Hanan Kim Took a $769K Treehouse Resort From $143K to $350K

Quick Summary

Four long term rentals were throwing off about $500 a month between them, and Hanan could see that pace was never going to get her where she wanted. So she went looking for property that gets valued on its income.

The seven unit treehouse resort she found cost $769,000. Under the sellers it had grossed $143,000 in its best year on a five month season, and her first year came close to $350,000. Before you underwrite anything of your own, check what a market supports on BNBCalc Markets.

Key Points

• She started in 2015 with a California bungalow that had an attached junior ADU. It made about $5,000 its first month on Airbnb and around $8,000 a month after that, which covered the family's living expenses.
• Local rules capped her at one short term rental permit, so she stacked long term rentals instead, buying with 5% down owner occupied loans about once a year for five years. Four of them together cash flowed roughly $500 a month.
• The seven unit treehouse resort came off BizBuySell for $769,000, which Jeremy works out to about $110,000 a unit. Its best year under the retiring sellers grossed $143,000, and they only opened five months of the year.
• Her SBA lender told her he had never closed one of those in under 120 days, against a contract she had written for 30. She filled the roughly $350,000 gap left by her 1031 with private money at 6% and 6.5%, on a 30 year amortization with a three year balloon.
• The second property, a bed and breakfast, ran $1.3 million with seller financing at 6% while commercial quotes were coming back at 9% to 10%. She put a little over $200,000 down.
• The sellers there were spending about $70,000 a year on breakfast for eight rooms. A $300 a week food budget brought that to roughly $12,000 a year.
• Her sourcing is deliberately unglamorous, mostly MLS, LoopNet and BizBuySell, and her advice is to know your numbers and study what the top performers in a market are already doing before you buy.

Full Transcript

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Jeremy: We are live with the Short-Term Rental Pros Podcast. Today, I'm here with one of my favorite people in the space. Hanan, who we were joking about before, is known on social media by that first cabin that she got, but she has gone a lot farther than that first cabin. Today, she has boutique hotels. She's really a property management business. She does a lot. So I'm super excited. Hanan, thank you so much for coming today.

Hanan: Thanks, Jeremy. Thanks for having me. It's lovely to be here.

Jeremy: Awesome. So first question, let's take it back. How did you get into short-term rentals?

I also want to take back, if you guys are watching this on YouTube, I am in what used to be my office when we got this apartment, but it's now my fiance's closet. So behind me, she essentially built a legit closet and clothing rack and dresser into my office. So anyone watching, curious why there's all this clothes behind me, I'm literally recording from a closet today.

But I did just sign for an office three, five, or six blocks away that I'm super excited about. I've never done anything like that, but we'll get into all that. But Hanan, I want to hear about you. How did you get into short-term rentals?

Hanan: So our journey started in 2015. We had just moved to California from Arizona. And knowing that we were going to be looking for a house and knowing that we were going to likely be paying double for half the square footage, we were definitely a little bit nervous about the new mortgage point. So we were looking for ways to offset that higher mortgage.

At that time I was working in consulting and I was traveling a lot, and I would always stay in Airbnbs because I would take my kids with me often, and my husband. And so Airbnbs were just such a better option for us. And with that being said, I had kind of my eye and thought about it myself, like, hey, I wonder what it's like to run one of these.

So when we moved to California, I had the idea that I wanted to try to buy something where there would be an option to Airbnb part of the house. And so we found this cute California bungalow and it actually had a junior accessory dwelling unit attached to it. So the house was, yeah, meaning it was actually attached. So it's not like an actual casita that's not attached. So they call it a JADU in California.

And so I just thought, wow, this is perfect. I think we can put this on Airbnb and make it a short-term rental. At that time, nobody I knew was in Airbnb. It was 2015. It was like the wild, wild west, very early days of short-term rentals. So a lot of people thought it was crazy, but I didn't care and went ahead and went forward with it.

And we listed on Airbnb and it was a success from day one. The very first month it had made like $5,000. And the following month, it started making like $8,000 a month. So we knew we were kind of onto something. But the problem was we were in an area that had pretty high regulation and it wasn't really an option for us to continue purchasing short-term rentals in this market. You were only allowed to have the one. So we decided we were kind of in a good situation. We knew all of our living expenses were being covered and we knew it was a unique situation.

Jeremy: Wait, your living expenses were covered by a junior casita?

Hanan: Yeah, absolutely.

Jeremy: Wait, what? What did they say? No junior casita. This is a...

Hanan: Well, like I said, this is the early... No, it was actually... Actually, I wouldn't even... It was very small, but it was in an area where there was a lot of tourism and there were no... At that time, there were hardly any short-term rentals.

Jeremy: A quick question. Just to clarify, living expenses, that mean your mortgage was covered? Or is that like you were actually paying for your food and everything else from a casita?

Hanan: Quite honestly, all of our living expenses were covered. But we both had full-time jobs at that point. So we weren't even thinking about quitting our jobs or anything like that at that point. But honestly, I mean, it was making $8,000 a month. So it was enough to pay our mortgage, pay our insurance, pay our taxes, pay for our food. We didn't have a lot of debt. So it honestly could have covered us completely. But neither of us were really thinking in that way back then.

So like I said, we realized we were in a very unique situation. So we didn't want to squander it. So I started really learning about real estate. I started listening to the BiggerPockets podcast. I started reading real estate books and just trying to learn and understand everything I could about real estate investing.

And like I said, we weren't really able to continue investing in short-term rentals in that market. So we decided that we were going to go the long-term rental market, or long-term rental routes. And so it was a very high cost of living area. The average house at that time was probably about $600,000 a year. So we decided our strategy would be basically moving into another property with a 5% down owner-occupied loan. And we would just have the goal of doing that once a year as we continuously stacked up long-term rentals. And so that's what we did. And we did that for 5 years until 2020.

And then at that point, we had amassed a sweet little rental portfolio. The problem was when we were looking at it, the short-term rental was doing really well. The four long-term rentals were making us like $500 a month in cash flow. So I just was like, this is crazy. We're never going to reach our goals this way. And so I just started thinking, we got to figure out a way to make short-term rentals work.

And at that time, the Avery Carl podcast had come out on BiggerPockets and I just so happened to listen to it. And it just kind of opened my eyes to this idea of long-distance real estate investing. And I learned about the Smoky Mountains. I set up a call with her. I didn't end up pulling the trigger on a cabin in the Smoky Mountains at that time. But I started looking into other markets and then we found some cabins in Lake Tahoe. And we decided that we would invest there. So we purchased a couple of cabins in Lake Tahoe, renovated them, and put them on Airbnb as short-term rentals. And they did very well.

And so after realizing that that was possible and a success, I realized, you know what? Hey, if we can do this from 300 miles away, why can't we do this from 2000 miles away? So at that point, I went back to Avery Carl and decided I was ready to buy something in the Smoky Mountains. And that was kind of where our whole real estate investing journey really took off. We started buying short-term rentals all over in the Smoky Mountains, in Blue Ridge, in different areas, Arizona, different areas all around the country.

Jeremy: Okay. So take a step back. So you started with the casita. I'm sorry. I don't mean to be fixated on this junior casita. Junior is making $8,000. But junior was having so much success. And then you decided to go long-term rental after you had started short-term rental?

Hanan: Yeah, because I was in a market that didn't really allow you to continue to invest in short-term rentals. And at that time...

Jeremy: You can only do one.

Hanan: Yeah, you can only do one. And actually, they had completely closed off the permitting process. Nobody could continue to invest in short-term rentals out there. So I was lucky to be one of the only permits that were issued in that market.

Jeremy: Is that casita still crushing it today? Is it still out there?

Hanan: Yeah, it is. And it does very well. So yeah, we kept that.

Jeremy: Is it a Tahoe area?

Hanan: No, it's a Napa-Sonoma area.

Jeremy: Got it. Okay. Wow. You are Tahoe, Napa. Jeez, you are California at its finest.

Okay. So casita, at that time, you were like, all right, we can only do local stuff. So if we can't do short-term rentals here, we have to do long-term rentals. Then she did the long-term rentals. I'm assuming at first, you guys still had your W-2. So were you leveraging your debt-to-income there to go after these long-term rentals?

Hanan: Yeah, absolutely. I mean, it really isn't that difficult though, because we had had the short-term rental for a while. So we had several... It was on our tax return, so that was covered DTI perspective. And then we bought an owner-occupied home. So when you convert it into long-term rental, they start to give you rental credits. So even though it's not like our income was crazy high or anything, it was just the strategy that we...

Jeremy: You can offset.

Hanan: Exactly. Every year we moved out, it became a rental and it offset. And so it was easy to do that. And everyone around us didn't understand that.

Jeremy: Low down payments as well. So you kept doing low down payments, low interest, and low down. And then move out, get the rent covered, do the next one.

Hanan: Yep. That's exactly how we got our start. And I mean, it paid off in the end, not from a cashflow perspective, but an appreciation perspective. Because over those years, that market had appreciated a lot. It's California, high appreciation area. So by the time we got to the point where we decided to go all in on short-term rentals, we had a lot of capital to pull from.

Jeremy: And that's what I tell my friends in North Carolina. I live in New York City now. So unfortunately, doing the whole... If I was going to do 5% down on anywhere I'd want to live, that's a $2 million house that I can then rent out after for like $6,000 a month, which if you do the math on that, that ain't nothing.

But my friends in North Carolina, one of them in particular, he's done that every year where he's house hacked. He's been buying places with an unfinished ADU. So him and his wife will buy the house, fix up the ADU, rent out the ADU, rent out the house, onto the next one. And he's done that like four or five times.

And I don't think he's listening here so I can trash him. But he is not the smartest guy of our friend group. In high school, it was the joke that he was like the least smart guy. He said that. We weren't being mean to him. He played college sports. He's a beast. So don't get me wrong. But he's crushing it just because he's just been consistent with that strategy you literally just talked about.

And when you live in a place, even today, 2024, you live in a place, you buy a house for $400K. If you do 5% down on that, that's $20,000. If you can save $20,000 a year, do that four or five years in a row, get it rented. Even if you're cashflow neutral and not cashflow positive, the amount of wealth you're going to create over that five-year span is insane. So I applaud you doing that.

So you did that. You built wealth on paper during that time. I'm assuming houses went up and even though they weren't cash flowing, you were building long-term wealth. But then you were like, all right, this slow long-term wealth, it ain't cutting it? Or what was that realization of like, all right, we're not going to keep doing this?

Hanan: Well, to be honest with you, we wanted to actually leave California. I was to a point where I had more than covered my expenses. So I had already left my nine to five and I was just starting to focus more just on real estate. And then our goal was like, okay, well, I want to get my husband out of his shoes as well.

Jeremy: The casita let you quit because the other ones weren't doing the cashflow.

Hanan: Yeah, exactly. I was doing other stuff. I was a real estate agent at that time, but I got to a point where I didn't even want to do that. And so I just wanted to focus. I really loved investing. That was my passion. So I wanted to focus on that.

So I told my husband, I think we should move because there's a lot more investing opportunities outside of California than there are here. And it's going to be really difficult for us to build that sort of portfolio out here with all the regulation. Because at that point, even Tahoe, they had put some severe regulation in place because it was post-COVID and there were moratoriums on short-term rentals and things like that. So I was in two markets that were not allowing me to invest in short-term rentals.

So I just said, all right, well, I think we need to get out of here. So I convinced my husband to quit his job. And then we moved to Alpharetta, Georgia. So we live in Georgia now. And that was when we started investing in all these different areas in the Southeast.

Jeremy: Okay. So you started investing in the Southeast. Where? I'm a Southeast guy. I want to know, where are you at?

Hanan: Yeah, sure. So the first big purchase we bought was a four-bedroom cabin in Sevierville, Smoky Mountain, Tennessee. I'm sure most of you guys are familiar with that area. And then we used that same real estate team to purchase in Blue Ridge because people were telling us about Blue Ridge and that sounded interesting. That was like 90 minutes from where I lived. So we bought a cabin in Cherry Log. I think you actually own out there, don't you?

Jeremy: I own a North Carolina side of the Blue Ridge in Jackson County.

Hanan: Oh, okay. Yeah. Okay. So we bought there. And then there's just some other areas in North Georgia, some different mountain markets that we started to invest in. And then we just got to a point where I was like, this is a lot of work, buying a property, taking all these months to set them up. I was like, I think we need to look into scaling this. And at that point, I started looking at boutique hotels.

Jeremy: What year was this at this point, just to keep this chronology going?

Hanan: Sure. That was 2021.

Jeremy: Got it. So you'd been in the game for four years at this point?

Hanan: Six years. 2015.

Jeremy: Sorry. Yeah, exactly.

Hanan: But I'm kind of weird in the sense that I started with short-term rentals. I had that experience, but there were four years there where I really wasn't doing much other than the one short-term rental. I had one little arbitrage deal that I was doing. But other than that, it was nothing.

But then I was like, no, no, no. Short-term rentals work. And when I realized they worked in other places except for California, because when you live in California, you think you're the only place that anywhere gets visitors, which I realized was not the case. And so when I started realizing there were all these other markets where short-term rentals were a possibility, that was like a light bulb moment for me because I realized, oh my gosh, we can invest all over the country. And so yeah, that was when we moved out to the Southeast and started purchasing properties in those areas.

And yeah, so we decided to move into the boutique hotel arena. And I was looking for something small. Making the leap, I didn't know what I would really be expecting. So I was looking for a very small property. I was looking for something under 10 units that we could manage without having onsite staff.

And so we actually found a treehouse resort in North Carolina, which was about... Yeah, your territory, exactly.

Jeremy: What are you doing on my territory? Who told you you could come there? Who said you could cross over to North Carolina? Stay over there in California. Come on now.

Hanan: I know, right? So we found our little treehouse resort in North Carolina and it was seven units. It was like the perfect size. And I was fairly confident that we could operate them very similar to short-term rentals and use all of the same systems. And so we went for it and we put an offer in on it the day that it actually hit the market and our offer was accepted. And that started this whole journey into boutique hotels for us.

Jeremy: What was the economics? We love talking numbers on this podcast, if you don't mind sharing.

Hanan: Yeah, absolutely.

Jeremy: What were the numbers looking like when you underwrote that deal?

Hanan: Okay. So it was owned by a mom and pop. They were older.

Jeremy: We love that. Old mom and pops, great people to buy stuff from. Exactly who you want to be buying from.

Hanan: And they were in their late 60s, early 70s, between the two of them. And it was so interesting to me that they actually built a treehouse resort. I actually asked her, I was like, what gave you the idea to build this? And she said...

Jeremy: They were ahead of the game.

Hanan: She really was. She said that she used to watch Treehouse Masters and was like, oh, we should do this. And she knew she was in the area that got a lot of visitors and there weren't any really nice accommodations in that area. And so it was also...

Jeremy: Outside of California? A place to get visitors?

Hanan: Right. I know, right? And she also knew that most of the visitors would be there to drive expensive cars. So the idea of having treehouses was perfect because...

Jeremy: Blowing Rock? Is it the Blowing Rock area? Is it Blowing Rock?

Hanan: No, it's like Tale of the Dragon. Don't tell me you've never heard of the Tale of the Dragon and you're from North Carolina.

Jeremy: Sorry. Let me walk out the closet here. Give me a moment. Sorry about that. I have no idea what a Tale of the Dragon is. I have no clue. Educate me on North Carolina.

Hanan: Yeah. So it's in Western North Carolina. It's actually the Western... We're close to the Smoky Mountains on the North Carolina side, but there's these roads that people come from all over the world to drive. And the Tale of the Dragon is one of them. It's just like, I don't know, it's got 311 curves. I don't know. I've never actually done it myself, but...

Jeremy: I'm on Google Maps right now. What's going on here? I did all the way over on the Tennessee corner. It's like literally right next to Tennessee, which North Carolina is a big state. People don't, I think, realize that North Carolina is actually a pretty large state.

Hanan: Yeah, it is.

Jeremy: That'd be like six hours from where I'm from, Chapel Hill. Our house in Silva is four hours, and then that's like another two hours from there. So it's probably, what, like two and a half hours from Asheville?

Hanan: It's actually an hour and a half from Asheville.

Jeremy: All right. I guess it's not. I should know about this. So people come there to drive around.

Hanan: No, it's a small market. If you aren't into cars, I don't know why you would even know about it, but it's where a lot of car enthusiasts live. So they built it with the idea of, they like treehouses because they were elevated and people could park their car under their treehouse. So they would have covered parking and all of that.

So anyway, I found this treehouse resort and it had just hit. I found it on BizBuySell. It was like one of those emails where they're like, this business is for sale. And I was like, oh, this is interesting. And so I got on the phone with the broker and I really knew that this would get a lot of interest and it would go fast. So I actually asked the broker, I was like, hey, would you represent me on this deal? I want to make an offer. And I did that to entice them because any broker wants to double dip.

Jeremy: Brokers love that. They'll say, no, I didn't hear anybody else's offer. I only heard yours.

Hanan: Exactly. So he was like, yeah.

Jeremy: My phone is broken. No, nobody else came in. There were no other offers.

Hanan: So yeah, he set it up basically for us to meet the owners the very next day. So we drove out there.

Jeremy: He set you guys up on a steak dinner, steak dinner on him.

Hanan: Pretty much, pretty much. Yeah, he was super excited. And so we went out there, we met them, they showed us around the property and we made an offer on it that day and it was accepted. And yeah, I mean, the rest is history.

How much did we buy in seven treehouses for? You'd be so shocked. $769,000.

Jeremy: $109,000 per door or $110,000 per tree?

Hanan: Yeah, basically.

Jeremy: Okay. And how much was it grossing at the time?

Hanan: So their best year was, it had grossed $143,000.

Jeremy: You probably looked at that and you said, I think we can up this.

Hanan: Yeah, exactly. I was like, we can definitely do better than that. And the more I learned about them and their operations, the more I just saw so many opportunities for improvement and optimization.

They were only open six, not even six months of the year. They were open five months of the year. They wanted to go spend half their year in Florida. That was just their prerogative. They hated the cold North Carolina winters. And so they really wouldn't even start their season until May.

Jeremy: Shut it down. Set it down completely. We're not going to be there. We're turning it off. We don't want to deal with anything.

Hanan: Yeah. And the more I got to know them, the more I realized there were so many other... They wouldn't accept same day reservations. It didn't matter that they lived on the property. They just like, I'm not dealing with that. And they wouldn't allow people with pets to stay. They wouldn't allow people with children to stay, which I thought was very interesting. They were not on any OTAs because she just couldn't figure it out and just thought it was annoying. So she decided not to do any OTAs and they weren't doing any marketing.

Jeremy: I know.

Hanan: And I would just feel like thinking, there's got to be a reason for this, right? So I would dig and dig and dig.

Jeremy: You're just like, nope, don't want to do it. Don't want to do it. I don't care. I want to hang out with my guests when I want to hang out with them. I don't want to hang out with kids. I don't want anyone's dogs. It was like a social experience for them.

Hanan: Yeah, kind of. She just did what she wanted to do and ran it that way. For them, $143,000 was plenty of money. They had doled them and I think they spent, like she said, $200,000 to $300,000 to dole them. Not very much.

Jeremy: So for them, it was a perfect amount of income. They could take it down the shoulder for seven months, live a good life.

Hanan: Yeah, exactly. And for me, I just saw a lot of opportunities. So what did we do? So this was in 2021.

Jeremy: Give us some numbers. What did you turn that into?

Hanan: The very first year, we got close to $350,000 actually.

Jeremy: D*mn. That's good.

Hanan: Yeah, I know, right? And I think this year is going to do a lot better actually.

Jeremy: It's a lot better. Like $450,000?

Hanan: Possibly. Our Q1 year over year was up another 20% from last year. So as far as our pacing reports go, we're looking like we'll beat last year. So I think when we got there, we inherited their reservations from previous...

Jeremy: Sure. You had to honor them.

Hanan: Yeah, exactly. So she was only charging like $165 a night. We're up to, I mean, during high season, we're between like $250,000 and $300,000 now a night. And we're also doing pets. So we have pet fees and we have all these other things that they didn't have. And then obviously, we're open pretty much year round now. We close for a little short period of time, but it's not very long at all. It's like six weeks.

Jeremy: Is that January, February, like icy season?

Hanan: Yeah, exactly. It's too cold. And it's so ugly there that time of year. And I just want to give our cleaners a break. And so we could probably still get some bookings to cover our expenses during those months, but it's not even worth it.

Jeremy: We had a house in Maggie Valley. We actually sold it a month ago. But yeah, one of the main issues we had was the road. It was like, honestly, look, I was looking on Google Images at the road that you sent me. That was the road to get into the neighborhood. And January, it wasn't a public road. So if an ice storm came, you just had to wait for it to melt.

And there was situations where people were up in the houses and the roads got all icy. And it was just like, oh, I guess you guys got to hold tight for a few days there. It looks like it'll be above freezing next week.

So it was just like Januaries and Februaries where it was like, do we even... Do we just block off the calendar? Because at a certain point, it's just not even really worth it. You have to check the weather every few days and be like, heads up guests, it looks like it's going to be freezing. Because it doesn't really snow. It's like freezing ice in North Carolina.

Hanan: Yeah. I mean, for us, our road getting in isn't an issue where it's completely flat. So we don't have any issues with that. It was more just because they're treehouses, the plumbing and stuff. And so for us, it was more like...

Jeremy: Exactly.

Hanan: I'm just more afraid of pipes bursting and stuff like that. So we just pretty much shut them down and we winterize them. And then we open them back up like six weeks later if the weather looks good. This year, we opened back up February 15th and didn't have any issues at all.

Jeremy: Got it. So you're going to do... I mean, no matter what the interest rate... I mean, did you do owner finance or did a bank give you a loan on that?

Hanan: No. So we actually initially went the SBA route. We were planning to do that.

Jeremy: Oh, wow. First on this podcast. Let's get into that. Oh, my gosh.

Hanan: Yeah. So super naive. I had no idea what I was talking about. I thought I did. So I literally put an offer for these treehouses and thinking we were going to get an SBA loan and I asked for 30 days on the contract.

Jeremy: Oh, my goodness. My familiarity with SBA loans is it's not a quick ordeal.

Hanan: Yeah, exactly. That just shows you how naive I was at that time. And I was in a boutique hotel mastermind as well.

Jeremy: Yeah, I know. Nobody cared to share that?

Hanan: Well, even they didn't know. I guess nobody... They thought they knew as well.

Jeremy: Nope. Exactly.

Hanan: So nobody had told me like, oh, you're going to need all this time or whatnot. So I just went in. I think I did 30 days. And then we started going down. The bank started asking us for all this paperwork, all this stuff. We started giving them everything. And it got to the point where our earnest money was going to go hard.

So I asked the lender that I was working with. I was like, okay, so how are we looking? Are we going to close on time? And he just stops and looks at me. And then he pulls up the contract. And then he says, I've never closed any of these in less than 120 days. And I was like, oh my gosh, this is not going to work. Because I knew at that point, the sellers had received so much interest. They could have gotten a way higher offer from someone else. And they knew that. So they were not playing nice with us.

Jeremy: They didn't mind pulling it out.

Hanan: Yeah, they didn't mind. They did not mind. They had a long list of people that were way willing to pay a lot more than we were. They were just honoring the contract. So I knew that that was not an option. So we decided that...

Jeremy: Mama Hanan, pull out the money bags.

Hanan: No, no, no, no, no. Well, it was a 1031. So we did have a good amount of money that we had to remit.

Jeremy: You had sold one of the long-term rentals?

Hanan: Yeah, exactly. And so we had some...

Jeremy: Is that really like-use property or whatever? Because as a 1031, it's supposed to be like, quote unquote, like something, like...

Hanan: Well, you can move to a commercial property from a residential. That's not an issue. So that was fine. But we had about, I think it was about $350,000 that we still needed. So we just made some phone calls and we were able to get some people to let us borrow the money. And I got really good interest rates. We got 6% on one of them and I think 6.5% on the other. And so we just got some debt...

Jeremy: Private money.

Hanan: Yeah, private money. Exactly. And it just made it so much easier. I basically prepared a pitch deck. I showed them the property. I showed them all of the opportunities in that property. And they were all for it. It was very easy to raise.

Jeremy: This was at a time when interest rates were like 3%. So they were like, oh, 6%. I'm not making that.

Hanan: No. So interest rates had already started to rise at that point.

Jeremy: Wow. Yeah, the PowerPoint's ready. Never mind.

Hanan: Wait a minute. I'm just realizing...

Jeremy: What'd you put on these PowerPoints?

Hanan: I'm realizing my timeline was actually way off. This was in 2022 when we bought that property. So that's why. So yeah, interest rates had already started to rise. Yeah, it was 2022. Sorry. I'm terrible with years.

So I think interest rates were probably around 6% at that time. But for private money, they could have asked for more, but it worked out.

Jeremy: Got it. Okay. So you got that. What was it? A 6% balloon, 30-year amortization?

Hanan: So we did a three-year. So it was a 30-year amortization with a three-year balloon. But we've already checked in with both investors and they both want to renew. So we're just going to renew it.

Jeremy: You'll refi with them? I mean, you don't even have to do that.

Hanan: We just have to...

Jeremy: Yeah, just extend it. Instead of a three-year balloon, it's now a 10-year balloon or something. And you can just keep pushing it.

Hanan: Yeah. They both just like the mailbox money, so it's not an issue at all.

Jeremy: Yeah, totally. And just to explain what a balloon is, to those listening, if you don't know what it is, it is essentially meaning you need to pay off the entirety of the loan or get it refinanced by that time period. So three years means effectively you have 36 months.

Generally, when folk do that in commercial, what they'll do is they'll get two years tax returns. So Hanan said they made 350K that first year. Let's just say you're on pace for 400K. You can now go to a commercial bank, maybe a local commercial bank to Western North Carolina. And you can say, hey, I have a business that's made 350 grand or 400 grand the last two years. I have all the paperwork. I have all the QuickBooks. I have this track record. Can you give me a loan for it?

What they're going to actually look at is what's called the net operating income, which is the revenue. So that 350K minus whatever the operating expenses are, toilet paper, cleaners, customer support representatives, whatever it may be. And they're going to look at that NOI, and they're actually going to give you a loan based off that NOI.

So do you have a number, Lassie, on how much NOI you did?

Hanan: I think it was somewhere around 230 to 250, somewhere around there.

Jeremy: Let's even say 200,000. And let's say that they're going to apply a 10-cap. And a 10-cap means that they're going to value the property and say your net operating income is 10%, a 10-cap of what the total valuation is. So 200,000 net operating income at a 10-cap, which is pretty high, honestly, a 10-cap, that would be a $2 million valuation, commercial valuation, which they bought for 730, 7 and some change?

Hanan: 769.

Jeremy: 769. And they created something that was conservatively worth over $2 million. In a year, which is insane. So I've already snapped enough this podcast. So my fingers are going to get some arthritis. So I won't snap anymore. But that's very good. So you created a few.

Hanan: Yeah, it's the power of commercial real estate.

Jeremy: That was one of the big reasons you moved into that space. Got it. Okay. So what are you doing? You're doing a lot of cash flow. Did you use that? Roll that over? I know you didn't. You're still paying that 6% to your investors. So what are you doing with all that cash? Hand in money bag, where's the money going?

Hanan: Well, six months later, we decided to buy another hotel. So we bought a hotel in New Mexico, the mountains of New Mexico.

Jeremy: Okay, you were done with North Carolina. He said, get me out of here.

Hanan: No, actually, I love North Carolina market. And I think for the next one, I definitely am looking for something in North Carolina, South Carolina, something in that area. But this deal was just too good to pass up. It's been a little bit of an experience. So our treehouse is where it's nice because we can jump in our car, we can be there in two and a half hours if we want to.

Jeremy: You say this earlier, were you in Atlanta right now?

Hanan: Yeah, North Atlanta.

Jeremy: Okay, North Atlanta. What's McCulloch County, Cobb County?

Hanan: Fulton County.

Jeremy: Fulton. Okay, so you're near the Braves.

Hanan: Yeah, not really.

Jeremy: I'm failing on North Carolina, South Carolina, Georgia geography today. Jeez, get me out of New York.

Okay, so why did you buy the one in New Mexico? Is it a treehouse? Is it a desert? What's it look like?

Hanan: No, it's a bed and breakfast. However, we are in the process of trying to drop the breakfast part and make it just like an inn. It's basically a series of casitas. I know you love that word.

Jeremy: I actually really do.

Hanan: But there are just these cute little buildings. It's on a one acre lot. And so it's a bed and breakfast, but it's all exterior entrances. So the layout is like any hotel would be.

And I mean, the numbers just worked. It was another mom and pop seller. And they were willing to seller finance us, which was a huge thing for us. Because at this point, we realized SBA financing was so difficult. And it's also kind of difficult to get financing for hotels in general. So we were looking for someone that would be willing to give us seller financing because at this point as well, interest rates were really high. This was just last year. So we were looking at like 9%, 10% if we went the route of getting a regular commercial loan. And they were willing to give us really good terms at 6%. So we just decided...

Jeremy: That's 6% again?

Hanan: Yeah.

Jeremy: Wow. You're like Drake with the six. Okay. How would you buy that one for? What was the gross revenue when you bought it? And I mean, is it too early to like have new metrics or what?

Hanan: Yeah. It's too early for us to really know. But we bought it for $1.3 million. And I am expecting that it will do close to $500 this year.

Jeremy: So that's... What did it do when you bought it? Or prior to buying it?

Hanan: So interestingly enough, they did not have their numbers updated. So when I requested financials, they sent us some financials and it was like in the low $300s. But when I asked them for updated financials, it took a bit for the bookkeeper to get it all to me. But when they actually did...

Jeremy: What was the ICP, or the ICP? What was the...

Hanan: Yeah. The profile...

Jeremy: I don't want... Okay. Sorry. We're not profiling. Who was the seller? Who was the seller?

Hanan: Oh. So it was mom and pop.

Jeremy: Mom and pop.

Hanan: Older couple. Husband was an attorney. A wife was running the B&B. But she was so tired of it and she just wanted out. She was like, done, done, done, done, done. She basically was doing everything herself, whereas I knew we would hire people to run it. So she was just ready to sell.

But yeah, when they had sent us the original financials, it was a lot lower than when I asked for updated financials. And so when I got the updated financials from the bookkeeper, I realized that they were closer to $400,000 in revenue. So then that was really...

Jeremy: You don't want to lowball your revenue if you don't have to.

Hanan: I know. And they didn't realize that. And I think they had valued it based off of the ones that they were looking at before because they had tried to sell before and it didn't sell. So when they went back on the market, they didn't even consider the updated income. And so, yeah. So I knew that there was an opportunity there.

And also just studying their profit and loss statement, I just realized that they were running so many personal things through the business. They were spending $70,000 a year on breakfast. I was like, what the heck? For eight rooms, that doesn't make any sense, right? So we've gone in there and we've set a budget of $300 a week for food. So we're now spending about $12,000 a year on breakfast. So there was just a lot of things in the profit and loss report that I felt like they were running personal things through the business. So I felt like there was a lot of opportunity for additional NOI.

Jeremy: Got it. So when did you close on it?

Hanan: We closed on June 30th of last year.

Jeremy: Is this just like a... It's not a treehouse. What's it look like? Now I'm thinking treehouses. Is it something cool or is it just like a rectangular building with...

Hanan: No. So it's a big lot and there's all these little buildings. So all these little individual casita type houses, Southwestern style, really cute rooms. They have the Kiva fireplaces, beautiful original tile flooring, interesting ceilings, really interesting architecture. So it's actually a really beautiful property.

We haven't gone in and done a full redesign. That's part of our plan. But when we bought it, we inherited all their reservations and it was hundreds of thousands of dollars of reservations. So I didn't want to shut down to do design and renovations. So now that we understand the seasonality of that market better, we're planning to shut down during the next slow season and we'll put our own design flair on things.

Jeremy: Okay. So without even really doing any improvements, what have you been able to do so far?

Hanan: Well, we converted...

Jeremy: And admittedly, I'm looking on BizBuySell a little bit right now. I was like, BizBuySell, we got more treehouses?

Hanan: No, I'm telling you. I've been looking at BizBuySell North Carolina every day since I bought those treehouses. I haven't seen anything like that. Actually, I lie. I did see the coolest property and unfortunately, I didn't get to them fast enough.

Jeremy: Was it the dog park people outside Asheville?

Hanan: Yes. Did you know that?

Jeremy: I saw that one.

Hanan: Did you see that one too? I called them.

Jeremy: I called them. I did too. And he wanted to see a credit report and what was it, their financial savings just to show that you could actually buy it. But whoever bought that got such an amazing deal. It was like $850,000 and it was just outside of Asheville. I was like, that thing could easily make $400,000 a year.

Hanan: Yeah. When I called, they were like, we have seven people lined up the next two days. They're all husbands and wives coming here to stay with us. And I think I was going to France the next day. And I was like, yeah, I'm going to go to France.

Jeremy: Dmn. So you actually got to them before I did because I didn't see that one. And by the time I actually saw it, he was like, oh, you know what? We actually just accepted an offer. And I was like, dmn.

I don't even have a dog. I took a picture with my sister's dog and I created this whole package to send to them. I thought it was like everybody had done. I mean, this looks interesting. It looks like, yeah, I did some preliminary numbers. And yeah, it was like it had a little pond or whatever. It was literally amazing. I mean, homes around a pond, which I love ponds. I mean, my parents live on a pond. I have an airstream on a pond. I like ponds. I liked it. And it was in the mountains and there's all these dogs. I was just thinking of the videos of dogs jumping into the water and little inflatable.

Hanan: Yes. And that one, that was an amazing deal. Whoever got that, I mean, I think because they didn't have an agent, I think they had no idea how much that place was really worth.

Jeremy: Yeah. Because I just... 800,000...

Hanan: And they weren't doing too well.

Jeremy: Yeah. Their numbers weren't too good on it. I think the revenue was pretty low, but it was probably what you're talking about. They weren't on Airbnb. They were only on direct websites. It looked pretty bad. They also required that you have a dog to stay there.

Hanan: Yeah. It was an actual requirement.

Jeremy: I was like, dog resorts. I didn't know that was a thing. Dang, now I feel like I should have jumped. I wish we could have went in and you could Photoshop some dogs. I'll go take some videos of some dogs. We could have thrown all the firepower at these people.

Hanan: I know. We could have pretended to be husband and wife. No, I'm kidding.

Jeremy: Yeah. Do what we got to do. Whatever we got to do to get it under contract, whatever.

Hanan: I know. Somebody got a screaming deal on that one.

Jeremy: That's funny. And admittedly, I don't look at BizBuySell that often, but I did look and I saw that one. I didn't know that that was such an outlier deal. I was just like, oh, this is pretty interesting. I'm going to give these people a call. So that's kind of funny.

Hanan: Well, it was. And I think they only marketed on there because I didn't see that on anything else. And because they didn't have an agent, it wasn't on the MLS or anything. So ever since then, I look every single day.

Jeremy: You're like, I'm not missing any of these anymore.

Hanan: I know. Anyway. One that got away.

Jeremy: Wow. All right. Well, that's a small, small world or a small BizBuySell supply. And I guess many eyeballs looking.

Okay. So, all right. Moving on. So you got Arizona. Currently without upgrading it, do you apply better revenue management strategy or have you been able to... What's it looking like already?

Hanan: Yeah. So the main things that we've done with that is just putting a lot more focus on revenue management, like you said. And it's in New Mexico, not Arizona.

But they also lived on the property. So we were able to convert the owner's unit into a revenue generating unit. So that added... I mean, I expect that that's going to add close to 70 to 80 grand of income.

So between that and just better revenue management, and also another situation where they wanted to have a life. So they were blocking off weeks at a time to go to the jazz festival in New Orleans, to go. They love to travel. And if they didn't have coverage, they would just walk off weeks at a time. They also did not want to do same day reservations. They didn't want to deal with that.

Jeremy: Never want to do the same day reservations. And always when they're not there, they close it off, which is crazy.

Hanan: Exactly. So it's kind of funny. So yeah, just a lot of operational inefficiencies that we've been able to resolve.

Jeremy: Okay. And then what's that done? How has that improved things?

Hanan: Well, so far, because we basically took over their old PMS, we're able to pace against their old numbers. So we're up about 18% in revenue based on year over year compared to what they were doing.

Jeremy: Which is crazy that they had a PMS, and they still didn't even know how much revenue they had.

Hanan: Yeah. No, I know. She didn't even know how to use it. So she actually trained me and she was like, I don't know. This is all I do. And I was like, okay, no worries. Sounds good. She didn't look at reports. She didn't utilize the PMS at all, really. She didn't understand the revenue management components to it. Didn't understand yield management. She didn't understand any of it. So it was just like, this is what we have. And so, I mean, it's good for us, right? As investors, we're looking for properties that are being underutilized.

Jeremy: Yeah. Which to me is just like, I don't know why. I guess maybe it's how I'm wired and probably how you're wired, where it's so crazy. Numbers aren't that hard.

But I don't know if my fiance can hear me right now. But taxes are coming up and she has her first year of having her own business. So she was doing her bookkeeping today. And I'm like, all right, just make a spreadsheet. All your income, all the things that came in where you made money, put them in one. All your things that came in that were expenses, put them in the other. Say what they were. Here's an example where here are the categories that you can classify it. If it's a transfer, say it's a transfer. If it's a credit card payment, say it's a credit card payment. Sum them up, call it a day.

And like six hours later, and yeah, she wasn't too happy. So I put her on with a bookkeeper and they'll have it done by Monday. But I wanted her to learn like, hey, you need to think about this. What's an income? Expenses? But she wasn't too happy with me. She still might not be happy making her go through that experiment, make her go through that homework assignment.

Hanan: Yeah. I remember all my accounting classes in college and I remember I never had time to be an accountant, but I was a business major. And I remember like day one in accounting one and he says, listen, accounting is the language of business. You need to understand accounting no matter what position you are in business.

And I really took that to heart and I never realized how important that was going to be later on. But now as an investor, it's like understanding a profit and loss statement, understanding a balance sheet and understanding the purposes of these reports is so huge. So I feel like anyone, whether you like numbers or you don't like numbers, you need to understand basic accounting and it's going to just help you out so much in your business.

Jeremy: Exactly. So let's just say you increase this business's revenue 20%. So if it was doing 400, what you said, you're going to get it to 500. What do you think post operating expenses you're looking at?

Hanan: I'm really not sure quite yet.

Jeremy: Too early to tell.

Hanan: Yeah. It's too early to tell, but that market's at an eight cap. So any changes that we do are going to force a ton of appreciation. So we're still working on figuring out all of the human resources and things like that. So that's my only number that I'm still not really sure because we tried a couple of different combinations of things.

Jeremy: You're paying for kitchen staff or breakfast currently.

Hanan: Yeah, actually. So when we first got in, we thought we were going to just only do breakfast and we weren't going to have onsite staff at all. A lot of people, there's a lot of gurus out there that are saying right now like, oh, you can buy a hotel. You don't need onsite staff.

Jeremy: Yeah.

Hanan: I'm sorry. I disagree. It works in certain types of hotels. For instance, the treehouse resort, we have a maintenance guy.

Jeremy: Yeah. And they're not physically touching each other.

Hanan: Yeah. And it's also just up in the mountains. The people that are visiting are really chill. They're in nature. They don't really care to be serviced. They don't care to see staff. But when you go to certain types of hotels, people really expect that someone's there.

And so we've kind of played with different models. So we originally had just someone coming and doing breakfast. And then we realized people were leaving us bad reviews. They were saying things like, COVID's over. Why is it self check-in and things like that. And so we kind of took that feedback to heart. And we realized like, okay, we need someone there checking people in.

So we have check-in hours between three and five now. And then we just let them know like, hey, if you want to check in between three and five, there'd be someone to check you in. Otherwise, here's your code. And if you arrive after hours, that way you're not having to wait to meet someone. We kind of make it seem like it's to their benefit. So we've played with some different things, but we're still kind of figuring all that out.

Jeremy: Yeah. Well, also I feel like when treehouses, or if they're like structures that are like by themselves, people then look at it as like, they're staying in their own place, but something that's like touching, then they just think of it as like, this is more of a hotel, you know?

Hanan: Yep. So that's exactly what it is.

Jeremy: Noise, like an interaction is higher, I'm assuming, because people are engaging more, which is kind of like, you don't really want people interacting without a presence there.

Hanan: Yeah. I mean, that's exactly it. I've had people who have approached me on Instagram and stuff, and they're like, hey, I'm looking at this 21 unit and they want me to look at their numbers and stuff. And I'll look at the spreadsheet and I'm like, you have no line for staff. And they're like, yeah, yeah, we're going to run it as an Airbnb.

And you're just like, 21 units, you've got walls that are, people are sharing walls. You've got, so many things can go wrong. 21 units, depending on the bed configuration, that could be 40 to 60 people on a property all at once. You need someone there. You need someone keeping an eye. You need someone like...

Jeremy: Like we're going to have one fire pit in the backyard. Like we're going to put a fire pit there. We're going to have a single grill.

Hanan: I know that there's a lot of misinformation, I feel like, out there.

Jeremy: There's so much hype in the boutique hotel. I feel like it's the natural, and I know, Hanan, for you, it was the natural next step in your progression. You had done short-term, you wanted something a little bigger, you wanted to drive NOI. So it was the natural next step.

And I feel like for a lot of people in short-term rentals, they've done houses. So now that they've done houses, they're like, oh, I've done houses. I get to level up. I need to level up to boutique hotels. And there's just so much hype in the space. I find it a little bit laughable.

Personally, I do find the models of the landscape hotels because essentially, yeah, you have multi unit on the same property. So it gets valued as commercial, but it is actually more of unique Airbnb experience. Whereas, yeah, what you're talking about, that 21 unit, it's a motel, guys. Let's not get dissuaded. You're buying a motel. Sure, you can brand it as a boutique hotel, but it functions as a motel.

Hanan: Yep. That's exactly what I tell people. And also, don't think you're going to buy this motel and put it on Airbnb and you're going to have all these bookings. We hardly get any Airbnb bookings. That's not how that works. I think people just have such a misconception who are coming from the short term rental space. And they think that you can just buy this and throw it on Airbnb and not have staff and use keyless entry and smart locks.

Jeremy: Yeah. Smart locks. We're good. What can go wrong?

Hanan: You're like, well, do you know how many phone calls you get a day in a hotel? Okay. There's a lot of differences.

Jeremy: So how do you manage that? How do you manage all the phone calls? What does your infrastructure look like for the two hotels? There's two hotels, right? There's not a third one, right?

Hanan: No, just two.

Jeremy: Yeah. That'll leave time if there's more.

Hanan: Yeah. So we have two. I actually have a team that handles both phones for both hotels. So that's kind of a nice thing about doing it the way we do it. You do get a lot of economies of scale and operational efficiencies. And being able to have phones handled not at the actual hotel, but offsite, you can have one person that's handling phones for both hotels.

Jeremy: And you said you have a company handling phones. What does that mean?

Hanan: No, no, no. Not a company. I have an actual team that handles phones.

Jeremy: So you have an offshore team? Like virtual assistants.

Hanan: No. American based. I don't have any offshore. I actually have my assistant. So she helps out with phones. And then I have a partner that helps out with phones as well.

Jeremy: So to me, that's not a virtual assistant. You have team members.

Hanan: Yeah. Exactly. People on my team. Just people on my team that are already doing stuff.

Jeremy: So virtual assistants are on your team. But I don't know. The way I think about it, I'm thinking...

Hanan: Yeah. I just haven't gone down that route of the whole offshore virtual assistants. I haven't gone down that route. I have an amazing assistant that helps out with everything. And she's already there doing stuff.

Jeremy: Your margins are good enough that you're good. If it was a little tighter, I'd say, all right, maybe we need to cut some of your expenses.

Hanan: Yeah. And we do have our check-in girl who checks people in. She answers phones while she's there. So there's just those gaps when we don't have someone on site that we need additional phone coverage.

Jeremy: Sure. Okay. Well, who's picking up the phone at 3am?

Hanan: We use a service.

Jeremy: And they charge you by the minute. And do they pick up the phone?

Hanan: Yeah.

Jeremy: So it's like an actual service that does...

Hanan: Exactly. They do phones for all these different hotels. They charge you by the minute. And so you can schedule your actual hours that you want them handling phones. So that's the nice thing.

Jeremy: And they'll be able to deal with stuff. Someone's at 3am. Hey, I can't get in. It's 3am. They'll deal with that?

Hanan: I mean, quite honestly, we haven't had a lot of that. There's been maybe two times. And so they can deal with it to an extent. But if it's an emergency, then they can call me personally and I can jump in.

Jeremy: Got it. Of course.

Hanan: Yeah. It's just how it is. So it's only happened a couple of times. But we basically...

Jeremy: You're keeping that phone on at night? On the ringer?

Hanan: So I actually have it where you have to call multiple times for it to go through. And so they have instructions. Like, hey, if it's a real emergency...

Jeremy: It's an emergency.

Hanan: Yeah. And you have to call multiple times and then it will go through. So I put my phone on Do Not Disturb at night. But emergencies happen. And you run multiple businesses. People need to be able to get ahold of you if it's a real, real emergency. But again, it's only happened twice. And it was because there were some weird check-in situations.

Jeremy: Okay. So we're talking about multiple businesses. I want to leave time. You have another business, right? So you got these two boutique hotels. Have you bought anything else?

Hanan: No, that's it. Just the short term rentals and the boutique hotels.

Jeremy: Do we get into Tahoe? You have a cabin in Tahoe, right?

Hanan: Yeah. We have a couple of cabins in Tahoe. And then we have some short term rentals in different parts of Georgia.

Jeremy: So how many short term rentals do you own at this point?

Hanan: I own nine.

Jeremy: So you own nine houses. Do you have any long term rentals anymore?

Hanan: No.

Jeremy: You liquidated those, got rid of those. And then you have two boutique hotels.

Hanan: Yep.

Jeremy: And then you also have a property management business?

Hanan: Yeah. We have a co-hosting business with a partner.

Jeremy: Yeah. Got it. So how'd that co-host business come to be? And how's the co-host world?

Hanan: I'm going to be totally honest with you. I don't really love co-hosting.

Jeremy: You're doing a lot. I mean, I would say you've graduated from co-hosting at this point.

Hanan: Yeah, exactly. So it's not something I'm putting a ton of time and energy into at this point. But we do have a small portfolio of co-hosted clients that our team basically runs. So I'm not super involved in it.

Jeremy: Got it. So you have the operations in place and you use the operations that you have, the team that you have, to also manage properties for other people.

Hanan: Yeah. It's kind of nice because it helps to pay for staff. So that's kind of the way I see it.

Jeremy: It's scale. It gives you scale. I mean, even arbitrage co-hosting, it allows me to hire more team members.

Hanan: Yeah, exactly. So my assistant, she helps me with my personal stuff. She manages all my personal Airbnbs and then she does stuff for the hotels and she also does stuff for the co-hosting company. So it's kind of nice because...

Jeremy: You have a rock star assistant there.

Hanan: Yeah, she's amazing.

Jeremy: How'd you find her?

Hanan: Oh, she's my cousin.

Jeremy: Oh, she's your cousin. She's family.

Hanan: She's family. Yeah, but she's just worked out so well, and she's constantly taking on more and more and more responsibilities, and she loves it, and we get along great, and we work well together, so it's been good.

Jeremy: I love that. I was in Florida this past week. My fiance was working with the Miami Open and ATP Tour, and then she did an interview with this guy, Tony, who's like the duck guy on social media. I think that's what people know him as, and everyone working with him was family members.

His cousin is his agent. His sister is his head of ops. His brother, well, they said his brother kind of just chills and does his thing. They didn't really give a position that he does, but his parents are also on payroll. His other cousin was on payroll. I don't even know what his other cousin was doing. It was like feeding the goats and ducks and stuff, so maybe he's like the zookeeper. I don't know, but it was like entirely family members.

I was like, wow, this is cool. I know family businesses, but this is like family business to another level. I thought that was so cool, so you have your own version of it.

Hanan: Yeah. It's like a whole entourage.

Jeremy: Yeah. It's a whole entourage.

Hanan: Yeah. I just have one cousin working for me.

Jeremy: He literally has a compound in the middle of... This is a little off topic here, but in the middle of Florida in a trailer park, has an absolute compound.

Hanan: Oh, wow.

Jeremy: And this guy, he's making hundreds of thousands of dollars a month, probably. I didn't ask how much money he was making, but I'm assuming hundreds of thousands of dollars a month, maybe millions a month, honestly, I don't know, and literally living in a trailer park, not in Los Angeles at like a hype house, like in a trailer park. So I was...

Hanan: Wait, what was his business? What was his business?

Jeremy: Well, he gets 300 million views a month across social media.

Hanan: Oh, okay. Gotcha, gotcha.

Jeremy: He has his own partnerships. He has his own alcohol beverage that he distributes through his social media. That's like one of the fastest growing alcoholic beverages. He also has an OnlyFans as well. Apparently that does really well, but whatever, to each their own. I don't judge.

Hanan: Do what you got to do. I do love people like that, though, that are just making tons of money and crushing it, and then they're just living, like you said, in a trailer. They're just like...

Jeremy: Yeah, they actually have a castle in the trailer park. You get to the end of the trailer park, and then there's a big gate, like a massive... It's actually the funniest thing. He has a massive gate. Well, I don't want to talk about his personal security situation, but I'm like, why do you have a massive gate here? And then there's no fence, and they're like, yeah, we're going to get a fence at some point.

And I'm like, what's the point of the gate? It's huge. And there's no fence. It's just the gate that's not around it. It's just the gate that opens, but then there's no... You could just walk around. I was like, oh, we got to wait for them to open the gate, and I was like, wait, you could just walk around the gate. I'm like, wait, then why is...

Hanan: The gate looks cool. I'm sure that's part of it.

Jeremy: It does look cool.

Hanan: Oh, that's hilarious. I'm sure. I don't know his videos, but I'm sure...

Jeremy: Well, I'm sure if you go on the... Whatever. I digress. But really cool. You got a family business there.

So, hey, what are you doing? What's up in the future? I mean, obviously, you bought recently, but you have great cash flow coming in. You've got great operations. What are you excited for?

Hanan: I'm looking to stay in the hotel space. I'm looking to maybe move into something a little bit bigger. I feel like I've got a lot of experience doing the...

Jeremy: Level up again. What's leveling up from these boutique hotels? A little more boutique?

Hanan: No, no. I mean, I'll still say boutique, but I'm probably looking to do something that's like between 20 to 50 units. I'm really focusing on trying to find a property that just has really high incomes, just because you can hire so much more staff that way.

Jeremy: Did your husband quit his job too? I don't mean to cut you off here. Did he also quit his job? Are you guys both full-time at this?

Hanan: Yeah, we're both full-time. He isn't really too involved in the real estate stuff. He helps out at the home life. He's a boxer.

Jeremy: Oh, wow. Let's go. I love this.

Hanan: Yeah, he's awesome. He's a rockstar dad and he also just does maintenance stuff at the properties. He just enjoys it.

Jeremy: Sure.

Hanan: So I actually laugh because he absolutely hates anything to do with actual hotel operations. So he'll be at our hotels and people will come up and ask him a question and we'll pretend like he's a maintenance guy. He'll literally be like, let me see if the owner's here, and he'll look for me and I'm just like, oh my gosh. So he just really likes to be in the background.

Jeremy: Awesome. Well, I love that you guys have a great, great dynamic. What tips do you have for those listening who may be not at where you're at, or maybe to succeed on short-term rentals in 2024?

Hanan: I think definitely know your numbers. I would not be buying anything right now without knowing exactly what you're getting into. Also, I think it's really important that you understand what a successful property in any market, like study them, right? So looking at a market, what are the top performers doing? What sort of amenities do they have? You need to kind of model off of success. I think a lot of people jump into short-term rentals just thinking it's easy and they don't know how to run numbers and they get caught with their pants down. And so, especially now with increased competition and saturation and things like that, just educate yourself as much as possible.

And it's the same thing for hotels, right? If you want to make the leap from short-term rentals into boutique hotels, you don't know what you don't know. I sure didn't. I've learned a lot of expensive lessons over the last couple of years. So the more you can invest into education and learning as much as possible about boutique hotels and how commercial assets are valued, how commercial assets operate, what does due diligence look like for commercial assets, just education is my number one tip for anyone that's looking either to get into short-term rentals or boutique hotels.

Jeremy: And then, where did you also source that New Mexico deal? I don't think I got into that. Where'd that come from?

Hanan: Oh, it was just like a LoopNet thing. But again, it was one of those very... BizBuySell, just straight online.

Yeah. I'm not a very good investor. I know most people are out there pocket listing and dealing with brokers and all that. I've just gotten really lucky. It's usually just basic MLS type stuff or whatever, but sometimes you just got to read between the lines.

I know a lot of people think like LoopNet is where deals go to die, but you don't really know what a deal looks like until you request financials and then really spending time with those profit and loss statements and really understanding what their expenses are, what would apply to you, what wouldn't apply to you, and also what their operations are like and how can you optimize revenue? Can you employ better revenue management strategies? Are there more operational efficiencies that they aren't utilizing?

So I think there's a lot of deals in front of us, but a lot of people just overlook them. So yeah, I just find my deals the boring old way, MLS, LoopNet, BizBuySell, nothing crazy.

Jeremy: And how much down did you put for that seller finance deal? I'm a numbers guy.

Hanan: Yeah, no worries. It was a little over $200,000. So it was a big chunk of change.

Jeremy: Got it. Well, I mean, it wasn't even 20% down. That was like 15% down or something.

Hanan: Yeah, exactly. So for us, it worked because one, we had capital to employ, but also it was just such a huge incentive that they were willing to give us the seller financing. So I was okay to part with a little bit more capital than I would have liked. But it checked out.

Jeremy: And how can folk who want to check out what you're doing and everything you've got going on and stay in tune with your journey, how can they follow you?

Hanan: Yeah, sure. So I'm on Instagram. My handle is TahoeLittleBlackCabin. So at least... It might change soon though.

Jeremy: Oh, it might not be. What's it going to be? Actually, as we've been on this podcast, I bought a Hanan underscore. I bought Hanan two n's, three dashes, and I've just put them for sale on bizbuysell.com. So if you want to buy them, we can talk.

Hanan: Oh my gosh. I haven't even looked, but I'm pretty sure my first and last names are not available.

Jeremy: Well, they're all gone. They're all gone. Every single one of them is gone.

Hanan: Well, I'll be looking on a... I'll be on BizBuySell then, apparently.

Jeremy: Loop that. Loop that. I'm sure.

Hanan: Yeah. Well, I'm not really sure what it's going to be. It's going to be some sort of combination of my first name and last name. But right now, it's...

Jeremy: I always like... I'm like TahoeBlackLittleBlack... Which one?

Hanan: I know. It's TahoeLittleBlackCabins.

Jeremy: TahoeLittleBlackCabins. You guys heard it here.

Hanan: I know.

Jeremy: That is TahoeLittleBlackCabins. Hanan put some great stuff out. She's a real one, for sure. And it's just straight value. So I hope you guys found value today. Hanan, anything else you want to share with the STR Pros who are tuned in?

Hanan: No, I think that's it. Thank you so much for having me.

Jeremy: Thank you for joining, guys. And everybody, stay tuned. We'll see you next time.