Boutique Hotel Secrets Podcast

22- The Outer Banks Bet: How One Developer Is Turning a 1952 Beach Motel into a 47-Key Luxury Hotel with Jonathan St.Leger

Share episode

Use Left/Right to seek, Home/End to jump to start or end. Hold shift to jump forward or backward.

0:00 | 39:04

In this conversation, Jonathan St.Leger discusses the importance of creating opportunities in the real estate market rather than simply waiting for deals to come. He emphasizes the need for creativity in identifying value-add opportunities, whether through ground-up development or enhancing existing assets. Key considerations include zoning, density, and the potential for adding amenities or additional units to maximize property value.


Connect with Jonathan:  

Find him on Instagram: jon_boy14


Loved this Episode?

Connect with Micah:
Instagram: micahinvests
Tiktok: micahinvests1

Connect with Adam:
Instagram: adaminvests1
LinkedIn: adaminvests1
Tiktok: adaminvests1

Thinking about Boutique Hotels?Schedule a call:
https://bit.ly/4t1q3bb


SPEAKER_03

In this market, you don't find a deal very rarely. You have to make a deal. And how do we make a deal? We have to look for opportunity where other people don't see it. Whether that's a ground up or whether that's an existing asset that we can do a value add. Do we have room in the in on the parcel of land to add more years? Can we go vertical? Can we rip the roof off and add different? Can we add amenities? What's the zoning look like? What's the density look like? All kinds of interesting things, right?

SPEAKER_01

Hey everybody, I'm Adam Walls, and I'm here with my co-host Micah Thomas. We're short-term rental operators who made the jump into boutique hotels. And we're in it right now, raising capital, renovating a 50-room property. We're figuring it out as we go.

SPEAKER_00

This is the boutique hotel secrets podcast, and these are secrets.

SPEAKER_01

What's up, Boutique Hotel Nation? Thanks for joining us to another episode of the official Boutique Hotel Secrets Podcast. I am your host today. My name is Adam Walls, and this show is all about telling stories, sharing the goods about making this jump from short-term rentals into the boutique hotel space. Thank goodness it's not just me. So let me welcome in my co-host, my mister from another sister, Micah Thomas. Micah, how are you doing, man?

SPEAKER_02

I'm doing great. You know, the Eagles won this week. All right.

SPEAKER_01

All right. Bye bye week for my Seahawks, but we'll allow it. We are quickly turning the Venn diagram into boutique hotel owners who also care about the NFL. He says, by the way, I'm not sure if you guys are baseball guy guys, but World Series last night, 18 innings tied for the longest game ever. Like I I about threw out my back just watching the highlight reels.

SPEAKER_02

Do you care about baseball at all, Micah? I do. And I got a friend who's a Blue Jays fan, so I hear about all the commentary about all these pitchers whose names I've never heard before in my life. But I like to keep up, at least to say that I'm a partial fan. Definitely. But eight 18Ns on the West Coast, I was probably on my third turn of sleep by the time that happened.

SPEAKER_01

Good to see, man. I'm really excited about today's guest and today's show. Because again, I've already learned a tremendous amount about this gentleman. Absolutely. You and I obviously met months ago through the Boutique Hotel Secrets Mastermind and mentorship group. We're learning from Joel, Isaac, Mike Shogren, Rashmi, and some legends. But honestly, some of the my favorite parts are the students. Some of the people that join this thing, they're working on their own stuff and happen to have a ton of expertise in different domains that I feel like every week I'm learning something. So without further ado, let's bring on John St. Ledger. John, how you doing today, man?

SPEAKER_03

Doing well. I appreciate you guys having me. It's my pleasure.

SPEAKER_01

Yeah, thanks for thanks for joining us, man. And I normally see you on the renovation and construction calls. And again, I think you and Isaac lead that brilliantly. There's so many different pieces that need to come together when we're talking about repositioning or value add plays in the boutique hospitality space. But maybe before we hop into your projects and what's in the hopper, maybe for people that don't know you, we could just start a little bit with your story. So, how did you find real estate and just tell us a little bit about you?

SPEAKER_03

Yeah, sure thing. So, John St. Ledger from the Outer Banks, North Carolina. And as a real estate investor and developer with a unique set of skills, I specialize in equity manifestation while creating generational wealth at an exponential rate. And I enjoy helping others learn how to do the same by helping them recognize and capitalize on their unique advantage. We have a portfolio consisting of short-term rentals and long-term rentals. And then we're getting ready to break ground on an amazing boutique hotel opportunity. We do a little bit of commercial stuff, a little bit of fix and flips, some subdivisions, and all kind of different, all kinds of different opportunities to generate capital.

SPEAKER_01

Man, and can I just ask as such a crisp, awesome way to introduce yourself and your portfolio and what you do? Was it always like that? If I met you five years ago, ten years ago, was it that clean and crisp? And you seem like you got your stuff together, man.

SPEAKER_03

I started a messing real estate in 1999, bought my first vacant lot, built it up through the early 2000s, mid-2000s, and then we've all some of us experienced, some of us heard about the 08 downturn. So that was a rough period of time and lucky and blessed to have the opportunity at a round two here. So we're doing it on a much more educated level. And we got to realize that back then there wasn't podcasts. YouTube wasn't really a thing. The conferences, the books, just it there wasn't as much educational platforms. And I would certainly was not in the right circles. My circles of friends back then, you know, we all had younger years that were less inspirational. Everybody told me you were gonna lose all your money and all that jazz. So that's why I'm super grateful to be part of the boardroom, the secrets group, boutique to tell secrets, because it's all about putting yourself in the right room, right? So when I joined this group, I told myself, I said, look, I want to put myself in rooms with people where my wildest dreams are their everyday realities, right? And then everybody within this group is very uplifting. I personally come from a mindset of abundance, not scarcity. So I love learning, but I also love sharing what I learned and brainstorming, spitballing with other people, like-minded folks.

unknown

Yeah.

SPEAKER_03

So to answer your question, if you would have met me 10 years ago, I always had an entrepreneurial spirit. I've done dozens of businesses, but real estate was always at the in the background, always running.

SPEAKER_02

Yeah. And you touched on community. I always mention you got to find your tribe, whatever that means for you, but get around people who are doing what you want to do or doing the same as you. And I think that's how you really inspire growth in yourself as well as the people around you. With that being said, you've you sound like you've been in construction and real estate for quite a while. And my first question is just what made you become interested in boutique hotels versus another residential property or another fix and flip? Why the boutique hotel space?

SPEAKER_03

So it's a couple different ways we can approach that, right? So obviously it's a commercial asset, right, which is valued based on your NOI and cap rates and so forth, right? So the opportunity, I love the equity manifestation or value add opportunity. We can do that greatly in single family, some multifamily, et cetera. But really with the boutique hotel, it's we live in the Outer Banks. I live in the Outer Banks, North Carolina, and we're in a prime market. A lot of the hotels that are here are very mom and pop. They're very old, they're dated. A lot of the STRs have been upgraded over the years to have luxury amenities and so forth, but really the hotels haven't stepped up. So there's a need and a demand for that in our market. And boutique hotels, quite frankly, just as an asset class, are one of the hottest things going on right now, and for damn good reason. And I just our market needs it, it's attractive from a value add point of view. It's a it's just sexy. It really is. It's uh love the idea of being a hotel year, and uh, we're looking at some other projects and we'll be growing in the future, but we're excited to break ground on this one around the first of the year.

SPEAKER_01

Yeah, I don't think I had asked you before, but my first experience in the boutique hotel space was actually as an LP as an investor where I put money in Richard Fertig's stomp capital. And I want to say one of the Ferg, one of his marquee properties, and again, OG, like YouTube educator, but he's got a beautiful like kite surfing, was it edge camp? I think out there. Have you met him? Have you seen his property? It seems like a lot of people have made this jump.

SPEAKER_03

Yes, uh, do know the Ferg. Uh I was actually on a short list to build the Edge Camp years ago before I even knew who he was. I just the plans came across my desk. I'm like, all right, that looks like a cool project. We bit it out and we were down, we were the second. We didn't quite get it. It was another local builder, has a little more clout, but it was nice to have the opportunity. Uh, yes, met him. He does run a great, he runs a great business, been very successful down there. Interesting fun fact is he actually owns more land on Hatteras Island, which is the southern outer banks, than any other person except for the Forestry Service or the National Park Service.

SPEAKER_01

Name his name.

SPEAKER_03

Federal land. Yeah, yeah, it's great. And uh his business or he's grown his syndication side of things to stomp capital. And no, I think a lot of him, he's I think he's backed off on the educational platform. I haven't really seen him around a whole lot, but shr University, yeah.

SPEAKER_01

Yeah, because he just closed a place in crested butte. I know he's got a Costa Rica spot up on the New York, upstate New York. So, anyways, an incredible operator. I'm just like you, I was like, where did he go? Because two, four years ago, he was everywhere in my feeds and now very quiet. But I think he's building quietly in the background, and that's my just doing it the right way. And I hope at some point, again, I like learning, I like sharing. But man, you talk about okay, when I'm 65, I don't know if I want to be on the podcast. Maybe just uh going off with my family to international beautiful resorts also sounds nice. Absolutely.

SPEAKER_02

Yeah, for sure. I've uh just earlier today, you mentioned something that really blew my mind when you said it. It was an acronym that you used, the ROSE method, or a way to get some sweat equity, but nobody really talks about what sweat equity looks like. And we all know that boutique hotels is a very sexy asset class, and some people who may want to get involved but may not know how. So I would love to hear your take on sweat equity and then your ROSE acronym that you use that that you could expand on.

SPEAKER_03

Absolutely. So sweat equity is such a broad statement, right? So that can come from just being the brainchild, being the visionary, and then taking action, right? To actually doing labor on air, literally sweating. Look, hey, I like creating deals out of thin air. In this market right now, it's very competitive. You guys have been experiencing that. Our listeners have been experiencing that, right? In this market, you don't find a deal very rarely. You have to make a deal. All right, cool. So then how do we make a deal? We have to look for opportunity where other people don't see it. Whether that's a ground up or whether that's an existing asset that we can do a value add to. Do we have room in on the parcel of land to add more units? Can we go vertical? Can we rip the roof off and add different levels? Can we add amenities? What's the zoning look like? What's the density look like? There's all kinds of interesting things, right? Is sewer available? Can you get rid of the septic to create free up more land? There's so many creative ways that we can add value. If you're not on the labor side of things, and you can be the brainchild, right? Your network is your net worth, right? For me being in the construction industry for decades, I like to bring sweat equity from A to Z. From the very beginning of the project, I will source that land off market, on market, doesn't matter. I know the zoning codes in my buy box areas like the back of my hand. Because I have overpaid, according to the general public, on certain assets. And people be like, dude, why'd you pay over a hundred grand for that asset? I'm like, because it's not what's there, it's what I can do with it. Fast forward 24, 36 months later, they go, How the fuck did you pull that off? Having a vision and not being having a kahuni is to take action, right? I like to track my time, my individual time on each different development, right? Whether it's a rehab, whether it's a ground up, whatever, it doesn't matter, right? So I play a game, it's like a a KPI for me to track from project to project. So I'll I'll track that and then I'll look, all right, cool. I'm in this project for 1.5, but now it's worth 2.5. Cool. So I just created or manifested a million dollars worth of equity. How many hours did I have in there? Okay, I had a thousand dollars, a thousand hours in it. So my time value for my sweat equity is a thousand dollars an hour, for example. It's just a fun way to track it. So that's what I mean by acronym ROSE, right? It's return on sweat equity. And it's just another way to look at it. It's a motivating factor. Let's face it, the game is pretty simple. It's not easy, but it's pretty simple, right? Make capital, deploy capital into cash flow on assets. We all know we make money in real estate in the four main ways, and there's a fifth way: cash flow, amortization, pay down, appreciation, there's tax benefits, and a fifth way is our unique advantage, which is a value add. And in my opinion, there's no greater value add than a ground up development. It leaves the most opportunity to expand the value of that property.

SPEAKER_01

I love that. And any reflections when you look back on projects that had a high return on sweat equity? Were there common denominators? And I'm thinking about one of my favorite exercises that Mike Shogren and others recommend was kind of like designing your perfect week, kind of look doing a two-week time study. So, what have you noticed personally when you look back on some of either your most successful projects or again when your ROI on your time was best again, you were leveraging your highest and best use time?

SPEAKER_03

I will answer that like this. I was brought up in a blue-collar world. My father raised me. He's like, Why would you pay anybody to do something that you can do your darn self? So I very much, up until now, had a I was a workaholic, two, three jobs when I was younger. I have no problem putting in the time, right? That's why I'm very grateful and blessed to have been able to join this community, right? Because Shogun and E and a lot of the other members in there have really helped pivot that, right? Round one through the 2000s and so forth, build up, crash and burn, build up again. I didn't have a family. I don't have a wife and kids to look after then. But I'm lucky and blessed in the sense that I had that opportunity to experience those cycles before I had such responsibility, if that makes sense. And so now round two, I'm much I'm becoming much more cautious with my time. That is an asset that we don't get bad. Time is super valuable, right? So the seven-figure boardroom growth group and chauvin and everybody has been very good at helping me dial in. So I've been working on pivoting your self-image and so forth and creating my time. So to answer, it's a hard way to hard way to answer that, but historically, like I would just work my butt off. That was the only way I knew. And I'm okay with that because that was yesterday, right? Now, as I learn more and I do hold, and that actually is intertwined. So doing that rose, realizing how I can bring value, it isn't just banging nails, right? It's in the creative stuff, seeing knowing the zoning, like I had touched on, and seeing opportunity. And when I'm coaching a consultant, folks, I always tell them to have on your opportunity detectors, right? Because if you want to find jewelry on the beach, you're gonna go over metal detectors. So when you're looking for opportunity, whatever it is, right? Have on your opportunity detectors, keep your ears open, keep your eyes open for sales signs, distress properties, etc. Tell people what you do, tell them where you're going, what you're looking for, dude. If people don't know you, they can't flow you, right? So that's it. So it's yeah, I was just a grinder, cutting beams and building dreams, man.

SPEAKER_01

I'm sure, Micah, you can't relate to that grinding. Oh my gosh. Do you see that at all?

SPEAKER_02

Oh my gosh. I I work more than I care to admit right now. I mean, we're head first into this deal, and I still work probably 36 hours a week as a as an occupational therapist. So I I am working hard and still trying to make the transition from that W-2 to the full-time entrepreneur, making income that way. Definitely get it. And in the beginning, it is it is hard. Sometimes that's what you have to do as a sacrifice, but you do have to set yourself up so you can transition. And I agree with that. You can't be the heart worker your entire life. Sometimes the hardest thing working should be your brain and you allow other people to carry out the vision and the plans that you have. I love that. I did want to circle back to, I know you said that ground up construction is the best way you can add value and see a profitable project, but I just wanted to ask about like replacement costs right now because construction costs are going very high, labor costs are going through the roof. So just wanted to hear your insight on how are you finding ways to combat that and still be profitable. Because right now you're getting into a project where you're not only the builder, but you're also an investor in it. So just maybe wanted to hear some of your insight on that side.

SPEAKER_03

The sure thing. So I'll touch on that. Over the past five years, everybody's been very grateful that their properties have gone up so much with the COVID boom and so forth. Yeah. So I've been advising folks, number one, is to make double check your portfolio and make sure that your assets are insured appropriately. Right. So I always like to throw that out there as a friendly reminder. Bump up your insurance policies. Why? Because the first thing you state is replacement costs. They're significantly higher than they were a handful of years ago. So from an insurance point of view, you want to make sure that you're insured. If I'm building the project and it's a $5 million project, but now it's worth eight and I made $3 million in equity, whatever. I want to make sure that I'm insured for that eight for sure, or whatever it's going to be in the future. So always run that little insurance audit. Things you can do to benefit yourself. If you're doing ground-up development, there's things we can do that are more economical, more energy friendly, such as like again, we're right on the coast of North Carolina. So we build a lot with impact glass windows. We do fortified roofs, we do certain kinds of sidings and paint that hold up a lot better in our environments, uh, down to your decking and railing choices. And, you know, you can build more economically, which is going to lead your utility costs to be lower. But also, once you make some of these upgrades, and you need to notify your insurance company that you have a fortified roof, impact glass, et cetera, because you'll actually get discounts on that, discounts on your policy.

SPEAKER_02

So a lot of times being able to build fresh just allows you to not only offer a better product product to guests or whoever uses the property, but also you can get some of those rebates or discounts from not only just insurance, but I'm thinking even some states will even offer a discount because you have an energy efficient property where you don't have to use as much energy from the county or the state.

SPEAKER_03

That is correct. Yep. Okay. 100% to know.

SPEAKER_01

Yeah, but I do remember seeing some reports or talking with some the hotelier that we mentioned at Micah in Nashville, just been to like three or four conferences over the last couple months, and we had a one-on-one with him last week. And he was just sharing that, man, I think it was like $1.5 billion worth of or sorry, trillion dollars worth of commercial real estate capital that's going to be refinance ready or coming due in 2026. And he was just sharing that the outlook for kind of new starts in the hotel space, like how many new Westons, how many new Marriottes, how many new, it's virtually zero. If you're getting value from this, follow the show and share it with one person who's ready to move beyond short-term rentals.

SPEAKER_02

And if you want to learn more about the boutique hotel secrets community, the link is in the show notes.

SPEAKER_01

It feels like the only place where ground up maybe makes sense is either smaller or more boutique projects. But it sounded, at least again, hearing it secondhand from him, that right now everyone's really managing their belt pretty tightly because revenue demand might be impacted. It might be flat or sideways. So you really just got to hold on to costs. And man, if you had to build the same hotel from scratch, again, I think our deal, you know, what you know, our purchase price is 3-3. We're gonna stick about $2 million in, add all the working capital, et cetera. We're about a six million dollar deal. I think Isaac was saying, man, you'd be jumping out of your shoes if you could get that done for eight to ten million bucks, like if you could demolish it and start over. So I think that's what you're after, Micah. It's kind of like this. Yeah, that's exactly right. Does it make sense to come in, look for opportunities where there's bones and try and improve it? Or again, is maybe your advice to some newer investors like, hey man, don't forget about land and don't forget about the opportunity with ground up, because again, there's a huge delta there if you know what you're doing.

SPEAKER_03

Correct. And that is not a game for beginners by any means. So there's a tremendous value in existing assets for many different reasons, right? In a lot of areas, zoning has tightened and become more restrictive. So there's a lot of value to that structure that's there and the room count and so forth. But yeah, I personally love ground up development. By no means am I advocating just for that. I just think that's the biggest delta for and it all depends. It's all real estate. You gotta buy. So if you can get an existing asset and your guy's asset would say three, three, three, three, three, three, three, three, and you're gonna put another two in it, right? So you're being for six, give or take, once stabilized, and your anticipated value, you would say, is like eight to ten.

SPEAKER_02

Yeah, yep.

SPEAKER_03

Dude, like all me up all day.

SPEAKER_02

All night, take it, John.

SPEAKER_03

Yeah, yeah.

SPEAKER_02

So that's go ahead. Sorry.

SPEAKER_03

No, that's that that's an amazing value add opportunity. That's still equity manifestation, it's a great value add, something very proud of, and I'm super excited to get you to watch you guys go through that and enjoy the fruits of your labor once it's done and operational. Yes.

SPEAKER_02

Yeah, we are definitely looking forward to it. And a piggyback off of talking about development, you guys have a project going on right now, and as much as you can share, I would love to hear maybe some of the general overview of what you guys are getting into early early next year.

SPEAKER_03

Yeah, sure thing. We have purchased an existing 20-room hotel, and then I've demoed it and we're fully entitled. We've been working on it for a few years, going through the entitlement process and so forth. We're actually going to be developing a 47-key, taking it from 20 key to a 47-key luxury boutique hotel right on the beach in Kitty Auck on the outer banks. Um, and in addition to that, we were able to do an 80-seat restaurant and bar with a conference center up above and two residential units that we can use for employee housing or flex space and so forth. We'll do a commercial pool. We're gonna have a whole nice gym and yoga studio there, so flex space, media center. In addition to that, another ocean front home is gonna be an amenity building with a rooftop deck, like a lounge area, bar, and so forth. So we are very excited. Super pumped up for that project. Our community needs that, right? The demand is huge for that product. And the Outer Banks, I'm not sure if either one of you ever came here or if or not, but when you're coming onto the island, you're crossing a three mile long bridge, and that lands you in a town called Kitty Hawk. And then you can go north for a couple hours, you can go south for a couple hours. The location of this one is strategically right there as soon as you come across the bridge. Right up a team. Right. Correct. Well, beautiful. Essentially located. The demand for that upper class. Hotel is there for sure. We could not be more excited to bring this to fruition. Yes.

SPEAKER_01

That's incredible. It's a little scary to me because Mike and I are talking about four-month renovation, six-month renovation. Man, how's the mindset change when you're talking a multi-year development deal? It does feel like the big money, the patient money typically wins and the gains are there for delayed gratification. But you know what, you're talking like 14 month, 18-month renovation, something like that?

SPEAKER_03

Yeah, so I want to preface that. You just said it to something that's very important, right? And I and that's delayed gratification. I feel like many people with this fast-paced world these days, they want to they want to scratch that itch immediately. They want to have that feel-good feeling, right? When somebody goes on a car lot to buy a new car, what is the, in your opinion, what is the single most important uh piece of information that they're worried about? Price.

SPEAKER_02

Price. It's always the price.

SPEAKER_03

The price for the total vehicle or the monthly payment. Oh, maybe even deeper. Yeah, yeah. They're gonna get a monthly payment. They're worried about you. So they want that instant gratification. And if they can get that new car for $337 a month, that's right. I'll take it. That fits their DTI. So they they want that. They don't care about what interest rate they're paying, what if they're paying 30k for the vehicle, they'll ultimately be paying 40k. They don't care about the deeper information if they're just worried about scratching an itch. So that also translates to real estate. So I also have an acronym for that, and it's from an old Atari game called Dig Dug. And this acronym stands for deny instant gratification for delayed ultimate gratification. So having the ability to have delayed gratification is huge. So that actually translates to this project. We're not going to get the returns for several years. I'm okay with that. I don't need I don't say it in any kind of way, but like we we all have we have our right, Mike, it works full time. I work full time. So we're keeping that those wheels spinning, and then we're doing this on the side. Now it's a big side project, but it will be full focus. But we set things up where we're not relying on that week to put food on the table, essentially. So I'm okay. That is in it for the long haul. I'm lucky and blessed to have that mindset of being okay with delayed gratification. So, yes, it is a big, bigger dollar amount, right? But we've got an amazing team working together on it. Not anybody I know can do these kind of projects by themselves. So we got an amazing group of folks on it, and we are gonna freaking crush it. The numbers on the tail end of that thing are so sexy. It's like, all right, cool.

SPEAKER_02

You're dropping so many gems. I'm like having a hard time keep the conversation going because I just feel like I'm in a classroom right now and just learning so much. But another question that comes to mind is you don't just look at an old hotel and say, I'm gonna knock it down. I want a luxury hotel right here because I want it. There's a lot of research, a lot of numbers that need to be run. We need to make sure the project makes sense. If this was a $40 million project, this may not make sense. It just you may price yourself out of the asset. So I guess the question I'm asking is what type of research, what type of data do you need to look at to determine that we knew it, but now the data supports that this market needs a luxury boutique hotel. And we know that this specific location is a lot better than the one two hours down the road for X, Y, and Z. Is there any specific way you go about doing that research, or is this more so like intuition and gut feeling?

SPEAKER_03

It's local knowledge of the locale where we're at and knowing and intimately knowing that it's our unique advantage that we have lived here, both my partner and I have lived here for decades and decades. So we do know it through that lens. Ironically, I live within a mile and a half of this particular hotel, and my other part, one of the other partners, lives a mile down the road. And then so that was also one of the challenges. The fact that there isn't there's only one other hotel here, it's called the Sanderlink that would be close to the product that we're gonna be putting out. And that's an older hotel, but they have done updates, and it's the nicest thing the Outer Banks has to offer. Everything else is very mom and pop. It's mom and pop from two different lenses. The actual asset itself is mom and pop and dated from inside to the outside. Some have been rehabbed to a certain extent, but not what we think when we think both what I think when I think boutique. And it goes from the actual asset to how they operate it as well. Their tech stacks are weak. So I feel like we can really level up on that as well. And marketing, advertising, et cetera. So one of the challenges where we did have the intuition and the faith that our market needs that product, right? But we found that challenging and we started doing other co-star reports and feasibility studies and so forth. This is something to bear in mind if you're trying to level up the quality. If there's no other comps in the area, like feasibility studies and star reports, they're based, their data is only as good as the other hotels in your market, right? And that's what they're gonna do your ADR and your occupancy on and so forth. So that was challenging because the reports didn't come out super favorable because they're comparing us to a Hilton Garden Inn, a Holiday Inn Express, a couple other small local ones that you wouldn't probably know by name, C Ranch, etc. But uh so yeah, it's both challenging and but yeah, that also is part of the opportunity, right? So we we also took data from other markets that had very comparable products where we didn't have it here, but we would go down to Wilmington and up to Virginia Beach and coastal neighboring communities. Go ahead, Adam.

SPEAKER_01

Well, I'm curious if you're if part of the story is trying to blend in or lend some credibility to the place. So, for example, when Mike and I were thinking about the name of our hotel, we went down there, we're like, oh, is it wellness? Is it adventure? Is it what and we ended up finding the name John Wesley Powell, like created Lake Powell? And so there was a story, there was a person, like it put us in this place, and I can't help, I literally had to Google it, but I'm like, hang on, if my sixth grade memory is correct, I think something very important happened in Kitty Hawk in 1903. It was the Wright brothers, right? So I'm just curious, are you trying to play in or tell any stories because of where you're at?

SPEAKER_03

We are definitely telling stories. We are struggling a little bit on the name. We have not solidified what the name of the hotel itself is gonna be. But regardless, throughout the hotel itself, we are gonna tell the story, right? We're gonna tell stories in different rooms and so forth. Without being too nostalgic, like two, we don't want to overkill it, but we are definitely, we've got quite the story to tell. It's very interesting. So the name of the hotel when we bought it was called the Sea Cove, two different words, sea, like the ocean, and then cove, K-O-V-E. The gentleman, it was originally built in 1952. The first two buildings were two more buildings built in 1954, and the other two buildings built in 74. The gentleman we purchased it from had owned and operated that hotel for 47 consecutive years. So he's 80 years old, and he was just hired. And the thorn in his side was actually the pool. The pool had leaks, and it was just it was a maintenance burden. When we and my partner Randy had tried to solicit this guy for years, 15 years, I think, 15, 16 years to try to get him to sell this hotel to him, and he would not. It was his source of income and so forth. But when we were able to finally secure that negotiation and we closed, his biggest sigh of relief was not having to open that pool up another year. See, it's interesting, and I bring that up because you never know what somebody's pain point is. It could be the silliest of things and persistence. Whenever I'm seeking out a deal or an asset, I don't mind hearing no. Of course, we all want to hear yes, but I don't mind hearing no. But what I do is I ask for permission to follow up in a certain period of time. Some of the most amazing deals I've gotten over the years are hitting somebody at that right point in time. And that to be clear, that's not taking advantage of every anybody, but we all go through different seasons of life. We're all going to experience ups and downs throughout the course of life. So I like to try to help people and create a win-win situation.

SPEAKER_01

That's awesome. And just real tactically, do you use a CRM or how are you you're meeting tons of people every single day? Like, how are you remembering to reach back out to Tony three months from now to ask him if it's still a no?

SPEAKER_03

I need to get a CRM. Super old school. You'll imagine all the the memory up there. So I'll track spreadsheets and so forth, and I will just I'll make my own notes on there. God, I'll follow back up with people, and then I'll rate that property too. I have a rating scale of one to ten, how interested I am in it, right? And then I'll prioritize old school, but hey, it works as long as it works. But it's interesting, once you follow up with people again and again, you're creating that rapport. So also on that, I make notes of all right, cool. I talked to Mr. and Mrs. Wilson, their daughter was just going off to college. I'll make a note of that. All right, cool. She was going off to ECU. Hey, how's Susie doing in college? Whatever. Try to get little nuggets of information. Again, not to be manipulative of anything, but you want to create that rapport.

SPEAKER_02

Yeah, that's it's such a good point because 15 years ago, it wasn't the right time. He didn't put his kids through college. He was still relying on the income, a little bit younger, he could still work. 15 years later, he's tired of it. His kids are probably through college. It just makes such a big difference. And then a 15-year relationship, I would feel very good about selling my asset to somebody I've known for 15 years versus somebody who just I met off the side of the street who wants to give me money and I'm still relying on that. So definitely, yeah. Yeah.

SPEAKER_03

And then one more layer to that on this particular deal, and is common in the boutique hotel space, is that we're actually able, due to that rapport and relationship, we're actually able to negotiate a portion of that in odor financing.

unknown

Yeah.

SPEAKER_03

I mean exactly just a little less than half.

SPEAKER_01

Yep, because you understand his goals. Yep. And why would you want to take that tax hit, man? You're 80 years old. If you don't have the next thing for that thing, let's pay you over time.

SPEAKER_03

Let's get great terms. To be that hundred percent. So to be transparent, it's about getting this information, understanding one's pain point. So it was that rapport. It was the fact that he was getting tired of operating it. And we did talk about the tax liability. Don't take it from us. Talk to your tax advisor, CPA, attorney, etc. But perhaps, and then also another important thing to him was that was his cash flow. So by doing structuring it the way we did, we still achieved giving him that consistent cash flow. Yes. He did a 30-year amp but a 10-year balloon. So if he's 80, he's got cash flow for the next 10 years. Give that to his kids. Correct.

SPEAKER_02

Exactly. That's amazing. Beautiful creating annuity. Structure it like that. You're solving a problem. You're not getting over on anybody. You're solving a problem. He'd never wanted to look at that pool again. And you're like, I can do so much better with this property. Help me help you as well. And everybody made out good in the end. So absolutely. 100%.

SPEAKER_01

Yep. Look, man, we've been chatting for 35 minutes now. I know we could go another 35 minutes, but we'll probably need to wind this down. For people that are listening to this, hopefully, this is educational, hopefully semi-entertaining. We're learning some things together. I mean, you're super inspiring. But I guess I'd like to pivot to the last section of our show where we try and give some advice. We try and help people, right? Again, you've already shared some great nuggets. Maybe you're meeting Adam and Mike uh three years, three months from now. You're gonna meet two new people that are entering this space who are just under contract. I don't know. What advice do you have for people that are looking to make this jump and looking to get in this game who say, this sounds interesting. I think this is cool, and this is for me. What would be some nuggets that you could drop for them?

SPEAKER_03

Be a sponge. Learn and soak up as much content and information as you can. There's so much free information out there, right? So start with that. See what piques your interest. If it's boutique how the tells, amazing. What an asset class to be part of. Let me tell you what. So between a podcast, books, conferences, YouTube videos, the world is your oyster in essence. So step one, soak it all up, right? Step two, don't be afraid, don't have imposter syndrome. It's not easy. You can't just tell yourself I'm not gonna have imposter syndrome, but tell people who you are, what you want to do, where you are going, right? Visualize yourself being part of that. Don't be afraid to ask the questions. If there's a RIA or a local meetup or a group you want to join, or if you're on a Zoom call, don't be afraid to ask the questions, right? So it might seem a little intimidating, so be a sponge, ask the questions, and then once you get comfortable, you also got to be an action taker that doesn't you got to analyze a lot of what we talked about today is taken for granted that we know we've underwrote the deal, right? We've analyzed it accordingly, no matter what the project is. But you have to be able to take action. I've seen so many people over the years just get stuck in analysis, paralysis, and they'll analyze 30 deals but never really take action. It's pretty freaking simple. I don't say that to under to to make anybody feel any kind of way, but it's just it's just simply not that intimidating once you start leaning on the people and the personalities that have been there and done that. Take their advice.

SPEAKER_02

Yeah, that's great. You said it the best way I could think of it. You put yourself around people who are doing it, and it becomes that much easier to take the action and you have the support. So if you don't know which way to go, the people are there to help you along the way. But if you never take the leap, you'll never get to the other side. I absolutely love that.

SPEAKER_01

Yeah, and look, a year ago, I was only into short-term rentals. I hadn't even seen or heard of Mike Shogren. So it's just you're one click away from joining an entirely new circle of friends. But again, it started with a common vision. Mike and I both saw independently this space coming from short-term rentals that a boutique hotel could be interesting. And then when we saw, okay, we're the guys actually raising our hands, we're showing up to the calls, we're underwriting deals. Every week we're coming with something. And then lo and behold, we find an opportunity to partner together. It's pretty amazing, right? A year ago, I didn't know this guy. A year ago, I was not thinking about hotels. And I could be stumbling my way into a very successful next chapter for my family, not just for me, right? And this could be generational, the way that a J O B will never be. So I'm finding it's inspiring. I love the community that we're part of. And again, if you're hearing this and listening to this, you want to join a community like Boutique Hotel Secrets, please reach out because I think this is what it's all about, right? Coming up with the courage yourself, painting that vision of where you want to go, and then taking action, getting around great people. So, anyways, I think we're all saying the same thing. I think we're high-fiving. And by the way, I can't wait to meet you, John, in person. We've just been doing Zooms and all that, but in November, we actually get to meet in person, man. Are you looking forward to that event up in Boston?

SPEAKER_03

Absolutely. I'm stoked. Couldn't be happier, man. That group of people, I tell you what, the machine, the group, the camaraderie, the brotherhood, sisterhood that Mike Shogun and his team has built and is still building is very impressive, very inspiring, enlightening. And yeah, there's nothing like getting in a room with rock stars such as yourselves. Tell you what. Seriously, man.

SPEAKER_01

Hey, man, we are blessed and honored to share a stage with you here today. So thank you so much for sharing a little bit about your story. Love to have you on again down the road, again, when your projects evolve. And I know you're not just a one, one, one project kind of guy either. You got lots of different things going on and so many great stories and wisdom shared here today. People are listening to this and they want to know about more about you or want to reach out or connect in any way. What's the best place for people to find you?

SPEAKER_03

Instagram probably the best place, and that is jo-n underscore boy 14.

SPEAKER_01

There it is. John Boy. We're still trying to earn that in in full transparency for the audience. It's just John right now, but we hope after maybe a beer in November with this guy, we get to the privilege of calling him John Boy moving forward.

SPEAKER_03

Gentlemen, it's been my absolute pleasure. Thank you so much.

SPEAKER_01

Amazing having you, Micah. Any closing thoughts today? Gotta end there. All right. Thanks, team, for another great pod. And thank you for listening to this. So we appreciate that again your attention. And if you want to do this, reach out. Let us know what stories you want to hear, what we can share to help support you. So thanks so much for another great pod, and we'll see you on the next one. All right, that's it for today on the official Book Eco Tell Secrets podcast.

SPEAKER_02

If this helps, be sure to follow or subscribe and send it to someone who needs that bigger push.

SPEAKER_01

And if you want the community or the resource and playbook to find what we're learning, the link is in the chat.

SPEAKER_02

Quick note for BHS community members sharing our own experience. And if you have questions or topics you want us to cover, reach out and let us know. We're building a channel for operators just like you at Demon X.