In this episode of STR Data Lab, Jamie Lane, Chief Economist at AirDNA, sits down with Matt Kruger, co-founder of DSM Stays, to discuss his journey from house-hacking to building a successful short-term rental business. Matt shares how he leveraged real estate automation, strategic market research tools, and the power of sweat equity to transform his investment strategy and scale his portfolio in a non-traditional vacation rental market.

Despite starting in Des Moines, Iowa, an area not typically associated with vacation rentals, Matt identified unique opportunities to cater to larger groups and families. His success stems from a deep understanding of local market dynamics, a focus on enhancing property amenities, and the use of automation to streamline operations and improve guest experiences.

Here’s What You Can Expect from This Episode

• Insights into transitioning from long-term to short-term rentals
• The role of market research in finding profitable STR opportunities
• Strategies for leveraging sweat equity to maximize property value and cash flow
• Tips for using real estate automation to scale and manage operations efficiently
• How to enhance guest satisfaction with thoughtful property amenities

Episode Highlights

Building a Short-Term Rental Portfolio in a Non-Traditional Market

Matt began his real estate journey with house-hacking. He bought properties, lived in them while making improvements, and eventually rented them out. This hands-on approach allowed him to build a solid foundation in long-term rentals before transitioning to short-term rentals.

Matt chose to stay local in Iowa rather than invest out of state. He identified untapped potential and catered to a niche audience in Des Moines by focusing on his local market. While most properties in the area were designed to accommodate smaller groups, Matt saw an opportunity to target larger families and groups traveling for events, family reunions, and business retreats. His first STR, equipped with amenities like game rooms, hot tubs, and spacious living areas, quickly became one of the top-performing properties in the region.

Understanding the local market was crucial for Matt’s success. Using market research tools like AirDNA, he identified gaps and tailored his properties to meet the specific needs of his target audience.

Leveraging Sweat Equity to Build Wealth

One of the key factors in Matt’s success is his focus on sweat equity, the value added to a property through renovation and improvement. Instead of purchasing turnkey properties, Matt and his wife sought out homes that needed work, allowing them to build equity and increase cash flow.

Matt shares an example of a property he purchased for $160,000. After investing time and resources into renovations, including modernizing the kitchen, upgrading the bathrooms, and adding high-demand amenities, the property now generates over $85,000 in annual revenue. The sweat equity not only increased the property’s market value but also made it more attractive to guests, leading to higher occupancy rates and better reviews.

For new investors, Matt advises focusing on properties with potential for improvement rather than those that are move-in ready. The value you create through sweat equity can provide a significant buffer against market fluctuations and help you build long-term wealth.

Real Estate Automation: The Key to Scaling Operations

As Matt’s portfolio grew, managing multiple properties manually became increasingly challenging. To streamline operations and improve efficiency, he turned to real estate automation tools. One of his most valuable tools is Hospitable, a platform that automates guest communication, synchronizes bookings across platforms, and coordinates cleaning schedules.

Automation has been a game-changer for Matt’s business. It lets him focus on growing his portfolio and improving his listings, instead of getting caught up in everyday tasks. Matt has been able to scale his business while maintaining high levels of guest satisfaction by automating guest messaging, cleaner scheduling, and dynamic pricing through tools like PriceLabs.

In addition to automation, Matt emphasizes the importance of having a direct booking strategy. He built a website to showcase his properties and encourage guests to book directly. This approach reduces reliance on third-party platforms like Airbnb and Vrbo and helps build a loyal customer base.

Direct bookings allow Matt to control the guest experience from start to finish. He can offer personalized touches, provide better customer service, and reduce fees associated with third-party platforms.

Enhancing the Guest Experience with Property Amenities

In a competitive market, property amenities can be the differentiating factor that drives bookings and positive reviews. Matt continuously updates his properties to stay ahead of the competition and meet evolving guest expectations.

He started with game rooms and hot tubs, but now he is adding unique features like barrel saunas, fire pits, and pickleball courts. These amenities not only attract more guests but also encourage longer stays and higher nightly rates.

Creating a memorable guest experience goes beyond offering standard amenities. It involves curating a space that guests will remember and want to return to. Matt focuses on the details, high-quality furnishings, comfortable beds, fully stocked kitchens, and thoughtful touches like welcome baskets and personalized notes.

Matt has been able to maintain high occupancy rates, receive glowing reviews, and build a strong reputation in the Des Moines market by prioritizing guest satisfaction and continuously improving his properties.

Actionable Takeaways for Aspiring STR Operators

1. Conduct thorough market research: Use tools like AirDNA to analyze local market trends, identify gaps, and tailor your properties to meet demand.
2. Invest in sweat equity: Focus on properties that need improvement to build equity, increase cash flow, and improve guest appeal.
3. Leverage real estate automation: Automate guest communication, scheduling, and pricing to streamline operations and scale efficiently.
4. Differentiate with property amenities: Continuously update and enhance your properties to create a unique guest experience that stands out in the market.
5. Develop a direct booking strategy: Reduce reliance on third-party platforms by building a direct booking site and offering a seamless guest experience.

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