Host, Christine Karpinski: Today's guest is Hank Drayton. Hank is a vacation homeowner. I thought it would be fun to talk to a vacation homeowner who has owned for really long time. He's got some interesting stories, some interesting perspectives on how he did this, even before the Internet existed. We are happy to have him on the line.  Hi Hank.

Guest, Hank Drayton:  Hi Christine.

Christine:  Thank you so much for joining us.

Hank:  Thank you for having me.

Christine:  OK. First of all, can you tell us a little bit about your story, as far as like, how did you come to decide to buy a vacation home?

Hank:  Well. After I retired from the Navy, I went to work for an aerospace company in Orange County in Southern California. And I thought, I was a pretty big success.

And then one day, I was stuck on the freeway, in the smog in very slow traffic, and I said to myself, how come this success is stuck on the freeway, in the smog in very slow traffic?

And my son, who lives in paradise on the North shore of Kauai, is living in paradise on the north shore of Kunai. There's something wrong with this picture.

Christine:  You were too successful... [laughs]

Hank:  Yeah. So, I called my son up on day and I said, "Hi Rick, why don't you and I get together and buy a piece of the rock," and we did.

Christine:  And what year was that?

Hank:  That was in 1988 or 89.

Christine:  OK.

Hank:  I know that we actually bought it in 1989; I am not sure what day that was when I was stuck on the freeway and however long it took to get our act together.

Christine:  And when you initially purchased it, did you have any thought... you know, basically, what was your attitude about renting? Did you give it any thought or...

Hank:  Yes. I talked to an agent who rented the vocation rentals with a property manager in Princeville. I had heard him say once, "Gee, I really wish I had a vacation rental with three master bedrooms. I could rent that all the time!"

So, we bought a bare lot in Princeville and designed the house with three master bedrooms. And my son built it as an owner builder, and I financed it. And then I put the word out, here is the house but a vacation rental and just waited for the people to come and rent it.

Christine:  Now. Did you use the property manager from the beginning?

Hank:  No. Never.

Christine:  No. Hmmm, interesting. Why not?

Hank:  Well, I knew how much property managers took as a percentage of the gross, and I knew we couldn't really make this work that way. Building houses and buying lots on the north shore of Kauai is not cheap.

Christine:  Right. I can imagine. Even back in the 80s, I mean, the 80s was pretty big boom in Hawaii and then also toward the latter part of the 80s and into the early 90s there was also a big bust in Hawaii. So, even if you wanted to sell it at a certain point, I bet there was a problem with that. Is that true?

Hank:  Well. I don't really know. I never have wanted to sell this place. I always figured we'll just do it, and do it, and some day we'll get the mortgage paid off, and if I don't live that long, my kids will do it, and do it....

Christine:  OK. So, you built the home and you, obviously, you did a little bit of market research. You had this foresight enough to build a home with three master bedrooms, which even in this day and age, you know, here we are 20 ‑ 30 years later and there's still not a whole lot of vacation rentals with three master bedrooms. So, kudos to you for thinking about that and actually following through with it. But how did you even begin to rent your vacation home back in the late 80's? Was the Internet even around back then?

Hank:  It may have been but I didn't know anything about it. I didn't have a computer and I thought to myself, "I don't know. What all these people are talking about. I don't need a computer." I learned better later. But anyway, when we started, I at first just sort of put the word out in Princeville and figured that people will hear about it and come, and that turned out not to be true.

Christine:  Because they already live there, so why would they want to vacation there, right?

Hank:  Exactly.

Christine:  OK. So then where did you find them? Where did you find all those renters?

Hank:  Well, I started out in National Magazine. I advertised in Digest because the house is right on the golf course, and I also advertised and still do in Hawaii Magazine. Much later, I went to Sunset but that was about the same time as I began to get with the program and get a computer, learn about the Internet, and heard about places like VRBO.

Christine:  And just for a gauge, how expensive was it to advertise in those magazines even back then?

Hank:  It was very expensive. I think that we spent $5,000 or $6,000 the first year on just ads for one magazine.

Christine:  Wow!

Hank:  If I remember an ad in Golf Digest, was and still is, something like $400 for one month.

Christine:  Now, but were they effective? Did you do a good job renting?

Hank:  Well, we did. We were doing pretty well, not the first year. We open in 1990, and I'd have to go look in my book. I still keep a green book which is a three‑ring binder with calendar pages and the application forms that people sent me. But for the first year or two, we did OK. Then a large hurricane arrived in 1992 and we had to start all over again.

Christine:  Oh, my goodness. How did you pick up the pieces after that?

Hank:  Thank goodness for our insurance company, which sent us a check which was enough to rebuild the house and tied us over until we got new renters just before they went belly up and their checks started bouncing.

Christine:  Oh, my.

Hank:  Oh my, indeed.

Christine:  I guess you were lucky.

Hank:  Very.

Christine:  So then, at what point did you start with the Internet. You said you started with VRBO. Is that right?

Hank:  Well, I'd have to go way, way back because I think that was in '94. I know that VRBO now has 10s, 20s, 30s, thousands of customers, and I'm number 393.

Christine:  Yes, actually we've got 80, 000 or 90, 000 properties on VRBO today.

Hank:  Oh, wow!

Christine:  Yes.

Hank:  I've lost track. I blinked.

Christine:  Definitely, one of the early ones. So then, how did it differ when you gone on to VRBO even being one of the early ones and VRBO not being what it is today with 80, 000 properties, you were number 300 or so? Did you find it to be effective right from the start?

Hank:  Yes, I did. In fact, I think I was more comfortable about what I needed to advertise or where I needed to advertise in those days than I am now.

Christine:  Interesting.

Hank:  Competition is getting tough.

Christine:  Interesting, very interesting. So, with regards to the rental aspects and you've been doing this for a long time. What do you feel like the most difficult part that you personally have experienced with your vacation home?

Hank:  Well. The times when things are good, lots of enquiries come in and lot of those enquiries turn into bookings, varies from month to month to month during the year and I just never seem to know.... when all of a sudden my phone feels like it stopped ringing, and I get very nervous.

Christine:  Right. So, I guess the absent flows, it's probably true of most home owners too.... You know, I have been in this field for 10 years now, and I have gotten to get a pretty good handle on the seasonality of my increase in bookings. However, it still does put that a little lump in your throat when, you know, for instance, like this month is not a really busy month for a lot of increase for my properties because I own in mainly summer destinations bring in summer. So, in October, November, December, people aren't necessarily thinking about next summer. So, for me, I've gotten to be comfortable, but I can't lie and say that it doesn't put that little lump in my throat, going 'gosh, I hope next year is going to be good'. [laughs].

Hank:  Yeah. When your rental is in Hawaii, as ours is, people seem to do their decisions pretty far in advance. We have very few bookings that are two months or less in advance. Most of ours is five or six or seven months in advance.

Christine:  Right.

Hank:  So, if somebody is going to come next summer..... if my phone is not ringing by the middle of January, and my calendar is not booked for July or August, I am going to get nervous.

Christine:  You get nervous. You know, and I have seen a change, especially with regards to air fair, it used to be if you booked far out that you would get the best price, but I can't tell you, how many times,..... you know, I travel a lot, travel a ton for work, and I can't tell you how many times I purchased a ticket a month or two in advance, and then two weeks, three weeks, four weeks before, I take the trip, doggone it, if there is a huge fair sale going on and I pay $200 more than what the cost of the tickets are today.

Do you think that that has something to do with it? Do you think that travelers are kind of playing out..... especially with your property that they have to fly to ‑ if they are going to go to Hawaii, they have got to fly. Do you think that has any impact on your business?

Hank:  It probably does, but I have seen such a variability there, I would think it's really like deciding what part of the roulette table to put your chips down on. I went to find a good fair to Hawaii one time a year or so ago, and thought I did really, really well until I got to the airport, was sitting along with some other people on the same flight and discovered that they paid considerably less than I had from my bargained fair.

Christine:  Yeah. That's always like one rule of thumb that they say 'when you are on an airplane don't ever ask the person next to you what they paid for their seats, because that would only make you have a horrible vacation'. [laughs]

Hank:  I am not going to do that again.

Christine:  So, let's flip this around. You talked about like the thing that's kind of the most difficult part. What about the most fun? I mean, what you find to be uplifting and fun about being a vacation rental owner?

Hank:  Well. Part of it is talking to the people, that's fun. But, I am an engineer and I like data. So, I take information from all the various places, where I store the basic data of who stayed me, how much, when, and where did they first find us, and I put it in spreadsheets and sort five ways from Sunday, and find the average number of months in advance, sort of what the percentage occupancy was for the month of October over the last five years and those sorts of thing.

Christine:  OK. Any woman that's listening to this right now is going 'he find's that fun!' You know. [laughs]

Hank:  Well. I am different, you know?

Christine:  Yeah. I know, I think it's cool. I mean, you are an engineer. I would never ever say that to me that's the most jaunting part of my.... I mean, I would like to go and find new things and talk to the decorators about new decorations and stuff, but never doing all the math, and the analytical work associated with it. I think, that's a kind of neat.

Hank:  Well. This house is not owned just by me. This is a partnership ‑ I own 50 percent of the lot, and my son and his wife jointly own the other 50 percent. So, we have this interesting division of labor and they get to do all the fun things that you like to do; like going and picking out new draperies and hanging things on the wall, and I get to try to keep it full.

Christine:  Gotcha. Well, I guess that probably works out pretty well. Do they still live in Hawaii?

Hank:  Yes, they live just down the road from the vacation rental.

Christine:  Oh, that's nice. So, you've got somebody there on the ground that can help out if need be.

Hank:  Absolutely.

Christine:  It's probably harder for them then it is for you I hate to say, isn't it? [laughs]

Hank:  I think so. They have to deal with the sudden problems, and there are always sudden problems on sight with any piece of real estate.

Christine:  You know it's funny because people will say to me, "Oh, Christine you live 1, 000 miles away! How do you deal with your properties?" I look at these people that live like right next door or close by. I'm like, "I would not want to be in your shoes!"

If something goes wrong my renters are sort of patient with me in calling the maintenance person to come and show up and do the work. If it were me, then I'd have to drop everything, and go and take care of it myself. I feel like being further away is sometimes a little easier than being right there next door down the street.

Hank:  You don't have anybody in your family or very close to you that you can call and say, "Help, the septic tank just backed up!"

Christine:  Exactly, exactly. So, I've just...

Hank:  I would really worry in that situation. [laughs]

Christine:  Oh, see it's funny. I just call service providers whether it's in that situation I'd call my well company and find out who I would call for septic service, and just get that taken care of. I really think having the housekeepers and my Constance, my feet on the ground. They are really my eyes and the ears to my property. So, I do depend on them very well. If you can want to look at it, it's really like having a family member there that really does take great care of my home.

Hank:  I think that's really important. I've heard that from other people on the Yahoo group that I spend a lot of time on. When they have a really reliable housekeeper, and maybe the housekeeper happens to be married to a really reliable handyman, that's the best of all worlds.

Christine:  Yeah, that's a great marriage! [laughs] No, Hank tell me about like your fondest memories that you've had about your vacation home.

Hank:  Well I love Hawaii, and I really like Princeville. I live half the year on Oahu, but I really like to get over to Princeville every now and then and just watch the grass grow. So I think the fondest memories of my vacation rental are visiting it myself, and sitting and looking out at the sunset over Bali Hai.

Christine:  Sounds wonderful! I want to go. Now, do you have any plans of moving there permanently any time?

Hank:  No, not to this vacation rental. I'm sure that it's going to be a vacation rental as long as we can make it work financially.

Christine:  You live the rest of the time in San Diego. Is that correct?

Hank:  Yes. I like to say that my wife lives in San Diego and I live in Hawaii, and we visit each other.

Christine:  [laughs]

Hank:  Right now, I'm visiting my wife in San Diego. In a couple of weeks she'll come visit me in Hawaii, and we'll catch the same plane.

Christine:  There you go! [laughs] Well, what a perfect arrangement. I can't wait till I get to your age and have two homes where I can split and enjoy both places. What a great thing that you've done for yourself and for your children, that now they've got a great place for them to have as an investment and perhaps use themselves as well.

Hank, thank you so much for sharing your story. I really appreciate it. It's always fun to hear how different people got into the vacation rental business. Some people stumble upon it, some people jump in with both feet, but it's always interesting to hear people's stories. Thank you.

Hank:  Thank you, Christine. I've really enjoyed this.