Renovating Old Motels Without Blowing The Budget | Luke Nelsen | Part 3

This episode isn't about scaling fast.

It's about building the infrastructure - the team, the systems, the standards - that lets you actually step back from a business you worked incredibly hard to build.

In Part 3 of our conversation with Luke Nelson, co-founder of The Refresh Collection, we move from acquisition and renovation into operations.

We cover:

• Why he threw away mattresses the previous owner had just replaced - and what that decision signals about brand consistency across multiple properties
• The 20% renovation buffer rule and how to frame it for the bank
• Where you never cut corners - mattresses, linens, pillows, air conditioning - and why "touch time" is the only standard that matters
• How a Wi-Fi-enabled fire pit managed from the Philippines became one of their strongest review drivers
• The Loom + Notion SOP system that lets him answer a question once and never answer it again
• Building a team of five virtual assistants through onlinejobs.ph - and why paying extra to headhunt saves more than it costs
• What his general manager actually does - and why he tells him to sit by the fireplace
• How contactless check-in went from local media criticism to their highest-rated guest experience feature
• Finding contractors through Facebook referral groups, Sherwin-Williams business card boards, and showing up at Home Depot at 6 AM

If you're a founder, operator, or investor trying to build something that runs without you - not because you want to disappear, but because the business has to survive your absence - this conversation will feel familiar.

This isn't a highlight reel.

It's a practical breakdown of how real businesses actually get built - under pressure, not in hindsight.

Chief Milestones is a video podcast featuring honest conversations with founders, parents, and investors about building real businesses, staying healthy, and raising families.

New episodes release Tuesdays and Fridays.

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Transcript

The $17,000 Internet Lesson

Luke Nelsen 0:00

Yeah, that well, that $17,000 internet mistake didn't allow us to do it.

Reshma Vadlamudi 0:05

So, how do you budget for the unknowns, especially the historic or older properties?

Luke Nelsen 0:12

This old building was plaster. So instead of just cutting drywall perfectly, plaster kind of crumbles. Yes. So then we had to deal with, we had to trim out all of the openings.

Reshma Vadlamudi 0:23

So what elements do you believe every boutique hotel room should have?

Luke Nelsen 0:28

Our customer service is top-notch. Like if you if you read the reviews on us, they all talk about how it the ease of check-in, they all love it. They can just show up at any time.

Reshma Vadlamudi 0:38

So who's on your dream renovation team and how did you find them?

Luke Nelsen 0:51

And you know, our general contractor who we hired, because I really I needed somebody to show me because I did not know what I was doing at that time. Now we don't really hire general contractors, but at this time we did talk us into putting like a uh a full marble shower in a duplex that's a long-term rental. And like I could have gotten away with a hundred dollar Home Depot tub insert, and they they talked me into putting a marble, a marble shower in a duplex, which is just it's nice for the tenant, like good on them, but completely unnecessary. So um, yeah, that was another one that I I think about that first project, all the money that we wasted.

Reshma Vadlamudi 1:35

But you just don't know what you don't know. No, yeah.

Luke Nelsen 1:44

That project.

Reshma Vadlamudi 1:45

Yeah. So what did you do with the second one? Like, how did you think about the internet for the second motel now?

Luke Nelsen 1:51

Well, we knew what to look for, and luckily that same IT company, both motels are in the same market, had already done that that whole access point situation. So there was already bridges for the internet all throughout the property. And we asked uh that specific company uh after we saw the access points if they were the ones that did it and asked about the Wi-Fi strength and all that kind of stuff. Because we knew to look for it, right? Because like you touch a hot stove once. Yes. Um, so luckily it had already been done. So we knew that it was good to go. We we got uh confirmation from the same company that we hired for the first property that everything was good to go, good Wi-Fi, everything. So we did not have to spend any money on that.

Reshma Vadlamudi 2:35

Yes, yes, lesson learned. Lesson learned. Yes.

Budget Buffers For Old Properties

Reshma Vadlamudi 2:39

So how do you budget for the unknowns, especially the historic or older properties?

Luke Nelsen 2:46

Yeah, so I would I would always recommend putting in a buffer. So if if your numbers all add up to just use easy numbers, hundred thousand dollars, I would put a 20% buffer just to be safe. I mean, at least a 10% buffer, but on an older property, something's gonna come up. You're gonna open a wall and there's mold or there's bad plumbing or there's um, you know, steel uh laterals or something, you know, something uh is gonna go wrong. Um, so I would definitely put in uh some sort of a buffer and and present that to the bank too. Just be like, this is the quotes that we've gotten, but just knowing what we know, there could be a a miss here. And like we're human and we're just telling you this. Yes and you know the bank's in business to lend money too. So they're you know, they're usually fine with with some sort of a buffer and they almost expect it. Yeah,

Where Guest Comfort Gets Funded

Luke Nelsen 3:46

yeah.

Reshma Vadlamudi 3:46

And where do you never cut corners?

Luke Nelsen 3:49

Never cut corners on things that the guests touch, specifically mattresses, pillows, linens. I mean, that's most of the time they spend in your rooms is gonna be on those things. So we have uh luxury grade hospitality uh mattresses. We use the same mattresses in both our properties, even though the owner had just replaced the mattresses. So when he saw our Instagram videos throwing away mattresses, he's like, I just bought those. Like he like messaged me, he like texted me. I'm like, we have to be consistent because we have a brand, right? So now we have two locations. We operate under the refresh collection. We want somebody to be able to check into any of our place and have the same experience. I don't want a seely mattress at one place and uh you know whatever other brand mattress at another, and it's just an inconsistent uh experience. So I would say um that would be the biggest thing is is uh make sure that you know the time that they they spend um you know in in your rooms, especially on mattresses, linens, pillows, anything that they touch and touch time on.

Reshma Vadlamudi 5:00

Yep.

Luke Nelsen 5:01

Yep.

Reshma Vadlamudi 5:02

Yeah, okay. So where do you say smart?

AC Choices And Retrofit Reality

Luke Nelsen 5:06

Um for us, um, we haven't touched not that we don't want to. Um oh, another thing is is air conditioning. Make sure we replace all the air conditioning units. That's another comfort thing that you don't want to skimp on because ours is a summer destination and it's hot. Uh if the air conditioning doesn't work or it's musty or gross, like that's not gonna bode well for you. Um, so that's another thing.

Reshma Vadlamudi 5:33

Um so did you replace it both the places?

Luke Nelsen 5:35

Yeah, that well, that $17,000 internet mistake didn't allow us to do it before we opened, but we did it um we did it like two months later after we made enough money. Um we we ended up doing it uh a couple months after we opened the first one. This time uh all of them were replaced before we opened and everything is is good to go. Um so what are what units do you guys use? Um so the first one we lucked out. So a lot of these motels will have like cut out like uh through the wall units. Yeah. So sometimes you have to find one that will like hopefully fit that hole.

Reshma Vadlamudi 6:17

Oh, yeah.

Luke Nelsen 6:17

So the the first one we were somewhat limited. Uh, we found one that actually worked. It was in a an Amana brand, which um it works totally fine. I mean, these things last for a long time. Okay. Um, and the ones arguably we didn't need to replace, but again, from consistency standpoint, we ended up using a mana at the next one, too. Um, this time at the second one, we ended up having to retrofit the holes so there was more we had to because then they the this old building was plaster. So instead of just cutting drywall perfectly, plaster kind of crumbles. Yes. So then we had to deal with we had to trim out all of the we had to trim out all of the openings because they had to widen them for these units. But we we've used a mana uh brand and they've they've worked good. Um there are uh different Wi-Fi brands, like Friedrich, I think is one with a Wi-Fi option if you want to be able to control them. Um, but we have a lot of these old buildings also have electric baseboard heat. So uh a lot of people don't know this, but there's a company called Misa M Ysa, and they will make uh they make a Wi-Fi enabled uh thermostat for electric baseboard heats, which electric baseboard heat is not a very efficient, um, not a very efficient heat source. So we have uh our team is able to, you know, if there's you know during winter or a little bit colder snap in fall and there's a you know break in occupancy when there's nothing but they can lower that uh temperature in the rooms down um for however long. And like we have contractors in and out of there all winter too, so like we can check because you know they if they love to turn the heat up to 70 and then leave, and then they won't be back there for weeks or whatever. So we can go in and and control that too, and that's uh that's a Misa product, which is yeah, yeah, that's nice.

Reshma Vadlamudi 8:13

And I I always heard about Amana, like I had more people talk about it and they love that product, but it's just that it's not it doesn't have it's not Wi-Fi integrated or anything.

Luke Nelsen 8:25

Okay, yeah, these are not Wi-Fi integrated and they're not the sexiest looking. They kind of look they kind of look industrial, but at the end of the day, um it's all about comfort. They work and uh and that's the most important thing.

Reshma Vadlamudi 8:39

Yeah.

Design That Stops The Scroll

Reshma Vadlamudi 8:40

So what elements do you believe every boutique hotel room should have?

Luke Nelsen 8:45

Every boutique hotel room um needs some sort of a statement piece. Um, it's all about stopping the scroll, and that's not just with short-term rentals, that's with boutique hotels as well. Um, so we we've implemented um accent walls in all of ours uh above the beds. Uh, I think from a design standpoint, uh you can't go wrong with some sort of a statement piece. Uh, I know that you you you're really bold in your designs. We're not as bold as as you with some of the choices. But from a from a from an aesthetic standpoint, I mean a plain wall just doesn't pop. And like I'm not gonna say, oh, I want to stay there because it's a oh, it's a nice whatever navy blue that you picked. Yes. But if you pick um, you know, uh a design that really really is unique, um, it will help you stand out amongst the competition. And and that getting back to making decisions for revenue that generate revenue, that directly generates revenue. Yes, because people like to stay in a nice place.

Reshma Vadlamudi 9:49

Yes, exactly. And yes, regarding our properties, I think it's all about what's in that particular market. So, whatever, like I go with go into each market, like when it comes to us, I look at what does this person have, what are the colors that are already used that we can't use and all that. So just like what are we used that it's more than just one thing, you want someone to book your place and over competition. So, what are you offering? Exactly.

Communal Spaces Guests Actually Use

Luke Nelsen 10:20

Yes, and then another thing too is if you can have some sort of uh communal space, um, it's not possible at all properties, but like uh Fresh Coast Motel, we have we have a fireball. Uh there was a patio already out there. Um a lot of people thought that we put in the patio just because it was so like grungy and nasty before. But uh we we took this patio and we actually have a Wi-Fi enabled uh fireball. So every night our VAs will turn it on uh from the Philippines. And uh so there's 10 chairs around this uh fireball, branded color. It's navy blue, just like all of our signage and everything. And uh it's just a nice area where people can congregate. And you know, usually you stay at a motel, you never meet anybody else that's staying there. We meet people from because we sit out there and and you know, uh meet our our guests when we're up there, and you meet people from all over the world, you know, we met people from London, um, just anywhere. Uh, and it's just a nice congregation spot, and you can include that in your renovation budget. The the bank is usually willing to you know lend on on things like that too, if you don't have the capital up front to do it.

Reshma Vadlamudi 11:35

Yes, and it's it's a really nice place where you could just come sit there, hang out, and look at look at the water in front of you. Yeah. Like it's it's such a nice view, too.

Luke Nelsen 11:45

Yeah, we got the rope lights that are all on a timer, Wi-Fi timer, and everything too.

Reshma Vadlamudi 11:49

And I I didn't believe like it's something that you can turn on from Philippines. Like I thought it's a real thing that's going on there. So yeah, it's it's a beautiful thing. Like when you go in and see all that is so beautiful, yeah.

Luke Nelsen 12:05

Yeah, and there's there's a bunch of different products out there. So um, and uh, you know, just getting to the Wi-Fi thing, like um, I think it's it's my Leviton. Leviton makes like the smart plugs that connect to the Wi-Fi, so it's right from an app or or a web browser. You can just um control outlets. So basically, you could control anything on an outlet, so our rope lights are tied to that, and yeah, it's uh how did you guys figure all these systems out?

Reshma Vadlamudi 12:34

Like coming from Airbnbs, and you're talking about so much stuff now. Like, how do you how did you figure these out? Like the systems, yeah.

Luke Nelsen 12:42

Um there's no magic pill besides just researching, researching and figuring out, talking to people. Um, ask your electrician. I mean, we sat through, I don't even know how many software demos before we, you know, made our decisions on our property management software, uh, smart lock solutions, all that kind of stuff. Um, you know, you have to do the reps. Like um, you know, you can learn stuff from podcasts and people just telling you, but it doesn't necessarily apply to your specific situation. So you need to get creative. Um, it's not a one size fits all thing. We have so many different systems communicating with each other to be able to make this possible. Um and uh yeah, it's uh not a one size fits all thing. And and just like anything, I mean, you have to you got to do the reps, right? It that's how you learn and you gotta get in and do it. I mean, if if I were to you know to try to feed somebody else information through you know a fire hose, as they say, I would scare a lot of people away. But as you get into it, it it's like anything, it just gets easier. And you know, then you go into the second one, it's like, okay, we already have all this stuff. It's so much easier to do the second one than the first one.

Reshma Vadlamudi 14:00

Yes, yes, exactly. And how did you find that person all the way in the Philippines for you to turn this thing on?

Luke Nelsen 14:06

Yeah, so we have a team that works for us in the Philippines. Um, there's uh there's a resource. Um, there's a bunch of different resources. The one that we found our team on, and they're they're amazing. Uh so we have 24-hour phone coverage because they cover the night shifts, and then we have uh a domestic-based VA team, which we call our guest experience coordinators. That's just the fancy name for our VAs. Um, but there's a resource uh onlinejobs.ph. Um you can you can either just pay to or pay to have a job listed, or you can pay a little bit extra to actually headhunt. I would definitely recommend paying a little bit extra to headhunt. It'll save you a bunch of time so you're not just waiting for people to apply. Yeah, you can like search Airbnb or you can search hotels and it'll come up with those people that have experience or actual experience.

Reshma Vadlamudi 15:00

Okay, got it. Um, so what does your team look like today?

Staffing A Contactless Motel Operation

Luke Nelsen 15:05

Yeah, so it's grown a lot, and that that kind of ties into the numbers. Um, it's hard to, you know, getting back to the lifestyle we want to live. It's it's hard to have enough meat on the bone with just a few short-term runs to hire out all the stuff you don't want to do or you're not good at. With uh with the commercial, the bigger stuff, you know, we were able to grow a team now to um we have a general manager who oversees both our properties. Um, he does an amazing job. Um and then we have a team of uh virtual assistants. So we have five virtual assistants that offer 24-hour phone coverage. Uh, and then this year we transition to hiring our own cleaners. So we have a staff of uh I believe we're at six part and full-time cleaners as well. Um, and that's that's what it takes to run our our business right now.

Reshma Vadlamudi 16:01

Yes. Okay. So the general manager um is that person like does he have to be on property or is he full-time, part-time? How does that look like for you?

Luke Nelsen 16:13

Yeah, so we actually we lucked out, shout out to my brother Aaron. Uh he was he's been working for us for uh nearly five years through the short-term rentals and everything. And he was our lead uh customer service guy um all last season. So he knows all the systems and everything. And when we when we expanded to the second uh motel, um, we knew that there was a need to have some sort of local boots on the ground um just in case of emergency and just you know overall managing our cleaning team because the first year we had a third-party company doing all the cleans. So we didn't have a lot of like hands-on uh duties when it came to cleaning, but we knew that we wanted to have a little bit more control over arguably the most important part of the you know, business is the cleanliness of the rooms. So he is full-time. Um, he oversees both properties, uh, cleaning team, um, guest experience coordinators. He's he's in charge of of all of it. And uh he does an amazing job. So he doesn't necessarily need to be on site all the time, um, but he's the the liaison basically between the you know uh all of our cleaning staff and the owners and the customer service team and the owners. Um, and yeah, he's uh he's he's a rock star. He has some guest uh interface to uh we tell him to go sit by the fireplace, put it, you know, because we got a lot of uh flack when we first announced that we're gonna be contactless. They kind of took it and ran with it as if like just gonna be some ghost town, you can't contact anybody. And and at the end of the day, like we wanted to stay ahead of that. So our customer service is top-notch. Like, if you if you read the reviews on us, they all talk about how it the easy ease of check-in. They all love it. They can just show up at any time, check in. Uh you're not rushing to a front desk to get a key, you know, because a lot of these front desks will close at 6, 7 p.m. or you know, 6 p.m. a lot of times. A lot of people get off work at five on a Friday, and how are you gonna get to a front desk? Yes, by that time.

Reshma Vadlamudi 18:25

I think we barely got here about nine o'clock last night. Yeah. If there was a front desk, we wouldn't be inside.

Luke Nelsen 18:32

Exactly. Yes. Exactly. So, so in a lot of the you know, media or you know, newspapers or whatever would kind of made it seem like a negative thing. So now we actually tell him, like, go sit by the fireplace. Yes, poor you, you gotta get paid to go sit by the fireplace and talk to guests and have a couple beers or whatever, but it it puts a face with the name. Yes. Um, and uh yeah, he does, he does a lot for

Finding Contractors You Can Trust

Luke Nelsen 18:56

us.

Reshma Vadlamudi 18:56

So who's on your dream renovation team and how did you find them?

Luke Nelsen 19:00

Yeah, so um I will say as you would probably attest to having uh a killer design is is the is the first thing you want to do. So that kind of sets your vision in your brand. Um that that would be uh one of the main pillars is having a really good designer. Um if it's not a person, it can be a software. I mean, there's there's AI that does this stuff now.

Reshma Vadlamudi 19:27

Yes.

Luke Nelsen 19:28

Um there's there's uh a lot of a lot of tools out there, but we personally have uh an individual that we've worked with for multiple projects now. So um she does a really good job of kind of taking our ideas that are hard to kind of articulate sometimes onto like what it should look like and really um put them on paper, show us the renderings, um, and you know, get us specific product links and and makes it pretty seamless. Um, and then and then it's just uh the typical contractors that you need, uh especially for us, we put in LVP for all of our units. So we have a really good work and relationship with uh Florent Company, our painter, um, wallpaper guy. Um we've done multiple projects with them now.

Reshma Vadlamudi 20:17

So um those those are the main the main people that we that we um so how did you find because I uh because we are in a total different market, but that's that's the hardest thing to find, like the people that you can trust and work with on a continuous basis. Because at this point, maybe we worked with about like 10-15 different people, but then there are only five people that we always hold on to at this point. So how did you find them? Where did you find them?

Luke Nelsen 20:49

Yeah, um, it's just like in any market, whether it's the smokies here in the you know, in the Milwaukee area or up in in Door County, um, you got to cycle through bad ones to lock on to the good ones. Um, and it wasn't any different uh on these motel projects. Um so we were able to interview. I mean, and and having done, I wouldn't say I would felt comfortable doing this project for my first project or any of these. You know, you start with that that first duplex that I talk about. You you learn the lingo basically and how to talk to contractors so you're not getting taken advantage of. And then you're pretty quickly able to tell if somebody's blowing smoke up, you know what, uh, when you're talking to them. Um and and just asking for referrals. Don't be afraid to ask for referrals. If that offends any contractor, they're not willing to give you references, don't work with them. Yeah. Um, so ask for references, uh, which we've done. Um, another little secret that I will say in almost any market, there's contractor referral Facebook groups. Um, that's how we found our painter. Um Actually, um just search in your market, let's say you're from Cincinnati, just Cincinnati contract referral or anything like that, or you know, or landlord groups, or there is a there is a group for Cincinnati contract, yes. And then you can talk internally and and and and some people are a little bit close to their chest with their contractors, they don't want to give them out, but there's a lot of people that will will share. Yes.

Reshma Vadlamudi 22:26

Um I think especially we are very active in our local RIA, and because all all people we know are other investors, so they want to keep their crew busy. If they don't have so much going on right now, they're willing to share their their guys because they want their guys to make money.

Luke Nelsen 22:44

Yep, and they don't want them to go get yes, yes. But if I had to start all over, I mean, which wasn't that long ago, five years ago, I didn't know anybody. Um, it's just started with Facebook groups. I mean, that there's uh um, you know, that first general contractor on the duplex that was found through the Facebook group of that real estate meetup that I said I went to.

Reshma Vadlamudi 23:05

Yeah.

Luke Nelsen 23:05

Um, so it's just networking. Uh networking either online or in person. Yeah. Um a lot of people say go to Home Depot at six or seven in the morning and see who's there because those those are the contractors that are actually up early, you know, getting stuff done.

Reshma Vadlamudi 23:19

I think one of uh one of our people that we stayed about like three to four years now uh is from Home Depot. Like one day when Chris was there at seven o'clock before he went to his job, uh that's how he they both met, and then we still have that guy to today.

Luke Nelsen 23:36

Yeah, yeah, yeah.

Reshma Vadlamudi 23:37

That thing really works.

Luke Nelsen 23:38

Yep. Or uh uh for painters too, uh Sherwin Williams always has that's where we buy our paint from. They always have that that board with all the the business cards. Oh yeah.

Reshma Vadlamudi 23:50

Uh I never seen that. Like, yeah, okay.

Luke Nelsen 23:52

So yeah, so if you're looking for a painter, um just go into Sherwin Williams. There's there's usually um like a board with probably 50 different painters, but then yeah, then it's like overwhelming. So then you ask the manager, like, which one of these guys would you recommend? And they'll usually have a couple names. Oh, nice. Yep.

Reshma Vadlamudi 24:10

Yeah. Actually, these are the tricks that local RIA would give, and they really usually work for us. So yeah, yeah, okay, nice. Okay, so how involved are you in the day-to-day once a project is up and running?

SOPs That Reduce Daily Involvement

Luke Nelsen 24:25

Yeah, so it's uh it's a lot of building at first to be able to remove yourself, right? So we put in SOPs and systems, and now obviously we have a general manager to kind of um be the front lines. Um, so uh ideally we're not super involved with the day-to-day after we get things up and running. I I like to answer a question one time and I'll record it on a Loom video, and that'll get housed in um we use Notion Um as our um basically hub for all of our SOPs. So somebody asks me how to you know cancel a guest reservation or something, you record that on Loom, put that in in Notion, and then it lives there forever, and then you have your team be able to search that and look for it. So uh, I mean, we're still involved. Uh, I do a lot of the pricing. Um, we tweak the listings, we're there for any sort of, oh Betty wants to bring three giant dogs and we only allow one. Like, are we willing to charge a triple dog fee to let them, you know, like we're still involved in in different scenarios like that. But um at the end of the day, it's not really scalable if we have to do everything. Um so as uh as much as we need to, but um ideally, you know, we can we can uh uh you know outsource a lot of that.