down to the city level to see what you can do with short term rentals for sure.
Mariette Frey (10:06.393)
Do you just like Google short-term rental and then that zip code or like, how do you find that information?
Kevin Bay (10:09.838)
No, well, you could do it that way. I would just go almost every city now has a link on their on their website, the city website about how they do rental, their rental policies, almost every single one, like Huntington Beach has one. And each thing is the whole city is graded like with a letter and a can do certain kind of rentals be can do certain kind of rentals.
Mariette Frey (10:24.101)
So you have to.
Mariette Frey (10:35.845)
Do you have to hire like a real estate attorney for this? Or how, like how do you, no? Okay. So you gotta like see if it’s allowed in that city and state. You have to look at the state level too, right? Okay.
Kevin Bay (10:41.186)
No, no, no. Just gotta do it yourself.
Kevin Bay (10:46.19)
Crap.
Um, most all state, they, states don’t really, there’s no state that says you can’t do short-term rental. There’s no, there’s no such thing as that. Chicago, you can’t do them anymore. They banned it unless you already had one, you grandfathered in, but you cannot no longer do short-term rentals in the city of Chicago as a new.
Mariette Frey (10:55.677)
Okay. So is, oh really?
Mariette Frey (11:08.953)
Do they consider that like a hospitality license? Like I read somewhere that that’s, like some areas require a hospitality license, almost like you’re a hotel, if you’re hosting an AirBnB or. Yeah.
Kevin Bay (11:18.158)
You yeah, you could do a boutique hotel The problem with that is that’s multiple units so they can’t be that way There’s no way that it would be a hotel or hospitality because it’s one unit You’d have to have like multiple like for air bed and breakfast I guess you could call it with four units would be boutique hotel, but at one it’s not either it’s none of those things so it’s just a
It’s an STR search on mental.
Mariette Frey (11:49.529)
So you basically go to a landlord and do you have like a, do you write them a letter? Do you call them? Like, how do you start that process?
Kevin Bay (11:56.802)
So there’s a couple ways and there’s, for me, if I can do something to save time, I would do it. So I found a really good company that will go out and find landlords that will do it for you. And they do all the due diligence and they find out about the permits. They do all that stuff. So I get rid of all that time that I have to do. You sign something.
They get paid. If I don’t sign it, if I don’t decide on the place, they don’t get anything. So it’s almost a risk-free service and I can put the cost of what I pay them into what the rent is. So…
Mariette Frey (12:30.217)
Oh, wow. Yeah. Can you say who it is or is it something like, do you have an affiliate link that we can put in show notes?
Kevin Bay (12:42.982)
No, actually they have a they have a free What is capital consulting? I can send you the link of what they do people can sign up for their newsletter for free They have a free newsletter then they have a paid service, which is what I do where you give them your Requirements of what you want and
Minimums and maximums. So they do rental occupancy Average daily rate that does all the stuff that you have to really get good with to be able to find a good spot Because like I said, you could just get a landlord that’s ready to go They just give it to you and then you’re then you’re stuck with it, you know so for me, I have like certain things that I have to have like
It has to show at least 70% occupancy rate. I need to make at least $,2000 margin between the rent and what my charges. I asked for three years lease so I can get three months free, so a month per year. And that way I can build up some capital for three months before I have to pay any money. And then it’s smooth sailing after that.
I also do furnished so I don’t have the I don’t have and that makes it tough So there’s a lot less places that you have to choose from but it saves me the headache of having to furnish a place When I don’t live there Like because I’ll do all over the country. I just won’t do where I live It’s the only way to do it would be impossible to make a business out of it if you only do where you live because
pool is smaller, the amount of landlords to agree to it. They, again, they always think it’s a scam as well because they hear AirBnB and then they’re like, no, I am doing it. It’s going to ruin my house, blah blah. Yeah.
Mariette Frey (14:33.969)
Right. Well, because the cons for them is like the wear and tear. Like they hear the horror stories about people having parties. Like one of my girlfriends, she lives in Fort Lauderdale and she, they’ve got a killer place. It wasn’t really updated at the time. Like now her and her husband live in it and they like remodeled it and it’s gorgeous right on the waterway. It’s amazing. But she had a, she had been AirBnB-ing it like prior, cause they were living up in Jersey and it was crazy because she got a call from one of her neighbors.
All of the neighbors own it, they live there full time, so they didn’t love the idea of the AirBnB or VR BR or whatever she was using at the time, but she got a call from one of her neighbors one time saying like, they’re jumping from the roof into the pool, you need to get these people out of here. And like that’s all, you know, you hear horror stories like that and the landlord’s like, heck no, like I want to vet everybody that stays on my property and I want to like, you know, make sure that I’m, you know, being able to charge them for late fees if they’re, you know, if they’re late on their rent and all that stuff. But you can’t, you know,
There’s also a lot of pros. Yeah.
Kevin Bay (15:34.434)
Well, AirBnB, they pay it all up front, so there would be no late fees. Also though, for me, and I might be on the minority, I don’t care what the neighbors say, to be honest with you. It’s none of their business, they don’t own the property. People think they own neighborhoods because they happen to live somewhere. It drives me crazy. So, I…
Mariette Frey (15:54.745)
Right. I mean, most people are very respectful. Like I’m, I AirBnB a lot. I’m always respectful. Everything. Yeah.
Kevin Bay (15:58.126)
Correct, yeah. There is horror stories for everything, I get it. I mitigate that, so I have a list of things. So I think the way I go towards, because I’ve got my own deals, I don’t only use a finder, but I do it a little bit differently. Because I use the gym and my baseball network as a selling ploy because a lot of the rentals I can get are from players, coaches, people that work for the teams.
And now I’ve tried to branch out into college recruiting. So when colleges are bringing in recruits to show them around, instead of them having to stay in the dorms or a hotel, they can go through me and stay in a house. Or if a kid’s playing for a team and their parents or family are coming in to watch them play or pro players, they can go through the school or the team who goes through me and then I put them in a house and it’s a lot more comfortable to stay than.
than going to a hotel. So in my list, oh yeah, yeah.
Mariette Frey (16:58.925)
Well, and some of the players are coming from different countries too, so it’s harder for them because they don’t know what good neighborhoods are and what, you know, so it’s probably a little bit of a relief for them to say, like, oh, I know this property, I know the guy, this is going to be safe for you guys.
Kevin Bay (17:12.498)
And I only really look in 24 hour, or 265 day tour, like tourism or business. So college towns, professional sports cities, obviously beach skiing, all that stuff is really high market rental areas for short term. So like Lake Tahoe is always busy in the summer, but it’s always busy in the winter. Nashville.
you know, the surrounding area all the way out to like Pigeon Fork, which is almost an hour away. It’s 24 /7 – 365 rental times because Nashville is the capital of bachelor and bachelorette parties for some reason, you know what I mean? And then you got like Dallas is starting to blow up Arizona was really hot and it is still is, but it’s very, very saturated now. So I kind of not.
Mariette Frey (17:53.025)
Right. I’ve been to more than one here.
Kevin Bay (18:05.906)
really looking at that very much and Scottsdale has a ton, a ton of like permit laws that you have to have which is just a headache so I don’t even want to
do that. So I have a list that I sent to the landlord. I’m like, look, I put noise detectors in all of my units. It’s a really simple thing. I get it on my phone. When the decibel level goes above a certain height, I get a notification. If it goes off more than twice, they’re automatically kicked out and evicted and I keep all the money. It’s in their welcome contract. They know what it is. That’s huge.
I cover all costs of repairs under $750, so they don’t have to worry about if the wash machine goes out or something like that, I take care of it. They get their money auto-debited every whatever day of the year or the month that you decide. They get it every single month.
I sign long term so they’re very secure and having it rented. I have to send a cleaning lady once a month no matter what. But if it’s short term, it’s every single person that comes in so it’s always clean. And that way I always, I do it for selfish reasons. So I have a good cleaning list.
and they can give me reports back on how the place looks without me having to go in there and see it myself. So they can tell me, oh, it was trashed this week or whatever like that.
Mariette Frey (19:36.265)
Right. Yeah, because otherwise you’re relying on like reviews to tell you, right? I mean, I just… AirBnB…
Kevin Bay (19:42.454)
I also do that though. If you go through AirBnB, my requirement, on my thing, you can’t even book it unless you have at least two reviews. Usually if you can get above two, then you know that the person hasn’t tried to screw anybody over.
Mariette Frey (19:52.569)
Yeah, I…decent. Yeah. I actually have to look and see like what, because I get reviewed as a person staying there, right? I can’t remember. Yeah, because like the last one, I should…
Kevin Bay (20:04.115)
Yeah, you do.
Mariette Frey (20:10.693)
I have friends that own properties that have our Airbnbs and it was funny because I had just stayed in one with a couple of my girlfriends out in around the Asheville area. So it was super, you know, in the mountains in North Carolina.
Kevin Bay (20:24.078)
I’m looking in Nashville for Arbor Trash. Yeah, right now, yeah.
Mariette Frey (20:27.733)
Oh, really? It’s gorgeous, especially around this time, because it’s when we stayed there, it was like mid October. So it was just gorgeous. The leaves were changing all that stuff, but I swear we walked in. And while the house like looked clean, when we kind of peeled back the onion, it was kind of gross. And like, it was like a Dateline episode, like the darker it got out, like the crazier things we heard, we kept hearing things hit the roof. And like, you know, we went to go lay down in bed and they allowed dogs.
Carter who you can probably hear snoring because he keeps snoring very loud and he just woke up. But like literally like I pulled back the covers to get in bed and it was like there was dog hair everywhere. It was gross and like there were no other sheets for me to like change and put on the thing. There was a hot tub out on the deck which you know in theory was great but the deck itself was disgusting and we pulled back the hot tub. There was no you know thing to clean it with and there was like tons of leaves and all
stuff in there and it was like I could have wrote like a scathing review and I probably could have gotten back to AirBnB. Yeah, but I will say that the person that I was renting from was really helpful like going there they were very they sent me like a book on you know like an ebook on like things in the area to find they were like very quick to respond they were super nice and I so I sent them a note and I said I could put this in the review or I could give you some feedback I don’t just yeah.
Kevin Bay (21:31.134)
You should have.
Kevin Bay (21:53.686)
That’s the best. Honestly, that’s the best. And so a trick I use for that is I have a thing, like what you’re saying, but I have like a thing that they get and it says, please leave a five star. Cause getting a five star is the best thing they can do, period, because it changes you on the search. But if anything less than a five star, please tell me why here, boom, boom. And I will get it taken care of. Otherwise don’t leave a review.
Mariette Frey (22:09.654)
Right.
Mariette Frey (22:18.125)
Yeah.
Kevin Bay (22:23.314)
And usually, I mean, we had over 200 rentals. We had one four star and the lady was like, it’s because of where it’s located. And I’m like, woman, it’s in the thing where it is. What are you talking about? She’s like, it’s very far from Scottsdale. Yeah, no kidding, it’s in Goodyear. It’s 45 minutes from Scottsdale. You booked it. I can’t help you with that, yeah. So that was the only less than five we ever got.
Mariette Frey (22:36.313)
You booked it. Right. Yeah. You booked it. Google map that stuff.
Kevin Bay (22:52.726)
But being a super host is a game changer. And that’s just a lazy landlord, to be honest with you.
Mariette Frey (22:58.753)
Well, she didn’t live there. She lived in California and so she had a cleaning crew. And so I gave her, you know, she had no idea that was happening. And so she’s like, thank you so much. I mean, she didn’t give me any concessions or offer anything up, but she’s like, thank you so much. Like we, they had a cleaning crew that was, you know, that they had for years that was awesome and they retired and they had a new service and she didn’t know, cause nobody had mentioned it. Yeah. So,
Kevin Bay (23:07.767)
Ah.
Kevin Bay (23:22.279)
Uhhhhhh
How good they were. Correct, yeah. So I would have get, so we had something similar. I had a tenant that was in there for four months and I have like gray tile. And when we, when they moved out, someone was moving in that day. Apparently they never washed or cleaned the floors or anything like that. Grease stains, the tile was.
And the new people moving in were a little older and they got back to me and they sent me pictures and I was livid And the and the cleaning person we have is phenomenal They told me that the floors are bad and there’s nothing they could do about it, which I got There’s like a four-hour window to get the place clean. I couldn’t have a tile and grout guy get out there in that time so I did have them come out and I Discounted the first month of their year for free
Mariette Frey (23:59.754)
Yeah.
Mariette Frey (24:20.289)
Yeah. It’s what you fit to. Yeah.
Kevin Bay (24:21.65)
I gave them money back and they were super happy. They were fine with someone coming and cleaning and that kind of stuff. So you have to go above and beyond because there’s so many Airbnbs now. The only way to differentiate yourself is to have a eclectic or unique experience when you get there and always be clean, clean. Clean is number one. I could never do the cleaning because what I think is clean is not what…
should be our beat or yeah so yeah it’s i’m like this looks fine and oh really it’s what about this and i’m like well i didn’t care about that but
Mariette Frey (24:51.306)
What I would think is clean. I’m slightly OCD. Yeah.
Mariette Frey (25:00.073)
I know before we recorded, we were talking about the TikTok shop and I actually literally just because I built my house two years ago and I’ve never cleaned my grout. I have cleaning people that come every other week, but literally last week on TikTok, I bought this or two weeks ago, I bought this like thing that like rotates. It’s like a cleaner. It’s it’s literally like this big and it’s sitting in a box next to like the bathroom where it’s going to be
Mariette Frey (25:29.767)
the white and gray tile has a slight discoloring on the ground just because I’m such a clean freak that I’m like every single time I sit down on the toilet I look at it and I’m like GROSS! But it’s…
Kevin Bay (25:39.606)
So, there’s, so you could find a tile and growl person that’s not super expensive, that can put something on your tile that it won’t get dirty anymore. Okay, yeah, seal it, yeah. Yeah, yeah, they never do. Ha ha.
Mariette Frey (25:51.041)
I need to seal it, but the builder didn’t seal it. I did that in my Orland house, but yeah, it’s just something that just, I notice it because, because I’ve remodeled houses and I know what it should look like, and I know what it looked like when I moved in here, because it was the first person that ever lived here. If somebody has never owned a place or never redone tile or something, they’re not going to know that it’s that, I don’t know. Just one of those things. But anyway, like let’s, so what,
Kevin Bay (26:16.124)
Yeah.
Yeah.
Mariette Frey (26:20.735)
Well, so let’s talk about the industries. First of all, like you’ve got a whole network and pool of people that can come in, but it’s just not baseball players that could do that. Like you’ve got travel nurses, like people who are displaced from, you know, people like I have, I know two people that had fires in their homes and they’re renting places while their homes get rebuilt. Like there’s a ton of industries. Mm-hmm.
Kevin Bay (26:22.926)
Sure.
Kevin Bay (26:28.811)
No, no, no.
Kevin Bay (26:38.442)
Yeah. Remote working, remote workers that just want to… The last person in my Newport place, he’s a guy that just goes wherever he wants to and works from there and goes to a different place and a different place. It’s for like three months at a time. So there’s lots of different people that will rent. And those are the safer…
You’re not, weekend renters, even though you make pretty good money, I don’t want them, to be honest with you. Because the turnover, the risk, all that stuff, I just don’t, as a business owner, I’d like to mitigate risk, so that’s the best way to do it is to try to get more longer term, one week, two weeks, 30 days, six months. You don’t make as much money, but it’s still nice. And there’s not gaps in your month, which is what you don’t want. You don’t want…
Mariette Frey (27:08.001)
Right, right.
Kevin Bay (27:32.406)
You don’t want like five because if someone worked rents for four days, but someone wants a week There’s you know three and then someone’s got the end weekend Then you got three days in the middle that are never going to be rented just because no one’s renting from Tuesday to Thursday Yeah
Mariette Frey (27:47.573)
Yeah. And I, I mean, I tell people in my coaching before they like commit to moving to a new city, go and do a city POC, which is a proof of concept, or, you know, do a bake off of two different neighborhoods. Like if you know that you want to move to say Newport beach and you know, you’ve got certain things that you need to have in your neighborhood to thrive, see like stay in two different parts of the neighborhood for a week or so, if not longer is what I always say. And like really feel it out because everything’s going to feel
Kevin Bay (28:12.27)
Correct. Yeah.
Mariette Frey (28:17.467)
magical if you’re there for a weekend, but like when you’re there for a week or two or three, then you can really get a feel of like the day to day if you would want to live in that area. And sometimes like I have a friend speaking of Asheville, he swears that I saved him and his wife $90,000 because they, you know, she had found a place on Zillow or realtor.com or whatever that she was like, they were dead set that, you know, she wanted to buy that place. And I told him about this concept.
even think he was listening. He just kind of, you know, I said, just maybe do a bake-off, like stay on another side of the area, you know, kind of go around that place and see if you like it. And they did that. They actually went and stayed for the summer and they stayed in a couple different places and turns out they didn’t want to be anywhere near that area because they didn’t like it at all. They ended up buying a place that’s like their dream house. They’ve got a couple acres of land and they’ve got, you know, like the house is huge. Whereas
wasn’t a good fit for them as a couple, but they didn’t know that because they live in Florida. You know, so I mean, this rental arbitrage is an awesome opportunity for them to go and like spend several weeks and, you know, try before you buy and like move all your stuff out because moving is expensive, you know, like just even the physical, you know, getting a truck, even if you DIY it, you’re spending a couple thousand dollars on, you know, all that stuff easily. Yeah.
Kevin Bay (29:21.516)
Right.
Kevin Bay (29:32.182)
Yes.
Kevin Bay (29:38.522)
Easily easily And me more because I don’t like to pack and I don’t like to move So I would pay somebody to pack and I would pay somebody to move
Mariette Frey (29:46.633)
Yeah. Yup. It’s a, it is a taxing physically, mentally, it is a taxing event and it can be very traumatic. It’s very stressful. Yeah, there’s a lot of joy at the end once you get settled in, but just, you know, getting up to that point is a pain in the butt and people forget.
Kevin Bay (29:56.686)
Stressful, yes. Anxiety-riven.
Kevin Bay (30:06.986)
And then you get in and you’re looking at all the boxes and the task at hand of packing, unpacking, getting everything set up. It’s like you’re looking at it. Like I still got like four more days minimum to get all this. Of course.
Mariette Frey (30:20.829)
I still have boxes that I have not unpacked and I’ve been here for two years. I probably won’t. I could just throw them out. I don’t even know what’s in them. It would be fine. So what are some of the outside of AirBnB and VRBO? How can somebody find something like this? Do you have a site? How do you find it? Okay.
Kevin Bay (30:24.766)
Yeah, of course, of course, of course.
Kevin Bay (30:37.578)
Okay So I have my own personal site But obviously those two sites are the Xerox of The rental world, you know, everyone says Xerox when it’s really copying
or Kleenex when it’s really tissue. And so when people think of short-term rental, they just say AirBnB, you know, or VRBO. So there’s other ones called, there’s a new one called Stay. It’s a good app. There’s Furnish Finder for midterm rentals, which is what I use. And that is almost Furnished Finder. And that is where almost every traveling nurse goes to.
Mariette Frey (30:56.193)
Right, right, right. Right.
Mariette Frey (31:12.645)
Oh, furnished binder? furnished binder, okay.
Kevin Bay (31:24.942)
And then there’s obviously Hundreds of Facebook groups that you can go on that if you have a place so I’m on like six Orange County or not Orange County six national Like traveling nurse groups you have to get accepted that you have to show them what you’re doing and what you’re offering That’s worked. Well, the only issue with those is people always lowball. It’s like
Mariette Frey (31:30.51)
I wouldn’t think about that.
Kevin Bay (31:52.118)
They don’t realize that this is Newport Beach and then, you know, it’s say it’s 6,000 a month for fully furnished, uh, everything brand new, everything’s included. You don’t have to do anything except come in and come out and rent here is high. You know, it’s high. So you’re not renting in, you know, Toluca, Kansas or something like that. You’re renting. I’m, you can walk to the beach, walk to the beach in 10 minutes.
You could take a scooter in three minutes. You could drive in one minute. So there’s something to be said for that. And they don’t get it because they’re looking at a site. So it’s hard sell sometimes because of how, what I have to get for it. And I can’t low ball it because then it affects everybody else that are renting around here. I can’t do that. So that is what makes it hard, but you’re also.
Like I could throw a baseball and hit the hospital. The number one hospital in the country is across the street from my house. It’s called Hogue, Hogue Hospital. They’ve won millions of awards, and apparently it’s the best maternity hospital in the country, so.
You know, I was thinking because of that, it would be gangbusters, but the cost is what drives people away a little bit, which is understandable. You were talking about other industries in the arbitrage space. I mean, there’s cleaning. You always have to have good cleaners. As an owner, I have three people, three companies on site, our call. And they, the first one knows the schedule. If they…
can’t do it, then it goes to the next one, it goes to, there’s platforms that do it. There’s different platforms that help you manage. I would never pay a property management company. You don’t have to do that anymore. They charge 15 to 10%. I think it’s a waste of money. Even if, you should be able to navigate it, even if you have like 10, 20 properties, you should. Because of the way the platforms are set up now.
Kevin Bay (33:55.55)
everything can be automated, you can do AI for a lot of stuff. So if you wanted to do it in the beginning, just to get the swing of things and see how it’s run, that’s good. But I think there’s no better way to learn than to do it yourself. You know, you have to do that kind of work. And so one thing that I was not good at and what my ex-wife was doing was the communications.
back and forth and set up like the automations of when you check in on day one, you get this on day two, you get that and it’s all set. And I’m a little bit more to the point when it comes to emails and stuff to say nicely. And she is more customer friendly she was. So I had to learn that kind of stuff now, which is fine. And that’s what you need to do.
Mariette Frey (34:35.794)
You’re a Southsider from Chicago.
Kevin Bay (34:49.782)
The more you can delegate, the better you’re going to be in your business because then you’re not wearing yourself thin, you can focus on the things that you’re good at and get people to do the things that you’re not the best at.
Mariette Frey (35:00.609)
Yeah. Is it stressful trying to get people to fill these places?
Kevin Bay (35:05.438)
It can be when it’s something like this. The way I use it now to make myself feel better is that especially this place, if it’s not rented, I’m living in it. So I’m justifying what I’m paying because I’m going to live in it. And then if someone rents it, then I’ll… Yes, correct, yeah. Yes, I do, yes. I’m looking in Boulder. So what I want to do, so there’s a lot of companies out there, or…
Mariette Frey (35:20.501)
Yeah, but you’re lucky you have another place in Arizona that you can go back to, yeah. So you travel back and forth.
Kevin Bay (35:35.798)
businesses that are trying to get arbitrage people in a group, okay, and then they teach them arbitrage. I want to do that with my experience, but I also, knowing what those groups do, I want to do what they’re meant to do. My thing is, and we talked about this, if the person running a group is making the majority of their money from the group and not what they’re teaching.
then they’re almost full of shit. They’re doing it, but they’re not.
Mariette Frey (36:08.816)
Yeah, smoke and mirrors. Yeah. Like you’re in the day to day doing it. Yeah.
Kevin Bay (36:14.206)
Yes, yes, I’m trying to show you what I do. I’m not trying to give you a script and have as many people join the group as possible. So I’ll put it, I’ll give you an example. I joined a group, okay? It wasn’t super expensive. And I wasn’t even going to join, all these groups do like a free seminar for an hour that shows you what they do. I never joined those. I always do it as like…
as like a shopping type of deal, like to see what they’re offering, see how they go about doing things. But in this presentation, I learned that they give a year free of AirDNA. AirDNA per month for one zip code is a hundred bucks or a hundred something a month, just a month. World, they have a world one where you can search anywhere in the globe to, that is like 600 a month, okay?
This group was, I think, $14 or $1500 for the year. But you got World Global AirDNA. So I’m doing the math and I’m like, well, I could pay 1600 for this group and I get AirDNA for a year, which would cost me $8,000. So I’m joining the group. So AirDNA is your bloodline of arbitrage.
Mariette Frey (37:34.273)
Wait, what’s AirBnB? Yeah.
Kevin Bay (37:39.402)
You can go in there and put in a zip code or an address. It’ll pull down all these analytics where you see occupancy rate, so how much it’s rented monthly as a percentage. Like I said, I mentioned it earlier for me, anything over 70%. It, sorry, it’s my daughter. Anything over 70% is what I have to do for it to be rented.
And then it tells you the average daily rate for the zip code based on all the analytics of AirBnB rentals in the area. And then it’ll tell you a yearly revenue, like what you can make yearly. And then it’ll give you a market score, ABC, or no, zero to a hundred. And for me, it has to be over 70%. So.
I can use this website that would cost me eight grand for the year. And I got into it from this group for $12 or $500 bucks. So I don’t even use the group, but I started in the group. And this is where you can differentiate what a group, how a group is. And they do a monthly call. And the guy talks about, I’m friends with Alex Hermosy and Grant Cardone. I’m like, bro, no, you’re not. He’s like, I paid Alex Hermosy a hundred grand to take a.
Mariette Frey (38:55.041)
Yeah.
Kevin Bay (39:00.238)
I don’t know, Grant Cardone, 100 grand, to just go on a plane trip with him. And now we’re friends and I’m like, my thing with, yeah, my antennas go up, my bullshit meter goes up and it’s like, usually when people have money or are very good at sports or something like that, they don’t talk about it. If they’re talking about it all the time, they don’t do it, you know what I mean? So if you’re talking about your friends, our Alex Hormozzi, the two biggest guys in like business building in that realm.
Mariette Frey (39:06.905)
So he’s bragging. Yeah.
Kevin Bay (39:30.546)
Chances are you’re not really, you know, so you get into this group Connect she’s calling me back again. There’s something going on
Kevin Bay (39:42.424)
Hey.
Kevin Bay (39:47.934)
I’m so well can you go back in there
Kevin Bay (39:57.462)
business app and make me an authorized user before I can even do anything. At Verizon? Yes. Okay I’ll do that. I’m on a podcast right now. Oh, okay. Can you go back there later? Um, not today. Ah, shit. Okay. I just don’t want them to turn your line off on T-Mobile, that’s all. Well, they texted me. Yeah, they should, you should get a day or two, I hope.
It takes me your enrolled in some of our paperless billing. You can view the terms. Okay, okay, okay. Don’t worry about it. I’ll take care of it. I’ll call them when I get off of this. Sorry about that. Okay. Love you. Love you, bye. Sorry. She never calls me and then she called me twice and they’re also at the side. That’s something was up. Um, where were we? Oh yeah. So, so I’m in this group and it’s a script.
Number one, there’s like 300 people in this group, okay? And he’s tells, he gives them top 20 cities to look for rentals, which you can find online. Then he gives them a script. And the script is very generic. Like I would never, it looks like a used car sales script and I don’t like it. You have to customize it at least a little bit and be more personable.
And then he’s like, you have to send out 200 of these a day. It’ll take you 10 minutes, which is right. That’s true. But my point is, if you’re giving a list of 10 cities, there’s 300 people in your group. If all of those people are going into the three cities, 10 cities, I’m emailing 200 of people a day, all 300 are emailing the same people. So they’re going to get the same script multiple times a day and then you’re done. You’re completely done.
They’re not going to respond to you, okay? So my goal when I started a group, and I want to do like a beta group, like test group, and have a bunch of people in it, it’ll be free, and I want to test how I can do the group and make it to where it’s going to be more individually based beneficial than templated bullshit that goes out to everybody.
Mariette Frey (41:50.999)
Yeah.
Kevin Bay (42:17.754)
Um, so I don’t, the group is not valuable to me other than I got, you know, air DNA, which is, I use it every day multiple times. It is huge.
Mariette Frey (42:26.181)
Huge. Yeah. Oh, but for data junkies like that’s um, it’s so valuable because a lot of times people go into these decisions like kind of spontaneously hoping for Rentals or occupants and that like hope is not a strategy. You gotta look at the data
Kevin Bay (42:42.282)
Well, and another thing I learned in this group, because it’s like a WhatsApp group chat, that people in this group want their handheld on every single thing that they do. Like, Grant, or I don’t even know the guys now, I said Grant, because I just had Grant Card going on my mind, but, you know, Mike, why, what should I do about sending people an email that want to rent? What should I do about, you know, this, that, I’m like, hey man.
Mariette Frey (42:58.577)
Yeah.
Kevin Bay (43:11.202)
I even say it in the group, I was like, do it yourself. And then he’ll message me on the side saying, I understand where you’re coming from, you can’t talk like that in the group. I’m like, dude, what are you, like, you have to be, like, if you get in my group, it’s going to be like, this is how it is, and if you don’t like it, this is how I’m going to talk to you about it, because you have to be sometimes smacked in the face to get what you’re doing. Like, the way to learn is to do it, not to have someone do it for you. That’s what drives me crazy.
Mariette Frey (43:35.102)
Yeah. But you’re also a fitness trainer and like that, that comes from your experience. See that mindset is like you have to try before you can. Yeah.
Kevin Bay (43:43.978)
Mindset, I guess. Yeah
Kevin Bay (43:50.122)
Yeah, learning how to do it wrong is the way you learn how to do it right. Yes, it’s 100%. It’s like learning or winning. That’s the way I talk, think about it. Correct.
Mariette Frey (43:53.759)
Right, failing forward. For sure. Yeah.
Well, you can only lead a horse to water and you’re not going to be responsible for actually helping them do, they have to do it. So, I mean, I think this is such an interesting topic because, I mean, again, until you had mentioned it when we were talking, I had never even heard of it. And this is such an awesome opportunity for people that don’t want to buy a house, but can manage this and can look at the data and figure out what places are good. It’s just a smart business move
to have the overhead of owning a property.
Kevin Bay (44:32.278)
Well, and the bad things about it, you have to have patience because you will 1000% get 900 nos, okay, that is what’s good that the reality of it and for some reason in my life. I’ve always picked Fields that are 99% failure, you know, whether it was acting or sports or whatever it is like
getting told no is like in my, in my, you know, mental capacity. Yeah. So it’s like crazy. Yeah. So you are going, you can’t, it could take you two months to get a deal. It could take you six months to get a deal. If it’s what you want to do, you have to stay at it. I think I can provide ways to do it that will mitigate the nose. Um, and my goal with when I start the group is to have.
Mariette Frey (45:03.585)
You like craved it. You’re like, you’re one step closer to a yes then.
Kevin Bay (45:28.726)
people acting on their own, but using my umbrella of experience and what we have as a way to help them get yeses. Like saying, you know, with the baseball players and that kind of stuff. That I’m telling you, I’ve gotten mostly yeses when I personally reach out because they see it that way. It gives them more security that it’s not like a party place.
Like, and I tell them, look, I’m going to use AirBnB, but majority of my rentals are going to be coming from not AirBnB, but I also have to make sure I make some money. So if I have gaps, I’m going to have to go to AirBnB. But if I do, this is how I do it. And it’s not, you know, people coming in to just throw parties and that kind of thing.
Mariette Frey (45:58.349)
Yeah, well you’re providing value.
Mariette Frey (46:18.829)
Yeah, they want to know that they’re protected. And a lot of times, they probably don’t want to do it themselves, because bookings do fluctuate. And they’re on the hook for it. And it is a lot of work. They don’t want to do it. Yeah.
Kevin Bay (46:20.767)
Yes.
Kevin Bay (46:28.63)
They don’t want to do it. Yeah, yeah, yeah. And there’s another other ways to get better deals. It’s like, cause there are some, there’s ways on Zillow that you can see how long something’s been on the market for rent for, and if it’s like three months, that means the renter, that landlord is not, has had to pay out of the pocket for three months. So they’re probably going to be desperate to get the place rented. So you touch on that. You have to be personable. The minute you start getting into templated,
you know, introductions, the BS meter goes way up and I just don’t, I don’t like that. You have to be authentic. And if that means you’re doing less, yeah.
Mariette Frey (46:58.057)
Yeah. Right. But you have to like put everything, yeah, I was going to say like, but you have to put like utilities and all that stuff in your name. So you’re paying for all of that. So you have to account for that. Yeah.
Kevin Bay (47:11.762)
Mm-hmm. You do. Oh yeah, that’s part of your overhead, I guess you could say.
Mariette Frey (47:19.897)
Well this has been really interesting. I know on Instagram you’re at @TheKevinBay. How else can people find you?
Kevin Bay (47:27.65)
So I have an Instagram for the property, it’s not live yet, it’s called hybrid elite properties at hybrid elite properties. I’ll give you my email that we can put down. And if people are interested in wanting to know more about this or want to join this, you know, beta group, is that the word, beta group?
Mariette Frey (47:47.637)
Yeah. Yeah, I would say it’s a pilot.
Kevin Bay (47:50.238)
I feel like beta means weak but I don’t know if that’s the truth. Like test group, the test group, the test group. Yeah. The test group. Um, and I’d be, you know, it’ll be free. Everything will be free. We can chat, chat just to start a small community of getting things going, answering questions, even if you want to do something, if you wanted to do something together, I would be more than happy to do like your first thing. And me and you could do it together. I do all of that.
Mariette Frey (47:55.485)
You’ll do the pilot again. Yes. Yeah.
Kevin Bay (48:17.474)
the research and processing, you can see how we could do it. And then you can maybe even use it as something that you could make content around too. So yeah, so it’s pretty easy to get ahold of me. I’m pretty active on social media with my personal, so easy.
Mariette Frey (48:34.669)
I love it. Well, we will put everything in the show notes. Thank you so much for giving, I mean, again, it was like an accidental mention that ended up being something that was so interesting and I just love it. So thank you so much for being on the show. Yeah, you bet.
Kevin Bay (48:44.878)
Thanks for watching!
Kevin Bay (48:49.282)
Great seeing you, thanks. Bye.