Why Most People Lose Money on Short-Term Rentals: Avery Carl’s Strategy to WIN

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The biggest mistake that I see people making with short-term rentals is saying, I'm going

to go where no short-term rental investor has gone before.

I'm going to go where there's no short-term rentals.

I'm going to be a first one.

There's nobody's talking about this market.

Nobody's talking about this is the market that nobody's talking about.

Like if it was good, if the tourism was there, it would have been done already.

Welcome to The No Broke Months Podcast.

Today, I am talking to Avery Leak Harle, and we are going to share about short-term rentals.

Specifically, what types of markets work best for short-term rentals?

And Avery's an author of Amazon's Best Seller, short-term rental long-term wealth.

Your guide to analyzing buying and managing vacation properties, she's the host of the

short-term show, Podcast and the CEO of the short-term shop.

She went from a $37,000 salary to a real estate portfolio of over 250 doors in just five

years.

Today, she's going to tell us a little bit more about that.

She's got another book coming up pretty soon as well, so I'd love to hear more about

that, Avery.

Welcome.

How are you?

I'm good.

How are you?

Good.

What were you doing getting paid $37,000?

So, I was doing what I thought was going to be my dream job working on the business side

of the music business in Nashville.

And because that sounds so fun, they pay basically nothing because there's always an intern who

will do it for free.

You got it.

Yeah.

Got it.

And how long ago was that?

That was almost 10 years ago now, so that was back in 2016 about my first rental in

2015.

Okay.

And so then you went from that role to over 250 doors in a very, very short period of

time.

You did, you know, with types of markets work best for short term rentals.

Tell me a little bit more about your journey from your first rental to your 250 door.

Yeah.

Yeah.

Happy to do it.

So, that time we had just moved from New York City to Nashville.

That was in 2013 that we moved to Nashville.

And our real estate agent was really trying to get us to buy in this super hit, fast appreciating

part of Nashville.

And we were like, no, thanks.

You know, we're moving from Brooklyn to Tennessee.

We want to be out in the country.

We're tired of neighbors.

No more neighbors.

And so we bought something out in the country didn't think anything else about it.

Year two later, we got married and had a little bit of money saved up.

And we're like, what are we going to do with this little bit of money?

It was like $10,000 and we wanted to be all, you know, smart and we just got married.

And I was trying to be all personal finance conscious and reading all the Dave Ramsey

books.

And I'm like, let's go to a financial planner.

So I went to a financial planner.

She was like an Edward Jones office in the same building as my corporate job and we went

to the bar.

And she basically told us we didn't have enough money for her to bother with.

And we're like, okay, great.

We're losers.

So I went to the bar and we were like, we're losers.

So we went to the bar because we went to the bar.

Yeah, we did quit drinking back in 2019, I believe so.

So we went to the bar and we're like, what are we going to do here?

Because we got to be able to do something with this other than let it sit in the bank.

And so we were like, well, remember those houses that Shelby or agent was telling us about.

What if we bought one of those?

You have to save up just a little bit more.

If we bought one of those, put a renter in it.

And if they're really appreciating, you know, the way they have been in 25 years, whenever

we have kids and they grew up and need to go to college, then maybe we'll be able to

pay for their college out of that appreciation.

We'll have a renter in it.

So it's not costing us any money all that time and we'll be these great financial geniuses

and we won't have to come out of our own pocket.

We'll just sell this house.

And so we're like, great idea.

So we went and did that, bought a house.

And luckily, we got very lucky that that house was a long-term rental.

Our mortgage on it was $647 a month and we were able to rent it for 15, 50 a month.

So almost $1,000, which is great for a long-term rental, paid $122,000 for it.

And coincidentally, after all the deductions on my great dream W2 job, I was making about

$1,000 a month.

So we thought, wait a minute, this house is making the same amount of money as me when

I'm having to work so much harder.

We need to figure something out here.

And only then did we actually start research.

We didn't even know it's called real estate investing.

We bought our first one.

Most people do the research first and buy later.

We did it in the opposite.

And so we said, we want more of these things and we want to build an actual business out

of this.

So then we started actually reading.

In fact, then this was, again, 2014, probably when we started thinking about buying one and

there were no YouTube channels.

There were no people posting on Instagram with yellow captions like we just had to figure

it out.

We had just a little bit of money left for like one single family down payment.

And we said, well, what can we buy that's going to make us the most amount of money,

the fastest so we can go buy more.

The intention was not to live off of it or to try to get rich.

The intention was just to buy more and buy more.

And so we landed on short-term rentals.

We knew we didn't want to do it in Nashville back then because Nashville is just very

anti-short-term rental.

But we had just been on vacation to the Smoky Mountains about four hours east of Nashville.

And we'd stayed in a rental cabin.

All our friends who came stayed in rental cabins and we thought, well, that's great.

We owns these cabins.

It's a normal thing for people to come and stay in a cabin.

Let's do that.

So long story short, we bought one.

It went really well.

We scraped like the pennies out of the bottom of my purse to get that property.

And that went well scaled to five of those over the course of about a year and a half.

Keep in mind, back then real estate was much cheaper.

We were able to pick these things up for 120 to 150,000.

And we also, after we got five, said, okay, you know, we got some cash flow coming in.

We could pick up some long terms here and there without really feeling that, leave the

bank account.

So we started picking up duplexes in Chattanooga, Tennessee for like 80,000 grew that to

about 40 of those.

And during that time, I started my company, the short term shop, which is real estate agency

because there weren't really any agents in the space who could answer our basic questions,

like, how much did this make?

Like, where's the best place to buy the rent stuff?

How do you find a cleaner?

So bridge that gap got my license, became that agent, started what would eventually become

the short term shop as just a single agent in the Smokies.

Now we've got like 60 agents across the country, 20 different markets.

We went from zero to the top team at EXP, the largest brokerage in the world.

We became the top team in the world within five years.

We've been the top team for three years running 2021.

We sold a billion dollars worth of real estate.

We sold about three billion total since we started in 2019.

So it helped over 5,000 investors by and sell short term rentals, grow my own portfolio

throughout that time, got up to 250 doors myself, still don't live off of my rentals only

by more rentals with the rental money.

And that's about it.

Thank you for sharing that with me.

It's first of all, it's impressive.

And it's also a journey that I think a lot of people can, I think the only hesitation

somebody would have listening to your story is, okay, well, how do I do this?

Because prices are, you know, in some places 20 to 50% higher today than when you started,

maybe even more than that, right?

So that could be an objection somebody may have.

But outside that, I can't imagine that somebody listened to your story, couldn't imagine,

you know, couldn't see themselves doing the same.

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What do you say, you know, so you're all across the country down in different markets,

is that true?

And what vacation hotspots, you know, a lot of people can talk about vacation hotspots.

What, you know, types of like non-touristy markets would you say that short-term rentals

are thriving?

And why do you think they are thriving?

Sure.

And I will say, I have not stopped buying, so the most recent property I bought was December

of last year, so still buying short-term rentals.

It's a great time to buy because there's not a lot of competition.

The real estate market is completely dead.

People, I think, sometimes don't realize that fewer homes were sold in 2024 than the

entire last 65 years.

So more homes were sold in the 2008 crisis than last year and in 2023.

So not a lot of competition, but these are definitely harder to find.

So markets where short-term rentals work really well, I, the type of market that I buy

short-term rentals and the type of market that I buy long-term rentals are very different.

I only buy in very tourism-driven vacation markets.

So like the Smoky Mountains in Tennessee, Destin, Florida, in places where there's very

little hotel presence and the economy is driven by the tourism that's coming to stay in

the vacation rentals that they've been staying in for decades and decades.

So like my grandmother, for example, has been coming and renting houses in Destin since

the 30s.

So all those regulation battles were fought generations ago.

Everything's very stable.

You're not really having to worry about, oh, they're going to outwash short-term rentals.

So I like to buy my short-term rentals in those types of markets so you don't have to

really worry about that.

You have a very, very deep proven tourism driver and you're not trying to like fish in a pool

of 10,000 when you can fish in a pool of, or a pond of 10 million.

So areas that people may not think about, I think the biggest mistake that I see people

making with short-term rentals is saying, I'm going to go where no short-term rental

investor has gone before.

I'm going to go where there's no short-term rentals.

I'm going to be a first one.

There's nobody's talking about this market.

Nobody's talking about this is the market that nobody's talking about.

Like if it was good, if the tourism was there, it would have been done already.

It's kind of my theory on it.

I'm not into trailblazing.

I've, at this point in my investing career, at this point in my life, I've got two

little kids.

I want it to be easy.

I'm not trying to trailblaze.

I want to do where it's easy to do it.

So for me, it's just vacation markets all the way.

Other overlooked markets that you would say have been a surprise for you that maybe,

I know you're not trailblazing, right?

But has there been a market where initially you had to consider it and then after you're

thinking through it, like, oh, wait, that does meet all the criteria.

That does, it is a vacation destination.

You know, has there been a market like that?

Yeah.

So Scottsdale, for example, or like the Sarasota, Florida area.

Usually when we started looking at potentially opening up offices in these markets, I was

like, no, vacation markets only.

These are metro markets.

I'm not doing that.

But when you look at, I call them vacation-ish markets now because Scottsdale, while yes,

it is a major metro area, you know, Phoenix, and there's a lot of other industry there.

Same thing with Sarasota.

It's still such a vacation destination.

So I didn't know because I'm not from out west.

I'm from the southeast.

I'm from North Mississippi.

I don't know anything about Arizona.

You know, a lot of people who live in Montana, Wyoming, Colorado, come down to Arizona for

the winter time.

These are things that I just didn't know because I didn't grow up in that region.

Same thing with Sarasota and Brayton and Clearwater and all like that whole kind of big Tampa

metro.

Yeah, it's a big urban area.

But that's where a lot of people go to the beach on the barrier islands out there too.

So I've opened my eyes to what I call vacation-ish markets that are kind of metro, but are

very tourism-driven as well.

So what's the difference between long-term markets for you in short-term markets?

I know that there is a difference.

Can you describe those?

Yeah, sure.

So for me, my personal preference and my portfolio already said short-term rentals.

I like vacation markets, beach, mountain, lake, desert, national park type markets.

For me, with my long-terms, I like small to medium metro areas, so like Chattanooga, Tennessee,

Birmingham, Alabama.

We've got a few in the Midwest in Ohio.

So areas that are growing a little bit, I will all

wouldn't say the Ohio one is, but areas that things are pretty stable, things are kind

of growing, but they're not like the Austin level yet, or not like the Charlotte where

they're on those lists of all the hotspots of places to move yet, because that makes all

the investors jump in these lists.

So I like to find this a little bit more under the radar you're seeing some growth in

the economy, but nothing too crazy, a southeastern and Midwestern cities.

What's been your biggest challenge that you've had?

In terms of the growth, or like you want to hear a horror story?

Whatever it may be, give me one of each.

Okay, okay.

So in terms of growth, like it's always just, you know, wish I would have had the capital

10 years ago that I had today to, you know, the best time to buy real estate was always

yesterday.

In terms of growth, I feel like we've not done everything right, but we haven't like

made any major screw-ups, like, oh my god, we chose the wrong market, but we have had

a few horror stories, and I feel like, or I know, I don't feel like if you buy enough

real estate and own it for long enough, you're going to get a non-performer at some point.

You can do everything right and still have some property that doesn't work.

So for me, not property was an apartment building in the Midwest, and I think this is really

important for other investors to hear because a lot of times they say people buy cheap

properties just because they're cheap.

They choose cheap markets just because they're cheap, makes it seem logical, right?

They look at market and the cash on cash return is really high all the way across the

board.

And they're like, this great, I found this treasure trove.

Why are all the other investors not jumping on this?

Well, there may be a reason for that.

Yes.

And usually that reason is because it's not desirable real estate, and I don't mean like

wrong side of the tracks.

I just mean it's in an area that's not growing, or if it's a short-term rental market,

it's in an area where there's not a lot of tourism.

So for me, it was a long-term, in an area that wasn't really growing.

And we've still got five or six apartment buildings there.

But this particular one, the mistake that I made in these areas that aren't growing,

there's a reason they're cheap because people aren't moving there.

So they're not appreciating.

You're not getting that appreciation that you're getting in some of the hotter areas of

the US.

So you know, a lot of people moving to Texas, a lot of people moving to Tennessee, Florida

because no income tax.

This particular area not happening, but the cash on cash return look good across the whole

market.

So we're like, sweet, we'll jump in.

And there's one property going fine, owned it two or three years, and then the bigger

apartment complex across the street starts looking a little crappy, and it starts looking

worse.

And then it's like, miscreants, drug dealers, things like that, coming across the street

to ours eventually, that property is condemned by the city.

I don't know what that owner did or why he just kind of quit, but that property is condemned

by the city.

Nobody's allowed to live there.

Of course, people are living there.

And all that crime has come in across the street to our place.

Our tenants don't feel safe.

People are breaking into our units.

Units that we've already rehabbed, by the way, I mean, how many, how many doors did you

have in the building?

That one was 12.

So nothing like dire, but also, yeah, about what you want.

So eventually, you know, we're cleaning this thing up.

We're cleaning this thing up.

And after about a year and a half, maybe two years of trying to like keep the people from

across the street from breaking in, from selling drugs, from doing all these things,

we're like, okay,

and our energy is no longer there.

The police do not care about your landlord problems.

They have better things to worry about.

They didn't care.

We just could not keep this building from getting broken into.

It got to the point where we had ring cameras on the outside that when the, when the motion

sensor would trip, we would like hit the button to make the siren go off to make them

think somebody was coming and it's just like, why are we doing this?

Why do we have this?

Why are we spending our time watching this ring camera?

We're hitting the button and yelling at people to leave.

So we're like, you know what?

We're done with this one.

It's time to sell it.

This is a dog.

So we go to sell it.

Well, you know, three or four years later, it hasn't appreciated.

The market's also shifted to be a buyer's market.

And we're having to sell it had to unload it for less than what we paid for it because

we chose a market where nothing appreciates.

And I used to argue with people all the time on the internet, like a stupid little newbie

internet troll.

And be like, no, no, appreciation, that's that could change in a minute.

That's stupid.

You want cash flow only cash flow only.

And now I had to take my medicine and learn like, no, it's not all cash flow.

You do need that appreciation.

So if you ever need to sell it, you don't have to sell it for less because that really,

that was a situation where it wasn't like we underwrote it wrong or we did anything

wrong.

It was kind of outside of our control.

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You have to pay attention to that and for a while, I didn't and now, whenever I see lists

with, oh, this is the cheapest property in the country, this is where you can get the

highest cash.

I think there was a best place to invest in short-term rentals list that came out last

week and they were like, Detroit number one, I'm like, guys, come on, let's think about

the capex here.

Anyway, that's my horror story, buying a cheap property just because it was cheap and

then learning the hard way, why you don't do that.

One of the concerns, I don't have, personally, I've not done short-term rentals.

I've always done, you know, buy and hold long-term type stuff.

And one of the things that, you know, I'm ignorant to it, I'm not ignorant to it, right?

I haven't a awareness of it, right?

But I don't have the experience in it.

And so I share that with you because one of my concerns that I have personally is, well,

what happens if laws change or municipalities say, you can do this and then suddenly now

you can't?

Do you think that most of that has already been sort of sort of sort of through-through

time?

And it's not likely to make changes that would make it a challenge for you, or do you think

that that's still a potential problem?

In certain markets, it's absolutely still a huge problem.

So again, that's why I choose markets that the entire economy would collapse if there

were no short-term rentals for guests to come stay in.

That's why I stay out of metro markets because metro markets don't need the tax income

from short-term rentals.

Like a Nashville, for example, they've got tons of other industry coming in.

All these other corporate headquarters are coming in.

The people who live there, their income does not depend on tourism.

It depends on other things.

So markets that aren't dependent on tourism, I'm not in for that exact reason because there's

no reason for them to protect it.

And then the other piece of it that I heard you say is with few hotels.

You want few hotels?

Yeah.

So the fewer hotels that they have, which that can be a little bit of a challenge to find

those markets, right?

But you gave with some examples, I mean, they certainly exist.

But what I'm hearing you say is fewer hotels and vacation as an industry, that's a prime

spot because they would kill themselves if they changed a rule.

So is that what I understand you saying?

Yes.

You just published your second book, Smarter Short-Term Rantles.

Yes.

Tell me a little bit about that book.

Sure.

So my first one came out back at the end of 2020.

It was more of the basics of short-term rentals, how to choose a market, how to analyze, how

to choose a property, that type of thing.

This one is more the systems and processes to really make sure that you are.

Well, it says build a dynamic real estate business and out host the competition.

So just because you buy a nice house in a nice market does not mean you're going to be

successful.

This is a business.

You have to run it like a business.

So we talk about systems and processes, standard operating procedures, hiring VA's to help

you scale the actual business running of it so that you can optimize and scale your portfolio.

In whichever way you choose, whether you want to buy more short terms or you want to go

buy long terms, you got to have systems, you got to have processes, you can't just

wing it.

How many VA's do you have?

Less than you would think.

So we have three total across all of our businesses or four total across all of our businesses.

Two of them are allocated specifically only to work with me in the short term shop and

the sales side and manage our agents, etc.

And then we have two who work with us on our larger real estate portfolio and then also

our education piece of the short term shop.

So those two as a piece of their larger job description help manage our short term

rental.

So we have eight short term rentals.

Everything else is long term.

So part of their job, definitely not, I would say less than half of their jobs are helping

to manage the short terms.

My business is D.F.

Oh, so we have.

I love asking entrepreneurs that question because if you ask me that question, I don't

know.

How do you not know how many businesses that you have?

It's so much weird.

Well, it depends on how you divide it up.

So we have the short term shop, which is a real estate sales company broker by EXP.

So we, that one, we help people buy and sell short term rentals, then we have the

mortgage shop, which is a mortgage company that focuses on short term rental and just

general investment products.

So you're probably not going to come to us to buy a primary you could, but that's not

our specialty.

Then we have our, I kind of think of our long term single family portfolio and our long

term apartment building portfolios to separate businesses.

And then we have our education piece of the short term shop.

So if you come by house with us in any of our markets using one of our agents, we'll

put you through what we call our world famous management Monday for free.

Any, I would say eight out of the 10 big short term rental influencers out there started

buying their first property, learning how to do it at management Monday with us before

they became big influencers.

But then we also recently started in the last year an education piece for people who

maybe you're buying in markets that we're not in that still want to learn from us.

So just like a true mentorship, we keep it super affordable.

So we call that STS plus or short term shop plus.

So we've got short term shop plus regular short term shop mortgage shop and then the investment

business.

All right.

You got a lot going on.

If I'm interested in maybe I'm an agent that wants to learn more about being a part

of your network or maybe a buyer that's interested to be able to purchase short term

rentals or I'm just looking for education just in general.

Is it like a one stop shop that I can get in touch with you?

Yeah.

So we're always hiring agents, whatever markets like pitch us your market or you know,

we're always hiring in the markets that we're already in.

I would say the best place to do that is on our website.

So the short term shop.com.

We've got links to if you want to buy with us in any of our markets.

We've got those links.

We've got short term shop plus links.

We've got careers links.

So their Instagram at the short term shop for the brand.

If you want to just follow what I as running this many brands and things do in a day at

the Avery Carl.

I love it.

Yeah.

Avery, you are amazing.

I wish you much continued success and thank you for taking the time to show your insights

with us.

Yeah.

Thanks so much for having me.

It's my pleasure.

Viewers and listeners, thank you for tuning in today.

Until next time, have the best Avery life.

Be grateful.

Make good choices.

And check out Avery's stuff at the shorttermrental.com.

Did I get that right?

Shorttermrental.com.

The shorttermshop.com.

I did it.

I'm glad.

As soon as I said, I knew I screwed it up.

The shorttermshop.com.

God bless you guys.

This is Dan Roshan, host of No Broke Months.

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