The Hotel Investor Playbook

Building a $6M Micro Resort with Only 3% Down Using a USDA Loan | Ian Joseph E31

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In this episode, we dive into an uncommon but powerful financing strategy that could change how boutique hospitality projects get funded. Ian Joseph, founder of Branch, shares how he’s leveraging a USDA Rural Business Development loan to finance a $6M micro resort buildout in West Virginia - with just 3% down.

We break down the entire capital stack, how USDA loans work for ground-up hospitality development, and why this financing tool is often overlooked by small to mid-size investors. Ian also shares his approach to designing high-ADR resort cabins, partnering with local economies, and building a scalable brand without taking on unnecessary overhead.

What You’ll Learn:

  • Why USDA Rural Business Development loans are a hidden gem for hospitality developers
  • How Ian structured a potential 97% LTV loan for his $6M project
  • His step-by-step process for identifying profitable “hidden gem” towns
  • How to market a boutique resort before it’s even built (and pre-sell stays)
  • The economics behind luxury micro resorts vs. short-term rentals
  • How to scale hospitality assets while staying community-focused

Whether you’re an aspiring boutique hotel investor or looking for creative ways to finance your next project, this episode is a masterclass in using leverage the smart way.

Connect with Ian:

Email: ian@staywithbranch.com

Website: https://staywithbranch.com

Instagram: @staywithbranch

Facebook: Staywithbranch

Connect with Michael on Instagram or LinkedIn.

Email Us at info@hotelinvestorplaybook.com

Visit the Hotel Investor Playbook Instagram

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Nathan St Cyr:

What if I told you that someone is building a luxury hospitality experience in rural West Virginia with almost zero money down? And they're already pre-selling a million dollars in bookings before even breaking ground. Hey, welcome to the Hotel Investor Playbook. I'm Nathan Saint Seer, alongside my partner Michael Russell. And today we're diving deep with Ian Joseph, the visionary behind Stay With Branch. You're about to discover how Ian is transforming 26 acres in West Virginia into a micro resort that blends nature, intentional design, and unforgettable experiences. In this episode, you'll learn how Ian secured incredible financing through a little-known USDA program, how he's leveraging crowdfunding to pre-sell future stays, and why an unincorporated county with no zoning restrictions might be the hospitality developer's secret weapon. If you're looking to create something truly unique in the experiential lodging space, this conversation is pure gold. 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.

Michael Russell:

Get in the game. Glad to be here. Yeah, baby. Let's go. All right, Ian. So today we're going to talk a little bit about your business, which you are starting a micro wellness resort, right? This thing is called Branch. And so for someone who's never heard of Branch, can you tell us what is it? Paint the picture for us. What makes this micro resort different from, let's say, a cool cabin or a boutique hotel?

Ian Joseph:

Yeah, for sure. So Branch is a collection. There's going to be a collection of 11 cabins in a beautiful West Virginia mountain country near a small town called Berkeley Springs. And what makes us different? We are designing our property so that guests can enjoy nature on site. They're going to have some interesting things to do on site. But the town has so many amazing things to do already when it comes to restaurants and spas that we're not building our own restaurant. We're not building our own spa. We're going to partner with the local community, the local businesses that are already there. Because frankly, it's something that I really enjoy. And the people I talk to think that they're going to enjoy as well, which is getting out into the community and that partnership with the community. They're going to support us. We're going to support them. We never wanted to come into a community that already has an established wellness, an established food scene and be a competitor. So we just want to help them improve their business. And we think that's what our guests are really going to enjoy as well.

Michael Russell:

Okay. So this thing's in West Virginia. And you live in Washington, DC. I'm curious to know about your strategy for locating this town. Can you walk us through how you were able to determine that this would be a good fit? Like, were you focused on the potential economics like land price or feasibility, like permitting? Or to your point about the guest experience, did you just recognize, wow, this town is killer? And that was your main appeal of this location. Walk us through why you picked this location.

Ian Joseph:

Absolutely. It was actually all of the above. So I was looking initially in Virginia, the towns near the Shenandoah National Park initially, but the prices I was seeing relative to what I thought we could get in rents and in revenue, just it wasn't quite there. It was almost too refined. And so I kept looking further and further north until somebody suggested I check out this town called Berkeley Springs in West Virginia. And when I did that, driving into town the first time, it just felt right. It was a very warm feeling. And the more I dug, the more I looked into the town, it everything started to unfold in a positive way. It is two hours from Washington, DC, two hours from Baltimore, two and a half hours from Pittsburgh, and about three hours from Philadelphia. So 17 million people within a reasonable drive for a weekend getaway, which is exactly the kind of visitor that comes to Berkeley Springs and that we expect to have as well. Our average length of stay is probably going to be somewhere between two and a half and three days. So looking at the population that could get there easily, it's a large population, high average home income as well, median income over 200,000. And I was able to acquire 26 acres for $600,000, which I could not do in anywhere in Virginia, anywhere near Shenandoah. It also included two houses. So there's already two houses on the property that I renovated and had been renting for uh over a year now. Then coming to the more I got to know the town, it has this history of hospitality. It is known as America's First Spa because it's where George Washington would go when he wanted to get out of Washington, D.C. He would go to Berkeley Springs. And it has so many amazing nature characteristics. It has parks, it has hiking, it has mountain biking, is becoming a very big thing there. There's fishing at the Potomac River. So everything that I enjoy in getting away for two or three days to get out of the city is exactly what this town offers. And that combined with the prices that are able to acquire real estate there and the guests that are going to come and what I think they're going to pay, just made for the right recipe for success.

Nathan St Cyr:

So I'm I'm hearing you paint this picture. And now you you've described that where you've landed is that there's going to be these 11 cabins and what have you. But why did you decide to go this direction in hospitality?

Ian Joseph:

So it it actually started in single-family Airbnb. Not that long ago, but 2023, I decided that I wanted to buy a mountain house. And it the the intent was for it to be an investment. And so I was on the search for the town that I'd like to buy a mountain house to myself and my family as an investment. But also I always thought, hey, if it doesn't work out, I'll have a nice mountain house that that I we that we can take the family to. And that's how I started on this path. And when I started learning how to acquire a hospitality asset in the form of a short-term rental, learning how to design, how to set it up, how to be a host, I I just I was just totally hooked. I always I always had an interest in real estate going back to my education, my early career. I just really like real estate. I really like building something, building a physical asset in the form of a home or a building. That just it just to me is so much fun seeing some idea come to life. Then I also realized through this early venture into short-term rentals and being a host, I love hospitality. I get so excited when we have a guest that gives us feedback that it was the nicest place that they'd ever stayed. Everyone, I read every review. Still, we have in a year, we now have over 120 reviews. Only two of them were anything but five stars. And so I just get a kick out of that every time. And being able to share that with people and have the feedback that they came and they just found every detail considered in our homes. Like, just it just keeps me going, just so exciting to me.

Nathan St Cyr:

Yeah. So so I'm like, I'm like watching this picture. So you're passionate about hospitality, you love the experience, you're like, dang, I'm hooked. But then there's a lot of directions that somebody can go once they do this. Hey, I'm gonna go and grow my my short-term rental portfolio, I'm gonna go and convert a roadside motel or whatever it is. But you've chosen this path to go create this unique, differentiated experience where you started looking for land to build out this micro resort concept. Why that direction?

Ian Joseph:

Two reasons. So one of them is that getting to the commercial side. So there is the power of a hospitality asset, a micro resort, being a commercial property as opposed to a single family residential property property, which no matter what you do to it from a short-term rental standpoint, will still be valued as a single family home. It can be a great short-term rental, it can be very profitable. But if you were ever to go to sell it or get a loan on it, it's going to be valued based on single family home comps. On the commercial side, we have the power of net operating income and a cap rate to value. So you can you can drive a lot more appreciation into a commercial asset than you can into a single family home. So there's the financial side, and that's one big component of it. The other side is purely how I pivoted from my initial strategy, which is exactly what you kind of thought might have been the case, which was I was going to build up a portfolio of, say, 10 short-term rentals. But when I bought this 26-acre property that had two houses on it, I initially just thought, this is going to be great. These are going to be two amazing short-term rentals in my portfolio and I'll go get another one somewhere else. But then I started looking at this land and thinking, this is a really special place. I think it could be more than this. And that's when it hit me to go the micro resort development route on that piece of property. And once I started educating myself about everything that goes into micro resorts, the marketing side, the social media, the financing side, and what's available on the financing side, and just the idea of taking a little bit longer view than one single family home at a time and thinking, starting to think more about three, four, five micro resort developments over time in different areas of the country. I now I was totally hooked on that. And that is where I want things to go for me in the future.

Nathan St Cyr:

Okay. So I want to just quick take a pause right there because I think that this is absolute freaking gold. Like here, you found this asset, and it was the intention in the beginning was to have a short-term, two short-term rentals, two buildings, and this beautiful property, perfect. But then you really looked at the asset itself and said, how could this asset perform at its best? You've got a ton of this experience from what you actually do for a living, where you're like, okay, all of my experience through life has allowed me to think in these terms and look at things from financial viability, funding, like all of the things that automatically now these skills that you have developed to look at this land or this asset in a different way. And that sparked the, oh, from a staying with hospitality, what gives me passion, but then also from a financial viability, how can I get the most out of this? This idea and concept was born. And I just, I just love that because I think sometimes, most times it's the opposite, right? It's like, okay, somebody gets this vision and then they go to construct. But sometimes it's like, okay, well, what asset are we looking at? And how do we get the highest best use out of that asset?

Ian Joseph:

So I just want to add so one more thing to it that is beyond the financial aspect, the scale aspect, is something that was in line with the brand I was developing, even with the single family homes, which was that partnership with the local community and the local vendors that are already in these amazing small towns. So Berkeley Springs is a hidden gem of a small town. I'm on the street, somebody says, Where's this project? Berkeley Springs. Nine out of 10 don't even know where it is, which is unbelievable to me because it's such an amazing little place. It's a hidden gem. And we're going to shine a little light on it with branch Berkeley Springs. And part of what was really important to me, even with my single family homes that I already have in that area, was to encourage guests to go out and visit restaurants. So I have pamphlets for restaurants. There's two great brewing companies in town. I have growlers for guests to actually take with them, buy the beer, bring it back to the house, leave the growler. The ability to have even deeper relationships and partners in town when there's 11 cabins on the same property just takes it to another level. Now we can have weddings. You can pick from any one of six restaurants in town to cater your wedding on this property. You can have we can have host corporate events and have a local yoga studio come in and do yoga for the entire event that's there. And so I couldn't really do that at this level with this deep. One house at a time. That makes sense.

Nathan St Cyr:

Yeah, no, it totally makes sense. You're look, you're gonna have an impact. And it sounds like one of your core values is contributing. Like I'm not gonna come to a place and take, I'm gonna come to a place and go, how can we leave it better than we left it? That's like my grandfather was constantly saying, whether we went camping, no matter where we went, hey, make sure and leave the place better than what you found. And that concept that I hear you saying reminds me of that lesson. Like you're actually looking at this from the community standpoint, just the way that you said here, we're gonna put a little spotlight on it, like this hidden gem of that. And you're talking about the community, not your own place. I love that.

Michael Russell:

I want to know about the economic viability. Because look, I'm bought in, man. The dream sounds awesome. You're you're building something cool, it's in a sweet little town, you're passionate about this. It's awesome when you get reviews and it makes you feel good. We've talked about this before. Like we've never gotten a review from a commercial retail tenant that is just like, you're you're such a great landlord. Thanks, thanks for so much for leasing your property. No, we don't get that. We get complaints. But with hospitality, it's a feel-good business. And the more you pour into it, man, you just get that back in a dividend of just a return on just whatever passion is that you put in, you you feel that your guests are experiencing that. So that is fulfilling. But what about the economic viability, right? You've got 11 of these things, but you got to build these bad boys. And man, there's some risk involved with this, and there's cost and there's uncertainty. And so, in order to justify all that work and mental bandwidth to go through this process, you got to look at this and underwrite and say, hey, this is worth my time from a financial perspective. Can you walk us through the economic viability of this project?

Ian Joseph:

So our total project costs right now are coming in around six million dollars. And that is for the construction of the new units. So nine new units total construction cost right now, around three to three and a half million just of the structures themselves. Then we have a good deal of landscaping and site amenities to go along with that. And we're also doing a full exterior renovation of the two existing homes so that from a branding standpoint, they all have the same look and feel. We're also building or we're converting three-car garage that's already existing into our operations center where we're going to do all laundry on site. So we'll have three industrial washers and dryers, three storage, a little office space for our on-site manager, supplies, that kind of thing in the operations center. And one of the larger ticket items, but I think is really important to the guest experience, is a new entrance. Right now you access the property going down about three quarters of a mile of dirt and gravel road, passing some other homes. But our property has half a mile of frontage on a paved road at the bottom of the site. So it's 180 feet of elevation, elevation change from the top of the site where the majority of the cabins are, to the bottom of the site where the pond and the stream and the amenities are going to be for guests to enjoy while they're on the property, as well as the new entrance. That new entrance, we have to cross the stream. So we have a bridge, new entrance, that's about $100,000 just to get that bridge in. So total project costs, including contingency reserves, interest reserve or interest, capitalized interest, the whole thing is about $6 million.

Michael Russell:

Okay. So $6 million, what's your capital stack look like? How much are you borrowing from banks versus private individuals or syndicating raising money?

Ian Joseph:

So I have arranged for a bank loan for $5.8 million, and that will leave me out of pocket for the other $200,000.

Michael Russell:

I'm sorry, you said $5.8 million bank loan. Ian, who's your banker? Go to get his number right now.

Ian Joseph:

I'll tell you after the show.

Michael Russell:

I mean, this is nuts. So you don't you don't hear about how how in the heck is a bank going to basically finance almost all of this project?

Ian Joseph:

So it's a very special circumstance. I was very surprised when it came to me. I was I was actually planning on having to go out and do a capital raise for a million two plus 300,000 of my own, about a million and a half in inquity. But there is a bank loan program called the USDA Rural Business Development Loan Program. And it is going to be one of my secret weapons for development because it is very favorable. It's based on a projected valuation upon stabilization even two or three years out. Can you walk us through the projected stabilizations? Yeah. So they they underwrite to the stabilized value, I think it was three years out. And based on our NOI projection and a cap rate, they used, I think, 10%. We were coming up with around 7 million in stabilized value, and they'll lend 85% of that, which is how we get so close to 100% loan to cost.

Michael Russell:

Yeah, you put down 3% basically. Yes. That's incredible. Man, this is this is mind-boggling. I I had no idea you were going to answer like this.

Nathan St Cyr:

Okay, but then when I think about that, and I think about the the the debt service payment on 5.8 million, so walk us through walk us through that. What's the debt service coverage then? What's what's the net income gonna be?

Ian Joseph:

Yeah, that that that that part to me, as with a with a history in career in banking, that is where I I get anxious. Is about the a level of debt, which is why I say I might not end up with that level of debt. I actually hope I don't end up with that level of debt because the coverage in the early years is very thin. It's one, it's under 120, it's 115 in the first year, it's one 130 in the second year. I am much more comfortable. I I told myself out of the gate, 150. Like I want to be 150 and and improve from there. So this financing was put on the table, and I'm looking at it and I'm thinking, more equity, better coverage. Which way do I go?

Michael Russell:

What's the interest rate on this 5.8 million?

Ian Joseph:

So it is nine and a half. Well, it was nine and a half. Now that rates have gone down, it might actually be nine or better. But in the nines during construction, and then it converts to a five-year adjustable. So it every five years, but it's fixed for five years. And before rates went down, it was six and a half. So it's very favorable. It also has 30-year amortization.

Michael Russell:

Hey guys, at Malama Capital, we're always on the hunt for the next great hotel deal. And as you know, the best opportunities don't stick around for long. If you've got capital to deploy and want to invest alongside us, hit the link in the show notes and drop your email. You'll be the first to hear about new deals we're working on. Now, back to the show. Dang. That's great. All right. So we're just trying to calculate real quickly what is your debt service going to be?

Ian Joseph:

40,000. It's about four, it's about 40,000 a month, yeah.

Michael Russell:

And you've got Nine units plus the additional two that you're remodeling, but that's not a lot of units to be able to service that kind of debt.

Ian Joseph:

So we're we're projecting a million in revenue and five hundred and fifty thousand in in NOI in the in the first year. First year of operation.

Nathan St Cyr:

So that's a f and that forty-five percent expense ratio.

Ian Joseph:

Yeah. 45%. We we we can run pretty lean because like all of my homes now, the units will have keyless entry so guests can arrive on their own. We will have somebody on site during the day, but not 24 hours.

Michael Russell:

All right. So I'm doing some quick math and I'm like, okay, assuming, you know, 65, 70% occupancy rate, you're gonna have to do around $500 a night in ADR. Is that feasible? Like, what are these units?

Ian Joseph:

We're projecting $425 and 60% occupancy out of the gate, which I actually think the occupancy out of the gate is gonna be 70, 75 because of the marketing efforts that we're undertaking. I'm hopeful that we'll actually have pre-sold almost 100% of our first year revenue based on our marketing. But at 60% occupancy, 428 gets us to a million dollars. And 428, it's is to me, I'm I'm looking at that number and going, that seems high. Okay. That that feels like a lot of money for somebody to pay. However, when I look at the comparables, and this comes from a feasibility study that I got done by a third party that looked at comparables, and we're we're we're right in line.

Michael Russell:

Well, who are you modeling this after? I mean, the north of 400 bucks in West Virginia, you gotta be modeling this off of something that's that's doing a a really nice job.

Ian Joseph:

So sure. So the the number one that most people would have heard of is called the Cliffs at Hawking Hills in Ohio.

Michael Russell:

Oh yeah. Yeah, we know them.

Ian Joseph:

We met them. Yep, they're good folks. So that's probably the number one that most have heard of. But there's also the box hop is another one that has north of 500 ADRs for two to four guests. The box stays is another one, and anyway place are the top competitors that we kind of look at or the top comps. There's a slew of other ones that kind of we have similar kind of characteristics too, but those I would say are are the top ones that kind of helped us shape this kind of 429. And and those competitors are are 547. So we're markedly below them. However, none of them are in West Virginia.

Michael Russell:

But here's also the thing like, have you supposed to Kimball? Kimball's the I forget his wife's name, but they run it. Have you spoken to him?

Ian Joseph:

Christine. Yeah, Christine and Kimball. I have not spoken to them directly, no.

Michael Russell:

Okay. They're awesome and they're like an open book, but they have a very seasonal project. It's not open. From what I understand, it's not operating like year-round. So in order to do what you've described, I guess I'm wondering like, how is that going to affect the seasonality in West Virginia? Like, are people going there in the middle of the winter?

Ian Joseph:

So believe it or not, this part of West Virginia has very low seasonality. So that the delta isn't that much. January and February are the slower months. But by March, everybody comes back out. March, May, people are coming out. They're in the spring. Summer is a high season, May, June, July, August. There's a little bit of a fall off in September as everybody's back to school and they just did their vacations. But then the fall colors come in October. People are there for the fall colors from October till middle November. And then they're there for the holidays. Like there's a great holiday crowd that comes. People actually spend Thanksgiving and Christmas. And we have all three of our homes at Christmas were booked. I was shocked. I thought, oh, I'm gonna take my family there because it'll be empty. They get booked because people actually go away for the holidays. December 2024 was our best month to date. So seasonality in this town is pretty low, which is something else I've come to really appreciate as far as an investment thesis in an area, the location is lower seasonality. Yeah.

Michael Russell:

Now I know we're putting you on the hot seat here.

Nathan St Cyr:

I appreciate you answering these. Well, you got you put yourself on the hot seat when you said you're freaking got a six million dollar valuation and you're you're borrowing 5.8. Instantly it's like, whoa, time out. So the name of that loan again, I know you said it's your secret weapon for funding these micro resorts, but it was USDA. There was a rural US rural development?

Ian Joseph:

Rural business development loan. So it has to be for a business and it cannot be multifamily. And so hospitality assets fall into the business class, and it also has to be to develop something. So you can't just buy an existing hotel and finance it with a USG of rural development. You actually have to be developing. And that's how I found that's how I found this. Okay. Do you know anybody that's closed one of these? I do not know a borrower has closed one of these. No.

unknown:

Okay.

Michael Russell:

Yeah, I've heard about these loans before. And from what I've been told, holy heck, they're very favorable, but they take a long time. There's a lot of hoops to jump through, a lot of paperwork, a lot of bureaucracy and getting this thing done.

Nathan St Cyr:

So Okay, but that's but that's the cool thing here, right? So that's what I want as I'm hearing you say that. I'm like, but dude, Ian's the perfect person for this because he's got skills and experience that are in alignment with this specific area of the development of this property. So can you touch on that, Ian?

Ian Joseph:

Yes. So my background in construction and finance, in real estate, and even specialty real estate development. I worked for it for a bank that and I was working on senior living, which is very specialized. A lot of what I learned in underwriting those deals myself on the other side of the table was to look at a market study, understand what you're looking at when it comes to average nightly rates and demand and supply and saturation and all of that. And so for this project, when I finally realized that all those things that I've done in my career and everything I've learned applies to this, just with some different words as far as how you explain the asset, that was uh a superpower. Going to a bank and being able to put in front of a bank a feasibility study that I ordered and my breakdown of the feasibility study, projections, business case, like the whole everything that went into it, that was very well received by the banks that I went to. And this one in particular, everything that they needed to see, I was able to, I able to produce easily, very quickly. And we are still in the process. Full disclosure, this loan is not closed. But right now, where we are is the only thing standing between me and getting this loan closed is final construction numbers. And I have one proposal, have another one coming, both viable options. So I'm feeling better every day. I keep giving the bank updates and they keep telling me that I'm moving faster than anybody they've ever worked with, even though it feels like I'm stuck in molasses because I just want to start.

Michael Russell:

Do you already own the property now, the property, the buildings, and the land that have you acquired these or are you in negotiation still?

Ian Joseph:

I own them. So so I bought this property in October of 2023 with the two houses on it, 26 acres, and fully renovated. The two houses are there. And I opened those for rentals as short-term rentals in March of 2024. So it helps a lot to have control because I don't have to meet a deadline. So the the the fact that it's that it takes a long time to do this type of financing, for me, that's okay. Because I'm not I'm not under an LOI to that has a deadline to close. I can do it at the right time. And it this is so favorable that it makes sense to do it on the timing that it takes. What is the land zoned as it is allowing you to do this? Well, West Virginia in unincorporated county parts of the state does not have zone. I have a real estate attorney, local real estate attorney. I'm just telling her this is what I want to do. Tell me what I need to know. Do I what what what could stop me from doing what I need to do? And she's basically told me there's nothing really.

Michael Russell:

Okay. So what is this? I never even heard of this. So basically, what you're saying is in West Virginia, this is a this is a clause specific to a particular region within West Virginia, or is this across all of West Virginia, like that these zoning laws don't apply?

Ian Joseph:

So it is it is all of West Virginia. It it's it's county by county. So in this county, the unincorporated parts of the county. So there the township of Berkeley Springs has its own zoning regulations. My property is just outside of the town of Berkeley Springs, five minutes outside of the town, and it's in the unincorporated part of the county. And in that part, in the unincorporated part of the county, they're the zoning is whatever you make the property to be. So it'll be a hospitality location. It'll be zoned for hospitality once it's complete. You actually go get the zoning after the property is open.

Michael Russell:

Yeah. Wow, this is incredible. You're dropping some some real nuggets here. It felt it seems like you really have found this like perfect opportunity. It sounds pretty unique. I'm curious to maybe shift gears here a little bit towards how you are starting to market this ahead of time. Because you mentioned was you're preparing so that when this thing is built and ready, you're gonna have pre-sold inventory. Can you tell us a little bit about your marketing strategy? What methods are you utilizing to start getting the word out there that this property is coming?

Ian Joseph:

We are doing several things. So the first thing that we're doing is trying to build an audience and a following for branch, for the brand, through Instagram, social media, Facebook at Stay With Branch is our handle. And we are utilizing my other property, which is very Instagram worthy. So not the 26 acres where the Branch Berkeley Springs micro resort is going to be. But I also built a an 1800 square foot three-bedroom, two-bathroom, a frame, new construction, ground up. And that is called Branch Frog Hollow. And that is kind of the centerpiece of at stay with branch on Instagram right now. That thing is sick. Thank you. We put a ton into it, and that's the response we're getting from guests. We're using that, marketing the heck out of it. One of the really neat things, and I'm sure you two have experienced this as well, is what we're doing is cool. And people just hear the story and they want to be involved in some way. So I have multiple people who have reached out and it's just, how do I help? How do I help you do this and that? And one of those people was an early mentor of mine on the short-term rental side, and he has a background in marketing and he has a YouTube presence and he has an Instagram presence. His name is John Hildebrand, and he's a great friend, and he's been helping me to really put this thing on the map as an advisor on the marketing side specifically. Not something I didn't even know what, I mean, I knew what Instagram was. I didn't have an account three years ago. Okay. So like I am not the person to run a successful marketing campaign, especially social media. He's really helped advise me on what direction to take. So we have done a couple of things. One is we have partnered with a really good short-term rental marketing firm and given them full control, and they have done a great job. The other thing about pre-selling stays is uh we are going to do a crowdfunding campaign. And in order to get to the point where we have a successful launch, we're utilizing a service called Launch Boom. So a quick overview of Launch Boom is basically they it's a it's a it's a program that helps you have a successful either Indiegogo or a Kickstarter campaign.

Michael Russell:

Is this the campaign that Travis Chambers used to launch his so Travis Chambers same concept?

Ian Joseph:

Basically, a lot a lot of developers will use it to get the equity they need to pair with the debt to then go and build. Since we don't need it for that, we are using it to prove the concept, put money in the bank, and then also be able to add back in some of the fringe amenities that maybe we we cut out of the budget so that we can keep the budget as tight as possible. The secondary benefit is it forces you to just build this enormous following if you do it right. And based on the team we've put together, we're gonna do it right. We're we're following in the model of Trev Travis Chambers. There's another great project that's currently underway in Georgia called Cyprus Resort that has had a successful campaign this fall and raised, I think, $794,000 in on day one. And so we are we are aiming to do the same thing.

Michael Russell:

Okay, but so for our listeners, look, this launch boom in in a nutshell, and I might not have this exact, but essentially what you're doing is you're pre-selling. So the advantage to the person that purchases the rights to book is that they get it at presumably at discount. So if these things are gonna rent for $400 a night or around that amount, then maybe they get it for $200, maybe they get it for $300. Whatever it is, they get the right to book once it launches. So they've got like an opportunity, they don't actually book anything because it's not available to book yet, but they have the opportunity to do so. So you're pre-selling, so you're raising that money. Now, launch boom, what do they do? They help facilitate getting the word out there or they help facilitate collecting the money and holding it in escrow. Like what exactly do they do?

Ian Joseph:

So it's a platform to build your pre-launch campaign. And so a successful launch campaign requires doing work ahead of time. If we if we're just to go put our project on Indiegogo today, nobody knows about it. So nobody goes to book. So launch boom helps you build the funnel of people beforehand and take deposits. And so you could you put a deposit down through the launch boom process, which is a combination of social media, Facebook ads, email marketing. And then you have 10,000 people who have agreed because they've given you a $50 deposit to book on your crowdfunding launch day. And then when that day comes and you launch, they are actually booking. So they are paying you in full for their stay. They're not reserving a spot and not paying, they're giving you the full reservation at a discount. That's how you get them to book, is you offer a discount, but they are booking their stay, non-refundable. And then when you when you're open or when your booking window starts, you you open it up, and they're the first ones who have the ability to set their dates, but they've already paid.

Nathan St Cyr:

Yeah, I remember Travis talking about this. And then there's breakage of that 50 bucks, right? So some people are like, oh, this is just cool. Ah, well, forget it. Like they never do it. Maybe of that $50, you get the of the 10,000 people that give you 50. Maybe it's only 50%, end up actually booking a stay, if that, right? And so there's there's like breakage in that. It's just like ends up then being kind of free money. And it helps fill the gap for the discount that you're giving them once then then this certain people actually go and make the booking.

Michael Russell:

All right. Well, what I want to do, I want to paint the picture a little bit because here we're getting into this, like into the weeds about this marketing platform. But I went ahead and pulled up your website to get an idea of okay, what is this branch frog hollow a-frame? Like what actually would I be extra if I'm gonna go and give you some money for pre-booking, what the heck am I gonna be excited about? And I will tell you, Nathan's right, this thing is sick. So, what I want to know is this A-frame that you have on your website now, that's already built, right? That is bookable currently. Is that correct?

Ian Joseph:

Yes, it's been uh available since October 4th, 2024. Yes.

Michael Russell:

Okay. And is this sort of the prototype? Is this the type of product that you're building with these nine other units that you're working on building?

Ian Joseph:

From a quality standpoint, from an amenity standpoint, and from a design standpoint, yes. However, we are not building three-bedroom A-frames at the new property. We are building three different floor plans: studio, tiny home, 365 square foot kind of singles and couples cabin. Then we're building a true one-bedroom, about 750 square foot cabin that has a lofted, stargazing, kind of unique space lofted above the bedroom with two 25 square foot skylights. One of the that that all came back, but that idea, by the way, came from guests who have come to that property and said, We loved it here. Can you cut some of the trees down around the deck? Because we just want to look at the stars and we can't see enough of them. And that's when I thought, well, let's make that happen in this next property with intention and actually call this space above the master above the bedroom in the one-bedroom unit a stargazing loft. So that has a is the is in the one bedroom. And then we have a true two-bedroom, two-story unit that has two king beds on the first on the on the lower level, and a large open space on the second level that has a kitchen, dining, and living area. What's the square footage on that two-bedroom? Oh, sorry, that one, the two bedroom is gonna be 1,400 square feet.

Michael Russell:

Okay, so how many of these tiny Helm Studio, 365 square foot ones, do you have? So there's gonna be three of each. Three of each. Okay. So number one, what I wanted to get to was looking at this right now, I can tell that this thing has been professionally designed. Like an interior designer clearly went in there and said, let's make this thing look incredible. And then you've got these huge windows in the living area. It's a it's a A-frame, but you can see all of the forest and all the trees. And so when you're sitting from the inside, it's just lush greenery. It looks incredible. The outside has a fire pit with these kind of outdoor chairs that people can just gather around. I could see people really connecting there along the fireplace. The outdoor deck has this beautiful hot tub. And then there's landscape lighting. There's landscape lighting everywhere, so it really kind of illuminates and creates like a soft, warm feel to it. The warm decking, the modern railing. So it's like the cable wire railing. Um, it's incredible. The the inside decor for the bedrooms adds like a layer of it's unique. You've got like accent walls and wallpaper. It's just clearly designed really, really well. And so this is not just a cabin in the woods. I can tell this is something to be excited about to take your family and feel proud of. Like, I'm staying here, like this the spiral staircase. There's there's too many details to really go through, but I'm trying to give some sense of like, okay, this is a luxury experience. And so you've done a knockout job. I can see why people would be excited about pre-booking. The the mechanics of like what their return on is if they deposit 50 bucks or whatever. That that gets a little bit boring. What what people get excited about is like the the feeling of like, wow, I'm gonna do something luxurious and something exciting and with these see-through roofs or whatever you're talking about, where you can stargazing, something that's novel, something that's that's a unique experience. So this really hits home with the idea of building a micro resort that's based on experiential lodging. You've done a great job. But that being said, while you're talking, I'm doing some math here. I wrote down the square footage and I've got here it's about 2,400.

Ian Joseph:

8,400 for each collection or each village. So these are arranged where there's this a studio, a one-bedroom, and a two-bedroom are are together.

Michael Russell:

Uh-huh. But you get about 8,000 square feet total, more or less. I mean, if my math is off a little bit, but is that about right? Seven. Yeah. Doing quick math here, but three and a half million dollars for the structure divided by seven thousand square feet is. About $500 a square foot. Yeah. No, that's totally feasible. I mean, that is sometimes what happens is people have these lofty aspirations to build these beautiful. I mean, this thing is sick, right? It's gorgeous. And they're like budgeting $250, $300 a square foot. I'm going, look, not in today's world, it's not going to happen. So my mind is trust but verify. So I had to go through this to see, like, okay, what is he budgeting to build this thing? Because from the photos, it looks luxurious, but you got to verify and make sure that your costs are in alignment with actually being able to produce something that matches what you're showing people. Because it could be theoretical, but not practical.

unknown:

Right.

Nathan St Cyr:

I have to say that that was a rare experience. I'm calling a timeout here. That that you that you that we actually you just got the freaking square, the price per square foot that you believe is realistic. 99% of the time when we go through that exercise with someone, whether it's offline or whatever it is, Mike, you're like, we end up having a conversation. Like, there's no way they're doing that. So the fact that you just busted that out right now and that it actually penciled to your standards.

Michael Russell:

Now, granted, I'm I'm I'm counting on West Virginia labor cost, right? So I discounted in my mind, like, because if this was Maui, I'd go, no way, you're not even coming close because to this level of luxury, you'd be at $900 square foot easy. But Maui's would not, Maui's not West Virginia.

Ian Joseph:

Well, the one other good thing about what I've done so far in in that area of West Virginia specifically is I built that that A-frame, so I know what it costs to build that. So I have an example, and I think we actually ended up building the A-frame for in the low fours per square foot. I think we're with the budget we've set out, I think is is realistic. All right.

Michael Russell:

Before we wrap this up, I I wanted to understand how are you going to operate this? Are you going to have like on-site management? Are you is this going to be with like a staff light model or more of a hybrid? Walk us through your staffing.

Ian Joseph:

It's going to be a little bit of a hybrid, but staying on brand with branch and the the local nature. I have found a local person who started as a cleaner for me when I was I'm still self-managing these the the three homes that are there. And I put out a interest for a cleaning partner and got a few applications, but one of those folks in in particular has just shown the ability to manage an entire operation like this on the operation side. And so I am trying to find local folks to manage. And she's definitely one of them. I have really kind of lucked into finding an amazing handyman who has his own company who is going to be a big part of the ongoing operations of Branch Berkeley Springs. And other than that, we are we're going to operate with local cleaners and local landscaping, but it's going to be fairly staff light. As I said a little bit earlier, we don't plan on having one person there during the daylight hours that's going to be there anyway. So we're going to have somebody that is very skilled in multiple, multiple areas able to do some clean turns for the units, but also set up for the guest experience. The little local touches that we that we do currently, we partner with a bakery and and they provide cookies for every guest. And we put a little box of cookies with the bakery sticker and our sticker that has our Instagram handle on it with a little handwritten note. And so that's one of the tasks of the local manager that'll continue. But the overall snapping model to answer your question is going to be kind of a hybrid, but but more staff light.

Michael Russell:

Yeah, I think you'll end up working through that. A lot of people, when they set out, they have a an idea of what they think they're going to do, and then they realize, you know what, maybe we need more staff, or if there's ways to cut back. I'm just curious. Right now, this is preliminary. This is still in planning and development stage. So it's hard to say exactly what's going to work for you for the long time. I do want to ask, what what's the significance behind the branch name?

Ian Joseph:

So it is a couple of things. It's nature, it's a it's design, and it's community. So those are the three tenets that we have for the brand. And the branch itself kind of represents all of that connected to the trunk, which is the core, which solidifies, but it also is extending away from the trunk and getting out there, the adventure aspect of it, being the branch also being a place for not only leaves to grow, but you know, the birds to sit. And it's it it again, it's back to the whole community aspect and being that place to connect the core and the trunk to extend out.

Michael Russell:

Right, cool. I love it. Yeah, awesome. So my last question fast forward five years, what does the branch portfolio look like? Is this a one-location story or are you starting more of a broader brand?

Ian Joseph:

Well, that is a great question. And I think it's going to be broader than Berkeley Springs. I am actually looking at another property in in West Virginia right now that has some potential and also looking at other locations in the Southwest. There's so many. The thing that I think that I stumbled on here with this hidden gem of a town in West Virginia in Berkeley Springs, once I realized what I had stumbled on, I also realized there was a thousand there are a thousand towns like that have this kind of undiscovered feel to them, but have something really special about them, a history, something. Doesn't have to be America's first spa like Berkeley Springs. It can be the last, the last lawless town in the United States. As long as it has some sort of story, some history to it, it's a good fit. As long as the people there today have a hospitality nature to them, are somewhat hospitable themselves, the then it's it's a good fit. And so I've I've already kind of heard from a lot of people that I've told the story. I found this town, it sounds like Berkeley Springs in my area. Like I want to do one of those here. Can you can you help me? And through those conversations, I think we'll have two or three locations up and running in five years, would be my my guess.

Michael Russell:

All right. Well, I wish you best of luck. Nathan, you got any other questions before we wrap up?

Nathan St Cyr:

No, I'm pumped. I love this conversation, Ian.

Michael Russell:

All right, sweet. So, Ian, listen, if our if our listeners want to stay in touch with you, follow your journey, or possibly book your resort, how can they stay in touch with you?

Ian Joseph:

So they can follow us on Instagram at stay with Branch is the best way to do that. We're posting offers there for stays. We'll start posting more updates on the Branch Berkeley Springs project as we as we get into it. Or they can go to our website at staywithbranch.com.

Michael Russell:

All right, sweet. Well, that wraps up another episode of the Hotel Investor Playbook. We are Nate and Mike. He is Ian Joseph, and we will catch you again next week. 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.