Building a Legacy Through Hospitality and Heart from London to Lake George with Katie Cline

Transcript

[Mattias]
Welcome to the REI Agent, a holistic approach to life through real estate. I’m Mattias, an agent and investor.

[Erica]
And I’m Erica, a licensed therapist.

[Mattias]
Join us as we interview guests that also strive to live bold and fulfilled lives through business and real estate investing.

[Erica]
Tune in every week for interviews with real estate agents and investors.

[Mattias]
Ready to level up?

[Erica]
Let’s do it.

[Mattias]
Welcome back to the REI Agent. Erica, thanks for being here again. You managed the stairs today.

[Erica]
I did. I learned a new skill. I hobbled down the stairs just fine with my crutches.

[Mattias]
I was hurriedly trying to get the new computer set up so that it would perform as needed for the podcast. And I all of a sudden heard this like, what could only be crutches coming down the stairs. I wasn’t expecting it.

[Erica]
I don’t really enjoy not being able to do things by myself. So sometimes I just, the stubbornness comes through.

[Mattias]
Yeah, the HOA did not force that. That was your decision, but I’m glad you’re safe and you got down here okay. Speaking of the computer, we’ve been chatting a little bit about this.

So I bought, I use Macs and I typically, I’ve been in the photo video space for a while. So I typically need a lot of storage. And then some of the applications that run those things need a lot of the bandwidth.

So typically a computer purchase for me is like, it’s more than emails. It’s a little bit expensive. When you get into the Mac space, it’s really expensive to make upgrades.

And I tried, I got this computer, tried to go middle ground and actually got less space than the last one, thinking that I could just try to make do with cloud storage. And then we had this conversation last night where I was like, I just, I’m already frustrated by it. And the last one I had for almost five years, it’s a long time.

And that’s something I just use so much every single day. It’s the one throttle for my business that if it’s not working properly, it’s just slowing me down. And it’s my main tool.

All I have to say is I then, after our conversation, bought another one that’s going to come in a week or so. But it’s maxed out. Not their top, top, top possible thing.

It’s pretty expensive and pretty maxed out. I think it will be worth it. But this is an ongoing conversation we’ve had.

We grew up Mennonite. We are Mennonite. It’s a cultural thing, not just a religion thing, really, honestly.

And one of the things, one of the stereotypes is being cheap. And I think that in battling some of that past, there’s been multiple times where I feel like I’ve bought cheap and bought twice because what I really needed just cost more money and I wasn’t willing to spend it at the time. You probably haven’t had that quite as much as me.

I feel like you believe in investing in quality things overall.

[Erica]
Yeah, mine shows up a little bit differently. If I buy something, I want it to work well for a long time. So I don’t mind spending money on something like that.

But I will fret over on our vacation, where were we going? To Mexico. And I was kind of fretting over buying a $12 book because I wasn’t sure I needed it.

And I could probably find something free from the library. And I just probably need to read something maybe that’s a little bit different than what I actually want. It’s things like that.

[Mattias]
Yeah, I’ve encouraged you to just do that. It’s just an interesting thing that I believe there’s just some things that are worth investing money in. And even though a goal would be to become completely financially independent, keeping our lifestyle cheap is obviously one of the ways of doing that.

I don’t know if anybody has heard of Mr. Money Mustache, but that’s a very popular blog. Maybe it was more popular in the past. I’m not sure how much he’s still active.

But his whole thing was he was able to retire, I think, before 30. Him and his wife both retired. They invested heavily in stocks and a little bit of real estate.

But their main thing was extreme efficiency of what they spend. So if they bring their expenditures down for far enough, then they don’t need to have as much to live on. And so I think there is a balance there.

And there’s definitely things that you can spend money on frivolously. But at the same time, there are certain tools. Like if you’re a carpenter, having a good set of tools, like a good drill, that kind of stuff, you wouldn’t buy the cheapest one if you’re using it every single day.

And it’s a throttle for your productivity.

[Erica]
What was it about our conversation last night that made you change your mind or make your decision?

[Mattias]
Well, I think first of all, you being okay with spending that much money and not seeming like it’s irrational was a helpful thing. You know me, I had to process things a lot. And so I think that was another processing thing where I just needed that extra confirmation that you should just go ahead and do that.

Bite the bullet now. Because another thing that I was thinking about with this whole computer situation was maybe I’ll just get a new one in a couple years. And in your mind now, it’s kind of like, well, the cost of things like a terabyte of storage or 16 gigs of RAM in addition to what you already have will probably be cheaper.

Those metrics kind of go up as years go on. But spending $3,000 now and then spending $3,000 in a couple years is probably not as efficient as buying something a little bit more expensive now and holding it for five years. It’s still a lot of money, but yeah.

So I think that extra processing really helped.

[Erica]
Yeah, it is interesting. Well, I guess let me ask you this. How would it feel to you to go out and, I don’t know, buy something that’s just purely for fun?

Because you’re spending a lot of time trying to rationalize a pretty expensive purchase for something you really, really need and use every single day, probably 90% of your day. It’s like, it’s your office. Everything you do with work goes through this computer.

So what would that feel like to you to spend quite a bit of money on just something that’s fun? Like a boat?

[Mattias]
Yeah, a boat. Oh, man, that would be hard. That would be hard.

Yeah, I don’t know. I mean, I guess the closest thing I’ve done recently is music equipment to pedals. That kind of stuff has been kind of a splurge that has felt frivolous a little bit, but I’ve enjoyed it a lot.

I think the other thing that I’m really interested in is a Tesla, which we’ve talked about, which is also not just fun. It’s also a work thing because I need something to drive around. We have a truck.

I have a truck that is just not the most efficient way of getting around town, both fuel-wise, but also just, it’s big. And we love that thing. It’s supposed to be our third vehicle.

We bought it with a little bit higher mileage so that we could have it as a third vehicle. It’s a Toyota, so it should last forever. But it’s hard for me to see me getting closer and closer to 100,000 miles on it.

And I just put a lot of wear and tear on vehicles. So having something that’s a little bit more practical has been something that has been on my mind. And recently, I don’t know if anybody’s paid attention to the news, but I guess this will come back out a little bit later, but the public sentiment for Elon has been low.

And so I think a lot of vehicles have flooded the market. A lot of Teslas have, so it’s been tempting for me because I think that those prices have gone down overall. But yeah, I don’t know, for just sheer enjoyment, I think we both just kind of spend more on experiences.

Like I think when we go on vacation, I like to splurge a little bit. For our anniversary, we went to an all-inclusive resort, which we mostly paid for with points, which was cool. But we’ve never flown first class.

And so I surprised you by bumping up our seat to a first class, which is an amazing video of you just like standing there confused as I’m trying to usher you into the first class seat. You’re like, what are you doing? I’m like, no, this is us for real.

Take your champagne and sit down.

[Erica]
Yeah, that was a surprise. That’s true, that was a splurge, but you did that for me. But that is true when we travel, we do, that is where we like to really enjoy the experience a lot.

[Mattias]
Yeah, when we go out to a nice restaurant, I don’t wanna eat the chicken, no offense to chicken, but I wanna have something fun on the menu. And that’s kind of maybe where it comes out a little bit more. But yeah, I guess it’s maybe just a cultural thing, maybe a way that we’ve grown up.

This guest today, we talked a little bit about culture things because she moved from London and moved back to New York City and owned or bought some short-term rentals. And I think culture is a really interesting thing that if you have an experience living overseas, it may not be quite as, you may not have quite the experience of culture shock that you would get if you actually submerge yourself in a culture for a long period of time. And I think that can help you understand where other people are coming from in business and communication.

And so we talked a little bit about that. It’s a really fun guest.

[Erica]
Yeah, she also covered, I mean, the culture conversation was really fun just to even talk through how different people communicate and how it’s helpful to give somebody the benefit of the doubt.

[Mattias]
Yeah, yeah. And her mindset was coming from hospitality and we talked about how we can kind of use that also in the sales business. But without further ado, we do have Katie Klein on the show.

So let’s get right into it. Welcome back to the REI Agent. Katie Klein, thanks so much for joining us today.

[Katie Cline]
Thank you both for having me. I’m delighted to be here.

[Mattias]
Katie, we had probably almost a full episode just kind of catching up and getting started before the show started. We have a lot we could talk about. Super excited to have you on.

I guess let’s just start with how you got into this real estate space and what your expertise is in.

[Katie Cline]
Yeah, sure. I was living in the UK with my husband for about six years. And while we were there, we bought a really small flat or apartment, lived in it for a few years.

And then when we decided to move back to the States, we kept it as a long-term rental. So we were kind of an accidental house hack before I knew what a house hack was. That property is doing okay, but where my love and my interest is, is really in short-term rental.

So we moved back to the US because unfortunately my mom is very sick. I wanted to be closer to her, be able to help her out, help my dad out. And both of my parents are living in Long Island in New York.

So we decided to move back to Astoria, Queens in New York City where we were living before we moved to the UK. And life was kind of in an upheaval. We weren’t sure how long we’d be here for or what we wanted to be here.

We also had my daughter overseas. So we had originally lived in the city. We were childless.

Now, would we still like it? So we weren’t ready to even consider buying something here. And plus, as you guys can imagine, the median price for a home here is very, very, very expensive.

So we decided to purchase a house in upstate New York near Lake George, a place that my husband and I had been camping every summer since we had started dating. And we thought maybe we can rent it out as a short-term rental. I come from a hotel and hospitality background.

So I felt like I would be good at it, but I wasn’t really sure. And it seemed kind of crazy to the rest of my family. They’re like, I don’t understand.

You’re going to own two places, but you’re not going to live in any of them. That doesn’t really make any sense. I’m like, I know, but I think we’re just going to try it.

So we were really, really amazed how well that property performed. And then about a year later, we decided to buy a second property about 40 minutes south of there in Saratoga Springs to do the same thing. Essentially, it’s a great short-term rental market, but it’s also a place that we’re considering moving ourselves.

And what I found from the first short-term rental was we spent so much time there setting it up, getting it ready for guests, really understanding the area so that we can make sure we’re making incredible recommendations for every single person who stays with us, that we really understood the destination and the place. So I thought before we make any big moves to the suburbs, let’s try out this strategy to see if we like it there. And it’s a great short-term rental market as well.

[Mattias]
That’s fascinating. I’ve got a couple of questions. First, what’s the buying a house process like in London?

Do they use agents? Is it similar to here?

[Katie Cline]
Yeah, it’s a bit different, actually. I’m trying to remember now, it was so many years ago. I think there was really only the selling agent involved and he became kind of the go-between.

It was a fairly straightforward process, kind of similar to here. There was definitely a real estate lawyer involved looking over the paperwork and so on and so forth. But what’s interesting is when you purchase a property there, you pay something called stamp duty tax.

So if you kind of think about the taxes that we pay every single year in escrow with our mortgages here, you’re almost paying that all upfront, maybe not to the same amount, but it’s a pretty hefty price tag when you buy. But the beauty of that is when you have renters in place, they have something called council tax. So that’s your really small amount.

It’s probably, I want to say, maybe a hundred pounds a quarter or something like that. It’s not too much money and that gets paid by your tenant. So whomever is actually physically living there pays that.

So while the stamp duty is a big purchase upfront, it’s kind of a one-time thing and then you’re done. Also at the time, they were really reducing the amount of stamp duty tax because this was right after COVID and they were trying to spur the market again. So that was great.

We didn’t have to pay as much as you typically would. The really tricky thing about there is that they re-mortgage every two to five years. That is very, very normal.

I don’t even know if you can get a 30-year mortgage there. So unfortunately, since we’ve purchased, we had to re-mortgage twice and both times it’s gone up. And each time you have the mortgage broker saying, surely they’re going to go down next time and unfortunately they go up.

So that makes it a bit harder to predict your margins.

[Mattias]
That was going to be my next question. With my experience in Switzerland, I’ve found that A, a lot of people don’t own and B, to own, the process seems a lot harder as far as financing goes. I think there’s not really this tame type of mortgage products.

And I think for the most part, they’re looking at probably 25% down if I’m not mistaken. So I just was curious if that’s similar there as well. There’s probably not many government subsidized 0% down or 3.5% down kind of products.

[Katie Cline]
Yeah, I believe we did put 20% down and they don’t really have the short-term rental loophole that we have in our taxes here. So it’s harder to find financially advantageous reasons to invest. But what I will say is your money goes a lot further.

So it’s very small square footage wise, but it was a two bedroom, two bath and we have a private backyard, like little garden space area. I would just never be able to afford something like that in New York City. So the fact that I can live in one of the top cities in the world, I personally think the best city in the world and afford something.

That I think is what is appealing about it versus in New York where to have the same apartment that I’m renting right now, I would probably be paying a monthly of double and I would never be able to afford the down payment.

[Mattias]
Yeah, that’s a really good point. That’s interesting too, because London’s not a cheap city, if I’m not mistaken, right?

[Katie Cline]
It is not a cheap city unless you’re moving from New York. So every person we met there, we’re like, it’s so expensive here. It’s so expensive.

And we would smile and nod to be polite. If you come from New York, it feels like everything is on sale. Your money goes so, so far there.

The quality of life that you’re able to enjoy there is much greater. You don’t make as much money in terms of numbers. And yes, you could say, well, if you convert it, you do.

But you don’t really make as much money there, but you don’t need as much to have a really lovely quality of life. So coming back the other way, after being there for six years, and then moving back to New York, where prices even went up since I had left, that was a big sticker shock. And actually still is on a daily basis, even though I’ve been back for over two years now.

[Mattias]
I feel the same way. Just like, I think I bought crackers yesterday at the grocery store. I was like, what?

[Katie Cline]
Cereal, like cereal is like $8. I’m like, what?

[Mattias]
One more follow-up question about London. Would be, or just owning in a different country, did you consider turning it into a short-term rental? If it’s allowed, if it’s not, would you consider doing so in a different area that would be allowable?

Is that a feasible investment strategy in the UK?

[Katie Cline]
Yeah, it’s something to think about. In London specifically, they have a 90-day limit. So you’re only allowed to short-term rent for a maximum of 90 days.

So I don’t like anything that kind of limits my ability to earn. I also think we all know with short-term rentals and a lot of, I also host a podcast called Sweet Success, which is all about hotels and hospitality. And with my short-term rentals, I really put hospitality at the forefront.

I try to handhold my guests and make sure they know how much I appreciate them being there, just like a great hotel would to you. And I just think with the time difference, things could go wrong. And I would really need to have a separate manager there.

And then would they handle my guests the same way? That I would. So we do have a management company for our long-term renters there as well.

And I think they do a good job for sure. But I think I would, if I could, I would definitely take better care of my tenants just because I’ve been a renter for so long. So I know what it feels like to be on the other side.

[Erica]
Tell us a little bit about your original decision to move to the UK and just what was behind that. Yeah.

[Katie Cline]
So when I was in college, I did a study abroad semester in London. And from the moment I stepped off the plane at Heathrow, I had never been to the UK before. I had never been to mainland Europe before either.

Well, I guess we shouldn’t say that. UK is no longer even officially Europe, but definitely not mainland. But I had been to Ireland, was the only place in Europe that I had been.

And so it was really interesting to me that the fact that I stepped off the plane in this airport, in this country that I had never been before, I just immediately felt like I was at home and I loved it there. And the entire semester, I watched a lot of my fellow students spending every single weekend in any European city that they could find a cheap flight to. And for me, I thought, I don’t want to do that.

I want to be here. I want to like get under the skin of London. I want to be a local by the time I leave.

And I feel like I succeeded in doing that, which was really exciting. But once I headed home, I thought, I’m going to move back there one day. And that really became my rallying cry of my entire like 20s.

I was always trying to finagle a way back to the UK. So I started working for different companies and would always be like, oh, would you transfer me? But I was so young and kind of useless at the time that they have to actually prove in order to sponsor somebody that there’s no British citizen that could do the job, that that’s why they need to sponsor you.

So then I saw that British Airways was doing a cadet pilot program. And that would mean that they would pay for you to go to your pilot training. And then after that, you’d have to work for the airline for seven years.

And that would kind of repay back the schooling as well as being paid to be a pilot for them. But in order to be eligible for that program, you had to have the right to live and work in the UK. So I thought, okay, back to the drawing board again.

But lucky for me, both of my grandparents are from Ireland originally. So because of that, I was eligible to apply for Irish citizenship. But by the time that came through, the pilot program had closed.

So I was like, okay, well, that didn’t work. But anyway, then I was working for Starwood Hotels and Resorts, looking after global PR for brands like W Hotels and Le Meridien. And we got acquired by Marriott International.

And lucky for me at a certain point, once they set up their UK office, there was a comparable role open on the team. And I no longer needed sponsorship because I have the dual citizenship. So raised my hand and was lucky enough to get selected for that.

[Erica]
Mm, cool. Awesome. That’s awesome.

Yeah, I’m curious, once you were there, so I was gonna ask you a little bit about culture shock and how you built community, but it sounds like that was easier for you maybe than some.

[Katie Cline]
No, I definitely felt culture shock. And I think because I had been there before and I had been there on trips and because I thought, you know, I definitely wanna do this. I thought I’m going from an English-speaking country to an English-speaking country.

I’m going from a major metropolitan city to a major metropolitan city. How different could it be? Add into that that my husband and I got married 12 days before we moved.

Wow. So a lot of life of people happening at the same time. And my husband had to quit his job to move there with me.

And luckily he didn’t need sponsorship because of my Irish citizenship. But I kind of laugh. And the first couple of weeks, it was like we were living parallel lives in the sense that I would walk down the street and it might be misty and gray and I would just be like, isn’t it beautiful?

Isn’t it magical? Isn’t everything so great? And my husband was having the exact opposite experience, like this sucks, get me out of here.

I need to find a job. So it was a tough transition for us both. Then he was able to land a job.

We found a flat to rent. We started to get settled a bit more. But it took a good year for us because when you’re buying groceries someplace, when you’re paying a water bill and needing to understand just how life works, how does health insurance work, which they obviously have the NHS and public health care, but just like navigating the day-to-day stuff of life, which you don’t do when you vacation someplace, it took a while.

And I had a friend who had moved a few years prior and she said, give yourself a year. And she was right. After the year, we were like, okay, this is home.

We feel comfortable now. But I was surprised how shocking it was for me. And even just in the differences in the workplace too.

I’m from New York originally. I am a very direct, straight shooting type of person. I like to be managed that way so that I can really achieve and know what the deliverables need to be.

And I remember having a British boss say to me, Katie, I would never say to you, I need you to do this by this date. I would instead say, oh, could you possibly? And would you maybe?

And when do you think that could be done by? And I said to her, that’s crazy. That’s completely inefficient.

You’re my boss. Tell me what you need. I’d be happy to deliver it.

She’s like, that’s just not how it’s done here. So really it opened my eyes to the way that people work and live all over the world, which is very different than just the way I think about it.

[Erica]
Wow. Did you find yourself needing to communicate differently on the flip side of that too, in order, you know, instead of being so direct, having to change your language a little bit at the same time? Yes.

[Katie Cline]
The Brits, they love a lot of extra words in like emails or in communications. So kind of like what she was saying, oh, please, could you possibly, maybe? I found now even being back in the States, having to like cut out a lot of it, like go back and reread my email and be like, I can just get to the point much faster, but really understanding how I could not come off as maybe too aggressive of a New Yorker, not aggressive in like a mean or negative sense, but just too direct, too forthcoming and kind of sitting back and observing and watching other people and seeing how they’re interacting and seeing what works for them and then picking up on those cues and kind of being a chameleon, depending on the situation that I was in.

[Erica]
Oh, so interesting.

[Mattias]
I was gonna ask, well, so I had a similar experience. I lived in Germany for a year right after high school. My mom’s Swiss, so I already spoke Swiss German, had some culture from Switzerland understood, came there.

I feel like my culture shock got delayed. They say often it would be around three months. It hit me hard in like nine months or so.

And it hit me really hard. And I also went there kind of with the hope or the goal or just the determination to just basically become European, become German and not, yeah. And so I think when that all kind of hit ahead at nine months, it was really difficult.

German culture is very direct. And we are here in kind of the South of Virginia, it’s two hours South of DC. And it’s definitely not as a direct of a culture.

So coming back, I kind of had to retrain myself. And in doing so, at some point I ended up picking up how to win friends and influence people, which now when I’ve talked to different cultures in this area, I almost see that book as maybe a how to do business in the United States kind of culture guide. Have you read that book by chance?

[Katie Cline]
A very, very long time ago. But it’s interesting what you’re saying because doesn’t it make you question what the definition of rude is? Yes.

You know, like what we would consider rude, maybe you experienced that in Germany or in China or just places where the culture is so different. And I think what’s really eye-opening about these experiences is like, it’s not necessarily rude there or we’re not necessarily rude here. It’s just a kind of miscommunication.

[Mattias]
And then you then can apply that to people that you work with as well, coming from different cultures. I mean, that could be guests at an Airbnb, that could be clients that are wanting to buy a house, et cetera. It’s definitely understanding that things are going to be a little bit different.

It’s just an important thing to kind of grasp at the beginning. Has that experience, that eye-opening experience, kind of helped you with your guests with Airbnb or just your work in general?

[Katie Cline]
Definitely. We get a lot of different cultures and even some different countries that will come and visit our properties in Lake George. You know, it’s pretty close to Canada as well.

And I see that come through a lot. And I think, you know, my husband can get a little bit more emotional when he sees a message from a guest. And he’s like, I can’t believe they said it that way.

I was like, well, let’s think about, let’s put ourselves in their shoes. Let’s think about, you know, why they might be speaking that way. Maybe it’s a cultural thing.

Maybe they’re just really tired and they’re a new parent or, you know, just giving everyone that benefit of the doubt and assuming that they have good intent at the end of the day. Now, unfortunately, we all know that occasionally you’re going to get a guest who just likes to complain about things. But I do think it helps me not get as emotionally triggered by it because otherwise I would just be in this kind of fight and flight situation all the time.

But I do want to deliver that incredible hospitality. And I do, I’ve had so many experiences of guests sending me pictures or sending me messages and being like, this house is so important to us. It was my bachelorette weekend.

It was our honeymoon. It was whatever it is. And to be a part of that is so, so special that when you have somebody who’s upset, it’s hard not to take it personally because you want it to be so good for them and you’re trying so hard for it to be good for them.

[Mattias]
It kind of reminds me, we were just at, we have a good friend and a client of mine opened a new restaurant. They had one close by and they opened a new one. And they were just talking about how, you know, how much work went into like everything, preparing everything.

And now they were kind of bracing themselves for the reviews to start coming in and how like it can be a really painful, it can be a really sensitive time. And I would imagine an Airbnb versus like, you know, just a regular rental would feel a lot more like that. Like you said, you really went to the area and really got into it.

I mean, can you talk about that at all? I mean, is that, is it like birthing a baby?

[Katie Cline]
It’s so true in the sense that like it’s really personal and it’s a place that I go and spend so much time with my family and have really important family memories that have happened there. We celebrated my daughter’s first birthday there, just really like momentous milestone moments. So I understand from the guest perspective that first of all, not all hosts are like me.

Not all hosts are really thinking about delivering that exceptional experience at every turn. And maybe they’ve had bad experiences in the past. But I do think sometimes guests forget that we’re human on this side too.

So, you know, this last weekend, I had a guest messaging me and just seemed like I could do no right. Every little thing they were critiquing to the point that they didn’t like that we didn’t have a hand railing on one side of the stairs, even though that’s very clearly shown in the photos. And, you know, just every little thing was a problem.

Meanwhile, on my side, I’m hosting my daughter’s third birthday party. So I think it would behoove us all to remember that there’s a human on the other side. At the same time, they’re there paying for an experience.

And so in a way, it shouldn’t matter that I’m busy hosting my daughter’s third birthday. If they need something or something isn’t performing to the way that they expected it to, that is the service that I am here to provide. And I get really frustrated when you see hosts saying things like, oh, I don’t need to provide shampoo, conditioner and body wash.

They’ll just bring their own. And it just, I think we should all remember the guest is paying for an experience. The guest is paying for something.

They’re not doing us a favor by staying there. So how can we go above and beyond to make sure they have an amazing experience? And then hopefully they can also remember a bit like we are doing our absolute best.

[Erica]
What are some of those small detail pieces that you provide for the experience at the Airbnb that you would recommend others might do too?

[Katie Cline]
I think the most important thing that everyone needs to do with their properties is stay there themselves and stay there at kind of max capacity. So our property can sleep between like 10 and 12 people. So hosting my daughter’s first birthday party there was really special and lovely for us, but it was also a great way to check out, hey, when we’re using all three bathrooms at the same time or multiple people are showering at the same time, are we gonna lose water pressure?

Are we gonna lose hot water? Like really testing those things out and then arriving at different times of day. So when I used to work in the hotel industry, we did a study when I was working for La Meridian about how the first 10 minutes of a guest stay really set up the entire experience for them.

And on my podcast, I was speaking to Rory Sutherland, who’s a behavioral scientist. He’s the vice chairman of Ogilvy. And he was saying that humans innately have something called confirmation bias.

So if you take in the fact of the first 10 minutes are going to really set your tone, you are then going to spend the rest of your stay looking for confirmation bias. So if you thought it was good, you’re gonna look for all the things that prove, I knew it was gonna be a good experience. If you thought those first 10 minutes were bad, you’re gonna look for everything that proves you right.

So I think it’s super, super important that we pay attention to the arrival experience. Did we give really good directions or did somebody have to drive past the house a bunch of times before they actually found it? If they’re arriving at night, does the light come on?

Does it stay on long enough to get the suitcases or the kids or the dog out of the car? Are they digging around for a lockbox or do they have the code that we personalize for them right on their phone? Does that work right away?

And then obviously right when they walk in, is it super clean? Because I think when you see like one cobweb, immediately you’re looking for all the other things that could be wrong. So that I spend a lot of time on and then actually using the property and saying, oh, hey, there’s not an outlet near here to plug my phone in at night.

Let’s put a little box on the side table so that that becomes really easy for our guests.

[Erica]
Yeah, all those details are so important. And you’re right. In some ways, there’s not really a way to think about those things until you do walk through it yourself.

And then you realize, at least for me too, I realize what I need for comfort or what I’m looking for that I don’t know I’m looking for.

[Katie Cline]
Exactly. And then when guests ask you things like, hey, where’s the cutting board or where’s the lemon squeezer? You know, because you’ve been there.

Whereas I would question if you have one of the national management companies who have never set foot in your property before, can they really handhold the guests in that same way? Not that everybody needs it, but some do. And when you can respond quickly and give them an answer that explains something to them or shows them where something is, you’re really gonna increase that guest satisfaction.

[Mattias]
The lemon squeezer. Let’s just say that sounds very detailed. I don’t think we have a lemon squeezer.

[Katie Cline]
Honestly, that came from a friend of mine, dear friend of mine, Zach Boozy Cruz. He’s the host of the Behind the Stays podcast. And I was listening to his show, as I was setting up one of my properties, and he was like, my wife and I are always looking for a lemon squeezer.

How do you not have a lemon squeezer? I did not have a lemon squeezer at the time. I’ve bought one for each property.

Thank you, Zach.

[Erica]
That’s awesome. That’s so funny. I’ll have to remember that because right now we’re working through furnishing a midterm rental, our first.

And I’m thinking through all of the things I might need to put in the kitchen. You know, like how far do you go? How stocked does it need to be?

You have to be able to speak to this well. But apparently a lemon squeezer.

[Katie Cline]
And isn’t this just proof of what we were talking about with differences, right? The fact that he would go, and if that’s not there, he’s going to be disappointed. Whereas for me, probably up until that point, I was barely even using a lemon squeezer.

It’s just coming down to like, how can we almost anticipate everyone’s needs? But then on the guest side, hoping that they’ll understand like, if we don’t have a lemon squeezer, that’s also okay too.

[Mattias]
Going back to you talking about the first 10 minutes being so important. It just made me think and laugh in my head about how the bottle of wine on the table was as often there. And maybe, you know, hoping they will just start drinking in the first 10 minutes.

[Katie Cline]
It’s great, best wine ever.

[Mattias]
Yeah, no, it is true. I think living in the space makes a ton of sense. We have often done things like a burr houses.

We’ve flipped and kept houses as long-term rentals. This is going to be a midterm rental. And honestly, there’s often little things that come up when you do that, when you renovate a house.

And you kind of have this, like the first year, you almost have to kind of work through some of those little things that come up. And so, you know, that’s going to add an extra layer of complexity with this midterm rental. How much renovation, how much work are you getting to turnkey places that are already furnished?

Or how much are you typically doing when you’re setting up an Airbnb?

[Katie Cline]
So our first place in Bolton Landing, it did come furnished, but that was more to make things easier for the seller because they had had it as a rental. I would say 90% of what was in the house we took away. And that property is really special.

It looks like a chalet, kind of like something from Switzerland, actually. And it’s set off the road. So you have to drive down this gravel driveway through the trees and then you arrive.

So it does have a really special arrival experience already. And the house just looks fun and whimsical. So a lot of, for that house, was just stripping things back.

They had a lot of like florals or, you know, decor pieces that I wouldn’t have necessarily selected. Even things like the walls were all painted like an off-white, which just made it feel really dirty. We repainted everything white-white and then had some accent walls or some fun pops of accent wallpaper and clean linens.

That’s another thing I steal from the hotel industry all the time. The white bedding with pops of color, either as a throw blanket or with the throw pillows. I just feel like that silently communicates to your guests, we’re clean, we have nothing to hide from you here.

You know, you can trust in that experience. So that house had so much character already. It was about peeling everything back to just let that house sing.

Our place in Saratoga on the opposite side was a flip from a contractor who did an okay job. Definitely made the house much more presentable than it was when they had purchased it. But it felt a bit like a very boring suburban home.

So for that one, we were really spending a lot of time putting personality back into the house. Because I think that’s the difference between a long-term rental, where you almost want a proverbial white box so that people can envision their life, their stuff into it. For a short-term rental, it’s not home for you for forever.

So you want the personality, you want the quirks. And most importantly, you want to feel like you’re in the destination you’re in. So Saratoga is known for having one of the oldest horse racing courses in the US.

So we brought in a lot of plaids and tweeds and just nods to the area so that when you’re there, you really feel like you’re in Saratoga.

[Erica]
Oh, cool. I’ve never been up to either of those areas. That’d be fun to explore.

You’ve got a place to stay now. Yeah, that’s nice of you. That chalet sounds perfect.

It’s really idyllic.

[Katie Cline]
It’s quite funny because it’s in the woods. We have more than six acres and we were setting it up. And I was setting up the cleaner’s closet and folding all the white linens.

And I had just put a beautiful stack of towels away. And all of a sudden, out from the towels came a very large spider. And I was just really surprised because I had just folded them and it completely took me off guard.

And I screamed, which is a bit embarrassing. And my daughter was sleeping. And my husband looked at me like, she’s sleeping, what are you doing?

And then he often says to me, I don’t understand why we bought a house in the woods if you’re afraid of bugs.

[Mattias]
It’s part of the experience.

[Katie Cline]
Exactly, exactly.

[Mattias]
You alluded or you talked a little bit about the tax benefits or loophole, if you will, with the Airbnb. Can you explain that a little bit further? Yeah, absolutely.

[Katie Cline]
So overall, what I think is really interesting and I didn’t intend to go down this path, but now that I’m kind of zooming out and realizing what we did, I think this is part of a broader trend where we’re seeing a lot of people who live in high cost of living places like New York City, like myself, who, as we said in the beginning, to buy what I live in right now would just be double the price. There’s no way that I could buy it for a comparable amount that I pay in rent. So I’m seeing a lot of people, including myself, buy their almost, quote, second home first.

So what’s really interesting about that to me is a few things. One, once you’re renting it, you’re generating income. In our case, we’re really lucky that it covers all of our annual expenses.

And last year, we actually had a small profit on top of that. So as a wealth building strategy, as a kind of side hustle, that’s really exciting. I think for people who don’t want to deal with the tricky guests or the late night phone calls or anything like that, that’s where management companies, Airbnb co-hosts come in to take that off your plate.

Yes, you’ll have a smaller profit margin, but at least you won’t be having to deal with that if you don’t want to. The second thing is, like you said, taxes. So I’m not an accountant, and by no means am I the right person to give advice.

I have an amazing accountant who I talk to very, very often. But essentially, if you materially participate in your property, you could then be eligible to take the income and the expenses as active, which means that you can start to offset some of your own W-2 income with your expenses from your property. You can also do things like depreciation of the property that help you get more back in your return.

So again, I’m not by any means a CPA or qualified to talk about it, but it’s an amazing advantage that comes specifically from short-term rentals as opposed to long-term rentals. And then I think you’re building equity. So for people like myself who couldn’t afford to buy in New York City, I now have a way to actually build equity and long-term wealth, hopefully.

And more important than all of this, because you could do all of that with the markets and investing and such as well, but you have a place that you get to enjoy now. You get to go and you can make family memories and when it’s not booked, you have a special place to escape the city and go enjoy the woods and the bugs that it brings with it. So it’s really advantageous and rare in the sense that you get a lot of the investment positives, but you also get that immediate gratification as well.

[Mattias]
Yeah, they typically don’t, real estate typically doesn’t go down 10% in a day, mostly back up.

[Katie Cline]
Based on one person’s comments.

[Mattias]
Typically that doesn’t happen, but.

[Katie Cline]
Oh, maybe a bad review, who knows?

[Mattias]
I wanted to, I did wanna tie that in a little bit because I think what you’re describing is becoming a real estate professional designation with the Airbnb process. And that’s true that you can’t, unless you’re really spending, I forget how much percentage of your time in a rental business or whatever, you really can’t have that designation. And like you said, it does help go against your taxable income with depreciation, et cetera.

And so one of the things I’ve been trying to do in this podcast is just to explain how agents often don’t understand that they already have the designation if they are a full-time agent. And so it’s a huge advantage. And that’s where investing in real estate alongside of being in the real estate business is really good for all the things that you just described, including reducing your taxable income.

So yeah, that’s awesome.

[Katie Cline]
And plus that signals to investors like myself that you really know the market, that you know the certain things that I’m looking for that maybe a primary home buyer wouldn’t be looking for. We’re able to kind of speak that same lingo to each other. So I think it will also increase their customer base as well.

[Mattias]
Totally, and having the connections with, you probably had to get connections with a few different providers in the area when you’re investing. If you are flipping, if you just need to have things painted, et cetera, just having those connections is just huge for your business as well.

[Katie Cline]
Exactly, and understanding the rules and regulations because with short-term rentals, it’s changing all the time. In Bolton Landing, I’m really lucky because that has been a really tried and true vacation market long before Airbnb existed. And I hope it will continue to be.

And they have a beautiful process there to apply for your permit, to keep that active, to be sure you’re following the rules, to make sure that they’re maintaining the integrity of the place. But you also can see that it’s driving everyone’s house values up, which is a great thing for people who own in the area already. In Saratoga, it’s a bit different because it is a bit more suburban, whereas Bolton is a bit more spread out, a bit more rural.

So there is a lot of changes constantly happening with legislation there. And having an agent who’s aware of what’s happening and how things are changing and how that could affect you is really crucial.

[Mattias]
Yeah, that actually brings me to my next question for you, which is what experiences have you had with agents? What would you look for if you’re exploring a new market and needed somebody like that to guide you through the process? Absolutely.

[Katie Cline]
We are so lucky for both of our properties, we use the same agent who happens to be a good friend of ours, mom. And I know everything about this is like red flag, don’t work with friends, don’t work with family. But she is incredible and she really, really knows her market.

Saratoga, where we bought our second place, I think she really, really shined, especially. She’s lived there for forever. She’s raised her children there.

They did multiple live-in flips when the kids were young as well. So she really knows kind of soup to nuts, the journey. And one thing she did that really stood out to me was before we made an offer on our place, she pulled comps in the area and was able to show me not only what they were listed for, but that all of them sold for over asking price.

So what she did with just that little bit of work was show me, I don’t need to just go in and low ball because that’s what the television shows tell me that I should be doing. I should actually be thinking really intelligently and strategically about the offer that I make. We started looking to purchase another place in the Finger Lakes and we got connected to an agent who unfortunately was not the right agent for us.

The feeling that I had was this was someone who used the key to open the door and that was really all the value she provided. And I remember one place that we looked at with her, I said, what do you think this should be worth? Like, what do you think this would go for?

And her answer verbatim was what it’s listed for. And what that said to me was you don’t even know what the list price is. You just want to make an easy offer that you think is going to get accepted.

And luckily since then, we’ve now worked with another agent in the Finger Lakes and he is fantastic. He is an investor himself. He is someone I’ve been talking to for over a year.

We’ve made a few offers together that haven’t been successful. But even just seeing him continue to keep me on his radar, continue to reach out and say, hey, I saw a place in the area that might be of interest to you. That to me, he has bought my loyalty and he’s bought my business just from that.

As well as every time I ask him for counsel, he comes back with really thorough, intelligent replies.

[Mattias]
Yeah, I love it. That’s great. Thank you.

[Erica]
It’s again that experience of feeling like you’re being taken care of. It really does make a huge difference no matter where you are.

[Katie Cline]
Exactly. Yeah.

[Erica]
I had a quick question about going back to the Airbnb space. Curious if you have ever created some kind of a document or resource for people who are looking for some of those details to put into their Airbnb. What sheets do you prefer?

Or what are the best towels? Or what’s like a pillow that’ll hit pretty much everybody? Have you ever created something like that?

Because I feel like you’d be good at it.

[Katie Cline]
Thank you. It’s funny that you bring that up. I do have a website called the Five Star Rental because I think a lot about how can we take these ideas from hotels and apply them to short-term rentals.

And it’s not have a front desk or book dinners for your guests. But it’s just things that are really actionable and easy. And a lot of that, like you said, is making sure the amenities are up to snuff and what have you.

So on that site now there is something called Build Your Own Brand which can help people think about their property. And how do you actually brand that? What’s interesting is our place in Lake George we call Trout Landing and our place in Saratoga Springs is called Gallant Fox.

They both have stories behind the name which I won’t bore you with now. But when you start to communicate that over and over with your guests what I find is when people check out they don’t just say, oh thanks we had a great time at your place or at your rental. They said we had such a great weekend at Trout Landing.

Thanks for having us. So it almost like is proof in the pudding that you’re kind of branding the experience for them more. And they’re not just staying at a random house.

They’re staying at Trout Landing. They’re staying at Gallant Fox. So I have that on the site now and coming very soon will be a list of like the set amenities.

Kind of what you’re talking about with what you need for the kitchen, what you need for the bedrooms, etc.

[Erica]
Very cool.

[Mattias]
We’ll follow that closely.

[Erica]
I’ll send it your way.

[Mattias]
Katie, I’m curious if you have any golden nuggets you’d like to share with our listeners.

[Katie Cline]
I think especially in the real estate space, people can get very distracted by what they should be doing or how many doors they have or maybe for the agent side, you know, how many dollars worth of listings did they sell or do they have under active listings right now? And I would really just encourage everybody to take a step back and like think about what your own personal goals are. And I felt this very much for myself when we first got started.

I was like more, more, more. We need to have more. And actually what I really like about owning and operating short-term rentals is getting to know my guests and getting to deliver those experiences for them and talking to them before they arrive and say, okay, you’re coming with an elderly parent and a small baby.

I’m going to recommend a different restaurant to you than I would to the group of girls celebrating a bachelorette party and really being intentional and specific with that. And therefore I’m never going to be the person who has, you know, hundreds of short-term rentals and digital assistants everywhere who are just, you know, sending out the key codes to them. So I think it’s really important that we all focus on who we are, what our strengths are, what we get enjoyment from and rather than following what maybe the podcast or the books are saying that we should be doing.

[Mattias]
Yeah, I love that 100%. And I think, you know, relating that to agents I think oftentimes people think they need to be driving in a fancy car, whatever, they need to be renting a Porsche to be able to appear successful. When I don’t think that really matters in most markets, maybe it would in some markets like maybe New York City, I don’t know.

I mean, you probably don’t show up in a car in New York City, I don’t know. But in other words, I think if you keep that end in mind and you keep your lifestyle simpler, it’s easier to build that base of a rental portfolio that would actually cover your expenses. And yeah, the more houses you have, the more problems you have.

And what is your end game? Do you want to have less problems? Do you want to be on the beach with a martini or whatever you drink at the beach?

But yeah, is that what you want? And if so, is making your life more expensive and more complicated worth it?

[Katie Cline]
Yeah.

[Mattias]
I love it.

[Katie Cline]
And even for which properties you’re choosing to invest in, so many cute houses or good deals come up on the market. And I think, oh, we should do that. We could make so much money.

And then I’m like, but is that what we want to do next? Like what fits for us next? And right now, with only two short-term rentals, our portfolio is really small.

I want to make sure that every asset we’re bringing, yes, makes sense financially, but also adds something to our lives personally as well.

[Mattias]
I love it. I have to ask then if you have any books that you think are fundamental that everybody should read or maybe one that you are currently really enjoying.

[Katie Cline]
It would be no surprise based on our conversation and the fact that I host a hospitality podcast that I would have to bring up Unreasonable Hospitality. But I know you had a guest fairly recently who mentioned that book. So I’ve got a second one ready for you guys, which is Setting the Table by Danny Meyer.

Danny Meyer was one of Will Guidera’s mentors. So he was the author of Unreasonable Hospitality. He worked for Danny Meyer.

And while on its surface, you would think it’s about the restaurant industry, it really is about hospitality as well. And I think a lot of times, especially in the short-term rental space, people get into this world from the real estate investor perspective. And yes, that’s important.

This is the biggest investment many of us have ever made or will ever make. But if we just go above and beyond for our guests and really put hospitality at the forefront when we become hosts, which is when we open our doors to our guests, I think we will see that pay off in the P&L long-term.

[Mattias]
Yeah, that makes complete sense to me. I agree completely. We’ve stayed in places that felt very, they look good in pictures.

And then when you get there, the feel is just plastic and not great. And I think that was definitely a quick flip investment trying to turn a profit and not focused on the right things with hospitality. And I think there’s probably a lot of parallels.

And I haven’t read either of those. So those are great. But I’m sure there’s a lot of parallels with the real estate sales business.

Like you have to take care of your clients. And one of the things that we just recently thought of that we’ve never implemented, but we have a laundry service in our area. That’s probably not super uncommon for you in New York, but where they would actually pick up your clothes and launder them, fold them, bring them back.

And I think they can, I think that’s a popular thing for Airbnbs as well. But what an awesome thing to provide a family that’s just buying a house that has small children. And we know how hectic and chaotic moving is.

And laundry would be just such a gift to get off their plate. That is maybe an example of how you could really implement some of that hospitality mindset with the sales business.

[Katie Cline]
It’s interesting you draw that parallel because I think it’s in the book Unreasonable Hospitality that Will talks about towards the end of when he left the restaurant world, working a lot with real estate agents and exactly what you said, rethinking that new home gift. Is it just the bad bottle of champagne or is it something like that that they’re always going to remember? And guess what?

When they want to buy their next property or their children want to buy their property, who’s the first phone call they’re going to make? Or their friends, their family. I mean, again, it goes back to not to bring him up for a second time, but Rory Sutherland, who is on my show, he talked about relationship versus transactional.

And if you think about a coffee shop, if you walk in someplace and it’s not very nice and the coffee is $7, all you feel like is, wow, they really just tried to get as much money out of me for that one cup of coffee as they ever could. Whereas if it’s about relationship, they’ve set out tables outside and they have really comfy seating inside and like you haven’t been here before, first one’s on us, don’t worry. And all of a sudden, you’re building that relationship with someone which over the lifetime is going to mean much more money being spent with you than if you had just maximized that first transaction.

[Mattias]
100%, couldn’t agree more. Referral business, all that stuff is so important. And yeah, it’s all about that relationship for sure.

If people, you mentioned a website, what other places could people find more information about you?

[Katie Cline]
Yeah, so the podcast is called Suite Success and that’s sweet like hotel suite. So you can find us at Suite Success Podcast on all socials or suitesuccesspodcast.com. And then on Instagram, I’m @ByKatieCline, B-Y Katie with a K, Cline with a C like Patsy Cline.

Unfortunately, no relation though. And definitely no singing talent came my way.

[Mattias]
That would be the next question is could you sing a song?

[Katie Cline]
Not at all, not at all. Only to my daughter. She doesn’t seem to mind, but I think she has the same tone deaf issue as I do.

[Mattias]
Well Katie, it’s been a lot of fun. Thank you so much for being on the show.

[Erica]
Thank you guys for having me. Thank you, Katie. Thanks for listening to the REI Agent.

[Mattias]
If you enjoyed this episode, hit subscribe to catch new shows every week.

[Erica]
Visit reiagent.com for more content.

[Mattias]
Until next time, keep building the life you want.

[Erica]
All content in the show is not investment advice or mental health therapy. It is intended for entertainment purposes only.