108: Myth Busted: Vacation Rentals During COVD-19 with Diya Liu
We welcome back the lovely Diya Liu in this episode. When we first spoke to her back in Episode #78, we had gone over her real estate journey up to that point and how she built her vacation rental portfolio in such a short amount of time. Then, a few short weeks thereafter, our collective world was rocked when the country went into lockdown amidst the COVID-19 outbreak.
At first, like everyone else, Diya approached the situation with cautious hesitation for the simple reason that she (like most other investors) had not experienced such a thing before. How can I sustain my vacation rentals when people aren’t even allowed to travel? thought Diya. Then she realized that a pandemic induced national lockdown can actually be beneficial to her and this can be an investment-altering opportunity. So exactly how did Diya take advantage of COVID-19 and break the myths it has created for aspiring short-term rental investors?
Takeaways from our conversation with Diya:
1) Adjust accordingly. When COVID-19 first broke ground, Diya wasn’t too worried. However, shortly thereafter, guests' reservations began getting cancelled all across the board. Approaching that following month, Diya’s net revenue took a hit and things weren’t looking good. Fortunately, around this same time, as Diya explains, most folks realized that “work from home” really means “work from anywhere.” So that combined with people’s cabin fever from being cooped up at home for weeks, this created a strong demand for people to want to escape big cities such as Los Angeles or New York and social distance in a nice, cozy getaway home. Diya turned her short-term rentals into “mid-term” rentals which are leased out in about 30 days cycles. And in doing this, she also fulfills the regulations placed on short-term rentals.
2) Communicate. So with this new investment strategy in place, Diya had to quickly get her team of property managers all on the same page. She had to create guidelines and best practices that all suited the needs of the guests, the rules of the government, and the capabilities of the property managers themselves. So she spoke to each and every single one of her partners and started executing on the new and improved business model.
3) Cut your losses. However, this goes without saying that not all Diya’s units made the transition smoothly. Many flourished and some not so much. So instead of trying to walk on egg shells with problem properties that would take her energy away from the successful units, she decided to unload those problem units and double down on what was working well. Which takes us to our last point…
4) Diversify and plan. As Diya mentions, her overall philosophy as it pertains to her real estate acquisitions is all about her personal preference to the nomadic lifestyle. This means that she is not tied down to one specific niche or market. She goes where the numbers make sense and where there is business to be had. And part of that means being prepared for trends and shifts that will come along the way. Instead of solely focusing on what this current pandemic has done, she’s already shifting her sights to what’s to come after this pandemic concludes and what investment strategy and niche will work then.
A lot has happened since we last had Diya on the show. She has left her W-2 job and has transitioned full time into real estate investing. Going forward, she plans on continuing to grow her vacation rental portfolio, and help other aspiring investors start theirs.
A recent book Diya recommends reading is Never Split the Difference: Negotiating As If Your Life Depended On It by Christopher Voss and Tahl Raz as it has helped her negotiate agreements with her neighbors, as well as find off market deals.
One lesson Diya has learned since our last conversation is that short-term/vacation rentals have a lot tied to search engine optimization (SEO) and digital marketing. As far as these investments are concerned, you have to understand the guests you are hosting, as well as the platform in which you are using to list your units. You fall less on the traditional landlording side and more on the hospitality/hotel services side.
If you’d like to get in touch with Diya, visit: www.diyaliu.com or follow her on Instagram @diyaesq
Thank you to everyone that has reached out to us to connect them with our trusted real estate agents in their area! And congratulations to those who have even closed deals using our referrals! For those that didn’t know, we can help connect you with real estate investor friendly agents in your area to help you get started investing in real estate. We recently made some changes to our website that we believe will better suit you in your real estate investing needs. For more information, visit www.millennial-realestate.com and head over to the “Start Investing” Tab. Best wishes and see you in the next one!