Chris Thomas Real Estate Background:
- Full-time short term rental investor
- 2.5 years of experience
- Portfolio consist of 257 rentals, 70 managed
- Based in San Diego, CA
- Say hi to him at www.getchristhomas.com
- Best Ever Book: Build to Sell
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Best Ever Tweet:
“Never lose money on a deal. Reverse engineer every deal to make sure you minimize your risk.” – Chris Thomas
Theo Hicks: Hello, Best Ever listeners, and welcome to the Best Real Estate Investing Advice Ever Show. I’m Theo Hicks and today we’ll be speaking with Chris Thomas.
Chris, how are you doing today?
Chris Thomas: Man, I’m fired up. Man, we should have done this interview a long time ago.
Theo Hicks: Well, we’re finally here. I appreciate you taking the time to join me today. Chris is at one of his rental properties right now. So a little bit about Chris — he is a full-time short-term rental investor with 2½ years of experience. Portfolio is 257 rentals; 70 of those are managed for other people. He is based in San Diego and his website right now is http://www.getchristhomas.com/, but it might be different when this airs, and so it’s either that or the one that’s in the show notes below.
So Chris, do you mind telling us some more about your background and what you’re focused on today?
Chris Thomas: 100%. I’m from East San Diego, North Park. So born and raised in North Park, San Diego. And pretty much what I’m doing now is—I come from the corporate world, I’ve been through two failed startups, to being back at my family’s house, in a bad situation, to now having a ton of Airbnb rentals and just absolutely crushing it.
Theo Hicks: Awesome. 2½ years when you started investing, right? 2½ years ago?
Chris Thomas: Correct.
Theo Hicks: And so obviously, corporate world, tried the startups, back at home. Tell us about the process of selecting real estate in general, and then tell us why short-term rentals.
Chris Thomas: Great questions, Theo. Hey, man, let me tell you, it was first of all out of desperation. But I’ve always wanted to be a real estate investor since I was like eight years old. That’s crazy, right? I knew I was going to be into something, into business, and I knew that the way to get rich when I eventually became more than an adolescent was being a real estate investor. So I saw this opportunity for Airbnb rentals and I saw how much it got in, I didn’t have any money. I saw that this opportunity was booming, so I started my venture by getting investors. That’s how I started.
Theo Hicks: So you got into real estate because you wanted to do it since you were a kid. For Airbnb, you saw the growth potential, the profit potential… So you mentioned raising money. Had you done real estate at all upto this point?
Chris Thomas: Never. I never did real estate. I did sales calls for a loan company when I was like 17 years old making sales calls. But I didn’t even know what I was doing at that time. But I’d always wanted to be in real estate since, gosh, 18 years old, by actually knowing what it can do for you. I just didn’t have the mindset for it or the know-how.
Theo Hicks: So how did you raise money then? Who did you go to and then how did you convince them to invest with someone who’s never done this before?
Chris Thomas: Great question, man. Hey, let me tell you, I was fully transparent with these investors. How do I reach investors? I manually reached out to these investors via LinkedIn, 500 messages via LinkedIn. I didn’t have LinkedIn premium or none of that crazy stuff, and for 48 hours straight, I think I had four hours of sleep between two days, and I was literally sending out messages to 500 investors and their tagline was “investor”. And I reached out to 500 people, 40 of them reached back out to me saying, “What is it? Tell me about it.” And then 11 of them moved forward and got 3-5 rentals each. And I was in debt, $40,000, I had -13 cents in my bank account. And then just imagine a couple weeks later, that I had 38K in my bank account from all these rentals I was doing. And then I was making 11K every month after that, managing their rentals. So it’s incredible man, I was—imagine I was on welfare; I had the yellow card here in California, and transitioning into managing rentals.
Theo Hicks: What did your message say? Was it the same message to all 500 people or was it custom?
Chris Thomas: Each message was custom. Because with LinkedIn, if you copy and paste messages, it goes up under their spam. So I had to manually say, “Hey, Theo, I saw that you liked this article. I like that article too.” So I made it relevant, boom. So I went in there, searched their profile, looked at stuff that they like and said, “Hey, I like that, what he said too here. I don’t know if you’ve noticed, but I’m in the Airbnb rental space and I’d love to pick up a rental for you.”
Theo Hicks: Okay.
Chris Thomas: And I’m new to this; I told these people, “This is my first time doing this, but I know there’s an awesome opportunity. But here I’m working with my buddy who already has a rental.” So I used that leverage that my buddy already had a rental in San Juan Capistrano and that I’m managing it.
Theo Hicks: There you go.
Chris Thomas: So I had some leeway.
Theo Hicks: And then they’ve reached back out. What was that process like? Was it just immediately boom, ready to go? Was there some additional courting? Walk us through what happened after that. How long it took, was it a lot of back and forth, did they want to talk on the phone, meet in person?
Chris Thomas: It was all phone. So most of them were here in California, some in Arizona. So the nature of the initial conversation was the vetting process, do they have an LLC, how much capital they have, how much capital that they have in their business, to show financials to potential property managers and owners, to make sure that they have the financials to back up, about 2-5 times the rent. So it was that vetting process.
Once we got through that vetting process, some were like, “Meh… I don’t know,” typical sales. And then to some of them were like, “Let’s do it. You’re going to do everything?” “Yes, I’ll do everything. I’ll manage everything. I’ll set everything up, and all you’ll see is the money going to your account, and all you have to pay me is $500 to $750 a month.”
Theo Hicks: Is that a percentage or is it just flat fee?
Chris Thomas: Flat fee; that’s for paid for cleaners and all this other stuff that goes into the business. So they’re paying $750 per rental, Theo.
Theo Hicks: Okay.
Chris Thomas: So per rental that they had, they paid me $750 per rental. So that was pretty cool. That’s how I raised capital, just finding people with money.
Theo Hicks: Okay, so you’ve got the money now. At what point in the process did you start looking for deals and how did you find them?
Chris Thomas: Good question. So how did I start looking for deals? Within eight months, I had 20 plus rentals myself. So I had 20 plus rentals, and I just went to the same places that we already had rentals in; smartest way to do it, right? We’re already in the building. So I just went back to them with another LLC, like, “Hey, my company – I would like to get three more rentals or four more rentals,” depending on the building that we’re in. So I went to the rental. So check this out. I went to the best places that were performing the best for my clients, and I just went to those buildings and got rentals in those places.
Theo Hicks: I’m kind of confused. So what kind of properties are these that you’re buying?
Chris Thomas: I’m not buying, renting. Yeah, we’re renting, renting to rent.
Theo Hicks: Okay, I don’t think I fully understood that. Okay, let me get back to that. So you say, you’re not buying them. You’re leasing them from—
Chris Thomas: Correct.
Theo Hicks: I see.
Chris Thomas: Yeah. So we’re leasing the apartment. And then the decision-maker – we’re using a subject to put this on short-term rental sites, and then we’re putting it under an LLC to put it back on vacation rental sites such as Airbnb, VRBO, go down the list.
Theo Hicks: So you’ll go in there — is your name on the lease, or do you have a buyer already whose LLC goes on the lease?
Chris Thomas: Correct.
Theo Hicks: Okay.
Chris Thomas: So when I initially started, it was their LLC, and they’re representing that LLC and that’s it, man. It used to be nothing personal; it’s be all under the companyies.
Theo Hicks: Okay, so you put the buyer’s LLC on the lease—
Chris Thomas: Investors.
Theo Hicks: Yep. So the investors do it, and then you’re just automatically allowed to do short-term rentals or does the lease need to be a specific way? Do you need to ask the landlord, or it’s just whatever?
Chris Thomas: No, no, no, it has to be 100% legitimate. You have to let these people know, we’re going into the building and we’re going to be putting this on Airbnb. So it’s 100% legal, and they understand what we’re going to be doing there. So that’s pretty much it. We got a lot of no’s and we got a lot of yes-es. And we just vetted out the yes-es and moved forward with those buildings in downtown San Diego, Chula Vista, California and some up north, Escondido, stuff like that. But primarily San Diego, California, Metro, North Park.
Theo Hicks: Okay. So once you’ve secured this lease, then I’m assuming you’re furnishing them. Who pays for all that?
Chris Thomas: Great question. The investor. So they would write us a check for $7,500, which would include their rents, their deposits… Pretty much per rental would be about 5-7K, and that would include their rents, their deposits and the furniture. And then we would take, of course, our portion, a fulfillment fee, which can range from $1,500 to 2K per rental.
Theo Hicks: Okay. And then you’ll go in there with the furniture and then you’ll post it on Airbnb and then you’re kind of responsible for just kind of managing that—
Chris Thomas: Day-to-day.
Theo Hicks: — day-to-day stuff.
Chris Thomas: Yes.
Theo Hicks: Okay. When you first started, were you doing everything yourself, or did you immediately outsource things like the cleaning and stuff like that?
Chris Thomas: I always recommend if anybody’s going to get in this business for the first couple months, do it yourself, so you understand the questions that your guests are asking, or all the stuff that you’re going to be going through with cleaners and the frustrations – you want to fill that, so that when you’re ready to outsource this or give that project to someone else, delegate that process, that you have all the answers ready for any questions that that person that’s doing the task, they understand the whole process.
So yes, in the beginning, the first three months, I was doing everything, before I hired a channel manager through Desti. And we weren’t doing the cleaning, of course. I’m—come on, I can’t swing a mop. [laughs] So we hired some cleaners. Man, we went through so many cleaners. But yes, we were doing everything when it comes to guests communication and managing the unit.
Theo Hicks: Okay. And then does that $7,500 that the investor gives you — how much rent does that cover?
Chris Thomas: It covers the first month’s rent and the deposit primarily, and then they’re responsible for the monthly rents.
Theo Hicks: So are they submitting that to you, or are they sending that in themselves?
Chris Thomas: They direct deposit it into the company. So they’re automatically—
Theo Hicks: Okay, pretty easy.
Chris Thomas: Yeah, they would direct deposit it to the company, and if they don’t have direct deposit, they would find a way to send them a check. So everybody that has a rental property, hopefully they have a direct deposit option. But all of ours did, luckily.
Theo Hicks: How much money — because you said that they’re actually paying the rent, plus they’re paying you $500 to $750 per month, so how much are these units generating?
Chris Thomas: On average right now? Are you saying after they’ve paid me?
Theo Hicks: I guess both. So how much are you bringing in total, and then how much are the investors making?
Chris Thomas: So to answer your question appropriately, the investors are making an average of $2,700 per rental. And after paying us, of course, it’d be 2K to $2200, depending on what type of rental it is. If it’s a three-bedroom, they’re paying $750 to manage it. Two bedrooms is roughly around 600 bucks, and one bedroom is 500 bucks to manage.
Theo Hicks: I think the fascinating thing about this is that, as you said, you kind of have the proof of concept already once you’ve gotten one. So you know, “Okay, well, if this one’s working, then I can just get more deals in the same building.”
Chris Thomas: That’s what we did for my portfolio.
Theo Hicks: Okay.
Chris Thomas: The whole vetting process was done. So I used these investors for my benefit, as well… Because check it out, Theo – we saw the best performing rentals, we saw the revenues that these people are bringing in, and what do you think I did? I went to the same buildings that had the best performers and invested my earnings into these buildings.
Theo Hicks: How long did it take until you started doing it yourself?
Chris Thomas: It took about six months.
Theo Hicks: Okay. So essentially you’re just buying the [unintelligible [00:14:28].18]
Chris Thomas: Correct.
Theo Hicks: I guess a little bit less than that because of the fulfillment fee. How much money are you paying upfront per investment? How much money are you making per rental?
Chris Thomas: How much am I making per rental on the management?
Theo Hicks: No, no, the one that your own.
Chris Thomas: Oh, currently?
Theo Hicks: Yeah, yours, just per.
Chris Thomas: Oh, just per. We’re bout $2,700 to 4K on average. $3,667 per rental. $2700 to $3667 average a month.
Theo Hicks: It is a very fascinating. I’m glad—I’m halfway through, and I realized what you are actually saying. I was like, I think I’ve heard this one or two more times before. Whenever I hear this, it’s so interesting to me, because it seems so obvious, but I never heard of that many people doing this.
Chris Thomas: Well, now you’ve met the don, man. You’ve met the King Kong of Airbnb rentals.
Theo Hicks: Your upfront work is impressive, with all those messages. Alright, Chris, what is your best real estate investing advice ever?
Chris Thomas: That’s a great question. [unintelligible [00:15:22].14] Number one is you want to minimize your risks. And the way to minimize your risks is to find somebody who’s already done it, and to find the softwares and tools—you can agree with this, you’re an engineer… Find all the backend stuff to reverse-engineer it and work backwards before you sign anything on the deal. The deal is done in the data. And I’m a huge data guy. So if the numbers aren’t attractive for a particular rental property, using tools like https://www.airdna.co/ – this is a short term rental site that analyzes short term rentals to make sure you’re making money before you even get into a deal.
The second piece of advice that I have for real estate is find a way to get there faster. Airbnb doesn’t cost a ridiculous amount. I have a guy in Nashville, Tennessee, who was one of my students that took my short term rental Academy. This dude has 11 rentals in Nashville. He started with 3,500 bucks, and he only went in with $500 for a deposit… Because people are struggling with the Coronavirus.
Theo Hicks: Exactly.
Chris Thomas: People are struggling in Tennessee right now, man. And in Nashville, this guy walked into a luxury spot in Nashville, Tennessee, downtown Nashville… And I was impressed. He walked in with $500 in a deposit, didn’t pay the first month’s rent. Now that guy has 11 rentals, making like 60k a month, and he’s a 19-year-old kid. That’s crazy.
Theo Hicks: Yeah. Alright, Chris, are you ready for the best ever lightning round?
Chris Thomas: Let’s do it.
Theo Hicks: Alright. Let’s hear a quick word from our sponsor.
Theo Hicks: Okay, what is the best ever book you’ve recently read?
Chris Thomas: The best ever book I’ve recently read is Built to Sell by John Warrillow. That’s a really good book. Have you read it?
Theo Hicks: No, I have not. I don’t think I’ve heard of it, so I’ll look into that for sure. If your business were to collapse today, what would you do next?
Chris Thomas: The same thing.
Theo Hicks: The exact same thing. I agree. I would, too. What is the best deal you’ve done so far?
Chris Thomas: The deal I made with myself to never quit.
Theo Hicks: I’ve never heard that answer before. I like that. What is the best ever way you like to give back?
Chris Thomas: Through teaching – YouTube, my training, that’s the best way, is through education. Education is the greatest foundation and formula to wealth.
Theo Hicks: And then lastly, what is the best ever place to reach you?
Chris Thomas: Everything’s @getchristhomas. Everything you can think of, any social media platform is @getchristhomas; YouTube, Instagram, Facebook, Snapchat… Whatever it is, wherever you’re, I’m at. It’s @getchristhomas.
Theo Hicks: Awesome, Chris. Well, thank you so much for joining us today and explaining your very unique strategy of essentially finding really well-placed apartment units that would work well for short term rentals, renting those out and then using other people’s money to furnish and pay the rent and then you just collect a fee upfront, and then each month based off of managing the entire short-term rental process for them.
You talked about how you first got started and you manually went on LinkedIn and spent two days straight manually messaging 500 people who had investor in their tagline; 40 had reached back out and 11 moved forward with 3-5 of these types of rentals.
You talked about how you initially messaged these people, making sure that it was relevant based off of what you found on their profile or something they’d recently liked. You were kind of transparent and letting them know that you personally hadn’t done this yet, but that you’re working with a friend who had a short-term rental for that proof of concept. And you said that once people invest their money, then you make $500 to $750 per month per rental. And that within eight months, you had a lot of rentals yourself.
And I really like this, how you’re finding these deals. You said you use some tech to make sure that certain places are good for short-term rentals. But then once an investor has bought one of these units and you see how well it’s doing, then you use that as proof of concept and then go and buy other rentals in that same building, because you already know they’re performing really well. You went into a lot more in detail on how this process works, but that’s kind of the gist of it.
And then your best ever advice was to never lose money on a deal by minimizing risks, which involves finding someone who’s already done it before and then reverse-engineering the process using data and technology. And then you said to find a way to get there faster, and clearly you are living that advice.
So Chris, I really appreciate it. Thanks for coming on the show. Best Ever listeners, as always, thank you for listening. Have a best ever day and we’ll talk to you tomorrow.
Chris Thomas: Yes, thank you so much, Theo man. This has been one of the best podcasts I’ve ever been on, man. You guys really do make that name shine, the Best Ever Real Estate investing podcast ever, and the questions you asked were just second to none. I absolutely enjoyed being on here today, and hopefully you’re making it an electrifying day.
Theo Hicks: I appreciate it, Chris.
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