Episode 078 – What You Need to Do to Add a Hot Tub and Increase Profits

We added a hot tub to one of our small properties in Tucson.  We're going to tell you all the things we needed to do in order to cover our assets and make local governments happy, as well as our insurance company.   Plus, what did this mean for our bottom line?  How long before the hot tub paid for itself?  It already has!!  You may want to try this out for yourself.

 

 

Transcript of this Episode:

Hi, this is Michelle, the master of money mindset, and you are listening to BNB dash boss podcast.

And in today's podcast, we're going to be talking about hot tubs. I love my hot tub. And we added a hot tub to a property and we are loving the results. So I wanted to share with you what happens when you add a hot tub, what your insurance company needs, the release forms, what it does to your income and your bookings.

So that's what we're going to cover in this episode. Now the majority of our properties are in hot areas. I don't own a short-term rental in a cold area. 'cause I don't like the coal. I moved from Chicago more than 30 years ago. And I just remember being so excited because the last winter would be my last winter.

I was like, this is going to be the last time I have to heat up my key to unlock my door because in those days, We didn't have, you know, cars that you could put on a remote that would warm up by itself. And I don't know that you would want that in the city of Chicago, our car was broken into several times.

I can't imagine having a car actually running without you in it, without it being a danger. But, you know, we didn't have a seat warmers or anything like that. As a matter of fact, it was so cold that I didn't smoke, but I carried a light. And I carried a lighter so that I could take an heat up my key and slide it into the lock of the car and hold it there for a few seconds.

And then you would hear the lock release like there. Now you would unlock it, but it wouldn't lock again. So we would start the car, get the car going, and then drive a little while holding the door. And then after the car heated up and the heater started warming everything up, you would hear the car door, just go clink, and then it would be locked, but you wouldn't be holding the door shut because the locks in the car did not work.

That's not a lie. That's the truth. It was, it was crazy wicked cold. My son is in Boston right now making a movie. And so he keeps calling me in it's wicked cold has this wicked. Um, so starting to get me to do a Boston accent and I have friends from Boston. I'm like, I'm going to, I'm going to call my friends and have them to pocket cat in the yard.

It's wicked cold out there. Anyway, it was wicked cold in Chicago. That's for sure. In the winter times, the summers were wicked hot and holy cow, I mean, Super hot weather, super high humidity. I worked downtown and took the train into union station every day. And then I'd have to walk for a few blocks. And boy, I'll tell you, man, you would just sweat and sweat and sweat.

You'd literally have to change your clothes when you walked in the door to work because you were already didn't matter. It didn't matter what deodorant or antiperspirant you used, you were sweating. It was miserable. There were a few times a year where it was really nice. That's why the fall was always my favorite.

And the second was the spring, because at least you had this mild temperatures, but Chicago had some extremes. Let's be honest. So now. When you grew up, you get to do what you want in this country. And so when I grew up, I said, I'm not going back to that shit. So I just stayed away from Chicago unless somebody got married or somebody died.

That was pretty much how you could get me back to Chicago. I started buying properties in Arizona first and bought a ton of real estate, close to ASU and Tempe and Mesa. And hospitals up there and stuff, because I was taught by Robert Kiyosaki and his crew Dosta ruse and everybody. So that's what I did, but I would still vacation in Florida when my husband and I were trying to decide where to go.

After he graduated, I was like, I'm going somewhere warm. My aunt lived in Scottsdale. We would travel there to see her all the time because I worked at a travel agency downtown. And we would also go to Florida because I was a huge. Disney fan. We had our honeymoon in Florida. We took a couple of weeks down there and my husband had only ever been to Disney land.

And he was like, what are you going to do for two weeks? And I was like, dude, Disney world is a world. And Disneyland is a land you could get. All of Disney land in just the parking lot of the magic kingdom at Disney world, that was like, I think we only have three theme parks back then. The studios didn't open until later if I'm correct, we only had three and they only had their three big resorts that they started with.

They only had the contemporary resort, the Polynesian resort and their campground. That was it. That was the only thing they had. When we started moving away from the Disney properties, we found some houses and BRBO was one of the first places I had owned my own travel agency by that time. And I knew a lot about travels.

So I had a computer before people had computers, home computers and stuff. I had one of the first home computers and. I knew all the websites to book people at, because that's what I did. I was a travel agent. I had a travel agency. So anyway, we started booking with VRVO and getting entire houses. And then we booked directly with the person that we rented from.

And then we decided, you know, why don't we buy a house down? So that's what we decided to do. Those were their first two states that we did. And I would drive all the time because I did not like flying with all my kids. I would just rather drive. I had no problem taking the 10 from Arizona to Florida. And I've done that ever since.

There's only been probably a handful, maybe two handfuls of times where I have flown to Florida, but the majority of time I don't fly. I will drive. I will drive and I would drive my kids and we would make it all the way through. It would be really easy. I saw some other states that I would like to purchase properties at parts of Texas parts of Louisiana.

There were places where I would get tired. It was like I could drive to about here and now I'm getting tired and. That's those are the cities that I would pick. And those were my favorite stops because they had a lot there and they were very, very pretty. And so we started flipping houses there. So that's how I got into all the other states.

Right. So it was just states of convenience. And then obviously being from Illinois, I also had to go back up there every so often and visit my mom. She lived in Iowa, so I didn't have to go to Illinois se. But I would go to Iowa and my mom moved there after I grew up and I left home. So I had never lived in Iowa.

I don't think I had ever been to Iowa. You'd go to Wisconsin because the drinking age in Wisconsin was still 18 when I was young. So once I was over 18, you couldn't drink in Illinois because the drinking age in Illinois was 21, but just drive, uh, an hour. And, uh, you would be in Wisconsin. Drink there. And we had friends who had properties on lake Geneva still do, could drink there, spend the night and then come home the next day or something.

So those states, they became convenience. We flipped a lot of houses out there, but I never picked up any properties to rent. I always stayed with my parents or at a place close to my parents. So that's how we got into that. But the majority of places I wanted to say. I never wanted to go back to the cold.

So I just bought properties and held properties in pretty nice places, you know? Nice, nice warm climates. Now the majority of properties that we own, I'm going to say almost every single property we own. I'm trying to think of an exception. They have a pool. They either have a pool of their standalone SFH, um, which is, uh, just a regular single family home.

If it's a single family home, it has its own pool. If it's not. If it's in a condo in townhouse or a resort, it's got a community pool. I looked for a pool. I mean, there should be a pool, some kind of community pool to kind of draw people. But as the nights get cold in the winter here in Arizona, we have a hot tub, right?

We got a hot tub, hot tub. When we were renting, we need to buy this house. And that was a few years back. And we loved it. We were like, oh, a standalone, hot tub. They're so big. So fun, lots of jets, way better than just a regular koozie as my kids like to call them in a pool. Right. So when I bought a property with my partner, a motto down into.

I told him last winter, I think it was our first winter. And I said, by next winter, we're going to take a few thousand dollars here and we're going to take our profits and buy a hot tub because by next winter, we're going to have a hot tub in here and that's going to keep us booked through the winter.

And we had a sporadic time, you know, it was obviously it was 2020 and stuff, but we did pretty good because we had long-term nurses, but we had. Weeks between those long stays that I felt would have been filled had we had a hot tub. And so this year we bought a hot tub and it's the first time that we've had a hot tub.

That's not a part of, you know, like a homeowner's association or somebody else has to keep it. We have. You know, like now it's ours. And so we had to make a few changes in order to buy it. So for the state and the city of Tucson, we had to build a higher, better fence in the backyard, which makes complete sense so that we can lock it in.

So no little kids are getting into your backyard. So we did that, but the other things we did were for our insurance. Now we use proper inch. Proper insurance did not raise our rate for having a hot tub. That was good. Right. But they did have a list of things that they wanted us to do. So obviously you have to comply with local laws and local rules and regulations.

And so hence the fence and you have to have a self-closing door, you have to have disclosures and all kinds of stuff, you know, like. Just like having a pool, you're going to want to have a self-closing door or some kind of security door and security locks on your gates to your backyard. Right. And on your door from the house into the backyard, into your back patio, you want to make sure that you have those.

We put a lock. With push buttons that you can access from the outside. And the only people who know that code, the only people who have that code is the pool cleaning company who is doing their cleaning. And I'll explain that in a sec. And then us, we're not giving that to guests. Guests can go out that gate really easily, but no one can come in that gate without us.

So. We're not giving anybody that they're just not easily changeable and we don't want to change the whole type of lock because first of all, it will be out in the elements of Arizona and holy cow guys. I mean, during the summertime, That lock gets beat to hell, uh, being right in the sun because it's, it's 118, 120 sometimes in the summer time.

And if it's in direct heat, it's like molten lava, right? So our locks on our doors, we go through really fast and Arizona because of this. They really wear and tear on our e-logs. We go through those relatively fast. If this one did, because of where it's located, the sun will be beating right on it. We just didn't want to do that.

We were like, ah, this thing, I mean, we'd go through this probably at least once every season, if not. Every summer we start one and probably have to replace it somewhere in the middle. It would not be a good thing. Once you get to the cool months, you probably last all through the cool months, but you'd probably go through at least two or three year, if not more.

So we decided now we're not going to do that. We'll just keep it open for just for us. And like I said, anybody can exit. Anybody can let somebody in from there as if they're on the other side, if an emergency crews come, they want to get in, they're just going to take the gate down. It's super easy to take a gate down.

If you're an emergency crew, they're just going to take their axes and go through it. And honestly, I have no problem with that. We'll just replace a gate if there's an emergency. So the entry ways into that backyard have to be secure. And then you should have a release form. Now that was crazy because proper insurance wanted us to have this release form.

I sent a release and that wasn't the right release. Like it had some of the stuff, but not all of the stuff. So that release that we got, that we finally got has like a hodgepodge of stuff. It covers everything like covers everything. It was like, okay, what do we need? We need this, this, this, and this. And so we kind of just check the boxes and had our list of rules and.

It was like, once we sent that in, it was like, no, you have to make it where they are signing this, that they are letting the liability go and any gas and they take responsibility for their kids. And, you know, it's like, okay. And you warned them that, you know, drownings are the number one cause of death in children under five in the state of Arizona.

You know, just letting them know how incredibly dangerous having any kind of body of water around children is in our state. And it is it's super dangerous. So we don't have a lot of people stay with kids. We've had people stay with babies, but not a lot with kids just because of the area. It's not really a kid friendly area.

It's a one bedroom anyway, technically they could. Like when you see it, I would say it's more for couples. So we've had a lot more couples stay and that's pretty much who travels. Not a lot of people traveled to Tucson with their kids, unless they're going to go for the holidays and visit family. It's not like, Hey, let's go to Tucson.

I mean, if you've got kids, you want to keep your kids entertained. Most people, they don't come here with a lot of kids, Florida. Absolutely the opposite. But here's the deal too. We don't offer hot tubs in Florida for the same reason. Why? Because hot tub is really dangerous for kids. Hot tubs. There are warnings.

Anytime you go to a resort and Florida, they have warnings outside the hot tub areas and the jacuzzi areas to keep the kids out of. Because little kids, bodies can't regulate their temperature, like an adult's body can. And so if a little kid goes in there for any length of time, it could wreak havoc with her health.

I mean, you should never have a little kid in a hot tub unless you've got your hot tub, you know, way down to, you know, 80, 90 degrees or something where it's like bath water, but not up in the hundreds where usually say. Uh, then it's dangerous for little kids and we've never bought any extra hot tubs or jacuzzis in Florida because that's all we ever saw.

All our properties in Florida are family-friendly properties. We don't have anything that we market specifically to adults there. Everything is family friendly. So we make sure the kids have a pool. And I don't mind heating pools in the winter time because that's a lot of fun, but, you know, All the tubes and all the pool toys for the kids.

We've never offered a hot tub because we knew hot tubs were dangerous. And that parents it's really hard for them to say no to their kids. It's hard for me to say no to my kids when I was younger. Right. Push over for your little ones. Oh, we'll go ahead and sit in here. And you didn't realize, even when you read those things, you're like, oh, I'm right here.

I'll notice. And then they get out and their little body has like a line with like red on it. Like, oh, he got. There that little good was getting really high. Cause I've seen little kids get out and their little bodies are beat red and you're like, holy cow, not a cool thing. So we've never offered them in Florida for that reason.

Uh, just don't want the liability of people boiling their children alive and not realizing it. Right. So this is a little bit of a different reason that we thought we would do. So as soon as we got the release, we also had to have a cleaning schedule for it. And I thought it would be a lot easier to just hire a poll company to come and do that.

And that was a little complicated. I actually gave that to my partner who lives down in Tucson, like call around and he called a couple of places. And, uh, he said, no pull companies don't do. Even the pool cleaning companies, they don't do standalone above ground hot tub cleanings. So I decided to call, and what I did was I called a few places that were five star reviews on Yelp and immediately got the, no, we don't do hot tubs that are above ground standalone, blah, blah, blah.

And I said, okay, tell you what. Here's my name and my number. Could you leave this information for your pool? And ask them if any of them have extra free time and they want to make some extra money. I need somebody to go there once a week, do the chemicals and clean it. If it needs cleaning or let me know, you know, what's going on with it, just to keep it regulated and keep it nice and clean.

And so when I left my number at a few places, I was calling maybe the fourth place and my phone. Take the call and it was the owner of one of the cleaning companies. And he said, you know what, we'll do it. How's 90 bucks a month. And I was like, you got it. 90 bucks a month is great. He's going to do it once a week.

And we looked at our bookings and I said probably Monday would be the best day to do this because we have a lot of exits on Monday. Know what your biggest entry and exit days are. And so we wanted to. Every time somebody was leaving so that we could clean it right away and have the chemicals ready for the next guest.

So that way, when a new guest comes in, we know it was cleaned because it's getting cleaned on the day that the people left. And if it happens to be an in and out, which we are starting to do now through the winter time we took off our COVID. And we're starting to have entries and exits at the same time, we just put into our hot tub rules that whenever the pool gets serviced on Mondays or whenever, if it happens to be a different day of the week, that you can't use the hot tub for 24 hours, because they're going to put chemicals in it, it's going to be really strong.

Anyway, it's going to be really bad for your skin. That's one of the rules that we put in there. So that's going to cover our pool clean. So we got the fence, we got the lock, we got the rules and the release, and we put our hot tub in there, listed it with a hot tub and then went and changed everything.

Wheelhouse. Now we use wheelhouse for our auto pricing. It's one of my favorite places. I love wheelhouse. You don't have to use wheelhouse. There is a lot of automatic pricing places, but I love wheelhouse in his shoes as we did, as soon as we plugged it in updated it, boom. The race went up and the rates went up about 50 to $60 a night.

And I was like, holy shit. That seems like a lot. Like this place is not going to book out. I don't know if this is going to work because right now we're doing really good in the market. Last year, this little one, one in Tucson pulled in between 25 and 30 K for us. And we were super excited about that. We were like, go that that's pretty good, especially because we only paid like 70, 70, some thousand for it.

Then we had to fix it up. A little bit, we don't have that much into it, so definitely less than a hundred thousand. And, you know, even with the furniture and all the new stuff we put in, right? So here's a a hundred thousand dollar property that's pulling in. It's making it's a return on investment is about 25% or more.

We're we're totally cool with that. We're like, this is great. We paid cash for it anyway, so we're, we don't have any loans on it. So that place is doing really well. As soon as we did this. I mean, our bookings went, boom, boom, boom, boom, boom. And we booked up, I mean, it just filled up so fast. You couldn't even believe it.

We had a long-term guest in there already. It was a traveling nurse and he had been there, I think since August. So let's say August, September, October, anyways, he was in there for awhile. So we told him we're getting a hot tub. It'll probably be delivered at the beginning of November. That was a crazy story because.

Uh, you know, I priced around some different places and they said, it's going to take this long to get there. So I was like, oh shoot, I'm going to buy this in August. It's not going to get there until November, which is cool. I was like, I'm cool that I don't care. It's not going to start getting cold until October anyway, in the evenings.

And it hasn't, I mean, it's just recently started getting cold at night. So it's already, you know, November here. We didn't have a real cold October evening all this year. I mean, we had some that, eh, you know, nothing that you would like, I'd love to be sitting in a hot tub right now. You want your evenings to be kind of cool when you're sitting in a hot tub, not warm.

Right. So we're like, okay, that's going to be cool. We'll get this. As soon as I ordered it, they had said like, it's not going to be delivered till November. Not even a week later. I think it was, it wasn't even two weeks. I know for sure. I get this phone call and it's like, yeah, we're in your neighborhood ready to deliver.

And I'm like, who are you? Like, what do you mean you're ready to deliver? What, what are you delivering? It's like, and they're like, we're delivering your hot tub. And I'm like, where are you? And they're like, we're in Tucson. And I'm like, oh great. Cause I'm in queen Creek, which is waiver away from Tucson.

Like I'm about 90 minutes from you. I had to call my partner. I said, where are you? They're ready to deliver a hot tub. And he's like, what? And I. Dude. I have no idea, but this thing came and less than two weeks, they must've had it. And they just said, let's get it out and deliver it. And so they did, they delivered it really fast and we were not ready for it, but we got ready really fast.

And the traveling nurse guy, he was super happy. He was like, holy cow, I can sit in the hot tub while it starts getting cool out in the evening. So he was really happy. So we got this hot tub delivered super fast and put it in there. Fence had already gone in, we had already done the fence, which was really good.

That looks nice now. Uh, I was super happy about that. So we got the hot tub put in and the bookings started coming in. I mean, they really started to roll. So right away, we had 2020 to start filling up from the beginning of the year. So I think we started with a booking that went in February and then a booking in March.

And then, um, it was like several weeks. We filled up all of February, the end of January, all of February and all of March 1st. Then the next thing we knew, we filled up all of October and November and those were completely filled up. And then. We filled up December, no, January and then December. And then there were just maybe a week here between a couple and a week there.

And then we put it on sale for 20%. If you put something on sell for 20% on Airbnb, they actually send it out in their emails. So we did a promo for 20% and we filled in those week or less than a week, right around Christmas time. Uh, we. People checking in on Christmas day before, but we, we had nothing leading up to Christmas day like that week before then.

So we filled that up and we filled up, you know, another week. And so now. The property is booked solid. Say September, October, November, December, January, February, March, and into April. So now the property is just booked solid within just a few weeks. It's amazing to me. So our projected earnings. In the next year, shot from 30 K to 40 some K and wow.

You know, you buy a hot tub and it increases your income like 10,000, the first year it paid for itself. And then some, and you're completely booked, which I love being completely booked because it makes my cleaning crews happy. So I think it's a win-win scenario. I really, really do. So now next week, what I want to do for you guys is I want to go over all the things that we have in our release form.

And because you're going to want to write your own, just take what we say and write your own. Here's the things we added. And here's why I'm going to tell you, but you're going to want to write your own, and you're going to want to hit the highlights that your insurance company tells you to hit and the highlights that you feel you need to hit.

Right? So. When I read that to you next week. Just know that you get to create your own release form and then take it in and give it to your attorney because the release that we have now we could share with you, but it's not the release we're going to be using forever because we just used it for the guy who was in there.

And the first couple of bookends to get us into November right before. We want Carlita to take a look and tell us, you know, what did we do? Like I said, right now, it's just this hodgepodge and it doesn't look organized at all and it's not like flowing kind of document or anything. So we got to have Cara Leda, take a look at it and then give it back to us because we were just basically.

Filling in the gaps, you know, putting in the things that we wanted in there and then filling in the gaps of what the insurance company needed. So now it's all in there. It just looks like, I don't know, just imagine somebody writing here's the pool rules and they put like four rules down in really nice.

And then they come back and then in a different color marker or even a pen or something, they put another rule in there. Oh. And by the way, don't do this. And then they come back the next day they had another one. It just feels like that kind of dog. Obviously it's all the same font, same font size and everything, but it just feels, it just feels thrown together to me.

So I would love curly that to make it like more flowing. So we're going to hand it over to her and let her do that. So next week, I'm going to be telling you all the stuff that we've got in there, and it's going to be a hodgepodge when I tell you it, because I'm going to be reading off this document and I'm actually.

Just going to read off that document. You can put it together the way you want. Okay. So if you don't have a hot tub agreement, it'll be really good. And I can put that agreement in the. You can find them online and you'll see what's missing and what's not missing. You'll see it. So it'll be easy for you.

But like I said, the bookings just super fast through the winter months shot up there. We filled up our winter and we used to fill up our winter all the time anyway. But when we filled up our winter this time, we filled it up for what, for a lot more. Oh, my gosh. Instead of somebody paying a thousand dollars a week, they're paying close to $1,500 a week.

Do you understand? So this place is booking. It's like booking big and we're going to have dead times in the summer. Cause we always have like a little dead time in the summer and nobody wants to come to Arizona in July. Last year though, we did have July fall, which was kind of weird. W nobody wants to come to those hot winter months, but we got some traveling nurses and I'll we'll discount for traveling nurses any day in our hot times.

So it's like, all right, get somebody in there. And at least somebody in their property is being taken care of. And I include cleaning sheets and stuff. For the traveling nurses now, so that my cleaners can go in there and kind of keep an eye on what's going on in the place so that it's not getting trashed.

And then they keep my sheets and my towels nice and bright white. Instead of having the nurses do it, the nurses, God bless them. They didn't do. Uh, great job cleaning. Some of them, I'm going to say some of them, but you know, it is what it is. So we want to keep our, our towels and our sheets nice and bright white, because that's what everybody loves.

And the only way to do that is do it yourself. Don't have your, your guests do that. They're going to stain your sheets, sane your towels. You're going to have to replace everything that you got in there. So I don't mind having that service. What. 30 $30 a week to have somebody go in there and change the sheets and the towels.

That's not bad at all, definitely worth it. So that's the episode for this week tune in next week. And I'm going to read off all the stuff that we have in the hot tub release, and it will all go together for you. Okay. Great. God bless.