MFREE 102 Full Episode with George Salas: What’s the Real ROI of Experiential Hospitality?

In this episode of the Multifamily Real Estate Experiment podcast, I, you host, Shelon Hutchinson, known as Hutch the Marine Investor, interview George Salas, the founder of Express Capital and a visionary in short-term rental capital and structuring. George shares his journey from growing up in poverty in Lima, Peru, to building a successful portfolio of experiential short-term rentals and structuring large fund management deals. The discussion delves into the importance of not letting obstacles hinder one's dreams, the intricacies of raising capital, structuring funds, and the need for creating unique guest experiences to stand out in the saturated short-term rental market. George also discusses his strategy for a $200 million roll-up of property management companies and the practicalities of acquiring and scaling operations in the short-term rental industry. The episode is rich with insights into building a sustainable and profitable real estate business, underpinned by personal development, strategic partnerships, and leveraging experiential amenities.

George Salas - LinkedIn

00:00 Introduction and Guest Welcome

01:27 Guest's Background and Inspirational Mantra

02:04 Overcoming Challenges and Entrepreneurship Insights

04:18 Capital Raising and Strategic Vision

08:54 Experiential Short-Term Rentals Explained

09:51 Challenges in the Short-Term Rental Market

13:53 Capital Structuring and Fund Management

20:52 Focus Round: Fun, Opportunities, and Personal Development

31:22 Conclusion and Contact Information

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hutch@hsquaredcapital.com

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Transcript

George Salas: 0:00

Wah Gwaan all you multifamily enthusiast. Welcome to another powerful episode of the Multifamily Real Estate Experiment podcast. I'm your host, Shalon Hutchinson. If you've been connected with me for a long time, you know me as Hutch the Marine Investor, and today our guest is a visionary in the world of short term rental capital and capital structuring. George Salas is the founder of Express Capital and. a fund manager And the architect of experiential, STR portfolio with over 130 plus transaction and millions of dollars raised in capital and a vertical integrated platform. George is redefining how STR is acquired and scale, and I'm really excited to hear about this one because look where most people are trying to buy as a house. He's trying to buy many houses, right? I'm not sure if you got into small boutique hotel yet, but that's what something that I'm interested in hearing about too. So George, I want to welcome you to this podcast brother. It is a pleasure. I know we've been looking forward to this, so I'm super excited to be here with you, man. Thank you. Yes, sir. Welcome, man. lemme ask you before we get into the meat and potato of your story, man. Do you have a favorite real estate quote or mantra that drives you? I do. And. Because of my trials and tribulations to get to where I'm at today. I always like to say, don't ever let anything or anyone stop you from achieving your dreams. Man, that's a good thing, man. let's dissect that a little bit and talk about why that became so important to you. Was it based on a paradigm that was created for you or just a realization that you made later on in your life or early? Yeah, I come from a third world country hutch. So I was born and raised in Lima, Peru, but I grew up in an Adobe house for many years. So from 6 to the age of 15, I was living in a half, it was a half a house, right? Half of that, that house had collapsed because we were so poor that the ceiling had a crack right. And water came down. The entire roof came down. So I grew up very poor. My humble beginnings taught me a lesson, right? So I worked very hard to get to where I'm at. And I think we're just at the beginning, So anytime I talk to someone that's just in another situation, whether they're in a. Personal, rock bottom or in a business or financial rock bottom. I tell'em don't, if you've got a dream, don't let anything come in between you and that dream, So I have worked very hard and as everybody out there knows, entrepreneurship is an up and down journey, right? For all of us, so sometimes we just don't share that journey, right? We just tell everybody, the world, all the awesome things we do, but 97% of the things that we do are gonna have difficulties. Nothing comes like that. So that's why I like to know and I like to tell people, just don't let anything come in between you and your dreams. Don't let anyone, no people, no person, no ideas, nothing. Yeah. I like watching comedy from time to time. I like a good laugh, but also like comedian that really have that really challenging a lot of social and societal norms, but also help us to laugh about some of those societal norms. And one of my most favorite, comedy that I've watched recently. It was with Dave Chappelle. He did a standup about being a powerful dreamer, and one of the things he talk about, he said the person with the strongest dream will always win. And you also emphasize it's really important for you to understand when you are accomplishing your dreams and when you are assisting somebody else in accomplishing theirs. And that was such a powerful paradigm shift for me because when you think about the world of capital raising A lot of capital raisers focus on helping others accomplish something massive. You know what I mean? Absolutely. I think one of the things that we really need to be conscious of is where and how does that fit into our dream and. Is our actions maximizing our effort towards accomplishing our dreams as well. Because I'm all about, rising tides raise all ships. So we help people accomplish their dream while we accomplishing their dreams at the same time, right? Yes, that win-win situation. But some folks just so focused on doing this big thing. Big thing. Big thing. They never really accomplished there. Maybe small dreams or big dreams over here. You know what I'm saying? So yeah, rising tides raise all ships But it's really important to know, whose dream you're in. Is it yours or somebody else's? Amen. Amen. Ambition is everything. Yeah, right? Dreaming is everything, but then you gotta get to the grind and do little things one at a time to get to that big dream. So yeah, man. All right, George, real quick, man, let's reverse engineer,$200 million in STR, rollup strategy, right? So if you were tasked with acquiring, consolidating a national STR brand, right? Specifically targeting, service-based STR businesses like property management, companies, What would that playbook look like? I love it. I love it. So let me break down a little bit about, some context on there, right? I've got two big dreams as we're talking about dreams, right? Two big ambitious goals. One of them is to build a real estate portfolio made out of experiential short-term rentals. And right along build out a service-based business portfolio that services The properties. Yep. Build them separately and sell them separately and exit them to an institutional buyer, a private equity or family office. That's the two big dreams. So just wanted to clear up so that way we don't get confused on what that is. But if I was to reverse engineer either of those, I'll break it down in 30 seconds each, for the portfolio, we have to get stable growing NOI assets that institutional buyers want. They want recession resistant markets that are not unstable, right? They're gonna be growing in NOI little by little. And they want bigger cash flow. So we have to be a bit better than other asset classes. So that's the goal when it comes to real estate, when it comes to businesses, we have to acquire these businesses at two to three x multiples, right? Be able to create and reverse engineer a strategy to go to IPO or take the company public. Take, you buy the businesses at two to three x, you pretty much roll them up we get with 25 property management companies, I own one myself. I have partners that own one. I have operators that are friends that own the so us. It's getting together. Putting together contracts with these property managers, operators, and taking them to a trigger point where we get X amount of EBITDA or profits, we would take that company partner with a team that specializes in roll-ups, and partner with them. Partner with the operators and take this company public, like a VACASA, for example, right? And these guys exited IPO, 19.7 EBITDA of their multiple. So we buy them a two to three X of their. Profits and we sell exit at, 15 to 20 x. That's the strategy for the businesses. The portfolio is rolling up a bunch of portfolios, having a hundred million dollars worth of real estate buying one portfolio or boutique hotel at a time.'Cause they're in the same category, right? 30 units and below. And creating such a large NOI, not 5 million, not 10 million, 50 to a hundred million. And then exiting that portfolio so that, that's the simple version in one and a half minutes. Appreciated that you, no, sir. Thank you. That was the second question I wanted to ask you. So let's go to the first question. You've build one of the most sophisticated Experiential STR model in the country, given where the industry stands right now in 2025, What do you believe is broken and where's the biggest opportunity moving forward for STR? What, let's break down. what is the experiential STR, by the way, let's break down that model and then let's answer. Answer that question. Yes. Thank you. Experiential is a niche, short-term vacation rental model that basically creates an experience out of a common regular property. So you are dedicated to the guest creating an experience by providing better amenities, better guest experience, and actually charging premium. So you take these 500 to a million dollar houses, but you do it with a strategy behind it of, Hey, I'm gonna go in there and create a resort like experience for my guests with top-notch customer service guest experience, right? That's what creates experiential. It's the asset. The amenities and the experience. That's awesome. Okay. So what do you think is broken and where's the biggest, opportunity moving forward? I love that question So honestly, what I think it's broken in this industry right now is the fact that a lot of operators come into the game, right? And they think that they can. make money with whatever property. So they're mama pop operators, they just list their properties and they, whether they're a single family or small multifamily, right? And they list them on these platforms, but they do a mediocre job. That's 50%, maybe more. Then you have another chunk. 30% 40% of people that come in, they do a great job also. but. Their properties don't create an experience. So what has happened is the market has actually become saturated with these mediocre properties, A lot of people are losing money. Ak 50% of the people out there, in my opinion, because of interest rates prices, insurance prices, they're just breaking even. Because they're not, true operators, you're not creating an experience. At the end of the day, when you create an experience for your customer, this is just business 1 0 1, right? When you create an experience and you take the customer through an amazing journey by providing a great product in your business, they're gonna love you. Most people don't know how to do that just because this industry's newer. So we've, this industry has become a bit saturated with. Mediocre properties. So now the true operators are getting a bad name. Like us. So as the industry shifts and pivots into a more mature industry, things will change. I think we're starting to get the word out that you've gotta be a professional if you're in the space.'cause this only 10, 12 years old. That's it. It's 10 years old since we, we have true data 2015. We're in 2025 today. I feel like that's what's broken. So also there's a fight between HOAs, and the cities. And this model. So that is also becoming a norm, right? So once all of that goes away, AK wants the industry matures. Things will be more stable in my eyes. But I believe that us millennials right, are the center of this industry, right? Because we are the largest consumer group. No, I got you, man. Now what are some of those amenities that you are putting into to make this experiential, STRs? love the question. So gimme give you an example. We recently finished a project, we threw in a pickleball court. We built a 11 foot kids pool next to the regular pool, both heated, right? the backyard of this property had absolutely nothing. It didn't even have a heater. So we added the heating component. We built an outdoor kitchen, right? and then we put tons of really good furniture, awesome furniture games. An area for the ladies to do their makeup and kind of get ready in a space that wasn't being used. Yeah. With mirrors, colorful stuff, really colorful walls, stuff like that. Pickleball courts, basketball courts, sports courts. outdoor seating, outdoors, anything outdoor. Depending on where you are. maybe not New York or not in what is really cold. not up north, but anything outdoor like Hawaii where you're at, right? Build an experience. So the winners, the true winners are those operators who are buying affordable real estate with a lot of land and creating an experience with affordable real estate, not the ones that are buying.$5 million properties.'cause your mortgage is gonna be like 500 grand, or 300 grand or whatever it is a year, right? So it's harder to win if you do that. So that's the answer for that. I got you, man. Now, no. I'm also a real estate agent over here in Hawaii. Just walking with, buyers, through the prequalification process to, to be able to purchase a home or an investment property. It's challenging for some people. Right. you are an expert in raising capital and structuring fund, right? So when launching Express Capital, how did you design the capital stack to align incentive between you, your LPs and the JVs partner? And these are important, for people to get to understand that if they change their relationship with money and look at a win-win model, right? Then they too can potentially realize. Can realize their dreams of becoming a investor in a whole different level. I love it, man. I love the fact that you're going deep, man. I truly do. So Empress Capital, right? Empress Capital was born with a dream of creating passive income, a dream and ambition, right? Creating passive income to this model that we've been doing for a decade almost, right? and then at first I was like. Okay, George, how do I attract bigger check writers? How do I attract fund managers, capital raisers to partner with us? Okay. I came out first and I went through, you and I met through our mastermind. Of course. Yeah. That's exactly what I was doing with every single coach, every day for like four or five months. I know. I remember. Oh yeah. I asked all of them and I'm like, how did you structure, how did you do it to attract X? How did you attract fund manager? How do you attract, how do you make it more attractive so that other people can partner with you? The veridic was create better economics for them, way better so that they can pass down better economics to their investors than if they came directly through you. So we did that by creating different share classes, And in creating incentives on the top, on the bigger share class. Those incentives align with the fund managers or capital raisers so that they can make a nice hefty sum for putting together the deal and their investors make more than if those investors came directly through us. We get to do what we do right, which is create experiential amazing short-term rentals. and then everybody wins. And I love that man. I've seen some projects where folks are looking for capital raises. However, when I look through what they're offering, I can't justify, I was not able to justify bringing those project to my investors, right? Because running a fund is not free. It's inexpensive. It's not super expensive at times, right? I guess it depends on the scale of which you want to go. however, it's not free. So the economics has to make sense for the income to be able to pay for the fund and also to make an income for themself. What I'm seeing is that a lot of folks, the same returns that they're offering their investors is really challenging to break out as a fund manager. So a fund manager managing a fund and doing deal with some of these operator does not make sense. so it's good that you're able to create that different class of shares, to make it, make sense for your fund manager. Now, If you listen to this podcast, you're thinking about STR and if you're in real estate for a while and you've been focusing on buying single family or house, whether it's be you buy long term rental or you're doing fix and flip, you understand. That the value of the property is based on the comparative market analysis in the neighborhood. Pretty much what your neighbor's selling the house for will justify what your house is valued at. However, George, you are putting in a lot of amenity into these properties, How are you justifying, what some folks would call an over improving a property for a neighborhood or a community, right? How do you, justify those kind of, big improvement to give that experience for your guests? Yes, absolutely. So the number one way, it's justified is that it doubles to triples the cash flow. Same property, same everything. We put in an extra, call it a hundred thousand dollars for the sake of even numbers, right? That creates an extra 50 to$75,000. More in net cash flow. That's justification number one, cash flow justification number two is that we're not driving and buying these properties to sell them as an asset on the MLS. There you go. We are consolidating portfolios and putting them in front of these larger private equity institutional buyers to sell'em at a cap rate. we're underwriting at 11% cap rate, not too shabby. Market is selling at five to seven. It's the beginning of this storm right now. Institutional buyers are just getting into the short term rental game, right? So we're positioning ourselves. We're already reverse engineer by finding the buyers. Now, AK reverse engineered the entire thing and positioning the NOI. Slowly on the growth finding affordable real estate that's more recession resistant, that doesn't go up and down on swings and it doesn't crash, right? Increasing the NOI over time. Slowly but surely. So that's the other justification. So three simple points. I love your questions, man. Thanks. I appreciate the inside depth there. That No, I got you, man. Now, so this is the last question before we get into focus round brother. And let's talk about, tactical, being a tactical person, you are currently looking for national, real estate brokerage partners. Is that still a thing? yes. And fund managers. Okay. All right. So what does the ideal partner look like, for your vision and what value would they bring to the table? Or do they need to bring to the table for you as a fund manager or a broker? Absolutely. So ideally experience and structuring deals, right? Because I've worked with fund managers that are newbies and it's very difficult to. Coach them through everything. And I'm not saying I don't like to, but at this point, we have limited infrastructure to coach them. Now as we grow, we could do the beginners, but as of right now, we want a bit of experience. Raise$1 million or more. As a broker, our broker is our partner in the sense that we could partner up with their, broker license in order to scale. Not the acquisition of properties, the property management acquisition portfolios, right? the rest is, ideally they have to be hungry, ambitious, meet the core values, right? Be like us, and, they have to be into. like growth and lifestyle in, building an empire. Like we just wanna connect with people that are like-minded, right? people that have, I have a family, so I wanna hang out with people that have kids, so we could talk about things, right? Because these people are our friends. Yeah. No doubt, right? They become our friends. At the end of the day, you're doing business, but the best business partners are the ones you're always building a relationship with. Yeah, no doubt. All right, man. So we gonna roll right into the focus round. I also wanna be respectful of your time as well, Yes, sir. A focus run is like a, we call a fire round, spell out the acronym focus, right? So the first one is fun. what do you do for fun? My wife and I and our son, we love to just take spontaneous travel trips. So what we do is we wait for, we plan our conferences, but the spontaneous trips is waiting until last minute. Schedules sometimes get open, right? Meaning the calendar doesn't get booked in the low season and in the midseason. So we wanna travel to that property to do two things. One is enjoy the weekend for a minute, right? So we take our son and while we're there. We set up teams to go help us do asset management. So I'm literally in the pool, in the hot tub telling people what to do. Or I'm like sitting down telling people what to do. And my wife, obviously, she runs operations. She's just running all over the place. So we take and take advantage of the lifestyle factor of our properties in our portfolio. So we're building that. We love that. gym health is important for me. So gym and health are my number one priority.'cause I wanna live to 180. I'm a biohacker. 180. as per Dave Asprey, my biohacker, hero 180, that's what he says, live to 180. So my mission is to live to 180. I'm going to, I'm, my goal is 1 23. 1 23. I love it. 1 23 years old. Very specific. That takes me into the next, what's that next century. 2100. Yeah. Yeah. Love it. Somewhere around there. Okay. So I heard that from, the strategic coach. it talks about, this life expectancy that they have placed on us. When you ask somebody how long you plan on living 80, that's the good number. Think about, yourself at seven, nine years old. What do you like? What is your wealth like? What is your relationship like? What is your health like and no one picture themself, towards the end of their life being weak and feeble. They picture themself as being vibrant. The wits about them, great relationship, good finances. And then when you picture yourself like that, just think about if you have that much vitality, how much longer do you think you'll live? a lot of people talk, 10, 15 years, and if you keep doing that and you keep prolonging your life, then you keep doing things to where you will, I think, eventually achieve a longer life than the life expectancy that BS that they try to feed on us. Anyway. What was one opportunity that was a game changer for you? Being able to transition from only operator, To deal structure architect. By being able to structure larger projects, our fund creating two to$5 million partnerships with fund managers and capital, that's what we're doing now. We have Several partnerships of that magnitude. So going from running operations of a portfolio of short-term rentals of our own and raising capital at a small one deal at a time cycle to putting together A scalable structure that allows us to buy a$15 million portfolio or 20 million. Right now we're buying a$12 million portfolio. That was a game changer because it immediately put me on another level of thinking. The second game changer was joining Raise Masters. So that opened the entire world because I came into there saying, I'm gonna raise 500 to a million dollars. now we're doing 10, 12,$15 million deals. But when I was thinking before that was lemme just raise a little bit of money. I wanna scale our portfolio by raising money from other people, passive investors. Now I'm like, let me partner with this$5 million partner. Let me build this$200 million portfolio. So your thinking opens up once you go into another room. A 100%. research has shown that if you are around, high achievers, your productivity will increase drastically. So I think that's what race mass do does for us. be in the room with people that even if there are people there that, that are just starting out, right? Raise master is not cheap. So just starting out in Raise Masters is, not for the faint of heart or somebody that's totally broke, You need to have some capital, some working capital, and it's important that you have a big vision and be willing to talk about it, that's a dreamer again, man, that dreamer, you got your dream. Other people got their dream. How can how dreams come together and make something amazing? You know what I mean? So yeah, raise masters definitely has been a catalyst for a lot of us, What would you say is your best communication tip? Best communication tip is over communicate, okay? No matter what. Outreach over partnerships, wife, son. Friends over communicate. And when you over communicate, bring vibrancy. Into that communication brother, it's great to have connected with you. Hey, here's what we talked about. I send usually voice messages, videos to people like my partners. They send me voice message over communicate.'cause if you write a text, boom, little, right. Two, one to three words that could get lost in translation. Yeah. But when you say. Every point in one minute, they have a minute to watch that. So if you over communicate, you go much farther in terms of the relationship than if you under communicate. Man, that's an amazing strategy, man. I love it. Thank you. I love it. some folks have sent me video messages on LinkedIn and I find myself, if I can see their picture, then I will click on it, but I don't click on random links. but those people that send me videos, I watch every single minute of it. And you get to almost feel their energy, Of what they're trying to communicate to you versus a text. Yeah. Because I think emotions can be lost. What is one thing you wish you've understood earlier. George, man, thank you for that question. I honestly, wish that I understood the vision of things and to being able learn. Growth and learning. I started too late. no, I started way later than I should have started. Okay. Not too late. It's never too late. I literally started in this world of personal development, self-development, growth, ambition. I was always ambition, but I had no knowledge or skills of what could be possible. So I started at about 33, I'm 40 now. If I would've just taken that back five years. but it's still not too late. Many people start later than I am, but when I look at it, I'm like, if I started then, but everything is part of your journey, right? It is. Yeah. So it doesn't matter, but that's one thing I would pivot just to learn faster, right? and before,'cause I made a lot of mistakes, but those mistakes also became part of who I am today. Gotcha. And when I think about my younger self is that, sometimes we were not mature enough, we were not ready for the level of thinking that we have now, and the things that are important to us now, we were not ready for that 10 years ago. Our focus was a little bit different. So even if our future self came back and told us something, we caught up in, our hype or friends and all that good stuff, so we were probably not mature enough, for this level of thinking. Yeah. I agree. I agree totally. That makes perfect sense, man. Yes, sir. last question, brother. in a focus round. What do you attribute your consistent momentum and success? I Love it. I would have to say that my continuous drive for personal development, because most people grind. They could be successful, but they don't take care of. Themselves, number one. So number one, you're building your infrastructure. It's like having a house with no foundation, right? I wish I would've started earlier.'cause I now I see the explosion in the last seven years. What if I did that five years ago, right? Five years before that. But personal development, mind mission, drive, goals, health. That is a foundation of everything, because if you don't have your health, you can't win, right? You might win temporarily, but you'll crash and burn a hundred percent. So every single day I've got my routine down in 2025 with AI has been a game changer because it made my decent routine into a 10 x. So I'm gonna leave it right there, brother. No, I got you, man. I appreciate that. Yeah. So glad that you bring in ai. We have a summit, the first, owner, of America's Summit for 2025 coming up on May 23rd And that's one of the things we're gonna talk about. We got Catherine Bell, one of her coaches in Raise Master. Coming to talk about, AI. We also have Hollis coming to talk about bots to be able to build credibility. We have, Adrian coming to talk about branding and we have Ben Fraser gonna bring some surprise information. to include a fund that we're gonna roll out as well. And we also have our fearless leader, Hunter Thompson, as one of our speakers Wow I'm super excited. Incredible. The own more of America's Summit here in on May 23rd. I am so ready for it. Send me some information, let's go. Yeah, I sure will, man. Yes, it's gonna be exciting. So we're building it out right now, and by the end of this week, we should be pushing out, so by next week. So by the time this podcast episode release next week, we should be pushing out the summit. We also pushing out a couple different bonus along with it as well. A couple different, a couple of resources that I've been working on for months. that is tailored towards accredited investor, our military veterans who are accredited, invested, and own a small business, so there's gonna be some exciting information that, that we're rolling out, so George. Amazing. I want to thank you, brother. Thank you so much for spending. Spend some time with us this morning to talk about, short term rental, STR, and man. If our audience want to get in touch with you, what is the best way for them to do that? Absolutely. So George Salas 3 6 0 has all my social medias right? I am most active on LinkedIn, so you click on the LinkedIn button right there. And I've also got a complimentary masterclass that I put together, that talks about our short-term rental model there as well. Awesome, man. Appreciate you, brother. Alright, thank you so much brother, for joining us. Thank you. And listeners, thank you for spending the time with us with another episode of the Multifamily Real Estate Experiment, podcast. Until next time, I'm Hutch the Marine investor out.