Episode Transcript
[00:00:05] Speaker A: Welcome to the short term show. The show about short term rentals and long term wealth with real property owners hosting real properties who are crushing it in the vacation and short term rental space.
And here's your host, Avery Carle.
[00:00:29] Speaker B: Hey y'. All.
[00:00:30] Speaker C: Welcome back to another episode of the short term show. It has been a great year so far. Actually, it's been a. The real estate market has been not good, but in terms of being able to get deals because the real estate market is terrible, it's been a pretty good year. So getting towards the end of the year now, so not going to complain. Getting into 2026, I think it's going to be, I think we're going to see a pickup in the real estate market.
We're already seeing that on the short term shop side of things. We're seeing a lot more people getting in there, making offers because rates have been falling. So interested to see what's going to happen the rest of the year, the beginning of next year.
We are still hiring in a number of markets.
You choose your market. I'm not going to make a list.
If you are interested in being an agent at the short term shop, we have a lot of our agents are getting overwhelmed and we're opening up a few new markets, specifically the Poconos in Pennsylvania. And, and we need some agents. So email careers at the short term shop.com if you think that agent might be you. And now we will get on to today's guest. Today we have Frank Napolitano.
Did I, did I get that right?
[00:01:40] Speaker B: Yeah. Great job.
[00:01:41] Speaker C: Awesome.
[00:01:42] Speaker B: Thank you.
[00:01:42] Speaker C: Practice well. Thank you so much for coming on, Frank. Let's start off just by telling our audience a little bit about who you are, what you do and how you got into real estate.
[00:01:53] Speaker B: Sure.
So I live in the Nashville area. I'm originally from Chicago. I've lived in the Nashville area for almost five years now.
And I've worked in sales, sales management, project management in different technology spaces and got into the short term space vacation rental space about a year and a half ago.
Always kind of wanted to or for a while wanted to because I enjoy traveling and vacations and things like that.
And then with the short term tax loophole, if you will, it was a good time for us to buy last year. I guess it's even better time for people to buy now because it's back and at 100%. So last year I think was 60%.
But we went with the cost segregation and did all of that as part of that process. But that was some of the driving factories for us, looking for an investment property was, you know, taking advantage of that tax incentive.
[00:02:57] Speaker C: Yeah, that's. I mean, a lot of people get into short term rentals, especially now because of that bonus depreciation, especially now that it's back at 100%. We're seeing, I mean, at the end of the year, every year, we have a ton of clients who just want to get that.
That tax benefit. So.
[00:03:16] Speaker B: And we had talked about doing it for several years, but it was just because we enjoy it and we enjoy vacationing and wanted a place that we could also vacation at. But that was kind of like the, I don't know, the tipping point, I guess.
[00:03:30] Speaker C: Well, let's talk about.
Aside from the bonus depreciation and being able to, you know, get that tax benefit on your active income, what were the other reasons that made you jump into buying a short term rental and where.
[00:03:45] Speaker B: Yeah, so we live in the Nashville area and we.
Shortly after we moved here, we were vacationing out in the Smokies and we were like, oh, wouldn't it be awesome to own a place here? And then maybe even eventually live here once the kids move out and they're off to college and things like that. So that was about four years ago. But the reason we chose that area is because we like to go there in the Smoky Mountains and. And you know, I hear a lot of people talk about it's saturated and I guess it is, but, you know, we're very happy that we made the investment about a year and a half ago. We went live May of 2024, and we've been very happy year over year. We're doing better than we did last year.
And yeah, we're really enjoying it. We do vacation there, but we're vacationing there less than we wanted to, which is a good thing because it's booked more than we had initially expected. It's been slammed since April. April was supposed to be slow. April was busy almost every day with maybe 8, 8 days available in April and same and continued from there. Each month we have less than probably five or six days available. And it's just staggered days that nobody's gonna book, right. A Tuesday or whatever, nobody's gonna book that when you get that Tuesday one night vacancy on it, two night minimum. But it's been busier than we expected and we're really enjoying it. And year over year income, we raised our rates. Everybody I see on Facebook, I'm in most of the groups that your listeners are probably in. And people constantly talk about lowering their rates and they talk about how bookings are down. And you know, I use price labs, I know you mentioned, you know, talking about numbers. One thing that's nice on price labs for anybody that uses it, they're aware of it. You can look at your occupancy, but the market occupancy as well. And like for the next 30 days we're at 60. The market according to this is 37.
And for the next 60 days we're at 42 and the market's at 38. So we're just above market at 60 days, but we're substantially above market occupancy at 30 days and our rates are higher than last year.
[00:05:51] Speaker D: Are you worried about your market being saturated?
Too much competition.
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[00:06:36] Speaker C: Well, that's kind of how it's supposed to work. If you're doing it right. You know, your first year is never going to be your best year. And I think a lot of people, they jump in, they buy something and the Smokies are elsewhere and they, they're like, oh, I didn't hit the numbers that I was looking for. Well, of course you didn't because it's your first year, there's a ramp up period. You don't have any reviews. You're not going to hit that projection number that you got on air, DNA or wherever your first year, you're working up to that. So sounds like you're doing everything right. What size is your property? How many bedrooms?
[00:07:07] Speaker B: So it's three bedrooms, two baths.
And it is, you know, it was a single family home that before we bought it, it was not built for vacation. A lot of the homes in the Smokies are built for vacation and unfortunately a lot of them look alike. Ours does not look like that. It's a ranch, almost a full acre, very secluded area.
Obviously we've all heard location, location, location in real estate. It's less than three miles to Dollywood. It's really close to JL Ranch. I know you know that area. Anybody that's listening that knows that area, you know, it's off of JL Road, so it's really easy to get to. It's got a good view. I Could see the Dollywood fireworks from our tiki bar in the backyard. And yes, it has a tiki bar in the backyard and a pool, an in ground pool.
So it's a little different, you know, than, than other places.
And I guess that's one recommendation I would give to any of your listeners is if you could find something that's unique. Obviously talked about location, but also their scarcity. So if you have something that's unique and different or you find a property that's unique and different, try to lean into it and embrace what maybe sets it apart from the rest of the properties. You know, everybody talks about a hero photo and that's important. But if everybody's hero photo looks the same because it's naughty pine floor to ceiling looking cabin, it doesn't stand out. And luckily, I guess we weren't looking for something that was different but we, but we found something that was different and you know, we're, we're embracing that.
[00:08:41] Speaker C: So what does it look like? If it doesn't look like a cabin, what does it look like?
[00:08:46] Speaker B: Yeah, so I mean it's a pretty typical home. We actually call it like we have a website, smokymountaincozycottage.com and so we're calling it a cottage. Not because it's not a cabin or you know, everybody calls everything a cabin. I don't know, it's branding. We're just trying to sound a little different. But it's a, it's a single story ranch home.
We did get certified by Airbnb on their accessibility, like their ad ADA accessibility. The door is wide enough and it's one floor. There's no steps up flat driveway. So some of that helps. We have had people that are elderly stay there, but mostly it's been families. And it's a nice kitchen. The previous owner had updated the kitchen so, you know, all stainless steel appliances.
But it's just to me, the way it flows is what you would want. Maybe your home, you know, it's not outdated like an old, your aunt or your grandmother's home or anything like that. It, it's nice. Like I said, it's got a tiki bar in the backyard with a, with full size refrigerator and a big gas grill. Not one of those park grills.
So it's, it's different. Everybody's got a park grill in their backyard. Ours is a gas grill with five burners and like I said, a full size refrigerator and freezer in the tiki bar. And so we leaned into that decorating. You know, we have you know, it looks like Lilo and Stitch back there. Not quite, but it's like porches and, you know, it's a little Hawaiian themed in the backyard, so it's more like an oasis rather than just another.
And we have bears and we have Sasquatch decorations, but we didn't overdo that stuff. And I think that's part of what makes our place different when they're looking, especially if people are going back and they've already stated every wood floor to ceiling cabin that's out there and all of them, that their buildings seem to look like that.
[00:10:43] Speaker C: So yours is all drywall, then?
[00:10:46] Speaker B: It is, yes.
[00:10:47] Speaker C: Yeah. So, you know, back in the day.
[00:10:49] Speaker B: Not loud colors or anything like that, but grays and stuff like that. Yeah. Back in the day, everybody had to have knotty pine.
[00:10:56] Speaker C: Yeah.
[00:10:58] Speaker B: On your headboard, on your ceiling.
And it's just. It's continuous.
[00:11:03] Speaker C: Yeah, yeah, it is. It is. And I remember when we bought. We've got one that's like.
It's wood halfway up the wall, and then it's drywall from halfway up the wall to the ceiling. We were like, is this too much drywall? Because, you know, 10 years ago, everything had to be like that. And I think there still is an element of it needs to feel like a vacation. You can't. Whether it's in a cabin, it lends itself to that because most people don't live in cabins. But I think where maybe you're taking advantage is that it doesn't have to be a cabin as long as it doesn't feel like they're just staying in their house somewhere else in the world. Something equivalent. You've kind of made it a bit of an experience then.
[00:11:47] Speaker B: Definitely. And we also. We decorate for every holiday. Obviously, the Smokies people take Christmas very seriously, but we also have decorated for fall. We put scarecrows up and things like that and. And those. Those big furry cows. I don't know what they're actually called, but they.
[00:12:03] Speaker C: But I think those are called Scottish Highland.
[00:12:06] Speaker B: That's it.
[00:12:06] Speaker C: Or something like that.
[00:12:08] Speaker B: So we put some of those pictures up in the. In the fall and know some sunflower stuff that kind of ties in with that. So we decorate for that. We decorated for Easter, and then, you know, we leave things for our guests.
We really oversupply our guests with everything you can imagine.
And when I think about it. So part of my background was I worked in, like, consulting in the contact center space, customer service, call centers. And it was mostly about technology, routing the call to the Right person, all of that type of stuff.
But a lot of the businesses, the large enterprise businesses were trying to strive to provide excellent customer service and some of them even called it customer delight. And when you think about a company like Marriott, for example, Marriott owns something like the Fairfield Inn, which is, you know, pretty low. It's not the worst hotel, but it's, it's not great. They also own the Ritz Carlton. Right. So the same company owns. And your experience at the Ritz Carlton is very different than your experience at the Fairfield.
And I don't expect, I'm not trying to provide the Ritz Carlton level. That's not realistic in a short term rental. Maybe it is, but I want to be somewhere in between. And when you think about the service that you get at those hotels, there's some bare necessities that you get though, right? So you go to a Fairfield, you expect any hotel really, you expect some basics. And I try to leave guests with everything they could imagine. And we've gotten a lot of, a lot of our feedback, our 5 star reviews or what they write in our guest book has been about how much we leave in the space of amenities and we kind of take that serious. My wife is the brains of the operation when it comes to that. But you know, obviously. And I brought some for your viewers. You know, shampoo and conditioner, but not just women's, you know, men. So we have the men's dove and little tiny bags with Q tips, sealed cotton balls, makeup remover, you know, even feminine products. You know, God forbid somebody's on a trip and, and they need that stuff.
Well, they got to go to the store. They'll go to the store and buy it. We're not leaving them enough for the whole week.
But it's that, you know, we were unprepared. We forgot our toothbrush. We leave toothpaste, we leave men's and women's razors in, in the bathroom basket and it's resupplied as needed. The, the cleaners turn that stuff over.
You know, we got sunblock and hand lotion, but you would expect all that stuff when you stay at a high end hotel. Of course at a high end hotel you could go down to the front desk and say, I forgot X and they're going to give it to you. Well, at a vacation home when there is no front desk, we're not there. We don't live there. And we don't want the guests to come ask us for something they forgot.
But we get a lot of compliments on those things, you know, even some Advil in the medicine cabinet, Advil, pm and the little individual packs that you can get in bulk on Amazon or at some of the dollar stores just in case they need it, you know, and we get.
They might not ever use it, but the fact that it's there, people really seem to appreciate.
[00:15:16] Speaker C: Absolutely. And for those of you who are not watching on YouTube, who are listening in your car or something, he did just hold up a handful of tampons on the show.
But yeah, I totally agree. You gotta have, gotta have those extra little things that in case people forgot.
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[00:17:00] Speaker C: So let's talk a little bit about the numbers. I'm not going to trip you up on numbers or anything like that.
Whoops.
But what did you pay for this? So it's a three bedroom. You bought it last year, which was 2024. So we're at pretty high prices. We're at the he of interest rates. What'd you pay for it?
[00:17:16] Speaker B: Yeah. So if we went back and forth a little bit, it was listed at 460 and it didn't appraise and it was in a short term available market. It wasn't one of these areas where you couldn't short term rent it. But the appraiser and the real estate agent had kind of gone back and forth and they came up a little bit. But luckily the seller, you know, met us where the appraisal was at. So we ended up getting it for 420.
[00:17:42] Speaker C: Awesome. And that is so the appraisal thing is so subjective. Like how you handle that is so dependent on where we are in the Market cycle in the real estate world. So, you know, back in 2022, it was like, oh, it didn't appraise. Sorry, Mr. Buyer, you gotta. You gotta come up, you know, 25, 000 extra cash out of your pocket. But now, because there's not a line of people out the door buying real estate like there was in 2022 because of interest rates, then you actually have a little bit more power as a buyer to negotiate a seller down because it could, you know, might have taken them six months to get under contract with you, and it may take them another six months to get under contract again.
So.
[00:18:22] Speaker B: Yeah, and they had already started moving out. It was their house.
Yeah, they had moved out. Their daughter was away at college. They were downsizing, and they had already started moving into their other house. They had already bought their other house.
So, yeah, they were ready, and they didn't want to start that process over. So we were fortunate.
[00:18:41] Speaker C: Yeah. I mean, I've seen that go so bad for sellers the past few years. We had a listing down here in Blue Mountain beach that we listed it for, I don't remember, like, 9:50. And they were flipping it. I remember they were flipping it, and they did not want to rent it while we were listing it. So they just let it sit without putting renters in it for a long time. So it's out for three or four months, I think we got an offer at like, the high eights, and I want to say we went under contract. It didn't appraise. They terminated. We got a few more offers in the hi eights, and they're still not renting it. It's taken like six months, eight months, and eventually they fire us, go list it with somebody else, end up selling it for 750 because it just sat. The market just got worse and worse and worse over the course of time when really they should have just, you know, gone with those high eight offers where they appraised. So it's it. You really do have more power as a buyer right now when something doesn't appraise than you did a few years ago. So that's something to. To keep in mind. So let's talk about how much I know. You haven't owned it a full year yet.
[00:19:52] Speaker B: No, it's about a year and a half. Year and a half of 2024.
[00:19:56] Speaker C: Oh, okay.
[00:19:57] Speaker B: So it has actually closed in March of 2024.
[00:20:00] Speaker C: Okay. I thought you got it up and running this past April. So what. What are we looking at having grossed our first year?
[00:20:07] Speaker B: Yeah. So last year, and it wasn't a full year, but was a, you know, from May until December was right around 40,000.
And then this year we're on pace for over 60, but we're, we're not booked yet for Thanksgiving and Christmas, so we know that'll obviously bump up. So, you know, we had targeted about 50 to 60, and we'll probably end up closer to 70 this year once all the holidays book.
[00:20:33] Speaker C: Right, right. And Q4 really is a big, like a high season for the Smokies because you got leaf Watcher season, which used to be in October, but it's kind of scooted a little further and further towards November every year. So you've got leaf watching, then you've got Thanksgiving, you've got, you know, some big, big booking dates with Christmas. So you've got quite a bit left to go.
[00:20:53] Speaker B: Yeah, Christmas and New Year's we booked, you know, a separate week long stay last year for each of those. I would expect similar. I haven't looked where, where the weekend falls, but I think we should be able to get two solid weeks between Christmas and New Year's.
Yeah. And so we've been very happy. We raised our rates. Like I said, this year. Part of it last year was just building up the reviews and things like that.
And, you know, we're very happy with the reviews we've gotten. And, you know, things are obviously progressing in the right direction.
[00:21:26] Speaker C: Love that. And I love that you're looking at it as a progressing in the right direction and not a, oh my God, I didn't get rich the first year.
Let me sell this thing. This is stupid. This is a bad idea. So it's, it's very much, you know, it's a journey, not a, it's not a slot machine.
[00:21:40] Speaker B: Yeah. And, you know, when we first bought it, we thought, okay, we'll rent this for a few years and then we'll move to it when our kids, you know, move out to college. And then we'll kind of downsize and move to it. And now instead of that, we're thinking, you know, when will we buy our second, third, and maybe fourth? Ideally, we'd like to get, you know, maybe in the next four years, get up to about four or five of them because we're enjoying it. And, you know, we think, we think we're doing a pretty good job at it.
[00:22:08] Speaker C: And do you want those four or five to all be in the Smokies, or do you want to diversify your markets a little bit or how are we looking at that.
[00:22:17] Speaker B: Yeah, that's a great question. I think if it could be within wherever we end up living once we move out of Nashville area, if we move east Tennessee, maybe we could live in Knoxville or something. If anything's within an hour, I think a circular hour, maybe around the Smokies, maybe one property in the. On the Carolina side once that highway is fully opened. I know it's open, but it's not fully open.
You know, Bryson City or, you know, Maggie Valley, something on that side might be nice.
You know, maybe one or two more in.
It's crazy. If. If somebody's looking to stay in Gatlinburg, they will not consider Pigeon Forge. If somebody's looking to go to Dollywood, they don't want to stay in Gatlinburg. It's not that far. I know traffic. It's crazy. So maybe we'll add a second property closer to where's Valley or Gatlinburg or Townsend or something like that. And then who knows if. If one of my. I have twins and if one of them go to utk, you know, we might want to get into student housing over in the Knoxville area because that's another up or short term because people go there for football games and basketball and, you know, family weekends to visit their kids. So even short term in a. In a college town might not be bad.
[00:23:29] Speaker C: Yeah. We have done an episode before on game day rentals where we had guests who. One owned in Tuscaloosa, one owned in wherever Ohio State is. Sorry, Midwesterners, I don't know my locations.
Columbus, um, and a few people who own in Starkville, where I'm from, which is where Mississippi State is. And I think that the game day rental thing is kind of. It's a good. It's a good strategy and it's kind of up and coming and it just kind of depends. So, like, it's gotta be a bit.
[00:23:58] Speaker B: Of a roller coaster, I would think, because it's not going to be. You're going to get a lot in revenue those game day weekends and you might not get anybody.
But if you can find people that are coming for their. To visit their kids and stuff, then, you know, you might be able to sustain and level that out.
[00:24:14] Speaker C: Yeah, just depends on the market. And you know, a lot of these towns, like Starkville, for example, Knoxville is a bigger city, but like Starkville, Oxford, Tuscaloosa, there's like, not much there other than these colleges, at least. I only know sec really that well, but, you know, there's not a lot in These places, so it'd be interesting to see. I've looked into it in Starkville before, but the way Starkville works, even though it's this tiny town in north Mississippi, it's actually extremely expensive to get anything near the university. Like, I might as well buy another beach rental down here. It's crazy how expensive it is for such a, you know, a piece of dirt in northeast Mississippi.
Yeah, but Knoxville is a much bigger town and it might, might work well. I mean, maybe it works well in Starkville. Who knows? I haven't tried it, but.
All right, so we're getting towards the end of the show, getting ready to ask the final three questions. But first, is there anything about your story that I haven't asked you that you think our listeners would benefit from hearing about?
[00:25:09] Speaker B: I don't think anything that we didn't cover. No, I think we could probably cover it all.
[00:25:13] Speaker C: All right, cool. Well, then we'll get right into it. So first question, what advice would you give 20 year old Frank if you knew then what, you know now?
[00:25:22] Speaker B: So I'd probably recommend to myself to not waste money on so many stupid things. Right. So not that I don't. Not that I wouldn't want to enjoy life. Right, right. Enjoying life and doing things that are memorable.
So you can take that with you for the rest of your life, enjoying living in the moment. But there's plenty of things that I just did that was like, oh, why did I waste money on this? Why did I waste money on that? And obviously I would have probably been maybe able to save up more if I would have planned ahead early on. So the earlier you could invest in a 401k or invest in real estate or whatever it is that you might choose to invest in. The earlier you do that and the more you can do, probably the better. So I would probably recommend myself to not spend money on some dumb stuff.
[00:26:10] Speaker C: Great advice. Don't spend money on dumb stuff.
Number two, what advice would you give a new investor who's looking to get started today, let's say in the Smokies, and oh my God, it's saturated, sky's falling. Let me throw myself down the mountain.
What would you have to say to that?
[00:26:30] Speaker B: Yeah, we talked a little bit about maybe finding something that's different and unique in your market to stand out. So location is key, and I think scarcity is going to be key. So if you find something that's unique, that can draw people in, you know, try to get that and maybe lean into it.
Because if you look like Everybody else. If your property looks like everybody else, you're not going to stand out. Right. So in a basket full of apples and there's one orange, you know, people are going to notice the orange more than, you know, the apples are going to get taken. But if there's only one orange there, somebody's going to grab it because it's different. So stand out.
[00:27:08] Speaker C: Also, great advice. And last question. What's your favorite book that's impacted your mindset?
[00:27:14] Speaker B: So and it was recommended to me for my boss at my, you know, 9 to 5 job. But it's a book called Smart Brevity and we talked a little bit earlier, I think before you started recording about Twitter and X and texting and how everything's gotten shorter. Our attention span has gotten shorter. And that's what the book is about. It's called Smart Brevity, the Power of Saying More with Less.
And it's written by co creators of Axios and Politico. I'll hold it up for those that are viewing, but I would highly recommend it.
People get very wordy in their short term rental listings and people don't have the attention to read all those things that we think are important. You know, they might want to bullet point it out high level and you know, let your pictures do some of the talking. But people get very wordy in short term rental listings and I think that this book could help people with that.
[00:28:08] Speaker C: All right. And nobody's recommended that. So that's a great one. And last before we go, Frank, if our listeners want to follow you on social media, how can they do that?
[00:28:20] Speaker B: Well, great. I doubt they want to, but probably easily found because I have a unique name. Frank Napolitano. I am on Facebook.
My property is called Smoky Mountain Cozy Cottage. That's also on Facebook and has a website. But yeah, so at Frank Napolitano I believe is probably what I am on Facebook and but easily found because like I said, it's a somewhat unique name.
[00:28:45] Speaker C: All right, well thank you again, Frank, so much for coming on. And guys, we'll see you next week.
