Feel like escaping the ‘rat race’? Wouldn’t it be nice to build a little wealth, making as much in passive income as you do active? Today Jasper has a conversation with a guest who has accomplished this ambitious goal – with the help of a game!
Mark Krupa has invested in multiple properties along the ‘tourist trail’ in Eastern Europe. He is the author of @Airbnb Coach: Maximize Your Income and Satisfaction as an Airbnb Host, and he does one-on-one coaching to help Airbnb hosts improve their listing performance.
Listen and let Mark coach you up on the investing game in Eastern Europe! Learn how he chose his investments, which one is performing the best and why, and how he navigates the ever-changing regulations around short- and long-term rentals.
How Mark chose the locations for his investments
- Researching tourist numbers and top destinations
- Visiting himself
Why Mark chose Eastern Europe
- He lives there and Americans are allowed to invest
- Low down payments and mortgage rates in 2009
- Bad Aussee, Austria
- Czech Republic (three studio apartments)
- Texas (two single family homes)
The success of the Austrian property
- Opportunities to ski in the area
- ‘Four season destination’
- Purchased for $35,000 ($7,000 down payment)
- Income of €900/month, expenses only €350/month
- Advantageous tax situation
- Low interest rate on mortgage
The unique requisites for guests of Mark’s Austrian property
- Fill out and turn in tourist tax form
- Leave cleaning fee in cash (€35)
- Access keys themselves via realtor lock box next to front door
Other locales Mark has considered as an investment
- Capital cities
The regulations surrounding short-term rentals in the Czech Republic
- Must have business license for short-term rental (30 days or fewer)
- Obligated to forward guest information to foreign police
- Required to report income at end of tax year
- Mark had to shift from short- to long-term rentals
Mark’s tips for investors
- Find out if you can secure a mortgage
- Look into buying properties that are fully managed
- Research the prospects of making more than you will spend
- Stay there yourself if possible
- Find a reliable cleaning staff that does quality work
- Communicate, react and welcome guests
Connect with Mark
Connect with Jasper
This episode is sponsored by Hostfully.com where you can create a custom digital guidebook for your guests!
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Complete Transcript for Get Paid for Your Pad Episode 141
Welcome to Get Paid For Your Pad, the definitive show on Airbnb hosting, featuring the best advice on how to maximize profits from your Airbnb listing, as well as real-life experiences from Airbnb hosts all over the world. Welcome.
Jasper: This episode is brought to you by Hostfully, a company that helps you make beautiful guidebooks for your listing. Make your own at hostfully.com/pad, and a special for Get Paid For Your Pad listeners, you’ll get a free guidebook consultation after you make your guidebook.
Welcome to Get Paid For Your Pad. Today, I have a guest on the show who’s invested in multiple properties in Eastern Europe along the so-called ‘tourist trail’. He’s also the author of a book called “@AirbnbCoach”, and he helps Airbnb hosts to improve their listing performance. So, welcome to the show, Mark Krupa.
Mark: Thanks, Jasper. It’s nice to talk to you.
Jasper: Are you in Eastern Europe right now?
Mark: Yeah, I am, in the Czech Republic, but I’m from the USA, Illinois.
Jasper: Right, awesome. And you own multiple properties along the tourist trail. What’s the tourist trail in Eastern Europe?
Mark: Well, I’ve moved here a long time, and I just noticed where people are going to visit because I wanted to get involved in some investing. I saw that the numbers are usually higher for short-term rentals. And so, I just noticed how many people are coming to Prague, it’s unbelievable, and how many people are coming to the second biggest location, Český Krumlov, and also, how many people are going to the Alps, and I just thought, “Hey, that might be a good place to invest and rent out short-term.”
Jasper: How did you find the number of visitors? Did you look at the tourist stats on websites of tourist bureaus?
Mark: Yeah. Part of it was just kind of being here and knowing where everybody’s going. Part of it was visiting those places, and gosh, even in mid-February, how many people are coming to Prague and how many people are coming to even small towns. And so, yeah, I looked up to see the top destinations, but then I also just kind of visited those places myself.
Jasper: Right. And what was the first place that you invested in?
Mark: It was in a place near Hallstatt, Austria, which is kind of a famous UNESCO visiting place. It’s like a wooden village right on the water, and nearby is a place called Bad Aussee, and it’s the geographical center of Austria, and where they’re wearing lederhosen. And there’s lakes all around, and mountains, really an amazing place. And back in 2009, they were just pretty much, during the recession, giving apartments away for just so cheap, I couldn’t believe it. And then, they allowed Americans to buy in Austria just shortly before that, so I really looked into it and pulled the trigger.
Jasper: And why did you choose Europe as a place to invest? Why not the U.S.?
Mark: Probably because I live here and they allowed you to invest in here. They also have really low down payments and really low mortgage rates, because all of my purchases are with a mortgage. But, I also am invested in the U.S., but into single-family homes, and I did all that from here in Europe. The two homes I own in the U.S., I’ve never been to, will never manage directly, and those are doing really well, too.
Jasper: That’s interesting. So, you’ve purchased two properties that you’ve never even seen.
Jasper: That’s interesting. I’ve never thought about that. For some reason, I want to see something before I buy it.
Mark: Yeah. You know, for me it was the numbers, and it’s kind of a new industry. It’s the turnkey single-family home rental business, and it’s really a change in the mentality. People used to think, “Invest within an hour of where you live.” I say, “Hey, invest where the numbers are best.” And, for me, you know, there’s certain parts of the U.S. where the home prices are low, the rents are high, and they have real long-term management that you can trust, that they’ve been around for 10 years.
So far, so good. I’m three years into it. All I did was go to the U.S. Embassy here in Europe to sign the papers and send the money, and that’s kind of a neat way to invest, but you don’t get to visit those places. Then again, I’d rather be visiting other cooler places than that.
Jasper: Right. And how many properties do you own currently, in total?
Mark: Six – four in Europe and two in Texas.
Jasper: Awesome. So, let’s focus on the ones in Europe for this episode. So, you’re saying you have one in Austria, and you have one in Czech…
Mark: I have three in Czech and one in Austria.
Jasper: Okay, awesome. So, the one in Austria, is that in a skiing resort?
Mark: Yeah, and it’s a four-season destination. There’s skiing all around, and people always ask about that. I’m surprised how many people come every month of the year. Sometimes, November is the low month, but then, two Novembers ago, somebody stayed there for the whole month, some digital nomad. You know, the first question was, “How strong is the Internet?” And I have strong Internet, and she worked there all month. But, people go there for skiing, people go there in the spring, definitely in the summer, in the fall, too. It’s an amazing place.
Jasper: That’s awesome. Did you get a mortgage in Czech? Because you were living in Czech, right?
Jasper: So, did you get the mortgage in Czech to invest in Austria, or did you have to get the mortgage in Austria?
Mark: In Austria, and this was back in 2009. I don’t know if they’ve changed any of the laws or anything, but you know, I don’t German. I saw those ads and I tried to make sense of them. For about $35,000, you could buy an apartment, and you could rent it out, and you could get a mortgage. So, I marched into the real estate… “Do you speak English?” And they said, “Yeah.” And I said, “I’m American. Can I buy here?” And they said, “Yes.” “Can I buy a mortgage?” And they said, “Yes.” All these things surprised me. They asked me how much money I made. I probably gave them some type of paystub, but I don’t remember exactly.
But, in Austria, it costs like 11%, 12% in addition to the price, so it’s kind of expensive to buy the place, but the realtor is also the bank, so I think there’s some type of, like, they could… You know, I fully own it, but I think they could easily, if I stopped making payments, they could reacquire it. But, you know, seven years into it, it’s still a lot of fun. That’s the rental that I get to visit, and I go there every two or three months.
Jasper: Do you go skiing there?
Mark: I do. I go snowboarding, go off-trail. Nearby is the longest ski run in Austria.
Jasper: Awesome. Well, next time you go skiing, let me know. I’m a big ski enthusiast.
Mark: Hey, come on down.
Jasper: I might hop over and join you.
Jasper: In terms of performance, is the Austrian one the one that’s been performing the best?
Mark: It is, yeah. It makes about €900 a month, and the expenses are only €350 a month, including mortgage, electricity, and everything, and that’s about three times more than I could make long-term, if it was a long-term rental. So, that one’s doing really well.
Jasper: So, you’re saying it makes about €550 a month, so times 12, that would be about €6,500 to €7,000 a year?
Mark: Yeah, yeah.
Jasper: Which, on the purchase price of, you said, €35,000, right?
Jasper: So, that’s great. That is, if I’m correct, about 20%.
Mark: Yeah, yeah. And the tax situation is great, too. I report the taxes, and then with the depreciation, you don’t end up paying too much taxes. That’s why I don’t pay it off, pay off the mortgage right away.
Jasper: Yeah. Yeah, that definitely makes sense, and you know, if you’re not paying too much for the mortgage, the interest rate’s quite low, then it’s a great way to leverage. Awesome.
What about the other properties in Czech?
Mark: Yeah, they also make a few hundred dollars more than the expenses. And they were all, all three were purchased for Airbnb, and then I got a letter from one of them, the one in Český Krumlov. That one was doing very well, especially because it was such a low purchase price. It was up by the train station, and it got about $400 a month for that, and I purchased it, also, for about $35,000 in U.S. dollars.
But, I got a letter from the city and they said, “We need to see your business license.” And so, I asked a lawyer and they said, “There’s no law determining what’s short-term and what’s long-term here in Czech yet, but there probably will be.” So, I ended up taking it off Airbnb and listing it really high for long-term, and right now there’s a Danish couple in there, and I’m actually making about $100 more long-term, surprisingly, for that short-term rental.
Jasper: Right, and that’s quite rare. Normally, short-term rates are higher.
Jasper: I just realized, by the way, when we did the calculation on your Austrian property, since you have a mortgage, how much did you actually invest?
Mark: Yeah, I only put down 20%. It was €32,000 to purchase it, and they asked me to put down like 19%, 20%.
Jasper: So, you only put down about €7,000.
Jasper: And then, you’re making €7,000.
Mark: Yeah. That’s the magic of real estate.
Jasper: That’s pretty epic.
Jasper: Yeah, that’s pretty epic, with the leverage. I mean, even without leverage, if you were to buy it, cash, €35,000, and then you’re making, I thought you said about €900, let’s say, I don’t know, maybe €100 turned to your cost, you’re still making like over 20%, even when it’s a cash deal.
Mark: Yeah. My goal was to… If you’ve ever played that game, Cashflow, online, the goal of that game, it’s like Monopoly, is to get out of the rat race, where you’re making this passive income. And then, my original goal was to just travel around and live in the different apartments, and when they get booked, just move to the next one. Now, I can’t do that so much because those are long-term, but I can stay in other places with that money. And I do life coaching, too, so I get to travel and work. But, so far, so good.
Jasper: That’s awesome. I’m just looking at Cashflow. It sounds like a fun game, but I’ve actually never heard of it before.
Mark: You know, you’ll learn more from that game than, man, just about any seminar or book. I mean, those are all good, but that’s kind of like real life. But, it’s a game, and you just invest in certain things, and the goal is to make as much in passive income as you do active so you’re not trading hours for money. It’s the only video game I play.
Jasper: It’s awesome. Well, I’m going to start playing that the moment I hang up the phone. That looks amazing, yeah. Awesome, man.
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So, can you tell us a little bit about the laws in Czech? I mean, obviously, in Austria, there’s no regulation against short-term rentals, I mean, because those ski resorts, everything pretty much is short-term rental, right?
Mark: Right, yeah. In Austria, for sure, short-term rentals, I have no doubt that they’ll be, always. It’s a short-term rental area, and so I don’t know if they’ll ever start changing the tax structure because, two things unique about Austria are, I have to make sure that, since I live about seven hours away, they have to fill out their own tourist tax form and turn it in to the Tourist Information, and people almost always do that. And then, later, I get a bill, you know, pay €1.50 per night for tax.
And then, also, probably only one I know, that they have to leave a cash cleaning fee, and I make it really clear on my Airbnb listing that they have to leave the cash, (€35, it’s not cheap), on the table when they leave, and they almost always remember to do that. If they don’t, I go on Airbnb, the Resolution Center, everybody’s really nice, and they send it if they happen to forget it. But, that way the cleaning lady who lives next door, I don’t know of any other way to pay her, and so that works.
But, Austria’s fine, and then, in the Czech Republic, right now, apparently, you need a business license to do it because they’re considering it a business, but more than 30 days, they consider it an investment. That’s why my three in Czech are now just investments, long-term rentals, because I don’t have that business license. And then, apparently, you also have to give the foreign police, whoever’s staying in your place, you’re supposed to turn over their information to the foreign police. Those are the two laws that I know, and then, you know, just report your income at the end of the tax year.
And that’s where we’re at right now, but hey, I’ve lived here so long, and visa laws change, short-term, everything changes. The law changes every year, so you’ve got to stay on top of it.
Jasper: Right. Can you think of some other interesting places to invest in in Eastern Europe or Europe in general?
Mark: Yeah, you know, I looked into it. I looked into Vienna because a lot of people visit Vienna. They have a brand-new train station, and I really looked into buying there, but in came those super-cheap, very high-functioning, clean hotels that they built, so the competition is really tight.
And I also tried to rent in my place. I live close to where Poland and Slovakia and Czech meet, and I just rented out my own place, so when I’m away, maybe somebody will stay, I’ll make some money, but no takers at all. So, you have to be in a good location.
Sometimes, Budapest, I hear that apartments in Budapest, Hungary, are really inexpensive, but you know, you’d have to definitely set up a management situation. That one intrigued me, but I haven’t really looked into it that much because I don’t think I could leverage it with a mortgage.
And the other places, gosh, they’re just so expensive. The capital cities are, yeah, the price that you purchase for what you get, it’s difficult.
So, in short, I don’t know. I’m glad I bought a few years ago because European prices are high now. You have a good time to sell, Jasper. Good luck with your sale. I’ve been following your blog and your videos.
Jasper: Yeah. Yeah, definitely, it’s not a bad time to sell, at all, which is great.
One more question about your Austrian unit, how do you manage it? Like, who does the check-ins, or do you have a remote lock, or some sort of smart lock solution?
Mark: Yeah, I have a realtor lockbox, and it’s a little village. So, the apartment’s on the first floor, and it’s just a one-room. All of my investments are studio, small, cheap apartments. You get into bigger apartments, it’s harder to find takers and it’s way more expensive, and the building costs are more. But, people are able to get into the building. They don’t lock the front door of this apartment building, which is rare in Europe. And then, drilled right into the door, I hung a realtor lockbox, where the key is just in there. They just have to punch in the four numbers, open the box, it’s not electric, and then open the door, and then the rest of the keys are hanging inside. And then, the cleaning lady, she lives next door.
But, first is the lockbox option, second is, I let them know where there’s a hidden key, and then third, they would call the cleaning lady, ring her doorbell, which, they don’t have to do that much. I try to be real nice to her. She’s really nice, does a great job, gets five stars, always dependable. So, that’s how we get the check-in.
Jasper: How did you find her?
Mark: Great question. I stayed in the apartment right above the one I bought before I bought it, just to see if the building’s okay, if there’s no issues, if there’s no mold, and also, I figured out how they do the cleaning. And they weren’t listed on Airbnb, they were just listed locally. And so, I just asked her if she would do the cleaning for mine when I bought it. And so, she did a good job for like five years, and then she just all of a sudden quit, and then I said, “Do you know anybody who could?” And I had it on Craigslist, and I put some listings on a supermarket, couldn’t find anybody. I actually found another neighbor, but they cleaned once and didn’t do a good job, so I cannot hire them again.
So, I went back to the first cleaning lady. I said, “I’ll give you €100 is you can provide me with another cleaner, and she did, and this cleaner’s been great for like two years, two, three years now.
Jasper: What would be your tips to somebody who’s looking to invest in Europe?
Mark: Yeah. I’m a big, like we said, leverage guy, so I would see if you can get a mortgage, but if you have the money, you could possibly look into these new things where sometimes you can buy whole units that are more like cabins. But, they cost a few hundred thousand crowns, but they’ll manage it for you and you can stay there. And I don’t know the numbers on that. Something makes me think you don’t get a great return, but at least it’s professionally managed and taken care of.
And I just think, get educated, look around. You know, the goal is to make more per month than you would spend. And if it’s important for you to stay there, too, then that’s neat, when you have a free vacation, money that makes you money.
But, yeah, the cleaning lady is super super-important. That’s my recommendation.
And then, just be a great host by communicating, reacting, and welcoming people, but I personally am an investor that doesn’t want to be hands-on. I’ve only met two of my guests ever, and they really are pleased, but I don’t want to be the investor that gets the calls in the middle of the night to fix the toilet or anything, for long-term or short-term. That’s why I do apartments, and in America, homes, but it’s fully managed.
Jasper: Right, but the Austrian unit, you do the messaging on Airbnb yourself, right?
Mark: Yeah, I do. I do.
Jasper: Okay. What if you get people from Germany? Do you speak German?
Mark: I don’t, just Czech and English. So, I have it listed only in English, and if people start writing me in German, I write back in English, and they always figure a way to just write back in English, and language has never really been a barrier.
Jasper: Awesome. Let’s talk about your book and your coaching business, because you do help other people with Airbnb, as well, right?
Mark: Right. Yeah, I wrote the book a while ago and help people through that, and then I’m just getting started with the helping people, and it’s a unique way. I combine my coaching practice with some of my experience in Airbnb. I don’t have all the answers for them, but I have certain skills in asking the right questions, where they could find the answers and their way forward.
And I do that through an app called Voxer, where it’s kind of like a texting app but for voice, and that way, there’s no time change, time zone difference, where they could ask me a question, and then I get their voice message, and then when I have time to react to that, I give them answers and more questions, maybe some experiences, and then, they respond to that. And the clients pay per hour of speaking, which could last over many months. So, it’s kind of a unique way to do coaching.
Jasper: And it’s called Voxer, and the app automatically tracks how much time you spend on it?
Mark: Yeah. Yeah, it does, and I’m not really strict about that. I just basically really enjoy Airbnb and want to help people. But, yeah, it’s a non-real-time voice messenger app – Voxer.
Jasper: Is this similar to WhatsApp?
Mark: Does WhatsApp allow you to record voice messages and then send them?
Mark: Yeah, okay, then yeah. Yeah, it’s similar.
Jasper: Interesting. And it’s voice to text inscription, it says.
Mark: No. Well, maybe it can do that, but it basically is, you know, as we’re talking now, there’s no delay in our answers, the Voxer app, you just hold the button, you speak, and then it sends the voice message to whoever you’re talking with, and then, when they have time, they do the same and send you a voice. So, I’m happy to help people with text, too, but it’s fun to just kind of voice back and forth.
Jasper: Yeah. What’s great about these types of apps, I imagine that this is similar to WhatsApp, where you put in a number, and then if you change the SIM card, you have the choice to keep your old number, so that when you travel around, you use different types of SIM cards, you can always communicate with people using the same number. So, if you change your phone number, then people don’t have to change the number in their contact details because you can just still use the old number.
Jasper: Awesome. All right, Mark, well, thanks a lot for taking the time to come on the show. It’s been very interesting, and I may take you up on your ski offer at some point. I’ve been skiing in Austria a lot in my life, and quite enjoy the Austrian culture, and the food and everything.
Mark: Yeah, yeah. Definitely, come down. It’s the Salzkammergut area, which is just so beautiful with the lakes and mountains everywhere.
Jasper: Yeah, Austria’s a beautiful country in general. It’s awesome.
All right, well, thanks a lot again. And to all the listeners, thanks for listening, and of course, you can find the show notes at getpaidforyourpad.com/podcast, where you can find all the links of all the stuff that we talked about, as well as Mark’s book, and the Voxer app, and all the other good stuff. So, thanks for listening, and we’ll see you next time.