From Motel Renovation to 300K Followers: The Innvestors Story | Brett McManus E23

Michael Russell 0:00

How do you turn renovating an old motel into content people can't stop watching? And ultimately attract more than 300,000 followers on Instagram. Well, in this episode, you'll hear from Brett McManus. He's one half of the duo behind the viral Instagram account investors. And you'll learn how they've done exactly this. Without flashy edits or social media gimmicks, Brett and his wife Casey have developed a cult-like following by just documenting what they're actually doing, renovating, overcoming challenges, figuring things out. And they tell the story in a way that's just super funny and raw and engaging. Plus, not only do we discuss content strategy, but we get into Brett's approach to real estate investing, raising capital, navigating SBA loans, and what it actually takes to operate a hotel once you own it. Brett's easy to talk to. He's sharp as hell, and someone we're definitely rooting for. So I hope you enjoy this episode as much as we did. Let's dive in. Welcome to the Hotel Investor Playbook, your guide to building wealth and freedom through boutique hotel ownership, hosted by Mike and Nate. Get in the game. We're Mike and Nate, founders of Malama Capital, and your host. On this podcast, we talk story with industry experts and professionals about everything you need to know to make money investing in hotels and hospitality assets. On today's show, we have Brett McManus. He is the internet sensation. Their handle is investors. Brett and his wife, is that right, Casey, are the proud owners of the Opera's Resort in Vermont. And what is the other resort that you own?

Brett McManus 1:54

Gray Bonnet is our 42-room hotel that we're doing a lease option that we're managing right now.

Michael Russell 2:00

Sweet. Run on. Okay. So Brett, welcome to the show.

Brett McManus 2:03

Cool. Thanks, guys. Appreciate you having me on.

Nathan St Cyr 2:05

Yeah, we're pumped, Brett. Let's go.

Michael Russell 2:08

We are excited to talk to you. You've had a lot of success in marketing your motel conversion. So, what we want to know is how did you turn a rundown motel into a viral sensation and a thriving business?

Brett McManus 2:24

Yeah, it's good old-fashioned storytelling. So, as much as I like to think that there's like this secret formula that we had or this hashtag strategy or something like that, a lot of it was just like genuine sharing the story of what we were doing. We had bought a uh dilapidated motel that had been used as a homeless housing program residence. Uh so essentially basically a drug den hotel in a really cool ski town. And we uh it was a big life change that my wife and I were going through taking this on. Um, we had been inspired by some other Instagram accounts and a few books that we had read that had talked about kind of this idea of storytelling, and it was a good way to keep mom, dad, and grandma back home updated as well. So we just started sharing a lot of our day today of what we were doing, um, first taking over operations, then renovation, and really how we were transforming this property. And it uh it ended up taking really a life on its own up on Instagram, which has been profound for us and uh, you know, not only the opportunities we've had, but ultimately the bookings for our business as well.

Michael Russell 3:17

Take us to the moment your Instagram video hit 10 million views. What did you think made it resonate so strongly with people?

Brett McManus 3:25

Yeah, so we had uh, you know, I had been doing social media for a little while before that, just documenting some of like house hacked stuff, but it was always like the floating head, here's what we're doing. Like, even I hated like going back and listening to it. And this is the first time that we really had like switched up our style of video where we were really just like sharing this story of what we were doing, like tackling this big beast of a motel that we had taken on, all the debt that we had grabbed, and had made a couple of videos just about like the day-to-day, like when we closed on it, we got like thrown to the wolves in our busiest time of year. The last owners left and moved to India after a few days, so we were like on our own to figure everything out. And we had made a couple of videos, like just like figuring out how to do the laundry and clean these rooms and do bookings, and each one started to get a little bit more traction, you know, maybe there was 5,000 views, and then the next one got 10,000 views, and it was on, I believe it was the fourth video we made. Uh, my wife, Casey, and I we made this video really for the first time talking about our plans for this property. So we had this natural hook of we had purchased this property and obviously we were very young. Uh, we had talked about how we were making money and it was working, but now it was time to do this renovation and this big transformation. And it's funny because it was probably one of the lowest production value videos we'd ever done. Uh, the audio's horrible, but we posted that video just going through literally our plans for the renovation. And it was one of those where you go to bed and you wake up the next morning and you're tapping her on the shoulder, like, holy crap, look what's happening! And just your whole screen is Instagram messages, not only the views that were going up, but we went from about 500 to 130,000 followers in seven days. So just this massive influx. Um, but also just this crazy thing to you because you have everything that's exploding online, but like we're still here having to run the business because we didn't have any staff and we're kind of in this sleepy town in Vermont. So very uh just a whirlwind thing, but also crazy. You open your phone and it's like this paparazzi thing, but then in real life, like I had five toilets to scrub that day. So it was uh it was kind of wild.

Nathan St Cyr 5:15

I want to talk about so now how has this impacted you guys and how's it impacting your business and all of that? But I want to go to the start of you making this decision. When did you have the idea that you were gonna document this as we go? When, like, how did that idea come to life?

Brett McManus 5:33

Yeah, for us, it was I had gotten inspired actually like in a totally different industry, which is a lot of like, you know, I don't find myself to be a particularly like creative person in terms of coming up with ideas from scratch, but like I'm really into sailing and like I've always had this dream of like, you know, cruising on a catamaran and I had been following a lot of these other uh kids like our age in their 20s who had left their job, sold all their belongings, bought these sailboats, and were just cruising around and found myself very captivated by this and just like the story. And it was kind of that similar, like, you know, they left everything behind, taken on this crazy idea that's not the norm, and were just sharing the day today, not knowing where it was going to take them or doing new stuff all the time. And it was just sitting down my wife, like as we were at this point going through the process of purchasing this first 17-unit motel, and like, hey, this is kind of like what we're doing. Like, it's this we're we've left jobs, she left her career as a teacher, like we've taken out millions of dollars of debt now with uh no way to pay it back without this business being successful. And it kind of has a lot of those same inklings. And again, um, we were moving away from our family, so we were moving to a totally different state, and a lot of people back home were just naturally gonna be curious. It's like we're gonna make some of these videos too, and just follow kind of a similar script, just not not creating anything, just documenting like what we're doing. And at that point, like we didn't have like it's not like you know that like it's gonna blow up into this massive thing. It was just like, hey, like we think when we're 40, 50 years old later in life, it'd be really cool to reflect back on. Um, and that was really the input, the decision making to do it, but then the the outcome that's come from it, obviously, just like more than you could ever anticipate.

Nathan St Cyr 7:05

I love that. There's a lot of people that are listening, right? That are get started. And this conversation I have all the time with people about, you know, the fear of putting themselves out there. And I'm gonna just be completely vulnerable right now and just say that like this is it's terrifying. I didn't have social media in my life. I'm a 49-year-old man, had zero social media, like zero, like no Facebook, even nothing. I lived in a bubble and I avoided it because I didn't want to be involved with it. And now we are going through this, this, this journey ourselves. And I just gotta, I gotta tell you, I I have to face my fears every single time that that camera comes on or that phone comes out or whatever it is, it's a big blocker. So um, number one, did you have any of that hesitancy when you were were starting? Like, dude, am I just a freaking idiot? Did you have any of that vulnerability, or were you just more like, hey, let's go, let's do it? What was your mindset?

Brett McManus 8:11

Yeah. So as I mentioned a little bit earlier, like this wasn't my first step into social media. Like I had been making some videos before, like talking about some of the house acts we were doing and the early short-term rentals. And that's when I went through my big like, who the heck am I to be here making this video? And like trying to create these like videos around what we were doing. And it's it, it it was documenting what we were doing, but in a very different way, like you're trying to, you know, you're pointing a camera at you talking, like trying to sound right, and all the things that really instilled a lot of fear. And the biggest thing that I can communicate that we change, it really is this idea of uh document, don't create. And the biggest difference that I found is that instead of like setting a camera up, looking at me, saying, Hey, here's the three ways that we bought our first house hack, when we transitioned to this style of video making, it was a tripod in the corner or somebody like one of our contractors, like following us around, like as we were working on it, just literally documenting what we were doing that day. And for me going into it, it was a very different mindset. And I think it is a lot of the why going into it. Like the point when we started documenting these videos, it genuinely the the point was not to grow big. It was we thought this would be a very cool thing to look back on. It's keeping mom, dad, and grandma updated back home and a lot of our friends who had just like already taken to what we were doing, just like they they knew we were buying this motel and we were going into it. So, like it for me, it just it lowered that bar of like really going into like, hey, we're just gonna document because we think this is cool and we think this is fun. And it really took down that stress level that I used to have, you know, just as you're saying, Nathan, like back when I was first starting to get into it, because you almost just kind of have this like, you know, it is what it is. We're just documenting our day and throwing it together. And if people like it, great. And if not, uh, you know, we're we're good with just a story to have too.

Michael Russell 9:48

Hey guys, quick break from the episode. Look, we're always looking to bring you the best content here on the Hotel Investor Playbook. And honestly, we'd love to hear from you. We want to know what you want to learn about. Is there a topic you're dying to hear us dive into? Or maybe you know someone who'd be an awesome guest, someone with a great story, unique expertise, or insights that would bring value to all of us in the hotel investing game. Shoot us an email at info at hotelinvestorplaybook.com. That's info at hotelinvestorplaybook.com and let us know. We read every single message, and honestly, it would make our day to hear from you. Your feedback helps us make this podcast better and more relevant for you. So don't be shy, reach out and help shape the next episodes. All right, back to the show.

Nathan St Cyr 10:34

I love it. I absolutely love it. And so fast forward, this thing goes freaking like you can see it is like this many views, this, and then all of a sudden freaking 9.9 million, like 10 million. And and now you're sitting with 300,000 followers. Um, you know, I've been like one of the first when I went out and created my uh my Instagram account, whatever it was six or nine months ago, you were like one of the first people that popped up because of what we're doing, I'm sure, right? We're hospitality investors, and so you popped up, and so I've been following you along, going, oh, dude, these people are famous, you know, like damn. So very, very, very inspiring your story. But so how has it impacted you? What's it done to your your business?

Brett McManus 11:23

Yeah. So there's two big impacts that it had on us, and and and it was a whirlwind. Like one of the things that you're just not prepared when things grow that fast, and all of a sudden your messages are loaded with every news channel that wants to talk about what you're doing, every social media manager that wants to take you under their wing and just start, you know, having you hawk whatever product they can uh they can get a commission on. And that was a uh that was a really tough phase. And we had made a decision when all that was going on is like, listen, we are and and part of it was and like when I try to like make sure that I hit on like well, all of this was going on, like, yeah, like a lot of this coolness is happening on social media. We were neck deep in the business plan of a renovation that wasn't really going that well. Like we had cost overruns that we were having to offset with our own sweat equity. So it's like, hey, this is a great thing, but like I just took out a loan to buy this motel at investors capital that like we have to still deliver the business plan. So it really was business first. You know, we'll keep documenting it, but we really had to push a lot of those opportunities that I think you would see most people who have internet success latch onto. Uh we didn't have the luxury of it. And I think we're better off for it because we really just focused on doing our thing, sticking to our plan of what we were doing and documenting it along the way. And the outcome of that was we built a lot of really, really good rapport with our followers. Like one of the things that like always just blew our mind that we were prepared for is like, you know, people who don't watch all the videos, they just you know, laser into one of them that gets a lot of views and they're like, oh silver spoon kids or like all the negative comments. And we just never had that because we were just grinding it in and out every video. And like we just had so much support. So, you know, we hadn't really made any ass of our audience. We were just give, give, give, give, give on the content. And the biggest thing for us that happened is that when we uh when we opened up for bookings, you know, we finally get this thing done, we released the new brand, we released the website, people came and started staying with us. And being in commercial real estate, you know, it the the biggest thing that we've realized is it doesn't matter what brand deal is out there, it doesn't matter what, I don't know, however else way you get, you know, whatever mastermind you try to start selling, being able to get an extra 20% of bookings and then being able to have nearly all of our bookings coming in direct. So not only like the incremental improvement to our top line revenue from the bookings coming from Instagram, but the fact that almost everyone is booking direct and not having to pay those platform fees, the value that's creating for us on our bottom line now, you know, multiplied over a cap rate, not to get too into the weeds of doing this, like the the benefits of that have been massive for us, of just not only the increase of bookings, but the cost savings that we're having month to month as well, and not having to do anything else but just be super stoked about our project on social media, meet a lot of the people who have been following. Like, I think that's one of the really cool things about what we have going on is that like instead of being like some like at-home influencer, like we're running this motel that people who are stoked about what we're doing, like they can come, they can stay, like we're here, like running it day to day. And uh, it's this very like even exchange where it's like, yeah, they're coming and like seeing us and like we'll have a beer in the backyard by the fire, but like they're supporting our business as well. So that's been huge. And the second piece that's been awesome as well is just being able to connect to other like hotel operators. So because of the audience, you just meet a lot of different people who are doing the same thing we've done so lately. Like, if you go and you look at a lot of our videos, we're spending a lot of time like going and highlighting other in operators that are crushing it in their business. And again, this really cool win-win where we're able to go like help create this video and highlight these other cool operators that maybe haven't had the social media success that we've had. Uh, and then in return, like we get to learn from them and like what they've done in their business. So there's a direct impact for us of like, I mean, ultimately bookings coming in and bookings direct, which is huge for the the hospitality world that we're in, at least in the commercial space. And then also this like indirect benefit that we're had, where we're just we're very rapidly getting to meet a lot of people and learn from them as well. And it's hard to know what the benefit of that'll be. But again, being our 20s and a long career ahead of us, like honestly, that's the part we're the most excited about.

Nathan St Cyr 15:14

Okay, I'm calling it timeout. Brett. Yeah. Would you like you and Casey like to come and island hop on Maui and the big island?

Brett McManus 15:22

We would love to. We would absolutely love to.

Nathan St Cyr 15:25

Okay, cool. We got you're you're coming. We're gonna freaking take good care of you. And um, yeah, we're gonna, we're gonna document that journey.

Brett McManus 15:33

Yeah, and you don't you don't have to like like if it's not the right fit, we don't have to dive into a lot here, but we are getting to like launch this kind of new end of our business that we're gonna be taking out here soon. We're really it's just like we've been doing a couple of these in tours now. I just got back from another one in Portland, Maine today. And it a part of it for us is like we've had this social media thing going like we can only buy so many of these hotels. And I'm not, I'm not into the massive syndication thing. Like, I'd rather just buy a couple assets we love every few years. So in the meantime, we're gonna keep doing these in tours. And uh our audience has really liked watching them and seeing other people's stories of what they've done.

Michael Russell 16:06

Well, so listen, your content, it's raw, it's real, it's engaging, it's authentic. But to Nathan's point, a lot of people like ourselves are like, dude, I don't know what to to do. I don't know what kind of content people want to see. And I guess I just want to know in simple terms, like, what's your strategy for creating content that that really that people love to watch?

Brett McManus 16:27

Yeah, it's uh it is almost embarrassing how little goes into it, but I think there's a lesson in it that we try to share with a lot of people. So when we started making these videos, it was nothing more than like I had at this point when our renovation started running awry, or like we had to take on a lot of stuff like the paint and the poly and the finish work and stuff like that, so that we could pay like the electricians and the plumbers and the stuff that had to get done. And a lot of it would just be like I'd set a tripod up in the corner with my iPhone with a vertical video, and I would just film everything I did that day. I would lay in bed at night and I would just do a little voiceover, just talking about like into my phone of like, hey, here's everything we did this day, here's what's going on, here's the big problems. And I think that that's been a big piece of it too, that a lot of people on the internet can be afraid of, but kind of took away the imposter syndrome a little bit is just be like, hey, like there's some stuff not going right right now, and we're not perfect at this. And like, not only did that take a lot of the imposter syndrome away because there wasn't a lot we were trying to hide, um, it made good content too. And it really kind of sealed the deal on this story. Again, like it is really a journey that we were taking people through. But again, it was more gen genuinely just what we were doing day in and day out. So each night I would just come back and plop my clips together and like a little editor on my phone and lay this video recording over, add some captions to it and away to Instagram it went. And uh it it was never polished, it was never, you know, a VA somewhere coming and like really dicing it up. It was really raw um filming that anybody could do, but the story was there. And that that was the big lesson that we took away. And I think there's something that goes with it as well, is it stands out a little bit too. You know, when people are flipping through and everything's polished, TikTok, Instagram, Rhea, like all of a sudden you have this like, you know, it people got to be able to understand what you're saying and see what you're doing. It can't be like filmed with a Nokia flip phone, but uh, it doesn't need to be this big studio production. And uh we've we've taken a lot of learnings from that.

Michael Russell 18:16

Yeah, well, look, I I think I'm a little tired of everyone teaching me what I need to do, right? And I say, well, look, we've been guilty of doing this ourselves because we're like, you know, we want to post stuff on social media. What other people doing? Oh, we'll copy them. And it's like you mentioned it, oh, here's the three things that you need to do. And it's like, okay, everyone's an expert these days. Who do I really trust? So I just kind of like skip through it all these days. It doesn't really capture my attention to the same degree. I think what you're doing is unique in that uh aspect, and that is probably one of the reasons why you've been able to accelerate viewership, is because you you're not trying to be perfect, you're not trying to be the authority, you're just like, look, this is what we're doing, this is how we're doing it, which is very different than telling people what they need to be doing.

Nathan St Cyr 18:58

I also want to go back and you said something to me that was uh it's still spinning around in my mind. It's like, and it was really, really, really refreshing. You said uh the whole syndication thing, it's just not your deal. Everybody out there gets told, you don't need to need you don't need any money, you don't need any blah blah blah, you just need hustle and if you can go and partner and then you go and syndicate, and then you get someone with more experience, and then at the end of the day, yes, that is a strategy, right? And look, we're gonna syndicate, we're we're gonna go and purchase big things and we're gonna go and do this, but it's not like our bootstrapping, what we did all the way up until this point has had such a dramatic impact on our life. And so when I hear you say, look, we're good with our model, like we're gonna go, and every couple of years, we're gonna go through this process and we're gonna add a property every couple of years. And that strategy for you is the direction that you're gonna head. And I wanna touch on that because that's A that's a to me, that's a gold mine. I think that that is a perspective that people need to hear. And so will you just kind of walk walk us through why that's your strategy?

Brett McManus 20:11

Yeah, I mean, for us, like what we found is that when you can just find really good projects. And for us, we did we did a lot of off-market search. I mean, we were looking for a a motel in 2023, which is really hot. And there were a lot of other short-term rental operators trying to do the same thing. And we found, you know, if you're willing to roll up your sleeves and you're willing to do some cold calling and reach out to direct to these owners, uh, there's good deals out there. And for us, it uh we were able to put together a package on our first one where we were able to find just a genuinely good property that had been producing income but had room for improvement to you know improve it physically, which ultimately would lead to higher occupancy and higher rates. Uh, because of that, we were able to get really good debt. So I'm a big proponent of SBA loans. Uh, it's what we've used, and it was a really good way for us again. So I was 26 years old and we bought this property. I probably had negative equity at the time. And the SBA program is a really good way. If you find a killer deal and you have the experience coming into it in the right business plan, you can get into one of these assets without a ton of money out of pocket and they combine the purchase, they combine the renovation. And what that created is us being able to just get into a genuinely good asset in a good market with good debt without having to raise, you know, 60% of the project total to cover the purchase and the renovation because it's wrapped up into the loan. And again, because it was a good deal, it appraised over that total when we before we even got into it. And I really love the idea behind that of instead of having to farm out like 80% of ownership just for the sake of doing deals, like, hey, we can just, you know, part of it is you gotta stabilize the one you're doing. You know, you gotta, and I don't think that's the worst thing either, is just like, especially when you're early on in this, get into your project, make sure it does well, you know, get the pieces in place operationally and let it rock and roll and move on to the next one. And so that's really our plan is just get into good assets, stabilize them, get them cash flowing, you know, be searching for the next opportunity, but really just focus on buying good assets that we like and good markets and uh and get good debt on them. So we don't have to give all the equity away. And and part of the benefit to that is we are younger. Um, we are, you know, we're we're in our 20s, we don't plan on slowing down every time soon. So there is almost like a freeing feeling of that of like, hey, I don't have to go and make the whole world happen in the next five years if we just keep stacking the fundamentals, like find other cool projects to do in the meantime. And this social media has been a cool part of that. Um, but just keep stacking good deals over time and it might change as we go along. But right now it's kind of it's been a very like mentally freeing thing to just like focus on what we have now, and especially uh, you know, I mentioned it before, like for instance, we have another property that we're managing right now down the road. Like we weren't in a position where we wanted to double down on earnest money and all of those costs again. We took over management of it and we're managing it right now. We're working out a lot of the kinks and we're gonna just do our due diligence over a two-year period and kind of put that next one on deck. So we're uh it probably a little bit different than what a lot of other people are doing, but so far we've enjoyed it and uh it's it's the plan for the future.

Nathan St Cyr 22:57

Sounds very familiar.

Michael Russell 22:59

I like how you describe debt as negative equity. I've never heard that before.

Brett McManus 23:05

Yeah, that's uh yeah, when you move really quick, you usually you uh you have a lot more on the liability side than the asset side. And uh it part of it too is like we've met a few people in this hospitality space that have uh, you know, they they've gotten into these projects and they've let them ferment. And we've met a few other people that got into a lot of projects really quick and uh little things like COVID hit or little economic downturns hit, and uh they they got war stories from it. So you try to take learnings from other people who are ahead of you as well.

Michael Russell 23:31

All right. So I I looked at your Instagram page and I scrolled all the way back to the beginning. What I noticed was you originally started documenting how you were investing in short-term rentals, and then from there you started investing in industrial warehouses. And now let's flash forward. You've chosen to invest in hospitality, hotels. And I guess I'm curious, based on your experience, why did you decide that investing in hotels was the right step for you? Why was that the progression?

Brett McManus 24:01

Yeah, there's two components to it. There's a very practical one, and there's a very, like, I guess to say, more lovey-dovey one, which is the truth behind it. And the so the practical component is we just through our natural real estate education, as you said, we were doing short-term rentals, long-term rentals, had started learning about um commercial real estate. And it was one thing that I latched onto really quickly about our short-term rentals, is uh it is a business that is not valued as a business. And uh, as I learned more about commercial real estate and the difference between um, you know, income-based appraisals and comparable-based sale appraisals that a lot of residential properties traded on, it made me start to loathe our short-term rental business a little bit because we're doing so much work. And uh, you know, my wife and I were pouring our heart and soul into it and we loved it, and it was making good money, but it's uh that home is only worth, you know, outside of you know, fixing it up, what that home's gonna be. So we had started learning about commercial real estate through industrial. Uh, through that, I also started learning the difference between passive and active income. And there's certain assets that, you know, strip malls, industrial that are really cool, and I still get a lot of excitement about it. Um, that, you know, you pour an investment into it, and over the course of 10 years, you'll be okay. But at the time we were 24, 25 years old, and like, we got to eat, you can't eat equity. And at the same time, we did have this short-term rental business that we genuinely enjoyed. Like, we had come off a stint where like there is nothing wrong with multifamily real estate, but like I just didn't like being a landlord. Like we had done the birthing, we had started stacking residential income properties. I just didn't love it. And then we took a, we did one little toe dip into short-term rentals. We loved that. We enjoyed doing it. Um, my wife is a teacher, so she's always kind of had that like, you know, put others before yourself mentality. I love the operation. I see a lot of beauty, like to us, like hospitality for her, it's more of that natural piece of catering to others, providing the best experience possible. For me, like a lot of like great hospitality. It's the operations of it too, making sure people have the information they need to book, making sure they can get into their room and all of that piece. And together it really made this nice thing where it's like, hey, we learned about commercial real estate. We really have gotten a lot of the fulfillment of really operating short-term rentals. And that has really come, you know, that's what inspired getting into you know commercial hospitality through these boutique motels. But, you know, to flash forward on the backside of it, it's it's just this really cool thing. And I don't, I don't know, I don't know how to say it without being cliche, but like, you know, I had worked done a stint in Fortune 500 companies in corporate America to know what like soul-sucking work feels like, and to now have this total polar opposite where we're arguably working 10 times as hard, 10 times as long. You know, we have cleaners now, but we scrubbed a lot of toilets leading up until this point. Uh, but there's a level of fulfillment that comes back from that, you know, and I almost get just as much excitement out of seeing a five-star review come in as we do a new booking coming in. And uh once you have that feeling, it's hard to get rid of it. And it's why we're just we're we're super, super stoked about hospitality.

Nathan St Cyr 26:44

I want to reach through and give you a hug.

Brett McManus 26:48

And yeah, and it's you it sounds cliche saying it, but it and I've always been this like hardened, like very like operationally focused guy. Um, but it just until you go, you you go into a business like this, and it's why we're going and visiting a lot of these bed and breakfasts too. Like, I had never stayed at a bed and breakfast my entire life, but I just go and have so much respect for what these other people like genuinely do to put their guests ahead of themselves. And by the way, they're also being very well financially rewarded for that too, on the backside. And it's just like when you do it like the right way, it's just a beautiful thing.

Michael Russell 27:20

Yeah, I want to touch upon something that you said, which is you just, you know, you didn't want to be a landlord, right? And we own a variety of properties, and one of which is a commercial property, it's a retail strip mall. And I can tell you, I never get um a comment or an email or a phone call that says, Hey, I just wanted to let you know we're having the best time over here at this marketplace. And you're just you've done a sensational job being the property owner. We I never get that, right? And so I can totally relate because whether it's our short-term rentals or it's our hostel properties, we're able to observe people having the times of their life, right? They're just these moments, it's such a passion project, and you gotta just take account for that. Aside from the cash, you know, the money that you can make, the cash flow, it's the fulfillment and knowing that you're curating these experiences that just provide fulfillment. It makes it worthwhile. It's not just about the money, it's about personal fulfillment.

Brett McManus 28:20

Yeah, and we see it all levels. We see it with our housekeepers. Like that's been one of the other cool parts of it too. Like when you get into commercial hospitality and these bigger projects up, you can bring other people along with you. So assistant managers were now able to bring in cooks that are all that are all like they're seeing those reviews come back too to like quali qualify the work that they're doing and hopefully making like a career for them that they're really excited about, even down to like the plumbers and the electricians that have come to work for us. There's just something cool about it and a light, a light feeling for anybody who comes onto these projects that's uh it's infectious for sure.

Nathan St Cyr 28:51

I don't know why I've never thought of it that way, Mike, the way you just described it. Like the feedback that I get from all of the other real estate that I've ever owned, I've never thought of it that way. Like, but the reviews we got we do, we get so freaking pumped, right? And uh and what we see visually on on the impact that we're having on our Instagram page of watching our guest experience. But I never thought of the reverse side of that, which is in the other real estate I own, the feedback that we get, it's just who is negative, man. Should we have a complaint? There's always a need, right? It's always responding to a need or something, and it's like, so then you know, I'm programmed to whenever communication comes through one of these other properties, it's like you don't even want to look at it. Yeah, but yet we get filled up. I don't know, I never looked at it that way. So uh light bulb moment.

Michael Russell 29:47

Hey, can we jump into operations? Yeah, okay. You you bought this motel, it needed serious work, right? So what was the most unexpected operational challenge that you faced?

Brett McManus 30:00

Yeah, what I will say is uh usually the the biggest challenge that we went into. So I will say like we came into it knowing we were gonna have to roll up our sleeves. There was a manager that was leaving and moving out of country. Uh, we didn't know what we were doing at the time to even begin thinking to hire somebody. So we knew going into it, like we're gonna be clean. And honestly, that was the easy part. Like it's you know, you clean the room, you go through the paces. The biggest challenge for us coming from short-term rentals, like into this commercial hospitality, is kind of like that, oh man, this is a business. And it's it's a little administrative to talk about, but the reality is like there's challenges, like you got to figure out payment processing, and there's licenses that you needed to get we never needed before, and health and safety stuff and everything there. And it's uh, and at least for where we're at in time right now, there's not necessarily a playbook that spells out how to do this from A to Z. So for us, like it's called the Hotel Investor Playbook. Well, yeah, no, now I know. And uh it's it so that that was a really, really tricky part for us to go through. So the the good news is there's people out there that help you figure it out, and uh, but it is, there's really a lot more to it, and you gotta have the licenses, you gotta have the health stuff. It's you know, it's it's one thing to talk about just providing great guest experiences, getting hugs and good reviews and everything like that. But uh, you do have to have your boxes checked and paying your room and meal tax and everything like that. And you just gotta go in, like, and and again, I think it's where a lot of people online can sometimes oversell it, is like, hey, just go and buy one of these things and jump into it. And it's uh you gotta be ready to, you know, to to reinvent your little yourself a little bit and learn.

Michael Russell 31:30

Okay, that's all well and good. But look, what I'm wanting to know, I want the dirt. I want to know when you took on this renovation work yourselves, like, was there one project that just turned into an absolute nightmare?

Brett McManus 31:41

Yeah, so we yeah, I'll give so we had plumbing problems. Like so we're in the Northeast, and all of these properties were built in like the 50s, 60s, 70s. You got galvanized pipe, you got copper pipe, stuff isn't pitched the right way. And uh, so the fast forward is we had to tear all that out and redo it, but that's the easy part. The short term is like when we're two weeks into owning this thing, and uh, this will be a gross one, but it'll be fun. So it's uh, you know, you get those messages from guests that are like, hey, my tub is backed up right now, and we had these cartridge filters that weren't tipped the right way, so they're creating these air pockets that weren't letting water flow the right way. So we were sold out that weekend and we didn't have anybody to move a couple of these rooms to, and they had standing water in their tub. So I had to crawl down in like our crawl space underneath, undo the cartridge and catch all like I can hear them up there taking a shower on catching all the water in a five-gallon bucket and bailing it into the sunk pump and just doing that for an entire weekend because we couldn't afford to refund these people because we had like a $12,000 mortgage payment to make. So it was like we had to do some like really greasy work like that. And uh in when we got in, um, I I had mentioned it before, the the motel had been part of a homeless housing program that had got shut down. So during COVID, the state of Vermont was um was paying motels when a lot of the homeless shelters got shut down. These people needed somewhere to go, but that program wrapped up. So this is about the time we're taking over ownership, and uh, they had already taken bookings and we're walking into these rooms like, man, there's no way no one can stay there. So just the the deep clean that went into some of these places and the paraphernalia you can imagine of just to try to get it guest ready, it uh it hardens you up pretty quick. But yeah, the the plumbing, the the two big projects, it was cleaning up, cleaning up after the drug addicts, that was a tough one. And uh, once we were running some of the plumbing and some of the delayed maintenance that we found, it was uh not only made for a big project. Fortunately, you can hire plumbers to figure that out. But you're uh when it's Friday night on a sold-out holiday weekend and people paid top tower to be there, it's uh someone's got to roll up their sleeves and get it done.

Michael Russell 33:43

I hope we captured that on video.

Brett McManus 33:45

Yeah, it's we haven't posted that one yet of making people too gross, but there's there's a video flowing out there of me taking a bath.

Michael Russell 33:51

So damn gross. All right. So how did you find this hotel? Or is it a motel?

Brett McManus 33:58

I I call it a motel. It's it's your typical exterior doors. You know, we got a hotel that we run down the road, like that's got it, you know, you're walking into an interior lobby or going to your room. This is your motel, it's your roadside motel, doors facing out here in a ski town in the northeast. And uh when we got into it, we had we had a lot of problems. Um, the biggest one is that we were in our 20s and broke, and that's a problem for a lot of people in commercial real estate. And you go to a lot of banks and you go to a lot of brokers and they pat you on the back and they say, all right, like good, you know, dream, come back to me when you find somebody to help you out with this. And uh, we didn't have anybody in our life at that time who was like a mentor in this hospitality space. So we just started reaching out to owners. And it was something that I had learned about when I was getting into industrial real estate, is there weren't a lot of resources out there in industrial. So we just had to go talk to the people who are doing it. And what we found in hospitality is uh these people all work in hospitality, so they tend to be pretty friendly. So we would just call up a lot of these cool motels near us and in the markets we are going to, and we say, Hey, I don't know if you're looking to sell or not, but like my wife and I are looking to do the same exact thing you are. Uh, would you talk to me about like how you acquired your property and how you got into it? And that's when we started learning about seller financing, about uh SBA loans. And after a while, a couple of these people come back and they actually want to sell. So you uh you start learning how to underwrite, and we got our first deals that way. And uh it it really was like something that started out as a wall where no brokers really wanted to work with us, and we just started reaching out direct to seller and uh you know, you get a little bit more targeted with it, and you find like, hey, the the five-star, you know, super hotel in town, you know, that might be a little out of our league, but hey, there's maybe these like three-star motels that like, you know, some of them, as we learned, like the reviews, it's it's a one-star review because it's moldy and there's no hot water. And then you find some of these other ones where it's a three-star review because uh the owner's a jerk and the sheets weren't clean. And we started learning like that's kind of easy stuff to fix for your first deal, relatively speaking, to what else is out there. So it was uh it was cold calling. And we had a couple that didn't work out. Um, you know, some of them you start learning how to underwrite PLs and the things the bank asks for, and you realize, hey, it doesn't make enough money. Like, I know you want this price, but like I can't get it. Um, some of the other ones that are just there are properties out there that are too far gone, and we've learned about it that way too, where it's uh, you know, mechanically utilities running to the property, um, all the way down to zoning and flood issues, there's things that make certain properties challenging. Uh, but eventually we found on our property here where we reached out to the owner. Um, he was looking to 1031 exchange it into another asset. Uh he had a buyer that actually wasn't able to deliver, but because some of the failed purchases, failed purchases that we had leading up to it, uh we had found investors along the way. We had found a bank that was interested in supporting us along the way. And you know, we were able to find this property where, hey, like he needed the 1031 exchange, he needed to close. Uh, we had the pieces, we're able to make it happen. So it was uh to answer your question, though, it's just good old-fashioned reaching out to people asking if they want to sell.

Michael Russell 36:47

Yeah, we we call that door knocking, right? So we we do that all the time, and um, we we talk about this all the time. So I I love them. And I also saw a video where you're putting mailers like in the mailbox, you're documenting yourself, mailing letters to property owners for you know to for to to buy directly, and just that concept like yeah, we we do this all the time where we make phone calls or we knock on doors, like, holy crap, we can document this, like this is what people want to see.

Nathan St Cyr 37:16

Yeah, and uh that piece right there about the direct, you know, everybody wants to use technology and automate and you know, skip trade, just all this stuff. And we're like, I just had a coaching session with someone where I was like, okay, you know where you want to purchase, like you have a basically 200 miles, and you know you've got this buy box, dude. Draw the freaking radius, and literally over the course of the next three months, have your list of everything that fits it. Go knock on the doors, go create a relationship, go see that's this that piece gets missed in today's world so often. Like just put the work in. And I love what you said about well, we are dealing with hospitality, and so typically, hospitality owners, especially in these scenarios like you're talking about, or in our scenario, hostile owners, right? A lot of them are very involved in the business, and because of that, by going personally to where they are, you gain access to them. So go start a conversation.

Brett McManus 38:26

Yeah, I haven't gotten kicked off of anybody's door in a hotel yet. So it's it's not as scary as it sounds. You got to get past the first one, but they're lovely people.

Michael Russell 38:32

Yeah, well, dude, but it's it's the biggest compliment you can give someone. Like, hey, I want to buy your property because I think it's worth something. Like, no one's gonna be like, Oh, I'm so insulted that you would even suggest that. No, they're gonna be like, really? Oh, that's flattering. No, I'm not interested, or huh, maybe. Or maybe we'll think about it and we'll get back to you in two years, you know, something happens and they do call you.

Brett McManus 38:53

Yeah, yeah, absolutely.

Michael Russell 38:55

Yeah. Hey, so let's talk about when you were analyzing this property in Vermont. You know, how did you know this was a good deal? Like what metrics or factors did you analyze before pulling the trigger?

Brett McManus 39:06

Yeah. So we we knew the market was a good one. We had narrowed down to a couple of markets because we're we were skiers. And one thing it's another lesson that I'll share too. Like, if you one of the reasons why investors felt comfortable with us, the bank felt comfortable with us, is because we were going after a target customer that like we were. So if you're a surfer, you live by the beach, like in your case, it might be buying a motel in a beach town or something like that. And so we knew we wanted to be in one of these markets. We had narrowed down to a few that had like four season potential, which was really important to us because with it being our first deal, I didn't want to have to try to float something for six, seven, eight months through a slow season, really trying to find a good, good market with good year round fundamentals. And uh it as we got into the market that we were in again, we're in Killington, Vermont, it checked a lot of those boxes from a market standpoint. And the biggest thing about the properties we got in, we were analyzing it, is it had strong income history, not only through that homeless housing program that I talked about, but fortunately that owner kept good data, so we were able to sit. Like even before that, into COVID, pre-COVID, they had always crushed it and done really well. And again, you learn a lot about it going through the market is one of the questions that we had to ask ourselves like, well, why is this place doing so well? Because it's not that nice. It smells like cigarettes. It's in pretty rough shape. Like it's all the old floral patterns and everything like that. And uh, you know, what we knew coming into it is that the market in Killington, there was uh, there just weren't a lot of hospitality assets compared to the growth that the mountain was having. So what we would see, like really reading through a lot of these reviews, is a lot of people talking like, man, this place absolutely sucks, but it's the only place we can walk to from the bars, or like it's the only option left on a Friday night. And we knew from coming to visit it that like the fortunate part about some of these like 70s built, like it's just a masonry brick castle, essentially. Like it's of it's block construction, and you don't have to tear back too far to get into like really just like you know, build back from there. You take the carpet and the linens out. So that was the really special thing about you know the property is it it needed renovation, it needed upfit, but there wasn't a lot of like, you know, oh, this could be rotten or have turbines, like it's all brick and masonry. We knew we were in a market where uh the you know things are growing. Killington is investing a lot into the resort. There's a more skiers that come in every, every year. And then we knew within the deal itself, like, hey, the price that we were getting it for, and this is a big thing for the SBA too. And one of the reasons why it took us a while to find this property is because it was us and we didn't have a lot of other assets to collateral, the deal itself had to make sense. Like the property had to have enough historical income to support the debt. And that was hard in today's day and age. A lot of people want really a top dollar price, and we had to work hard to find a good property, but it was a we were in this situation, I guess to put a bow on it, where this property had been performing and delivering enough income to cover the debt service requirements of the price we were purchasing it at. And just based on looking at local comps, we were able to see really easily, hey, if we put you know X amount into each one of these rooms, we're gonna be able to raise not only the price about $100 a night, but we're gonna actually make this a place that people want to stay at, not just their last resort. So the big thing for us, like it was just getting into an asset that basically all we had to do was not screw it up. And it was gonna be able to support itself, but we know pretty just from the research that we've done, you know, putting X amount in is gonna get us X amount out. And that was really where the underwriting made sense to us on this one.

Michael Russell 42:19

Yeah, the property had good bones. I like to use that expression because you know, there's only so much you can do to structure for building. You can change the aesthetics, but if it just has poor bones, then you're you're limited. And it sounded like you had a good foundation to work with. And I'm curious to know do you have to deal with the homeless situation? Like in California, for example, if you've got people living there long term, to get them out of there is a complete nightmare. How did that work in this scenario?

Brett McManus 42:44

You know, we got really lucky, and I think we it's funny because now we meet people who knew this property was for sale and uh and a lot of them passed on it because of the homeless housing program going on. It's it you laugh at it because we were just ignorant in the beginning, but now like we just asked the seller, like, hey, would you be willing to relocate everybody before we close? And he said, Yeah, absolutely. So um, you know, as we went through inspection and due diligence, you know, we had to make sure they were actually like getting out and we were able to get to more and more rooms every time. Obviously, before you close, you want to come and make sure it happened. But uh, that was kind of a lesson for us. And don't be afraid to ask the questions that you just assume people might say no to because they took care of the whole thing, which was a lot of people's fear about the property, which is wild.

Nathan St Cyr 43:22

That's money.

Michael Russell 43:23

Yeah. Now, I've heard you mention the SBA financing a couple of times now, and you know, I puckered up a little bit because I cringed. I'm like, oh, SBA. Like the SBA is notorious for being difficult to work with. And I want to know, you ran out of the gate went for SBA financing. So this wasn't like a refinance, like you were in contract to purchase this. You have to obtain SBA financing. They're notoriously um, like it takes a long time to secure the loan. Walk us through that experience obtaining SBA financing.

Nathan St Cyr 43:55

And what type of SBA loan program was it?

Brett McManus 43:58

Yeah, so we we we liked the SBA. It was either when we were making offers, it's gonna be seller financing or SBA. But what we kept finding is a lot of these properties that they were open to seller financing, they weren't at least the ones we are looking at. It's never a one-size-fits-all answer. We're in rough shape, needed a lot of work. And in the case of the property we bought, it was a good fundamental property with a level-headed price and just an owner who was in a time crunch if he needed to spin this thing around. And uh, so we were lucky where he was able to qualify for the 504 program. And the nice thing about the SBA 504 program is again, they will take your purchase and your renovation, they'll lump it into one. And one of the big things is it is split between two different loans, but they're fully amateurized over 20 and 25 years. So that was one of the really cool things to us is we didn't have this gun to our head about like a three or a five-year balloon coming up. So that's one of the reasons we really like the 504 program. Um, the interest rate's a little bit more advantageous as well. But the key to it is you got to have a property with like a strong income history, it has to be able to support itself. Um, the other thing that we did too, because timeline is the it's the biggest fear that people have around the SBA, and it's the the one option that we didn't have to work with. So again, um, with my fear of cold calling being over with from going to properties, I wasn't afraid of calling different banks either, knowing this is going to be a problem. And I talked a little bit about some of those properties that didn't work and how those have served us coming into this project. Is we had some initial properties we were looking at that ended up not being the right fit. We had inspection issues or appraisal issues, but along the way, when we didn't have the tight timeline, we were researching all of these different SBA lenders. And what we had discovered is, you know, if you go to a broker, you go directly to like a random small bank that does SBA, like those can be long closings. I was talking to somebody yesterday that took them eight months to close their SBA loan, which wasn't gonna work with us. But then we discovered the world of these uh economic development centers or economic development funds. And basically how it ends up working, and uh I'll flash word because what we ended up doing to make it an easier example is we found a bank that was really excited about you know the project. They wanted to be a part of it and they offered SBA loans. But instead of having that bank work directly with the small business administration, we went out and found an economic development center. So every state typically has one. Sometimes there'll be multiple within each state, but essentially they're their businesses or their bodies that are administers of SBA loans, but the biggest thing is they're part of the preferred lender program. So what that made happen is instead of the typical back and forth where it's just months and months and months of back and forth with the bank, we were able to find a bank that had worked with this economic development center before. So they just had to work with each other. And basically, those economic development centers, they underwrite the entire loan in-house, and all they have to do is go to the SBA one time at the end of it to get their stamp of approval instead of months of back and forth. So the result of that is in a world where a lot of these SBA loans could take six to anywhere from a year to close, uh, we had to clear to close in 90 days from a bank because we were just able to work really, really rapidly. So again, um I never found a lot of loan brokers that told me about it. It was just calling around to banks, sharing this problem that I had of, hey, you know, we got to be able to close quicker than like a year-long period. And they're like, oh, well, have you gone and gone talked to the you know, Vermont Economic Development Authority? And it's like, what is that? And uh fast forward, here we are. So that's how we were able to get it done uh with an SBA loan with the right type of lender that's able to get it done, you know, in the timeline that a normal real estate transaction can close in.

Michael Russell 47:23

That's incredible. Yeah, that's that's inspiring and that gives me hope because we had a tough time getting our SBA loan, and we worked with something called the CDC, which I don't really know if that is similar to what you're describing. It sounds like it's something different, but um I'm definitely gonna look into that. For all our listeners, that's a hot tip. You should listen to that and investigate that because if you could get a loan in 90 days with SBA terms, holy heck, that is an awesome opportunity.

unknown 47:50

Yeah.

Brett McManus 47:50

And there's different type of SBA programs too. There's a 7A program. It's you know, I I like the 504. I loved it for our first deal because the term is good. Um, the key to it is like, at least for that program, like you have to have a property that can support itself financially through historical income. But they have the 7A program as well that can uh do like a little bit more uh, you know, prospective performa-based projects. So there's there's not there's options out there in this world.

Michael Russell 48:14

All right. Well, what about what about your financial partners? So look, you said we were young, we had no money, and we had a ambition. We have ambition and a dream, and we're gonna, you know, we're go-getters, but we've got no capital. So where'd you get the money for the down payment?

Brett McManus 48:28

Yeah, it's uh the beauty of some of those early Instagram posts. So you talked about some of those, like when we were just dropping letters in the mailbox and uh and it just some of the early stuff way, way before like things blew up. When we were just documenting what we were doing, um, we we knew the money was gonna be a problem. It wasn't coming from mom and dad, it wasn't coming from anybody. We knew we had to go out and do it. And what we would do is we'd go to our local RIAs, we'd go to our local real estate meetups and we'd just talk to people and we'd tell them about what we were doing. Like we didn't know where it was gonna come from. We didn't know, we didn't even know if we were gonna be able to find a property at that point. Um, but we were just telling, hey, we're doing the short-term real things, but we're gonna go buy a motel, we're gonna go buy a hotel this year. And instead of giving people a business card, I'd tell them to follow us on Instagram. You know, we have an Instagram, like whenever we'd find somebody who's kind of interested in what we were doing, I'd never hand them a business card. I'd just show them our Instagram page or find it on their phone and have them follow us. And we started having groups of people that they watched those videos putting the letters in the mailbox or going up and doing inspections and talking about the reasons, you know, the things we found, the the reasons things didn't go through. And we'd go back to those RIAs and like they knew what we were up to and what we're doing. And we had done this, it was over the course of about a four or five month process. But uh, we finally had a couple that came to us and they said, Hey, if you're able to get one of these to go through, we'll back you in it. Like we're really excited about it. We like they had seen what we were, the the lengths that we were going to to find these off-market deals and find a really good investment. And coincidentally, at that time, uh, we were putting this Killington project um under contract. So they had watched what we had done on the ones that failed, didn't work. Uh, they were really excited about just that we were still persistent and going on with it. And ultimately they ended up being the couple uh they came in and they brought colleagues of theirs too as well. So we had two couples that invested and gave us all the capital. It was about 400,000 that we needed to close. And the beauty about the SBA loans, and I talked about this a little bit before, is instead of having to purchase the property and then having to raise all the money for the down payment and all the money for the renovation, we only had to put 20% down on the total project cost. And um, and we wanted to have a little bit of working capital as well. So, what that allowed us to do is put together a scenario where we could still bring just a couple of investors in to give us the capital we needed. We were able to retain majority of ownership because we were able to give them a smaller amount of ownership, um, which again, because we didn't have to put a lot of capital in, still equated to like a really solid return for them over the course of the project. And they didn't have to personally guarantee any of the debt either. So that's where the SBA loan um really created like a win-win where we could bring a couple in, limit their risk in the deal, and still for us keep majority of ownership, which I think is awesome for our first project to be able to do that. Uh, but it all come came from just some of those early Instagram posts that we were doing.

Nathan St Cyr 51:05

I love that. And was it did it end up being with the SBA 80% loan to cost?

Brett McManus 51:10

It did. Yep. So they'll they'll say 10%. There's different things they'll throw around. From everything I've gathered and learned, every broker will tell you 10% the first time you talk to them. Uh typically at the SBA, motels fall uh within a special, you know, category of assets, and it's typically at least 20% down as long as you can show some experience and hospitality. Uh, sometimes it can be a little bit higher depending on what your experience level and in the bit in their comfort level with you.

Nathan St Cyr 51:36

Yeah. Yep.

Michael Russell 51:37

That makes sense. What was the purchase price and what was the rental cost?

Brett McManus 51:42

Yeah. So we uh we bought it for $1.4 million. We had a $400,000 renovation. It was $300,000 originally, and then we had some electrical stuff that ran away from us. So we had some work to do there. So we ended up being into it right around like $1.8 all in, is where we're sitting right now.

Michael Russell 51:58

Okay, so that extra hundred thousand though, that that that that overage, did you have to come out of pocket for that?

Brett McManus 52:05

No, we ended up luckily we had we had asked for more money than we needed. So one of the things that these SBA loans is uh, you know, they give you the funds for renovation, but they don't give it to you up front. It's all on a draw basis. And we had learned about that early on. So we had asked for a little bit more money than we needed, like an extra hundred grand than we needed for close. And that ended up, well, it was supposed to just be like slush reserve money. Um, it ended up having to like go to the actual project. So we also got kind of lucky there where like we had closed, and this is another like hot tip too. Like if you are in a market that has any type of seasonality, if if it's a running asset and you're closing on something, like one of the things that we benefit from immensely is we closed right in winter during ski season. So we were able to cash flow and make really good money right out of the gate, especially like when we didn't have a lot of expenses those first couple of months, like you're not making a mortgage payment for 30 days. We were able to just stuff money in the bank. So even though all of our operating capital like had to disappear into the renovation, that saved us in helping us flow our our operating costs while we were renovating.

Nathan St Cyr 53:08

I love that. Um, on the the money that was set aside for the renovation, uh, how did that work with going through? Did you have to go through any with any of these renovations permitting processes? Or was it just this was more cosmetic?

Brett McManus 53:26

It was more cosmetic. Um, you know, we did have to pull electrical permits and plumbing permits. Uh, we are very fortunate in the state of Vermont that it's a rural area and uh that things move a little quicker in the permitting department. So like we're able to work really closely with the fire marshals. They come that day we were able to get our permits for some of the stuff that we needed, and they were really that it's the benefit of being in some of these smaller rural areas is a lot of times the zoning officers, code enforcement, uh they're easy to get a hold of. And then again, also remembering we were in a project too that wasn't exactly like the the gold gem of the community. So a lot of people are really excited about seeing it get turned around. So that helped us out a lot as well.

Nathan St Cyr 54:02

And did that process have to be completed for the before you were able to close on the lending?

unknown 54:09

Yeah.

Brett McManus 54:09

So the way that we ended up doing it actually is we ended up closing on three different loans at the time of our closing. We ended up closing on a purchase loan, a construction loan that all came from the bank that we are working with. And then we closed on an SBA loan that's a debenture that comes and pays the bank back for the construction component, if that makes sense. So we closed on all three of those. They had given us like a year, I believe, to execute that on at least that that first little construction loan that was interest only, which is really cool. Um, and then we were able to get it done in eight months. So basically we could just signal to them, like, hey guys, we're done. You know, we did everything that we needed to. They come, they do some final checks. And uh, the beauty is you close on everything ahead of time. So as long as like you did what you said you were gonna do and you didn't go buy like a Porsche and a house in the Bahamas or something, uh, it was a pretty seamless process for us on the back side.

Nathan St Cyr 54:58

Awesome. Very valuable to hear your experience here.

Michael Russell 55:02

Yeah, and I want to give you credit for just simplifying something that can be very complex. What you just described with those three loans that that makes a lot of sense. Like the SBA is gonna guarantee the permanent debt, but you got to have the permits. And so, how do you bridge that gap between getting the permits done and getting all the construction set up? Well, there's a temporary loan, an interest-only loan that you're essentially preparing, and then that gets paid off once the SBA comes in and and funds the remainder. Is that essentially what you're describing?

Brett McManus 55:29

Absolutely. And in the the again, another tip I'd give for anybody going to the SBA world is find a lender who's done it before. Like somebody who's really like you don't want to be in a position, and there were some lenders we talked to, it felt like I was having to educate them about the SBA process. Like the biggest thing that happened for us is like we had just worked with a small bank that really almost specialized in SBA loans, and it took a lot of calls to find that person. But like again, you just find that one bank where it's like they know how to lay it out, they've done this before, they tee it all up in uh at least from that process, you know, the loan draws, the draws to the renovation, like they've done it before. It was seamless, it was really easy, but it can go awry if you're working with somebody took their first SBA loan. There's a lot of red tape to it, but again, if you have the right lender that you're working with, it's not as scary as people lead it out to be.

Nathan St Cyr 56:11

Okay, I want to uh kind of close and finish with this piece because you've said it several times, and I know that the listeners can't see you. So I can see you. And every time you use this word, you kind of pause and then you you you say it in a different way, and your physiology changes. They can't see that, but I can. You continue to say because of the failed projects, but every time you're saying that, what you're really saying is that every time you hit an obstacle or a no through this process, that what it seems to me you're saying is that there was a lesson learned before behind that, or you gained information that ended up being absolutely pivotal and valuable to where you currently are. And so you keep saying this, but I I the relationship that people have with failure is, I believe, one of the greatest differences in those that succeed and don't. And um, I just I wanted to turn that over to you and say, is that intentional the way that you're you're promoting that word?

Brett McManus 57:26

It is, yeah. It was it was something that we had struggled with a lot, and it's it's so ironic looking back at it because we we went through a dark phase. Like when I had I had just left my job, you know, we had a little bit of success with short-term rounds, and I left my job because we were gonna buy a motel and we were gonna do this, and we had some of we had poured months and months, and we'd gone under contract, we had paid for inspections and appraisals, and things didn't work out, and not only you're washing tens of thousands of dollars down the drain, um, but time too, and like really dark spots and like those moments like, man, are we really cut for this? That I think a lot of us, if you haven't gone through it yet, um you'll go through. But I'm sure you guys have had a couple of those yourselves, and you just gotta muster up a way to press on through it. You don't know it at the time, but uh like what I can say, like looking back in our example, and I know like so many of us out there who have like gotten to the other side of some of these deals, like they have it themselves too, is like, I don't know how, but whatever you go through in that process is gonna benefit you on the back side of it. And for us, it really was like the the property that we purchased, the 17 minute here was the culmination of like, you know, we had had multiple of these not go right, but it was just like everything came together where we knew that the inspection items that we needed. We knew what we had to get to the seller from the seller before we even committed to it. Like we knew everything with the bank, we had the investors pulled in, and all of that happened because of the deals that we plowed through that didn't go well. And it was like our Super Bowl, like coming together, closing on this project. So, like it's always sounds like this like bright, beautiful thing looking back at it. But like if you're out there and like your cutscene right now and something's not going right, like you just gotta figure out how to plow through it because uh one way or another, like as long as you keep going, you're gonna be better off for it on the other side.

Nathan St Cyr 59:00

Beautiful. Per thank you. That that is just I mean, seriously, thank you. That's yeah, that's absolute money.

Michael Russell 59:07

That's gold, baby, and that is a wrap. But before we go, Brett, if our listeners want to stay in touch with you, obviously they can catch you on Instagram. Let's go ahead and get your handle. What is it?

Brett McManus 59:21

Yeah, it's it's investors. So in INN and then Vers, and that's that's the best way to get a hold of us. My wife, Casey, and I, we uh we answer every message that comes in and we respond to comments where we can, and uh, we're very active on that. So that's the best place to get a hold of us, is right there on Instagram.

Michael Russell 59:35

Sweet. All right. Well, we are Mike and Nate. He is Britt McManus with Investors, and this is the Hotel Investor Playbook. Signing off, we'll catch you next week. Aloha. Thanks for hanging out with us today on the Hotel Investor Playbook. If you got even one good nugget of wisdom about hotel investing, do us a favor, hit that subscribe button and leave us a five star review. And hey, If you're feeling extra generous, drop a quick line in the review section. Something like Mike and Nate are the go-to hotel investing guys, or best podcast for anyone looking to crush it in hospitality. Or, you know, whatever feels right. Those little shout-outs go a long way in helping more people find the show. And they pretty much make our day. All right. Appreciate you guys. Catch you next time.