Bought a Resort? How She Did It WITHOUT Breaking the Bank!

Anybody can do this.

Yep, we're sitting in a resort that was on the MLS. Our biggest multifamily property, MLS. Your resort, MLS. You can absolutely play this game. These deals are out there. You don't have to get super creative on how you find them. So today we are talking about resorts. We're sitting inside the Robin Hood Village Resort, our seller finance resort. However, we have another resort owner with us, Savannah.

Welcome back to the YouTube channel. My name is Cody. I'm here with Christian and our good friend Savannah. Savannah just joined the club as a resort buddy, our very first resort buddy. Hey, if you want to join that club, you need to buy a resort, preferably seller financed. If you want to learn how to do that, follow along on this channel.

So today we're gonna be talking about your deal, what you just purchased, because we've definitely put enough content on here about the Robin Hood. But yeah, talk to us about your deal. Where's it located? How much was it for? Let's, let's hear some of the details.

Yeah, so it's located in Packwood, Washington. You probably only know that market if you live in Washington, but basically it's a ski town. It's like the base camp to White Pass ski area here in Western Washington. But it's a 15-unit resort. It was listed for $1.8 and I got under contract for $1.25. Eventually got it down to $1.23 and that was the price that I bought it at. Basically, do you guys want to go into the financing or do you want to talk more about the— Oh, heck yeah.

Let's talk about it.

Yeah, let's talk about it.

Everything we do is deal debt equity. So you found a deal. How did you get a loan on this?

Yeah, so it wasn't super financeable. That's why it had been sitting on the market for a while. It's a motel, has a motel license and everything, but it was being run as a long-term rental with really low rents. So people are having a lot of trouble getting financing on it. So I had to go an alternative route and found a hard money lender who gave me $800,000 on the motel itself. Did essentially a cash-out refi on another property I own free and clear and put $200,000 of that cash-out refi towards a down payment. So now we're at $1 million and then the seller carried back $200,000. So I was out of pocket $30,000. That's like 2% down.

That's incredible.

I would trade $30,000 for $1,200,000. Yeah.

Yeah.

So you figured out the deal, then you figured out the debt and then you had the little bit of money down, $30,000, 2% down. What's your plan on it? Are you rich instantly?

Yeah, so it's going to take like probably a year to fully optimize it. Found a lot of private money for the renovations. It's going to be almost half a million in renovations. But once it is fully optimized, we're projecting about $18,000 a month pure cash flow after full optimization. Just because the market is a year-round market, it's 20 minutes from a national park, Mount Rainier, and it's 20 minutes to the ski mountain, a different mountain. So it's booked all year round and we're going to have relatively steady cash flow because of that.

Nice. What is the journey from point A to point B to really get to where you want to be? Like, talk about it today and then where it's going to go.

Yeah. So today it's a lot of deferred maintenance. So I have a contractor who is going to come in and basically take care of renovating the entire project top to bottom over the next probably 10 months or so. And then I have a friend and mentee of mine who's going to live on site about half the week and be managing the contractor, managing the renovation, be taking materials out there and stuff, because I'm going to be designing it myself. And, um, that's basically the, the crew that I have going forward through the renovation and seeing it into getting it booked out and everything.

Now you mentioned half a million dollar rental budget. You're taking it from this dinky, beat-up motel to a very cool resort, very fun destination place where people can just enjoy themselves all year round.

Yeah.

What exactly is $500,000 doing?

Yeah.

How— what are you going to do? Are you completely changing the vibe? Are you putting in new rentals? Like, what, what's the plan?

Yeah. So right now it's 15 units. Um, 7 are studios and the other are suites, 1 to 3 bedroom suites. There is an original homestead on the property, a shop, and a clubhouse. So in this first phase, we're going to renovate the clubhouse, and that'll be like the first amenity we offer to the guests. Uh, we are also— so the first phase will be clubhouse and all the units, and then we'll leave the original homestead and the shop for phase 2 after the cash-out refi. So basically, that $450,000 reno budget is gonna do a complete cosmetic rehab on all the units and then renovate the clubhouse into like a hangout space. Right now it's storage. Phase 2, after the cash-out refi, we will probably have to tear down the original homestead because it's going to be less expensive to build something new there just because it's in such disrepair. Honestly, it looks really cool from the outside. We might do like a skilled demo and take off the siding and kind of reuse whatever we can, but we're probably going to make a coffee shop there. Been talking to some locals.

That'll be awesome.

Yeah. Talking to some local like coffee shop people about the possibility of partnering in the future on that. And then the shop in the back will turn into like a hostel style bunkhouse. Cause that's kind of popular in like mountain towns.

Now while you're doing all that, are you going to keep renting it out or are you just going to take it completely off the market and bang it out in like a couple months and then get the big projects a little down the road?

Yeah. So we are going to do the studios and any exterior work that we can do in the winter will be first. And then once the studios are done, we'll just rent those out and start bringing in some income to try to break even through the rest of the renovation. We'll probably offer some sort of, you know, construction going on discount for the studios, but we plan on being able to break even with those— half of those, the total units being studios, having all those being rented out, we should be able to break even. So that's what was hoping to carry us through the renovation with those.

So for like just cash flow planning, what happens in the event that you're off by a little bit instead of taking 12 months, it takes you 18 to 24 months? Do you have a plan for that? Because a lot of people want to get started in, in the space and they want to join the Resort Buddy Club, but they're just afraid that it might not go quite to plan.

Yeah, I would say I just ran my numbers super conservatively. So I looked at all the comps in the area, all the AirDNA reports, all the reports in the area I could find, and then took that number that I was seeing and slashed it by a lot just to be ultra conservative, to know that, you know, if things don't work out like I was planning, it's still going to be at least this number that I'm conservatively projecting. So I could go more into like that a little bit if you want, or—

yeah, let's do it.

Yeah. Okay. So basically in the area, the average nightly rate is $260 a night. I cross-referenced that with just looking directly at motels, hotels, resorts in the area, and AirDNA reports and things like that. So seeing that it was $260 a night, I priced mine from $150 to $220 a night. So that's significantly lower already. The DNA report shows about 70% occupancy. I put mine at 60% occupancy. That's also obviously lower. And then after taking that conservative number, I took another 10% haircut off of that just to be safe. So I feel like as long as you run your numbers really conservatively and you're, you know, planning for it being less than I realistically think I'll be able to get more, but like planning on it being less, you're hedging your bets a lot by doing that.

Absolutely. And that's one of the most important things we do. We have yet to have any property that we purchased do worse than we projected. You always do the numbers super conservatively. What if we're off on occupancy, on rents, The insurance is more expensive than I think it will be. The timelines take longer. That's why it's so important to have long-term fixed rate debt. Now, there are some properties like yours where it's a short-term project and you got a bunch of loans. Yeah, I was going to ask about that at the very beginning of the call. I wonder if we get comments on this already in the video by the time you get here. But it's— you said hard money and then you had a paid-off asset that you re-levered. Yeah. So you're, you're already leveraging what you've already built. And you're bringing in hard money, which I'm guessing is not cheap money. Just an educated guess. We have some of that ourselves.

It could be worse, but it's definitely not good.

And seller financing.

Yeah.

That is the whole bundle of financing.

Yeah, basically 100% levered on the acquisition and the rehab.

Now some people are going to say you're silly and you're uninformed or uneducated because you made that decision, but that's how I played the game too. What's your plan to go from 100% LTV to less than 100% LTV? Because that's, that can be really scary for people watching.

Yeah. Yeah. I would say just do a lot of due diligence beforehand. Like I've been continuously in talks, even though it's a year or 2 years from now that I plan on getting a refinance, I'm already in talks with the people that I want to conduct the refinance and just knowing exactly what their parameters are to obtain a good refinance and know what you need to be working towards so that you can securely finance yourself out of the hard money that you've put yourself into. Um, I would say that that's key, definitely doing a lot of due diligence beforehand in that way.

And for your specific deal, you bought it for $1,023,000. Where do you think you can get that to, to make sure that your loan-to-values are in check for that refi? Because that's a year out, two years out, that's coming up.

It's hard to say. Yeah. We just have such good margin on it that even if I'm 50% wrong, we would still not be in a bad spot. So we were looking at how to value motels and how we can look at an ARV. It's a little bit harder because there aren't a lot of comps in my area. But we were just looking at, you know, similar markets and things that the future commercial appraiser will be having to do. And we just base it off of like the simple just NOI, just based on the average nightly rates that we're projecting, not based on any other revenue generators potentially like vending machines, you know, that ticky tacky stuff that can, you know, raise the NOI. We're not counting any of that right now. We're just looking at the nightly rate and then kind of coming up with a cap rate based on comps. So considering our NOI being the nightly rates that I already discussed we kind of came up with, let's just say it trades at an 11 cap conservatively because motels are a little bit more management intensive than long-term rentals. So it's going to be a little, it's going to trade kind of more in that realm. So we came up with an ARV of $3.5 million based on our NOI and the 11% cap rate. So we feel like there's enough cushion in there that we feel comfortable being that we bought it at 1.2. 1.23. But yeah, you just— it has to be a really good deal in this market to feel comfortable like that. And knowing that if you're, if you're off a little bit, you're still okay.

And that was on the MLS, right?

Yeah. Okay.

Anybody can do this.

Yep. We're sitting in a resort that was on the MLS. Our biggest multifamily property, MLS. Your resort, MLS. You can absolutely play this game. These deals are out there. You don't have to get super creative on how you find them. For all of us, you may have to get a little bit creative on how you purchase them. So you find these opportunities no one else knows how to make happen. You did the whole gambit of stuff.

Yeah.

Hard money, uh, put a second on your property, or first, I guess you had it fully paid off, but leverage your assets, hard money, and seller financing. That's crazy. Well done putting that together.

Thank you.

That's going to boost our video because that's going to get some hate.

The easy part, honestly, was finding the deal. The hard part is putting it together. Because I did have hard money and private money fall through multiple times before being able to land on this final solution and getting it done. But just know that it's not always going to be easy, but there's always a way to do it. And just keep, keep at it and you'll figure it out.

Last question on the, on the capital for this. How close to close was it before you had all your money figured out to close this deal?

Literally like days.

Like, and for perspective, she closed yesterday. So that means Monday.

Yeah. So like last week I didn't know if I was going to be able to close on it or not. And we had had it under contract for almost 2 months. And yeah, about a week before closing, our second financing option fell through. Just the guy was a private lender and he went, he went to New Zealand and he was like, peaced out and his money went with him, I guess. So then we were like having to, you know, figure out a third, third option less than a week before closing. Luckily, I knew the hard money lender personally. He actually sold me my first ever investment property and we invest in the same market in Centralia, Washington. So he was able to like do me a solid and expedite it. But that's all about relationship building before the deal comes into play, like building out those relationships so that you can call on people when you need it. That's the— that's networking is the, is the real way to get things done. Obviously, it's the biggest value.

Well, people want to follow your journey on this resort. How do they find you? Where are you online? How do we hear the whole story?

Yeah, I will be posting a lot about it because it will be like my whole life almost for the next year on my Instagram, Investor_Sav. And I'm also creating a YouTube channel. And the YouTube channel name is undecided yet, so— Resort Buddies! Resort Buddies! Just search the Packwood Resort on YouTube and you'll be able to find it.

And this will air in just a little bit, so we'll put the link below as soon as we have it. So just look below for the link to your Insta and we'll add the YouTube in there when it's there. Until then, follow her, like and subscribe. She's hosting all month, so you'll see her all of April. Super excited for that. And, um, Chasten, thanks for having me. Yeah, cut my arm.