BiggerPockets Real Estate Podcast - 968: Making $10,000/Month PER Rental with These Guaranteed Cash Flow “Contracts” w/Noble Crawford

Episode Date: June 10, 2024

Want to know how to make millions WITHOUT owning real estate? Rental arbitrage is the strategy for you. And maybe you’ve heard about it before, but we promise you’ve never heard anything like this. Today’s guest is bringing in millions of dollars through “guaranteed” rental arbitrage contracts that last YEARS. You heard that right—guaranteed rent for years, often at the highest price on the market. And you don’t need to own a single rental property to try this strategy. So, how do you get started? If you’re looking to make big money with big deals but don’t have the deep pockets to buy a hundred-unit apartment complex, Noble Crawford has what you need. After choosing his wife’s health over his day job, Noble realized he needed an income stream he could depend on—one that wouldn’t be ripped away from him when life’s challenges arose. He learned about Airbnb investing and, by default, rental/Airbnb arbitrage. When the opportunity came for him to house medical students in need, he jumped at the chance and found a seriously lucrative investing avenue. In today’s episode, Noble will walk through exactly what you can do to start making tens of thousands, if not millions, with rental arbitrage. Plus, he’ll share how to get the deeply-desired government contracts that guarantee you top-of-the-market rent for YEARS. In This Episode We Cover How to use “rental arbitrage” to invest in real estate without owning a single property  The lucrative government housing contracts that can make you millions (seriously!) How Noble gets up to $10,000 per month per unit with these lucrative cash flow contracts Crucial first steps to starting your rental arbitrage empire (don’t get these wrong) Exactly where to find and how to get in touch with agencies that are looking for housing  And So Much More! (00:00) Intro (01:23) Cash Flow “Contracts” (04:38) $10,000/Month from ONE Rental? (09:23) Leaving His Job (12:20) Moving from Airbnb to Contracts (18:44) How to Compete for Contracts (26:30) How to Get Started (35:01) Connecting with Agencies (36:53) You NEED This Document Check out more resources from this show on BiggerPockets.com and https://www.biggerpockets.com/blog/real-estate-968 Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Email [e-mail]. Learn more about your ad choices. Visit megaphone.fm/adchoices

Henry, is this the coolest interview we've ever done together? I'm fairly certain this is probably the coolest interview I've ever done. I usually like to stick to my guns, my bread and butter, but boy, I am definitely looking into this strategy. And the bar is very high because we get to interview incredible investors with amazing stories and strategies. But I don't think we've ever immediately, upon concluding an interview said that we were going to both try and do this exact strategy together. Yeah, today blew my mind. So let's go make some money. Definitely.

Welcome to the Bigger Bockets Real Estate podcast, everyone. I'm Dave Meyer, joined today by Henry Washington. And today we're talking with Noble Crawford, who has cornered an extremely cool, profitable slice of the midterm rental market. Noble books long-term contracts with government clients and other types of businesses and agencies. And today, we're going to break down why direct booking makes sense for so many investors and why it's different from other platforms like using Airbnb or VRBO. We'll also talk about

how you can actually get started yourself securing long-term contracts for more consistent cash flow and higher profits. Yeah, I think we've got people on the edge of their seats, so let's jump right in. Noble, welcome to the Bigger Pockets Real Estate podcast. Thanks for joining us today. Thank you. Thanks so much for having me. Oh, it's our pleasure. So Noble, you work in sort of the hospitality side of the real estate investing world, short-term rentals, medium-term rentals. And you focus on direct bookings. Can you just start by telling us what that is in the first place? Yes, absolutely. So direct bookings would be considered B2B, business to business, right? And so unlike, you know, someone who focuses on B to C, business to consumer, or business to customer,

like, you know, an Airbnb host, for example, we typically go after. direct business with corporations, with different entities, different organizations. So that's our specialty. And what kind of organizations are the businesses you're working with? Great question. So it ranges. It could be corporate, could be health care, higher education, could be relocation, military, federal government, aviation. So it kind of ranges a little bit. So all the businesses is what you're telling me. Yeah. Did you leave anything off there? anyone who travels, basically. Pretty much.

And why do you focus on this subsection instead of going direct to consumer? So what we have found is that it's very much what we consider a blue ocean strategy. So unlike folks who are focused on the transit guests, right, those weekend travelers and three to four night stay guests, we focus on a guest that is not as, there's not as much competition there. right? And so because we're dealing direct with these organizations and these corporate entities and things like that, it's just a different type of customer. And it produces higher revenue. So that's why we like it. Okay. You could have just said the end part. I think that's like. Here's more money, Dave. That's why we do. Okay. So on these contracts, like what do they typically look like? How long are they? Are you renewing every month, every six months, every year? Great question. So typically, more often than not, they're 30-day plus, you know, our opportunities. Those can last anywhere from is something as small as 30 days to as much as five years, and then everything in between. So they can go from midterm to long term pretty quick. Did you say five years? Absolutely, five years, yes. That is incredible. And it's cool that there are 30 days or more because then you avoid all the regulation and issues that, you know,

short term, less than 30 day people may have to worry about. A hundred percent. And just so I understand Noble, it's the contract is with the business. So it's not necessarily the same person staying for five years. But you, I'm just going to make it up. You say you start, create a contract with an airline, and they just use it as employee housing essentially for whomever needs it at whatever point during those five years. That's correct. So it differs a little bit between each of those verticals I described.

However, that's the general concept. So yes, it could be, you know, someone, an organization sending their employees or their people or their contractors in and they change at different intervals or it could be, you know, a specific individual within an entity or a corporation that's staying for a much longer term. So I think this concept, like, I think people generally have understood this concept, but maybe not known quite how to execute it or what it looks like. Would you be able to just briefly give us an example? So we've got, let's do government, medical, airline and business. Give us an example. Give us an example. of a contract, what kind of property they would typically demand and like what kind of rents or

profit you're able to make. So on the government side, for example, so the government pays a specific rate per night. It's called a GSA lodging per diem. Right. And so with that rate, it's capped, you know, at a certain amount per market. And so when a federal contractor, a federal employee, a military service member, whatever, what have you, is coming to stay at a specific lodging facility, then that's typically going to be, you know, at a specific rate per night. So let me give an example. So there are contracts whereby, you know, a pilot's mechanics. They come to the area. They're going to do training or recertification, right? And so with that training and recertification, the pilots stay in 30 nights, the mechanics are staying at two-week intervals.

And so because they are going to be there for an extended period of time, they qualify for this GSA rate. So in our area, as an example, that rate will be 167 a night, right? So, So for a pilot coming in at 30-day intervals at 167 a night, that's $5,010 a month. For mechanic coming in at two-week intervals, right, at the same rate, you know, that's half of that amount, right? And so, you know, one of the beautiful things about this space is, particularly with the government, when you have that happen, you can use different types of real estate assets. For this use case, we found that apartments work best, right? So it's very much an arbitrage player, lease arbitrage, right? And so mechanics coming into a one-bedroom apartment might cost you $1,500 a month in rent, because.

couple of hundred expenses, but then the cash flow is sizable because you're generating $5,000 a month per door in revenue. Conversely, with the mechanics, they're coming in two-week interval. So you can actually double them up. You can double them up in a two-bed, two-bath. It's going to generate 167 a night per individual times two, so that two-bear room can generate $10,000 a month, right? And it might cost you a couple of thousand dollars. So it's crazy. Yeah. Go ahead, Dave. I have so many questions about this. This is amazing. So first of all, you don't even need to owe these properties. You're just doing arbitrage, which for everyone who doesn't know what that means, there are ways where you can be, you know, get a lease on an apartment. You can rent it from a different landlord. And then if the lease allows it, you can rent it out to further people. So that's a perfect example here. And the thing that seems crazy to me about this is good crazy is that you're just guaranteed. you know exactly how much money you're going to make, right?

So like when you take out that master lease, you already know exactly what your revenue is going to be because the government's paying you a set rate every single night, and they're paying for every night for the extent of that contract, right, even when maybe they're not doubled up or maybe no one's even there that night. Correct. So the great thing about the government as a client, right?

When you become a federal vendor with the government, it's very much guaranteed revenue, first and foremost, right? And then a lot of times, especially for lodging, accommodations, housing, those type of contracts, those are three and a lot of times five-year contracts and sometimes even beyond. So these are long-term contracts and they're guaranteed revenue over time. So it's beautiful. So if I'm hearing this right.

Henry's speechless, by the way. He can't even talk. I'm doing the math in my head. So essentially what you're saying is, correct me if I'm wrong. you can go out wherever these government contract requests for proposal are, see what they are, apply for them, get them, and then go get the asset to service that because you already know what your income is going to be. Is that, am I hearing that right? You're hearing that 1,000%. So the beautiful thing is you can run the numbers on the front end,

right? You can actually go look this up, right? So people listening, maybe watch. watching the YouTube, just go Google. GSA lodging per diem, putting your zip code to your city, it's going to tell you what that nightly rate is, right? So then typically you just multiply in that times 30 nights, right, and then for the leaf of the contract term. So you'll know on the front end, you have a very good indication of what your profit margins will be before the ink is even wet on the contract. Then once you have the contract, you can leverage the contract to then go get the inventory, i.e. arbitrage, to service the contract. So it's a beautiful thing. Wow, and this is just government contracts, one of the different categories of entities that Noble works with.

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Fast, simple, reliable. That's Dominion Financial. Check them out at biggerpockets.com slash dominion. That's biggerpockets.com slash dominion. Welcome back to the show, everyone. We're here with Noble Crawford talking about how to secure long-term contracts for long-term cash flow. Let's get back to it. So Noble, let's just back up for a second here.

What were you doing before you got into investing? So immediately prior to this, I was running. running a marketing agency. I did that for a few years. And that was on the tail end of, you know, being just a normal W-2 job. So I worked a normal W-2 job. I did that for years. I actually came from, I have a hotel background. So I have a hospitality background. I work for all of the major brands you can think about. And then I went into the tech industry. I was doing tech sales. Long story short, my wife gets sick. She is a brain tumor. We have to get it removed. And, you know, after, after that time when she had the surgery or whatever, we ended up having to, I had to, I

to make a decision to either stay home and care for her, you know, if she recovered or go back to work. And I decided to stay home. So on the tail end of that recovery, you know, I get called into the office and the CEO just ripped me in front of everybody for having dismal sales numbers while I was home because I was commissioned sales rep while I was home caring for my wife. So I just decided in that moment I'm going to grind and work myself out of this, this W-2 job. And so I have my time freedom and I'm able to execute and do things like I want to and be there for my family. And so that's ultimately what led me to, you know, being interested in real estate. You guys were around back then. I had been listening to your podcast for years, but I was introduced to short-term rentals in 2017,

and that's kind of where everything started. I feel like a lot was said there because there's a lot of people kind of in this boat, right, where they want to be able to do something like you did, which was stay home and take care of your spouse who needed you to be there and didn't have a job that allowed them to do that. Fortunately, you did have a job that allowed you to do that, but your income took a hit, right? And because your income took a hit, you had one of those epiphany moments at work where you realize when you're in the office that like, hey, I need to put myself in a position where I don't have to be in this position anymore. I had a very similar epiphany experience at work when we all got shuffled into an auditorium one day. And everybody

knew a layoff was coming. We didn't know if we were getting let go or we were getting to stay, but we knew one of the things was happening. And I remember standing in that hallway, waiting to go into this auditorium to find out if I was going to lose my job or not, that I said, I never want to give somebody the power to put me in this position again. And so I think it's commendable that you didn't just have that feeling, but you took action on it. And I think it's extremely commendable that you were able to make a choice to stay home with your wife. and do what you had to do for your family, man. So this is a, I just didn't want to gloss over how special that is.

Thank you. Thank you. I appreciate it. Appreciate it. Well, I'm sorry you had to go through that difficult situation, Noble, to arrive at where you were. But yeah, I agree with Henry. I want to commend you for handling it with grace and figuring out how to make it work

for you and your family. So back, this was back seven years ago, it sounded like, like what made you choose short-term rentals over other strategies you might have considered? A good question. It's a funny story really because I had no idea what short-term windows were. And it was actually my dad, if I remember correctly, he was watching a guy on YouTube, watching YouTube videos about short-term rentals. And I had just exited my job. I was trying to do the entrepreneur thing. I started a podcast. I was interviewing entrepreneurs and all this stuff. And he said, well, here's this thing in real estate called short-term rentals. And so I went and watched the podcast, link with a gentleman,

went to a mastermind out in California. And then me and my wife, we were like, we could do this back home in Texas. We came back, put our heads down and went to work. And then the rest is kind of history. So that's great. I love that. It was a family affair too. You all bought into it together. You know, given your hospitality background, did you go straight into these B2B businesses? Like, did you feel more comfortable there? Or did you originally start where I think most people who are interested in short-term rental start, which is with the direct booking platforms like VRBO and Airbnb. Good question.

Yes, we started very much. We were introduced to the idea starting as a kind of quote-unquote Airbnb operator using the rent rental arbitrage model, lease arbitrage model. And so that's how we got started. But quickly into the first like couple of years, we realized that we didn't really have control over what happened with these other platforms. you know, the guest experience, we didn't have control even over that per se. And so I had a background in my commission sales job where I worked specific verticals. Ironically enough,

the ones that I mentioned at the top of the show were the same verticals that I worked in my commission sales job. So I had this epiphany moment. I had a light bulb moment where I'm like, wait a second, why am I not, you know, leveraging what I know and learned in my previous W2 job in this business? And then more specifically, certainly with the government contract stuff because I was doing that in my previous job. And, you know, once we hit that switch, it was just up into the right. So you decided, you went from doing sort of the traditional way of doing it. Then you moved on to more direct bookings. Was it easy for you? Like, did you have a Rolodex? Or how did you land that first contract? Because I'm sitting here thinking,

man, I got to start doing this, but I wouldn't even know the first step to start looking. It's interesting because the first vertical that I applied the strategy in was in the health care side, right? Now, for most folks, they're thinking about travel nurses and stuff like that because that's very common in this space, right, in entertaining that audience. But for me, my background, I actually, one of my verticals was higher ed in health care back in my W-2. And so I had a contract with a university, had an osteopathic, you know, school of medicine. and a lot of postdoctoral students and stuff were having to attend there to, you know, get ready for their practice. And so they very much were staying in off-campus housing at the time. And this is what I realized when I worked there.

So I thought, why don't I go back to that same university where I had some more connections and find out how I can leverage some of our housing for these same type of students? So that was my first en route into a vertical that just happened across kind of health care and higher education. and then it just kind of double down from there across different verticals. That is so smart. I think I know we as real estate investors still don't have any clue about how many different verticals are out there

and the need for housing for these different businesses. Like this is, there's really, what do you call it, a blue ocean strategy? I understand why you call it that now because there's definitely a need and these businesses aren't set up to just be able to service housing. And so what happens, and correct me if I'm wrong, but what I imagine happens is these businesses need to service housing. And so they end up doing it, but they do it in a way that's probably not super desirable for the people who have to live in that housing.

Because if you're not good or don't understand how to go find quality housing for your people, then you probably just end up with bland property. that don't have amenities that the people need, they don't meet the needs of the tenants. And so I'd imagine you as somebody who can curate spaces, can, and has more of a background of being able to provide serviceable housing, that you really can probably set yourself apart because it's not just, you're not just renting like a hospital room with a bed. You're actually providing them a decent place to stay. 100%. I can. So real quick, I give you guys a real quick brief case study. So a student of mine,

student in mind, he's looking, we're looking at this contract opportunity. We identified, and it was calling for hotel rooms. It's calling for hotel rooms. Now, both of us, we have a background short-term rentals, right? So we know how to, you know, furnish a property, make sure it's nice, you know, warm inviting for the guests and all that stuff. So what we said was, hey, this contract opportunity is called up for hotel rooms. However, we want to introduce a corporate furnished apartment, right? Short-term rental, right? It's an option because we know product versus product like there's no comparison, right? So more square foot is just a nice, everything included the whole nine yards, right? And so we actually bid this opportunity using

apartment complexes. So we went, we found a new development complex. It was class A new development community negotiated with the ownership to say, hey, we want to take 50 doors because this was a 50 door minimum opportunity. We want to take 50 doors. We know you guys are in our lease up. We're going to take them furnished. We're going to put a government contract client in their five-year deal. Should we win it, right?

Went to the bid that, right? The agency contacted my student and said, not only do we want to award you the contract, we want to award you the contract because we have never seen this before. We really love this option as compared to the traditional hotel room space that we listed in the contract. He won a $7.5 million five-year contract. Whoa. Right. Oh, my God. Using it. Jesus. Oh, my God. Wow. That's unbelievable. There's a lot to unpack with that story. So I just, I want to, I want to start with the first sort of foundational question here because recently we've talked a lot on the show about how to compete as an Airbnb host. Like there was this gold rush over the last few years and now you have to be better at the business. You have to be good at generating demand. I imagine that when you're working with an

agency, government contractor, like the things that they're looking for are different than what, you know, a family going on vacation is looking for. So can you just give me an overview of, like, how do you compete as an operator like yourself to get these contracts? Like, what are they looking for and how do you distinguish yourself? Great question. Great question. So first and foremost, one of the key things to understand when you're dealing with the federal government, so the federal government, because they're as large as there are, there's over 400 federal agencies. A lot of people don't realize that. And so they're all buying for different products and services. And so when they have a need, typically that need is in bulk, right? There's no different

for housing. When there's a need for housing, lodging, accommodations, that need is in bulk. So it's not uncommon for them to all ask for multiple of something, right? And so probably one of the biggest differences is versus, you know, being a kind of a traditional operator is that you need a lot of something. And more often than not, that means you're going to be executing an arbitrage model. because of that unless you just happen to own an entire subdivision that's available, right? And so, so that's one. In terms of the actual units themselves, so government employees, contractors, service members, those type of people, they're really no different than, you know, the regular civilian

type of person, right? It gets down to location, location, location, you know, they want to be in a nice property. Everyone wants to be in a property that's nice, this safe, this in a good neighborhood, all of that stuff. So that doesn't really change too much, right? in terms of like what their needs are inside of that property, that's really not too different. If you're used to providing an STR level property with all the different things in and amenities, then that's more than what they're accustomed to.

Because again, they're more accustomed to hotels than they are traditional like corporate furnished department style properties. And so I think if you understand that you need to typically provide it in bulk, if you can do something similar to an STR level property, it doesn't have to be fully outfitted like one and you can present them a property that's in a decent location at a reasonable price point that doesn't exceed that GSA rate, then you're locked and loaded. It's go time. Essentially what you're saying is you go and you look for the contracts. You need to have the ability to service the contracts. You want to provide a decent place for people to live, right? That's what would be expected. So what I think I'm reading between the lines there is there's not a ton of

competition bidding on these contracts. Is that accurate? 100%. So good, good question. So here's what happens. So the government, Congress allocates these funds, right, for these federal dollars, right, to be used, you know, by these different agencies. And a lot of that is in a form of government contracts. Well, it's very much, those are used it or lose it funds. And so if those funds are used by the end of the fiscal year, then they lose them, right? And so you'll be surprised at the number of opportunities that go unfulfilled, right? And so the agency, either lose those funds or they find themselves having to rebid that opportunity again or even during the next fiscal year, right? And so, so, so absolutely. I just want to explain that to some people who haven't been through the budgeting process before, either with the government or corporations, but usually if you're a department, you get allocated X amount of dollars, let's call it a million dollars. If you only spend $800,000 instead of getting rewarded for that cost savings, usually the next year you get $800,000 to do the same job.

And so what a lot of people, right or wrong, you know, what they wind up doing is trying to spend exactly $1 million. And so that is one reason. I'm sure that these agencies are motivated to work with someone who can help place all the dollars that they have to spend. So what I hear when I think about this strategy is similar to like people who apply for grants. That's how my brain is working, right? Like there's grants out there.

You got to go apply for them. And then if you get them, that's awesome. But, you know, you've got a lot of other people that are applying for the grant. So you need to be able to stand out. Yada, yada, yada. But in that world, you would probably, you could write, you know, a hundred grant proposals and maybe get, you know, 10, five, two. Right. So how kind of help me, help my brain understand like what that looks like in terms of these contracts.

If you're out there and you're perusing. contracts and you see four or five of them and you apply. Like, what's the likelihood that you land any of them? Yeah, great question. Excellent question. So a couple of things to keep in mind. So what we've discussed up to this point are specific to biddable opportunities, right, which is kind of what you described. And so, you know, one thing to realize is that the U.S. government is massive. Their accounts payable apartment is just massive. Larger than any other company, corporation, entity, or country, right? The U.S. accounts payable is just ridiculous, right?

And so there is constantly stuff coming down the pipe, right? Including in the housing and lodging space, there's always something coming out. This is year-round, right? So this is non-stop. It's just coming down the pipe. And so one of the things to keep in mind is that there are biddable opportunities, and then there are also opportunities that you don't have to necessarily bid on, right? Okay, so then that's the other side of the corn with a biddable opportunities.

It can be a bit of a numbers game, right? So, you know, maybe you go after, you know, 10 and maybe you land one or two. But then that one or two that you land, that could be a multi-six figure, even a multi-seven figure thing, right? And so, but it could be based on the amount that you go after. Now, there are non-bidable opportunities, right, so that you don't necessarily have to bid on. So those are sole source awards. So I'll give an example. Real quick.

Had a student taken him through the process, he received a phone call. He received the phone call to his business number. they said, hey, this is a U.S. Army Car of Engineers. We see that you're in the Atlanta market. You know, are you, we need inventory. We need housing, right? Are you able to accommodate us? Right.

He's like, no, I don't have enough. Okay. I find out about this opportunity two weeks later. I am like, oh, m.g. Like, don't say that, right? Because that happens. They will pick up the phone and they will call you and it's called a sole source. That means they are going to award you an opportunity.

They're going to provide that opportunity. to a sole entity, right? And regardless of what you have at the time, say yes, right? That was a seven-figure opportunity that he said no to, basically, right? And so that's a non-bittable. It just happened that he had the industry code that they were looking for in the location that they needed the inventory. So that's one.

The second one is called a Set-Aside Award. A Set-A-Side Award is one where if you fit into a certain socioeconomic group, so maybe you're a woman-owned, a minority-owned, disabled veteran, service-disabled veteran or veteran, you're in a hub zone, any one of those like socioeconomic classifications, what the government do, they will set aside, i.e. set aside, they will set aside opportunities specific to those folks that fall in those in those classifications. And so those are very much low-hanging fruit opportunities, right? I can go on and on, but you get the idea. There are biddable opportunities that are kind of numbers-based, and then there are non-bidable opportunities that you can also go

after. And this is still one vertical we're talking about. Yeah, we're still just talking about the government. We're going to be here for four hours. I hope you blocked off your whole day, Noble. So I know there's a lot of folks listening right now screaming for us to ask Mobile, how the heck do they do this too? We'll answer that right after the break. There are two kinds of real estate investors, those who have reviewed their insurance, and those who think that they have.

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Because in some ways, it just sounds so great. It makes me wonder why more people aren't doing it. Excellent question. Excellent question. I love this. So the reality is, first and foremost, the government loves experience. Okay. And so you don't want to come to the table having zero experience at all in whatever that product or services that you're looking to resell to the government, right?

They don't want to see a fly by night mom and pop shop that just started yesterday trying to go after a seven-pigger deal. That's just not what they want to see, right? So, you know, you want to come to the table with some level of experience for that product or service, right? So with that being said, there's a couple of fundamental things that you really should do in order to position your entity, not you as individual, but your entity to land these government contracts, right? So really some primary, fundamental business one-on-one stuff, right? So you want to have an entity, first of all, right? You want to make sure you have a, you know, a professional phone number, a professional

website, a professional email address. The government is picky about that, believe it or not, right? So you can't use a Google Voice or something like that. You need no cell phone numbers. You need a specific business phone line, right? So your grasshoppers, your ring central, dial pad, services like that, you want a professional email address. does not like Gmail, Yahoo, that sort of thing.

So you need to be set up in a way that you have professional email address at XYZ.com, right? In the same vein, dot com preferably, right? A website at the very least, but if you can capture the dot com, then you want to capture that. Your business address for most now, because there's been some recent changes, you can use your home address. I would actually recommend that to get started.

Once you're in the system as a vendor with the federal government, then you can go and change it to a business address or a suite number, right? You want to have your EIN set up and you want to have a business checking account. Those are the fundamental like 101 things. Everyone needs from Square One to be set up as a vendor with the federal government and then you get access to these opportunities. Awesome. And is it similar? We've talked a lot about the government noble, but is it sort of a similar process with private companies or even public companies, but not government entities?

Yes, very much so. So all of those things that I just rattled off, those are just your prerequisites. really, in my opinion, for any business, you should have those fundamental things in place, right? And so, yes, whether you're going into other verticals like corporate, which also will require much of the same to be set up, the same information, right? Healthcare, higher education, aviation, whatever the case is, right? A lot of that information is the same. And what I like to say is when your company is set up as a vendor at the federal level, that's very appealing to every other industry underneath that, right? When you're able to say, my entity is a vendor with the federal government, that holds work.

wait, right? And so you can leverage that then to go do business and get business in other verticals. Real quick, I do, I do want to talk about at least one of these other verticals that I'm very interested in. But before we, before we move on, what I don't want people to think is that, well, you got to live in a place where there's a military base to get government contracts. You got to live in a place where there's a strong military presence. Like, I know you said there's over 400 government entities, but like dispel that myth for us, if you can. Like, what are some of the contracts or agencies that really don't rely on a base being nearby. 100%.

100%. So the reality is that there's housing demand, lodging, accommodation demand everywhere across the country, really, even outside of the U.S. right? But for the most part, we're talking to U.S. base. And so you would be surprised at some of the secondary, tertiary markets where you find these opportunities. I'm working with a student right now who there's an opportunity in Iowa.

You know, there's been opportunities in North Dakota, right? places that you would just think like, and I'm talking about like significant size opportunities, right? Um, dozens and dozens of doors. And so, um, so don't, don't put yourself in a box. I would say to all the listeners and viewers, don't put yourself in a box and think, you know, what, what are these, these hot markets? There are some hot markets.

I'll just rattle off a couple that the Virginia, D.C. area, Alabama, Florida, California, those are some hot markets. Just side note. But you don't have to operate in those markets. You don't have to be in those markets. You don't have to have inventory in those markets. Um, because these opportunities. are literally everywhere. Yeah, absolutely. Because a lot of the times these government agencies may be

running some sort of test or project in some non-military related market. So they have to send people from a base over to a market where there is no base. And if there is no base, there's no housing. And so they need housing is, I think, what I'm hearing here. A hundred percent. And then a lot of the opportunities are not specific to military installations at all, right? They just need, they may need a small opportunity, they may need 50 doors and maybe they only need it for a week. There is a play for that where you can actually go after that type of deal with that short of time and put significant profit in your pocket just with something that has that smaller window to it. Okay, Noble. Okay, I'll bite. All bite. Okay. Tell me how I could service that weeklong needs. So there's a model,

right? I call it hotel brokering, right? But basically, the government has, you know, a lot of opportunities, of opportunities where they're looking for short-term hotel-based stays, right? It could be a weekend. It could be a week, two weeks, whatever the case is, right? Very short, but a lot of doors are required, maybe 50, sometimes 100 or more, okay? And so, you know, what I've taught is there's a strategy where you can actually go and get these rooms, this inventory of rooms under contract, and then mark them up and resell them back to the federal government, right? That's very common, okay? And so when you do that, then what's the benefit of that? Well, I'm not using a corporate furniture department, so I don't have to deal with housekeeping and cleaning. I don't have to deal with checking and checkout. I don't have to deal with shuttle service. I don't have to deal with maintenance. I don't have to deal with any of that. I'm simply getting the doors under contract. I'm collecting my payment from the department from the department from the department and I keep the department and I keep the spread in the middle, right? So low-hanging through high-profit march.

Wait, so you're saying the government says I need 50 doors for a week and they need like short term hotel stay. So you go to like your local extended stay in that market and the government will tell you I'll pay $200 a night, let's say for an example. And so you go to the extended stay and you say, I need 50 rooms for a week. What's the best rate you can give me? And they'll say, I'll give you a room for $125 a night. And you say, perfect. and then you go collect $200 a night from the agency because the agency, I assume, pays you because the deal is with you.

And then you turn around and pay the hotel and you keep the $75 difference per room. 100%. This is, why would the agent, why would the government just not go straight to the hotel? Why go through you? Why have an intermediary? Excellent question. Excellent question. So here's the other thing.

So there are what to call a small business size standard. So basically what does that mean? That means that per industry, there is a cap of revenue, right, where they will no longer consider a business, a small business, right? So, for example, in the hotel space, I want to say that cap is like 30 million annually, right? So if you have an entity, XYZ corporation that owns four or five different franchises, right, then because those collection of properties under that franchise model do more than $30 million. a year in annual revenue, they can't participate in the bid. It is a small business set aside, right? And so then they need the small business operator like myself, like all of us, right,

to then come in and create and facilitate that contract, right? And so that's how it works. So that's why the big boys a lot of times can't participate, right? So then someone like ourselves comes in, there you go. We need the DJ board, bomb dropped, the air horn. I'm just hearing class. for this. It's unbelievable. This is incredible. I don't, Dave, you got to talk. I don't know what to say. Well, I'm realizing that we're just going to need to have Noble back because we've gotten to one of the four

different types of entities that we wanted to talk about today, but there's been already so much good information. So let's just keep going on the government for a few more questions. And Noble, we're going to force you to come back. Hopefully you'd like to. But let me just ask you this. So, like, you know, how do people get in touch with these agencies? Can you just like walk us through some steps that people who are listening to this and are as mesmerized as Henry and I, how they can, you know, start learning a bit more? So probably one of the best opportunities is Google, right, quite frankly. So there's a lot of agencies. There's a big boys, right? The biggest one, Department of Defense for obvious reasons, right? Billions and billions of dollars in

transactions happening through the DoD, right? And so, but the majority of the agencies have what are called Osdibu offices. That's the acronym. Office of Small Business Development utilization. I always mess up the acronym. But anyway, Osdibu, OSDBU. So that office in particular, a lot of the personnel in that office work with the small business entrepreneur to help us go after uncover and get access to these types of contracts.

So that's very much, you know, an office that you want to engage with. Other offices, a lot of them have small business liaisons, right? again, a similar concept. Those personnel are put in place to work with us as small business owners to uncover opportunities. And then I would also say because what we've described so far has been very much, you know, bid-based, the other side of that coin is, you know, getting access to opportunities based on developing relationships that cannot be lost.

That is very important. Just like in a lot of other industries, real estate included, relationships can help you substantially, right? And so you want to get to know these people. You want to, you want to go to conferences, you want to go to events. You want to get on their virtual meetings and things like that, right? You want to get in front of them. You want to be in the room where they're having these conversations at because you can get access to an opportunity that's relationship driven and they can create a sole source award directly with you because you fit the bill for what they're looking for. It never goes out to bid. So, Noble, this is obviously probably one of the most

incredible, like, untapped resources I think I've heard in the real estate space in a long time. And I'm sure there is like tons of people listening to this episode who are very interested, but wondering what is my first step? Besides having your entity set up and all those things set up correctly, I assume there's two probably fundamental steps that you need. You need to have your entity and your business set up, and then you need to get registered as a vendor for the United States government. But once those two things are in place, what's the very next step people should be focused on in order to take advantage of some of these contracts?

And I'm asking for a friend. Okay. Got it. So one of the key tools, the key tools that we use in this space is called a capabilities statement. Okay. So I will work on drafting that document. That is simply a one-page. business resume, right? It's a capability statement. There's some core, there's some, some bits of

information you want to include on this one page business resume, right? Part of it is, you know, showing your past performance. Now, past performance, that doesn't mean past performance with the government contracts. That means what is your experience level with that product or service that you're looking to resell to the government, right? You also want to list like, what are your core competencies? What do you feel like you do well in this space that you're servicing, that you have a command of, right? You want to list your core competencies. You want to list your past performance. So there are also what are called industry codes. They're called NACS, NACS, North American Industry Classification System. That is how they identify your company in the federal

vendor database, right? So I'll give you one right off the top. So for us in this space, that code is 531110, lessors of residential buildings and dwellings. Okay. There's another one, 70 to 1110. That's for hotels and motels, right? You can't actually include both. of those there's probably like seven eight to ten of them that you could include in the space that where we provide real estate services right so you want to put together your capability statement you want to include all this information including your company information and contact information all that stuff that is the single probably most used marketing asset and tool that we use in this space and you'll you'll need a digital copy you'll need a printed copy but that's when you reach out

to people on lincoln because a lot of federal agencies employees are on lincoln you want to be able to pass that that document off so that that that's That is the very next step, I would say. All right. Well, I know you don't have any questions, Henry, because you're too busy writing down notes and probably starting to write out your capability statement here while we're still on this interview. I mean, that's accurate. That's accurate. I mean, I'm not going to not lie about that. That's fair. All right. Well, I think this is all we have time for today. But Noble, you have been such a great guest and shared such valuable information for our listeners here. I certainly learned a lot. And for everyone who wants to connect with Noble, learn more about the strategy and what he does will put all of his contact information in the show notes below or in the description if you're watching this on YouTube. Noble, thanks again.

This has been a super fun. And I meant it. We'd love to have you back sometime soon. Thank you, Noble. Thank you so much. I appreciate it. 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.

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