BiggerPockets Real Estate Podcast - 660: Deal Deep Dive: How Robuilt Doubled His Property Portfolio Overnight

Episode Date: September 11, 2022

Hotel investments, big BRRRRs, and some mind-boggling cash flow are coming up on this Deal Deep Dive with our very own Rob Abasolo. For almost the entirety of Rob’s short-term rental investing career, he’s preached the good gospel about how small, mom-and-pop-owned vacation rentals are the way of the future. The secluded single-family rental, log cabin, or treehouse were some of Rob’s most impressive and profitable investments. But now, he’s taken a step in a whole different direction. Rob doubled his rental property portfolio almost overnight, going from fifteen units to thirty-five by purchasing a twenty-unit hotel/motel mix in beautiful Upstate New York. Without much experience running anything on that scale, Rob and his partners went to work trying to figure out how to turn this mess of a motel into a profitable, high-value vacation destination. He faced some serious hurdles, from canceling on guests to fixing a literal hole in the middle of the property, but found a way to make it work. Once the renovations are complete, Rob will walk away with an almost unbelievable amount of yearly cash flow, a seven-figure increase in equity, and a scalable system that will let him do these types of deals more often than he thought. Want to hear the nitty gritty so you can tackle something as lucrative as this? Sit back, relax, press play, and prepare for your next big property purchase!  In This Episode We Cover: Transitioning from single-family rentals to multifamily vacation rental investments  Hotel hurdles and what you should know before investing in a multi-unit short-term rental Big BRRRRs and how to revive a rental property that has serious deferred maintenance  How to find contractors when you’re in a low-population investing area The right way to transfer ownership after you’ve bought a not-so-straightforward property Seller financing and getting deals with lower interest rates and far more flexible lending And So Much More! Links from the Show BiggerPockets Youtube Channel BiggerPockets Forums BiggerPockets Pro Membership BiggerPockets Bookstore BiggerPockets Bootcamps BiggerPockets Podcast Get Your Ticket for BPCon 2022 Listen to All Your Favorite BiggerPockets Podcasts in One Place Learn About Real Estate, The Housing Market, and Money Management with The BiggerPockets Podcasts Get More Deals Done with The BiggerPockets Investing Tools Find a BiggerPockets Real Estate Meetup in Your Area David's BiggerPockets Profile David's Instagram Rob's BiggerPockets Profile Rob's Youtube Rob's Instagram Rob's TikTok Rob's Twitter Our Interview with Heather Blankenship on RV Park Investing Are There Opportunities in Hotel Investing in 2022? Struggling to Find a Stellar Contractor? Try These 9 Pro Tips The Definitive Guide to Using Seller Financing to Buy Real Estate Watch Rob’s Video on This Property Click here to check the full show notes: https://www.biggerpockets.com/blog/real-estate-660 Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Check out our sponsor page! Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Bigger Pockets Podcast show 660. But one of the really hard lessons that we learned was that the transition of ownership was a little bit tricky. We hadn't really hashed out a battle plan with the seller because we were so focused on closing the deal. Like there was always stuff happening. As you know, deals start to fall through and then everyone's got to be like, hey, we're all on the same team. We all, you really want to sell it. we really want to buy it. Let's renegotiate.

How are we going to make this work? And so we had like five of those moments. I felt like through that whole process, we're like, oh, shoot. What's going on, everyone? This is David Green, your host of the Bigger Pockets Real Estate podcast here today with my partner in crime

and partner in business, Robert Abasolo. Rob, so nice to see you today. And I can't help it notice you're a little dressed up. You got rid of the black pocket tea and you're actually looking fit, trim, and sharp in a shirt with buttons and a collar.

That's true. man you know I think I've mentioned this to you before but I did this whole thing for two years where I saw a YouTube video of this guy that was like why I only wear one shirt and I was like you know I like that and so I decided to just rock the black pocket tea for the last two years on the channel and I was like you know what I think I'm tired of looking like a schlub like a minimalist schlub so I decided to you know fork out some dough and buy a couple button downs that's all well and you can afford it based on the cash flow you should be getting from your new acquisition, which is what we are talking about on today's show. This is a deep dive episode where we are getting deep into the

details of Rob's newest deal. It's a lot of D's right there. You bought a hotel. Well, you've actually bought like a kind of a boutique hotel. Tell us a little bit about what people are going to learn about as they listen to today's episode. Yeah, so I'm pretty open about this stuff. You know, I'm a very transparent person. So we'll be talking about the hotel. Why I even went the hotel route after being such an accomplished short-term rental operator that's so anti-hotels. You'll get to hear my pivot on why I'm doing that. And then some of the really big hardships and mistakes that I've made on this deal, which I just want to be honest about and put it out there because I think for me, I embrace mistakes because they make me better. And I just want everyone to know that it's okay to make mistakes and to

fail because that is how we get good at the thing that we call real estate. That is a great point. And if you listen to today's show, you will learn about the mistakes Rob made, how he overcame them, how he found this deal, how he structured the deal, how he negotiated the deal, what he likes about the deal, how he's designing the deal, and how if everything goes well, he should make over $5 million when he exits this deal. Fantastic episode, make sure you listen all the way to the end to get all the juicy deets. But before we get into those juicy deets, today's quick tip is brought to you by Rob Obasolo himself. So if you're ever going to buy any kind of property that's outside of your typical asset class,

ask yourself, what is the battle plan as soon as I close on this property? I think a lot of people are like me and we jump in because we're not scared to just tackle something head on. But at the end of the day, you're going to sign those closing docs and then you have to actually run that business or asset class that you just purchased. And you don't know what you don't know. So before you get into a deal and you focus all your time on closing the deal, focus on everything that's going to happen the month after you close that deal because it will save you a lot of headaches. Take it from your friend Rob. Very nicely done. Great job there, Rob.

Did you know your house gets bored when you leave? I can't actually prove that, but it probably misses out on the action. The footsteps, the late night fridge raids. Yeah, when you're gone, your place is basically on unpaid leave. It's sitting there in the dark thinking I could be contributing right now. Your side room wants a side hustle. Even your Wi-Fi is like, we could be networking. You're on vacation, spending money like it's a sport,

while your staircase at home is fully capable of sending your income upwards. Here's the twist. You can go on a trip and actually earn money. Airbnb makes that possible with the co-host network. If you're away for a while or have a secondary property, you can hire a vetted local co-host with real hosting experience to handle it all. A co-host can handle guest communications, it can manage reservations and keep things running smoothly so you don't have to check your phone between beach days.

That means less stress and more time enjoying your trip. You can relax, knowing guests are taken care of, and your place is in good hands. You travel, your house works. Everyone wins. If you're ready to host but could use some help, find a co-host at Airbnb.com slash host. Okay, we're going to shift gears for a minute to cover something important, especially for new landlords. The shows often talk about getting stuck doing everything ourselves and the cost of sweat equity. The key question is simple.

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started. Rent Ready helps ensure on-time rent with auto reminders, keeps communication professional, and lets you post listings to multiple sites. Check it out at rentready.com slash bigger pockets. That's rent-R-E-D-I.com slash bigger pockets. Do you ever notice how every passive investment somehow turns into a very active lifestyle, active spreadsheets, active phone calls, active stress? Here's a better question. What if you could buy brand-new construction homes, 10% below market value, and the best markets across the country, without making real estate your second job?

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All right. Let's get into the interview. All right there, Mr. Abasolo. Let's get into this thing. So first off, in your opinion, you've probably been investing in real estate for quite some time, but to an OG like me, I'm thinking you're kind of new to this game. So it seems like you've done pretty well since the time that you've been in real estate. Can you share with our audience how long you've been investing in real estate and what your

journey was like to get to where you are right now? now. Yes, yes, yes, I do. I will. And let me just say, it is an honor to be a guest on the Bigger Pockets podcast. It's been a dream of mine for a long time, so thank for having me on. I did kind of make myself sound like an old man right there. So tell me about how you're using computers to buy houses. What does this Airbnb you speak of? All right, reeling this back in. So, yeah, I've been doing this for about five years, probably just a little bit over now. And, I'm just a little bit over now. And I have really, I've done a lot in the short-term rental space. And it's always been an interesting journey.

I think for me, I've wanted to diversify as much as possible for just, I just like, I'm very curious. And one of my favorite things really about bigger pockets is how creative people can get in real estate and, you know, extrapolating that further into just the, the actual Airbnb space. I've always been very appreciative of how creative people can get with their spaces. what can you Airbnb? You can Airbnb an air mattress in your living room. You can Airbnb potato in the middle of Idaho. You can Airbnb a cabin. It doesn't really matter, right? It's whatever your imagination is. You love that potato. I do. It's so good. It makes like 70 grand a year. I'm

jealous. I love how often you bring it up. I know. It's just I'm so jealous that I didn't think of it for it. But this is exactly what I'm talking about because someone would see that. Yeah. And they probably were selling it for 20 grand. And then, you know, everyone was like, no, I would never pay for that. That's a stupid price. and we have someone that comes on. Actually, we should bring her on. We should bring her. I think her name is Kristen Wolf.

I'm going to make that an initiative here. But effectively, I like how creative things can get. So for me, I started in the rental arbitrage space for like, I think my first three or so listings. And then I bought my first house. In that house, I had a tiny 279 square foot studio that I rented. That was making pretty good income on Airbnb. And then I thought to myself, what if I built a tiny house in my backyard? And then I thought, what if I built a tiny house?

house in Joshua Tree and then a small home in Joshua Tree. What if I put a tent out in a national park or an airstream or a tiny a frame? And so I kept really like leveling up as much as I could because every type of new listing I could come up with, I was like, this is great. This is fun. It was so fun because no matter how wacky you get with your ideas or whatever you put out there, there is a target market for that, right? There's a target market for a vintage airstream. There's a target market for a tiny a frame or a tiny house. And for me, I think I get a lot of joy out of fulfilling that bucket list item for people. So in my five years, I went from zero to 15 units for all of those 15 units. For the most part, I think I had partners on a lot of those because I was

pretty broke when I was getting started out. And I was doing pretty well and I was putting myself out there on social media and people would reach out and say, hey, Rob, I'd see that you're pretty good at this. Would you mind taking an investor? And I'd say, sure. And so that's how I was able to scale up pretty quickly. And I was pretty passionate about it. And I still am, but I've started to realize as I was acquiring all these different units, the scalability was getting a little tougher because I was getting so engulfed in the actual A, the self-management. But B, the setup. Setting up an Airbnb takes a very long time. I don't know. Have you ever set up one of your Airbnb's or no? Going through that right now, I was lucky enough that almost everything I purchased came furnished and was

used as an Airbnb before. So those ones are going pretty quick, but the ones that I bought in Florida that were not used as an Airbnb, it's definitely a log jam right now with ordering furnishings and getting the cable and the internet turned on and getting stuff fixed so we can take the pictures. I'll actually let you go into everything that goes on to that because I'm sort of just getting exposed to this now. Well, yeah, and you kind of saw a sneak peek of how I do things in Scottsdale, right? When we were setting up our 6,000 square foot Spansion, our Spanish Mansion, You kind of saw a little bit of, I mean, that was a little bit of a different beast compared to your typical like 2,000 square foot home. But that's a pretty good indication of how I, how I do it.

It's not just coming in and putting couches here and hanging a picture frame. For me, it really is a process of like, where do things go? How do we get rid of boxes? Who's going to do what? Are all the drawers filled? Do we have can openers? And it's a very analytical process, which is very odd because I am not necessarily the most analytical. person. You appear that way in those environments. I thought I'm watching Banksy looking at a street

corner and figuring out the mural that he is going to paint here. That's what it was like to watch you in action. That's how, honestly, that is kind of how I felt walking into that house, but, you know, admittedly, that mural was very beautiful and I didn't have to do much to it, right? It was much of an open canvas because it was already an architectural house. That was just, anything we would have done to that place would have been perfect. But all to say, even that house took a little bit longer to set up than we thought. We thought we were going to set it up and say, hmm, let's do this thing. And it took about a month to get all the furniture in and everything due to the supply chain issues and everything. I think what short-term rentals have done to real estate,

real estate has traditionally been, especially commercial real estate, because this is where investors used to operate. Commercial real estate was for investors. Residential real estate was for people that just want to live in their home. Then we started buying rental property and mass after 2010 when there was all this opportunity and all of these foreclosures. And now it's gone into this whole new stratosphere where we're doing short-term rentals and we're competing with hospitality industries. And what I've noticed is real estate's always been part art and part science. It used to be much more heavily geared towards the science element. The spreadsheet would tell you almost everything you needed to know about that triple net property or that big commercial

multifamily property you wanted to buy. Well, Airbnb has allowed the art side to play a much bigger role in what's happening. How do I design the house? How do I market the house? How do I furnish the house? These are all things that are not numbers you can put into a spreadsheet to determine a return, but the art will affect the return. Is that something that you think you've been able to kind of harness to be so successful as a short-term rental investor? For sure. I think short-term rentals in general are a very visceral thing for me. Like I walk into a place and I know if it's going to work or not. Or I see photos on Red Fender Zillow and I know if it's a dud or not. Now, I do genuinely believe that any house in a good market can perform well if you put a little bit of love and TLC

and passion into the design side of things. But certainly some houses, you know, they make for better properties in general and they're more Instagramable. So I'm always looking for something that has a bit of that potential in the, I don't know, the category sense, right? Airbnb just changed their website design and they have categories at the very top. So for me, I'm always looking at how can I best fit those categories. And this is a lot. This is a lot of the way. And this is a I've really been doing over the past five years until somewhat recently, which is, you know, moving into where I am now, and that is focusing a little less on the single family acquisition. All right. And so as you're focusing less on the single family acquisition, where are you shifting

that focus to? Right. So this is, it's a bittersweet moment for me because I cut my teeth on buying single family residences and doing that. Obviously, I still will. Like I still work with a lot of investors and we partner up, they'll fund the deal, they'll finance the deal, and I'll go and find the property and set it up and everything with my team. But we just started to realize how quickly that started to eat up, you know, gobble up our time, if you will, to source the deal, analyze the deal, overanalyze the deal, get in touch with the realtor. In this crazy competitive market, you can do all that work and still not get it, right? Even if you put in a really good offer, and you got to go and do it again. And then traveling and doing

all the remote setups as well, was really, really, really tough for us because we're a pretty scrappy team. Like, there's only three of us, really. Right now, I mean, it's expanding relatively quickly on a lot of different fronts. But for us, it's just really tough because I think in a perfect case scenario, what I started to realize was if I find, I can effectively set up at least one Airbnb a month, but if I was just really firing on all cylinders, I could probably do two with my current team. And that's great, right? If you could do two every single month, that's 24 in a year. That's certainly not anything to walk away from. But that's the max, right? I can only do 24 short-term rentals in a year working with investors. And I'm also splitting it

with those investors and I'm having to work with them and get info and analytics and answer questions. And really that side of it too has been very, I mean, in the right, So they want the information. So it does slow down the process to work with the one-off investor because it can be a little tough to just get everyone on the same page and get money moved around. And in this market, you need to act very fast, make offers and think last kind of thing, which is terrible advice. Don't ever do that. But this market is crazy, right? So I think honestly, this all started to come to a head when you and I were talking about partnering up and then I was like, all right, man, let's buy this campsite with 10 units on it or something. And then you're like,

dude, it's a good return, but that's a job. Ten units is crazy, right? And you're like, what if we just started acquiring luxury properties and that will cost the same as this 10 unit campsite you sent me? And I was like, okay, sure. So I started giving a lot of thought to that. And that was sort of, you know, the beginning of your and I partnership where we bought that house in Scottsdale. And setting that up was a bear, but it wasn't the work of setting up 10 properties is that equal the same amount monetarily? And I think the moment that hit me, I was like, okay, I think it's time to rethink how I approach short-term rentals. Yeah, that's awesome. I remember that conversation we had where we were kind of fleshing

out our options. And you said, well, look, we can get a, it was a ridiculous number, like 40, 50% ROI on these $400,000 houses. Let's just buy 10 of them. It's like, okay, we could do that. And then for the next year, this is all that we're doing is we're trying to manage these 10 properties we bought. What if we just bought one for $4 million that could do less maybe cash flow right up front, but it had a bigger upside. And we could, with that time, we would make more than the cash flow that we were giving up. And it was, I almost remember seeing like you freeze for a minute, like the little, like the little apple rainbow thing was spinning and you're like, wait a minute. That's not how I was ever thinking. Tell me more of this, how we would make more money with

the time you speak of. And that, I remember when I had that first same. epiphany that we often look at ROI. It's very seductive to just find the highest ROI you can find and it feels like progress to the human mind so we like to chase it. But in real estate, ROI is never pure unless you're investing in a REIT or in someone else's syndication with the money that you're putting into the deal, you're putting in time, effort, mental energy, you're thinking about it, you're having to go find people to do work. There's some frustration that comes when things break or a guest isn't happy. And there's a cost outside of just your capital.

It's very easy to forget that because we tend to only look at the ROI when it comes to the capital. And when I had that revelation, I realized like, oh, I need to think way differently about how I'm investing. So as you, you're sort of like newly born, right? Like you just got jacked out of the matrix and you've like opened your eyes for the first time. I think the red bill, if you will. Yeah, exactly.

Now you're in Zion, right? tell me what type of thoughts you're thinking, what types of properties are starting to catch your attention. Where's your mind going with your investing strategy at this point? Right. So fast forward to about, okay, I guess not fast forward, but let's go back to about two months ago. All right. And I get this very mysterious Instagram message from somebody and they were like, hey, I don't know if you'd be interested in this. I follow your channel, but I'm actually selling this hotel in New York. And it's a split motel. It's a seven-unit motel, I think, with 12 tiny home cabins and then two two-bedroom cabins and then full-size and then four RV spots. And then I was like, oh, you know, I get a

lot of messages like this all the time. And it's really hard to respond to all of them because, you know, when someone says, hey, I got this house, you interested? I'm like, maybe, but you didn't give me much information to analyze if I want the house. So I don't, probably not. But this person actually wrote it out. And I was like, okay, well, this was sort of around the time where I'm like, okay, how do I scale? How do I scale? I've done the one to 15 units. I've proven I can do that. And sure, I could go out and continue to do that. And as a matter of fact, I worked out a deal with an investor who wants to buy a hundred houses with me and my business partner. And he runs a fund. And he's like, hey, if you can get us a 10% return after your equity split and everything,

we're happy, we're good to go. And we're like, great. So I was just, I had to tell him. I was like, by the way, from a scalability standpoint, this is really difficult and it's going to take about two years to do that. And he was like, yeah, that's fine. And we're like, okay, cool. So we worked out that deal with him. But that's even scary to me because my partner brought that to me. He's like, dude, this is it. This is the Holy Grail. And I was like, man, that's a hundred houses we have to buy. That is really hard. So when I got this Instagram message from the guy who was selling this hotel, I was like, this sounds interesting. It was a little scary because it's a whole new asset class, right motels and hotels i know a lot of people have done them and they all say good things and they

all do super well we just had had their blink and ship on the podcast and she just did the same thing she buys these and i was like okay i know that a lot of people do these and everyone that i've talked to is always really scrappy and like very savvy with this and i consider myself relatively scrappy and savvy scravy if you will and uh i was like okay let's pursue this so i said hey sure you know let's talk about it he's like here's my my real real share-brokers info, give them a call, and let's see. And I was like, great. So I shot this over to my partner, connected them, and then we kind of started just talking about all the different logistics and really kind of figuring out if we wanted to do this. Because you have to also keep in mind,

as a real estate investor, I'm kind of anti-hotel as an Airbnb guy, right? Like, all of my videos are about hotels are evil and Airbnb is the way of the. future. So there's a little bit of dissonance here with changing my investment strategy. But ultimately, we are going to renovate this hotel and we are going to still listed on Airbnb. It'll still be an Airbnb property, but we'll also be hosting direct bookings. All right. So I definitely want to ask you about some of the hurdles that you've encountered because anytime you move into new asset class, it's guaranteed. Mistakes will get made. Things will hit you that you didn't see coming. You just have to accept that. But before I do, I kind of want to ask,

about how you're analyzing the property. So you have a large degree of comfort and confidence when it comes to analyzing a short-term rental. But a hotel is a little bit different. Was the process similar? Did you have to learn a completely new system? How did you figure out the revenue this thing was going to make? A few different ways. Yeah, this was a little bit tough. It definitely, you know, the concepts are similar. But yeah, it's a whole different animal because you're analyzing 20 units at one time and deciding, is there a taste for? this or is there a desire for this in the market? And so we started looking around at all the different motels and hotels in the area. They weren't really that great, but they seemed to be booking up

very heavily. And the owner left us with his pro forma and his books. The numbers looked pretty good. And he said, hey, I've only been running it for this amount of time. But based on what I know in the area, it should make X and this much. And it should be this kind of return. And we're like, okay, well, Thank you. We appreciate your opinion here. We do have to verify this, right? You know, everyone can say a high number. So we started looking into the seasonality of hotels and we just had to get a little creative, right? So we started calling different motels and hotels in the area and asking like, hey, what's your business? What's your busiest season? What, like, what are the dead seasons? Is it true? I hear that this is a really great touristy spot. Are you usually

booked up? And then, you know, all of them were basically like, oh, oh, yeah. we are booked up for the next three, four months straight. Then it's one or two months of dead zone. Dead zone. And then it gets crazy after that. Then we were like, oh, okay, good. And so we had to get really sneaky with that and asking the different locals about the seasonality and really trying to figure that stuff out. So basically, we had to analyze that. And then, of course, I had to also do the Airbnb analysis as well. So, you know, I have my own way of doing this, but basically I had to go and see what's my competition, because whenever I'm buying in any market, I'm running several audits. I'm doing an audit on Redfin and Zillow, just to see in general

what things cost. And then I also have to run an audit on Airbnb to see who my competition is and how good is my competition? Is my competition design forward? Are they small? Are they big cabins? What's the theme? Are they booking? And we found a couple of not as great Airbnb listings that were booking like crazy. So I was just like, okay, you know, all I have to do is figure out how to renovate and run a 20 unit motel. And when I do that, it should be successful. So when you were analyzing the revenue streams, are you looking at how it's going to book on Airbnb? Is that where most people are booking this hotel? Or is it also something where SEO becomes a factor as people are looking for a place to stay in this area. It's probably going to be a little bit more on the SEO side simply because right now

it is completely direct bookings. They are not on Airbnb. And so I actually, I like this because I know that based on the bookings, and we're getting bookings now and they're coming in. We were actually trying to stop the bookings, which we'll get into in a little while because we wanted to renovate the place. But it's booking right now. And based on how much it's booking, based off of this, you know, a little dinky website that we inherited, I mean, it works and it books and everything. but it's not the greatest and the SEO is okay, but there's a lot of work to be done there, but somehow people find it. We're trying to figure out how the heck are people finding our motel. I have no idea. I'm thankful that they are, but for sure there's an SEO component.

I actually just think there's not a lot of options in the area. And so when you type in motel in Tupper Lake, there's just not a lot. Ours pops up. So, oh, there's one other thing that we found when we were analyzing this market. There's a lot of, There's this other hotel here. It's a fancy word for saying hotel investor. And they actually just bought a motel down the road like at the same time or right before us. And they were doing a full renovation of that property. And so we looked into this person and basically everything they touched turns to gold kind of thing. And so we were like, oh, okay. So if this person just found this, you know, bought a hotel and they want to renovate it, clearly they've already done the

market research for us, right? They figured out that this is a good spot to invest in. So we use that, and then we took projections and, like, we also took past data. And then we looked at Airbnb comps and we called around and we got like a sense from the different locals and the different motels in the area to kind of find out when our hot season is and everything like that. So it was a little, it was a little bit of what they call internet sleuthing, but also, you know, general Airbnb research as well. And based off of that, there were a few things that were also working in our favor. The owner was willing to finance. It needed a lot. It was like, this is the ultimate burr, man. I mean, it is, needs a full gut remodel on the whole thing. So based on the fact that it was actually doing

pretty well in the current state that it's in, which is not not raw built standard. I'll put it that way. I was like, okay, well, if we make this nice, it should book a lot more and we can also raise rents. So what made you, I guess the person brought you the deal. So they said, hey, do you want to look at it? So you probably weren't looking at that area already. But now that you're in that area, what do you like about that location that would cause you to buy more property there? You know, I'm not sure that I would necessarily go the single family route out there. And I'll tell you why. That area is very rule. And it's very, it's not secluded, but it's very rule. And the vendor, there's a vendor shortage there. It's tough to find people to hire.

So for me, when I'm buying an Airbnb, I'm always looking for the Airbnb Avengers, right? And so I'm looking for my cleaner, for my handyman, for my pool service guy, for my landscaper, for my pest control person. And I need backups for all of those. And we have found that it is tough to find vendors in that market, just like a lot of the other markets I'm in where we're out in the middle of nowhere, basically. So from a single family resident standpoint, I wouldn't really do that. but because it's a hotel and there are economies of scale,

we have it in our budget to actually just hire a full-time on-site manager, very similar to like mobile home parks or RV parks or even storage facility units where there's someone that is dedicated and it's their job to run that place. So that sort of alleviates some of that dream team that I need to hire because we now have a full-time staff. We provide that full-time staff housing and then a relatively, you know, I think a fair price to live there. And actually, funny enough, we were striking out left and right.

We were not able to find people to help us. And we're like, uh-oh, we just bought this hotel. No one can actually work on it. And we had Heather Blankenship on the podcast, and she talked about this group of people called work campers. And these are people that travel around and they're effectively nomads, right? Digital nomads or they're always just looking for places to park their trucks that have campers and basically camp at the place and make money and that kind of stuff.

So I was like, okay, let me try that. And we posted an ad on one of the Facebook groups and someone was like, oh my God, this sounds exactly like what I would love to do. I used to work in hospitality and I used to work in hotels, like for the Marriott and stuff. So I know exactly what you need for this job. And we were just me and my partner were like, yeah, it's a little too good to be true, right? Like there's no way. And we interviewed her.

And afterwards we got off the phone and I was like, yeah, it's too good to be true. right? And he's like, yeah, I don't, I don't believe it. And I was like, I don't think so either. There's just, there's no way that she's like, perfect, our first candidate. And we called all the references and all the references gave glowing reviews. And we're like, man, you know, sometimes I do get lucky on the first try, right? But it happens less and less at scale. This is a legit problem. And I've run into this myself, not as often because I typically, my investing strategy is usually to find the best market, the hottest market, where I see a lot of growth headed and try to get there early. But a handful of times I have bought in rural areas or maybe

like vacation destinations where the only people that are going there are going to vacation. There's not a lot of people who live there as their primary residence. And so you don't have a workforce. And it's like when there's a problem, like you said, pest control or I'm running into this on one of my properties actually in the Smoky Mountains that has a pool. And in the middle of escrow, the seller could not get the pool fixed before we closed. But I had to. to close because of a 1031. So I was in a situation where if I close, I'm inheriting a problem. If I don't close, I'm inheriting a bigger problem because I'm going to lose, you know, over seven figures in taxes here. And we close and there's not a person that does pool repair

for months, right? It's really bad. I'm like, I'm going to have to find a person and fly them out to Tennessee to look at this. It's that bad because there's not a big workforce. So it is absolutely something to take in mind when you see an area and it looks amazing. Sometimes there's, there's reasons why that opportunity's there. So if you're listening to this and you are someone who's willing to travel and do that kind of work, please message me because I'd like to put together a system of like traveling like work campers, like you said, that could go to some of these remote areas and charge a premium to do stuff like fix roofs or fix pools, whatever the problem would be. But until something like that is going on, make sure you put that in your underwriting because I'm sure

like, I mean, how much did your butt pucker when you realize, oh, there's not people around here that can do this work? And I just bought a 20-unit hotel. I mean, I think the proverbial butt was puckered the entire process because we knew nothing going into this really about motels. We were just really leaning on the fact that we are a couple of smart guys that fail and learn from our mistakes and get smarter. That's how I think of it. So we sort of expected it. We sort of expected it. But every time we buy, it's exactly what you just said. Like, there's this opportunity.

And you're like, this is crazy. This is too good to be true. And then you find out that it's like smack dab in the middle of South Dakota or something. And there's not a civilization around for 50 miles. And you're like, uh-oh, what about done? That was us this whole time because we were like, yeah, okay. New York is obviously a very populated state. But out here, it really is kind of not a ghost town or anything like that.

but it's tough to find the work. So I think we were expecting it. We always find these houses. There's a lot of accounts that I follow like cheap old houses or mid-century modern hunt kind of thing. And they have all these amazing beautiful character-driven homes or these amazing mid-century modern beauties. And then they're like $200,000. I'm always like, oh, this would be the greatest Airbnb. And then it's in a place where the population is like negative three. So that's always the tough part. So we bought this knowing that the vendor shortage was real. But actually, just like you said, we actually have a contractor who reached out to my buddy. And I think he was a fan of the channel.

And he's like, hey, I'd like to be involved in your projects. He was working for a construction company. And he was just on salary. And I think he wasn't getting promoted in the way that he was hoping to. I can't really recall that off the top of my head. But basically, he's like, I'll come work for you guys. If you guys pay me to come and do the work, I want to put. I want to prove myself and then I'd like to start getting some equity on some of these projects.

And then we were like, are you willing to move to New York? And he was like, absolutely. And we were like, great, you're in. And he's been really great. So we actually flew our contractor out to New York and he's living there right now. He's cleaning everything. He's maintaining everything. He's meeting with contractors. He's budgeting. He's getting the timeline set for the next six months. And honestly, without him, it'd be pretty tough. And that's why we were relatively confident going into this deal because we knew we had a contractor that could sort of run the show for us while we were gone. Yeah, that's huge. That's why I was saying. If I had a system of a traveling contractor that you could put a business together that they're willing to do that and they could stay in the

property and then they could work on it, man, that would just be huge for the BP community if there was people that we knew could do that, especially if you're someone who lives in an area where wages aren't as high. Like if you live in Malibu, this probably doesn't make sense to you, but if you're in Louisiana, Mississippi, you don't make as much money, but you can work on projects in Southern California in New York and some of these more expensive areas, that could be a really good way to make some... It's a business idea of kind of been tossing around

for a while in my mind, and you definitely are highlighting the need for it. So let's talk about renovations, because that's a huge, huge part of opportunity in today's market, especially is the market's been so hot. They're even fixer-uppers, you couldn't find them. And then when you did find one, good luck finding a contractor,

because they're so busy working on the people that are putting their houses on the market and the people that just bought one that needs work as well as all the investors that are flipping houses and doing burs. They've been in short supply, but as the market cools off, you actually have an opportunity to get a contractor. So what's your renovation model look like here? What's your budget on this?

What's the strategy going forward? How much effort are you putting into the renovation to add value? Right. So this is a tough one because you can't really extrapolate your single family home knowledge to a 20-unit motel, right? everything gets a lot more expensive on bigger properties. But luckily, our contractor who's working on, he's worked on these types of projects. He's worked on every type of commercial development.

And so it has been extremely helpful for us in budgeting all of this. But effectively, right now we're looking at an entire gut renovation. There's not much that we're saving from this property. Like the seven-unit motel, that it was painted this like very bright aqua blue, which I don't know why this color follows me around, but that was also like the main central color in our Scottsdale house that I was like, no, we have to remove this color.

Why does this color exist? So the hotel is this very bright, vibrant blue, and then everything on the inside is just, it's in disrepair. Like not every single unit, but a few of them. My business partner went to go for inspection and final walkthrough, and he called me at like midnight,

and he was like, after he was done, and he was like, bro, there is a hole in the ground. And I was like, what do you mean? He's like, in the middle of this motel, there's literally a hole in the ground. And he, like, shows me. And I'm like, how is it booking? How does anyone stay? This can't be safe.

So we have effectively gone into this knowing that there will be nothing really salvaged except for maybe a couple of wood walls that are currently in there. But yeah, this renovation is going to cost us in the neighborhood of about $800,000. Okay, $800,000. And then what did you purchase it for? We bought it for $825,000. So we're spending just under the purchase price to get it flipped. Yeah, there should be like a title for that when your rehab is higher than your purchase price.

That's definitely a specific type of deal. Yeah. Is this a Burr situation? As far as hotels are valued, can you refinance it once the upgrades are done? Or do you have to wait until revenue is a certain point for a year or two before you can refinance to get that capital out? Yeah. So because it's seller financed, we actually, actually worked it out to where we are going to be financing it on an amortized schedule over 20

years, but it's going to balloon in three years. So we're hoping that by the time it's stabilized and rents are up and there's a history of rents, exactly what you just said. We can go to a commercial lender. Hopefully interest rates won't be like 27% APR and basically refi cash out, pay our investor back. This was a really opportune timing because we actually had an investor who had about I think $800,000 set aside, I want to say. And we had been trying to find a project for him. He wanted to build a treehouse village with us. And we were like, okay, let's do that. But it was hard to find land. All the places that I wanted to build tree houses in, I have talked about them a lot on the channel in different places. And they, yeah, I'm not going to say I ruined the market for myself

because that's not possible. But more attention has been brought to a lot of the different places. And so I was just like, okay, we were striking out trying to find... I believe it. That happened to me when I talked about Jacksonville like five years ago and the next, it was like within a month, all of a sudden stuff was disappearing off the MLS very quickly. Yeah, I'm not going to say I'm that cool, but... Your pockets is a powerful entity. Yeah, but there have been markets that I'm like, well, I haven't even, honestly,

I haven't even opened up like Redfin and Gatlinburg in about six months. Not because I've ruined it for myself, but because everyone has sort of ruined it for ourselves. And so now it's like impossible. I mean, you bought a bunch of stuff there. I'm honestly very impressed because it's a tough market out there. Although I do see some price cuts coming in every so often. But, you know, we were trying to find this land. As a side note, don't lose your thought. It's important to note that real estate investors, now that we have podcasts like this information that's readily available, everyone's talking on YouTube, the word spreads really fast. I mean, like imagine 60 years ago, first off, long distance investing was not even a thing that you could

do safely or that you would do. And second off, you would have never known about the markets you should be investing in everything had to be local. And now I've noticed this trend since I've been in this educational space that real estate investors are like locust that just move from area to area. So when we had the crash, you notice like everyone moved into the Phoenix, Arizona and Las Vegas markets and started scooping up properties because they got hit really hard. And then that sort of dried up and they moved into Memphis. Memphis was the big thing. And then after Memphis, it was Atlanta. Everybody was in Atlanta. And then I kind of got into North Florida. And so a lot of people moved into that space. And there was a lot of cash opportunities. And then

they moved on from Atlanta. And it became like hunting, Huntsville, Alabama was really, really big. And then Austin, Seattle. So like those tech hubs started to catch on. And then it moved into the Idaho area and Nevada. And now we're seeing like the Smoky Mountains was super popular for the last several years. But there's absolutely patterns where everyone hears that everyone else is buying and then they all go. And the reason I want to highlight this is it's very easy to be the last person to the party. And you don't know that you're the last person to the party, right?

Like you could be getting into a market that's already sort of peaked thinking, oh, this is what everyone's doing and you're all happy. And right when you start the game of musical chairs, they turn off the music and you get left stuck. That's true. And it compounds, right? So it's a compounding effect where everyone talks about it, more people talk about it. Oh, I heard this. And I heard it's a really good market.

Yes. So all to say, this is actually a really great side note because I really like the term, real estate investors are like locusts. We totally are because everything. It's not like I just find a market and I'm like, I have done it. I'm a genius. I've heard it from someone else, right? I'm one of those locusts.

It's human nature, right? We all want to cross the river at the same time as other gazelles. We don't want to be the one out there crossing the river. Well, yeah, we want to emulate success, right? And that's what I always say, emulate the grates. Go find someone that you really like and go emulate their strategy because there's a reason they're successful. And I think that that happens a lot on bigger pockets where we have a lot of these Titans come on.

It's like, whoa, I want to just do what they did. That sounds good to me. I don't have to do anything else. And so, you know, a lot of my portfolio and a lot of what I've done is just come from listening to the success stories of a lot of other people. But yeah, I mean, that, basically all to say, I was trying to find land to build this treehouse village for our investor, and he had the money lined up, and we just couldn't find land that fit from a zoning standpoint,

because we have to go legit, right? We have to get conditional use permits and engineering and all that stuff. And so it's hard to find something for an investor, you know, at scale like that. So I was taking a little bit of time. Then all of a sudden, this deal popped up. And I was like, well, you know, it's kind of in the same budget that the investor had. It's not quite as well. wacky or cool as a treehouse village, but it is a tangible thing. Because I think when you're working with investors, honestly, what it comes down to is how quickly can you deploy their money, right? I've had a lot of investors that they want a very specific kind of thing that they want us to execute. And I'll say, well, look, we can do that, but it can take five to 12 months to find

that exact thing. And so are you okay with an alternative? Like, what if I find this type of project? would you be okay with that? Most of the time they say, sure, because no one likes to have a million bucks in their bank account for a year, right? You want to deploy money. If you're a good investor, you're trying to make yourself broke

as possible by sending all that money out of your bank account into some new asset. And so this investor had his money sitting and we were like, great. So we went in and we bought it and a few trials and tribulations along the way, if you will, if you want to talk about that for a second, some of the hard lessons that we've learned.

Well, you said it was 20 years. units, how are those 20 units actually broken up? Is this literally, like, I'm picturing a building that has like a condo building type hotel, like the Hilton that you would go to and it's just 20 different rooms, or is this more of several different types of properties all on one location? Yeah, so it's the latter. It's a seven-unit motel, and those are all in the middle of the property. And it kind of just looks like a very long mid-century modern cabin, log cabin that's painted that bright blue I was telling you about. And then all along the edge of the property, there are 12 tiny cabins that are, I mean, I can't say off the top of my head, but I want to say like two, 300 square feet.

And then there are two, two bedroom cabins on the back of the property. I think it's on four acres. And then there's four RV spots. And so those four RV spots, we're going to eventually build out decks and put air streams on there. And the reason I like this strategy, by the way, is because obviously I like glamping and I'm working on permitting a 60 unit glamp site in Arizona. And I'm a big fan, but it takes a long time to permit this. Like we've been working on the permit for the Arizona glamp site now for about six months to about a year, depending on a few different variables there. But basically, this place is already entitled, right?

It's already got all the, or sorry, this place already has all the entitlements. So we don't have to go and run permits for all these tiny homes or anything. already came fully permitted. So the four RV spots are already permitted. We can just add our airstreams on there. It's not going to be a big deal. Or we'll just open it up to the public to bring their RV and just make our lives a little bit easier, probably. But one of the really hard lessons that we learned was that the transition of ownership was a little bit tricky. We hadn't really hashed out a battle plan with the seller because we were so focused on closing the deal. There was always stuff happening.

As you know, deals start to fall through. And then everyone's got to be like, hey, we're all on the same team. We all, you really want to sell it. We really want to buy it. Let's renegotiate. How are we going to make this work? And so we had like five of those moments. I felt like through that whole process, we're like, oh, shoot, this is going to kill the

deal. And then we would renegotiate and then the seller would actually give a little. And so we did that a lot. And we never really formally said, hey, what's the current schedule for guests? and when are they checking in? When are they checking out? Who are they? What's their information?

How do we get this information? What kind of CRMs are you using? We kind of closed and effectively the owner was like, all right, well, here's all the logins, have fun. And we were like, oh, shoot, we hadn't, well, we didn't even talk about this. And now in retrospect, obviously, this will never happen again because now anytime we negotiate this, we will negotiate that the owner of the hotel or motel that we buy stays on board for a month or two to help train the new staff and pass over everything. And so I think there

was, this is not something I blame the seller for. Really, I think I blame equal parts here on both sides because I was kind of hoping that he would just want to help. This was his baby. And I was like, oh, yeah, he should, you know, hey, would you stay for a week or two and help us transition? And he's like, oh, man, I really got to get back home to family. And we're like, are you sure? Because we could really, we could really use the help. And he was like, no, no, I'm sorry. And we were like, okay. And so basically, we did the worst thing you could do. And I hate saying this, but, you know, I am an honest and transparent person. But this was Fourth of July weekend. And like days before, we had to cancel on a few guests. And they were not happy about it. And I was not happy about it. And

we did our best to reason with them and say, hey, I am so sorry. We just, bought this. We were thinking maybe we'd get a little, we didn't even know this booking existed until we closed and it was that kind of thing. And some of them took it okay. One lady was like, oh, I'm going. I'm going anyways. Try to stop me. And we're like, literally no one is there. And so basically we actually ended up working it out with her because the owner was like, well, hey, I keep an extra set of keys here. Do you want to, if you want to let her in, she can just stay. And we're like, all right. I mean, even if she destroys the place because she's not vetted or did not give us her information. We're remodeling it anyways. And so that was like one,

one kind of oopsie on our spot was just not having a battle plan for transition of ownership. This is something that's like not super clear or tangible. And so for anybody that's working to do this, you definitely want to have a lot of conversations outside the negotiation with a seller on how to break and run the property. Because if you try to figure it out yourself, I've learned the hard way, it's going to be very difficult. I'm really glad you're bringing this up because hotels are, and really this is a trend in general with the hospitality industry becoming bigger in our space. Hotels are a mix, just like an Airbnb is, of real estate and business. It's not like you're just buying a single family home and renting it out to someone with a year-long lease. That's still a

form of a business, but it's much more passive. When you're buying a hotel, the revenue is higher because there's more work that's going to go into it. So if you were buying a pure business, like you were buying a software company or you were buying a pool maintenance company, like I mentioned earlier, it would be customary to negotiate into the terms of that deal that management is staying on for this period of time to help with transition. You see this all the time. Like Patrick Pet David just sold his insurance company.

And part of that was he had to stay for a year to get the new people trained up that bought it because they don't want it to immediately run into the ground. Imagine that you're flying a plane and someone says, okay, I'm coming into take over flying the plane, but they don't know anything about how to fly that plane. You want the pilot sitting in the co-pilot seat for a while. So they kind of get it down. And this is the first, from my understanding, like, legit business that you had bought so I can understand it wouldn't have occurred to you to even think about, well, you think you're buying real estate. And you're like, well, I'll just have my team go out there and get it ready. This is all happening in your subconscious. And then you close.

And then, oh, no, like, what do we do now? There's no one there. I didn't think about that. there. There's no employee that's on the property. How are we going to do any of this? Well, I need time to get it ready than these bookings. So that's probably a terrible feeling, just the pit of your stomach got to sink. Like, oh, no. It was because I, basically my business partner slash C-O who runs operations, like he was running this and he was really spread thin also trying to learn how to buy a hotel, you know? So it's not his fault. Okay, you know the phrase, you don't know what you don't know. It's very true. You don't know what you don't know. We did not know. And I empowered my C-O to do this. And he did really crush it. He crushed the negotiations,

most of the actual coordination of all this stuff. But this didn't really translate for both of us. Like we're like, uh-oh, we dropped the ball here. And for me, with the way I've empowered like my team, it's like, you own this, right? You're running it. But when something like that happens, it is ultimately a reflection of me and my management for not having been more involved in asking those types of questions. And so that's just a, you know, a management failure that I'm like, okay, cool. I get it now. Like I failed there. I'll make it up on the next one and we're going to crush this. So it's not a, it's not anything that's like detrimental to the bottom line, but it is detrimental to the bottom line of my heart. You know what I mean? No, I'm just kidding.

Well, that's how you know you're the right person to be doing the deal. Because the reason it hurts your heart is you have a standard and you missed your own standard. Yeah. And high standards are the hallmark of success. That's what you want to do business with people that have high standards. That's what makes people good at anything. Tom Brady is a better quarterback than other quarterbacks because he has a higher standard for what you expect. So if you hold high standards and you push yourself, it is inevitable that you will feel the way that you're feeling right now, Rob. So I'm not judging you for that. I totally understand. I think that it takes some courage to come up and share. Yep, these are all the mistakes I made with our audience. So I just want to thank you for that.

And anybody who's listening to this is like, oh, see, that's why I would never do whatever I'm going to do. that's okay to make mistakes. You have to make these mistakes. It's going to make you a better overall investor and business person in the long run. Well, that's why I always say you don't become a real estate pro by everything going right. You become a real estate pro by everything going wrong, right? So I recognize that.

And that's, I do, I'm far enough along this where I'm like, okay, it's not a big deal because I'm going to be better for it. I will say the reason it affected me as much as it did was because my philosophy, what I teach to my host Kent students and everybody out there's never cancel. No matter what it takes, you never cancel on a guest because these guests made reservations.

They plan their life around this. And then if you cancel on them, everything's booked. And then you really end up putting them in a bad spot. And so this directly just breaks my number one, like, non-negotiable. But we did everything we could. We started looking at flights. The flights weren't going to get in in time. It's out in the middle of nowhere. So it's not like you could just fly to Tupper lake. And so it was like all this stuff where we're like, okay, all right, it will cost us four grand to get out there. We can rent a rental car. We'll go to this airport. We'll go here and then we'll get in at four o'clock. We'll check them in. If they check in, and so, you know, that Zach Goughlinock is like math meme. That was us. And it just ultimately was, it was going to cost us money to go out

there. And it wasn't even going to work. We just, we put out ads on Craigslist. Like, we need a one day, you know, like worker to help us with this stuff. And it didn't work out. So that's okay. lesson learned. Another thing for us was that I mentioned this earlier, we, oh, and also want to say, to the credit of the hotel owner, we did kind of hash things out a little bit on, on Instagram. And he was like, look, here's how I felt. I didn't realize that this is what you needed, but I'm happy to actually go back out there and teach you the systems and teach whoever you hire how to run this hotel. And I was like, great. Okay. Awesome. I'm sorry for me. making you mad. You know, like all that kind of stuff. So we squashed that that bug too because I was

I was a little miffed by the whole scenario or the whole situation myself. So anyways, that's kind of that big one for us. The next one is we didn't have the Airbnb Avengers. We were kind of hoping that the owner had a Rolodex of all the different vendors and he did not because A, it's really hard to find the vendors out there. So what did he do? He did it all himself for like six months. He was the cleaner, the pool guy, the pest guy, the plumber, the electrician, and everything. And so I think he burned himself out so much. Like, I think he had intended to buy it. I don't know for sure. And then say, okay, I'm going to clean it up, remodel it. I'm going to hire my teams. And then I'm out. Couldn't do any of that.

Couldn't hire anybody. And so he said, all right, I'll just do it until I find someone. He never found someone. And after six months, I think he was just like, I'm out. This is terrible. And again, this is just speculation on my part because this is how we're feeling now. It's like, oh, there are no vendors. He was the vendor. So that was our tough thing. Now we're having to hire a full-time property manager, all good there. Our contractors out there all get there. And contractor, it's his job to go out to supermarkets, hotels, motels, mom and pop shops,

and just start asking people, you know, asking the cashier, asking the owners of those business is, hey, do you know anybody that's looking for work? Hey, do you happen to know any handymen in the area? Do you know any cleaners in the area? By any chance, do you know a pool guy? A lot of these relationships and these vendors have to come creatively. And that's what a lot of people don't understand about Airbnb. They think you can just go to TaskRabbit and hire everybody, which I do. I hire a lot of TaskRabbit people. But sometimes you need a human touch that an app isn't going to help you with. And so you have to get, you have to take it to the streets, as they say, find the people that are going to be running your operation.

Or the woods in this scenario. Right. Or the mountains, really. It's actually on a lake. So the woods, the lake, the streets, all of it. So yeah, no vendors, but we're working on it. Did you know your house gets bored when you leave? I can't actually prove that, but it probably misses out on the action. The footsteps, the late night fridge raids.

Yeah, when you're gone, your place is basically on unpaid leave. It's sitting there in the dark thinking, I could be contributing right now. Your side room wants a side hustle. Even your Wi-Fi is like, we could be networking. You're on vacation, spending money like it's a sport, while your staircase at home is fully capable of sending your income upwards. Here's the twist.

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problem there, but that's still something's going to be popping up in the future. You've got the management issue like, okay, I bought this place and now how am I going to run it? And you've had to overcome that. Any additional ones before we move on that you can share of things that went wrong that you just weren't expecting? Yeah, just one big thing. And that's, there's no roof. No, I'm just kidding. There are no automations in place at this motel, which is really big for an Airbnb business. The reason I have no issue running 15 Airbnbs is because I've got automations. I've got automated messaging, automated check-in, automated reviews, automated pricing, all that stuff is all automated and so it helps chop out 80, 90% of the work involved with running those Airbnbs.

And there's none of that for this hotel. And rightfully so, because typical hotels, you got someone behind the counter, they go and they check you in and boom, you're good to go, right? But we are wanting to make this a very hybrid, boutique hotel, Airbnb experience type of thing. So as I said, we hired a property manager. And this actually goes back to the whole like, oh, it's a job. And like the thing with that campsite, was there wasn't anyone living on site, and I don't even think that was really an option because it was so far out in the middle of nowhere, even more than this hotel. Whereas this, our automation is hiring a full-time staff member to run that motel for us. So it won't really be like running 20

units. It'll be like running a business that we've empowered someone to actually do most of the work for us, and we'll be supporting with the bookkeeping. And it's our job. We told the property manager, we're going to do everything we can to automate as much as possible about this motel. We're going to try to automate check-in. We're going to try to automate cleaning schedules. We're going to try to automate supply deliveries and inventory checks and all that stuff. So you have to tell us, hey, this one thing, I keep doing it, it sucks up 40% of my time. Is there anything we can do about it? And then we will figure out what we can do to automate that. And so we told her, we're here. We want to help this be.

we don't want it to feel like you're managing 20 units. We want it to feel like you're managing a couple at a time because at the end of the day, like my contractor, he's out there right now and he had to clean 10 apartments or 10 units like two days ago by himself. And I was like, dude, you are the man. So I think with a little bit of automation with the check-ins and checkouts and with the cleaning scheduling and all that stuff, I think we'll be in an okay spot. I appreciate you sharing that. It's some really good stuff there. One of the cool things when you get into bigger real estate is that excess revenue that it generates can be used to hire the people to run it. You hit the sweet spot where if it generates enough revenue, you can hire someone to do the work and make it more

passive. When you're kind of playing in the smaller spaces, it doesn't make enough revenue for you to pay somebody to manage it so you end up managing it yourself. So kudos to you for moving on that. Before we get you out of here. Let's talk about the numbers on this deal. So you said you bought it for, it was 825? We did. We bought it for 825 and we, it actually started, it was either 950 or 925. I'll go 925 for now. And so those numbers didn't really work for us when we first started. So we really went back and forth quite a bit. And so 825 at the end of the day, and I think I said this already, but it was amortized over, Oh, the seller was willing to finance it, which is why we were down to do this, because I think if we had to go and get commercial lending, it would have muckied up everything with the investor

and trying to get that, all, everyone on the co-signing and everything. So seller financed, and then 30% down, which was relatively hefty for us, but it was worth it. And here's the cool part. Oh, man, I love this part. The interest rate is 2.75%. Yeah, that's nice right now. That'll make it be able. work. That was during, it's not like we got in right before the rise of interest rates. This was as it was all happening. So we, they originally, I think, wanted seven or eight percent, which is, it's not totally unfair. I actually think that's where market rate is right now. Yeah. And I think that's actually pretty common for owner finance things because, you know,

it's either, it's usually with an owner finance, you have to concede a little bit, right? You have to give them the price they want and the down payment they want and the interest they want, because they're like, hey, I'm financing it. So you got to be on my terms. So I think what it came down to the phrase that comes to mind here, it's like, you can either have your price in my terms, but you can't have your terms and your price. And so we went back and forth on this. And effectively, we bought this at an 11 cap, which is pretty good. We were really happy with that. And after our budget of $800,000 to renovate this place, we'll be all in from a cash standpoint, like $1.1 million, but if you're talking about the actual total price here, we'll be all in at

the, I don't know, like $1.7 for this whole property. And we're hoping that rents will be in the neighborhood of about a million dollars gross with a net operating income of $750.5,000. $50,000. Oh, that's solid. Yeah, it's really good. That's best case scenario pie in the sky. If I come out there and I do do my thing and I hit my marks the way I usually do, that's the best case scenario. And so obviously, if we sold that at a 10 cap, it's a pretty good deal. Appreciate you sharing the details. Is the plan to sell it? Is that what you think you're going to do once you improve performance? It is hard to say. I mean, right now, we have that balloon at three years. So it would make sense to either refinance it or resell it. I don't know.

I don't know. I know, like, it's just, if I sold it, let's say we sell it for 7 mil or something like that at just like a 10 cap. Then I got to figure out what to do with that 7 mil, right? Go into the next thing. So I think I would like to maybe just write out the cash flows on this. I think the $750,000 net operating income between me, my partner, and the investor will actually be pretty good. Like, it's a nice little cash flow thing. So we'll see. I mean, everyone always says, oh, I'm going to hold it, and then they get a really juicy offer. And it's like, all right, I guess I'll sell. But for now, theoretically, I think I would like to add to the cash flow of my business because I have never paid myself from cash flow. I always reinvest it. So I'd like to think one of these

days, I'll actually pay myself for all this stuff. Well, the cool thing with a property value as a commercial deal like this one will be is that you win in two ways with cash flow. A, you just get more money, which is always good and you increase your return. But B, the property. The property will be valued based on the improved performance of the cash flow. So if you decide you want to sell it, it's not like you gave anything up. You actually made it worth more by focusing on improving the cash flow. So it's kind of a win-win no matter how you look at it. Yeah. Yeah. And then just the apocalyptic kind of nuclear scenario. And this would really just be, I mean, if we just really didn't change much, it's, I think about a half a million dollar gross with

the NOI of 250. And so, yeah, we're going to really design this. I mean, this is going to be, a very boutique, aesthetically driven, beautiful property. We've met with our interior designers on it. They've presented the mood boards. It's going to be a whole different property by the end. So I'm pretty confident that we'll hit our marks on the investment side. But honestly, any scenario from the 500 to the million dollar mark for us on the gross revenue, it's a pretty good scenario for us. All right. Well, thank you for sharing that. Thank you for sharing some of the obstacles. Thank you for going into such amazing, beautiful depth on this deal. I learned a ton listening, and I'm sure everyone else can say the same. If you guys enjoyed this

episode or if you want to know more about this deal, first off, go to Bigger Pockets YouTube channel and leave us a comment. Let us know what you're thinking as you hear this. Rob, if people want to get more intricate detail about this, where can they find out more about you? So I did a YouTube video on this on the Rob-built channel. It's called I just doubled my Airbnb portfolio overnight, which is another cool thing that I didn't really talk about, but 15 units, about a 20 unit motel. I got 35, just like that. Over the course of one month, I doubled my short-term rental portfolio, and that's a really cool thing to be proud of. I think I'm like, okay, that's cool. I did it because I worked so hard for five years, and then in one month it all changes, right? So you can go to

YouTube and you can watch that video, give it a like, shoot me a comment, and then you can find me on Instagram at Rob Built. What about you? Follow me at David Green 24. have a very boring name, but that makes me easy to find. And let me know what you're thinking. You can also message me through that Bigger Pocket system. I do my best to try to keep up with that. Rob, this has been fantastic. Really appreciate you sharing all this stuff. I'm going to let you get out of here. This is David Green for Rob Hotel Motel Holiday Inn, Abasolo. Signing out. Thank you all for listening to the Bigger Pockets Real Estate podcast. Make sure you get all our new episodes by subscribing on YouTube, Apple, Spotify, or any other podcast.

platform. Our new episodes come out Monday, Wednesday, and Friday. I'm the host and executive producer of the show, Dave Meyer. The show is produced by Ian K. Copywriting is by Calicoke content, and editing is by Exodus Media. If you'd like to learn more about real estate investing or to sign up for our free newsletter, please visit www.com. The content of this podcast is for informational purposes only. All host and participant opinions are their own. Investment in any asset, real estate included, involves risk. So use your best judgment and consult with qualified advisors before investing. You should only risk capital you can afford to lose. And Remember, past performance is not indicative of future results.

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