I Asked a Real Estate Millionaire how to Get Rich (feat. John Entwistle from Wander)

homes have generally appreciated for for quite a while we own about $40 million of real estate and then we have a little over 200 million like under operations meet John and whistle the founder and CEO of Wonder a $100 million startup owning and operating the most mind-blowing properties in the US my biggest piece of advice if you're getting into investing in real estate is hey guys welcome to silcom Valley Girl and uh today we have a very special guest I have John H owns a company valued over $100 million and it's a company in real estate and shortterm rentals thank you John so much for being here thank you so much for having me I have so many questions I'm just getting into real estate and I wanted to ask you a bunch of questions around like picking out the property and like managing it so my first question would be when you look at the market like how do you decide what you're going to buy what are your resources what are the calculations absolutely so the the first thing you want to look at is just all the different data providers that out there so you have services like airdna key data how the regions that you're looking at buying a home in will will perform from a revenue perspective you the one thing I'll note though is that you want to kind of take those Revenue projections with a little bit of a a grain of grain of salt right you want to you sort of be really thoughtful in in your underwrite and be rather conservative in it and ideally if you can once you find a region that you're really excited about and you want to purchase a home there and you're thinking about short-term renting it call the local property managers and say hey how are other homes in the area performing what can I expect this one to do would they be open to sharing that for for the most part typically they'll want to have you as a as a customer right so that'll like kind of be like the flip side of it um but again what what I would say there is like you really want to get multiple sources if you can find and talk to other owners of vacation rentals in the area you know they'll typically be pretty open for the most part it requires a decent amount of of digging but the more accurate you can get the the better um and then again like I would say is is you can't I wouldn't necessarily plan on on the revenues if that makes sense so you really want to make sure that you're buying you the home at a really good price that you feel good about the market that you're ready to hold it for a long time long time meaning I mean gosh I mean there's there's so many different ways to look at that that question um you know I would say probably like 10 10 years plus is really like in your in your ideal world but a lot of it also depends on the appreciation that the market may see you also you may also have the opposite of that right you could have you know home price depreciation which is I think something that people haven't really thought about homes have generally appreciated for for quite a while but as as everyone knows it's possible for home prices to obviously go down as well and so you just want to make sure that when you buy a piece of real estate that you give yourself a little bit of cushion you really focus on that cost basis if you can increase the value when you buy a place that's always like a good move as well let's say you know a place needs a little bit of work or whatever that looks like but you you the biggest thing when buying real estate is you just never want to overextend yourself you want to make sure that it's an asset that you can very clearly afford that if the cash flows from renting the property aren't as good as you want that you're still in a good place and then you're prepared to own the asset for a long time because you know if you think about it you know when you're forced to sell real estate like it can be relatively difficult to make money and so you have to be in a position where you know you're willing to say no you're willing to hold on to the asset those different pieces and how accurate when so when you do the research and then you actually buy the property cuz how long have you been doing this for yeah I mean in terms of in terms of wander it's only been around for about two and a half years we own about $40 million of real estate and then we have a little over 200 million like under under operations the the ones that somebody else has owns but you ex R them out for them and so how accurate has the data been one so you have real numbers now yeah absolutely like prediction versus reality yeah that's a great that's a great question I mean candidly it's been relatively accurate and I think that's been because we've been like very paranoid about like a lot of our Acquisitions though some of it can be like pretty dislocated like for example um which areas are the most dislocated well it really depends actually like on an asset level so wander wander as a platform we we generally outperform the market in terms of occupancy and ADR and generally Revenue by what's the average occupancy rate by the way uh we average 80% occupancy across the portolio that's perfect um so we we generally outperform the market but what like when we do our underwrites we underwrite based on what would this home do as an average if it was just listed across the various booking platforms like Airbnb and vbo like we don't attach a wander premium to it and we just do that to give ourselves a little bit of cushion when when we see that like wander is performing the same as that like original underwrite like we didn't outperform our underwrite then it's like okay like that even though like that's in the margin of safety for us like we would have wanted it to do a little bit better mhm so you know again I I I think like the data the data is perfect you want to be like really thoughtful with it and then if you're going to do you know I what I would effectively do is multiple versions of your underwrite so like here's here's our base case here's our you know really downside case then here's our upside case and you really want to be purchasing based on that downside case as opposed to the upside case yeah but your properties have been profitable since day one like month one yeah no so I mean obviously there's a stabilization period like about like call like 3 months give or take but yeah all all wanders properties were profitable in the first year that's great so the The Profit sorry the revenue covers mortgage payments insurance payments renovation uh like do you buy new furniture or yeah so that falls into this idea of like capex that goes like into like the total total cost but yeah wow so by the way I had a question because I know Four Seasons when they start planning a hotel they start with planning how much mattresses are going to cost because they're so expensive I know your mattresses are like the is it purple uh bright bright okay so how what is like the most expensive piece of like furniture or li

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