The Paradyme Shift
Step into the evolving world of real estate investment with "The Paradyme Shift," a podcast hosted by Ryan Garland, the visionary founder and Chairman of Paradyme. This show is your gateway to uncovering the strategies, trends, and success stories that redefine the real estate landscape today.
On "The Paradyme Shift," each episode takes you behind the scenes of Paradyme's groundbreaking approach to real estate investment. Ryan Garland, alongside industry leaders, dives into the intricacies of Paradyme's holistic model—covering everything from direct lending and strategic investments to hands-on development. Discover how Paradyme's innovative crowdfunding platform and investment management software are not just tools but game-changers that are reshaping real estate by bridging housing gaps and nurturing community-driven projects.
Tune in to "The Paradyme Shift" to explore how Paradyme consistently delivers exceptional financial returns while positively impacting communities. This podcast is more than just about investing—it's about leading the charge in real estate innovation. Join us to stay ahead of the curve, gain exclusive insights, and become part of a community where expertise meets transformative ideas in real estate.
The Paradyme Shift
How A Korean Immigrant Built Cash Flow With ADUs, Airbnbs & Boutique Hotel | Alex Kang E31
In this powerful episode, Ryan sits down with entrepreneur Alex Kang to unpack his unbelievable journey from immigrating alone at 15 to building real wealth through ADU investing, Airbnb arbitrage, and eventually acquiring a 24-unit boutique hotel in California.
Alex reveals how leaving his corporate CPA job forced him to rethink what financial security, ownership, and freedomreally mean. This episode hits everything from real estate strategy, seller financing, hotel investing, the collapse of Airbnb profits, and why immigrants often outperform because of their relentless grit and resourcefulness.
If you're interested in entrepreneurship, real estate, private equity, or creating true multiple income streams, this episode will hit you hard.
Hey everybody, Ryan Garland here, founder and chairman of Paradigm. Welcome to the Paradigm Shift Podcast. And I am honored today. I have Alex Kang, but he really actually says it by Kong. Yes. Because you are Korean and that's the right way to say it, but all your white friends say Kang.
SPEAKER_00:I'll respond to all of them.
SPEAKER_01:There you go, right on. But Alex is uh uh an amazing, genuine, genuine gentleman. Um kind of the way to bring this up is that him and I met in Toulon.
SPEAKER_02:Yeah, two weeks ago.
SPEAKER_01:Yeah, two weeks ago, and we just totally hit it off, and I had a chance to speak there. And he had a lot of good uh he he's one of the guys that has two ears and one mouth. And I really want you to hear kind of his background because he came from the corporate world and uh really kind of stretched out his arms and decided to get into the entrepreneurship and and business ownership. And he has a CPA background, and I'll let him speak for himself. But you know, I think that's really important because I use CPAs, I love those corporate guys, I need them in my private equity space. But to see him venture out with that type of caliber and knowledge and how he's implementing that into business strategy is really important. That's the whole point for today. So, Alex, thanks for coming, buddy.
SPEAKER_00:Well, thanks for having me. Appreciate it.
SPEAKER_01:Cool. So let's dive in. So I'm gonna bring this up and I know I asked you about one thing, but I want my audience to get to know you a little bit more just from a personal side. What's the hardest thing you've ever had to overcome?
SPEAKER_00:Yeah, I know you asked me that question two hours ago. So I had to, I've been I've been thinking about this a little bit. Um, but you know, I think I think like really what set me as the, you know, what gave me the foundation of who I am today was when I decided that I would move from Korea to Canada. So my immigration story, really. Um, you know, kind of a typical immigration story, but um, you know, I was in middle school, I was just studying in Korea. I was born and raised in Korea. Um you came over? Uh I was 15, 14, 15. And you went to Canada first. I went to Vancouver from Korea. Um, but I went by myself for the first year and a half. So my family asked me if I wanted to move. I told them honestly, I think it's just kind of a uh a pattern of my story when people just ask me, like, you know, if I'm interested in doing it, or if you if you ask me if I can come out, um I my default is just saying yes. Because I think a lot of it just kind of opens a lot of uh opportunities and doors for me, at least in my experiences so far. And back back then, I honestly didn't know what Canada really meant, like living in Canada really meant, but I said yes because I felt like that was gonna give me better opportunities. I didn't know what that really meant. Um, but went by myself because my family wasn't ready for about a year and a half. Basically, I was I was uh scoping it out for the family, if you will. Sure. After a year and a half, my my mom and my brother came.
SPEAKER_01:Which by the way, that's very common, right? You kind of come out here, kind of get the lay of the land. You gotta start sharing with your family some of the things that are going on over here and see if you can bring them in, right? Exactly.
SPEAKER_00:Yeah, well, if you're like a little bit older, I think that's a little bit more common. If you're young, young obviously you know, whole family moves together. Um, but I was in the middle school, I just finished up middle school in Korea, so I was starting grade 10. Uh actually, funny story, I never had grade nine in my life because I finished grade eight in Korea, and the the way the school system works in Korea and here is a six-month uh difference. So uh in Korea you start school in March. Here you school in in September, October time frame, right? So I came to I went to Vancouver and then I I spent the first like three, four months in learning English, so I didn't go to school directly.
SPEAKER_01:Got it.
SPEAKER_00:And then because of that, I just completely skipped uh a grade nine and then went into grade 10. Um so did my high school first year, my family came afterwards, but shortly after that I went up to Montreal for college. Um, but you know, during that time I didn't know what I had signed up for. Um, but that was probably the most challenging part. I didn't know anyone in Vancouver, I didn't have any family, I didn't have any friends, uh, I didn't speak the language. I had no, I I really just didn't know what I was uh uh assigning up for when I went to Vancouver. So you know I remember just like the first year being very like lonely. I didn't really have friends, I didn't know what was going on. A lot of times like I would you know go to class, and but I didn't know what the homework was. I still didn't know what I was supposed to be doing. Um, but they gave me kind of just a lot of um just motivation to just like you know, if I just if I were gonna be successful and if I were gonna get through this, I'm gonna have to put a lot of effort and and and and and time into it. So from that time on, my just default has always been like if it takes 100 to achieve something for most average people, I'm gonna put 200 or 300 into it. And that's just been my mentality so far. Um, and every time I kind of get through or am I, you know, I'm I'm faced with any sort of challenges or harsh is my default mode has mode mode has always been like I'm gonna put just 2x and 3x into it and get through it.
SPEAKER_01:You know, let's let me stop you right there because that's something I've been talking about on other podcasts for a long time. And I'm sorry, but I wanted to bring that up because that's a really good for you know when people I think naturally when things get tough, they put their head in the sand, right? They kind of backpedal and they go, I don't want to do it. But when you are trying to get in to move your life around from Korea into the US or into a different country, like that's a different commitment, right? And that's also to your family because it's it's so much different. I think there's a that's a whole different drive that I think a lot of people in in our country have no idea the type of commitment and how much you have to push forward. So therefore, what you've what you've had to experience by coming over here, yeah, you've figured that out to implement in all other aspects of your life.
SPEAKER_00:Yep. Yeah. So that's been really the foundation to your point. So um, you know, so Montreal moving from Canada to to to LA, that was about 10 years ago. Kind of similar mentality. You know, I if I did from Korea to Canada, I I can surely do it Canada to US. And it came with different challenges and and and different you know aspects of life, but having gone through it a a couple times and definitely gave me the motivation and the foundation to say, hey, I'm moving, I've been in corporate for the first, you know, last like 15 years. I'm now moving into entrepreneurship and buying businesses, and we can we can talk about that a little bit more. But it just kind of gave me that the confidence that like I don't know what I'm really signing up for, but if I just stick with it, if I can be resourceful, if I can learn from others who've done it, surely there's a way to to get through it.
SPEAKER_01:Yeah, absolutely. You know, I I I like the fact that you brought that up. So when did you actually get into when did you come to the US? And how old were you?
SPEAKER_00:I came to US, I came to LA from Montreal about 10 years ago in 2014.
SPEAKER_01:Got it.
SPEAKER_00:Um, that was to so just to kind of backtrack a little bit. I started my career as a CPA. Um, and honestly, I think that was like more of a safer choice that I had back then. I was barely speaking English in high school, so I was like, okay, I gotta find a job that doesn't require a lot of English skill set. And I was like, okay, what are some of the jobs that required numbers? And there was banking, and there was CPA job, and I was in I was in uh a business administration. I graduated college in 2010, and as you know, 2008, 2009, there was no banking jobs, right? Like everyone was getting fired. Oh, yeah. So in Canada, investment banking, there was I still remember there are like two or three investment banking internships across the whole Canadian banking system.
SPEAKER_01:Got it.
SPEAKER_00:And I was like, okay, wow, I don't think I'm smart enough to be the top three in Canada. Like I think I knew that about about themselves, about myself. Yeah. And I was like, okay, what is the next thing? And the the CPA firms are like they were still hiring 20 to 30 uh people per office. So Montreal, Vancouver, and Toronto were the three top offices, and every big four was still hiring maybe like 10, 20 up to 30 people per class. So that gave me like still somewhat of a good chance. And and and you know, I think maybe just being creative myself, um, I've always been stronger in numbers than than other areas. So that's where it felt like you know, I I that's a that's a job that's that's conservative, um, that it's going to be at least a good starting point. Uh so I signed up for it. But you know, two or three years after the job, I I quickly realized that wasn't something I wanted to do for the rest of my life, the rest of my life. And also the my my starting salary was I can kind of you know laugh about it now, but it was 30,000 Canadian dollars.
SPEAKER_01:Yeah.
SPEAKER_00:And and that is just not enough to be able to sustain my life. Also, funny enough though, like long story short, if I kind of just stuck with the CPA job, I think I could have the outcome also could have been a little bit different in that because I was looking for CPA firms to buy at some point, but we can we can talk about that a little bit. But um so it really kind of got me to like to figure trying to figure out after two, three years of CPA, what other path can I explore that is gonna get me out of the kind of auditing CPA job. And and I saw really two paths there. One was a lot of people exiting into corporate finance and exit into kind of being an accountant and at a corporate job. And and when I was looking at it, looking at them, I was like, I don't know if that's the life that I design that that that I desire in the next like next the next like five to ten years. Um I guess there's a really three parts. One and the second part is that if I if I stuck with the CPA job, then I'm looking at looking at the partners and other senior partners. I'm like, do I want that life in my life? And and the answer was obviously no.
SPEAKER_01:Yeah.
SPEAKER_00:So number three was I just had always this I don't know, notion of coming to the US, an American dream, and maybe I got sold a little bit. Um, but uh, you know, I just always wanted to come to the US. And uh MBA was a really the good tool. And really one of the only ways that I found to be able to come to the US on a student visa uh was to get my MBA. So started prepping for MBA, took the GMET and all that, uh, got into UCLA, that's where my MBA. Um, and I still didn't know what I wanted to do. So I signed up for a consulting job. Um and you know, to me that you gotta do, man. Yeah, to me that was like, okay, if I did it, because like really I've been only exposed to accounting world, and I don't know, I didn't even know what kind of functions or jobs are out there. Um, so I just wanted to go out there, learn as much as possible. Consulting felt like the most a natural path to do it. So did that for another few years. Um, and then over the last four or five years, I was in the software space. Um, and then uh, you know, I this year, February of this year, I left my W 2 and doing and starting doing my own things.
SPEAKER_01:And that was gonna be my next question kind of segment going into this. So, what made you really want to step out of that corporate secured income kind of job? I mean, obviously I could see it in your eyes. You just you're built differently. And for those of the of you that are listening to this, when you see this man, you'll see what I mean by that. But I can tell you're just you your mind is running the whole time you've been here. You're like, what else can I do? How am I, you know, I want to grow my business. And and you have some uh experience from ADUs and you know, um, your hotel, and I want to talk about that, you know. So let's kind of just give us, give me a little background on what made you want to venture out and how hard was you was it to actually pull the trigger.
SPEAKER_00:Yeah, yeah. So I would say there are probably two different triggers that I had. One was uh when I realized that having one sole income stream wasn't not so it's not so secure anymore, right? Like I felt like having W-2 salary was the most conservative, secure thing in the world. But when I realized, especially when I saw a lot of my talented friends getting layoff during the crazy tech layoff in 2020, 2021, 2022 timeframe. And I I that's when that that was sort of a wake-up call for me. Like it's not really about how good they are, how bad they are, it's really all about the business from the company perspective, and they'll they'll get laid off, right? Like it's just uh uh you know, it's a it's an expensive, uh dispensable uh to to the business, to the to the uh to the companies. Yep. So I started seeing that a little bit. And then number two was um uh you know, when I was still working on my corporate, I started building my own stuff. You know, granted, it was a small project. When I bought my first house, um, you know, I I we were joking a little bit like with we're recording this in the uh in your men cave. Um, but when I first bought my house, I had a two-car garage, and I really wanted to convert that two-car garage into a golf simulator and kind of build a small man cave myself. But uh, you know, I had no assets, I had nothing. I you know, really the logical thing for me was to convert it to something that's a little bit more value-added, if you will. So decided to build an ADU instead. Um, you know, went through the process. Now I have a long-term tenant in there, started giving me the supplemental income for the first time that was not W-2 income. And that was it's not really difficult to think about how that can be life-changing for you, but it was life-changing for me because now I had certain percentages of my total income coming from this ADU rental, and that was a wake-up call for me. And and I really enjoyed the process of building the ADU. Um, I really enjoyed having you know my house appreciated value because of the build, you know, addition of the ADU. And that's when I started really started doing a lot of side hustles, if you will, right? So did an ADU and the next project was uh did a couple Airbnbs. Um and then uh after the Airbnbs, I was thinking to myself, like, do I continue to do I want to continue to build more Airbnb portfolio, or is there something else can I do? And then that's when I got introduced to the the concept of hotel. Um, and you know, it's it was essentially just supercharging Airbnbs and then having multiple, multiple Airbnbs under one roof, that made just a lot of sense from just management perspective. It's just one deal, it's one team that's managing it, um, but yet you're still getting the benefits of having multiple um um Airbnbs all together.
SPEAKER_01:So let's let me ask you this. So with the with the um ADU, that's been a big movement right now. I mean, we have you know private lenders that are providing capital for people who just want to drop ADUs in the back of their property. And for those of you that don't know what this is, ultimately it's a dwelling that you can pop down in the back of your home. And in LA, which I'm gonna ask you some questions because you're gonna know more about it than I will. But in LA, let's just say kind of the old way of development, they were kind of you know skinnier lots where you'd have a detached garage in the back, right? And then people would over time start remodeling it, tie the houses together, build a pool, or put an ADU in or both, right? And so therefore, it became such a big movement for cash flow, kind of a granny flats, kind of an extra dwelling. You can rent it out, you can get more square footage and sell the whole property for more for a small investment. So let's talk a little bit about that because I haven't had anybody in uh on my podcast yet that had experience in ADU. Okay. So just give us a little background on ADU and kind of what you uh experienced on that investment.
SPEAKER_00:Sure. I I think ADU is probably one of the safest investments that you can make, if especially if it's your primary home. And the reason I say that is because my experience with my ADU is that to your point, it was uh a single family house. We don't detach garage. It was it's you know, our garage is two-car garage, about 500 square feet. Not not a big not a big standard two-car garage. Yeah, standard two-car garage. Um, I could have converted into golf simulator in the main cave, and they probably wouldn't have any added value to my house. Now that because I've gone through the process of actually getting permitted and then doing the construction, what that did was that now the 500 square feet of the ADU is getting added to my entire house um square footage. And as a result of that, the value per square footage has gone up uh because now I've added about 20% of the entire house with the addition of the ADU.
SPEAKER_01:And what's crazy is that you know, I've done thousands of loans through private money, and a lot of the a lot of it went when I was funding in LA was just doing additions to the house to get those type of additional returns and increase in value. But this is kind of one of those things where you can mitigate this and and the headache and the stress of remodeling, because when you when you do an addition, you're kind of remodeling the whole house.
SPEAKER_02:Yes, you know.
SPEAKER_01:So if you have a house that's in decent condition, sometimes you just want to do paint carpet, you don't want to pull any permits for that, you just drop an ADU, you know, and then you're getting immediately returns and you can buy these things. In some of the cases, you could buy these things and drop them right in, and now you got the square footage, you just got to pull your utilities and make sure you got grading done. And so it's really with a small investment, you can increase the value of your house. So it's kind of the same thing of flipping just another model. So instead of just going in and flipping and doing again a full edition and remodeling the whole house, you can literally come in and drop an ADU and get an increase in value.
SPEAKER_00:Absolutely. So in terms of like a numbers, because I'm a numbers guy, right? Like in terms of the numbers, so I I made my investment back in three years of renting it out. So I made my money back fully.
SPEAKER_01:So once whatever the investment for the investment for it was, you made it back in three years.
SPEAKER_00:I made it back in three and a half years, so less than three years.
SPEAKER_01:That's incredible.
SPEAKER_00:Yeah, so I mean, like if you just the cash and cash, if I just put all the cash into it, in which case I actually did put because I didn't actually know there's an ADU loan and other products available, I just didn't know any better. And I, you know, I have the savings, I'm gonna put my own money into it. Um, I did it, but I you know, I got my returns back. So, you know, it's basically about 35% cash and cash return uh because I made the money back in in in about three years. Um on top of that, um, I was able to get a HELOC on my house with the addition of the ADU. Um, and now I have about 200 to 250,000 of HELOC available. I haven't tapped into it, but it's an emergency fund if I need it. Totally. Um, you know, I can use it for the low interest rate, low interest rates. Um, that is only possible because yes, the house appreciated a little bit, but because I was able to force this uh depreciation through the addition of the ADU, the the bank who you know was a community bank and they looked at us, oh yeah, like you've done a bunch of work for your house, and now your value is this because your comms is this. Um and I was able to pull, you know, at least have the line of credit or HELOC ready to go.
SPEAKER_01:So in essence, you now have a line of credit and you were able to get an increase in value, which now allowed you to qualify for that HELOC. So now you have cash at hand if you need it at a low interest rate because you probably got it a few years ago when the rates were low.
SPEAKER_03:Yep.
SPEAKER_01:Um, would you what would it let's look at it from a perspective of okay, you made your your investment back in three years off the cash flow and the rent, but what do you believe the equity increase was? What's the delta there?
SPEAKER_00:So I would say about so my house is 1500 square feet, and that additional was 450, 500 square feet. Um so it essentially added 30% of the score total square footage, and the last valuation that we got, he added about 25% of the total house value as an additional date.
SPEAKER_01:And what what's the value of the house then?
SPEAKER_00:Uh so we bought it for 1 million. Uh last time we got appraised, we appraised at 1.4.
SPEAKER_01:Yeah, so in like two years. Yeah. So so even though with appreciation, so yeah, about let's just call it if you said 30%, let's just call it$300,000.
SPEAKER_00:Exactly.
SPEAKER_01:So you made$300,000 plus you've made enough money and cash flow in three years to pay for the principal. So let's talk about a hell of an investment. And you nailed it. How much was the how much did you put into it?
SPEAKER_00:So it was just before COVID. So I got I think I got lucked out with the with the timing. That being said, my total cost was$75,000 uh with everything, right? Um all in. All in. Yep. And now I'm getting rent for$2,100 a month.
SPEAKER_01:Dude, so$75,000 up front, you built it three years, you've already made your money back, plus you got a$300,000 increase in value. That's a hell of an investment. Yeah, so that's why people go all in in this project.
SPEAKER_02:Yeah. Yeah.
SPEAKER_01:Not only are you making your principal back, but then you're getting that equity increase. So that's why it's also easier to raise equity capital for that because it makes sense for multiple partners to get involved.
SPEAKER_02:Yeah.
SPEAKER_01:So now it's just about acquiring the home, making sure you can get qualified for ADU, right? So that's another thing that people are doing is they're going out and searching for homes that can drop an ADU and get that equity increase as if you were just flipping the property and more and or remodeling and doing the ADU, trying to really increase those types of returns. But I think there's some moratoriums going on too in certain areas about you know having ADUs and so forth, because cities, counties, and jurisdictions are starting to catch on to that stuff, you know. And then you have neighbors that get whine, depending on what you're doing, you know. Most of the older areas, they really don't care, but there are areas that do.
SPEAKER_00:Yeah, you know, yeah. I do remember when I first got introduced to concept of ADU, it was starting to get a little popular, but it wasn't like everyone was doing it. But now it does feel like everyone's kind of doing it. So I don't know what the scene looks like now. It is a little, it feels a little saturated. Yeah, but that being said, I think if you can buy a locate a property with a detached garage, I think that's the most economical way of getting it.
SPEAKER_01:Absolutely. I've seen guys where they're taking detached garages and going up with an apartment.
SPEAKER_00:Oh, yes, absolutely.
SPEAKER_01:That's pretty smart. Yes, especially if the garage has good bones already. Yes, you know, you can just re-engineer it, go vertical a little bit, and you're, you know, with 30,000, 40,000 investment, maybe a little more, you're pretty much set. But you hit bedroom, bathroom call it a day. Yeah, you know, yeah. More m where you spend a lot of the money is engineering and plumbing. Yeah, making sure it's all plumbed up because most of those detached garages don't have any of that. So you got to plumb it, make sure you have a bathroom, so forth. So yeah, okay. So then you went from ADU to hotels, or did you know you went to Airbnbs?
SPEAKER_00:It's I did went to I did go to Airbnbs.
SPEAKER_01:So let's talk about that too, because Airbnbs is no, it was a huge hype for the longest time, and then it's kind of went down and kind of up. So let's talk about your experience with that, and then you exited that to go into a hotel. So this is that entrepreneurship I was talking about, man. You've been able to just shake the you just rattle the cage. So I love hearing all this. So look, okay. So let's talk about the experience in a Airbnb.
SPEAKER_00:Yeah, so you know, even Airbnb, like again, like I it's one of those things where like I got introduced the concept of running an Airbnb. Like, you know, I saw a lot of people are getting profitable, and I had some of my friends were also doing it, and I was like, okay, I'm just gonna go ahead and do it. I'm just gonna go ahead and do it. So shortly after that, I think like two, three weeks after that, I I located the property. Uh by the way, I did an Airbnb arbitrage, so I didn't actually buy the house. I didn't have the capital to actually buy the house. Uh so I did Airbnb arbitrage, so two properties. Arbitrage, you know, for for for some of the listeners who are not familiar with the concept, is just because basically I'm I'm I'm renting as a as a renter, and then I'm I'm sub-leasing it as an as an Airbnb. So arbitrage as in I'm paying a long-term rent to my landlord, and then I'm getting the arbitrage between what I'm paying to the landlord um and and what I'm getting as a as an Airbnb revenue.
SPEAKER_01:And do you have to disclose that to the landlord? You do, yeah.
SPEAKER_00:So I got you have to get explicit permission in and I I have that in my lease to say that yes, I'm I'm permitted to rent as a as an Airbnb rental.
SPEAKER_01:Got it. How cool. So okay, so you did you enjoyed it, but then you decided to shift out of it.
SPEAKER_00:Yeah, you know, I think to your point, in 2020, 2021, 2022, a lot of people were entering into the Airbnb space. And and by the way, I'm I'm just as guilty as one of those people who entered into the space. Um, and and as any product or asset classes, it's all it's all about supply and demand, right? Like there's too much supply that went into it in terms of everyone getting into the Airbnb game. Also, during COVID in 2020-2021, everyone was desiring to stay at different Airbnb in different stages because everyone was locked down. As we all came out of COVID, the demand went down because now people were actually free to do whatever they wanted to do. The supply stayed the same, so that meant Airbnb host power, the control went down significantly in terms of the pricing power, in terms of you know what they can uh uh demand to to the guest. Um, so I was starting to see that kind of uh inflection point, like just like kick it off a little bit, and that was after my second Airbnb.
SPEAKER_01:Got it. Um I would I ended up moving headquarters out of California into um Nashville, and Nashville was booming with Airbnbs. I mean, all the way down to people that were literally developing, buying land and developing an entire community of Airbnbs through single family, yeah, like the build-a-rink community, but more of the um you know Airbnb model. So it was huge. Another thing, too, that developers are doing. I actually uh uh helped fund a project out in Denver, and they it was a five-story condo building where they sold all the condos, but one floor was all Airbnb. Yeah, I think that's in that. Yeah, yeah. That's which that was a good model too. Um, you didn't the thing that the thing was about that is that people who live there full time didn't want to live next to the Airbnb partiers, right? So they were on a different floor. So it worked. Yeah, um, and it and it was pretty cool because a lot of lenders, you know, when you have the capital markets that are willing to back it and support it, the likelihood of those that type of asset class to expand goes up because now you have capital hit in the market for it, right? So all these borrowers, operators, what have you. So I was looking at how some of these projects were able to get financed because the operator was going to implement Airbnb, which typically increases returns, right? Yeah. So the hence the reason even Airbnb. Sure. But according to whatever the debt uh mortgage was and cash flow and whatever your debt to income ratio was, if you had you know several of those units, Airbnb'd, it would qualify. So now you're getting 20, 30 million dollars in construction loans because your overall model was to implement Airbnb cash flow and strategy. So I really watched from a capital market how Airbnb really expanded, but as you nailed it, it was such a demand that it people came in hot with it. Big projects got funded with it. I mean, it was a whole thing, right? And then the the DSCR loans, you know, a lot of times they were like, hey, look, at first they were funding the short-term loans, no problem. But then they started looking at it, and you probably know they were underwriting on more of a long-term comps, standard comps. And as long as you have the DSCR ratio, they'll fund it, even if you're gonna go ahead and Airbnb it. So you have to come in with more down, whatever the number was, right? To make it make sense for the DSCR qualification. So that was really impressive. But what I've realized is that it got saturated so quickly. And then when when things kind of went back to normal after the pandemic and people weren't traveling to those areas that were open, that Airbnb model just kind of started compressing.
SPEAKER_02:Yep.
SPEAKER_01:And now, with like for example, here at Paradigm Storage, I have, I couldn't even tell you how many buyers 1031 exchanged out of short-term rental and came into more long-term rentals. The thing about storage was you don't have turnover, you don't have maintenance, you know, and you can get pretty good returns on it. So if you look at it over time, you have less headache, less stress, and then you have long-term no turnover, and that sometimes more comfortable for no, you're not making as much money as an Airbnb, but you have that steady cash flow with no headache. And that's where I think people kind of got. It's really what happens is when the market shifts like that, it's about retaining the wealth you've created, not trying to build too much of it. So, like when the pandemic hit and everyone was pumping in the PPP loans, oh my gosh, everyone's buying houses or 100,000 over asking price, rates are super low. It just went nuts, right? Yep. But as soon as those rates high uh spiked, everything started, you know, people were coming out of stocks and things just kind of went into more of cash positions, and people just wanted to retain that wealth. So, yeah, all right. So you went from Airbnb and you just kind of felt what? So just because you saw it go down and the income came down?
SPEAKER_00:No, I think my income when I decided that I wasn't gonna do a third Airbnb, um, was really the decision point or the three three decision points for me. One was do I continue to do the Airbnb arbitrage? And that was not attractive in two different ways. One was the cash flow was good, but it was just purely a cash flow play. Like I wasn't getting any tax benefits, I wasn't getting I wasn't actually owning the the asset. So after the two, it didn't, you know, I didn't feel like that was attractive enough. And number two, I was just starting to see because you know the inflection point of uh Airbnb. I can see in the next like maybe six or twelve months the cash flow is gonna continue to come down.
SPEAKER_02:Yep.
SPEAKER_00:Um, I was still in a disin like in a disinposition when I when I exited, but it was definitely not as profitable when I first started. And then number three was I really wanted to uh you know uh uh start owning and and and things and assets that I can be proud of. And then you know Airbnb, I you know, to don't get me wrong, I think Airbnb operators who are still offering unique experiences, unique designs, and I think you really have to be like the top 10, 5, 10 in the Airbnb world to like really make a lot of money now. Um, I my Airbnbs were kind of generic Airbnb, they were nice, but they were not like unique in nature or anything like that. It was so I my Airbnb was one of those core targets that just suffer from um you know more uh supply and less demand.
SPEAKER_01:Gotcha. You know, it's kind of crazy. I was thinking about this the other day. It Airbnbs can still be really strong in specific markets. Like, for example, I was just up in Park City. I went up there with my old man, him and I spent some time together, went shooting and just you know enjoyed our size. We haven't done that in years. So we were like, hey, let's go get away and you know spend a little bit of time together. So four days we spent, I think, a thousand bucks on an Airbnb. That same Airbnb in February in Park City is$15,000 a week. You know, these guys can make all their money in their nut, literally in just you know, during the winter up there because it's you know that's what Park City's for. And then you have Sundance, even though they're gonna move, it's still like kind of like recreating out there. It's impressive. But I mean, talk about craziness. So certain areas you could still do very well in Airbnbs.
SPEAKER_00:Yeah, I mean, like, I mean, yeah, exactly. Like, you know, it's my my Airbnb wasn't like a 15 grand a week type of Airbnb, but my ADR in the summer was 500, it will go up to six six fifty a night. Wow, and and funny enough, it's it's mostly the the folks in Arizona traveling to San Diego who want to just get away from the heat, and then they'll just pay whatever, right? Because there's not enough Airbnbs to stay in. And they don't want to go to hotel, they want to stay in Airbnb.
SPEAKER_01:Yep.
SPEAKER_00:Now the winter time comes. My ADR is like 150.
SPEAKER_01:Oh, so just to get something in there.
SPEAKER_00:Yeah, it's just 150. I'm barely kind of making the rent, I'm I'm barely breaking even. So all my money extra profit came during the summertime and maybe some holidays.
SPEAKER_01:Got it. So you try to keep keep a little bit of a reserve just in case you have some dry months. Yeah, good for you. Yeah, and I thought I think I noticed too, like certain areas, it's really about the experience, is what it sounds like to me. You know, if you have like a hell of an experience or a lot of rooms, and people can kind of get a ton of people there over the traveling for. Friends and family, whatever. That seems to be the ones that are working. Yes. But those kind of hair, you know, those just like you said, that core kind of three-bedroom, two-bath stuff just isn't trading that well. Yeah, good. Okay. So from there you went over to uh you went over to um uh hotels. Hotels. Let's talk about that one because that one seems to be pretty, pretty good for you. And I know you're gonna look at buying businesses, so we'll go to that too, and then we'll kind of get sum it up.
SPEAKER_00:Sure. Yeah, so the hotels was again like it was more, you know, my my decision point of more Airbnbs or or something else was really my my my different uh decision point. Um and um, you know, I got introduced to hotel um asset class, I met Rich, uh which is how we got connected also. Yep. Um, and um, you know, I think I think everything is really to me is a it's a pay-to-play, right? Like he had uh a community that he was starting to start in uh in terms of hotel investing and all that. Um, you know, pay to play as in like, you know, I I pay to be a CPA, I I pay, I went to school, I pay for it, I I pay for my MBA. You know, every time I I felt like I leveled up, I I I paid to get in. So I was like, okay, community, great hotel I know nothing about. I'm gonna pay to get into the community.
SPEAKER_02:Yep.
SPEAKER_00:Um, so long as I I can justify to myself that there's a return gonna be there's going to be a return. And that return to me was as long as I buy one hotel from just whatever I learn or community or learning or people that I meet through this group, you're gonna monetize it. Yeah, it's gonna it's gonna pay itself. Sure. Um, so it's kind of similar story as like when I decided to come to Canada. When I saw when I met Ritz, like two days after I signed up, and uh two days after I was in the group. You know, it wasn't like a super cheap group either, but like it was a decent amount of investment. But I was like, okay, I'm gonna I'm gonna go there, I'm gonna spend my next year or two minimum uh learning about hotel, and then that this is how I'm gonna dedicate myself. Um, and um, you know, I I gave myself a year to buy a hotel. Funny enough, I don't know, maybe it's like a goals and timings kind of things, but literally uh a year after I joined a group, like 365 days. I can't I can't even like join like like April 1, I joined Richard's group, April 1 of the year after I closed in the that's great.
SPEAKER_01:And you said you gave yourself a year.
SPEAKER_00:I gave myself a year.
SPEAKER_01:So you really started searching how many how many months before were you starting to hunt?
SPEAKER_00:Uh so I joined a group in April. Um, I really just spent the first like two, three months just learning about the commercial real estate lingo and develop started developing, you know what I didn't even know what cap rate was, by the way. Like so I didn't I I was really new to the space.
SPEAKER_01:Yep.
SPEAKER_00:So gave myself three months to like really study. Um, and then after the three months is when I just started calling brokers, like knowing stuff every day. I was emailing, I was calling. Um, I still had my W2, by the way. So I had my day job. So I I met a couple other friends who are now partners of the hotel deal. We met 7, 7:30 in the morning every single day uh for an hour, hour and a half. Uh we would huddle, we would call, we would email, and then 4 p.m. we would meet again, 4 to 4 30, depending on when our day day ended. We would just do another blitz. Yep. And then we would do it for next three, four, five months every single day.
SPEAKER_01:I literally just posted something yesterday on social media because Ed Milette talked about having like kind of two jobs. So from seven o'clock in the morning to 12, he was running one business, and then from one o'clock after lunch to six or seven o'clock at night, he ran another business. So that's cool. You did it before and after work, is what it sounds like.
SPEAKER_00:Yeah, because you know, I felt like everybody else in the game was spending the entire day doing what I wanted to do. And and to me, it was four to seven. Um sorry, it's a seven to nine in the morning, and then a five to nine at night time is really what I had, yeah, um, in terms of the extra time that I had.
SPEAKER_01:Sure. Yeah, and you know, that is so impressive. A lot of people just don't understand what it takes to actually get things done. That's a lot of work, you know. And so, and and sticking to your day job, yeah, yeah, your W-2. Yep. And then so you once you did uh you ended up buying your first one. Let's talk about that. When did you actually quit your W-2 job?
SPEAKER_00:So uh while I was doing the whole hotel and even after W closed, I still had my W2 job.
SPEAKER_01:Yeah.
SPEAKER_00:So I just timing wise, 2023 is when I started searching for my deal.
SPEAKER_01:Now, meanwhile, you still have your ADU cash flow.
SPEAKER_00:Oh, the ADU, yeah. I did my ADU and my Airbnb. So everything was kind of still everything was running in parallel.
SPEAKER_01:Got it.
SPEAKER_00:Um, so 2023 I started searching, 2024, April I closed. Um, and 2025 this year, February is when I left my job.
SPEAKER_01:Got it.
SPEAKER_00:So it was only recent that I left my W 2. Um, it was W2 sort of became my cash cow, if you will. But like it became less, less, less important in terms of my attention spin, how I, you know, how much I care about the job really.
SPEAKER_01:Well, your heart was over here, man.
SPEAKER_00:My heart was over there, but like, you know, I was trying to milk it, if you will, as much as possible. Um, but I knew towards the end of last year that sometime this year I was gonna leave my job.
SPEAKER_01:Got it. And no regrets?
SPEAKER_00:No regrets. I love it. I'm I'm I'm you know, 15 years of working. I'm I'm probably making the most least amount of money, except for made maybe when I was a CPA when I was made at$30,000. Um, but I'm I'm having the most fun.
SPEAKER_01:Yeah, well, you're it sounds like you're on the right track. So talk about the acquisition of that hotel. What did you where is it at? You know, I because you told me, but I want our audience to know where is it at? You know, how many keys, what did you have to do to get it to where it's at today, and kind of talk about a little bit of the uh the economics of it.
SPEAKER_00:Yeah, so it's a uh 24-unit uh boutique hotel. Um, and also we bought a duplex.
SPEAKER_01:Which is great, which a great number right out the gate.
SPEAKER_00:Yeah, yeah, yeah. It's perfect. 26 keys total 24 hotel and two door duplex. So with 2026 keys. Um, it's in uh Salvang, uh California, which is half an hour from Santa Barbara. It's really nice, charming, Danish um city. If you know, you if you haven't been there, you have to go there. It's like just like every time I go there, I love the city more.
SPEAKER_01:You don't feel like you're in California, you don't feel like you're in LA, you don't feel in the base big city.
SPEAKER_00:Everyone's happy, it's very slow, it's a wine country, you know, everyone's just like having fun, it's very family-oriented. Like, yeah, it's just like it's very slow. Like, I I love it.
SPEAKER_01:Um, yeah, I love it too.
SPEAKER_00:Yeah, no, it's it's a great area. Um, so uh yeah, uh, you know, again 24 units. Um, it was very, very under uh utilized in terms of the hotel. So they it used to be run by a 93-year-old. Um, they no technology, no process, no uh OTA presence, like none of that, right? Like they had like PDN and stuff like that, but no one was really watching it. Um, and um you know, it wasn't really maintained well. There's you know, everything it they had good bones, um, but it didn't have a lot of um you know what it could be. Yeah, so we we saw it. Yeah, we saw it. Um, and then um, you know, I recruited a couple other partners that I met through the the hotel investing group. One of the one of the members, one of the partners, um, he has eight, nine, maybe ten hotels. So he was the kind of the mentor of this whole process um in terms of you know the valuation, the value ed, and you know, any strategy that we had, OTA presence and marketing, all of that. Um, so we we had him as uh you know, I had him as one of the partners. Um and uh yeah, it's been about a year or so that we've been executing on the value ed strategy. Next week, we should be done with our renovation. We we started renovation this year intentionally, not not last year, because uh we wanted to you know operate the the property with some cash flow coming in. Um, and then we started the process of renovation during the soul season. Um, so next week there was a little bit of hiccup with the with the with the city in terms of permits and things like that. But shocking, you know, just shocking.
SPEAKER_01:You think I I know exactly how that all goes, man. I build all kinds of stuff. Yeah, I hear you.
SPEAKER_00:Yeah, even with the buffer, there was still an additional buffer that I should have built in.
SPEAKER_01:Yeah, you're so you're telling me you had problems with the government entity? Got it.
SPEAKER_00:In California, got it.
SPEAKER_01:In California, exactly.
SPEAKER_00:Yeah, yeah. But uh, you know, I think um that in itself was a was a learning process for me, getting the permit, working with the city. Um, you know, now I have uh refactor everything about the property. Uh we have a new uh management company, uh, we hired a new GM. Uh we're gonna have a new product. Uh so I'm I'm I'm building, I'm putting the right process and the people in place that's gonna you know help really maximize the potential of the the property.
SPEAKER_01:You know, that's a typical you know private equity strategy. Come in, see the deficiencies, implement strategy, get rid of the old management, bring in new management, bring in a new energy, you know, renovate it, make it new, make it modern new systems, cut costs when you need to, and and then market, build awareness. You know, that's private equity in a net show. Yep. So you do exactly what you did. And the biggest thing people don't know is how to cut costs using systems and AI and tech, and then how to uh obviously build awareness. Marketing's its own, you know, you know, monster. Um, and then changing out management. Yes. You have to get rid of old management because old ways ain't working for today's market, you know. So you have to really shift. So good for you. Yeah. So what was your acquisition on that one?
SPEAKER_00:Uh intrinsic numbers.
SPEAKER_01:Yeah, just what'd you buy it for?
SPEAKER_00:Uh we bought it for 5.9 million altogether.
SPEAKER_01:What do you think the value is equity-wise of it now?
SPEAKER_00:You know, it's a little bit hard to tell because that we were shut down for a period of time. And and obviously the the commercial real being a commercial real estate, it's it's more of an income approach.
SPEAKER_02:Yep.
SPEAKER_00:Um, so I think we're gonna really need to build uh the 12 month of solid financials. Of course. But over the next year or so, um, I think it's gonna go up to our target refinancing target is eight to nine million. Perfect in 12 months? In 12 months.
SPEAKER_01:Think about that type of you know, increase in value in 12 months. That's insane. You know, by the way, yeah, uh a conservative CPA is an is uh is stands, sounds about right right now. So, okay, and then uh and then how much did you increase the rents um from what they were getting? You know, and I say rents as to say per night, you know, uh stay, what they were getting to where they are now. What's the what's the delta on average?
SPEAKER_00:Yeah, so again, like we haven't got there yet, but uh we should be able to raise our ADR, which is the average daily rate, by somewhere around 60 to 80 dollars. So going from like 150 to 220, 230 uh average. Um, and then the occupancy was I think well, occupancy is uh really, I think, is a driver for us. It used to be a 45% occupancy. Solving as a market has 75 to 80 percent occupancy across the board. Yeah, so our deal thesis was like it was simple. We let's just do what everybody else is doing, let's just catch up to the market.
SPEAKER_01:Yeah, yeah. Sometimes just you know they say uh if you are a builder, don't overbuild, right? Sometimes if you go too far, too big, it people just you're not gonna get the valuation you want.
SPEAKER_02:Yeah.
SPEAKER_01:Um, unless you're in a niche market and you have a lot of money to burn, right? And you can ride and really build awareness and create some sort of uh environment people want to go to or an experience. But if you have something that's kind of down the middle of the fairway in the same category as most, and you're trying to just get to that 70% occupancy, don't go too far, do exactly what I'm gonna do.
SPEAKER_00:I don't need the property to go 90% plus occupancy. I I would love it if you can get there, but if we can get to 70%, um, everyone involved in this project will be happy.
SPEAKER_01:There you go. And you know, that's the that's the best part, is because really what you're doing is you're tracking the data, you're eliminating the emotion and you're looking at the data. And if you can get to what everybody else is doing, you're making money. So buy low, sell high.
SPEAKER_00:I'll tell you one funny story. So I knew all about this data point because the solving actually uh publishes like the all occupancy data, adr data through the TOT reporting.
SPEAKER_01:Perfect.
SPEAKER_00:So that's that was objective data. But what's skewed in the data is that you don't have an individual comp, um, you know, you you can't you don't know what hotel is making how much.
SPEAKER_01:Just giving you an overall average.
SPEAKER_00:Yeah, just kind of overriver. So like there could be uh a one-star hotel that's making fifty dollars an ADR, and there's a five-star hotel that's making fifteen hundred dollars ADR, and it's just kind of skews, right?
SPEAKER_01:Got it. So that's hard.
SPEAKER_00:That is hard. Um, the funny story is that when our when we were looking at this uh deal and the investment opportunity, there was another hotel right next to our hotel, which is literally maybe like 50 feet, maybe 100 feet away from our hotel.
SPEAKER_01:Right there.
SPEAKER_00:I go there as part of the market due diligence. I was visiting all the hotels nearby, just trying to get any information, right? Like I asked the hotel from manager, like, what's an ADR look like? What is their shoulder season? What's their high season? What's their low season? What's your ad look like? They probably didn't know. Uh they someone would surprisingly, a lot of people actually did know that good. Um, but the the one that was right next to our property specifically, she literally just gave me, like, show me their their uh financials and like literally like show me their financials. And then what they were doing was what we needed to do.
SPEAKER_01:Did you tell them you were a CPA?
SPEAKER_00:No, I was just telling them that I was doing a market study uh in the hotel space because we don't know whether was we're gonna actually buy this or not. Um and I wasn't lying, but at the same time, we weren't all uh under contract either. Yeah, so I told them what I was literally doing doing, which was uh doing the market study. Go there, but you know, it's uh the hotel of the the next next hotel is uh 24 units, same, same size, but half of the units are renovated, half of the units are not renovated, and they were still doing the revenue that we needed to do post-renovation.
SPEAKER_01:Wow.
SPEAKER_00:At the at the ADR and in occupancy.
SPEAKER_01:Sure.
SPEAKER_00:And that kind of gave me the confidence that we actually have better space in terms of we have more space than this this potential competitor or the neighbor property, um, and and post-renovation and you know putting the right uh the team and process in place. We that that sort of kind of gave me uh a conviction that yeah, this project is going to be successful.
SPEAKER_01:Love it, man. So you got a hell of an increase in value, at least your projections. And it sounds like you've you know, I don't think a lot of people I want to touch on this because it's important. To do boots on the ground market studies is really where you're gonna get the data because you can go pay for a third-party market study all you want. Sometimes they're not gonna be able to pull that data. It's gonna be a scrub of some sort of, you know, you know, um, Google is really what it is. All these different um sites that may have some data and they're just scrubbing it and trying to give you an overview, right? To do and door knock is a whole nother level of data. And I think it's a testament to how you're really trying to put this together, mitigate risk, and really know what your neighbors ultimately getting. And I think that's huge that you mentioned that half of it was renovated, the other half wasn't. And if you're still seeing that type of occupancy rate, that's huge because you now know no matter what, even if you have a little bit of a tired product, you're gonna do well. Where a lot of developers, especially guys like me. So, like let's say, for example, um, I'm building an apartment. Depending on how big the apartments are, as far as how many, how many units I have, uh, like the dollar amount and location, of course. But depending on the type of product, for example, windows I'm putting in there will determine on who my end buyer is gonna be, believe it or not. Sure. Because if you have an in if I'm building to sell and I'm not looking at a long-term hold, whoever is gonna buy it typically is gonna look at it from a long-term hold, and what they're gonna kind of pay attention to is renovation, cleaning up, management, maintenance. Yes. If you can create, you know, space where you have less maintenance, your return profile looks more promising. Yep. And so that's something that a lot of people don't really pay attention to is how yeah. So so if you have once you get into the institutional play, like let's say you had a 200 key hotel, it you're gonna be looking at it from that perspective, going, hey, we're gonna renovate this. You're no, you guys are looking at it from a long-term play. Yes, you guys have this as long. So what what was the terms on that one?
SPEAKER_00:Um, what do I mean turns?
SPEAKER_01:The return profile for your investors.
SPEAKER_00:Uh so uh ours is going to be seven to ten year old. Um, and we bought it for 5.9. We're hoping to refinance around 7 to 8 million um and exit around 11, 10 to 12 million would be our target.
SPEAKER_01:Now, did you when you acquired it, you did what what kind of mortgage did you go with? Because you went you went after debt, correct? Yes. Okay, so did you end up getting like a regular bank debt? Did you go with a private money loan? What did you end up doing?
SPEAKER_00:Yeah, so that is where I think this what made this project also kind of interesting. So one, um, so we had two different um assets, if you will, with duplex and a hotel.
SPEAKER_01:Sure, you had commercial and residential.
SPEAKER_00:Yes, yes. On the on the hotel side, uh, we got about 30% uh seller financed, um, at the 5% interest only for the first two years and six percent after three years. So that was a killer deal.
SPEAKER_01:Killer.
SPEAKER_00:Um, and then get those rates? Nope.
SPEAKER_01:That was a 30% seller carry.
SPEAKER_00:Yep. And then the 50% uh we got uh bridge lending because we knew yeah, we knew we were gonna refinance out of it.
SPEAKER_01:Um and that's cool because that stands alone and res it's residential, so you have a lot more options.
SPEAKER_00:Yep, yeah.
SPEAKER_01:So renovate it, get the increase in value, refinance just that portion of the asset. Yep, you got the seller carry for the other was it 24 units on that one? 24 units and then two keys on the resident.
SPEAKER_00:So on the on the residential side, um, so the similar story 30% seller finance, but we actually took over the seller's mortgage as a as a sub two. Does the the the two mortgages originally then? So there's one mortgage okay that we basically just took over the payment of the mortgage on behalf of the seller. We assumed it. We assumed it, yeah.
SPEAKER_01:How cool.
SPEAKER_00:Yeah.
SPEAKER_01:I'm actually working on a deal to try to assume a nine million dollar mortgage right now in the city. Oh, there you go. Yeah. So and not all the time can you do that. So you had to go to the bank, disclose what you're trying to do, assume it, qualify. Yep, and they took it right over. Yep.
SPEAKER_00:How cool is that? Yeah, it's a four percent um, you know, 30 year arm. It was a great is a great deal.
SPEAKER_01:And so he got a 1% delta, so he got a yield because you said five percent, right?
SPEAKER_00:No, no, no. We were just we just took it over. So he's not even making money off the mortgage.
SPEAKER_01:Oh, so it's the carry that got five percent. Got it. So that 30% carry, in essence, the down.
SPEAKER_00:Yeah, yeah, yeah.
SPEAKER_01:How cool is that, man?
SPEAKER_00:So that made the deal a lot more attractive.
SPEAKER_01:Yeah, oh, for sure, because you don't have a huge debt piece that you have to cover. And and then that almost guarantees it it does, it makes the numbers pencil better for his returns. You know, so now he feels more comfortable that you're gonna get it because he not only does he already know the rents he's got or the you know income he produces now, yeah. He's seen someone who's not tired, he's got the young back, he's 93 years old, right? You say he's 93 originally.
SPEAKER_02:Oh, yeah.
SPEAKER_01:There's a manager, and then and then you know, you go in, renovate it, generate more income. He's got a guaranteed cash flow.
SPEAKER_02:Yep.
SPEAKER_01:Yeah, and he doesn't have to worry about the debt piece or any of that stuff. So he's probably making the same amount of money on a 30% carry as he was on managing and dealing with the headache of it. Yeah, exactly. Is that kind of where it like so now it's a win-win for everybody?
SPEAKER_00:It is a win-win for everyone.
SPEAKER_01:So that's the strategy. Yep. So when you go in to negotiate, it's like, hey, listen, boots, you know, ear to the ground to the owner. They, and especially with the smaller boutique stuff, I've learned that there's um some sort of connection to it, you know, especially if they owned it for many years. They you know, they've raised their family with the income of that, and they've had all these experiences, they've had it for 20 years or 30 or more, whatever. He's 93 years old. How long did he have that thing for?
SPEAKER_00:I think he had it for like so actually, you know, backtrack a little bit. The manager of the hotel was the mother of the owner.
SPEAKER_01:Oh, okay. Wow, okay.
SPEAKER_00:Yeah, yeah, yeah. But like, you know, he is 60, I think around 60 years old. Um, but he's had it for like 10, 15 years, if I'm not mistaken. Okay. Um, but he didn't like really put any anything into the property, like kind of kind of kept it as is. Um, but uh, I think what that really does into the seller carry and just having seller as part of our the uh capital stack, if you will, is that it just aligns uh everyone's interests together. So like you know, when we do our due diligence, um, you know, it wasn't going to be, you know, we didn't necessarily have to worry about seller lying to us or anything like that. Because like now everyone's looking at the same thing, and every we we all we all want the same thing, which is to be successful out of this hotel.
SPEAKER_01:And that's so cool because you're really sitting down, you're showing your cards and you're saying, hey, this is what we're doing, and if you believe in it, that's we need you to carry 30%. Yep. And if they're gonna do that, and that's a lot of skin, they're leaving in the game, you know, they need to feel comfortable.
SPEAKER_00:Especially for the first timer like me, who are like getting into the game for the first time, like having that sort of assurance was very, very helpful.
SPEAKER_01:You know, and then really at the end of the day, he can always help if something were to come up.
SPEAKER_00:Yep.
SPEAKER_01:You know, if something's gonna get rough, you're like, hey, you're sitting on the board, dude. I need you to help me, you know.
SPEAKER_00:So that was like kind of a side uh benefit that we were potentially hoping for, is that we knew that he had a couple other hotels as so maybe down the line, if we can continue to make the debt payment to him, um, that he'll be potentially selling his hotel, other hotels, or maybe it'll become investor. We you know, still keep in touch with him, checking with him from time to time.
SPEAKER_01:That's cool because you know, at the end of the day, he probably has a relationship with the city. Yep, right. And so if you need someone to kind of sit at your board, he can kind of help you with any type of city movement and so forth. Yeah, that's when you have a small town, which is very, very small town. I'm very comfortable in small towns. I get that. You know, I had to power through my way of showing that I'm actually uh, you know, I'm part of the community. It took me a little bit of time to earn that trust with the community here.
SPEAKER_00:Yeah, I think that's really key. Like being part of the community, like you're not just like a big guy coming into a hotel, just throwing money at it. Like we part of our core marketing strategy is to be uh an a marketing pillar, is to be part of the community, right? So we're reaching out to different vendors and we're looking at different partnership opportunities. We want our hotel to be blended into the CDL Solvang.
SPEAKER_01:Yeah, and you have to, you know, so again, the small town, you have to. If it's a big town, yeah, not necessarily you have to play the politics, but you you're not as tied into the community. When you have a small town, community is absolutely everyone knows everyone. Everybody knows everyone. Yep, you know, and it's a good old voice club in a those towns, too. So cool. Well, all right. Is there anything else that you would like to talk about to build awareness for our audience of what you're doing?
SPEAKER_00:So I think the last thing moving forward is that um now I have minus sight to building my cash flow, which is it was one of the big projects that I had this year, which is to buy a small business. Um, so you know, I've developed my thesis around real estate. So I wanted to do more hotels, more real estate. Um, but I also wanted to buy a business that provides cash flow and the services um that can fund different real estate projects. Um, so you know, I've been searching for the last six, nine, twelve months or so. Um, I'm under contract for a uh a windows and doors uh distribution company. So anybody needs doors and windows, especially high-end uh customized doors and windows, this dealer uh does it. We haven't closed yet, um, but we are at the final stretch of being able to close. Hopefully November, December-ish is our timeline. Um, so you know, once we buy that business, I'm gonna go all in, uh, learn about it. I know nothing about windows and doors is kind of the thematic area, right? But I'm gonna spend the first like three, six, nine months, like really, really learn the business, learn the different product, talking to different vendors, talking to different customers, um, and then figure out figure it out from there.
SPEAKER_01:Now, that's a little bit more of a different strategy. So that's kind of keeping management in place.
SPEAKER_00:Yes, correct?
SPEAKER_01:So you're gonna keep, you know, in essence, the existing CEO as the CEO of the case.
SPEAKER_00:No, the owner is actually uh moving away.
SPEAKER_01:Does he is there a management team that's gonna take?
SPEAKER_00:So everybody else is staying in. There you go.
SPEAKER_01:Yeah, okay. So the ones that are actually hands-on. Yeah, yeah, exactly. So that's usually that's a private equity structure too. You know, PE firm comes in, offers something, they have the CEO and management team stays in place for X amount of years. They give them a little bit of money up front. There's so many different structures, but a little bit of money up front, then hey, keep that type of volume and cash flow. We're gonna do all back office tax strategy, we'll do all PO orders, right? We'll deal with all that. Yep. And then, you know, we'll do all the marketing, try to build awareness. You guys continue to scale, we'll step you out and bring somebody else in.
SPEAKER_00:Yep. Yep. Yep, exactly. So five-year reason for me would be you know, owning more hotels. Uh, I want to do one or two hotel deals uh a year. Um, and in the in the business side, I want to continue to expand uh construction material distribution side. All right, um, so you know, it could be flooring, it could be windows and doors, it could be all kinds of different construction materials. It's key in California because a lot of the trade businesses I was looking at require specific licenses. And I I'm just not a blue collar person. Um, so we're gonna kind of bypass that a little bit, still stay in real estate.
SPEAKER_02:Sure.
SPEAKER_00:Um, but I want to just like learn more about like I want to be in the renovation project, it was such a cool project. I want to like, you know, I want to be more boots underground, learn about it, uh, be able to um, you know, show to whether blue or the white collar and anyone in real estate, I want to I want to show to them that I am not just someone behind my desk and just you know punching numbers.
SPEAKER_01:Well, you did it, you know, and now you've you've you realize that's not the cloth you're really cut from. You tend to step out and do your own thing. And I think that's great because that's a lot of people are scared, you know, to step out of their comfort zone. Once you get comfortable, you don't really want to move out of there. You all you want to do is try to make a little bit more money and start building a different personal life. You know, I I'm the type of person as I've been doing this for so long that if I don't have a something to hunt for, I don't have purpose. Yeah, you know, and and I have goals to buy and do and develop, but I'm realizing how much I enjoy the hunt more than the money. The money will follow. You do all the right homework. So it's it's like a it's a high stake chess game.
SPEAKER_00:Yeah, you know, that's a good way to put it.
SPEAKER_01:And it's it's so much there's so much um power, and you just feel so like it's intoxicating when you're able to make a deal work and then you negotiate it. It's like a whole different high, you know? Yeah, and and that's what people I think really get addicted to. And if you're someone who just enjoys the hunt, you're not really chasing the money. Yes, the lifestyle naturally comes, and of course, you want nice things, but you're also looking for stability and you want to be able to give value to your people that are involved and believed in you. And that's so cool. And again, like you said, uh, you know, the way you set up the structure of the hotel with the carry and how it's a win-win for everybody, for the most part, I've learned that every investment, if it's good for the community, it's good for everybody, the seller, us, the investors, everything, if it's good for everybody that's involved, the likelihood of that investment to do well goes up significantly. And so that's really cool. And I love the fact that you again you took out got outside your comfort zone. So kudos to you, man.
SPEAKER_02:Appreciate it.
SPEAKER_01:So, how can my audience reach out to you, especially when you're about to open up the window? Which is funny because when we walk through Dover today, I was like, Yep. You saw all the stuff. That was all custom windows, everything else. So it's perfect. It's right, and honestly, I think that's the way the world's gonna go. Um, a lot of spec home builders, as you know, I do financing for ground-up construction, a lot of spec builders, and those are all customs, right? So I would love for my audience to reach out to you. I have framers and I have all the guys that have also been on our podcast, they're gonna probably want listen to this. They always are looking for good resources. So I'd love for you to just give everybody a little bit about you know how to how to contact you.
SPEAKER_00:Yeah, so I'm not super uh active on Instagram, but s.alex.kang is my handle. Um, I am a little bit more active on LinkedIn. Um Alex Kang. Alex Kong, yes. Okay, you got me. Uh Alex Kong on LinkedIn. Um, I'm I'm which is where you're more active. I'm a little bit more active on LinkedIn. Um, but you know, one way or the other, I'll definitely check messages. Yep. Um, but you know, it's yes, windows and doors, please reach out maybe within a month or two uh or so from now. But if there's anything that I've said during this podcast that I can help with, maybe someone who's thinking about making changes, if there if I can be a resource to to anyone um in in any way, please just reach out. Happy to help.
SPEAKER_01:Well, I love the fact that you moved out of Airbnbs, you went out of ADUs, like you literally have done the paradigm shift. Like you've learned that you have to make moves. If you just sit still, a lot of times you're just gonna lose. So if you're starting to see a trend down, it's time to make a move. Yep. Right. And so you did the right thing, you're not by not being bullish, not being scared, just hey, I gotta go learn it. Knowledge is power, data doesn't lie. Take the emotion out of it, sharpen your blade, go do it.
SPEAKER_02:Yep.
SPEAKER_01:I love it, man. So thank you very much for joining me today, man. I really appreciate it. For all of you, thank you guys all for watching and listening and on to the next.
SPEAKER_00:All right. Thanks for having me.
