Saturday Special: Behind the Curtain at Malama Capital | Mike & Nate E27

In this special Saturday edition, we’re flipping the script. No guest today — just Mike and Nate giving you a behind-the-scenes look at what’s going on inside Malama Capital.

After a listener reached out asking to hear more about our journey, we decided to hit record and share where we’re at, what we’re focused on, and how we’re thinking about the road ahead.

We cover:
Why Q2 is all about acquisitions and our $10M purchase goal

How we’ve restructured our team to create more bandwidth

Using ChatGPT to refine our buy box and narrow in on target markets

Our take on the current investment climate — and why uncertainty might be the window of opportunity

If you’re building your own hospitality investment business (or thinking about it), this is a real-time look at what that actually looks like.

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Click here to get the Time / Energy Audit

Connect with Michael on Instagram or LinkedIn.

Email Us at info@hotelinvestorplaybook.com

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Transcript

Michael Russell 0:00

Welcome to a special Saturday edition of the Hotel Investor Playbook. Today's episode is a little different. No guest, just Nate and me chopping it up about what's really going on behind the scenes. We got some feedback from a listener who said, I'm getting to know you guys through the podcast, but I'd like to hear about what you guys are actually up to right now. So we hit record and just started riffing. In this one, we talk about the systems we've been building, how we're freeing up time for acquisitions, and why Q2 is all about going all in on finding our next property to purchase. We also break down how we're using tools like ChatGPT to refine our buy box and how we're thinking about opportunity in today's choppy market. If you'd like to know what goes into scaling a hospitality investment business in real time, this is that episode. Let's dive in. Welcome to the Hotel Investor Playbook, your guide to building wealth and freedom through boutique hotel ownership, hosted by Mike and Nate. Get in the game. On this podcast, we talk story about everything you need to know to make money investing in hotels and hospitality assets. On today's episode, Nathan and I are just going to riff on what's going on right now in our world. So we thought we'd just take a few minutes here to kind of update our audience and just talk story and bring up speed on what we're working on. So to start, I will say this quarter, quarter two, we have identified that we are in full acquisition mode. We're on the hunt, baby. We are looking for our next deal. And we have been deep in negotiation currently, but our goal is to buy $10 million worth of assets this year. And so while we have one property under negotiation, we are simultaneously out there pounding the pavement, looking for other opportunities. But what I want to mention is that this didn't just come out of thin air. We have had months of preparation of getting our house in order, right? Hiring the right personnel, getting our team built so that we could free up our own time so that we have more bandwidth to focus on acquisitions. And so Nate's done an excellent job going out there and recruiting a couple new team members. Brandon and Bryce are a couple guys that have joined our investment side of our organization. So we have Malama Capital, which is the business side where we invest in hotels and hostels. That's the investment side, raising money. And then we also have House at Hostels, which that's where our team falls for operating our hostel properties. We have four commercial properties. We actually bought another commercial property in January. So these properties do they take a tremendous amount of monitoring, asset management. So one of the recent hires we made was we went out and found someone that could assist in asset management. A lot of that was falling on my shoulders, and that stuff is really important.

Nathan St Cyr 3:16

I gotta call a timeout just because there's a lot to unpack there. There's some really important points that I think that we need to, I want to slow down and and point out, right? Okay. So first of all, I just want to say as a competitor, the concept of slowing down to speed up has been very challenging. Like, dude, I as a visionary of saying, look, we're building this $400 million company, and to slow down and watch people that I'm involved with, coaching, providing feedback for, moving along. They're moving along. And then, but yet we've had this temperament of, hey, let's slow down so that we can speed up. That concept is very, very, very difficult from a mental standpoint for me personally. I want to go, I want to make movement, but I also want to say that I've been able to step back and recognize that mantra has been very, very important. Slow down to speed up. What does that mean? And what that really means is for us to go hit that $10 million and then not stop at $10 million, but able to be able to use that momentum to then allow us to do the next property, the next property, and really scale. The infrastructure has to be there. Otherwise, we're going to be in trouble. And so I just want to, I want to identify that. That mentally slowing down to speed up isn't fun. It's just not. But I'm really, really excited with what we've done. So let's let's go through a few of those things that we've done. You mentioned that we've grown our team. And and part of growing the team, I think it's important to identify that you have to identify where bottlenecks are occurring. Like, where are your bottlenecks of time? So ultimately, Mike, you can go and operate in your zone of genius. Like when I wake up in the morning, part of my role as in this partnership and the growth of this company is to really go, how what is what is slowing Mike down? Right? What are the things that he's spending his time on that we can go and shift from his responsibility to someone else's? Like, how do we go do that? And so you quickly went and mentioned that you know, we've hired Bryce and Brandon. So let's talk about Brandon quickly. So Brandon has been an absolute beast. Brandon's the man. Brandon is the man, bro. He's just freaking, we've had him go in so many different directions. But from a marketing standpoint of our growth of not just the hospitality brand of House at Hostels, where we've seen increases in occupancy, we've influencer program we've rolled out, like all of these things that he's done over there. But also then to really look at, okay, how can we help grow from raising capital and finding deals? And a lot of that has to do with people knowing what we're doing. We've built everything privately as two guys that partnered and bootstrapped this entire company. So now we got to go do do that publicly. But for us to build and us focus on our highest and best use, we needed that help from a marketing side. And so to bring Brandon on and help us go become known is a big focus point, will continue to be a focus point. And we finally feel like we've got some clarity with okay, here's what we're doing, here's how we're gonna go and do it. We've got him now starting to push us out there.

Michael Russell 7:00

Yeah, but I want to add something. Like, so you just said the zone of genius, right? And let's face it, like, dude, we're we're not Instagram guys, like that's not our zone of genius. We're not marketing guys in general, right? Whether it's LinkedIn, if it's YouTube, who whatever we decide ultimately to pursue. But right now we've got LinkedIn, we've got Instagram that we're pushing, and neither of us are really passionate about that. That's not our not our zone of genius, and that's a good thing to identify and then source it to someone else, like delegated someone else, like someone else that's just really passionate. And Brandon, he's really good at it and he's passionate about it. And when you have those two elements, like it's way better than trying to force something. Because when you and I were trying to do this, like ourselves, because we're like, well, we know it's important to get our brand out there, it just wasn't working effectively. And so now that we've got the support in that area, it does free up the bandwidth to focus on our areas of genius, zones of genius, like you said. So I just I want to give props to Brandon because it's it's a it's not only a time saver from like just getting things done, but it's also like, okay, I I don't really enjoy doing this. And now that someone else is doing it, that that makes me a lot happier in my just well-being in general. And you need to be happy in what you're doing on a day-to-day basis. Otherwise, it's not sustainable.

Nathan St Cyr 8:14

Yeah, absolutely. That's that's a really good point, right? So let's talk about Bryce, right? So we go and we align with Bryce because we knew that we could really amplify our results since we've started building this really strong infrastructure that we could go from an acquisition standpoint, we could go and start ripping, right? By having somebody put all of their focus and funneling everything up to you. But then what we found was well, there was a challenge with that. You didn't have the time for everything to get funneled up to you to actually operate as the person that's out there negotiating these deals, which is really your highest and best use. And so we're like, oh crap. So now we've got this person we brought on to focus on acquisitions, but it's not really optimal because it's not really helping, it doesn't matter how many opportunities are coming your way if you don't have the time to really dig in, assess them, develop the relationships that you needed to really move the the needle needle forward. So we made our next pivot, which was well, wait a minute, what is it that is holding you up? And what what we really dug in and recognized by you doing deep audits of your time is that, man, we we own four commercial properties. And which with each commercial property, as we've grown, every single property has asset management tasks that are just nonstop. They just never let up. And so we hadn't done the best job of creating a infrastructure and system that allowed you to really have number one, the system in place and the people in place to handle those tasks. So you're spending your time on tasks that really are taking away from our opportunity to growth. So we've shifted that. We went and made an additional partnership with Janet, who is now helping oversee us integrate our existing team in using our existing team to really handle those, those tasks, and obviously rolling out an actual management system, task system, project management system, Asana that will allow us to not just be about the person, but also be about the actual system. So I'm pumped for that. All of those things we've had to go through and recognize, solve, partner with, hire to put us in a position where now you're gonna have the ability to really be the kind of the tip of the spear to get us to where we need on your highest and best use of acquiring these next properties.

Michael Russell 11:03

Hey guys, quick heads up. Malama Capital, our investment arm, is full steam ahead on finding our next hotel acquisition this quarter. If you know of a deal or you're working on something yourself and want to partner up, we'd love to hear about it. We offer a generous finders fee. Or if it's a fit, we can bring you into the deal for a slice of the equity and give you a front row seat to the whole process from A to Z. There's a short form linked in the show notes. Just drop your name and a few quick details. And if it looks like a fit, we'll be in touch. Now, back to the show. Yeah. So what you referred to this time energy audit. There is a system, there's a process to figure out like, okay, what am I spending my time on? It takes two weeks. You do it daily. And if you look, we'll put it in the show notes, we'll provide a link. So you just click on this form, send it to us, say, hey, I want the time energy audit. We'll send it to you. We'll we'll email it to you exactly what I've done. And it's been really valuable for me to recognize, okay, what is bringing in the most money? What am I spending the most time on? What is something that could be delegated? And because I'm a doer, man. You give me, I'm just like to put my head down and go execute. And sometimes that's not as effective because I'm just working on tasks that maybe it could be done by someone else or maybe even our virtual assistant. It's a task that from a from a revenue generating perspective doesn't bring in a lot. And from a cost perspective, it could be delegated to someone at a much lower cost than what my time is worth. So anyway, figuring that out was the first piece. And now that we've got that in place, I want to shift gears, start talking about what we're excited about moving forward this quarter, which is acquisitions, right? So now that we've kind of gotten all of our systems and our pieces in place and it's freeing up time, we are in the hunt to go out there and just buy some property. So look, everyone uses ChatGPT these days. And so we found it incredibly valuable to just use the intelligence, that the technology that's out there to start identifying markets in which we want to we want to start investing in. So we're in Hawaii, that's where we live. Nathan and I live in Maui. And it's no big deal for us to hop on a flight, but it's not as convenient as just getting in the car and driving somewhere. So we got to do a little bit of research ahead of time. We got to really understand before we spend time evaluating all of these potential deals, it's like, well, what are we really looking for? And so using Chat GPT to put in some prompts in there that are like, okay, find us the specific markets that are going to fulfill our investment criteria. So ChatGPT has been great in developing our buy box to really streamline so that our team knows exactly what we're looking for. And when I say team, not in not just internally, but anyone out there that's that's you know potentially finding deals for us, we have a deal finder program. We'll release more information about this. But basically, if someone has a hot deal and they want to refer us uh an opportunity, a deal, then there's a way in which we can make that work so it's mutually beneficial. But also brokers, having a clear, concise buy box is critically important. And ChatGPT has been very helpful in providing a very concise understanding of where a buy box is, and then also remarkets, regional markets.

Nathan St Cyr 14:04

Well, I just think that one of the things that you identified that got us both jacked was not just identifying what it is that you want, but but identifying what you don't want is such a crucial piece to developing your buy box, right? Because there's so much noise, right? And especially if you're dealing with multiple deal finders, you're you're dealing with multi brokers that have large regions, all of these relationships. Part of this is just not only identifying what you do want, but being able to very quickly and easily assess what you don't want, what doesn't fit our criteria. And that's been a really fun process to be able to walk through and be like, okay, none of that fits our criteria. So that allows us to chisel down into what we actually do want so we can be more efficient with our time. And yes, this is worth spending time underwriting, digging into, doing a deep dive on. This is not. I think finding the no finding out how to say no quickly is a very important task.

Michael Russell 15:06

Yeah, let me give you an example. So just I think it was yesterday or maybe the day before, one of our team members brought us a deal, had done all the underwriting and said, Hey, look, I think this is a great opportunity based on these ADRs and occupancy rate. We can make improvements here and we can invest this much into the aesthetic and with some better marketing, yada, yada, yada, on paper or in an Excel file. This thing looks very attractive from an investment perspective. And so it's like, well, where's it located? And when he told me, I was like, there's not enough population to support that. And so that that point right there, I think, is important because look, he spent all this time doing this work into underwriting this. But if it's in the middle of nowhere, it doesn't meet our buy box. It has to be within a two-hour drive of a major metropolis. We want the population to be there to be able to fulfill the demand. And so coming to that realization, sometimes it you you learn by doing. And we're going through that now, but but we're importantly, we're we're working on defining that so that we can very quickly eliminate which property so we are efficient in our time and not spending time underwriting deals that because of certain criteria, they don't they don't match what we're looking for. And so that's a that's an excellent example of just like a first step that we've taken.

Nathan St Cyr 16:20

And that look, that wasn't might not necessarily have been a bad opportunity, but it wasn't an opportunity for us. What we know we want to focus on based on what we want to deliver to investors, based on our risk profile, based on what we've already determined. So it does make that, hey, that could be a that could have underwritten very well and be a great opportunity for someone. But it it's important for us to understand that it doesn't matter because it's not a great opportunity for us and what we're looking to accomplish.

Michael Russell 16:48

Yeah. Yeah. And and one of the things that's come up recently is like, well, holy heck, what is going on with the impact of the the tariffs? Market is just influx, the stock market's really been volatile to say the least. And so, from an investment perspective, like a lot of people are thinking, well, maybe maybe this is not the right time to consider investing. Let's hold off. And so, how you approach this? I mean, we we're human beings, we're we're emotional people, like we're gonna go through the same reactions as everyone else is like, oh my God, I'm fearful. Like, I don't want to invest right now because the whole world is ending. You know, I'm being dramatic. But the point being is like this is a very uncertain time. And so I'm curious, Nathan, what's your perspective on right now with these tariffs and the uncertainty? How do you feel about investing in hotels right now?

Nathan St Cyr 17:36

Okay, so I I guess I have two thoughts. One are existing business, right? So international travel obviously is very important to us with our hostile business model, right? That's a very important metric that we looked at. 50% of our are travelers. Now we're here in Hawaii, and so sometimes they people don't look at Hawaii exactly like they look at the US in general. And one of so I've been watching these trends very, very specifically. What I will say is I'm seeing a decrease in competitor occupancy. I believe we're taking more market share based on all of the focus that we've put into building our brand and differentiating ourselves. So I'm seeing the market share has shifted a little bit more to us. So that work is put in. But it creates as we move forward and look at our next project, that's something that as we underwrite, we want to look at that specific region, how much international travel they see. So that's something that I'm watching. Now I will say that we've outperformed what we've done last year, and we're outperforming five of the next six months in our future reservations for our own business. I own revenue on our business, so I'm constantly have my finger on the pulse there. But as far as what we're doing in the marketplace looking for hotels, I think that there's an opportunity here in what we've been targeting because I think it opens up drive travel to, you know, within a couple hours of a metropolis, there's an area of opportunity here that we're gonna continue to see like we've seen in COVID, right? COVID created very, very significant results based on people not traveling internationally. And so I think we could see a similar, a similar swing. And I think now the sellers, I think what we're gonna see is a shift in people that have been waiting to not that that have been trying to hold out to get top dollar for their properties that want to sell. So we have this huge shift of obviously the silver tsunami baby boomers that are going, okay, we're ready to move on. But they've been trying to time it right. And they've been waiting for interest rates to come down. And because they feel like, hey, if interest rates come down, then I'm gonna. To get the highest potential sale price for my property because the math works better for a potential buyer. So I feel like a lot of these, these baby boomers that have been holding on for the right timing, I think they're going to be in a position that with the uncertainty in the market, if they can get an offer, I think they're going to be more, I don't think, I think the fear of the unknown of what's happening moving forward, they're not going to want to continue to hold on. They're going to be like, look, if I've got an opportunity to exit right now, I'm going to take that opportunity versus trying to hold off for interest rates to drop and things like that. So my gut feeling, just based on psychological like impact of what's happening, I think that that could provide opportunity for some of us that are like all in, like, hey, the world's going to solve itself. It's going to over the next seven to 10 years, it's going to work its way up. I think it provides us a real opportunity to unlock some of these properties that have been sitting on the market for a while.

Michael Russell 20:59

Yeah, look, we don't know, right? We don't have a crystal ball, but all we can't control everything. All we can do is control our own perspective and mindset and make calculated decisions based on more long-term uh projections, right? Because if you look at Palm Springs, Palm Springs is a very convenient hot market. LA is close by. You got all these people that want to buy in Palm Springs because there's a lot of little trophy assets there. It's, it seems like it's a nice place to be able to say, hey, I own a hotel in Palm Springs. But right now, Palm Springs is like, they're, they're, they're scared because there's been a significant decrease in the number of Canadian travelers, particularly during the winter months. And so they're out there in the news and shows like the town of Palm Springs or the other municipality, municipality, whoever's in charge of tourism is like promoting, like, we love Canadians or putting signs up everywhere that says like trying to promote, like, please, Canadians, come, we still love you. Right. And the only point I'm making here is that some hotel owners might recognize that as a sign, like, oh crap, we better sell. And so we don't know for certain what's gonna happen, but there's a certain percentage of the population that will not make moves because of uncertainty. And the point that I'm driving home is when you have opportunities like this where there's less competition for whatever reason, then there can be a real opportunity to take advantage and find a deal when you have less competitors. When people are standing on the sidelines, that's the time to take action. And that's the perspective I think we're taking. We're not gonna just go blindly and buy whatever. We're not naive to the fact that there are some possibilities here that the economy could, you know, we could see a recession. Who who knows? But the point being is we're gonna we're gonna underwrite conservatively, but we're not gonna sit on the sidelines. We're gonna keep moving, we're gonna keep finding deals, and there might be more opportunity because now sellers, to Nathan's point, may be more willing to offload their property than they were before because they were holding out for the best time.

Nathan St Cyr 22:57

I mean, look at the greatest opportunity that we've had. The greatest opportunity that we've hadn't taken advantage of was during COVID, when everybody was frozen and paralyzed, and we're like, all right, here's our time to go take advantage. The everybody's like, we just had a strong feeling that the world, number one, the world's gonna solve this, right? We will solve this, this, this situation that is happening right now might feel like it's the end of the world. But if it is the end of the world, then who gives a shit anyway? Because it doesn't really matter. It's the end of the world. But if it's not the end of the world, which we didn't think it was, we're like, okay, here's opportunity. And we took advantage of that. And in a time where people looked at that as a very high risk time period, we went and created a win-win with a seller and provided ourselves with an opportunity to release him from his responsibility of his hospitality asset. And we have absolutely never looked back and crushed it ever since.

Michael Russell 23:58

Heck yeah. All right. So I'm gonna put this out of the universe. It's quarter two. Malama Capital, Mike and Nate, we're gonna go get a deal under contract this quarter. So we're putting it out there. We're gonna be head down focused on getting something under contract this quarter. We'll continue to from time to time offer these special edition episodes where we'll just keep you updated on what's going on. But in the meantime, if you want to reach out to us, email us info at hotelinvestorplaybook.com. We read every email and we appreciate your input and you guys listening. Nate, anything before we sign off?

Nathan St Cyr 24:33

Let's go, baby. Let's freaking go.

Michael Russell 24:35

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