Student of the Game

Welcome. This is the Insider's Edge to Real Estate Investing with James Nelson, the principal and head of Avis and Young's Tri State Investment Sales Group. In this program, you'll learn game changing strategies to outperform the market. James will teach you how to source, execute and capitalize on the best real estate opportunities in New York and around the world. Now, here's your host.

Welcome to episode number 134 of the Insider's Edge to Real Estate Investing. This is your host, James Nelson. Thank you as always for joining. It means so much to me. I appreciate your sharing the show with your friends and most recently sharing the news of my latest book, the Insider's Edge to Real Estate Investing, how to Gain the Advantage to outperform the Market, which you can find now on Amazon. You can pre order that, but better yet, go to James Nelson. That's where you can find the show notes to this podcast. You can also find a link there. And if you're interested in bulk ordering the book, you can also arrange to make that order there. We're also having customized speaking engagements, training sessions. There's a lot that I could do for your company if you all want to learn what I have learned not only through 25 years in the business, but also interviewing over a hundred guests on this show. So today's show is no exception. Today I am interviewing Matthew Joseph, who is founder of Coastal Hotel Properties in West Avenue Realty. Matt reached out to me to share his story. Now I'm approached multiple times per week by potential guests and their PR firms to come on my show. And I really try hard to focus on active investors who I think will be of the most benefit to you, the listener. And I believe Matt is definitely one of those investors. When I asked Matt about his investment experience, he told me that he started as a residential broker in 2005 in Miami, where he sold over 300 million of apartments. Then he started working with investors flipping condos in 2009-13 and then got into selling luxury. But he said he realized that the only way to get ahead is to own real estate. So he bought land on Biscayne Boulevard for $250,000 in 2006 and flipped it for 1.2 million in 2013.

And.

And he was hooked. He said he started syndicating and finding deals. He found a motel deal, get this, in 2015 on Craigslist. And he created a cool niche by taking old roadside motels and making them cool. He talks about how he structured his first deal with just a deposit down. Matt now has 18 years of direct real estate investment and sales experience and his firm, Coastal Hotel Properties, is a privately held, fully integrated entrepreneurial real estate and hotel management company that develops, acquires and operates hospital assets. They manage over 400 units, a $50 million portfolio through Florida and North Carolina. CHP is in the process of creating a new extended state brand called Coastal Suites. What I really liked about Matt's interview was how he spoke about being a student of the game and the importance of being a constant learner. He also talks about how he looks at assets from the inside out to figure out how to best reposition. I know you'll get a lot of this episode. To connect with Matt, check him out on LinkedIn at LinkedIn. Thank you again for listening. We'll have a brief word from our sponsor and we'll get right into that interview with Matthew Joseph.

A Different approach to Putting our clients first Avis and Young's Tri State Investment Sales Group sells multifamily office, retail development and specialty sales throughout the New York metro area. As experienced thought leaders in their industry, our 35 member group is available to help you make informed investment decisions by advising you on your current holdings or identifying new opportunities in the marketplace. Our one unified team is built on an industry unique platform which promotes unparalleled collaboration and teamwork. We share core values of hard work, integrity and expertise. We put our clients first, providing tailor made strategies to achieve superior results. Please Visit us at aytristateinvestmentsales.com and follow us on Twitter, LinkedIn and Instagram amesnelsonnyc to learn more.

And now it's time for our Investor Spotlight and with us today is Matt Joseph who is founder of West Avenue Realty and Coastal Hotel Properties. Matt, thank you so much for joining. You were kind enough to reach out. Tell me about all the exciting things you're doing. So I'm really looking forward to this conversation today.

Yeah, thanks for having me.

All right. So Matt, I know you live in Florida now. Are you a lifelong Floridian? Is that where you you grew up? Maybe. Tell us a little bit about your story.

Actually, I just moved to the D.C. area. I was in South Florida from 2004 until 2000, the end of 2020. And my wife and I lived in Coconut Grove, which is a little south of Brickell. And we had a son, a pandemic baby, and we wanted to raise our son in a in a different environment. So we moved to DC to be closer to her family. And plus somebody offered me a Too good to be true. Price for my house. And I just knew the writing on the wall in Miami. I've ridden a lot of the roller coasters. So I sold our house. We moved to dc. We live in Old Town Alexandria, which is right outside D.C. and it's great enjoying fall. Different. Different. I needed some change. I was in South beach for 10 years. I was in Brickell for five years. And then I was in Coconut Grove for four years.

Awesome. Well, congrats on your son and the move and also for being a contrarian. So I'm up here in New York and we're always hearing about people moving down to Florida. So it's about time that you all sent some people back up north. Exciting to hear about, you know, what you're doing now in the D.C. area. But let's, let's roll it back to kind of how you got into the business. So now, where did you go to school? And was real estate on your mind at the time?

So it was interesting. My evolution into the business wasn't. I had a mentor in New York City, actually. I went to boarding school for high school. I did not go to college. Right after high school, I moved to New York City and I worked with a mentor who was in the restaurant real estate business. And he taught me the ins and outs. He said, the only way to learn business is to be in business. You can always go back to college later. And he had me working in the deli business in midtown Manhattan. And I lived on 72nd between Broadway and Columbus. And I fell in love with the Gray's Papaya concept, which then I opened up a hot dog concept on my own in Harlem on 125th in Lexington. And it was a great success. We would do the recession specials back then, the two hot dogs and a juice for 250. And I just loved the business concept. It was breakfast, lunch, dinner, 24 hour operation. And I was 24 years old and I was doing some soul searching. I didn't want to be known as a hot dog salesman in Harlem my whole life. And I had a friend move to South beach in 2004 and the real estate was booming. And he's like, you got to come down. It's wide open. There's so much opportunity here. It's like the sixth borough. And so, yeah, I packed up my bags, 25 years old, moved to Miami, got my real estate license, and I moved into a rental complex. And the big game back then was condo conversions. And the developer was converting from rental to condo. And the Developer had to give tenants what's called a first right of refusal. So I went online, I looked around. I couldn't find any details of the building. So being a new broker, I was like, how can I take advantage of this opportunity? So I bought the domain name of the building. I slid notes under everyone's door. I told them I was a realtor in the building, built up great relationships with everybody, and I figured out a way to sell 50 units in a week to the. To the. From the developer, which helped kickstart my career.

Wow. I love the hustle. And I know you've already moved on to, you know, your first foray into real estate, but I gotta ask you about the hot dog business, because this is fascinating. Now, what actually goes into the hot dogs, I don't want to know. But talk about actually setting up shop in Harlem. And you know, what was involved with that? Because, I mean, obviously there is a real estate aspect to running a business. So I assume you had to go out and find space and you had to rent it. So how did you pull the money together for that? Like, what did it cost? It set something up like that. And then what? I mean, I'm just fascinated. Like, what, what were the margins? And, you know, any other lessons learned from that business?

Oh, wow, we're talking 2002. So I had a mentor that's in the restaurant business in New York city. He owns 30 restaurants. And he took me in under his wing. And living on 72nd street, we fell in love with the papaya concept. And we just, you know, right outside the subway, you come outside, you see the big sign, graze papaya. And there were always lines out the door. Very minimal labor, no, you know, waste. It was just hot dogs and juice. And a real estate broker, I think it was Peter Ripka Ripke Realty. He had this corner on 125th and Lexington. It was the drop off for Rikers island. And it had four methadone clinics right there. So we're like, if anyone's going to eat hot dogs, it's these guys.

You weren't like, a little concerned for your, you know, safety setting something up like that? I mean, are you like, man in the booth, like to get things rolling? I'm sure you had some stories earlier.

Oh, I used to get off the four or five or six, and the bums sleeping on the floor used to know my name because they would study my patterns when I'd come out of the subway. And it was, you know, when people say they're from the streets. Like, I really learned in the streets, you know, facing McDonald's across the street, when everyone would hang out at the supermarket, and, you know, you get to learn who's against who and. But there, that area was ripe for development. I knew the west side pretty well because I kind of lived on the Upper west for a long time, so I've always driven off across 125th, and I just saw the gentrification. You could just see it, how it was shifting, but we just needed volume and a certain demographic to feed, and it worked well.

I remember in mid-2020, you know, like, when I was driving into the city, coming across 125th street, and there's a lot of the areas that were just, like ghost towns in the city, but, like, you know, maybe it was later in 2020, to be fair, but, like, stores were open, there weren't any vacancy, and there is a lot of foot traffic there. So. Yeah, no. So that. That was. Wow, what an interesting way to kick things off and, you know, hustle. Know what it takes to get things done. Okay. And so then going in, figuring out that opportunity to kind of play the roles, the broker and the notes under the door, that's. That's also, you know, look, you figured out a way to do something that I assume no one else was because you were the newcomer. Right? So I'm sure there was hundreds, if not thousands of other brokers down in Florida who could have done the same thing. But you said, well, hey, I'm not gonna. You know, I don't know what inspired you to do that, but very creative. So where. So where did you go from there? I mean, at that point, was Coastal Hotel Properties born, or were you still working for another broker down there? What. What was.

No. So 2009 happened, and a lot of that inventory that I had local knowledge of became for sale in the courthouse steps. You know, there was no Internet back then, so I was getting calls from investors and banks to understand values of units, because different apartments face different directions. And I noticed people were buying these apartments at the courthouse steps for pennies on the dollar, and they were coming to me to sell them. So I said, you know what? Let's cut out the middleman. Let's raise some money and go buy our own. So we started flipping places from 2009 to 2012, and it was a huge success. And then as the courts started putting everything online, the margins started to compress because there was more bids and more competition. But it was a good experience because the banks didn't understand values. Everyone was just writing things down. And, you know, I knew the apartment facing Star island would be a different price than the apartment facing another building on the third floor. But the 837 square feet, people didn't understand that, you know, way of looking at the properties back then. So I had that kind of arbitrage. So I would be like, well, I sold that one for 700 grand. You're telling me we could buy it for 200, I can still rent it for 2,500. So your cash on cash was still 3 to 5%. You know, you hold it. And then by 2012, everything was back up 50, 75%.

So, Matt, how did you tell us about your first couple purchases at the courtroom steps? Because I believe. I mean, don't you have to register and you got to have a 10 deposit? Like, how much was. If your first one of your first purchases was $200,000, was this like a cash deal? And if so, how did you raise the money to do that?

Yep, yep. It was all cash deals back then. You did have a 5% reserve. The banks had the right to buy back at a certain reserve amount if it wasn't met. But you're talking 2009, 2010. It was a game. I had other people that were competing with us, and I'd have to fake bids so they would buy it. Then I would see on the docket opportunities that I really wanted, because people would look at us as the local knowledge and, you know, because we had the experience. So we kind of cut out the other guys. But I had one investor. I worked out a formula to where he would put in 70%, I would put in 30%, I would service it, and then when we transacted a year later, we'd split our gains 50, 50. And his IRR was always more than 30 to 50%. So the money he was investing, he was happy.

Wow. So how many of these did you do?

Oh, my God. I mean, this is 2009 to 2012. We were probably doing about 20 a year.

Wow. So that's real money. I mean, we're talking 4 or 5 million bucks. If you're buying these at 2, 300,000 a pop, you're buying them for cash.

I mean, I was buying studios for 80 grand, selling them for 175. Yeah, you know, so.

So do you think. I mean, you. Not to fast forward to today, but just, you know, people. Investors love when they hear distress. Oh, you know, I want to buy it at foreclosure. I mean, it really And I do believe things still are, in some cases, sold at the courtroom steps, which is kind of amazing to me that you've got these auction platforms like my friends over at 10x. So I don't know if that's still part of your business, but I mean, you did say that kind of after a while it got more efficient. So, like, do you think there's still these types of foreclosure type opportunities and ways where you can go buy this type of distress?

I don't think so. Back then, the banks weren't prepared for the carnage that happened back then. It happened really quick, really fast. And I think as they got more comfortable with the process and put systems in place and then the government, governments were bailing them out, so there wasn't such a need to get stuff off their books. So I think the engineering of the way money flows today is a lot different. Back then it dropped to zero in a week. So I don't foresee that happening. I mean, I remember in the depths of the pandemic, I was preparing all my investors to be prepared for opportunity. And it never hit because you had the PPP, the SBA loans and you know, maybe we'll see that six to 12 months from now. But you know, all this has been propped up for the last 12, 15 years, so it's, it's hard to say.

Yeah, yep. And my, my own take on that also is a lot of these lenders who use the pretend and extend strategy, you know, after the last, you know, after the great financial crisis, it worked for them because, you know, after a couple of years the market did recover. So I think there's probably bit of that is, hey, if we can just kind of hang on, hopefully, you know, people come back to work like they used to and, you know, we can dodge this bullet. But that's for another, another conversation. So I want to hear, so you're flipping apartments, you're brokering. What happens next? Well, what was your first, you know, serious commercial acquisition? Obviously, I know you've got these hotel properties. Maybe you could talk a little bit about the inception of coastal hotel property. So like, at what point did you build out your, your brokerage business?

Yeah, so I was getting a little burnt out of brokerage. You know, it's a hustle. I was a volume guy. I wasn't a luxury, you know, 25 million lifestyle kind of broker. And I really wanted to be creative and build stuff. I bought some small properties that I did well on. So I bought some industrial and I was getting My feet wet in that. And I just. All the big guys that I modeled after, like Barry Sternlicht and Sam Zell and Jonathan Gray, I just followed their trajectory. And for some reason, Barry Sternlich's extended stay model just always stuck with me. Every time I heard him talk about it, he was always saying I was his best performing asset. It withstood every downturn. The downside was protected, the upside was unlimited. So I came across a buddy of mine who took a motel in California and transformed it into a cool boutique place. And he tripled revenue. So when he was explaining to me his model, I was like, if we find one, let's do it together. And he said, yeah, that'd be awesome. So we found a 26 unit motel in St. Pete Beach. This is in 2014. And the guy wanted 1.75 for it. We didn't have 1.75. So I told the guy, I said, look, I'll give you $125,000 non refundable deposit and I'll triple net lease for a year if I don't exercise my option to buy it. You could keep my 125,000, I'll pay ten grand a month, I'll pay your taxes, your mate, you know, all the expenses. And within six months, I tripled revenue. So, you know, I got a takeout loan and that was my first deal and I've done that seven times.

That is awesome. There is another podcast guest who we've had on this show, Legend, self made billionaire. And that's how he started. So you're on the right path. And so for those of you who have not heard my interview with Francis Greenberger or read his book Risk Game, fascinating. But he was doing this back in the 70s and he called these stretch deals. So he, I, I can't remember if he was actually doing the net lease with the option of purchase, but he would do like these elongated contracts, right, where he'd say, hey, I'll give you this, you know, this price, you know, he'd offer in some cases more than the asking price. But he said, hey, it's going to take me two years to close. And he'd go, and he'd convert these to co ops, different business model than what you were doing. But he'd sell off enough units where he could basically close with no money down and then, you know, keep the rest of the units to sell off later. So I love the creativity. Wow. Okay, so, so how did you go about tripling the revenue? I know you said you kind of Reposition making, you know, chic. Like were you actually doing this work yourself? Were you actually managing the hotel? I mean that's running a hotel is a 24 7, you know, business. So shed a little light on how you were able to oversee and manage that process.

Yeah, so my business partner who's, who's a great operator, he created an off site call center. So all the money and reservations flow through our call center and we turn one of the units into a live in. And that live in pretty much runs our day to day and we oversee everything. So we control the yield, revenue management, we're in charge of all the marketing behind the scenes. And then our manager on site controls most of the, you know, capex and cleaners and all the day to day functions.

And as far as like, did you, I assume you rebranded it? It probably sounds like some sleepy kind of motel. And you see a lot of these now, kind of these, you know, chic surfer lodges. Was that kind of the idea or what? What was the, you know, how much money went in to actually improve this.

Thing and rebranding, you know, believe it or not. Well, this was our first one. We put maybe 100 grand into it, you know, Ikea furniture and some paint, gave it a little lipstick. You know, it's a, it's a high barrier to market, market. So across the street you have these beautiful beach hotels that are charging 6 to 800 a night. And there's no alternative. So we can push rates based real time off of the volume of what's, you know, happening in the city. But to answer your question, you know, if they have charm, you know, we don't want to ruin the charming aspect of it. Some people still love that feel. And we became the drive too. So you could, you know, drive right up to your room. Open air, no lobby, no hallways, not a lot of people. So there's a market for these kinds of demographics that just love simple walk to the beach. No service fees, you know, no, nothing complicated. And there's kitchenettes in each one so you can bring your family and you don't have to spend a fortune to have a vacation. And it's been working really well. I mean 2020 was scary, but we turned them into apartment houses. We taken people that were traveling nurses or people working in Construction paying $1,000 a month on their credit card. You have 40 rooms charging 1,000 bucks a month. That's 40 grand, service your debt. No cleaners, no operations. Keep it simple. And then by April, May, the market just boomed. Everyone was traveling to the beaches and the mountains and driving everywhere. So that it really helped us a lot.

And Matt, you still own that hotel.

I do.

So just as you're thinking about building up a portfolio and I know we'll get to some of your next acquisitions, but early on, weren't you thinking after you had, you know, reposition the asset after a year, I'm sure maybe some offers came in or, you know, you're a broker so you know what's going on out there? Like, you know, I don't know if you could have doubled, tripled your money at some point, but didn't the thought cross your mind, like, hey, why don't I, why don't we sell this and we'll go buy something bigger?

It did. I mean, it's, it's hard to turn down a 3X in two years. But you know, I was young and all the guys that I studied wish they never sold in their 80s and 90s. And it makes you work harder to dig to find, you know, other investors or the opportunity on the next deal. I'm not a fan of a lot of debt and we try to keep it low. We haven't refinanced. Luckily we have a couple of great investors that have our vision and you know, it's a 20 year play. So, you know, I'm not in that get rich quick flipping scheme. So I've always been in it for the longevity of it and I, I'm a student of the game. I love it. I love the market. I just love the, the real estate business so.

Well, we are definitely in the same camp on, on that. So. No, I, I applaud you because I, I look at my clients who have amassed these portfolios worth hundreds of millions of dollars and yeah, they just, I'm sure they could have sold so many times along the way, but you know, kind of using those properties as their platform to refi, to expand, to buy other properties, you know, the economies of scale now that is getting a little more challenging today because with where, you know, what's going on with interest rates also is pushing down proceeds. So you know, the days of kind of buying, refinancing all your money out and going and do it again, you know, the banks are definitely getting a little more cautious and the rate environment's making that tougher. But tell us about your next opportunity, Matt. I'm also curious how you found this stuff. So obviously you're a broker, you're out there, but you know, it doesn't sound like that hotel deal in St. Pete's was on market. Like, were you like approaching owners directly? Were you canvassing? Tell us how you found your opportunities.

Craigslist.

Craigslist, okay, that's our thing today.

No, that one was on Craigslist. And once we executed, you know, we've actually bought one up the street from there. All the brokers knew us, you know, as it hit the tax records, you know, everyone knows who you are and now you know, all the brokers, like my niche is that 2 to 8 million, you know, price point. So you know, everyone within that market knows who we are. So they call us direct. We look on LoopNet, we look on Crexi, but those are usually shopping. But when they sit for a while, and these are second generation businesses, so I'll go in and build rapport with the owners. Some of them I sell or finance because they don't want the lump sum, you know, they rather collect that 6 to 8% interest only and have their asset that They've owned for 30 years to fall back on if we can't deliver. So building great relationships with the owners. And as you said about legacy families, typically these guys pass away and their kids don't want it. So I'll, I'll plant the seed and three to five years I'll get the call. And so it kind of, that's the evolution, but that's the small, non institutional stuff that I'm doing. I've graduated from that now. We just bought a 63 room Super 8 that we converted to our own concept and that's the next phase of my, my.

Matt, I'm loving your story here and I know a lot of our listeners will too because we've had some legends on the show and I have no doubt you'll be in that category in years to come. But like sometimes you hear about these big investors who are taking down 100 million billion dollar deals and it's kind of hard to figure out how you're going to get there. But the fact that you kind of bootstrapped your way up and through creativity, through finding opportunities is really, you know, I, I think it's inspiring certainly for our listeners. And you know, it's also that story of finding the deal on Craigslist. So as my listeners know, I'm coming out with a book in January called the Insider's Edge to Real Estate Investing. And the whole premise of the book is that you can gain this inside edge to outperform the market because there are so many, so many inefficiencies in this Business. Like, if you're buying stocks, everybody knows what the stock price is at any given minute. But, like, you know, look, there's no law that you have to publicly market your property. Like the fact that this owner had this on Craigslist, you know, look, clearly you did not have as much competition, because I would imagine most people are not looking to buy property off of Craigslist. So, you know, hats off to you for finding it. But. And I also. I'm interested to hear that part about watching LoopNet just for. Not just for stuff that comes immediately to market, but like tracking that stuff and waiting. Because sometimes it's, you know, it's great to be the first. Every. A lot of people want to say, hey, I want to be the first buyer, and I want to preempt. I want to buy before hits market. But I'm also a big advocate of being the last buyer. And after, you know, the seller, you know, people have kind of stopped tracking it. So do you have, like, a good CRM or how do you track pipeline opportunities? And are you looking at, like, two deals a month? Are you looking at, you know, 20 deals a month? Like, take us through kind of how you are managing these opportunities.

Yeah, it's a good question. Right now, I'm just slow and steady. I'm in the growing pains of my business. You know, I'm doing everything with my partner. We have a team of people. We do have layers of management that oversee our. Our individual properties. But right now, we're just growing organically. I look at about one to two a month. We probably averaged two acquisitions a year. But as more people see what we're doing and throwing money at us, I mean, the opportunity. The money's there. The opportunity is what, you know, people typically need to find. And we have it. We're just crafting it and fine tuning it. And then our goal is to eventually have 50 to 75 and probably sell because everyone's going smaller, you know, everyone's going more boutique. A lot of the bigger guys, you know, they're looking in that 50 to 75 room price range. It's just a niche that was never tapped before, and the market clearly enjoyed it the last couple of years, and you just see a lot of people going to that direction. So right now.

So the goal, you know, fast forward five, ten years from now, you're thinking aggregate a portfolio of these. So even though individually they're not institutional, but if you bulk these up enough, you know, I would imagine at some point, you know, now you can start you know, taking on, you know, institutional partners. If you want debt, sell the whole package. You know, is that, is that kind of the, the goal?

Yeah, that's the goal. Yeah.

And do you have, is there a brand that, I mean, I guess it's, it's, what is it Coastal? That, that is, you know, your line of hotels or I know the company's West Avenue Realty. But what, what do you like? Do each of these hotels have their own branding and maybe tell us a little bit about that?

Yeah, so we didn't want to try to, you know, I think it's a mistake that some investors make is they try to push their vision into an area to make it successful. I more look at a location as an outside in instead of the inside out. So I'll step back and figure out what the area needs. And if it's working, why try to fix it? Why try to put my brand on something that has, you know, it's been there for 30 years and it's working because they're second generation typically, so we just make it a little bit cooler. But we haven't necessarily slapped our brand on each one. Each one has its own name within the community that it serves. But we are gearing up towards, like I said, we have this concept called Coastal Suites that we just launched and we took a Super 8 in Wilmington, North Carolina, where we stripped the brand so we don't have to pay the fees. Their brand was coming up and then we put our Coastal Suites logo on it and we're running it as our first Coastal Suites. So it's in Wilmington, North Carolina, right by Wrightsville Beach. So the play for us is there's a lot of properties coming to market that the owners have owned for 30 years. They can't afford the Pips, so they're looking to sell because of Capex. Everything's so expensive. So we'll go in, do some light work, take the brand off, put our own brand, cut costs and just run it better.

So just for our listeners who might not be familiar with how the, the branding works in the hotel business, and you all might think that, you know, Marriott and Hilton are the biggest owners of hotels out there because you see them everywhere but you know, they don't own. Yeah, I mean, maybe they own a couple of their signature properties, but they're, they're managers. Right. So and typically depending on the flag, you're signing an agreement with them that could be what, 20, 25 years. But you know, tell the audience so Pip how that works. So if you're looking to renew the flag, they're going to say, okay, well, fine, but you need to do X, Y and Z, and you're going to have to pay for this. So maybe, maybe tell the audience a little bit how that works.

Yeah. So it's called a property improvement plan. So to be relevant with the market, as you know, every seven to eight years, the industry changes. They want you to be relevant to what's happening today. So they'll want you to go in and change headboards, carpet, just give it, you know, a nicer look for their guests. And it could cost anywhere from seven to $20,000 a key. So, you know, if you're an owner enjoying something for 20 years and all of a sudden you got to spend another 2 million to fix your hotel, you might say it's time to move on.

Right. And I guess, I mean, what you do is obviously a lot harder work because when you do have a third party manager like that on one hand, you know, you're tapped into their massive booking network, but clearly, you know, there's a cost associated with that. Right. Whereas, you know, tell us a little bit about how you booked your reservations, because it's interesting, a couple weeks ago we had Alex Jarbrough on the line, and he's, he's doing a lot of kind of Airbnb stuff, but, you know, he was talking about how, you know, he's cultivated his own list so he can rent directly. Because I, I don't know how many of your bookings come in through Expedia or wherever else, but if I'm not mistaken, those are, you know, Those sources charge, what, 25, 30% for bookings? So maybe talk a little bit about that aspect of the business.

Yeah, that's a great question. We use all the OTA sites and all the engines that drive traffic, but normally by year two, they come to you directly. So if you are organized and have a good software program, you can keep track of all the data and how to reach your guests. But what's unique to our model is that we are zoned hotels. So, you know, if you're an Airbnb in a neighborhood, it's hard to collect data. It's hard to, you know, you'll run into zoning issues, you could run into issues with neighbors. You know, these are hotels, so the data for it is, is out there. And we don't wrestle or have issues with our neighbors or, or. But as far as revenue management, yeah, it comes from everywhere. I mean, motels are typically positioned in great locations. So you have your walk ins, you have Airbnb, you have, we use every channel. I mean, and yeah, we do pay 10 to 12% on booking.com or Priceline, but as you're building your business, that tends to, to drop off and then you could even pass it on to the customer. And we tell them, you know, they'll see at the end of the bill, oh, I paid 10% for. We're like, yeah, because that's what booking.com charges us. Come to us directly and, you know, you could get around paying that fee. So educating them, even online on our websites, we mentioned that. So. But today's day and age. The, you know, the Marriotts, the Hiltons, there's a lot of competition for them. You know, back then you needed their, you know, wheelhouse of client base. Today it's, you know, it's a free for all. You know, you could do it yourself very easily.

And, and how do you set rates? You know, there's all these, you know, dynamic pricing algorithms. Like, so how, when you're trying to do. Well, let's start with when you're doing your diligence. So you're looking at a hotel and you're trying to figure out what you can actually charge for it. I mean, I'm sure you're checking out comps, but like, how do you figure out, you know, how far you can push rent? Because look, I mean, there is a direct correlation with how much you charge and your occupancy. Right. So I'm sure you could fill these 100% of the time. But you might say, you know, look, I don't want to be full 100% of the time because then I'm not charging enough money. So maybe talk about that.

Yeah. So I look at a couple factors. One is airport traffic. I love airport traffic because you can kind of get a feel for how much volume is coming into this area. Two is you just go online, you just look. I mean, a big tell for us where there's opportunity is when we walk into a place and they're doing everything by hand and they have rates set from 10 years ago and they don't understand technology. So right off the bat, that's, you know, when someone says in a 25 room, you know, Airbnb, you know, hotel. What's Airbnb? I mean, Airbnb on a 25 room place is an extra 200 grand a year. You know, so, you know, little things like that and just intuition from the past experiences, they all kind of fit the same demographic. Older Couple older people, they just don't understand technology. And then you just look around, you could see what's what people are charging across the street and you know what the area is doing. And we're in vacation markets, so we're in Clearwater, St. Pete Beach. We were in Palm beach, we just sold one. We're in Daytona Beach. Great up and coming market. Just the secondary Cities where in 2014, when I was looking for these opportunities in Miami, for instance, the same building I was buying for 8 million, I could buy in Tampa for 1.5, but the revenue was the same. So I'm thinking to myself, is the brand worth that much money? So I was able to take 1.7 and turn it into 8. But that 8 million that I watched over the years never got to 10. It always stayed maybe nine and a half. Or if an overseas buyer wanted to overpay for preserving capital. But the economics never made sense. So I liked, I mean, pre pandemic, I was looking in the Austin's, the North Carolina, Tampa, all the markets that became hot. So we were just right place, right time and did it well.

Yeah, Matt, I, I love that observation where you had enough sense to kind of take a step back and look at the actual numbers. Because, you know, a lot of these really hot markets, like Miami, yeah, you're competing with kind of the, you call it, we call them ego buys, where people like, yeah, I want to own a hotel in south beach. And, you know, who knows what's, you know, I could show up and tell people I own the place, you know, and, you know, you just kept your head down. You said, look, I'm, I'm looking at the numbers and what's happening. And, and it's true. Some of these markets that get the hype and others that maybe, you know, have the same, you know, numbers. But again, they might not have that, you know, coolness factor or whatever it is, you know, you're, you're finding these inefficiencies once again. So I'm curious, like, how much competition is there for what you're doing? Like when you're showing up and bidding on these? Like, are there, you know, are there 10 other bidders every time? Or like, is this just kind of like a section of the market where just no one is really. It's just kind of too hands on and it, it's kind of more of a local, you know, players game.

So we're clustering in the markets that we like. But yeah, there's not that much competition. I mean, of Course, when price gets to a point where it could make sense, maybe, but pre pandemic, the stuff we were buying for sub 2,3 million today is all north of 7. So like you said, deal flow, watching markets, we're just watching. It's hard like everyone else with the rates and the economy. Right now we're just fine tuning our concepts to be prepared for when opportunities present themselves.

But how big is this market? Because, you know, and I know it's specific to, you know, what city you're looking at, but like, like in a, in a St. Pete's or a Clearwater, how many, you know, how many hotel rooms are there in that market? How much of those are coming from like the big flags? And how much of this is kind of like these, like boutiques? Are there like dozens of these out there? Is it, you know, give us kind of a sense of the scope of the opportunity here?

Yeah, I mean they're, they're. Honestly, I don't know the, the number, but I mean they're out there. They're all, you know, they're, they're typically, you know, the motel industry has changed over the years, you know, from the Patels to the, you know, the way that society works. They used to be the drive to you sleep for one night, you go, but it's great real estate. So, you know, the cash flow is what's great within this business. But the dividend is the land. You know, I'm buying whole city blocks in up and coming markets. I have 40,000 square feet in a high barrier to market in St. Pete beach where they don't allow the W's and the fancy hotels for competition. It's only mom and pop. But to answer your question, I'm not sure. I mean, we look in Florida because they happen to be in Florida. We look in North Carolina, all the bigger markets like New York and California, again, it's like Miami, the prices are too high. But Capex is definitely an issue. You know, these are older buildings, so understanding how to navigate the older buildings, but I think that's a big issue in Miami and in New York is these preservation boards, you know, not allowing progress. I mean, and then us, you know, we don't want to put money into the buildings which would help the tenants. And you know, I think there's a lot of work to be done in these cities. So. But that's my politics view. That's a whole nother, you know, chapter.

Well, I'm really fascinated about the opportunity because, you know, there's few places within the US Real estate market, where there is still, you know, there's not institutional competition. I mean you look at like even back in the 70s and 80s, Sam Zell was famous for kind of moving into the, the trailer park home space, I mean in manufactured homes and like, you know, Blackstone owning, you know, the largest owner of single family homes. So it just, it sounds like your, your business is, is ripe for some type of, you know, institutional appetite. So I, I, you know, this is very exciting to hear that you're, you're building up this portfolio in a disciplined way and really exciting, inspiring to our listeners. So look, with only a couple minutes left and Matt, you, you've, this has kind of been the, the theme throughout. But you know, the name of this podcast, the Insider's Edge to Real Estate Investing, you know, what would you say is your inside edge to give you success?

I had a great mentor. You know, I, I truly believe this work to home environment is, is not great for people my age and younger. You know, when I was 25, up and coming, I, I asked a lot of questions. I didn't have the Internet to compare myself to people and what other people are doing so large, you know, I just put my head down. I had great mentorship. I was a student. I truly enjoyed the business and, but I think, you know, being in an office environment and getting the mentorship from, from older people that have that experience, it's just things you can't learn online and navigating how to deal with investors face to face and you know, it's a relationship, people, business. And a lot of my success has come from, you know, understanding how to deal with different personalities that you can't capture on a zoom meeting, you know, so I think it's very important to understand how to deal with people face to face. Great mentorship. Stay off the social media, just, you know, you can listen to great podcasts and learn like I listen, like I said, you know, Barry Sternlich, Sam Zell and I stay educated. You know, I don't spend ten grand and give it to a fundraiser, crank cardone to make a quick buck. I'll go to Wharton for two weeks and learn, you know, in a certificate of program for two weeks. You know, invest in yourself and it's a long journey. It takes time, it takes 10 years to build a business. You're not going to do it overnight. So yeah, that's my spiel.

Matt, I love it. You're like an old soul because again, the way that a lot of the young guns out there who are kind of making their mark is, yeah, they're blowing it out on social media. And look, I think if used in the right way, it can be effective, it can be powerful to top of mind, you know, brokers see you're active, they send you opportunities, you know, and look, I do get some help on my social media outreach. I do, you know, come up with a lot of content for it. But as far as how I consume social media, I'm not scrolling through, you know, Instagram, you know, hours for the day, like I'm flipping through, but that's where I get my data, my research. So like even who I subscribe to and what I'm looking, looking at, I'm looking for properties that sold, I'm looking for things on the market, I'm looking to see who bought what, you know, scrolling through, through LinkedIn as well and ways to connect with people. So I, I think if used in the right way. But yeah, totally, you know, your point that, you know, those are still sound bites and, and I think that, you know, to spend the time to get educated and for those of you listening right now for this podcast, you are investing the time, taking the time and look, you're learning. If you didn't pick up at least three or four things that Matt said that you can apply to your investing, go back, listen to the episode again because, Matt, this was really fantastic. You said a lot of great things today and I know it's going to be hugely helpful to our audience. So Matt, if our listeners want to find you, where can they find out more about what you're doing?

Oh my God, our website.

Maybe Your website. You just said you don't do social media, but I know you have a.

Website website, so see what my, my personal Instagram is. My wife makes fun of me because she's on podcasts and she's a social media star. What's. It's Matthew underscore Joseph, 78 is my Instagram. I'm pretty active on there and I.

And I, I did see you on LinkedIn as well. So you can definitely connect there. And then Coastal Hotel properties, I think you've got. Is that the, the website as well?

Yes, yes, we have Coastal, I believe right now it's Coastal Suites.

Got it. Okay, great. Well, Matt, really appreciate your joining today. Wishing you tons of success and for all our listeners, thank you as always for tuning in. If you've not already, please go to james nelson.com that is where you can pre order my book that's coming out in January the same name as the the podcast. And that's what we are doing here. We are helping you learn to gain the insider's edge to real estate Investing so you can outperform the market. So thank you as always for joining. Until next week, this is your host, James Nelson.

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