Allen Meringolo
@Aldigity
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Building: -THS: a central NH home services co -Pothos Stays: a premium STR mgmt co -A small RE portfolio (3 STRs, 1 MFH)
Plymouth, NH
Joined December 2012
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Last Seen Profiles
Pinned Tweet
Three years ago, I sent out the first quarterly Pothos Capital Family, Friends, and Partners newsletter.
Since then, my partners and I have:
-Acquired two properties - one 7 unit MFH and one “mini resort STR” - and have a third under contract
-Become the best STR operators in
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It's a good thing so many small businesses include "LLC" in their trade name and marketing.
Can you imagine if customers did not know the legal structure and tax filing status of the company they were doing business with?
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Telling Brooklyn millennial girls I do real estate and Airbnbs for a living -
Would be better off just say I’m in human trafficking
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Last week, my group closed on a 12 acre short-term rental / Airbnb property in Woodstock, NH - this deal is a culmination of 2.5 years of STR learnings.
🧵on the thesis, location, value add & guest experience plan, financing, partnership structure, & preview of what’s next.
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Crazy series of events last night:
-Guest checks in at 1130pm and messages us asking where pack-n-play is
-We don't immediately respond and guests checks out at 11:50pm without messaging us
-Airbnb messages us and calls us this morning and says we have an hour to respond
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I’m 27 yo and have done 4 real estate deals with a 5th under contract.
I’ve never worked for a real estate investment co or made over $60k annually; my knowledge is largely DIY’ed.
The mental model I’ve used for growing:
The goal of each deal is to add tools to my tool belt🧵
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Big challenge with Airbnb guests: not understanding the binary review system where 4 stars = failure.
So we purchased this off of Etsy for $10. Let's see if this helps set expectations.
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I got pushback a couple weeks ago when I said that the operating expenses for a SFH STR could be $100k.
So let me walk you through the underwriting for an STR deal on 1.3 acres in White Mountains NH to show you how we get there and overall how my group evaluates STR deals.
👇
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Here is a brain dump of notes and observations from my last 10 days on a half-cation in Mexico City (CDMX).
CDMX is my favorite city in the world and this was my first time back here since February 2020.
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The Airbnb Apocalypse discourse is stupid, but that does not mean there are not very legitimate reasons for STR pessimism.
In late 2021 / early 2022, there was a very active STR investor community here on ReTwit - myself included - regularly sharing advice, operational tips,
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In 2021, my biggest realization was that the best opportunity* for cash flow in Airbnbs / STR real estate atm is not necessarily in buying the RE but selling the shovels.
Here is why 🧵
*Caveat: for more entry level folks without a ton of capital. Not ppl like
@imrichardfertig
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Maintenance issues with short-term rentals:
1. Many small requests from guests
2. Lots of wear-n-tear that gradually degrades the property
Solution I am testing: handyman agreement with my contractor - $140 / month for 8 ad-hoc calls & biannual in-depth checklist / inspection
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Our hot tub service guy at our STRs sucked - mean, horrible communication, unwilling to do anything outside of basic scope.
We have refunded guests $100s of dollars because of hot tub issues.
And he is the only option in the market.
So we will be launching a hot tub service
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So much of what everyone thinks is alpha and “crazy cash flow” in STRs is really operational ignorance, poor underwriting, owner-operators not valuing their time at market rate, and unpriced regulatory risk.
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My group launched our second short-term rental property in White Mountains NH in May 2021. Our basis was ~$240k.
Aug 2021: revenue - $9238, NOI - $5,659, cash flow - $4664.
Aug 2022: revenue - $21,160, NOI - $14,318, cash flow - $13,304.
Here's how we did it
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STRs are the restaurants of real estate:
1. Ppl see high menu / listing prices and think 💰 but don’t see the operational headaches and thin margins, particularly for commodity offerings
2. Everyone has been to one so they have an opinion on what makes a good one
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A lot of bad STR advice out there, folks
Was at a meetup this morning and a guy with a real estate podcast purchased an STR for $900k in a market I know quite well.
He is projecting $100k in revenue and said he thought it was a “pretty good deal.”
Hint: you need double that
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If I was moving to a new city and wanted to start investing in resi real estate, I would drive Lyft for a few months:
1. Learn how the city is laid out
2. Find out where people work and like to go
3. Talk to passengers and figure out what it’s like to live in different areas
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STR hack: delight guests by leaving a Busch in the fridge for when they arrive.
Low cost, good ROI, even better flavor and refreshment
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This morning, we got a request from a massive commercial property to put in a snow removal bid.
The catch: it's for this Winter and the customer is looking for a proposal in 8 hours on the day after Thanksgiving.
Had to break the news to the guy that we have won multiple
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After 4 months in the wilderness, we got an offer accepted on a massive STR property in Central NH that should perform in the top 1%.
It was probably the fact the offer was $25k above w/ $50k escrow and no contingencies but I am going to tell myself it was the personal letter.
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@ChrisSpoke
@realEstateTrent
I’d pay $100k for 8 minutes of
@LilTunechi
time, specifically “Go DJ” and “I’m Me”
If he’d be kind enough to comp a third track - “Fireman”
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Whenever a guest who left something at one of my Airbnbs reached out to see if we can send it back -
I call them and lecture them about how they should listen to Naval and their hourly rate should be $5000 / hr and asking for a $100 item returned is an inefficient use of time.
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@GabrielsNotes
Even when you understand the density and population of NYC, the number of corner stores is truly staggering and is definitely one if the things that makes NYC NYC.
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Pothos Capital STR deal
#3
is officially closed.
✅ First deal > $1 million
✅ First capital raise (JV with institutional type partner)
✅ 10000 legal entities created
✅ First commercial loan
Now it’s execution time, and as
@rohindhar
says, the real work begins.
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How did people do real estate anywhere outside of their neighborhood before Google Maps?
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Our neighbor at our 6 BR mini resort STR is an old lady. She is very sweet and has never once given us or our guests a hard time.
In fact, we have heard from a couple of guests that she has offered them vegetables from her garden.
But she clearly does not have much money. As
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Do you want to partner with or eventually sell your short-term rental / Airbnb real estate portfolio to an institutional investor?
Here is an 8 step process for how to think about underwriting & executing an STR deal that be attractive to institutional investors 🧵
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Before buying my last STR property, I dove deep on the top 20 listings in my market ($120k+ revenue) and these were the common characteristics:
- Seclusion / privacy
- Mountain views
- "Unique" factor (i.e. treehouse)
- Amenities (ie. hot tub)
- Excellent photos
- Sleep 12+
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My group went from buying 3 BR / 2 BA, ~2000 sq ft, small lot generic mountain cabins to a 6 BR / 4.5 BA, 4000 sq ft 12 acre “mini resort.”
Beyond a larger furnishing budget, more set-up time, and higher ADR, here are some other key differences I have observed:
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Common mistake I see newbie STR investors making:
They spend too much time trying to identify the "best" markets - little competitive advantage there.
Instead, they should spend more time understanding what attributes drive disprotionate value within specific markets.
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The biggest mistake I made getting started in STRs was bringing a long-term rental investment lens.
I.e. paying a 75% premium for a view seemed silly. But in mountain markets, it is the
#1
driver of value.
With this incredible view, this condo does ~3x what it would without it.
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@ZeroBasis
I see your point but Jake - the owner of the home services biz who would be crafting the bid - is near burnout right now / needs the holiday weekend so not going to push him there.
And in general, I think it's important to set some boundaries with customers early to make sure
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For anyone wondering about toilet here’s our solution.
Also the only reason this listing got sent to me is because it abuts the land where I keep a dumpster for a little trash pickup service that my group runs.
You can see the dumpster from the door of this unit.
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The lending terms my group got for a $925k STR purchase from a local bank:
-Commercial 20 yr loan term
-70% LTV
-3.95% rate
-25 year am
-10 year fixed, adjusting thereafter
-Sponsor personal guarantees, none needed from capital partners
-5,4,3,2,1 step down prepayment penalty
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Just four years ago - it was only one wheat and two ore to build a city.
Thanks, Joe Biden
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Reviews are a very gratifying part of the short-term rental business.
But the best compliment I have gotten during my STR journey did not come from a guest review; it came from our contractor, Jake Tuck.
“Working with you has changed my life.”
Story time🧵
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Nothing like staying at a $400 / night 150 sq ft hotel room to make me question my real estate strategy of acquiring and operating 10+ Acre 3500 sq ft properties for $1000 / night.
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@MrJonesSTRs
If you really want to do Mom a solid -
Buy her a duplex, STR the side that she's not living in & the other bedrooms in her apartment, and then have her do the turnovers.
Only communicate with her through TurnoverBnB.
#passiveincome
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In July of last year, my group started a trash pickup service in our little mountain town in Central NH.
Nine months in, we’re at 14 customers and ~$2100 in monthly recurring revenue.
Here’s a thread on why we get into the biz, the operations, costs, and long term strategy
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When you see the guru's screenshot of $10k for their July Airbnb payouts for a 3 BR STR they got for $300k & self-manage, here's what you're not seeing:
1. It's their best month by far (April is $3k)
2. They paid their cleaner $1.5k+
3. The market value for their time is ~$2k
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July 1 marked 12 months of operating data from Pothos Capital first mini resort short term rental deal in Central NH - Riverview Retreat.
In the next tweet, I will share the trailing 12 financial results and operational metrics and the larger thread will be some reflections.
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90% of short term rental / Airbnb customer service is:
1. Automated, clear messages with check-in, checkout instructions
2. Responsiveness to questions and concerns
3. Quick trigger finger for refunds when there are inevitable operational mishaps
Bonus points for a guidebook.
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At our "mini resort" property, we had a guest request a private chef for their stay.
We set it up - a ~$1,340 cost from chef and we mark it up 20% for $268 - a 10% revenue increase from booking.
Not spectacular and required a lot of coordination but we're figuring it out.
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Okay so we have the address here, folks!
Let's take a quick closer look at the underwriting from this deal
@jonjfarb
posted.
It got 70k views and 93 bookmarks, suggesting people are taking it seriously.
cc:
@MrJonesSTRs
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@sweatystartup
When historians are mapping the advancement of technology in 100 years, self storage PM systems will definitely be talked about in the same breath as gene editing.
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Bought a car today and got suckered into a warranty, gap insurance, and undercoating.
Wasn’t sure if I needed it. Probably didn’t.
At the end of the day - the story I tell myself to not beat myself up:
I sell people overpriced shit people don't need, I get sold overpriced
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Yesterday, my group closed on our first MFH real estate deal in Central NH. Although our focus is still mainly STR, we decided to diversify and add another competency to our toolbelt.
🧵 that walks through the location, thesis, underwriting, sourcing, financing, & business plan.
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Everyone STR investor should have a basic system like this for tracking zoning & regulation for markets they operate in.
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God help those in the men’s bathroom line at
@REconveneLA
.
@moseskagan
should have a warning:
“Expect long lines due to Twitter addicted bros refreshing the bird app for a half hour nonstop sitting on the toilet and forgetting where they are.”
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Purchase and sale agreement officially signed on a 5 unit MFH in rural NH we’re converting to a STR-motel.
Pothos Capital getting called up to Double A
Excited and shitting my pants simultaneously
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Whenever discussion of Airbnb or STR real estate regulation or banning comes up, the pro-STR camp vaguely yells, "But STR is good for the local economy!"
Ever wondered how large that impact is in real numbers?
Let’s run through the impact of STRs on a real town 👇
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100%.
Was on mom's insurance plan until 26, drive a car paid off by parents, no student loans cause of parents... the list is extensive
Have benefited endlessly from the Joe Meringolo / Cathy Carter welfare state. Eternally grateful.
Plan to pay it backwards and forwards.
Even at this stage in my entrepreneurial career, I derive enormous confidence from knowing my folks could support my family financially if I *really* screwed up.
Those of us lucky enough to have that security blanket should recognize & appreciate the advantage it gives us.
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@jkostecki_rei
Running an interstate highway through it, not building any parks or green spaces for it - the list really can go on
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The killer, unique feature at our STR launching next week:
Private pond with a deck and dock
Sometimes ya gotta get your hands dirty (and your body wet).
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My hell would be putting on king size duvets nonstop for the rest of eternity
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Have a fireplace at both properties and in the last month:
1. Gas fireplace remote broken = $564
2. Fireplace got so hot glass window shattered = $934
Asked guests reimburse on
#1
- TBD if they will.
More amenities, more maintenance expenses. Good luck underwriting $100/month.
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Been a little over a year since we installed a hot tub at our 3 BR, 2 BA STR property in Central NH.
Here is some data on revenue and direct expenses related to hot tub:
*Eversource is electricity
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Operating Class C multi-family apartments:
50% real estate
50% social work
Operating short-term rentals:
25% real estate
75% hospitality
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Many home service businesses are inefficient with how they price jobs and send quotes.
They want each quote to reflect the nuance of the job, which makes pricing jobs and cranking out quotes hard.
🧵on a home services co I worked with to standardize their yard maintenance.
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Real estate is a very dangerous game for impatient, cash poor beginners
In mid-2021, I had the goal of bootstrapping a real estate private equity business over the next few years, and by 2025, be at a pace of raising capital and buying $25 million of real estate annually.
This
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Many very smart folks on ReTwit tell you low LTV is the way to go.
My group is highly levered (for our STR portfolio, we have used 10% down 2nd home loans, gulp) but how we mitigate our risk:
1. Very, very conservative underwriting
2. 6 months of working capital on hand
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Here's a first in my Airbnb host career:
Our little Galaga arcade game wasn't working, and it turns out one of our guests stole the circuit board right out of it
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Latest addition to our Riverview Retreat listings:
Illustrated, amusement park type map
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@JFulfordtheIII
Not sure what your use case is here but for investor decks, I use Google MyMaps to make more interactive maps and can group nearby attractions by different buckets.
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The amazing thing is 16 guys can be at a bachelor party for 3 nights and there won't be a single photo of the group the entire weekend. Really no proof it ever happened.
Meanwhile bachelorette parties are documented like a Congressional hearing.
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@realEstateTrent
I took a negotiation class in college and it was incredible.
Our semester project was called “The No Exercise.”
You realize how negotiable the world around you really is.
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How a millennial working in sales would have told Mr. Gorbachev to "tear down that wall"
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Yeah it’s possible to manage a portfolio of short term rentals remotely but it requires two things:
1. Being a top 1% operator when it comes to systems and tech
2. Paying a healthy premium to your cleaner and / or maintenance person to be an on the ground ops manager
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Even though much of the current AirBnB apocalypse discourse is anecdote-driven (i.e. a viral FB group post) and the bold predictions are not specific or quantifiable -
It's a much needed counterbalance after 1.5 years of get rich quick, "passive income" Airbnb guru type content.
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If your long-term STR profits hinge on any of the following:
1. Operating in regulatory ambiguity
2. Not valuing your time / not underwriting a management fee
3. Betting that your competition will remain informal mom-n-pop operators
Then you don’t have a scalable strategy.
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Three big mistakes I made getting started w/ STRs:
1. Did not understand the factors that drive a top 10% revenue proeperty in my market
2. Spent too little on furniture and amenities like a hot tub
3. Did not implement tech like dynamic pricing & guest management
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@antoniogm
Yeah my simple mental model for this is that the US is a much better place to be a consumer (choice, convenience, and customer service) and Europe is a better place to work / be a producer cause of laws & lower consumer expectations (ie take your siesta, Spaniard restaurants)
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@sweatystartup
Twitter, as you have talked about in depth, has fundamentally changed your life trajectory and ironically is also how you’re sharing this anti-tech rant.
Twitter is technology.
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The best performing Airbnb properties can do 2x-4x the revenue of comparable properties.
There is no silver bullet strategy or amenity that will lift you from $70k to $200k.
The competitive advantage is an accumulation of many details in acquistion, set-up, and operations.
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October was our second full month running our hot tub service business. Financial breakdown:
-5 customers
-Gross profit: $299
-Gross margin: 21%
Revenue: $1445
-$1100 in baseline monthly billing (MRR) - 5 customers @ $220 / month average
-$345 in ad-hoc visits and drain &
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We have an entrepreneurial culture fetishizes:
-“Own nothing”
-“Passive income,” digital businesses
-Location independence
So there is a market opportunity for entrepreneurs who are geographically focused and building operationally intensive businesses in the physical world.
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My group is now about 6 months into operating our first MFH - a 7 unit Class C apartment building near Plymouth, NH.
This thread walks through some of the learnings from that deal a half year in:
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2
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Hey
@ShaanVP
- this thread on Clubhouse got a shoutout from
@BillSimmons
on
@davidchang
's
@ringer
podcast yesterday.
"He fucking called it... nailed every piece of it"
Use this shoutout to get on his pod!
So... everyone seems to think clubhouse is the "next big thing" - but I think it's going to fail.
Here's how I think it all goes down..
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18K
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In real estate, acquisitions & investor relations are the sexy jobs.
But there’s no deals or capital raised w/o the back-office.
This 🧵 gives a tour of how my group set-up our back-end legal & finance processes for our last acquisition, the first time we raised capital.
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22
Summer in New England is here!
Thank you, Eight Pound Six Ounce Newborn Baby Jesus
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Is there anything more beautifully American than a bunch of overweight people at Walmart in a self checkout line, eyes glued to their phones waiting to go deeper in credit card debt to buy cheap Christmas gifts their family does not really need or want?
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@ConciergeBoston
@universalhub
@megansarahj
@VisitMA
@VisitBostonCity
@MassFilmOffice
Should just keep it open and let the cameras roll documentary style from 1am-3am Friday and Saturday nights
Will be better than whatever they’re filming there
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First storm of the year today. Overview of the Tuck Home Services 2023 snow removal business:
-173 properties
-$268k total contract value, all seasonal contracts
-18 commercial, ~$55k value
-6 plow routes
-8 drivers and trucks with plows and sanders (2 alternatives)
-4
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About time for a new picture here.
Hired my Airbnb photographer to take some professional photos in downtown Concord.
The cartoon photo I've had for the last year that I paid a Twitter DM hustler $25 to make will be one of those things that I probably cringe looking back on 😬
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The good part of Airbnb / STR real estate - delighting guests and good cash flow.
The sucky part - getting a booking for Thanksgiving, having your cleaner miss that cleaning, then having to beg your backup (a mother of 2) to slot you in last minute the day before 🦃 day 😞
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.
@rohindhar
has not bought an STR in a couple of years (from what he has shared) and his content has mostly shifted to posting about interesting real estate listings all over the country, which I am totally here for
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Square footage has limited predictive value for STR performance.
A 600 sq ft A frame with a view that sleeps 4 could outperform the generic 2200 sq ft mountain cabin that sleeps 12.
@CharlieBurr
Nope, that one came in right on the nose. Was Kauai (because of small square footage) and the Earthship (probably bc of appraiser was on a power trip)
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