In this episode, Clint Coons of Anderson Business Advisors welcomes Kim Lalande, Founder and CEO of Key.
Key is a ‘one-stop shop’ that partners with quality vacation rental homes (usually 3+ bedrooms and a certain aesthetic) to take all of the “concierge” burden off of the host or homeowner’s plate and provides one place to book all the in-home services to enhance each guest’s stay. Before launching KEY.co in 2015, Kim was the Director of Business Development for DLA Piper, a law firm representing many leading technology companies.
I talk with Kim about some of the reasons that investors who own or are looking for short-term rental properties should use this type of service. From my own experience with a rental in Hawaii that I sold because I hated doing all the work with guests, it is obvious what a relief this service would be to any short-term property owner. Kim says that naturally most of the “vacation destinations” with beaches like Hawaii, Florida, Nantucket, and The Hamptons are perfect spots to invest, but there are also some up-and-coming areas such as Austin, Nashville and Charlotte that are hotspots for short-term rentals. You’ll get better reviews and more bookings when you offer a concierge service such as Key, and there are a number of tax benefits as well.
Highlights/Topics:
- Kim came up with the idea for Key during one of her own short-term rental stays
- The types of “quality” homes Key represents – they personally vet every home
- The most attractive markets: Data shows lake, beach, Florida, Hawaii, Austin, Nantucket, Hamptons, mostly vacation destinations
- How should a person stage their rental? Think high end hotel
- Using Key services – what’s the return on cost of your services?
- At Anderson, we say if you spend 100 hours managing it, you can accelerate the depreciation. Key shares all their marketing and promotion with each homeowner to increase bookings
- Today’s short term rental market is even getting large hotel chains participating. If you DON’T have a service like this, it’s harder and harder to compete
- Each type of renter needs different services – families vs. couples vs. bachelorette party. Flexible service is best, trips types are so different
- Cleaning, pre-arrival groceries should be automatically included, along with a “mid-stay” cleaning
- Smaller properties (condos, townhomes) will have high volume, large homes may only need to rent out six times a year with their higher cost
- Make sure your rental is in the “center” of local activities (beach, skiing), people don’t want to drive on vacation
- Outlier homes, drive to go anywhere, ppl don’t want to go driving, not nec city center, lake? Boat rentals/beach, center of activities.
- The pandemic took many rentals off the market – people moved out of city centers to their second homes
- It’s important with today’s hybrid/remote workers to include highspeed internet and a desk/office area – consider adding a cool background wall for video calls!
Resources:
Full Episode Transcript:
Clint: What’s up, guys? Hey, it’s Clint Coons here. In this episode, I wanted to talk about short-term rentals and how to stand out if you’re thinking about getting into that space. If you watch some of my other videos, you know I’m a proponent of short-term rentals because you can reap massive tax deductions through cost segregation by accelerating the depreciation because you don’t have the same issues you face as a real estate professional.
When it comes to using short-term rentals, there are a lot of people out there that tell you how to get into them, but the thing is that you need to know where to invest. It’s just like anything. What I decided to do is reach out to someone who is a high performer in this industry, who has gone out there and cultivated individuals in certain markets to help bring their short term rentals to the forefront of individuals who are looking to rent these spaces.
Her name is Kim Lalande and I’m happy to have her on here. She runs a company called key.co. She actually started it. She has tremendous insight that she’s going to be providing us today. Kim, thanks for coming on.
Kim: Thank you for having me.
Clint: Hey, why don’t you tell us? You got a really interesting story about your bio. You moved out to San Francisco, you realized this isn’t working, and you decided to start this company. How did that start and how did we got to where we are today?
Kim: The craziness of entrepreneurship. Prior to launching Key, I traveled quite a bit for my job. Specifically, every other week, I had the luxury of staying in great hotels where you have the convenience of the hotel-like services—daily housekeeping, concierge for local recommendations, and room dining. The firm asked me to move there for two months. I got a vacation rental so I could bring along my two young children.
A beautiful home right in the heart of the city, but I was completely on my own. There’s no shortage of information on Google, but it was on me to do the research, read the reviews, coordinate, and book everything. And then if you suffer from FOMO wondering, did I book the right stuff, am I at the right restaurant at the right park?
That’s what gave me the idea to return back to Austin, Texas where we’re headquartered and launched Key. What we do is partner with quality vacation rental homes to take all of that burden off of the hosts’ and homeowners’ plate and provide one place to book all the in-home services to enhance each guest’s stay.
Clint: Okay. This is what I want to get into right away. You talked about quality properties. What do you mean by quality properties?
Kim: Properties that we list on our site and property managers that we partner with, they’re professionalized in the hospitality space. When you walk into the home, it’s great design, great aesthetics, and a great place to gather as groups and families.
Most of the homes that we partner with are three-plus bedrooms. You want to interact, have a great kitchen, and a backyard. Just a great home to spend your three days, five days, however long you’re going to be there. Our team personally vets the homes. We partner with a lot of three-star as well, but they’re not listed on our site, but we still provide services to guests staying in those homes as well.
Clint: If I’m a short-term rental investor and I’m thinking about buying a home, there has to be some markets now you’ve identified that you think are more attractive to residents than other markets. Can you maybe explain some of that to the people who are watching this right now or listening in about what they should be looking for and what the markets that you see are trending?
Kim: Sure. The data that we see right now, it’s markets that have great outdoor experiences. Lake Austin, North Lake Tahoe, beach, Hawaii, San Diego, and Florida have always been top rental markets. It still remains that way as far as investors putting money into it. Nantucket, Hampton, et cetera. And then there are some hotspots, urban towns, so Austin, Nashville, Charlotte is another one that we’re seeing.
Right now, vacation destinations are still where most are going. There’s a shortage of inventory there, so lots of opportunities. With our request to book coming into our site last quarter, 67% were unavailable so we’re always scrambling to find great homes. When you invest in that home, let us know. We have a guest to send there.
Clint: All right. If I was going to invest in one of those markets or maybe already have a property there when it comes to staging the property, I’m sure there’s a lot that goes into that and you just wouldn’t take every home that someone has. How do you address that for the short term rental investor? What should they be looking to do?
Kim: In your own home, you’ve got your family pictures everywhere. We always say pull those out. People don’t want to come in and feel like they’re staying in someone else’s home or the kitchen stocked with someone else’s stuff. The closets are stocked with someone else’s stuff or their family photos. It’s really a blank, think hotel.
If you go into a hotel, you don’t have personalized pictures, but you can come in with your stuff and really move in. That’s what we recommend for short-term rentals. Make sure it’s furnished from the utensils in the kitchen to the living room. Great aesthetics. People want to go in there. It’s a brand that you’re building that essentially. Drive five-star reviews, drive repeat bookings.
Really making it a homey feeling and making sure there are great pillows, great bedding, great towels, towels, toiletries, et cetera. Key is always offering someone to help with all the services because when you invest in a great home and you’ve got guests staying in there, they want more, and so then it’s on you to do it.
Clint: Yeah. Obviously, that’s just another burden that they have. I invested in a short-term rental property in Hawaii, which is one of the areas that you’re talking about. I wasn’t using a company like yours to interface with the client. I was trying to do it on my own on Airbnb, and I ended up selling the property after about a year and a half. This sucks. It’s not for me.
Had I known there are services like yours, I may still have that property today. Sure, it’d be worth a heck of a lot more than what I sold it for. In doing this, you’re talking about the services.
If I have a short term rental and I’m thinking about providing services, what does that typically look like? What is the return on my investment? It’s going to cost me more than have someone manage that. Could you speak to that?
Kim: Sure. We have a mix of clients. We have individual homeowners who like to manage all the bookings and the listings on Airbnb, Vrbo, or wherever they choose to list their homes. They will use Key to handle all of the hotel-like services. Food and drinks are the number one most selling category.
Think of that hotel room. When you’re getting your wellness and massage, your outdoor experience is someone that’s local to help plan it all, and then food and drink, pre-arrival grocery, chef-prepared meals, et cetera. They’ll use us for that component.
We’ve got some who don’t want to handle any of it. They just want to use it as an investment as an income strategy, and then they’ll work with property managers who will take a percentage of the booking. Key works with those property managers to service the guests as well. It really just depends on how much time and effort you’re wanting to spend on it.
In today’s day and age, when everything’s on-demand, guests expect immediate response, whether they’re trying to book, whether they’re booking the services, et cetera. It really just depends on what you love to do in it and what you want to outsource.
Clint: For a lot of individuals that we work with here at Anderson, what we’re telling them is you invest in a short-term rental. As long as you spend 100 hours, it’s typically what’s going to take, you can qualify then to accelerate the depreciation and get these huge upfront tax deductions, but they’ve got to spend some time managing it.
What I like about what you offer is that you layer on top of that. I assume that you would give someone, hey, here are the top concierge-type services that people typically request in your area. You should advertise these. Is there some guidance that helps individuals along the way that are going down this road?
Kim: Definitely. Our platform is a curated marketplace. It’s local, so local shops, local drivers, babysitters, masseuses, and runners to get in the house to pre-stock the groceries before the guests arrive, et cetera. We share that data with the homeowners and property managers even down to the address. You could have 10 homes you have invested in, so down to the address on here’s what your guests staying on this property want because they may be in different locations.
The homeowners use that to market. We also provide all the assets. It’s really like a membership. They can be a part of Key’s network. We feed them the data to win more bookings so the guests can know the full experience.
The pain point on why I started Key, I was on my own to do the rest, but it’s a one-stop shop for the guests, which helps drive reviews. For us, yes. Our platform is all data-driven on what the guests most requested and what they want.
Even if it’s not in our catalog, there’s a little button on don’t see what you’re looking for. Our team gets to work to find it. The next hundred guests that check into that property, it’s available to them.
Clint: What do the numbers look like for people who offer these types of services versus those that don’t as far as how often their property gets booked? Out of 365 days a year, if the average rental period is five to seven days, how many vacancies are we going to see in someone who’s not offering these types of services versus someone who is?
Kim: Sure. To back up a bit, it’s interesting when we first started Key seven years ago. Let’s take Austin for example. There were hundreds of vacation rentals. Today, there are thousands. It’s getting more and more competitive.
The next wave was photos. You had to have great photos to compete and get bookings. Today, everyone’s got great photos because it’s hard to compete without. The next wave is really what we’re carving out and doing, and it’s the services.
Today, if you were to check into a four or five-star hotel and you didn’t have daily housekeeping, that would be an awkward situation. As the time comes, when they’re looking at property A or property B to rent and one comes with services and other doesn’t and it’s not an added cost to them, they’re going to go with the one that comes with it all.
The other trend that’s happening, Wall Street Journal just released an article a few months ago, but the hotels are now getting into the vacation rental space. The early movers, Core hotels, Marriott were early movers in it years ago. Now, Four Seasons, Mandarin Oriental because they want you as a traveler, depending on where you’re going, here are the hotels if you only need one or two people traveling, or here are the vacation rentals that we service.
That’s going to make it harder for the individual homeowners and the property managers. It’s a very fragmented space to compete for the traveler. Today, most say they do it, but it’s a pain point on them, so you’ll go to their website.
We’ve just closed a partner and they have full concierge service. I’m like, who’s doing that, though, if you’re partnering with us? We put it up there because we have it to compete, and they handed it all over to us. It’s a trend that’s coming. It’s going to be harder and harder to compete if you don’t offer, just like it was harder to compete with the photos today.
Clint: When you say offer, I see there are two ways I can interpret this one. I’ve dealt with this before when I’ve stayed in properties that I’ve rented off of Airbnb and other sites. They say if you want the following services, you can call this person and you can deal with this company over here or it’s all included. They’ll tell you right at the very beginning, hey, when you rent this property, you’re going to get the following. They’re going to come in, they’re going to clean every third day six or seven different items.
What you have found then is more beneficial to the short-term rental owner. Should they make them all-inclusive? Does that help raise their listing, the attractiveness of it versus the link and you deal with it on your own?
Kim: I think the all-inclusive is hard because depending on why people are traveling, you may have a family that’s going and they have four kids. Their needs are going to be different than the couples, when you have three couples going and renting the home, or the all guys bachelor party or girls bachelorette party.
It’s hard to offer one unless you’re doing you know pre-arrival grocery stocking, but that’s cumbersome to include, and then your grocery bills for groups are not cheap either. I find just adding it and having flexibility. Anytime we’re running promos with our partners or offering something for the month—ski season 20% off. Ski valet who will come to the house and handle all the fittings for the guests and pick it up, so they’re not having to spend time. The flexibility is important because the trip types are so different. You don’t have the same need checking into that house every time.
From a traveler’s perspective, vacations, they’re emotional. You want to arrive relaxed. Our motto is make memories, not plans. Let us do all of that. When you can provide that aha experience for the guests that’s going to drive your reviews, it’s going to drive repeat business, but it can be cumbersome. It’s just a matter of how much time you want to spend on it.
Clint: Are there certain things you think that people should include? Cleaning or basics that should be in there automatically that’s going to help drive more people to your listing or make it appear more attractive?
Kim: In general, the cleaning. A lot of the property managers will offer a mid-stay clean. They’re not doing the daily housekeeping because of the distributed nature of vacation rentals, it’s hard operationally to get from home to home, unlike a hotel where you’re all in one building.
Yes, any little added perk that’s beneficial. Pre-arrival groceries is a big one. You’ve got these amazing kitchens and they’re empty. The last thing you want to do as a traveler is spend your first hour of your vacation at the grocery store for your group. It’s always one person in these groups coordinating everything, so it’s a pain.
Clint: When people are evaluating the properties and going back to that, single family home, duplexes, does it matter as far as the ability or townhomes even to attract people to come there and rent your property? Would you list them in a certain order, hey, you’re going to do this, you’re going to be able to keep a book more often than somebody who has this type of property?
Kim: It depends on the trip type, really. There’s not a magic number. The market size is massive, so you’re going to get more volume on your lower cost and mid-market type homes. On your lux, you’re going to get lower volume, but much higher ticket sizes.
Some of our lux homes that we partner with, they’ll only rent it out six times a year, but they make all of their capital and revenue, so they don’t want the usage on the house during that time. It just really depends on the spend and what you’re looking for, more of the volume play. Just backing up to the real estate, you’ve got to start with the numbers there in the market.
Austin, for instance, right now, is not a good time to be a buyer. Austin is very competitive. But there are plenty of markets where it is a good time to be a buyer. It really just depends on the property and then just marketing it that’s making it amazing.
Clint: Got it. I think what you said originally, it’s the location. Somebody once told me, if you’re going to invest in short-term rentals, you’re going to maximize your revenue if you invest in areas in which you yourself may want to travel to because there are other people like that that definitely want to go there.
Kim: Definitely. We run into this all the time just because it’s geo-based. When you get the outlier homes that it’s a drive to go anywhere, unless it’s a ranch property for instance, in Texas or Lake Tahoe, it’s a drive. But once you’re there, you really don’t need to go anywhere. I think location is very important when figuring out—and a lot of people don’t want to spend the first two hours driving either, unless they’re there for a week. It’s hard to do for longer weekends. I think location is everything.
It’s not necessarily the city center. It’s more if you’re a lake property, what’s around? How close is the town? The boat rental place if the home doesn’t come with a boat rental or ski slope, same thing, beach. It’s really around that center of what’s amazing to do in that town.
Clint: The properties that you’re dealing with right now and you’re providing the services to, you just mentioned at the very beginning, 67% of them were unavailable. Have you seen a trend over the last two to three years in how much has COVID impacted that trend, would you say, as far as the desirability for people to look at short-term rentals versus the standard hotel rooms?
Kim: A lot. During COVID—we’re in the travel industry—our business, initially everything came to a screeching halt, but the vacation rental industry had a really nice recovery faster than hotels. Specifically to homes that were in mountains, beach, or lake where there was an outdoor experience for people to go out and about not having to be indoors, so city centers were not the most traveled.
What we saw was inventory took a hit because most people that own second homes, they moved in there. They got out of the city center, moved into their home, and took it off of the rental market. Families that didn’t own second homes, they were renting these homes for a month, two months, just given the work was remote, school was remote so took it off the market.
Now with people returning back to work a bit, travel, you’re seeing more and more open up, putting homes on the market because they’re not spending as much time there. We’re definitely seeing that recovery. I think with any recovery, there’s opportunity for investment.
Clint: Got it. One of the things that I’ve experienced in my own travels, you’re probably going to agree with this, is that a lot of people that not only travel for leisure, but they also want opportunities for work or they have to check in to do some work so they try to do both at the same time.
What portion of that element would you say needs to be incorporated into your listing as far as the high speed internet or a place for you like an office? Do you find that as something that people request or not? Is it not important?
Kim: Definitely important. It’s a must-have. We get a lot of calls, can you confirm that the house has high speed internet so we can tell our property? Be sure you’re marketing because that matters today, especially in most people that have not returned to the office. You’ve got your hybrid models, so the high speed is important.
Having a desk or office space in the house is important. It doesn’t necessarily need to be its own room, but having a desk in the bedroom that’s got a background. Even they can phase it out. Remote working is a trend and we don’t see it going away anytime soon. People are more mobile because companies are allowing it.
Clint: Yeah. You mentioned having the background because of things like this in Zoom meetings or presentations. Last year, I spent a month on the Big Island. That was kind of the key because I ran two events while I was there. I wanted to make sure I could set up my lighting, my mic, my camera, and then what was behind me. I didn’t want some weird art of two horses having sex in a big thing right behind me because it just doesn’t go with what you’re trying to do.
Kim: Or maybe it could be a good conversation starter.
Clint: Yeah. Hey, what do you think they’re doing? That’s good to know. Now, as far as your company, you talked about the services you provide. If somebody wanted to reach out to you and get a hold of you because they currently have a short-term rental, what’s the best way to engage with you?
Kim: Our website, partners.key.co is where to go and sign your home up, or you can reach out and talk to any of our team. We’re happy to work with everyone. It’s a simple onboarding process. They can sign up their home, onboard their home, and then ingest their guest data. We’re handling all the guest outreach once the home is booked.
Clint: If I sign my home up on your website is what you’re saying, then it goes onto your site and people can book through the site?
Kim: We’re targeting a very lux clientele right now. If the home fits the parameters of our clientele, and we’ll start to go downstream, eventually, then yes, we’ll absolutely list the home. If it doesn’t fit our clientele, we don’t think we’re going to have success in selling it just given the nature of the guests we’re working with, then we’ll absolutely provide services. We work with thousands of homes that we don’t list on our site providing services to guests when they’re checking in.
Clint: This is the other side of short-term real estate investing. Some individuals have properties that they rent out for an average of more than 7 days but less than 30 days. A challenge they’re going to face is that they want to capitalize on the tax benefits. They have to provide concierge-style services, which your company provides.
If you’re sitting here watching this or listening to me right now, you’re thinking, well, I see the benefit of using these services, but is it really for me? Well, definitely it is for you. If you have a property you want to stand out more. But especially if you’re over seven days, you need to be providing these types of services if you want to maximize your tax deductions from your short-term rental real estate.
I would highly encourage anybody that’s in this space to reach out to her company and see what type of relationship you can establish. Is there anything else you’d like to say before we cut out here?
Kim: I don’t think so. Just reach out. I’m excited. It’s a hot space. You’ve got Airbnb and Vrbo, they started less than 15 years ago and they’re already a multibillion-dollar market cap. It’s a space that’s doing nothing but growing. It’s a good time to get in, especially if you’re finding a market where the real estate’s great because people are staying in vacation rentals just like they’re staying in hotels. That trend is not going away.
It’s a nice investment and you can then have a place to stay or one of your vacation homes that you can make money on, so it’s great. Happy to answer questions or work with anyone. Thank you.
Clint: Thanks, Kim. Guys, definitely go check out the website. I’ve been to the website myself. There are a lot of neat-looking properties on there. Who knows, maybe you will end up renting one of those properties.
Kim, thanks for coming on. We appreciate you taking the time out of your busy day to be here. All the best.
Kim: Great. Thanks, Clint.
