Our $1 Million Motel Makeover in Zion National Park!

we bought not one not two not three but 13 Airbnb units at once stay tuned to find out how we did it we are the real estate Robinsons hey everyone if this is your first time here I'm Tony I'm Sarah and we are Real Estate Investors who quit our day jobs by investing in airbnbs and we're here to show you how you can do the same now we've got big news guys we just bought a 13 unit Motel outside of Zion naal Park is that freaking cool now buying a a boutique hotel or motel has been a goal of ours for a while now so we're excited that it that it actually happened the property was originally built in the 1960s and it's changed hands a few times since then we bought it right at the new year and rehabbed it into a modern St but we did our best to keep all the charm of a traditional roadside Motel including this super cool retro sign and in this video we'll walk you through why we bought it how we found it how we negotiated the deal and how the rehab process went if you've been following the channnel you know that our specialty is airbnbs so why the heck did we decide to buy a motel now first we'll say we're not abandoning single family airbnbs and we'll continue to buy more but there are some major benefits to moving from single family airbnbs to commercial motels and hotels so let's break them down reason number one control honestly one of the biggest reasons we love commercial real estate is that you have more control over the value of the property when you buy an Airbnb as a single family home the value of that home is based on what's called comparable sales so basically you look at other homes with similar size quality and features that have recently sold in that same neighborhood and whatever price those homes sold for is what your house is worth so when we buy an Airbnb even if it does over $100,000 in Revenue the value of that home will always be tied to what other similar homes are selling for but it's completely different when you buy commercial real estate so with this motel and with all commercial real estate the value of the property is heavily in influenced by the amount of Revenue and the profits that a property generates so as we increase revenue and keep expenses in check we actually increase the value of the property so let's go over this with a quick example but first let's give you a few quick definitions so definition number one is net operating income or noi for short this is your total revenue minus all operating expenses excluding your mortgage payments definition number two is cap rate uh this is basically an Investor's estimate of the potential return on a property and it's usually expressed as a percentage you hear someone say like hey this deals a six cap or a 10 cap now your cap rates and your noi come together to give you the value of your commercial property so you get the value by dividing the net operating income by the local cap rate so say a property generates $100,000 of noi and the local cap rate is 6% that property is worth 100,000 divided 6% or 1.67 million now say you're able to increase the noi from $100 to $200,000 still at a 6% cap rate now that property is worth 200,000 divided 6 or 3.3 million so we doubled the value of the property by simply increasing the profitability of it so if we took an Airbnb and doubled its Revenue the value is still going to be based on comparable sales that's a big limitation that's why you see so many big players in the commercial real estate space make ridiculous amounts of money they buy commercial assets increase the noi and then they tap into all of that Equity often times taxfree through refinances or they sell and 1031 into something even bigger the second reason we bought a motel is because we want to scale you know we have a goal of growing our real estate portfolio to a value of $1 billion over the next decade say that again 1 billion with the B and doing that through single family airbnbs would be pretty much impossible so naturally we're forced to focus on bigger properties now we'll get into the number shortly but this first motel won't make a big Financial impact on that goal of getting to 1 billion but it really does lay the foundation that it's our proof of concept and honestly if we knock it out the park it gives us a process we can repeat at a bigger scale yeah but before we keep moving we'd really appreciate if you guys could give this video a thumbs up subscribe to our Channel hit the bell for notifications every new subscriber really does mean a lot to us uh we have a goal of getting to 100,000 subscribers by the end of the year so if you're enjoying this content if it's helpful in any way please subscribe and turn on those notifications we also have a totally free download for all of our subscribers if you head over to the real estat robinson.com calul we've got a free tool we put together that helps you analyze properties you're considering purchasing as an Airbnb guys we've had I think like 100,000 people download this calculator so go grab it now last we have an in-person Airbnb event coming up June 23rd through the 25th in Denver Colorado it's called the Str Str Summit now if you're looking for an event where uh you're going to have amazing guest speakers like Pace morby like Rob belt like Mike elante like Rich Summers like Amanda Han and Matthew McFarland who are extraordinary real estate CPAs uh we have the VP of data and economics from airdna coming to speak an amazing speaker lineup obviously myself and Sarah will be speaking there as well but you're going to learn so much you're going to have and our interior designer Brianna and our interior designer Bri we be talking about here in a bit you'll also get an amazing opportunity to network with other Real Estate Investors which is literally the best part our lives changed by expanding our Network and it starts with getting into to Rooms like this so guys we have a special discount going on right now so if you head over to strr summit.com use promo code special 500 now guys that that promo code isn't going to last forever so make sure you jump in quickly by the time you get to the website if you wait too long that promo code could be gone but special 500 gives you 500 bucks off of a general admission ticket and we hope to see you guys in June all right so now that you know why we wanted to buy a motel let's talk about how we actually found the right property now I'll tell you finding a motel or hotel is a lot more involved than buying a regular Airbnb now you can use sites like cxy or lubet which are basically like Zillow for commercial properties but even s takes a lot longer to find the right property here's the big difference between buying single family airbnbs and buying a motel if you're focused on buying single family homes you can really focus in on just one or two cities right because there's enough inventory for homes for sale but that's not the case with motels I can't say I only want to focus on this one city because there are just way less motels in a city than there are single family homes so when we decided to buy our first motel we we pretty much started looking everywhere all over the United States and since we had such a wide Geographic range we really tried to focus in on a specific type of our motel or hotel so here's what we created as our buy box we're looking for boottique hotels or motels in the 10 to 30 unit range with a value add opportunity located in urban and vacation markets our ideal debt is seller financing or assumable loans and our goal is to raise no more than 1.5 million from investors and provide a to 12% cash on cash return and an IR in the High Teens so once we had our buy box in place it became a bit easier to kind of quickly disqualify the properties that didn't meet that buy box so through months of searching talking to Brokers all over the country and submitting a bunch of offers we finally found this motel in Utah just outside of Zion National Park and it's so cute and after confirming that deal fit our buy box it was time to negotiate with the seller so let's actually break down the numbers on this Motel so our purchase price was just under a million bucks at 950,000 we were able to negotiate seller financing for the majority of the purchase price so we put down $200,000 and the seller carried the remaining $750,000 now we're paying them a 7% interest rate on a 10-year term we set our rehab budget for $320,000 and also included some working capital so in all the capital needed to close on this property was about $600,000 yeah it's not bad right you know that's a single family home in some places but in all it take about 90 days to close you know the the due diligence on commercial property seem to be a little bit longer we also ran into some issues the seller had to fix before closing but about 90 days now once we officially closed in the property then the hard work really started the property had good bone so luckily we didn't have anything to worry about regarding plumbing heating cooling electrical or foundation work but it definitely needed a refresh so as soon as we went under contract we hit up Brianna Michelle our in-house designer uh to help us create a vision for what this property should look like we started off by creating a mood board um we looked at other Motel designs and tried to find those that would appeal to the potential guests in that market but we also really wanted to be different enough so that we stood out from the competition and working with Bri we came up with a design concept that kind of perfectly Blended the Retro Vibe of a roadside motel with kind of that modern touch that today's Travelers are looking for now once the design plan was set it was time for the actual rehab now like we said our rehab budget was $320,000 this was by far the the biggest rehab we'd ever done our biggest budget before was like just over 100k so this is like three times bigger than anything else that we'd ever done before we really wanted to set ourselves up for Success here so we ended up Hiring Our rehab crew from California to complete this project so every week they would drive the hundreds of miles from California to Utah and stay at the hotel for 5 days at a time now we have to get extra cost of covering their transportation back and forth each week but we felt the extra cost was worth the Peace of Mind of working with the crew that we already knew and trusted right like like most investors we've been burned in the past by other contractors and we didn't want to take that gamble on a project this big so that ended up being one of the best decisions we made seriously so in total the rehab took only 13 freaking weeks from start to finish our team did an absolutely incredible job and they really brought that place back to life and it was just so cool to see the transformation from mood boor to in real life now one of the biggest challenges we had with rehabs in the past was going over budget right but uh but with this rehab budget being so big at over 300K we couldn't afford to go over budget here so I was stressed yeah she was a little stressed I I literally cried she did cry one time so we we tried to make a few changes to make sure that we were on track here so first we created a super detailed scope of work for the rehab um and we also added an expense tracker sheet so every expense we had was added to this Google sheet and then weekly we sit down to review all of our expenses and see how we were tracking against the budget if we were under budget in one area and over budget in another area we made whatever tweaks we needed so that the overall spend was still on budget and that was so helpful thank you so much baby second we used a new feature from relay our business bank to make sure all of our expenses were accounted for so relay recently rolled out a new receipt management feature right when we started this project and that made it super super easy for us to make sure all of our books were tight and in order so for every transaction we were able to snap a quick receipt um uploaded into relay where was tied to the actual transaction so you know no more collecting a bunch of receipts in random places right at the point of purchase you snap the receipt and then never have to think about it again yeah I literally had to do hundreds of transactions for this project so it was super super easy to or it could have been easy to start losing track of things but the receipt capture kept me on track kept our rehab crew on track and kept us on budget now the other benefit of using relay for this project was the ability to create virtual debit cards for each team members now the virtual debit cards are great because we were able to instantly create debit cards like as soon as we closed and we could start ordering material immediately one of the biggest delays for a rehab project is just material not showing up on time so if we would have had to wait like seven to 10 business days for a physical card to AR arrive it would put us way behind track and the team member cards that we were able to create instantaneously were super helpful too so I tried to bulk order most supplies online but sometimes our team would have to run to the local hardware store last minute to pick things up and each team member had a debit card with their own preset spending limit so they can move as quickly as possible to get whatever they needed in that moment instead of having for me to order and then wait for the delivery now these may sound like small things but I promise you having a dialed in workflow for two member purchases and expense tracking was a big part of making this project run so smoothly huge now we've recommended relay to pretty much every real estate investor in business owner that we know and it's because honestly they're just continuing to improve their product for small business owners like us not to mention when you call relay support you actually get to talk to someone on the phone Y without hitting a bunch of different numbers on the dial tone and yelling speak to representative yeah and usually it's someone like on your continent so there's like no language barrier relay also offers same day AC payments zero monthly maintenance fees Integrations with your favorite bookkeeping software and it's literally the only Business Bank that's built to support profit First Cash Flow management so if you want to sign up for a relay business bank account have over to the link in our description below and sign up now we had our brand opening for the motel a little over a week ago and we still got a lot to learn about this new space but we're excited to take you guys on this journey with us as our subscribers and more importantly we're excited to see something that we've dreamed about like finally become a reality it's been so cool to see that this was literally your on your vision board what two years ago uh yeah yeah I'll never forget you know at the beginning of the year Tony's like a big vision board guy and you know locking in a motel was on there so [Applause] and honestly it was a bit surreal to like be at the Grand Opening and see like all of our families surrounding us so it was just a really cool thing so just just a reminder to all of you that if you've got a dream you got to work hard you got to dream big because when you do the sky's now if we're able to hit our projections for this motel that we bought for a million bucks it should be worth about 2.5 million in the next 24 months or so so we'll create 1.5 million in equity that we can actually tap into which is pretty crazy yes now guys if you want to help us on that journey of getting to a billion dollars in asset in management you want to buy cool properties just like this one head over to Robinson capital. that's Co like co uh and you can learn more about how we're building amazing uh commercial Hospitality STS just like this now you can be a part of it so that's it for today guys I hope you enjoyed today's video if you have any questions drop in the comments below I'm Tony I'm Sarah and we are the real estate Robinson [Music]

Channel: The Real Estate Robinsons

Views: 2,499

Keywords: the real estate robinsons, str, short term rental, airbnb, airbnb hosts, super hosts, real estate investing, investment, property, property investement, real estate, tony robinson, sara robinson

Id: MdfQ3QC7HRw

Length: 14min 37sec (877 seconds)

Published: Tue Apr 30 2024