How to Go from Military (or Any Full-Time Job) to Millionaire

0:00I'm curious you know with the community that you have and all the people that you've interviewed on your podcast and interacted with over the years what do you feel like the biggest lesson you've learned since 2015 when you first started dude honestly I've probably said this on like 50 podcasts now and this applies to so much more than just real estate it's so simple and yet I see it every damn day I even I just recorded a video on this I didn't post it to Instagram yet I need to do that when we get done talking but filter the advice you receive through the lens of whether or not the person you're talking to has achieved what you want to in that specific area and the reason I say the specific area is because like when I was struggling with my marriage I I actually realized hey if I talk to my friend who got

0:48Divorced and is now happy he will tell me hey like red flags move on and if I talk to my dad who just celebrated his 40th anniversary like he going to tell me about how great marriage is if you stick it out and help me of course he was also a marriage counselor but but like you know go talk to someone who's been married for 70 years like they're not going to tell you you should get divorced you know they're going to be like it's a bump in the road if you love her stick it out it's worth it and so it's similarly like what I find with like the the real estate space or anything with like people who chase goals is like if you put this in the context of let's say hey Kirby you want to go be a a UFC world class MMA fighter right your mom I'm I'm making an assumption here so if if I'm striking a nerve

1:36I mean the general mom you know loves you and wants what's best for you and she probably doesn't know anything about UFC and so you're not going to go to your mom who has your best interested heart and loves you and has your back and supports you and everything and be like teach me how to fight and you're not going to listen when she starts telling you when you go to like a professional MMA coach like I don't know you know oh I'm drawing a drawing a blank now on anyway you know you're not GNA go to like Chris Weidman or or whatever and and khabib and be like hey I'm taking lessons with khabib and your mom's like ah you know I really don't think you should throw that hook and you're gonna be like hey khabib like sorry my mom she loves me she said I shouldn't do that so I'm just not going to do that you're gonna listen to khabib because he's the best freaking fighter ever yeah

2:25for some damn reason when we get into real estate investing it's like yo Kirby I'm super stoked about this real estate investing and then your mom's like I heard you have to deal with tenants and toilets that's scary your uncle had a bad tenant once and it made he got divorced because of it and ruined his life and you're like oh so this person who you don't own any real estate and you heard a story about a guy who bought one rental yeah I should listen to you instead of the guy who has 30 short-term rentals and doesn't have to work unless he feels like it that makes sense like it's so weird to me and so like I always just tell people I'm like look it is totally okay to be like hey Dan Bilzerian is great with women maybe not relationships but you

3:13know however you want to look at it right like he is the man but I probably shouldn't listen to him about marriage because he don't know about it or I don't know take whatever extreme example you want like Donald Trump great at building massive hotels and Towers don't agree with him politically maybe I won't ask him about politics but I could probably still benefit from asking him about a hotel like whatever example you want to use like it's totally okay to go to somebody get the advice that you want from that person who's living that life and that role and then not let like I don't know we'll just say you've got some billionaire friend who owes owns all the real estate and New York City or wherever but is divorced cool maybe you learn from him about real estate and don't ask him about relation ship there's nothing wrong with that but for some reason

4:01we just think we should take advice from everyone about everything and it drives me nuts because I see it all the time people like I'm going to get started what do I do and I'm like I would do these things and then they're like well my mom said I'm like did your mom own rentals yeah well no exactly yeah so I guess that's the thing that I would say is like I've that just is a recurring truth in my life yeah yeah no it's so so true and I think on the other end of the spectrum too even people that seem like they have a lot of experience you got to be careful with I think I I fell into that trap in the beginning you know we we my partners and I paid to go to some you know seminars and stuff and some of them were great and others it's this used car salesman on stage with this picture in front of his private jet never

4:50done a deal before and he's telling everyone how to you know that he's going to teach them if they pay them you know enough money and you know I realized after a while of that first off do I want my life to look like this guy's life who's on stage and then also what is he actually doing when he's offstage you know and so getting super clear on the outcome that you want you know for your your life your days to look like does it align with the person that you're you're getting advice from that's such great great advice yeah in terms of I'm curious about the boutique hotels because I'm I'm in the Airbnb space and we've talked on your show a little bit about the difference between you know Airbnb a typical Airbnb and and a hotel what drove you to pursue hotel

5:39And a pretty large hotel with multiple pools and you know really really nice hotel yeah so you know interestingly enough one of the last wholesale deals I did and we didn't actually wholesale it so I shouldn't call it that off-market deals was a small town about 40 minutes from where I live and I bought basically I got a hold of the guy he had a house he wanted offload but he was like look I'm done with this whole real estate thing you can have it if you want it but you got to buy everything and I'm like what's everything and he's like well I have a 15 unit apartment I have a 23 unit apartment and I have a 40 unit hotel and it used to be a I don't know courtesy in or something comfort in and but it had no flag anymore he had bought it from the bank it had gone under bad management when we bought it somebody called the phone at one point and was like do you guys still take a hit of heroin for a night's stay

6:27I'm like no we we not that guy anymore sorry You probably shouldn't call public places and say that but like it it had really bad issues so the guy bought it and he was going to cons convert it into an assisted living facility and basically it was the only hotel in town and the town was like nope we need a hotel so he didn't want to manage a hotel I get that and he I mean that that was pretty much the the thing he just was done and so we went back and forth we found a decent price negotiated a bunch of stuff you know we made a ton of mistakes we actually we've been trying to sell that hotel for like a year now and it's not that it won't sell it's just that we're not going to take a haircut on

7:16It and we don't need to and the biggest mistake with that was like we didn't understand the location the demographics like that City's just not trying to grow they're not helping themselves they're very old like farmer kind of you're not with us you're against against us for any like new it's weird but all these issues with that hotel I had two partners and of the three of us two have basically sworn off hotels for life and I was like you know realistically like when we bought this thing it made like 180k in Revenue we're at like 3:30 right now we put a bunch of capex into it like but if we hadn't we would have cash flowed pretty well we've got all these issues but we've also done all this and I'm like I just kind of realized like this a lot of work but if we did this on the right property in the right space we could have made a freaking killing with this guy

8:04And we still can like we we still have we're still profitable on the whole deal by the way like we've all got our Capital back plus probably probably 2x already and we still own the hotel so we'll see what happens when that sells but it's just it it was a learning curve and so you know when when Blake my partner on this other Hotel found it and was starting to talk through it it had the location it had the cool look it had the amenities it had the room to grow and it had the terrible operations that we had seen when we first took over this one and I mean I was able to go on Google look at reviews go on social media look at the only re like video about it and a couple of other things and just basically go hm lot of room to grow on this bad boy and it currently works so what if we and he's like we actually raised for a real renovation budget and

8:53like that one's going to be nice and so you know what kind of turned me towards it is like I'm not a huge multif family apartment guy I think that got like a little over overwatered or watered down or whatever over the last few years I think it'll take a few years till that comes around to where it's something I really want to pursue and but all the multif family like syndicator guys their whole pitch has always been you know hey it's like long-term rentals but economies of scale you get you know one roof for 60 rooms instead of 60 roofs for 60 rooms and you get yeah you know all the things and that's Airbnb with hotels like you get one roof or in our case it's eight buildings so eight roofs for 130 Keys instead of 130 roofs but it's also eight roofs for I'll give you the whole perspective here it's it's 130 keys with a 150 person

9:42wedding venue three pools two hot tubs we're putting a gym in and it by the time we're done we should have a like coffee shop with a restaurant because we've got another building that we don't know what to do with and we're probably just going to put food and beverage in so it'll be eight rooms for that or eight roofs for that with you know and we're going to do a $3 million budget renovation so that it'll be nice it's not actually like structurally it's great it's just you know the guy hadn't updated it in 20 years so it's we're going to make the rooms sexy and then we'll update the operations a little bit and it's going to do very well and like when we bought it the guy wasn't on xedia the guy wasn't on Airbnb the guy wasn't on booking.com like there's a lot of room to grow the reviews will go up the I'll make social media content once it's really at that

10:30point like YouTube and stuff SEO and whatever and I'll Trump whatever's out there for it and we'll start to see that that Revenue increase and I think the real kicker is like it's all the economies of scale plus it's a commercially zoned asset that the city wanted there so you do not have to worry about them ever putting out a regulation that'll hurt you as an Airbnb if anything if other airbnbs start popping up all over the place we've seen this in big cities and it starts hurting your business you go hey City you're going to lose this much in tax revenue from us if we go under and the city's gonna go screw you little Airbnb guy we don't want you we want the hotel and so like you've actually got you know that was kind of what drew me to it I'm like look the operations suck

11:18So there's a barrier to entry most people are not going to buy a damn hotel and then you can buy them at a discount right now because of covid and then if you buy something that's poorly managed from a you know the running joke in the hotel world is you buy from a Patel Patel is a last name an Indian last name and that class or clan in India is like notoriously that's what they do hotels and anyone who's listening to this and thinks I'm racist go to Facebook and type hotel hotel motel there is a 60,000 person Facebook group full of people with the last name Patel who buy and sell hotels and want to manage them what they do like this is their typical Style they go in they buy a hotel that they can live in and manage themselves they have the team and they run Bare Bones and they will basically they don't run into the

12:07Dirt like that makes me sound like I'm an they they bleed it and so they run it for 20 years they put as little as they possibly can into Renovations capex you know making it sexy making it pop they basically run it as Bare Bones as humanly possible and they capitalize on that as much as possible by the time they get ready to sell 20 years down the road the thing's doubled in value so it doesn't really matter they still make out and so these guy and it's not I'm not saying it's a bad model or a good model but it provides us the opportunity to go in we buy it at fair market value but at fair market value for an underperforming asset they make out because that's still they've got Equity so they're still happy and then we go in and we're like this dude hadn't updated anything the wedding venue needs help the one of the pools is

12:55Down you know the operations are basically non-existent the last 20 years of tech improvements we're going to turn all that on and we will be great and so it's a win-win Winn win and yeah I guess that's kind of in a nutshell I'm like dude and and for reference on this one we are two miles outside smoking at Mountain National Park but we're in a town called Townsen which is about 25 minutes from Pigeon Forge and about 35 from Gatlinburg but it's like South and so if anyone's familiar with that area you've got the park and Gatlinburg which is like the gross Dirty Vegas version of Smoky Mountains that everybody goes to and gambles and drinks and parties and then you know throws up on the sidewalk and it feels like honestly New Orleans and Vegas are cleaner than Gallenberg then you got Pigeon Forge which

13:44Is way cleaner but super overcrowded like that's where Dollywood is and and all the chaos and like there's some beautiful really cool stuff there there's traffic and it's a city and and then you've got South and kind of between both of those in a V is Townson which has doubled in population in the last 15 years has you know it's only like 10,000 people so like I say that it's not huge it's like a two-lane road that winds through Townsen and there's like five restaurants a Distillery a coffee house and a couple hotels and it just tracks into the back end of the park and it's beautiful it still has views you're not overcrowded like so in my head I'm like okay over the next decade this

14:32Is going to be more crowded and we're right outside the park it's beautiful and so and it's a it's a the whole hotel is like log cabins with like green metal roofs and like rustic theme it's it's super cool that's awesome yeah and and I think people will Overlook a lot of those fundamentals like what you just went through is just so many fundamentals of just like okay just it makes sense you know that that the deal fund fals when you put them together it makes sense so what's what's the like increase that you think you'll get average nightly rate in terms of rooms so well I'd be more more more important for more more likely to be accurate when I speak for this so let me at least give you this first because I'm not the daily operator so

15:21We paid 7.7 we're putting 3 mil in and we've got a tentative post appraisal at 14 so kind of the you know metrics there I want to say we're sitting around like 145 revar and I think we're looking at like 175 is so we'll we'll kind of see you know what that looks like realistically you know Blake would I actually missed the last GP call because I was in Costa Rica getting drunk Blake would I it was actually just the time zone I was sitting at the computer and I'm like logged on and then they were like I hopped in and they were like hey we just ended I'm like oh shoot I'm an hour further than I thought but yeah he's he's definitely more on

16:09The ball for that but the it's about a $30 revar increase that we anticipate but also an occupancy increase that's the bigger kick is like you know I guess I should say so average daily night would be $30 increase rev par will will go up because we we were operating around like 55 60% occupancy depending on the season obviously worse in in low season not bad but when we turned all the bookings on in December we actually had to like give people money back for like 12 rooms because we over booked we were like oh sh wow like our systems just broke the system so we need to like so we still haven't like fully cranked you know third party booking Airbnb advertising we're not running any ads right now so we're like we need to wait till we're renovated and and nice before we really turn that on a