Jan. 20, 2026

How an Ex-Space Force Engineer Bought a $2.45M Motel With 10% Down | Jordan Malara E67

How an Ex-Space Force Engineer Bought a $2.45M Motel With 10% Down | Jordan Malara E67

Most first-time motel buyers don't lose money on the purchase price. They lose it by underestimating CapEx, guessing on underwriting, and assuming they can "market" their way to higher occupancy. That's how people get smoked. In this episode, you'll learn a simple, real-world way to sanity-check a value-add motel deal, including what "light reno" actually costs per key and which levers really move ADR. My guest is Jordan Malara, an ex-Space Force engineer who went from managing short-term ren...

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Most first-time motel buyers don't lose money on the purchase price. They lose it by underestimating CapEx, guessing on underwriting, and assuming they can "market" their way to higher occupancy. That's how people get smoked.

In this episode, you'll learn a simple, real-world way to sanity-check a value-add motel deal, including what "light reno" actually costs per key and which levers really move ADR.

My guest is Jordan Malara, an ex-Space Force engineer who went from managing short-term rentals to building a 60+ key hotel portfolio in just a few years. He's breaking down his first deal: a 27-key motel he bought for $2.45M with $500K in renovations, using SBA 7(a) and seller financing.

What you'll learn:

  • Why "$20K per key" is a better starting point than your optimistic spreadsheet number
  • The hidden CapEx that blows budgets: sprinklers, fire systems, laundry equipment, and code compliance work
  • Jordan's 60% expense ratio sanity check, and why occupancy lifts are way harder than you think
  • How he structured SBA 7(a) + seller financing in second position (and what made the seller say yes)
  • The upgrades that paid back fastest: amenities, lobby experience, and staff, not bathrooms
  • How he outsources revenue management and bookkeeping globally without bloating payroll

If you got value from this episode, share it with one friend who wants to buy a hotel. And if you want to talk through a deal, email me at info@hotelinvestorplaybook.com.

About Jordan

Jordan Malara is a former U.S. Space Force engineer turned hospitality entrepreneur who transitioned from managing satellite operations to building a high-performing portfolio of boutique hotels. Previously the Director of Operations for Renjoy, where he oversaw 180+ short-term rentals, Jordan co-founded Springs Hospitality to apply engineering-level systems to the revitalization of undervalued assets like the Adventure Inn Durango. He specializes in leveraging creative financing and narrative-driven branding to transform distressed properties into thriving community hubs, teaching investors how to scale from residential units to commercial hospitality with operational discipline.

Connect with Jordan

Connect with Jordan on LinkedIn.

Follow Jordan on Instagram or visit their Website.

Learn how to use AI to underwrite faster, streamline operations, automate the busy work, and make better decisions. Start your 7-day free trial of the AI for CRE Collective here.

Connect with Michael on Instagram or LinkedIn.

Email Us at info@hotelinvestorplaybook.com

Visit the Hotel Investor Playbook Instagram

Invest with Malama Capital

Submit a deal

WEBVTT

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Most people who buy their first motel don't lose money on the purchase price.

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They lose it by underestimating CapEx and guessing on underwriting.

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My guest today, Jordan Malara, figured out how to avoid that.

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He went from managing short-term rentals to buying a 27-key motel for just under$2.5 million with only 10% down.

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And he's breaking down the real renovation cost, the hidden expenses that blow budgets, and the financing structure that made it all possible.

00:00:53.439 --> 00:01:00.640
On this podcast, we talk story about everything you need to know to make money investing in hotels and in hospitality assets.

00:01:00.799 --> 00:01:15.120
Today I'm sitting down with Jordan Malara, who went from space engineering to investing and managing STRs to now building a 60 plus key hotel portfolio within a few short years.

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So, Jordan, we're I'm super stoked to have you here.

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Let's dive in.

00:01:18.640 --> 00:01:19.359
Welcome to the show.

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Hey, thanks for having me.

00:01:20.640 --> 00:01:21.519
Yeah, excited to be here.

00:01:21.680 --> 00:01:21.840
Yeah.

00:01:21.920 --> 00:01:23.519
So tell me, man, your origin story.

00:01:23.599 --> 00:01:25.040
I'm trying to connect the dots here.

00:01:25.200 --> 00:01:28.560
You went from space engineer to now hotel investor.

00:01:28.719 --> 00:01:32.000
Can you help me piece those two different career paths together?

00:01:32.239 --> 00:01:39.200
Yeah, I wouldn't say it's the easiest thing to piece together and was kind of maybe not like a logical process in how most people get into hotels.

00:01:39.280 --> 00:01:41.280
But yeah, I kind of just started in the military.

00:01:41.439 --> 00:01:46.239
I I guess I went to school for engineering and ended up kind of wanting to join the military.

00:01:46.400 --> 00:01:56.000
Joined the military for a short time and got into real estate along kind of that path, really just as a means to maybe scratch an entrepreneurial niche or itch, I should say.

00:01:56.239 --> 00:01:59.840
And also just maybe wanting to figure out business for myself.

00:02:00.000 --> 00:02:01.280
And so got into real estate.

00:02:01.359 --> 00:02:03.200
I started doing some long-term rental stuff.

00:02:03.280 --> 00:02:07.680
I connected with some people in my market that were doing short-term rentals, and it was very lucrative at the time.

00:02:07.760 --> 00:02:10.400
And so I was like, yeah, okay, let's do short-term rentals.

00:02:10.479 --> 00:02:11.840
And so we we jumped into that.

00:02:12.000 --> 00:02:19.199
And kind of along the way, I was like, man, my conversations at work in the Space Force really center around real estate more than anything.

00:02:19.280 --> 00:02:21.759
I'd have people pop into my office and be like, hey, I know you do real estate.

00:02:21.840 --> 00:02:23.120
Like, can I ask you a few questions?

00:02:23.280 --> 00:02:26.159
And I was like, this is really, this has become a passion of mine.

00:02:26.319 --> 00:02:33.599
And so kind of when when my term, when my like kind of service came to an end and it was like, yeah, I can get out or I can kind of re up and stay in for a little bit longer.

00:02:33.680 --> 00:02:35.759
I was like, I think, I think it's time for me to get out.

00:02:35.919 --> 00:02:39.199
And at the time, some of my friends had started a short-term rental management company.

00:02:39.280 --> 00:02:43.120
And so they were managing maybe somewhere around 100, 120 units.

00:02:43.199 --> 00:02:45.120
And I was like, okay, like let me jump into this.

00:02:45.199 --> 00:02:53.199
This would be like maybe a pretty good way for me to get into real estate, get into kind of the hospitality side of things and really figure out is this something I'm I'm I'm truly passionate about?

00:02:53.360 --> 00:02:55.439
So I got out of the military and started doing that.

00:02:55.680 --> 00:02:57.039
And it was a challenge.

00:02:57.280 --> 00:02:58.800
Short-term rentals are a challenge.

00:02:58.960 --> 00:02:59.439
They're fun.

00:02:59.599 --> 00:03:00.560
It taught me a lot.

00:03:00.719 --> 00:03:05.919
But kind of along the way, discovered that hotels operate a little bit more efficiently.

00:03:06.080 --> 00:03:10.800
There, there's a lot of cool things you can do in hotels that you can't necessarily do in the short-term rental industry.

00:03:10.960 --> 00:03:15.520
And happy to kind of dive through and jump through some of those, those different nuances between the two industries.

00:03:15.680 --> 00:03:18.319
But kind of along the way, I was like, I think I want to get into hotels.

00:03:18.400 --> 00:03:20.000
I think that's maybe what I'm truly passionate about.

00:03:20.080 --> 00:03:23.039
There's something really cool about this specific hospitality asset class.

00:03:23.199 --> 00:03:28.800
And so ended up talking to a real estate friend of mine in my industry or kind of in my like local area.

00:03:28.879 --> 00:03:30.240
And we're like, let's buy a hotel.

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So we bought a hotel.

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And that's that's kind of how we initially got into it all.

00:03:33.919 --> 00:03:34.879
Yeah, I think that makes sense.

00:03:35.039 --> 00:03:36.319
So that's a natural progression, right?

00:03:36.400 --> 00:03:37.680
A lot of us are doing the same thing.

00:03:37.919 --> 00:03:40.400
We we caught the bug of short-term renting.

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We go, wow, this is a high cash-flowing business.

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Now, how do we scale?

00:03:43.439 --> 00:03:45.439
Operationally speaking, it's like herding cats.

00:03:45.520 --> 00:03:46.719
It's it's a little more difficult.

00:03:46.960 --> 00:04:00.639
So coming from the perspective of someone who's in the military, where things are really methodically thought out, there's structure, there's organization to go into short-term renting when where it's a heck of a lot more chaotic, I'm sure that's kind of hard to reconcile.

00:04:00.800 --> 00:04:13.360
So to me, the logical step is like, okay, well, how do I bring my spirit for hospitality, but organize it in a way that is a little bit more efficient, both in time, energy, effort, all this, and then ultimately financially?

00:04:13.599 --> 00:04:20.000
So I guess though I'm curious, like, what was the inspiration for you that you found?

00:04:20.160 --> 00:04:24.399
Like, I get that you go into short-term rentals, but what led you to say, you know what?

00:04:24.480 --> 00:04:26.079
I'm, I think I want to do hotels.

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Was it something you saw online?

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Was it a book you read?

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What inspired you to want to make the leap from short-term rentals into hotels?

00:04:34.480 --> 00:04:40.079
There's a lot to be said about maybe just past experiences we've had with traveling and just different places we stayed.

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And short-term rentals definitely they fill a specific, I guess you could say, niche where people have, you know, these large groups, they need a place to stay.

00:04:47.759 --> 00:04:53.360
And like we still, obviously, like when we travel with family, very easy to find a short-term rental where we can all stay in the same place.

00:04:53.519 --> 00:05:05.600
But what really interested me about the hotel industry was this idea of crafting a unique story around a property and allowing that to like really be something that guests are drawn to.

00:05:05.759 --> 00:05:10.160
And so it's hard to do that with short-term rentals because every property might be different.

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It's not all in one place.

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You can't really craft a feel.

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You can't, you can't write a story necessarily for a specific property.

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But when you have this hotel, then you have this opportunity to create something truly unique and really write a story.

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And then someone, you know, a guest is looking and they're saying, Oh wow, I really resonate with something that maybe the hotel story is saying.

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And so then they're drawn to want to stay there.

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And so I think it was maybe part of that story that I was really drawn to the hotel industry for.

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You know, you couldn't really figure it out on the short-term rental side, especially with managing all these different units of all these different owners.

00:05:42.800 --> 00:05:58.720
And it's like, well, if I'm the owner of the hotel, I can now take maybe these shared experiences I've had along the way traveling, and I can craft this unique story for guests so that everyone coming into our market, wherever that hotel may be, can then find our place and really feel at home there.

00:05:58.879 --> 00:06:02.000
So I think that's maybe like what really drew me into it initially.

00:06:02.079 --> 00:06:14.959
And that's why we've stayed kind of the boutique hotel route, because I don't think the branded hotels really have the opportunity to craft this unique story and really position themselves to attract a specific type of guest.

00:06:15.199 --> 00:06:21.839
Yeah, I was gonna mention that because as soon as you started talking, I'm going, well, this definitely applies more to the boutique style, the the crafting of story.

00:06:21.920 --> 00:06:23.279
And I never really thought about it that way.

00:06:23.439 --> 00:06:36.000
That's a nice way to put it in perspective that with each individual short-term rental, they all have unique circumstances related to it, maybe location or size or just whatever the attraction is.

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And with the hotel, you really get to build a more robust story upon that.

00:06:39.759 --> 00:06:48.240
There is kind of this thought in my mind as you were talking that I had that's like, you know, when you get into short-term rentals, you're kind of you're kind of selling against the idea of a hotel, right?

00:06:48.319 --> 00:06:49.519
There's a little bit of a conflict there.

00:06:49.680 --> 00:06:54.000
Short-term rentals offer all the things that hotels don't, right?

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Space and convenience and privacy and all these things.

00:06:57.839 --> 00:07:07.040
So, how do you reconcile when you go from crafting experiences that are selling against hotels to becoming the hotel person?

00:07:07.439 --> 00:07:07.680
Yeah.

00:07:08.079 --> 00:07:10.399
Well, I we're still we still own short-term rentals.

00:07:10.480 --> 00:07:17.120
So I think we're still like heavily invested in those because they fit a very specific use case in each market.

00:07:17.279 --> 00:07:19.839
But a lot of times what we're looking at is where's their opportunity?

00:07:20.079 --> 00:07:26.240
And I know in in some of the markets that we have short-term rentals, there's, I mean, what a lot of other markets with short-term rentals are experiencing.

00:07:26.319 --> 00:07:28.480
There's oversaturation, there's increased competition.

00:07:28.560 --> 00:07:35.199
There's, and I think from the hotels, there's a lot of these roadside hotels and smaller hotels that are kind of just being left on the wayside.

00:07:35.279 --> 00:07:36.480
But there's a market for them, right?

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And we're all seeing that.

00:07:37.759 --> 00:07:50.319
You've had so many guests on your on your podcast that are finding these places that were left behind, that just haven't been operated, haven't been kept up, aren't really telling a story anymore, but are in these great locations where people do want that.

00:07:50.480 --> 00:07:54.319
And so I think part of it is recognizing, okay, there's a gap in our market.

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There's a gap in these markets where we have these hotels where there's some great short-term rentals.

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They're going to continue to be successful because there's people coming with big families that want a place to host a reunion, that want to get their family together and go out and explore the outdoors.

00:08:08.319 --> 00:08:18.639
But there's also a lot of places where, or there's also a big market of people who don't need a big house and maybe want that custom feel that might come from a hotel that's really curated in a particular way.

00:08:18.800 --> 00:08:22.240
So I think you're chasing two different types of the market.

00:08:22.399 --> 00:08:24.319
And that can be a really good thing.

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Like I think it helps us stay diversified.

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So if short-term rentals aren't doing good, then we can capture market, the market on the hotel side of things.

00:08:31.759 --> 00:08:37.919
But you're right, they're they're very different strategies and they're they're not necessarily, in some ways, they don't really complement each other.

00:08:38.240 --> 00:08:41.679
Yeah, I mean, I'm kind of, you know, poking around here to see if I can get a reaction.

00:08:41.759 --> 00:08:43.279
But the reality is I'm I'm in the same boat.

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You know, I started with the short-term rentals and I found that it was a great opportunity to gain some immediate response, a cash flow, right?

00:08:50.799 --> 00:08:56.000
To to gain some experience, to be able to, there's a relatively lower barrier to entry.

00:08:56.159 --> 00:09:01.120
When most people are starting out, the idea of a fully operational hotel can be a little bit intimidating.

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And when you get one, two, three, maybe up to 10 or 12 short-term rentals, you've kind of figured out the operations, you have a little more comfort in that.

00:09:08.559 --> 00:09:10.000
And so it is a natural progression.

00:09:10.159 --> 00:09:13.200
But to your point, too, yeah, oversaturation is a real thing.

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And I think that's why a lot of people now are looking at the opportunity to invest in short-term rentals has diminished to a certain degree.

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Not to say there aren't jewels out there.

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But if you've learned all these skills and you've learned all these, you know, that this that you've gained this accumulated knowledge about investing in real estate and operating a hospitality business, then that is the natural progression.

00:09:34.080 --> 00:09:35.600
And so let's talk about this.

00:09:35.840 --> 00:09:39.039
You you ended up, so I think it was 2024.

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So you had roughly, is it 10 or 11 short-term rentals that you owned or managed yourself independently?

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And then you decided with a partner to go and purchase your first hotel in Durango, right?

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Can you tell us about why Durango?

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What was it about Durango?

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What were the demand drivers that made you feel comfortable, comfortable betting on that market?

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Yeah.

00:10:00.080 --> 00:10:01.759
Well, it didn't start with Durango.

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It wasn't like we were looking in a specific market.

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We were honestly, we were on this journey to find a hotel that was somewhat outdoor-driven because we're in Colorado.

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And so I think there's just a part inside of us that really resonated with kind of like this outdoor traveler.

00:10:15.919 --> 00:10:18.559
And then we'd seen a lot of these, like these great concepts, right?

00:10:18.639 --> 00:10:28.799
You look at Trailborne, you look at the postcards days, you look at there's tons of great kind of hotels and boutique hotels that are kind of bridging that gap between this traveler who maybe doesn't really want to be towards the glamping.

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They want to be in a hotel, but they still want to feel that connection to the outdoors or like it's an extension of the outdoors.

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And so we were really looking at all these different markets, trying to find kind of where this best hotel is going to be.

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And we really didn't want to like segment and say, like, this is the one country or sorry, state or or county that we want to be in, because we're like, how many deals are there?

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We want to make sure like we're we're leaving ourselves opportunity and we're not searching for a deal for two, three years.

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But then we came across this deal, honestly, pretty early in our search in Durango, and we're like, yeah, this might be a deal.

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It's kind of overpriced though.

00:11:01.840 --> 00:11:06.799
And it was one of those things that we just we were persistent in just kind of keeping communication with this broker.

00:11:06.960 --> 00:11:13.840
And we didn't, you know, we obviously wanted them to drop their price, but we were going to continue to look at different deals, but kind of kept coming back to Durango.

00:11:14.000 --> 00:11:16.080
And it's funny, we had never actually been there.

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We, it's it's about a five and a half hour drive from where we're at, where we're based out of Colorado Springs.

00:11:20.639 --> 00:11:27.840
And so we didn't really understand the Durango market, but we started looking into it more, started pulling reports, started understanding like what is the demand in this area?

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What's the competition in the area?

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Is there, you know, are there a lot of other high-level boutique hotels?

00:11:32.879 --> 00:11:37.039
And what we kind of figured out was there's an insane amount of demand in the summertime.

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They have way too much, too much demand and not enough supply of hotels.

00:11:40.879 --> 00:11:43.759
They don't have, they have pretty strict short-term rental regulations.

00:11:43.919 --> 00:11:48.399
So the supply of those were really pretty low, again, considering the demand in the summertime.

00:11:48.559 --> 00:11:56.879
And then one of the things we really, really liked, which I think people kind of look past a lot of times, is what is like the tourism department trying to do in the in the area?

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And the tourism department, we went to Durango.

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We're like, let's go just find out more about the area.

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We're like, this place is beautiful.

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We met with the tourism department and they're like, like, we have way too much demand in the summertime.

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We're trying to level out demand, we're trying to bring demand into the wintertime.

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And since then, they've done an incredible job of that.

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They're looking to like put festivals in the wintertime and draw more demand kind of in those shoulder seasons.

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And they're doing such a good job of trying to level out that demand, which isn't taking away from summer demand.

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It's just adding increased demand in the slower seasons.

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So they're trying to like balance out seasonality, but all it's really doing is kind of bolstering the low seasons and keeping that high season high.

00:12:34.240 --> 00:12:38.399
And so those were some of the things that we really liked when we were looking at the market.

00:12:38.559 --> 00:12:44.240
And then we also liked that there was a ton of branded hotels in the area, not a whole lot of boutique hotels.

00:12:44.320 --> 00:12:48.559
And when there was smaller boutique hotels, they were mom and shop, mom and pop run.

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You know, they were outdated.

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There was really nothing being fixed up.

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The newest property was the one next door to us that was being fixed up kind of right around the time we purchased it.

00:12:56.639 --> 00:12:59.120
And they did a good renovation, but you know, they're small.

00:12:59.200 --> 00:13:01.519
They're they're not as large of a hotel as us either.

00:13:01.840 --> 00:13:09.759
I would say initially, like when we were looking at deals, that's kind of how we kind of came to the conclusion that, hey, this Durango market is actually going to be a good market to invest in.

00:13:10.000 --> 00:13:15.279
Hey guys, people have been hitting me up asking if I have a mastermind or a course.

00:13:15.440 --> 00:13:20.480
I don't run one right now, but I do know the legit operators in this space.

00:13:20.720 --> 00:13:31.840
If you're thinking about paid education and you want my honest take on who I'd talk to for your situation, just email me info at hotelinvestorplaybook.com.

00:13:32.240 --> 00:13:35.600
I read every email and I'm happy to point you in the right direction.

00:13:36.000 --> 00:13:39.759
So this first property is called the Adventure Inn, is that right?

00:13:40.000 --> 00:13:40.159
Yeah.

00:13:40.480 --> 00:13:42.399
And it it's 27 keys.

00:13:42.480 --> 00:13:42.960
Is that correct?

00:13:43.200 --> 00:13:46.240
It was 25 when we bought it, and then we added two additional rooms.

00:13:46.320 --> 00:13:47.279
So now it's 27.

00:13:47.600 --> 00:13:47.919
Okay.

00:13:48.159 --> 00:13:55.519
So looking at the frame, the structure, the footprint of the building, it's your typical, I don't know, roadside motel kind of right.

00:13:55.600 --> 00:13:57.919
It's it's I don't know, it must have been built in the 50s.

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It kind of just has that nostalgic look to it.

00:13:59.919 --> 00:14:00.720
Is that is that about right?

00:14:00.799 --> 00:14:02.159
Like, is that when it was built?

00:14:02.799 --> 00:14:06.080
Yeah, part of it was, I think, built in the 40s and part of it was in the 60s.

00:14:06.159 --> 00:14:08.639
They actually helped demo some of it and then rebuild it.

00:14:08.879 --> 00:14:15.679
Yeah, so the structure itself is not like anything that would stand out as being too remarkable, quite frankly.

00:14:15.840 --> 00:14:22.159
No, that said, you guys did a uh knockout job in the design, the decor, the renovation.

00:14:22.399 --> 00:14:32.080
You've got the walls of the main common area are all black and the floors are this like light, light wood color, and then the ceiling is is painted white.

00:14:32.159 --> 00:14:34.240
And so it's got an edgy look to it.

00:14:34.399 --> 00:14:41.519
So you you took something that was relatively outdated and modernized it with design and decor.

00:14:41.679 --> 00:14:44.799
But before you did all that, you just had this roadside motel.

00:14:44.879 --> 00:14:48.000
And it was, I was gonna ask you, but you you mentioned it had a broker.

00:14:48.080 --> 00:14:50.879
So this was a hotel that was on the market.

00:14:51.039 --> 00:14:53.360
A lot of people, anyone, could look at this motel.

00:14:53.519 --> 00:15:00.320
What was it about this motel that you saw the potential in that a normal investor might overlook?

00:15:00.559 --> 00:15:06.559
Yeah, it really was nothing special and it had been on the market for I think almost two years by the time we bought it.

00:15:06.799 --> 00:15:12.720
I think what we saw in it was just the fact that we didn't really have to put a whole lot of money into it.

00:15:12.879 --> 00:15:17.919
I think a lot of people go into these hotels and they think, like, oh, I gotta, I gotta do all these like this internal work.

00:15:18.000 --> 00:15:23.279
But we when we went and looked at the hotel, mechanicals had been updated, electrical had been updated, plumbing had been updated.

00:15:23.360 --> 00:15:27.840
Like the the previous owner had done a phenomenal job of just the basic upkeep.

00:15:28.080 --> 00:15:31.279
And we all we knew is that it's just gonna take cosmetic work.

00:15:31.360 --> 00:15:33.279
It's not like it's gonna take all this money.

00:15:33.519 --> 00:15:36.399
And then I think part of the fight was financing.

00:15:36.559 --> 00:15:42.720
We talked to every local bank in Durango, and there just was like no one that really wanted to finance the property.

00:15:42.879 --> 00:15:45.039
And I think many people had been down the path.

00:15:45.120 --> 00:15:51.519
I mean, when we were calling around to these banks, they're like, yeah, we've talked to a lot of people about this property, and no one really wanted to finance it.

00:15:51.679 --> 00:15:54.159
And so it was really the key to our success.

00:15:54.240 --> 00:15:58.240
And I think what really helped us was finding a bank that could actually provide financing.

00:15:58.399 --> 00:16:03.840
We ended up using SBA financing on the property, and then we were very strategic about the renovations we wanted to accomplish.

00:16:04.000 --> 00:16:08.960
And so we kept them pretty basic, which kept our costs low, which made the numbers work even better.

00:16:09.120 --> 00:16:14.480
And then I think we were just pretty, pretty persistent about the numbers that were going to make the deal work for us.

00:16:14.720 --> 00:16:17.840
So I don't know, kind of there was a lot of people interested in the property.

00:16:17.919 --> 00:16:22.879
I will say, like when we were first engaging with the broker, there was tons of people, they were getting a lot of interest.

00:16:23.120 --> 00:16:28.720
But again, it comes back to we were very persistent and you know, we weren't like outlandish in our requests.

00:16:28.799 --> 00:16:34.720
We had a specific purchase price we wanted, we had a certain amount of seller finance we wanted, and that's really all we were asking for.

00:16:34.879 --> 00:16:39.519
And so when we when we put those two things together, you know, it really became a good deal for us.

00:16:39.600 --> 00:16:43.360
And maybe the other aspect of that is we talked about how we added two additional rooms.

00:16:43.440 --> 00:16:44.879
That really helped our numbers a lot.

00:16:45.039 --> 00:16:56.320
Maybe other people looking at this deal were maybe only looking at adding one additional room via the manager's suite, but there was kind of this second office space that could be an additional room as well.

00:16:56.480 --> 00:16:59.519
And so maybe they were only looking at adding one room instead of two rooms.

00:16:59.600 --> 00:17:03.679
And then if you're not an owner operator, maybe the staffing doesn't make sense.

00:17:03.759 --> 00:17:05.599
Maybe you look at things differently.

00:17:05.920 --> 00:17:17.440
I think for us, when we when we able to combine all those different things and then taking kind of unused space, we don't have a lot of amenity space, but we had kind of this broken down side yard that was just collected with trash.

00:17:17.680 --> 00:17:21.839
We turned that into a really nice hot tub area, trying to add whatever amenities we really could.

00:17:22.000 --> 00:17:25.359
I think that's maybe what we saw in the deal that a lot of other people didn't.

00:17:25.519 --> 00:17:32.240
Um and it's turned out to be a phenomenal deal for us, and and it's been really fun to be able to see that project come to life.

00:17:32.480 --> 00:17:38.240
Yeah, I mean, I kind of led with some context about what it is now because clearly you saw the vision of what it could be.

00:17:38.400 --> 00:17:43.200
And most people, when they're looking at these outdated hotels or motels, it's it is tough.

00:17:43.279 --> 00:17:44.880
It's tough to see the potential.

00:17:45.200 --> 00:17:46.640
You got to have some reference point.

00:17:46.720 --> 00:17:50.640
And your motel serves as a great reference point of what's possible.

00:17:50.799 --> 00:17:54.240
You talked about financing, which we can I want to dive into that a little bit more.

00:17:54.400 --> 00:17:54.640
Okay.

00:17:54.799 --> 00:18:02.079
But for now, I guess I just I want to circle back and I say outside of financing, what was the biggest risk that you had to get comfortable with?

00:18:02.400 --> 00:18:10.720
When I think about the risks, I think maybe some of it comes back to like when we're buying this thing, it's really just a personal guarantee from me and my business partner.

00:18:10.799 --> 00:18:12.640
And then we brought in kind of a silent partner.

00:18:12.799 --> 00:18:16.559
Maybe going back to why that felt like a risk, we had never underwritten a hotel before.

00:18:16.720 --> 00:18:20.720
And so there's a lot of people that will jump in different masterminds, and those are great.

00:18:20.799 --> 00:18:24.000
Like they can do a great job of helping people understand and double check numbers.

00:18:24.160 --> 00:18:32.960
We were kind of just trusting some of our experience, a lot of our experience, and then just some of our gut gut in trying to underwrite conservatively.

00:18:33.119 --> 00:18:36.240
But at the end of the day, we're new to this, we're new hoteliers.

00:18:36.400 --> 00:18:38.799
And so we didn't necessarily know how to underwrite.

00:18:38.960 --> 00:18:43.279
And so the biggest risk for us was our number is even correct.

00:18:43.440 --> 00:18:55.279
Now, there were some basic assumptions we made in the we made in the beginning that maybe like a lot of first-time hotel hotel owners want to make, like, oh yeah, we're going to go virtual on a lot of our staffing, or we're going to pull that to global overseas talent.

00:18:55.519 --> 00:19:04.720
And so we wanted to additional or initially go with this employee light model where we were kind of maybe guests can check in because it's all exterior entrances to the motel.

00:19:05.039 --> 00:19:05.839
They can check in themselves.

00:19:05.920 --> 00:19:07.519
We don't need a front desk, all this stuff.

00:19:07.680 --> 00:19:14.799
And then we realized as we're kind of underwriting this deal and in our due diligence that wow, all of our reviews actually mention the front desk.

00:19:14.960 --> 00:19:19.039
That person, that team does a great job of saving a lot of reviews.

00:19:19.119 --> 00:19:29.920
And so we kind of made this decision halfway through of like the team we have, which has been really cool because when we bought it, we kept everyone around and they've wanted to stay around and they've been, I mean, they've been phenomenal employees.

00:19:30.079 --> 00:19:39.599
I mean, I I give a lot of the credit and success of our hotel to just the people that we inherited, those employees that we inherited, specifically our general manager and assistant general manager.

00:19:39.759 --> 00:19:46.720
I mean, they're just so good at what they do and just keeping kind of the life of the property intact and really helping keep guests happy.

00:19:46.799 --> 00:19:49.440
And so our underwriting assumptions kind of changed along the way.

00:19:55.039 --> 00:19:59.759
And so, you know, we had these thoughts of like we're gonna cut all these expenses here, but really those things changed.

00:20:00.160 --> 00:20:01.039
Change over time.

00:20:01.279 --> 00:20:05.039
So going back to your question, the risk is we didn't know how to underwrite these deals.

00:20:05.200 --> 00:20:07.759
We didn't really understand what we were underwriting.

00:20:07.920 --> 00:20:13.519
Thankfully, we had enough experience that some of our numbers were wrong here, maybe on cutting expenses, but some of our numbers were wrong here.

00:20:13.680 --> 00:20:18.000
And we underwrote the ADRs really conservatively, and they're better than we expected.

00:20:18.160 --> 00:20:20.079
So it all kind of balanced out.

00:20:20.240 --> 00:20:29.759
But I think that was maybe some of the biggest initial risk when you're the largest loan I've ever taken on was prior to that, maybe, I don't know,$600,000 for a single family home.

00:20:29.920 --> 00:20:32.960
And now all of a sudden it's like, hey, this loan is$2 million plus.

00:20:33.119 --> 00:20:35.839
Like, do I know what I'm doing enough to be able to do this?

00:20:36.000 --> 00:20:39.519
And so you these fears kind of creep in and you're like, can I do this?

00:20:39.680 --> 00:20:40.960
This is five and a half hours away.

00:20:41.039 --> 00:20:42.880
Are we gonna like, we're gonna lose our shirt?

00:20:42.960 --> 00:20:44.319
Are we gonna lose everything on this?

00:20:44.480 --> 00:20:56.640
But I think if you have a lot of people, especially like the right business partner, I attribute a lot of stuff to him bouncing ideas back and forth and just having someone that you can trust kind of helps you feel a lot better as you're kind of going through those different risks.

00:20:56.960 --> 00:21:01.599
Yeah, that that piece on the underwriting is so good, man, and so relevant for so many of us, right?

00:21:01.759 --> 00:21:05.839
Because we're all guilty from time to time of being spreadsheet optimist, right?

00:21:05.920 --> 00:21:08.319
We we want there's like this confirmation bias.

00:21:08.480 --> 00:21:10.160
We we want to believe that we can do this.

00:21:10.240 --> 00:21:19.759
So, you know, I'm having some fun here, but if you're gonna be wrong on your underwriting, be wrong on the revenue projections, like be more conservative than what potentially it could be.

00:21:19.839 --> 00:21:24.160
So it sounds like you had some additional labor expense, which is to be expected.

00:21:24.319 --> 00:21:25.200
And I agree with you.

00:21:25.359 --> 00:21:37.519
Look, I know that it can seem favorable to cut staffing and be more efficient with labor, but what makes a hotel memorable is not the room that you're staying in, it's the overall experience.

00:21:37.599 --> 00:21:42.079
And as humans, we crave connection, human emotional connection.

00:21:42.240 --> 00:21:44.240
I say this to my staff all the time.

00:21:44.400 --> 00:21:50.319
They will overlook a lot of imperfections if we treat them like as well as possible.

00:21:50.480 --> 00:21:53.920
And when we were under construction and doing renovations, we didn't close.

00:21:54.079 --> 00:22:03.359
We we actually were renovating the ground floor while the upper floor was still open and people had to kind of deal with noise and chaos and construction people.

00:22:03.519 --> 00:22:14.319
And I was like, this is where you just pour into kindness because they will step past the construction worker that's an inconvenience and still give a positive review if our staff is overwhelmingly positive.

00:22:14.559 --> 00:22:16.079
And that is just an example.

00:22:16.160 --> 00:22:25.119
But what you're describing is when someone arrives at your hotel and they go and they check into their room on their own and there's no human interaction, there's a sense of emptiness.

00:22:25.359 --> 00:22:35.920
But when someone walks into the front desk and they are greeted with a big smile and a warm welcome, and there's a human connection, that's what's gonna drive positive reviews.

00:22:36.000 --> 00:22:44.240
And those positive reviews are gonna drive more occupancy and higher ADRs, which are gonna afford you the ability to pay for that labor.

00:22:44.319 --> 00:22:45.599
It's all full circle.

00:22:45.759 --> 00:22:47.039
That's my theory.

00:22:47.200 --> 00:22:50.960
And look, other people operate hotels differently and are very successful.

00:22:51.200 --> 00:23:01.039
But I choose, and my philosophy is what I just described because part of why I like investing in hospitality is the hospitality part, not just the revenue and the income part.

00:23:01.119 --> 00:23:04.240
It's connecting with people because I'm a human as well.

00:23:04.400 --> 00:23:05.920
So love that answer.

00:23:06.079 --> 00:23:09.279
I love the fact that you're honest about your underwriting and not knowing.

00:23:09.440 --> 00:23:12.559
You learn by doing, and the more you do, you you get better and better.

00:23:12.720 --> 00:23:20.319
I'm curious though, how many properties did you underwrite or analyze or consider before you landed on this one?

00:23:20.960 --> 00:23:32.559
I don't know the exact number, but I want to say we were probably pretty close to maybe we underwrote 30, 35, maybe like had serious conversations, LOI.

00:23:32.640 --> 00:23:40.720
Well, maybe not to the point of LOIs with brokers, but um maybe 15 of them, maybe half of those, maybe maybe 10.

00:23:40.880 --> 00:23:46.160
And then yeah, I think we had written a couple LOIs, but you know, just didn't ever really go anywhere.

00:23:46.319 --> 00:23:49.200
So yeah, that's probably about what it looked like for us.

00:23:49.519 --> 00:23:51.359
Okay, so it wasn't like hundreds and hundreds.

00:23:51.440 --> 00:23:54.079
You didn't get stuck too much in analysis paralysis.

00:23:54.160 --> 00:23:56.960
You you got enough research context and then pulled the trigger.

00:23:57.279 --> 00:23:57.839
Yeah, yeah.

00:23:57.920 --> 00:24:04.720
I think that was one of the you know, we set out, I think it was February of 24 that we set out to really like buy something.

00:24:04.960 --> 00:24:11.119
We were hoping to just buy something in in 2024 and ended up kind of locking this one up.

00:24:11.279 --> 00:24:14.880
I think it was like June was maybe the time frame that we ended up kind of getting.

00:24:15.119 --> 00:24:15.519
That's great.

00:24:15.920 --> 00:24:17.440
That's a relatively short time span.

00:24:17.680 --> 00:24:20.000
Yeah, it was it was way quicker than we thought it was gonna be.

00:24:20.160 --> 00:24:21.680
But I think it was just a lot of hustle.

00:24:21.759 --> 00:24:30.400
You know, we were hustling during that time frame, calling anybody we could, trying to build connections, and really just like I think we were figuring out during that that time too, like what are we actually looking for?

00:24:30.559 --> 00:24:33.519
Because you set this buy box, but again, we'd never bought a hotel before.

00:24:33.599 --> 00:24:43.359
So we were trying to keep that like pretty open and like, yeah, maybe we're looking for something 40 keys, okay, maybe a little bit less, maybe, and and really trying to like there was a lot of discovery during that initial phase.

00:24:43.599 --> 00:24:43.759
Yeah.

00:24:43.920 --> 00:24:48.079
All right, well, let's expand upon that a little bit, like the buy box, just in general.

00:24:48.240 --> 00:25:01.920
So I I've heard you, uh at least in my research here, there's a reference that you've made to investing in hotels is kind of like it's like restoring a vintage off-road truck, right?

00:25:02.160 --> 00:25:09.920
Like some people might see rust and they're gonna walk away, but you can see like a chassis that has good bones, and then you, you know, you can fix the engine.

00:25:10.079 --> 00:25:17.440
And it's not just that you fix the engine, you also paint the picture of the adventure that this vessel is gonna provide, right?

00:25:17.519 --> 00:25:20.559
I I think I've paraphrased basically the way you've described.

00:25:20.720 --> 00:25:26.000
So if we continue with that analogy, when you're walking a property, like what is your your chassis check?

00:25:26.079 --> 00:25:30.000
Like, what are you looking for in a property that says, you know what, this checks the box for us?

00:25:30.319 --> 00:25:31.519
It's changed over time.

00:25:31.839 --> 00:25:36.079
I think a lot of it is that these old properties have quirks to them.

00:25:36.240 --> 00:25:41.200
And I think there's so many times that people think, oh, it'd be so much easier to just build a new hotel.

00:25:41.359 --> 00:25:42.640
But you lose a lot of that character.

00:25:42.799 --> 00:25:44.799
We live in a home that was built in 1914.

00:25:44.960 --> 00:25:53.279
There's some not great things about it, but you know, there's also some like real life and story that comes with these older hotels.

00:25:53.440 --> 00:25:59.440
And so I think a lot of what we're looking for is okay, is there character here in this actual hotel?

00:25:59.599 --> 00:26:01.839
And is there kind of story that we can play along with?

00:26:02.000 --> 00:26:18.319
Like you said, people will overlook kind of those awkward things if they're getting this really unique experience, not only like the fun design of maybe the hotel room or the lobby, but also just getting that through the employees and kind of letting the the employees kind of embody the character of the property as well.

00:26:18.480 --> 00:26:20.559
So I think maybe that's a piece of it.

00:26:20.640 --> 00:26:26.640
We're really looking for something that has a good story to it, maybe even like a location that has a good story to it, the town.

00:26:26.799 --> 00:26:29.680
What is the history of the area that the hotel is in?

00:26:29.839 --> 00:26:32.880
And then, yeah, I think maybe that's kind of the biggest thing.

00:26:32.960 --> 00:26:35.359
But then we are looking at like kind of the bones of the property.

00:26:35.519 --> 00:26:36.400
Is this an older property?

00:26:36.559 --> 00:26:37.759
Is this a newer property?

00:26:38.079 --> 00:26:40.079
There's definitely challenges with these older properties, right?

00:26:40.160 --> 00:26:42.240
Like soundproofing is one of the biggest challenges.

00:26:42.480 --> 00:26:49.599
These newer properties are built with very tight, good soundproofing, especially if you're buying like something that was a formerly like a branded hotel.

00:26:49.759 --> 00:26:51.359
These older properties don't have that stuff.

00:26:51.440 --> 00:26:56.400
And so you have to find ways to kind of overcompensate for the lack of sound dampening.

00:26:56.559 --> 00:26:59.920
But I think that's a lot of kind of maybe some of the initial stuff we look at.

00:27:00.160 --> 00:27:00.400
Yeah.

00:27:00.480 --> 00:27:07.759
And okay, so you know, we're talking about the bones of the building, or the in this case, the to continue with the analogy, the the chassis, the this car that you're repairing.

00:27:07.839 --> 00:27:09.200
But let's talk about the engine.

00:27:09.359 --> 00:27:22.079
Because I know you have a lot of experience in recognizing ways to optimize the business, the efficiency of it from marketing, from guest communication, you know, using AI and implementing this.

00:27:22.319 --> 00:27:25.519
So, what do you look for in terms of things that you can fix?

00:27:25.680 --> 00:27:33.599
Because if it's a value add strategy, you're buying a hotel at a price point in which you're going to add value and it's ultimately gonna be worth more.

00:27:33.839 --> 00:27:37.599
What are you looking for in terms of areas where you can add that value?

00:27:37.839 --> 00:27:45.039
Yeah, I operationally, I think where most properties or like these older properties fail is pricing strategy.

00:27:45.119 --> 00:27:46.559
So not really knowing how to price.

00:27:46.720 --> 00:27:53.599
When we bought the Adventure Inn, the kind of mantra and even what the general manager was under the assumption of was we don't charge more than this.

00:27:53.759 --> 00:27:56.880
This is like our top of top of pricing in the summertime.

00:27:57.039 --> 00:27:58.640
They didn't understand dynamic pricing.

00:27:58.720 --> 00:28:03.519
It was just like, hey, are people willing to pay this much on weekends, this much on weekdays?

00:28:03.680 --> 00:28:06.319
And in the slow season, we drop that by X amount.

00:28:06.480 --> 00:28:09.839
And so you come in, you're like, okay, well, we'll just introduce dynamic pricing.

00:28:10.000 --> 00:28:11.599
Very easy operational thing to do.

00:28:11.759 --> 00:28:18.319
And it's not, people assume it's like as easy as just connecting to some algorithmic platform like Wheelhouse or Price Labs.

00:28:18.480 --> 00:28:27.680
It's not like, yes, you use those as something to guide you, but then you bring in, or like we have a revenue manager that kind of helps us understand what revenues should actually look like and how to adjust those things.

00:28:27.839 --> 00:28:29.039
So you have the pricing side.

00:28:29.200 --> 00:28:33.680
The other side of it is operationally, marketing is huge for these boutique hotels.

00:28:33.839 --> 00:28:53.359
You have to be able to not only know how to market the property from a like visual standpoint, but you have to understand like what is the story you're trying to share with guests and how is that going to resonate with them where they're gonna say, actually, I'm gonna pay more to stay here than I would this the place next door, because something within the story that this hotel is saying resonates inside of me.

00:28:53.440 --> 00:28:54.880
And I want to stay there now.

00:28:55.039 --> 00:28:57.680
I have this deep connection and desire to stay there.

00:28:57.839 --> 00:29:00.559
And so marketing is a huge pillar of our operations.

00:29:00.720 --> 00:29:05.440
And then, like we talked about, like kind of like the overall guest experience and then operational efficiency.

00:29:05.599 --> 00:29:22.559
How are you building operational efficiency, whether that be through cost controls, you know, through good deals with linen suppliers, or for some of these properties, if they're so small, maybe you're not going to see huge gains in trying to build kind of bulk pricing for supplies, but that can be like a great area to save money.

00:29:22.720 --> 00:29:29.119
And then also just focusing on like how do we get in and out of rooms quickly and efficiently and still provide like a great cleaning experience.

00:29:29.279 --> 00:29:39.440
And some of those like operational efficiency aspects of things are really important that we think about a lot as we're kind of looking at these different properties and trying to like tighten our operations even more.

00:29:39.759 --> 00:29:40.079
Yeah.

00:29:40.319 --> 00:29:42.400
Well, every day every situation is a little bit different.

00:29:42.480 --> 00:29:57.200
And you know, that's a tough question to answer what I'm what I'm about to ask you, because it's like if you're looking at a value add hotel and you're working with the existing numbers, well, you're gonna you're gonna tell yourself, yeah, I'm gonna improve marketing, I'm gonna be more operationally efficient.

00:29:57.359 --> 00:30:01.519
But how does that translate into coming up with concrete project projections?

00:30:01.759 --> 00:30:11.680
Is there a rule of thumb that you apply where if you look at the potential for a property where you apply maybe let's say a certain expense ratio based on experience?

00:30:11.759 --> 00:30:35.599
Now you oh, you've got one property and your next one that you you're you got you're working on, you should have some reference now to where if a listener were to take away something tangible from this when underwriting the next value add hotel, what kind of operational expense ratio or what if they were to make these improvements that you're describing and marketing and the story and all of this?

00:30:35.920 --> 00:30:40.160
What should they expect to be able to punch in from a just a broad perspective for underwriting?

00:30:40.480 --> 00:30:43.440
Yeah, again, it's gonna be it's gonna be different for everybody.

00:30:43.599 --> 00:30:50.160
I think a lot of what we look at is especially like I think you have to take each one of these things for kind of in in each section.

00:30:50.240 --> 00:30:51.920
And so let's take marketing, for example.

00:30:52.079 --> 00:30:54.400
Your marketing, you're gonna you're gonna apply a budget to it.

00:30:54.480 --> 00:30:58.160
Let's say I'm gonna apply 2,000 a month in in budget to to marketing.

00:30:58.400 --> 00:31:06.559
And then I'm also then going to maybe backtrack on maybe my conservative estimates on OTA commission is 18% of revenue.

00:31:06.640 --> 00:31:08.559
Maybe I'm gonna back that up to 15%.

00:31:09.200 --> 00:31:18.880
And so then your hope is, and what you should be looking at is does that back up from 18% to 15% equate to more than your overall marketing budget, right?

00:31:19.039 --> 00:31:21.680
Because marketing is done through OTAs.

00:31:21.759 --> 00:31:27.680
And so really what your OTAs are doing is it's just a line item in a marketing budget, if you're thinking about it that way.

00:31:27.839 --> 00:31:32.799
And so you have to kind of look at that and say, okay, does this make enough sense to spend this much on marketing?

00:31:32.880 --> 00:31:35.920
And then how much additional do I think I'm gonna generate?

00:31:36.079 --> 00:31:40.160
And really what we what we're gonna do is we come up with maybe a couple different scenarios.

00:31:40.319 --> 00:31:43.359
We're gonna come up with maybe like a break-even analysis.

00:31:43.519 --> 00:31:47.839
We're gonna come up with an analysis, analysis that's maybe a little bit higher projections.

00:31:47.920 --> 00:31:52.319
Hey, I think we can really, I think we can really push ADR on this if we do marketing right.

00:31:52.480 --> 00:32:01.039
And so that projection is gonna include maybe a slightly larger marketing budget, slightly less OTA compliance, and a slightly higher ADR projection.

00:32:01.279 --> 00:32:02.880
We don't really change occupancy.

00:32:03.119 --> 00:32:09.759
I would say no one should really expect to get higher than uh the the market rate occupancy, which is about 65%.

00:32:10.319 --> 00:32:11.759
That could be different for certain markets.

00:32:11.920 --> 00:32:16.079
Maybe if you're in the big city like New York or LA, maybe those occupancies look different.

00:32:16.160 --> 00:32:23.920
But I would say most people should not think that they're gonna push occupancy up a large amount through marketing efforts or just through operations alone.

00:32:24.079 --> 00:32:27.279
I think it's a lot harder to push occupancy than people realize.

00:32:27.440 --> 00:32:33.920
But I think it is easier if you craft a really good story to really push ADR above where you expect it to be.

00:32:34.079 --> 00:32:34.319
Yes.

00:32:34.559 --> 00:32:38.400
And it also depends on on kind of the quality of the renovations you're gonna do too.

00:32:38.559 --> 00:32:50.400
And so that's kind of what we've realized from our first hotel is like, and that's kind of bled over into lessons for the second hotel of I think we have a greater opportunity to push ADR and maybe pull down OTA reliance.

00:32:50.799 --> 00:32:54.559
And so that was a long-winded way of maybe answering part of your question.

00:32:54.880 --> 00:32:55.839
No, I think it's good.

00:32:55.920 --> 00:32:57.599
I didn't I didn't tee that thing up too well.

00:32:57.680 --> 00:33:03.920
I mean, the bottom line is what you just said there is really important is occupancy is is tough to to lift.

00:33:04.079 --> 00:33:19.839
But when you're talking ADR, if you make the improvements, like from the guest perspective, if the average hotel in the area is, let's just say benchmark, 150 bucks, and then yours is killer and it's$175 a night, like that's a nominal increase.

00:33:19.920 --> 00:33:25.200
If they're staying for four nights and to pay an extra hundred bucks to have a way better experience, like much easier.

00:33:25.519 --> 00:33:39.680
But the market overall market demand, the amount of people that visit during a period of time won't necessarily fluctuate so dramatically, but the ADR can based on the story and the feeling that you're generating, the value.

00:33:40.000 --> 00:33:43.119
I could go off on a tangent, I'll I'll stop there, but that's pure gold.

00:33:43.200 --> 00:33:44.160
So I appreciate that.

00:33:44.319 --> 00:33:47.039
I think from a rule of thumb, though, would you mind sharing?

00:33:47.119 --> 00:33:59.599
Like if you were just high level to look at operating expense ratios, would you say you take your typical hotel that you're investing in and would that fall like 60% occupants or I'm sorry, operational expense ratio?

00:33:59.759 --> 00:34:00.880
Would you say 65?

00:34:01.039 --> 00:34:02.000
Would you say 70%?

00:34:02.480 --> 00:34:04.720
Based on how you guys are running things, where do you fall?

00:34:04.880 --> 00:34:06.559
Yeah, we like to be around that 60%.

00:34:07.039 --> 00:34:08.320
That's usually where we tend to land.

00:34:08.480 --> 00:34:08.719
Cool.

00:34:08.800 --> 00:34:11.920
All right, I want to um shift gears in a little bit because we're getting into the nitty-gritty.

00:34:12.000 --> 00:34:15.519
I love that stuff, but let's keep moving because I want to talk about how you guys finance this.

00:34:15.599 --> 00:34:20.400
This is this was the first thing you brought up that was like this was gonna be our biggest hurdle, our biggest unknown.

00:34:20.559 --> 00:34:21.519
We talked to a lot of banks.

00:34:21.599 --> 00:34:22.880
They said they weren't interested.

00:34:23.039 --> 00:34:24.480
You guys want to do a value add.

00:34:24.559 --> 00:34:27.599
So you go and you figure out financing through the SBA.

00:34:27.679 --> 00:34:28.400
Let's start there.

00:34:28.480 --> 00:34:31.280
Was this a 504 or was this a 7A loan?

00:34:31.519 --> 00:34:32.800
This was a 7A loan.

00:34:32.960 --> 00:34:33.199
Okay.

00:34:33.280 --> 00:34:34.880
And so rate fluctuates, right?

00:34:35.039 --> 00:34:36.400
How often does it adjust?

00:34:36.559 --> 00:34:37.519
I think it's quarterly.

00:34:37.760 --> 00:34:38.079
Okay.

00:34:38.239 --> 00:34:43.119
And so right now you're probably seeing the benefit of interest rates getting lower.

00:34:43.280 --> 00:34:44.880
You're riding the tail ends of this.

00:34:44.960 --> 00:34:47.599
This means less debt service for you each and every quarter.

00:34:47.840 --> 00:34:48.400
Yeah, that's right.

00:34:48.480 --> 00:34:52.320
We have seen rate decreases, but we are looking at refinancing out of it.

00:34:52.559 --> 00:34:55.599
Our plan was never to stay in kind of this variable rate for too long.

00:34:55.760 --> 00:34:58.000
So we're gonna try to try to refinance if we can.

00:34:58.320 --> 00:34:58.480
Yeah.

00:34:58.639 --> 00:34:59.840
Okay, so walk me through this.

00:34:59.920 --> 00:35:00.800
You went with the SBA.

00:35:00.880 --> 00:35:01.519
Was it difficult?

00:35:01.679 --> 00:35:05.119
I mean, in my experience, it's a long process.

00:35:05.360 --> 00:35:08.719
What should someone expect if they wanted to buy a hotel?

00:35:08.880 --> 00:35:13.440
What are the advantages and the disadvantages of SBA 7A financing?

00:35:13.679 --> 00:35:15.760
Yeah, there's definitely it's funny.

00:35:16.000 --> 00:35:20.079
Going in without knowing anything about the SBA, I think there was a lot of misconceptions.

00:35:20.239 --> 00:35:22.719
People say it takes six months, it's really difficult.

00:35:22.880 --> 00:35:30.400
We, like I said, we called about 40 different banks through a connection of ours and the kind of the real estate industry got connected with this bank out of it in California California.

00:35:30.480 --> 00:35:33.199
And they're like, no, we should be able to close in like 30 days.

00:35:33.360 --> 00:35:34.239
Like 30 days.

00:35:34.320 --> 00:35:35.280
Like, there's no way.

00:35:35.440 --> 00:35:37.760
And we didn't take them for their word on that, anyways.

00:35:37.840 --> 00:35:39.760
I think it was just kind of a sales ploy.

00:35:39.840 --> 00:35:42.480
But we had about the closing time frame was about 60 days.

00:35:42.639 --> 00:35:44.960
So quick, a lot quicker than I would have expected.

00:35:45.119 --> 00:35:49.280
What we ended up doing is we kind of went back and forth on 504 and 7A.

00:35:49.360 --> 00:35:55.599
The reason we went that with 7A is because we had about$500 in construction or renovations that we needed to do.

00:35:55.760 --> 00:35:58.639
And with 7A, you can you can finance that portion.

00:35:58.800 --> 00:36:05.519
And so we ended up taking a loan for, I think the the total ended up being about 82% of purchase price.

00:36:05.679 --> 00:36:09.519
We had seller financing for another 8% of that purchase price.

00:36:09.679 --> 00:36:17.840
And then we came in with the 10% down, and then they funded, again, kind of similar thing, about 82% of the renovations.

00:36:17.920 --> 00:36:22.880
And then we came in and put the rest down on that property for the rest of the renovations.

00:36:23.119 --> 00:36:23.840
It was difficult.

00:36:23.920 --> 00:36:29.760
It was definitely a difficult process as you kind of learn what the SBA wants, these kind of wacky requirements that they might have.

00:36:29.920 --> 00:36:32.960
But one of the best things about the 7A is they can take projections.

00:36:33.039 --> 00:36:38.639
And so even if the property didn't perform historically very well, they could look at what we think it's going to perform at.

00:36:38.800 --> 00:36:42.400
They run obviously their own appraisal, their own assumptions on the property.

00:36:42.480 --> 00:36:46.800
And then they were able to lend us everything we needed to to get the renovations done.

00:36:46.880 --> 00:36:48.719
And so that was one of the huge benefits of it.

00:36:48.800 --> 00:36:49.920
And it really didn't take that long.

00:36:50.000 --> 00:37:02.480
You know, like I said, a lot of people assume SBA is gonna drag out for six months because this lender was, and I'm gonna get the verbiage wrong slightly, but they they're basically approved by the SBA to underwrite the loan.

00:37:02.639 --> 00:37:04.960
So they don't have to go back to the SBA and get approval.

00:37:05.039 --> 00:37:06.320
And that's what takes time.

00:37:06.480 --> 00:37:12.480
So if you find a lender who is actually connected with the SBA, then it's gonna be a much quicker process.

00:37:12.559 --> 00:37:18.239
And that's my recommendation for everybody because you don't want to have to get the lender to put everything together and then submit it to the SBA.

00:37:18.400 --> 00:37:20.639
The SBA sends it back and there's all this back and forth.

00:37:20.800 --> 00:37:27.599
You want them to know the exact requirements of the SBA and be able to basically underwrite and process the whole loan without SBA approval.

00:37:27.840 --> 00:37:28.079
Yeah.

00:37:28.320 --> 00:37:33.360
So just for reference, the 504, the SBA 504 loan has its advantages.

00:37:33.599 --> 00:37:35.599
It's something that is fixed.

00:37:35.679 --> 00:37:44.480
So you don't have to deal with an adjustable rate loan, which can be favorable, especially if potentially interest rates may go up.

00:37:44.639 --> 00:37:57.039
But the disadvantage of the 504 is that it takes longer typically, and it doesn't have those kind of approved bank, I don't know what you call them, but the people that basically, if you work with a local bank that's got that connection, then they can expedite it.

00:37:57.119 --> 00:37:58.239
So it's more cumbersome.

00:37:58.400 --> 00:38:01.280
So it sounds like you went the SBA 7A route, but this is unique.

00:38:01.360 --> 00:38:05.760
You actually had a combination of bank financing and then seller financing.

00:38:05.840 --> 00:38:07.119
And the SBA didn't object.

00:38:07.280 --> 00:38:08.239
That was all above board.

00:38:08.320 --> 00:38:11.519
They knew obviously the seller was gonna finance that and they were okay with it.

00:38:11.679 --> 00:38:14.960
Yeah, the biggest thing is just that the seller subordinates that lien.

00:38:15.199 --> 00:38:17.679
So basically we had two SBA loans on it.

00:38:17.760 --> 00:38:21.360
We had an initial SBA loan, then we had the renovation loan, and then the seller financing.

00:38:21.519 --> 00:38:25.280
Seller has to basically subordinate to both of those two loans from the SBA.

00:38:25.360 --> 00:38:27.679
But yeah, they they were fully aware and they don't care.

00:38:27.920 --> 00:38:29.360
Wow, how'd that conversation go?

00:38:29.519 --> 00:38:36.239
I mean, to get a seller to be in second position, especially at that high a leverage, that that's a little bit tricky.

00:38:36.320 --> 00:38:37.679
You walk that tightrope, huh?

00:38:37.920 --> 00:38:38.239
Yeah.

00:38:38.480 --> 00:38:40.159
Here's something that I'll share with everybody.

00:38:40.320 --> 00:38:47.280
At the end of the day, real estate and a lot of these hospitality deals, especially when you're dealing with the mom and pop seller, is just about relationship.

00:38:47.440 --> 00:38:53.039
And so when we first went out and we met the seller, we wanted him to know like we're not some big corporation.

00:38:53.199 --> 00:39:01.360
This is just two guys, you know, about to turn 30 who are just trying to buy a hotel and just trying to like create something unique here and keep this local.

00:39:01.679 --> 00:39:08.000
And so we sat down with him at a local restaurant, had a beer, and we were just having a conversation with him about what we wanted to do.

00:39:08.239 --> 00:39:11.440
He was sharing stories about, you know, his whole process of buying this thing.

00:39:11.599 --> 00:39:15.920
He had an incredibly difficult time buying it in the first place, but it was a passion project for him too.

00:39:16.000 --> 00:39:18.079
And so there was a connection built immediately.

00:39:18.239 --> 00:39:24.960
And that connection allowed us not only to get a good purchase price, because he didn't want some big company coming in and buying it.

00:39:25.119 --> 00:39:26.239
That was like his biggest fear.

00:39:26.320 --> 00:39:27.840
He wanted someone that was local.

00:39:27.920 --> 00:39:30.960
And he said, I haven't had really anybody in Colorado that's been interested.

00:39:31.119 --> 00:39:34.800
And so he was happy that even though we didn't live in Durango, we were from Colorado.

00:39:35.039 --> 00:39:38.480
And he was willing to kind of do whatever he could to kind of make the deal sweet.

00:39:38.559 --> 00:39:43.280
And so one of the things he offered, we said, Hey, can you, you know, we didn't ask for the seller financing up front.

00:39:43.360 --> 00:39:46.639
We kind of arranged it on the back end as we were kind of running tight on cash.

00:39:46.719 --> 00:39:50.000
And we asked him, we said, This is the situation, we really need seller financing.

00:39:50.079 --> 00:39:51.440
He's like, Okay, I'll provide it.

00:39:51.599 --> 00:39:52.800
Here's my interest rate.

00:39:52.960 --> 00:39:55.920
And he actually gave us a year off of payments in the beginning.

00:39:56.000 --> 00:39:57.760
He said, I want you guys to be successful.

00:39:57.920 --> 00:39:59.760
And so you don't have to pay me for the first year.

00:40:00.159 --> 00:40:05.679
Interest will still still accrue, but I want you guys to, you know, have the cash flow that you need to keep the business running for that first year.

00:40:05.840 --> 00:40:07.039
And then we'll start payments.

00:40:07.199 --> 00:40:09.599
And so he was very, very generous and kind.

00:40:09.679 --> 00:40:13.199
And I truly believe that was just because of the relationship we built with him.

00:40:13.440 --> 00:40:13.760
Yeah.

00:40:13.920 --> 00:40:15.280
No, that's that's really important.

00:40:15.360 --> 00:40:25.599
You know, not just for what you described, arranging financing and such, but a lot of times to get a deal done, I found that people are always always asking me, like, okay, how do you find the deal?

00:40:25.760 --> 00:40:32.880
And in the three contracts where I've entered, I'm gonna say successfully here, it's always been by door knocking.

00:40:33.039 --> 00:40:41.199
Like I know that that's not the most efficient way to scale, but it's always been the most effective for making it a win-win is literally knocking on the door.

00:40:41.360 --> 00:40:45.119
And the last time that I you know I went under contract here, I led with this.

00:40:45.280 --> 00:40:46.400
I called him on the phone.

00:40:46.559 --> 00:40:48.559
I actually stayed at the hotel and I like it so much.

00:40:48.639 --> 00:40:50.639
I when I got home, I reflected on it and I go, you know what?

00:40:50.719 --> 00:40:54.719
I want to call this owner and see if it's possible that maybe, maybe there's a world in which he'll sell this hotel.

00:40:54.800 --> 00:40:59.199
And so when I called him, I just said, Hey, I hope you take this as the biggest compliment in the world.

00:40:59.280 --> 00:41:00.159
And he's like, Okay.

00:41:00.320 --> 00:41:03.360
And I'm like, is there any chance that you'd be willing to sell your hotel?

00:41:03.519 --> 00:41:04.960
And you know, he was kind of stunned.

00:41:05.039 --> 00:41:14.159
But the the point is, like, instead of just submitting a bunch of deals out there, if you put a little bit of extra time to like connect with an owner, and so I built this relationship.

00:41:14.239 --> 00:41:18.639
I he he took it, he was in that moment, he he was kind of put off, like, oh, let me let me think about it.

00:41:18.719 --> 00:41:23.840
And so I gave him the time, but I I I called back two months later, reminded him.

00:41:24.079 --> 00:41:31.599
And over a six-month period, I just followed up every 30 to 45 days with just a gentle either an email or a call and just checked in.

00:41:31.679 --> 00:41:33.679
And then ultimately he, you know, he came along.

00:41:33.760 --> 00:41:35.440
And and we've been building this relationship.

00:41:35.519 --> 00:41:38.880
And so, again, not the most efficient way, but oftentimes the most effective.

00:41:38.960 --> 00:41:41.760
So I love that you have that that relationship with the seller.

00:41:42.000 --> 00:41:52.400
That makes sense that he was willing to be in a position that otherwise, if if this was just about crude dollars and cents, yeah, being in second position, subordinating the loan, that's that's not optimal, but there was the relationship.

00:41:52.480 --> 00:41:53.280
So I love that.

00:41:53.440 --> 00:41:56.159
Can we move on now to um I want to talk about the reno?

00:41:56.559 --> 00:41:58.159
So, first of all, what did you buy this thing for?

00:41:58.239 --> 00:41:59.199
What did you buy the hotel for?

00:41:59.360 --> 00:42:00.159
The first one or the second one?

00:42:00.559 --> 00:42:01.760
First one, first one, yeah.

00:42:01.920 --> 00:42:04.880
We bought this for 2.45.

00:42:05.280 --> 00:42:05.599
Okay.

00:42:05.840 --> 00:42:06.159
Whatever.

00:42:06.239 --> 00:42:08.079
It's somewhere in the mid, you know, 2.4.

00:42:08.559 --> 00:42:10.079
Oh, you actually bought it for 2.45.

00:42:10.239 --> 00:42:11.280
That's exactly what you bought it for?

00:42:11.599 --> 00:42:11.840
Yeah.

00:42:12.000 --> 00:42:12.480
Okay, cool.

00:42:12.559 --> 00:42:13.280
2.45.

00:42:13.440 --> 00:42:16.079
And then you said you put about a half a million dollars in renovations into it?

00:42:16.239 --> 00:42:16.480
Yeah.

00:42:16.639 --> 00:42:17.840
So what did you do?

00:42:17.920 --> 00:42:19.920
Like, where was that money spent?

00:42:20.239 --> 00:42:25.440
A lot of it was spent on we went in and basically anything that you could kind of see.

00:42:25.599 --> 00:42:33.599
So flooring, paint, all the bathrooms got retiled, you know, new tubs and everything, new vanities, new lighting in and out, new paint in and out.

00:42:33.760 --> 00:42:36.159
It's, I mean, primarily cosmetic and then FFNE.

00:42:36.320 --> 00:42:36.719
That's okay.

00:42:36.880 --> 00:42:38.400
Primary where most the budget went.

00:42:38.800 --> 00:42:42.960
Well, let me do the math here, but I'm not I'm not that quick, so you'll bear with me.

00:42:43.039 --> 00:42:47.280
But half a million dollars divided by, did you say it was 27 after, right?

00:42:47.599 --> 00:42:48.239
Yeah, that's right.

00:42:48.480 --> 00:42:52.159
And that was a decent amount of money that was put into those getting those two rooms up and running.

00:42:52.320 --> 00:42:52.639
I see.

00:42:52.719 --> 00:42:54.960
So it's$18,500 per key.

00:42:55.119 --> 00:42:57.760
Call it$20,000 a key from from an underwriting perspective.

00:42:57.840 --> 00:43:03.119
I think that's just an important takeaway because you're like, all right, well, how much is it gonna cost to to renovate a hotel that has good bones?

00:43:03.199 --> 00:43:06.000
You're not really messing with some of the infrastructure stuff.

00:43:06.079 --> 00:43:08.559
It's really just cosmetic, like you said.

00:43:08.800 --> 00:43:14.400
Moving forward when you're underwriting, is that a metric that you would use about$20,000 a key for for light renovation?

00:43:14.719 --> 00:43:15.280
Yes.

00:43:15.519 --> 00:43:19.039
I think it ends up being more if if you want to go higher end on the renovations.

00:43:19.119 --> 00:43:22.239
Like our our newer hotel is gonna be end up end up being more than that.

00:43:22.320 --> 00:43:24.320
But yeah, I think that's probably a fair place to start.

00:43:24.559 --> 00:43:29.840
I think we had an in our heads we could do it for a lot less, but I think it becomes a lot more difficult than you think.

00:43:30.079 --> 00:43:30.400
Yeah.

00:43:30.559 --> 00:43:30.800
Yeah.

00:43:30.880 --> 00:43:33.360
I mean, I think that the bathrooms, those are killer.

00:43:33.440 --> 00:43:35.119
And you guys renovated all those bathrooms, right?

00:43:35.199 --> 00:43:36.559
They had older tile or something.

00:43:36.719 --> 00:43:37.360
Yeah, they did.

00:43:37.519 --> 00:43:42.079
Well, and then that I I mean, I think people miss out on the other large expenses that you're probably gonna have.

00:43:42.159 --> 00:43:45.920
Like we had almost 100K in in sprinkler work that needed to be redone.

00:43:46.079 --> 00:43:52.559
So all of a sudden you start, you open one thing, so those two rooms, and all of a sudden they're like, oh yeah, actually you need to do all this this additional work.

00:43:52.639 --> 00:43:57.519
And so some of that work, it doesn't go directly into the room, so it goes into basically just bringing stuff up to code.

00:43:57.760 --> 00:43:58.400
Yeah, yeah.

00:43:58.559 --> 00:44:01.599
Well, your design, man, I mean, your design, it's bold, it's clean.

00:44:01.840 --> 00:44:03.440
I love the the vision that you got there.

00:44:03.519 --> 00:44:04.800
Did you guys hire a designer?

00:44:05.039 --> 00:44:05.280
Yeah.

00:44:05.360 --> 00:44:14.239
For that one, we did a I would say a a smaller, you could say somewhat local designer, did a lot of like short-term rentals, not a professional commercial interior designer.

00:44:14.480 --> 00:44:14.880
Cool.

00:44:15.119 --> 00:44:16.400
Yeah, I'm just kind of looking at it.

00:44:16.639 --> 00:44:17.599
So let me ask you this.

00:44:17.679 --> 00:44:25.519
If if knowing what you know now, what what are probably the the top three upgrades that clearly move the needle in terms of improving the ADR?

00:44:25.760 --> 00:44:25.920
Yeah.

00:44:26.000 --> 00:44:31.440
I mean, I want to branch out and say it's something unique, but I mean, truthfully, a lot of it is just the aesthetics of rooms.

00:44:31.519 --> 00:44:38.239
And so just it doesn't have to be crazy, but it it's literally just making sure you update paint, flooring, and FFE.

00:44:38.559 --> 00:44:41.280
I actually don't think bathrooms are as important as people think they are.

00:44:41.440 --> 00:44:45.039
They can be nice, but you don't have to go like all tile in the bathrooms or anything like that.

00:44:45.199 --> 00:44:50.000
Like maybe in certain classes of hotels, if you're trying to go like up or up scale, you know, maybe you should consider that.

00:44:50.159 --> 00:44:55.039
But bathrooms don't end up being like a huge selling point for people in hotels, amenities.

00:44:55.199 --> 00:44:59.679
So I think what was really big for us is putting money into the lobby and adding a hot tub.

00:44:59.760 --> 00:45:01.119
People use the hot tub like crazy.

00:45:01.280 --> 00:45:05.440
We bought this massive cedar barrel hot tub that tons of guests can kind of get in.

00:45:05.519 --> 00:45:06.719
It's it's this really cool experience.

00:45:06.800 --> 00:45:08.960
It fits with the mountain vibe and people love that.

00:45:09.039 --> 00:45:13.679
And so I think that's another place in which people really book our place because you know we have that.

00:45:13.840 --> 00:45:19.440
And then the third, I don't know if I have like necessarily I think I lumped like the whole room into like one.

00:45:19.519 --> 00:45:24.719
So it's really like the the like rooms where people are staying and the amenities that you can add.

00:45:25.039 --> 00:45:30.880
Well, let me put it this way, then does anything come to mind in terms of what guests mention in the in the reviews?

00:45:31.199 --> 00:45:40.400
I mean, if you look at our reviews, so many of them are just the people, you know, investing, yeah, investing in our employees and investing in and that honestly that's that's an area that we did put more money towards.

00:45:40.480 --> 00:45:45.119
We looked at these employees' salaries in in this small town and we said, this is like pretty low.

00:45:45.280 --> 00:45:49.360
Like, I get it, that they have a lot of job satisfaction, but like we should pay them more too.

00:45:49.440 --> 00:45:54.719
And so we came in once we kind of felt good about where everyone was at, we're like, yeah, these people are around for the long haul.

00:45:54.800 --> 00:45:55.599
They're invested.

00:45:55.679 --> 00:46:00.480
They wanted, they were so excited about this hotel being renovated and it becoming something new.

00:46:00.559 --> 00:46:01.840
And so they wanted to stick around.

00:46:01.920 --> 00:46:02.880
They wanted to be a part of that.

00:46:03.039 --> 00:46:06.239
And after we felt confident in a lot of them, we ended up giving a lot of them raises.

00:46:06.480 --> 00:46:06.639
Yeah.

00:46:06.719 --> 00:46:07.840
All right, well, let's talk about that a little bit.

00:46:07.920 --> 00:46:11.760
Let's talk about operations, staffing model, systems, keeping review scores up, all that.

00:46:12.000 --> 00:46:13.840
So, who does the day-to-day management?

00:46:14.159 --> 00:46:16.079
Did you you hired a general manager?

00:46:16.159 --> 00:46:17.760
You're not involved in this day-to-day, are you?

00:46:17.920 --> 00:46:18.559
No, I'm not.

00:46:18.800 --> 00:46:24.159
We had a general manager that was part of the he was the general manager before we purchased, and we've kept him in place.

00:46:24.239 --> 00:46:25.679
So we didn't even have to go find him.

00:46:25.760 --> 00:46:28.559
And so, yeah, he he's the one that really keeps the day-to-day running.

00:46:28.639 --> 00:46:33.280
And then he's got an assistant general manager who at the time was just kind of a maintenance guy for us on the property.

00:46:33.360 --> 00:46:36.079
And then he stepped up kind of into that assistant general manager role.

00:46:36.320 --> 00:46:36.800
Gotcha.

00:46:36.960 --> 00:46:38.800
So, what are what's your scorecard look like?

00:46:38.880 --> 00:46:43.840
What are like the three to five things that you're tracking or watching to ensure that the hotel is performing?

00:46:44.079 --> 00:46:44.320
Yeah.

00:46:44.480 --> 00:46:45.920
The biggest one is reviews.

00:46:46.079 --> 00:46:50.079
So yeah, having those five-star reviews, they get paid a bonus based off of those reviews.

00:46:50.239 --> 00:46:54.000
And then obviously like watching out for we do surveys in each room.

00:46:54.079 --> 00:47:00.000
And so a guest can kind of fill out if anything's going wrong, and then we collect those and we want to know if there's cleanliness issues.

00:47:00.159 --> 00:47:02.400
We want to know if there's maintenance, deferred maintenance issues.

00:47:02.480 --> 00:47:05.519
I mean, so those are the kind of the other two KPIs that we're looking at.

00:47:05.760 --> 00:47:05.840
Yeah.

00:47:05.920 --> 00:47:07.119
Well, so what do you mean you bonus them?

00:47:07.280 --> 00:47:14.639
Like, do they get paid based on reviews collected if their name is mentioned, or is it just like a general pool where if you get a certain amount of reviews, you share it with the whole staff?

00:47:14.880 --> 00:47:20.559
It that review or that bonus is only for the general manager and the assistant general manager.

00:47:20.639 --> 00:47:23.599
And so for every review that comes in, Google reviews are the most important for us.

00:47:23.679 --> 00:47:30.880
So I think we pay out$10 per five-star Google review and then$5 for all other um five-star reviews.

00:47:30.960 --> 00:47:35.840
And then that splits$75.25 amongst our general manager and assistant general manager.

00:47:36.079 --> 00:47:36.559
Gotcha.

00:47:36.719 --> 00:47:50.960
Yeah, you know, it's interesting because when you take over an existing property and and you you're lucky in this regard that the culture, it wasn't hard to make an adjustment because sometimes, you know, you go and you press into folks that have been doing things a certain way for so many years, and you're like, hey, we're trying to offer a little more of an upscale experience.

00:47:51.119 --> 00:47:58.320
Did you hit any tailwinds or resistance when you tried to maybe change the way things are done to to provide a little bit better guest experience?

00:47:58.559 --> 00:48:01.039
I wouldn't say in order to provide a better guest experience.

00:48:01.199 --> 00:48:06.960
I think our general manager, Jordan, has always been kind of like all in favor of just trying to make it a good experience for guests.

00:48:07.119 --> 00:48:12.880
I will say where we maybe had a little bit of friction in the beginning was I don't think guests are going to find the value for pricing it this high.

00:48:13.119 --> 00:48:16.639
So he he was hesitant on I think we're I think we're selling these rooms for too much.

00:48:16.800 --> 00:48:18.239
I think we're gonna get a lot of bad reviews.

00:48:18.559 --> 00:48:19.679
Didn't end up being true.

00:48:19.760 --> 00:48:21.039
And he's uh he's a humble guy.

00:48:21.119 --> 00:48:25.039
And so he's he's willing to kind of accept, okay, yeah, maybe, maybe I was wrong there.

00:48:25.199 --> 00:48:30.639
The other area is we've tried to find additional ancillary ways of maybe inducing some returns.

00:48:30.800 --> 00:48:33.519
So can we charge for early check-ins, late checkouts?

00:48:33.920 --> 00:48:38.000
Maybe a little bit of resistance there in the beginning of, oh, we got to figure that out operationally.

00:48:38.079 --> 00:48:39.039
What does that look like?

00:48:39.199 --> 00:48:43.760
Um, and then you know, the more most recent rub has been can we can we bring pets into this?

00:48:43.840 --> 00:48:46.000
You know, a lot of people in Colorado are traveling with their pets.

00:48:46.079 --> 00:48:47.840
What does it look like to actually accommodate pets?

00:48:48.559 --> 00:48:56.960
And you know, his obvious concern of, well, you know, how do we keep these rooms clean and make sure that guests aren't having allergic reactions when the when they're staying in these rooms?

00:48:57.039 --> 00:49:04.239
And so I would say maybe those are some of the the the friction that we've experienced with the previous culture and and how he's done things.

00:49:04.400 --> 00:49:07.199
But honestly, again, my hat's off to him.

00:49:07.360 --> 00:49:09.920
He has embraced the culture that we've brought in.

00:49:10.079 --> 00:49:18.400
He's been really excited about you know the uplift of the property and really has done a good job of kind of coming behind us, championing that to the rest of the team.

00:49:18.719 --> 00:49:18.880
Yeah.

00:49:19.039 --> 00:49:25.119
All right, well, let's talk about back of the house stuff because I know that you coming from an engineering perspective, right?

00:49:25.280 --> 00:49:27.360
You're looking at putting these pieces together efficiently.

00:49:27.519 --> 00:49:38.960
And from what I understand, you're you're you're outsourcing, or at least you've hired people that live abroad that have certain technical skills, like a revenue manager, and you're also implementing AI and technology.

00:49:39.119 --> 00:49:46.559
Can you walk us through some of the operationally efficient means in which you've you've been able to um improve operations?

00:49:46.880 --> 00:49:47.199
Yeah.

00:49:47.360 --> 00:49:50.880
Some of the areas that we've chosen to outsource revenue management, as I mentioned before.

00:49:51.039 --> 00:49:55.039
So someone that's just constantly looking over our pricing and helping us optimize on that side.

00:49:55.280 --> 00:49:55.920
Bookkeeping.

00:49:56.079 --> 00:49:56.559
So, you know.

00:49:57.519 --> 00:49:58.719
Revenue management, this is super important.

00:49:58.800 --> 00:49:59.760
So, where is this person?

00:49:59.920 --> 00:50:04.639
Like they're based out of the, I think they're oh man, somewhere in Central America.

00:50:04.800 --> 00:50:04.880
Okay.

00:50:05.199 --> 00:50:06.400
We kept them the same time zone.

00:50:06.480 --> 00:50:08.480
That gotcha, that ended up kind of working well for us.

00:50:08.800 --> 00:50:10.559
Did you hire them off of like Upwork?

00:50:10.639 --> 00:50:11.760
Or did you get an agency?

00:50:12.079 --> 00:50:12.320
Yeah.

00:50:12.400 --> 00:50:17.039
So what we did is there was a large short-term rental management company that went out of business.

00:50:17.199 --> 00:50:20.639
And so at the time we had some connections with them for my former job.

00:50:20.800 --> 00:50:23.519
And so those people were looking for other jobs.

00:50:23.599 --> 00:50:29.519
And so we had kind of gotten this list of from this company that was going out of business saying, Hey, we want to take care of our employees.

00:50:29.599 --> 00:50:31.760
Like, here's all of our employees' emails, reach out to them.

00:50:31.920 --> 00:50:37.039
And so we reached out to a couple of their revenue managers because we knew their revenue was really good, their operations were really bad.

00:50:37.119 --> 00:50:39.199
And so we're like, let's grab one of their revenue managers.

00:50:39.360 --> 00:50:42.000
We interviewed a few of them and then ended up hiring this person on.

00:50:42.159 --> 00:50:42.960
And they're part-time.

00:50:43.039 --> 00:50:44.159
I think people don't realize that.

00:50:44.239 --> 00:50:46.960
Like this person, they're like, hey, I got to find a full-time job.

00:50:47.039 --> 00:50:50.960
We're like, go get that full-time job, just work for us in the evenings or like whenever you can.

00:50:51.119 --> 00:50:56.400
Like, we want your your expertise, but we don't need you full-time when we only have X amount of rooms.

00:50:56.480 --> 00:51:00.960
And so we're, you know, we're we're not paying them an insane amount because they're just doing side work for us.

00:51:01.039 --> 00:51:02.239
So it ends up working out really well.

00:51:02.480 --> 00:51:02.960
That's great.

00:51:03.039 --> 00:51:03.519
That's really good.

00:51:03.599 --> 00:51:08.800
And then the the technology that you're using for revenue management, you mentioned price labs, and there was another one.

00:51:09.119 --> 00:51:10.000
What are you using?

00:51:10.159 --> 00:51:11.519
So we are using price labs.

00:51:11.679 --> 00:51:11.920
Okay.

00:51:12.079 --> 00:51:12.239
Yeah.

00:51:12.400 --> 00:51:12.719
Yeah.

00:51:12.960 --> 00:51:14.239
Are you familiar with Price Point?

00:51:14.639 --> 00:51:19.280
I did a demo with Price Point, but I don't, I didn't have I didn't know anybody that was using it.

00:51:19.360 --> 00:51:20.000
Are you using it?

00:51:20.239 --> 00:51:21.039
Yeah, we're using it.

00:51:21.119 --> 00:51:22.320
I'm not the best guy to talk to.

00:51:22.400 --> 00:51:23.039
I I don't know.

00:51:23.119 --> 00:51:23.280
Okay.

00:51:23.519 --> 00:51:26.320
My partner is very much immersed in that, and I I just let him.

00:51:26.480 --> 00:51:29.039
That's one area where I'm just like, I'm gonna let you ride with this.

00:51:29.119 --> 00:51:31.920
So I can't tell you how to compare it to Price Labs.

00:51:32.000 --> 00:51:36.639
I have Price Labs for my short-term rentals, and it seems like it's pretty slick, but that's not my area of expertise.

00:51:36.719 --> 00:51:38.559
So I'm gonna just I'm gonna sidestep that.

00:51:38.719 --> 00:51:41.599
But but yeah, price price point is another software.

00:51:41.840 --> 00:51:42.639
Free plug to them.

00:51:42.719 --> 00:51:46.239
They I should be getting them to sponsor this podcast, but no, I'm kidding.

00:51:46.320 --> 00:51:46.960
Anyway, they're good.

00:51:47.039 --> 00:51:48.639
And then so you're talking about bookkeeping.

00:51:48.719 --> 00:51:49.280
Let's go on to that.

00:51:49.360 --> 00:51:50.320
So who's doing the bookkeeping?

00:51:50.400 --> 00:51:51.679
Are they in the Philippines or something?

00:51:51.920 --> 00:51:55.599
We we have someone in the Philippines, and then we have a second person.

00:51:55.920 --> 00:51:57.280
I'm not sure where they are globally.

00:51:57.440 --> 00:51:58.239
Uh I can't remember.

00:51:58.320 --> 00:52:00.719
But we have it, we've been kind of testing two different ones.

00:52:00.800 --> 00:52:06.880
So for the adventure in, we have someone in the Philippines, and then for our other property, we have someone else global.

00:52:06.960 --> 00:52:10.000
And we've been kind of testing the waters, trying to figure out which one we like.

00:52:10.079 --> 00:52:12.000
Um, and then it'll probably just consolidate into one.

00:52:12.239 --> 00:52:13.280
Well would you say you're saving?

00:52:13.360 --> 00:52:19.039
Like if you were to pay these folks domestically, like what is just like a 30% of what a domestic person would cost?

00:52:19.360 --> 00:52:20.320
I'll I'll tell you what we pay.

00:52:20.400 --> 00:52:27.679
I don't I don't know what it would cost here, but we pay about 500 bucks a month for them to kind of go through all our books, reconcile everything, make sure everything's up to par.

00:52:28.000 --> 00:52:28.320
That's great.

00:52:28.480 --> 00:52:29.199
That's not bad at all.

00:52:29.360 --> 00:52:29.679
That's good.

00:52:29.840 --> 00:52:30.719
And what about technology?

00:52:30.800 --> 00:52:32.800
You're using AI for guest comms and such.

00:52:32.960 --> 00:52:34.239
How are you using AI for that?

00:52:34.559 --> 00:52:39.039
Yeah, so we are in a way, so we're using a program called Akia.

00:52:39.920 --> 00:52:48.239
They do that, you know, they they provide kind of custom touch points to guests and guidebooks, and they can do they can manage kind of upsells to guests.

00:52:48.400 --> 00:52:52.320
So they have their AI features that they've kind of implemented slowly.

00:52:52.480 --> 00:52:53.920
I'd say it's working pretty well.

00:52:54.079 --> 00:52:56.880
It's not maybe necessarily our favorite program right now.

00:52:57.039 --> 00:53:08.159
And maybe one of our biggest complaints is that not a lot of companies integrate well with with cloudbeds and then integrate, which is our PMS, and then integrate further with like Booking.com and Xpedia and some of those OTAs.

00:53:08.239 --> 00:53:11.760
And so I'd say that the messaging is still a little bit clunky.

00:53:11.920 --> 00:53:16.719
Um, and it's just not like our favorite, but it's one of the best programs that we've used so far.

00:53:16.880 --> 00:53:18.000
We've tried some other ones.

00:53:18.239 --> 00:53:26.800
I'd say there's definitely better AI messaging platforms out there, but to get it all seamlessly into like one main guest experience, I think is difficult right now.

00:53:27.039 --> 00:53:32.960
Yeah, what you're saying is so Akia does a nice job of offering this like full-scale solution for all these different features.

00:53:33.119 --> 00:53:40.719
But if you're really looking for excellence and guest communication specifically, there's companies that can do a better job because they focus specifically on that component.

00:53:40.880 --> 00:53:50.559
I was recently listening to someone else who was talking about there's a company, and there's a lot of these guys that do this, but it's a totally, you know, I'm getting kind of nerding out on AI software right now.

00:53:50.639 --> 00:53:54.960
But N8N is a sort of platform for programming AI.

00:53:55.039 --> 00:54:05.039
I don't know how you would describe it, but there are companies that will use N8N to develop a custom agent for you specific to hospitality that is brilliantly smart.

00:54:05.199 --> 00:54:09.280
Like, like all of your company data gets dumped into this thing.

00:54:09.360 --> 00:54:18.559
And if you have high turnover with people that are calling it, like it's actually many ways, forgive me, smarter than someone that's brand new because it's got all of the collective intelligence.

00:54:18.719 --> 00:54:23.760
And so the demo that I saw was incredible, just from a you know, AI chat perspective.

00:54:23.920 --> 00:54:27.119
It's like way better than what things used to be years ago.

00:54:27.199 --> 00:54:28.559
And so I'm so blown away.

00:54:28.800 --> 00:54:43.760
Of course, you always still want the human connection on site, but in so many of these episodes now, people that are in the trenches of hospitality are saying AI is not to replace people, AI is to give people the ability to focus on the one thing that matters most, which is connecting with people.

00:54:43.920 --> 00:54:46.079
Let the AI handle all of the busy work.

00:54:46.239 --> 00:54:48.079
So I'm really big on implementing it.

00:54:48.239 --> 00:54:55.920
I haven't done so myself with this particular company, but I certainly feel like that is a goal to implement AI for guest communication.

00:54:56.000 --> 00:54:58.800
And we're right now at the worst we're ever going to be with AI.

00:54:58.880 --> 00:55:00.159
It's only gonna get better from here.

00:55:00.320 --> 00:55:01.280
So I love that.

00:55:01.519 --> 00:55:01.679
Yeah.

00:55:01.840 --> 00:55:08.239
The other company I'll put a plug-in for that we use on the short-term, that we did use on the short-term rental side with my management company was Conduit.

00:55:08.400 --> 00:55:15.039
And some of their stuff has been, I mean, especially like they've built out custom workflows and their voice messaging is getting better and better.

00:55:15.199 --> 00:55:17.599
I think we've had we tried demoing them and using them.

00:55:17.679 --> 00:55:23.599
We had some difficulties with the connection with cloud beds, but they're they're really good, especially for those in the short-term rental space listening.

00:55:23.679 --> 00:55:25.119
Definitely like kind of worth checking out.

00:55:25.199 --> 00:55:28.239
And I think they'll work their way into the hospitality space really well.

00:55:28.480 --> 00:55:28.639
Yeah.

00:55:28.960 --> 00:55:34.239
Before I shift off this marketing piece, I I'd be remiss if I didn't bring up something that caught my attention.

00:55:34.480 --> 00:55:48.400
Was that on your website, from what I understand, you recognize that there is a different sentiment for people that are looking to book during the summer versus the winter, and you're making an adjustment to your website based on the season.

00:55:48.559 --> 00:55:49.280
Is that accurate?

00:55:49.519 --> 00:55:51.280
How is that working out for you?

00:55:51.679 --> 00:56:00.079
This was something uh we were we were interviewing some companies uh to help us kind of build a website and they had kind of demoed this thing and we're like, I wonder if like that looks really cool.

00:56:00.159 --> 00:56:05.199
Like we want to appeal to people in the whatever season they're visiting, and so we're like, well, let's just try it out.

00:56:05.519 --> 00:56:14.559
So we ended up developing our own website, but I wouldn't say we have enough data right now to say if it like is actually working out well or kind of like what the the value in that is, but it was a really easy tweak.

00:56:14.719 --> 00:56:19.119
We vibe coded our our website, and so it wasn't like it was an easy change to make.

00:56:19.360 --> 00:56:19.679
Interesting.

00:56:19.760 --> 00:56:20.400
What did what did you use?

00:56:20.639 --> 00:56:21.280
So vibe coding.

00:56:21.360 --> 00:56:36.719
For anyone who doesn't know, there's AI software where study instead of having to know how to code and or to hire someone who can code for you, you can speak to the AI website and give it just English language commands and it'll create the website as you want right then and there.

00:56:36.880 --> 00:56:39.679
So that's vibe coding, but your website is spectacular.

00:56:39.760 --> 00:56:41.840
So you guys used some sort of AI for that.

00:56:41.920 --> 00:56:42.719
Which one did you use?

00:56:42.880 --> 00:56:44.159
My business partner handled that.

00:56:44.239 --> 00:56:54.400
I think he used a combination of replet and maybe lovable, but I know we use replit a lot because I've built off of that as well for some stuff, but I I don't know exactly what he built it off of.

00:56:54.559 --> 00:56:55.199
Dude, that's awesome.

00:56:55.360 --> 00:56:58.320
Inspiring because I was looking at your site going, dude, I want something like this.

00:56:58.400 --> 00:56:59.360
This thing looks killer.

00:56:59.440 --> 00:57:00.719
So hey, way to go.

00:57:00.960 --> 00:57:01.760
Thanks.

00:57:02.159 --> 00:57:10.559
Look, before we wrap this episode up, though, I I do I want to hear about the cannabis cabana, right?

00:57:10.719 --> 00:57:14.239
Okay, what I'm referring to is your next deal, which is in Manitou.

00:57:14.480 --> 00:57:15.119
How do you pronounce this?

00:57:15.280 --> 00:57:15.679
Manitou?

00:57:15.920 --> 00:57:16.719
Manitou Springs?

00:57:17.039 --> 00:57:17.519
Manitou.

00:57:17.760 --> 00:57:18.159
Manitou.

00:57:18.400 --> 00:57:18.559
Okay.

00:57:18.639 --> 00:57:20.800
So this is what it's just near Colorado Springs.

00:57:20.880 --> 00:57:24.880
So in your backyard, so to speak, what a couple hours away from Denver.

00:57:25.119 --> 00:57:33.199
And you just recently, you should, I should say, in 2025, you picked this thing up and you're under renovation right now.

00:57:33.440 --> 00:57:36.719
So this is hotel number two, high level.

00:57:36.880 --> 00:57:38.960
What are the details and what's the status?

00:57:39.039 --> 00:57:40.000
What's the key count?

00:57:40.159 --> 00:57:40.800
What's the plan?

00:57:40.960 --> 00:57:42.000
And then why this one?

00:57:42.159 --> 00:57:42.719
Yeah.

00:57:43.039 --> 00:57:48.079
So this property has a long story to it, which I won't dig into here just for the sake of time.

00:57:48.239 --> 00:57:51.199
But we ended up purchasing this property for 2.1 million.

00:57:51.360 --> 00:57:54.239
We're gonna put about another two and a half million dollars.

00:57:54.480 --> 00:57:57.440
I think it ended up being about 2.2 million in renovations.

00:57:57.519 --> 00:58:00.239
So a pretty, a much larger renovation than our first.

00:58:00.400 --> 00:58:02.719
We're going more upscale on the renovation here.

00:58:02.880 --> 00:58:08.400
It's a 39-room hotel right in Manasea Springs, right across from some of the greatest hiking.

00:58:08.639 --> 00:58:09.840
Garden of the Gods is right there.

00:58:09.920 --> 00:58:11.679
It's got a spectacular view of the mountains.

00:58:11.760 --> 00:58:13.519
It's got a great outdoor area, pool.

00:58:13.679 --> 00:58:15.360
It'll have a great patio space.

00:58:15.519 --> 00:58:19.360
So it's really like this prime property that was just in terrible condition.

00:58:19.519 --> 00:58:21.599
So we bought it in June of 25.

00:58:21.760 --> 00:58:24.719
It was a train wreck, which is another story for another day.

00:58:24.880 --> 00:58:28.239
But we basically kept it running for the busy summer season.

00:58:28.320 --> 00:58:33.920
And then we closed down in November and have been under renovations with plans to kind of reopen.

00:58:34.079 --> 00:58:40.719
Um, it'll be rebranded as the Outrider Hotel, and that'll be May 1st, is what our target open date is.

00:58:40.960 --> 00:58:41.360
Gotcha.

00:58:41.440 --> 00:58:48.800
So you bought this thing for about$54,000 per key, and you're gonna put in just about another$50,000 per key or so.

00:58:48.960 --> 00:58:53.760
What is the average cost per key in that area, like market rate for stabilized assets?

00:58:54.079 --> 00:58:57.119
For mid-mid grade stuff,$120 to$140.

00:58:57.360 --> 00:58:57.679
Okay.

00:58:57.840 --> 00:58:58.079
All right.

00:58:58.320 --> 00:59:01.599
So we're gonna be, I think we're gonna, I think we're gonna come out far on top.

00:59:01.760 --> 00:59:03.519
I think we purchased it for such a killer deal.

00:59:03.679 --> 00:59:03.840
Yeah.

00:59:04.000 --> 00:59:05.920
I mean, that's a lot of money you're putting into this thing.

00:59:06.000 --> 00:59:09.039
So it was just what it was a bankrupt property or something.

00:59:09.119 --> 00:59:10.079
It was in foreclosure.

00:59:10.320 --> 00:59:10.800
Yeah, yeah.

00:59:10.960 --> 00:59:14.079
We yeah, we kind of picked it up from the seller.

00:59:14.159 --> 00:59:15.679
It was a seller financing deal.

00:59:15.760 --> 00:59:18.960
Um so he thought seller financed it to a guy, and then that guy stopped paying.

00:59:19.039 --> 00:59:21.599
So he foreclosed on him and then reached out to us to buy it.

00:59:21.840 --> 00:59:22.320
Gotcha.

00:59:22.480 --> 00:59:24.639
And so this one, you're putting all this money into it.

00:59:24.880 --> 00:59:26.800
I I imagine wellness is gonna be the theme.

00:59:26.880 --> 00:59:28.639
You're probably gonna have some of the wellness features.

00:59:28.719 --> 00:59:29.599
I I saw some photos.

00:59:29.679 --> 00:59:37.519
There's a pool, I guess, and you're making some how do you how would I say this common area amenities that are unique or fun.

00:59:37.679 --> 00:59:42.559
So walk us through what makes this property or what is going to make it special from an amenity perspective.

00:59:42.880 --> 00:59:43.119
Yeah.

00:59:43.199 --> 00:59:46.320
So in Manitou Springs, so we're we're right in kind of the foothills of the mountains.

00:59:46.400 --> 00:59:48.239
And so pretty landlocked area.

00:59:48.400 --> 00:59:52.719
There's really not much, like not many hotels in the area have amenity space.

00:59:52.800 --> 00:59:59.599
And so we were fortunate enough to buy this hotel that has this nice large pool area with patio space around it, and then kind of this ants.

01:00:00.159 --> 01:00:02.239
Slary patio to the side of it.

01:00:02.400 --> 01:00:09.840
And so our whole goal with this property is to kind of, again, mix some of the things we've really appreciated about travel, which is the community aspect of it.

01:00:10.000 --> 01:00:20.880
You know, you we I remember sitting in a hostel in Costa Rica and just loving the this feel of, man, we just sat down at this long table with a bunch of people we don't know and we're sharing some of the greatest stories.

01:00:20.960 --> 01:00:23.199
We're hearing about the next places we need to go.

01:00:23.280 --> 01:00:25.599
You know, there's just such a community aspect to it.

01:00:25.760 --> 01:00:33.920
And these this hostel was, you know, nothing fantastic, but we have the best memories from there because of the people we shared time with that we didn't even know.

01:00:34.079 --> 01:00:40.079
And so really a main focus of this hotel is how do we create those communal spaces in the outdoor area?

01:00:40.159 --> 01:00:48.800
How do we not put, you know, 20 bistro tables, but instead put two long tables where people are forced to sit together and share stories and talk about their adventures?

01:00:48.880 --> 01:00:51.119
And so that's really a central element of it.

01:00:51.199 --> 01:00:55.119
How do we gather people together in intentional ways, whether they want to or not?

01:00:55.360 --> 01:01:00.400
Because if people are given the option, a lot of times they're gonna sit in their own corner by themselves.

01:01:00.559 --> 01:01:08.320
And there's something special to be to having to sit next to somebody, enforcing that interaction and them realizing, oh, actually, this is really great.

01:01:08.480 --> 01:01:09.599
Because that's kind of how we were.

01:01:09.679 --> 01:01:13.519
We weren't maybe necessarily looking to meet a bunch of people, but we did, and it was phenomenal.

01:01:13.679 --> 01:01:20.960
So a lot of it is geared towards building these communal spaces that are intentional, making good use of the space, getting people outside.

01:01:21.119 --> 01:01:33.519
So the the inside is going to be nice, but how do we create these really great outdoor amenity spaces because we have the space and because we want people to be out in the Colorado nature experiencing an extension of what they're there for?

01:01:33.679 --> 01:01:36.400
And so that's kind of a lot of our guiding principles.

01:01:36.559 --> 01:01:40.000
We do have some wellness aspects, a sauna, a cold plunge planned.

01:01:40.079 --> 01:01:41.599
We'll have a hot tub and then we've got the pool.

01:01:41.760 --> 01:01:42.000
Yeah.

01:01:42.079 --> 01:01:45.599
And then um, what about like a little mini golf or maybe outdoor movie or anything?

01:01:45.679 --> 01:01:47.360
Are you are you planning anything like that?

01:01:47.760 --> 01:01:53.360
We have like this little turf area that we might do like some mini golf with, but we just don't have a whole lot of space for that.

01:01:53.519 --> 01:01:55.519
And then we do have this garage.

01:01:55.599 --> 01:02:01.039
It's a two-bay garage kind of off the side of our parking lot, which we're trying to figure out in a phase two.

01:02:01.119 --> 01:02:01.760
What do we do with this?

01:02:01.920 --> 01:02:03.760
Does this become, do we really dig into all this?

01:02:04.000 --> 01:02:04.880
We create a spa out of it.

01:02:05.039 --> 01:02:06.239
Do we create a game night group?

01:02:08.320 --> 01:02:10.400
Yeah, video games and like, you know, what's the table?

01:02:10.639 --> 01:02:13.199
You shoot the basketball and ski ball, like all the stuff the kids love.

01:02:13.360 --> 01:02:19.920
Like, man, I tell you, when I'm sorting through hotels at this stage, and you're almost there, you're gonna be there.

01:02:20.000 --> 01:02:21.599
You've got your second kid on the way.

01:02:21.760 --> 01:02:23.199
Congratulations a month from now.

01:02:23.440 --> 01:02:24.480
So that's awesome.

01:02:24.639 --> 01:02:27.440
But I've got kids now that it's like, okay, where's the nearest playground?

01:02:27.599 --> 01:02:29.599
And what are we gonna do when we're not in the room?

01:02:29.760 --> 01:02:31.280
We can't be in the room all the time.

01:02:31.440 --> 01:02:33.519
Oh my gosh, there's something for the kids to do.

01:02:33.679 --> 01:02:35.119
Sign me up, let me book it.

01:02:35.280 --> 01:02:38.320
So that could add a ton of demand alone, right there.

01:02:38.480 --> 01:02:48.320
You know, listening to your talk about the context of like the communal space, like anyone that's been a listener of this show has probably heard me speak to the same sentiment about communal spaces, right?

01:02:48.400 --> 01:02:52.159
So it's like almost like I was listening to myself and I I love it, but I believe it.

01:02:52.239 --> 01:02:54.480
You know, I think it's a real distinguishing factor.

01:02:54.559 --> 01:02:59.280
If you're running a boutique hotel and you're not the Marriott, the High at the Hilton, you're going for something different.

01:02:59.360 --> 01:03:00.800
Well, how do you set yourself apart?

01:03:00.960 --> 01:03:09.039
It's those communal experiences that people don't always even realize they need it or they want it, but they do and they appreciate it always in the end.

01:03:09.119 --> 01:03:11.199
So I commend you for recognizing that.

01:03:11.440 --> 01:03:21.280
The the cannabis cabana reference, by the way, was just because when you first bought this thing, it was kind of like just being occupied by people that were without homes, I guess, right?

01:03:21.360 --> 01:03:23.440
They were just kind of bunkered up in there.

01:03:23.760 --> 01:03:27.360
The story about that is that there was quite literally this cabana.

01:03:27.440 --> 01:03:31.360
I mean, it was like this little shed that was in one of the side patio spaces.

01:03:31.519 --> 01:03:35.199
And it was a the hotel was deemed a 420 friendly property.

01:03:35.280 --> 01:03:39.039
And so you couldn't smoke in the hotel, thankfully, but you could smoke in this cannabis cabana.

01:03:39.119 --> 01:03:41.519
And so they had this thing actually called the cannabis cabana.

01:03:41.679 --> 01:03:43.360
It had this ratty old couch in it.

01:03:43.440 --> 01:03:44.320
It was gross.

01:03:44.559 --> 01:03:47.519
But homeless people would get in there all the time and sleep in there.

01:03:47.599 --> 01:03:52.000
And so it just had this like weird stigma, and we were so happy to get rid of that thing.

01:03:52.239 --> 01:03:56.719
But it it does make for a good story of just this cannabis cabana that homeless people used to sleep in.

01:03:56.800 --> 01:04:01.920
And then there was, I mean, yeah, there was weed growing all over the property, like actual cannabis.

01:04:02.079 --> 01:04:07.440
People would just flick their cannabis out, and for some reason it would just grow be back in our hotel.

01:04:07.679 --> 01:04:08.159
It was weird.

01:04:08.480 --> 01:04:09.679
It's Colorado, right?

01:04:09.840 --> 01:04:13.599
So I got I got just a few closing rapid fire questions.

01:04:13.679 --> 01:04:14.960
Okay, these are short answer ones.

01:04:15.039 --> 01:04:16.880
I just want to fire away and get your quick response.

01:04:16.960 --> 01:04:18.400
Don't think, just respond.

01:04:18.559 --> 01:04:22.320
But biggest mistake you see first-time motel buyers make.

01:04:22.559 --> 01:04:30.159
I think most they undershoot like renovation costs and specifically like the amount of larger capital expenses.

01:04:30.239 --> 01:04:36.239
Like I said, fire, like the fire systems, the like washing machines, the dryer, the dryers, like this stuff all costs money.

01:04:36.400 --> 01:04:39.440
And I think the larger the hotel, the more those expenses add up.

01:04:39.519 --> 01:04:41.119
And so I think a lot of people don't factor that in.

01:04:41.199 --> 01:04:42.159
They just think about the rooms.

01:04:42.480 --> 01:04:46.480
Your simplest rule of thumb for expense ratio sanity check.

01:04:46.719 --> 01:04:47.920
I think just the percentage.

01:04:48.079 --> 01:04:50.880
I just want to know you know, does this come back to 60%?

01:04:51.360 --> 01:04:53.119
Does that line up with what we're expecting?

01:04:53.280 --> 01:04:55.599
One renovation upgrade that almost always pays back.

01:04:55.840 --> 01:04:56.400
Amenities.

01:04:56.559 --> 01:05:02.239
What's the fastest path for a STR short-term rental investor to become a motel owner without getting smoked?

01:05:02.480 --> 01:05:03.360
Uh partnership.

01:05:03.599 --> 01:05:04.239
Great answer.

01:05:04.400 --> 01:05:04.639
Cool.

01:05:04.800 --> 01:05:05.440
All right, Jordan.

01:05:05.679 --> 01:05:07.280
Well, hey, this has been awesome.

01:05:07.519 --> 01:05:08.159
Thanks, man.

01:05:08.239 --> 01:05:13.760
Thanks so much for being on this show and and sharing all of your accumulated knowledge here, man.

01:05:13.840 --> 01:05:26.719
I I'm I'll be the first to well, I probably won't be the first to say this, but I want to make this public remark that I know in a few short years here you're doing some big things and you're we're gonna look back at this conversation and be like, wow, he's done that.

01:05:26.960 --> 01:05:27.360
Wow.

01:05:27.599 --> 01:05:29.119
So hats off to you, man.

01:05:29.280 --> 01:05:30.559
Uh, appreciate you being on.

01:05:30.719 --> 01:05:34.960
I guess if our listeners want to stay in touch with you, they want to continue to follow your journey.

01:05:35.119 --> 01:05:36.400
So where can they do so?

01:05:36.639 --> 01:05:38.320
Yeah, Instagram and LinkedIn.

01:05:38.480 --> 01:05:39.760
LinkedIn is just my name.

01:05:39.840 --> 01:05:42.239
Um, I'm trying to be more active on both platforms.

01:05:42.400 --> 01:05:46.320
And then Instagram, I'm hotel investor with two N's.

01:05:46.480 --> 01:05:48.079
So I N Investor.

01:05:48.239 --> 01:05:49.360
Those are probably the best places.

01:05:49.440 --> 01:05:50.639
I try to be really accessible there.

01:05:50.880 --> 01:05:51.920
Happy to kind of share knowledge.

01:05:52.079 --> 01:05:52.800
Yeah, of course.

01:05:52.880 --> 01:05:54.480
As always, we'll put it in the show notes.

01:05:54.639 --> 01:06:08.079
So for everyone listening, if you got value from this episode, do me a favor, share this episode with at least one friend who wants to buy a hotel or already owns one and could benefit from listening to this.

01:06:08.239 --> 01:06:11.440
And if you want to talk through a deal, you want to ask me a question, email me.

01:06:11.599 --> 01:06:13.840
Info at hotelinvestorplaybook.com.

01:06:14.000 --> 01:06:16.400
I read every email and I appreciate the feedback.

01:06:16.559 --> 01:06:18.239
And that is it for today.

01:06:18.559 --> 01:06:20.800
Aloha, and we'll catch you again next week.

01:06:21.119 --> 01:06:21.920
Peace.