Business As Real Estate : Hotel Investing With Michael Stohler #hotelinvesting

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This is the no Closer show where you get the latest developments in distressed note investing and learn the secrets of how you can control millions of dollars worth of property. For panties on the dollar. Get educated and entertained by someone who has closed thousands of deals and lives to support you in achieving the same. Now, here's your host, CEO of We Close Nodes, Scott Carson.

Hey, good morning, good afternoon, and good evening, everybody. Welcome to this episode of the no Closure show. As always, Scott Carson. Excited to be here with the day. And I am. I'm really, really, really, really, really excited about this episode because we've got a very special guest on today who's a rock star. And, and when he's done, he's made some transitions, some pivots in his life, and we'll get to that in a second here. But somebody who is tapping into one of the most distressed asset classes out there. And we'll cover that in just a second. But just honored, first and foremost, this guy served in our military. He's a previous commercial airline pilot, but a Navy veteran. He's a co founder of Gateway Private Equity Group. It's a real estate investment firm. Focuses on hotels, multifamily residential properties, but between apartment complexes, Mike has owned and operated over 1400 units and he's always seeking valued opportunities. But Mike pivoted primarily from the multifamily to hotels and now focuses exclusively on this niche. So we have not had a hotel expert on here to talk about this. Escalate. We've had a few people on. They were supposed to be on the ed reschedule and reschedule. And so we're really honored for him taking time. We got to give him a little bit of break, too. This is his third podcast in a row today. So I don't know about you guys, but when you've been on booked on stuff, you might be a little scratchy. But Mike, first and foremost, thank you for your service and thank you for being on the no Closer show today.

Yeah, thanks a lot, Scott. I'm happy to be here.

So what attracted you to. Well, first of all, you've been investing for years. Were you investing when you were in the service or did you get out of the service? How did that kind of transition get into being an investor to start off with?

Yeah, well, it came after I got out of the service. I realized that I'm not a nine to five guy. You know, I don't have the mental aptitude to sit in a cubicle. I did it for a little bit and just got Mad I was just like, no, this is not the type of farming I want to do, which is the cube farming. So like anything. And it's like, what do you want to do? And probably like everyone, most of the people out there, I picked up the rich dad, poor dad, and it's kind of like the starting book for Real Estate 101, right? And I liked it, changed my life. And when I got started, this was, I call it the PG days, pre Google. So there wasn't a lot of opportunities out there to learn. The buying part was easy. So, you know, basically we went out and bought eight units and failed miserably. Failed miserably, you know, because it's not like I could Google how to be a landlord, you know, and basically lost everything because it's like, now what? You know, I don't know how to fix things. You know, how do you have to put an ad in the paper for tenants? You know, this is how far back it was. Paperwork. I mean, I didn't know how to do that part. Failed, and then kind of gave up, you know, for a little bit. But then I was like, I know, this is it. So I actually went and worked for. I was like, how can I learn? So I actually went and worked for a property management group, and I was like, you know, now I can learn how to be a landlord. I can manage some units and learn and find out what kind of paperwork they're doing and how to evict people and how to find people and all that stuff. And then, you know, just kind of took a break, became an airline pilot, because that was kind of what I was shooting for. That was my dream, and did that for a while. And then now I'm making money. And so then I got back into it, you know, when I could use my own money like that, instead of racking up credit card debt in order to do transactions and things like that. But, you know, that's kind of how it started. But it was that. That thought process of, I know it's the right thing to do. I know that real estate is it. You know, you look back in the history of mankind, movers and shakers, you know, I mean, you know, if I'm not in, which I don't have the brain of like the Elon Musk and those things, you got to do it some other way. And it doesn't take a lot of brains to make it in real estate. You just have to know what you're doing and have the right mentors.

That is definitely true. Who was one of your biggest coaches once you started getting back in the right track for a little bit of that stuff after you flicked your wounds. I mean, I think every investor, we start off thinking, hey, we can figure this out, we'll do it. You know, as entrepreneurs, it's kind of like, hey, let's jump out of the plane and we'll build the parachute on the way down, right?

Yeah. Right, yeah. And how's that going to work out? You know, you're going to fail miserably like me. But, you know, that's a great question. There was, well, the people at the property management group, you know, there's my boss at the time really pushed me and he goes, this is how you do it. And he invested and he kind of taught me all the things that he did. And he had some homes. And then fast forward, I had a coach that kind of talked about this is how you use other people's money. And I was like, oh my God, you know, I'm just like, you know, I don't have to like buy a 4 Plex, hold it for 3 years and you know, save up the money and you know, and then flip it. And then, because I was thinking, you know, my way, it's like, all right, you know, I could maybe get a couple hundred units in 20 years. It's going to take a long time.

Use your VA loan on the first one.

Yeah. You know, so that person really brought it up. And it wasn't just syndications, joint ventures, and just all these different, unique, out of the box ways of getting deals done. And then once I started doing that and once I started getting bigger and remember it's mentorship and coaching. Is it? I mean, if you want to succeed, you have to be a good student and learn. I did a couple different coaching programs. One focused on the business side and one focused, which I think is the most important one is the mental side of it and just finding my unique abilities, finding out what I'm good at and putting down your day into a calendar and, you know, just all this different. The mental aspect, because once you get out of the 9 to 5 job now you're on your own. Now what do you do? You know, that time management part is extremely important because I, before this, you know, you'd sit there and get on social media, it's like, oh, crap, it's been two hours later, you know, so you have to be disciplined. And the mental coach really helped me with that discipline on how to be a successful entrepreneur.

That makes a lot of sense There. So you're working for a property management company. How long did you do that before you started going out and buying stuff on your own?

It was a while. So I worked that property management group for a couple years, and then I became that airline pilot. Finished my college GI Bill. And so I was kind of working for the property management group, going to class at night, and later on became the airline pilot. And then once I started that, it been several years later, then I was like going, okay, I'm kind of over the pain of losing everything. I know this is it. This is the life I want. And so that's when we bought a fourplex and hired a property management group, you know, while I was still flying. And that was kind of the start of the ramp up. And then, you know, what happened is I got injured flying into Houston. Bad injury, you know, I tore my forearm trying to land the airplane. And while I was on disability, I realized that that property management group was nickel and diming me. And I was like, no wonder this thing isn't making any money. So I actually fired them and started doing it myself. You know, I'm using that because now it was like, well, I'm not going to make those same mistakes that I did. Now I have the knowledge from someone that owns tens of thousands of units, you know, and that was it. You know, I talked to my wife and I said, you know what? I think I can do this. You know, because I was turning that little complex around. And that's. The rest is history now.

Bought a lot of units. When did you make that? When did you discover up hotels or what kind of. What made you make that switch? Evolution.

It was the cap rates were starting to compress in the multifamily sector. And it was. I was getting to the point where it's like, you know what? I sold that complex a year ago, and now it's twice as much. I'm like, it's a pig. You know, it's not worth. You know, And I actually toured it, and I'm like going. They put laminate down and painted the outside. And I'm like, really? You know, and that's when I was thinking, it's getting really saturated. It's starting to. And I actually had this group out of Idaho or Iowa. One of the eyes, you know, came down and looked at a couple of my properties that they weren't even on sale. And they said, boom, I'm going to offer you this amount. And I was like, man, gosh dang it, you know, And I. I Turn them down three times. And on the fourth one, they looked at this one property and said, you know, this is it. You know, this is the final thing. Here's how much we'll pay for it. And I'm like going, that's the most stupid number I've ever heard in my entire life. And I said, what in the world is going on with this market and multifamily? But I was a fool not to take it. And I just, I made that property 10 months and made almost $900,000 net. And I'm like, now what am I going to do? Because I was going to 1031. And that's when I was like, I'm not going to speculate. Because right at that moment, multifamily became speculation. Am I going to buy something at three and a half, hoping it goes to three? And then what happens if you have the inflation now? What happens when that interest rate starts going above the cap rate? And I was like, I don't like speculation. So everything's about networking, right, in this industry. So I knew a guy that had a lot of years experience in hotels and I started talking to him about it. And you know, hotels are, if you do cap rate conversions, you know, we really don't use them, but they're 8%, 10%, you know, on up. And it's because, you know, HGTV doesn't have the hotel episode yet, right? So no one's thinking about, right? So everyone, my brother's not doing hotels, but everyone, everyone's goal when they start with the fix and flip is eventually going to multifamily and there's millions of people and syndications that are doing multifamily. It's just, it's saturated. And, you know, God bless them, you know, it's still going up. But at what point are we going to make that shift and it's not there for hotels, Matter of fact, it's. It's going the other way, you know, because of COVID and things like that. But what I did is I talked to the guy and I said, you know, I'm going to make you deal because I had all the different coaching. So you're going to teach me everything you know about hotels and you're going to run the operations for me, you're going to find the hotel, you're going to teach me everything, and then I'll actually give you a piece of the action if you do this. And there we go. That's. Long story short, that's how I got in hotels I just didn't want to buy multifamily at that rate.

It totally makes sense. I mean, I think we see it all the time multifamily, over. I think the same thing. Like, how are you buying that in such a low cap rate? I mean, people are literally raising capital and they've got to buy something because there's money burning a hole in their pocket. And it's, you know, I think back to years ago when everybody in California would slice your grandmother's throat for a 4 cap. Now they'll do it for a 2 cap, you know what I mean? And then inflation rising. And so that's why I look back at trends. When I first got into the note space back in 2007, 8, we were buying a lot of apartment notes that people had overpaid for. Some of these big gurus who were on stages that overpaid because they had money, they raised, and then they ended up having to take a loss, walk away from the deal. And we picked it up at a big discount. We see that happen again at some point down the road. But like you said, hotels right now are really very distressed. When did you buy your first hotel?

Wasn't that long ago. 2017.

2017.

Awesome.

And when you're looking at a hotel, you said, we don't usually use cap rates, but for us as investors, we like to convert things to cap rates. You're looking. What are some of the metrics? What are the things that you're looking at when evaluating a hotel?

Yeah, and that's a great question, because if we would have had this conversation in 2019, it'd been completely different. But something that we did during COVID is instead of cry and drink our way through Covid, we actually listened and paid attention and looked at the reports. And there's a lot of great industry reporting and analytics in the hotel space where we can break everything down by each hotel class, each region, each different city, each neighbor, you know, area of town. And we can paid attention to that. So. Because hotels, one of the big difference between multifamily hotels is hotels as a business. Okay. And that's what people have to understand is it's no longer really real estate, it sits on real estate. But you're buying a business. Okay. And you have to look at it that way. And that's why we really don't use cap rates, because we don't look at the noi because that's just very.

So much across the board with.

Right. It really varies. So we look at gross, you know, what is a gross right now? And when you buy a business, whether it's a manufacturing or industry and anything each type of business is, there's a generality, is it's worth X amount times gross. Okay? You buy one business and you sit there as well. You know what a good variable is? It's worth two times as gross. Okay? And that's what you offer hotels, it could be 4, it could be 4.5, it could be 5 times gross. So we look at that gross and then how can we get that gross up? Okay, through putting our own people, by not using property manager, by using our own management, by looking at the vendors, you know, all these different things. But now what we do is whether we're doing a ground up or buying something is we look at the different drivers. What that means is why are people driving to that hotel? What drives them to that hotel? Pre Covid, you'd sit there and say, man, you can't go wrong if you buy a hotel near a university. Okay, well pre Covid, same thing with.

Like weekend Airbnb around a university with a football game or basketball, that kind of stuff.

Yeah, Concert venue, you know, you know, it's until Covid happens and no one's going to school and no one's visiting, the kids are going to school. So we look at the different drive ins, we looked at what hotels did best. And for you multifamily people, you know what A, like a C plus, B minus is that class. Those are the type of things that we need, we like to stay in. As far as hotels, it's the blue collar, it's not your high end. They don't have the restaurants, they don't have the conference space, but they have it's free breakfast, the free wifi and they're gone. It's more of a transient hotel. We look now the ones that did really, really well are outside of a major metro, off of a highway, a major artery, and it has truck driver parking. Okay. Because who kept America rolling during COVID And I was like, man, you know, this out of the way old hotel that, I mean, it's nice. Did the best in our portfolio, you know. And I was like, I can't believe it because it was in a smaller town. And that's another thing during COVID is nobody wanted to go into the major metros. They didn't want to be around 5 million people that might have Covid. So a comfort in, is a comfort in whether you go into that city or you stay 20 minutes south or north or Wherever. And you can save a little bit on the rate, but it feels better. It's that placebo effect. Well, you know, it's only a town of 25,000 and it's off the highway. We get a breakfast, you know, free Internet and then go the next day. And those are the type of things that people can afford. Truck drivers, the family of three, the traveling nurses that were there. It's that blue collar, 80 to $100 a night, $120 a night instead of the three, 400. But you know, they also don't want the $50 to $60 night hotels. Right, right. You don't want to sleep with any bugs. But that changed our way. You know, it's like, oh, okay, you know what? We're going to be blue collar hotel people now.

Are you seeing a lot of those like they still are where they do have a flag? Where they are the flag, like a comfort in or non flagged hotel. Non flag hotels being the lower value aspect of it. Or are you seeing some stuff that really varies?

No, we like flag. It's, it's all about when you have a flag hotel. And depending on which flag, I have now attached myself to some company that has 90 million followers. You know, as far as rewards programs, okay. So I don't have to do any marketing, I don't have to do my own website, I don't have to do my own reservation system. I can just kind of plug and play into someone that everyone knows and they want that rewards program and they're going to go to marriott.com or radisson.com, enter the city and boom, we pop up. That's why we do flag. We're thinking of, it'll be our, one of our builds that we're going to do in the next 12 months. The only time that we would do a non flag is if we do a boutique. I don't want Mike's family in, you know, that is competing with all the other flags. You know, that doesn't really work. But what we do is if you do a higher end boutique in a setting that has multiple drivers and then what you can do is attach yourself to a flag but not have to deal with all of their rules and regulations on how it looks. Okay, so if I build something in northern Arizona, let's say I want that southwest feel, that mountain feel, I can do that, make sure it's high end. It's going to be small, maybe 50 room hotel. But then if I want reservation system, I can attach it to like a Marriott and become what's called like an autograph collection, which is the kind of the high end. And then I only pay them for the bookings they give me. Okay. But I'm using their 100 million plus people.

Right. Their marketing machine. You're just tapping into.

I'm just tapping into their machine now.

With hotels really one of. Still one of the most distressed asset classes. I've got some friends that own and operate several. And they're still saying that. And this is here in Austin, which is one of the hotter markets in the country. They're still saying they haven't. I mean, they're still at 50% what they were pre Covid in a lot of cases, and they're a flag hotel in a lot of cases. But also from looking at a lot of the different things that we see on the distressed debt side of things, we see a lot of hotel notes that come to us where that's still the underlying factor. Vacancy is still, you know, rack rates are down low still in a lot of cases there for you. You know, when you look at your portfolio, the ones that you had that. Yeah, you said you had the one that was really good. What was some of the things that you maybe did to the other hotels? Did you reach out to any of the cities or. Cause we see that some. Some of our friends have been doing that. They reached out to see like, you know, temporary Covid housing or looking if it's a lower valued hotel, lower brand, turning into a transitional housing in some cases, you know.

Yeah, that's a great question. We did a couple of things. We did what's called day use. And what that means is, you know, there's a lot of business people, men and women, that were used to going into their office and now they're stuck in their dining room table with three kids running around and whatever going on. And it's really hard to concentrate on your work, do zoom calls, you know, because everything's virtual. So we said, hey, you know what? For 50 bucks, $60 a day, come to our hotel. You have a desk, you have free wi fi, take a shower if you want, you can do whatever you want.

Free coffee.

Coffee. Free coffee. You know, but you have that sanity again, you know. So we did a lot of those day use because the other type of day use things, they were shut down, like industrious and. And the other ones.

That's exactly what happened to me. I had an office, executive suites. They closed the building for three months. Yeah, so that's the thing. Yeah, it's funny, I actually went and worked in the lobby in my hotel a couple days. That was street here.

Yeah.

I didn't know that More hotels do. That's awesome.

Oh yeah, yeah, we did that. The hotels we have in Arizona, it's the only time I've ever like say thank you, California. But you know, they closed the entire state down. They couldn't even do outside sports. You know, it just was amazing to me. And that's the best thing they ever did for us. If you can imagine this. We would have teams, travel teams that lived four miles apart from each other in San Diego. They would actually get on a bus and travel all the way to Arizona, stay at our hotel just to play each other.

Yeah.

You know, so those, you know, those type of travel teams really helped us. We went out and networked with different groups for the traveling nurses and gave them. And then of course the cdc, which is, you know, a lot of the trucking and a lot of the commercial, you know, type use machines. So those are some of the things we did. And then to save money, you know, let's say it was a three or four story hotel. We would just completely shut off the top floors. No ac, no heat, no lights. And we just completely shut them off and work as a. Just a two story hotel, you know. So we're doing things like that that.

Keeps your cost downs with, you know, cleaning power, but your labor costs as well too.

I imagine it did, you know, labor and the great thing and one of the, probably the biggest difference between hotels multifamily is because we're a business, we're considered a small business with the government. We got the EIDL disaster loans, we got the PPPs. So even though we were running it, you know, hardly anything oxy on some of that. I actually kept the full staff. They appreciated that until recently and now, you know, no one wants to work. That's a whole other story, you know. But during COVID I took care of them and you know, and it was really nice that we got that A lot of city grants, state grant. I was a grant making machine finding machine that really helped us and that is what kind of brought us through Covid. You know, the ones that did not do well during COVID will still do the best five years from now and seven years now are the ones that are in the corporate parks. You know, we have some really nice beautiful property in the town that is just booming with chip manufacturing, just all this type of business and all this stuff coming in and just the land itself is going to be worth five times, you know. And so that's the, that long term where that'll just really appreciate. But it that those are the ones that kind of struggle because it, it needs that corporate business that a close.

By rack basically close by stays at the foot traffic, basically people staying nearby where they're working. Yeah, I've seen a lot of that stuff there. When you're buying your hotels and you mentioned your build up, you've bought existing ones primarily first and then so you bought the business. You're looking at the NOI or the operations aspect of it. So what are you kind of looking to buy off of? You said you want to try to buy it at what kind of multiplier of the operations.

What we do is number one look at the where it's at. I'll buy something at. You know what they're asking. If I see too many people, especially in the multifamily world, they sit there and go oh my God, I have to have a 20%, I need a 30% discount. Who cares if, if you know that there's growth? You know, if you look at the, the five year plan of the city and you see that three manufacturing plants are coming in, there are permits for four or five new build multifamily different industries are coming in. You know, if there's stuff happening, why not pay? That's just one of the things. So but we look at is it now state owner is being mismanaged. You know, if I can go in and look at the P and ls, I'm like why in the world are they doing that? I'm wondering, you know, the ownership even paying that much attention to it, then I know that we have something that we can go in and do because we can just put in our own people and rehire a GM and then work it. But we do look that's kind of similar to multifamily. I look at instead of the noi, you know, I look at the gross and say okay, if it's 1.5 now, you know, million gross, how long and how can we do we say see a performer where we get it to 2 million a year because that's what the hotels are based off of. If I can buy it at 4.5 times gross at 1.5, even if it stays at 4.5 and I bring it to 2 million. Investors are happy.

Are you, how are you raising capital for the syndications? Putting funds together? What's your kind of financing strategy?

Yeah, most of syndications I've done some JVs. You know, you have someone that has a lot of money, it's like going, hey, you know, it's like, I want to be the only partner. Like, okay, that's fine, that's less work for me. But syndications, I only do accredited investors. I learned the hard way. Even I don't want you to ask me for your money back six months from now. I'm just not going to do that. And I don't want to put up with that. I look at people that have know the ins and outs of, you know, real estate invest. I'd love it if they've done it before. They've done a lot of my investors syndicated, multifamily, and they're just diversifying, you know, or they've done some rentals, they've owned some things and they're looking to diversify. They're not putting their whole nut in with us. So that takes a lot of pressure off of me because, you know, you can imagine if during COVID and it's like, you know, sorry, people, we're not going to have any distributions because it's more important that the survival of the asset is the most important thing. You need the investors to understand that, okay, you're not losing money. It all rolls in, you know, you're still going to have it and you're still going to make 2.3, 2.5 times your money. But you have to understand why we're doing and what we're doing to protect the asset.

Makes a lot of sense there because that's the most important thing. And that's. Yeah, when you start dealing with lower level investors, it is often their full nut. And if something goes awry in their personal lives, like we've seen happen, layoffs, things like that, oh, I got to get my money back. Well, that's. You're not really an investor at that point.

Yeah, you know, I've had some people say, hey, you know, I want to refinance my house, do HELOC and put, put it in to your. One of your hotels. I'm like, no, no, you know, don't do that.

Or hey, I got a credit card, 0% interest for six months.

Tap it out, right? Let me cash out my credit card. I just want a piece. Yeah, I'll let you stay in the hotel. How about that? You know, for a discount. That's the thing.

There's. People do stupid things. They get excited. I mean, we've seen people come to us like, oh, we invest in this apartment complex. They Overpaid for it. Now we're not getting anything. You know, change the contract. So it's not a return on principal, it may be a return of principal. You know, there's a lot of crazy stuff you got to read out there to make sure out there for you it really gave some great qualifications. Near a hotel. You don't mind the smaller place, smaller cities because it may be the only thing. There are a couple of things there that do it. We see that in some of the small towns of Texas and other places like, like that the hotels still do good. Are you looking more as you've evolved here now, just a fresh start. Are you, you interested in distressed stuff that as long as the numbers make sense for you?

Yeah, you know the, there's a couple of things we're looking at buying some distressed and here's the thing, it's not really distressed. You know, CMBS loans are, if you're familiar with that, the hotel owners that had the CMBS loans really, they're the ones that really suffered. When you have a market based security as your lender, they don't have the mechanism to give you four months deferment. You can't call the stock market and say hey, you know, can I not pay for four months? And their help came way, way too late when there was help and they were never allowed to get a second. So no Eidl, none of that helped. They couldn't sit there and say hey, I have some cash, I need to refinance, I'm going to get a second. Can't do it. So you have assets that are coming on and it just takes a long time. People thought they'd see a lot more now, but the whole machine just takes a long time for that to happen. So you're seeing those type of assets and they could be really performing and they could be great assets. I've seen several in Texas that are really, really work. But they just got so far behind and there's no deferment that by the time that help came it's like, oh, well, now that it's been a year and a half, we'll give you two months off. Well, how about the six months that I haven't paid? Those are the things that are starting to come on and those are the, the auctions that are going to be coming on. Those are going to be. There's opportunities for you to look at the notes and go to the lender and just say, hey, you know what, we're just going to take it over. We'll bring them current and just take it over. When you have that type of an asset, they're really not that bad. They're not something you need to put millions of dollars into it. You know, they're not that distressed. They're just, they got behind really bad situation.

Well, they just need somebody to come in that understand that maybe they buy the debt at a bit of a discount. So it gives them some flexibility to allow the borrower to start back over. And then if they get back on track, it's a pretty good cap rate. Or you just, hey, take it over, you know, take over the asset and start managing yourself and going from there.

Yeah, it's a fresh start, you know, now the debt's been paid off, you just need someone with the capital to come in and say, okay, you know what you owe, you're behind 150,000, 200,000, here it is. And the bank's happy. They do the cold credit. Oh, you know, you have five hotels. Yeah. Okay, you know what you're doing. Here you go. And you can get the asset for not very much money.

Yeah, well that's, and that's the beautiful thing is even some banks too out there, and I wouldn't say the CMBS stuff, but we see a lot of, you know, the smaller banks that, you know, you look back at the numbers and your local banks finance about 60% of the commercial stuff out here, that's below $5 million asset. They're flexible on that. If somebody's coming in and has management experience, they may even carry that financing with a much smaller down payment and say, okay, you're in management, bring 20% to the table, we'll carry the rest for you. And move it from the non performing side of the performance side of the bank.

Yeah, especially if it's a smaller community bank, you know, because 2017, 2018, 2019, you had these smaller community banks that wanted to get a foothold. So we're giving restaurant loans, they are giving hotel loans and then boom. And there's like going, oh man, you know, we're not big enough to absorb three, four or five of these $5 million hotels. What can I do? And then we become the savior, right?

Exactly. Now what's your long term goal, Mike? What's your, you have an idea of how many doors you want to own or what the next step is for you?

The next step is we're getting ready within the next 12 to 18 months. Looks like we're going to be building ground up three hotels. We may look at some Distress stuff if it makes sense, if it meets those different criteria. I'm not going to buy something if it's a great deal. And I know it's like, you know, this is just one driver because then it's just, it may be a good deal on paper but then the stress that I'm going to have is, is too much. And, but the goal is, and the reason why we like ground up right now is, is the automation. And you can build and I know the building costs are up, but you're building and it's over a two year period and you're amortizing that build period. But then you have a brand new box and you can actually have more. Because if you look at some of even the distrust in that same market, the $2 million or so that you have to put into it to get it into the next gen for what that flag wants now you're up at that area and then you're like okay, now what is going to go wrong with it? But if you can build something and some of the new concepts are really, really nice and because the flags are wanting to expand, they're willing to really discount, you know, they're willing to give us, you know, maybe five, six thousand dollars a door just to build, you know, and maybe defer franchise fees. So there's a lot of things going on because they're wanting to expand. But the automation is a big thing right now. You can have a hotel where there's no front desk if you want. You know, you can do a lot of things like that. And that appeals really to me especially now because the employee situations, there's a reason why there's kiosks at McDonald's and there's self checkouts at the grocery stores.

Right? I mean like I've seen that with like with Marriott too is doing that where it's the whole check in with your phone, your key in and out, you know, stuff like that. Experience just in Denver during COVID they had room service, stuff like that I could have done but it was like didn't even go by the front desk, went straight to my room at night, didn't even talk to anybody, checked out and everything was very automated. I mean that's the thing, especially with costs going up for labor, having hard to find people that want to work especially graveyard shifts and stuff like that. Difficult there.

They even have robots coming up and bringing towels now. I mean you can do anything you want.

There's a whole the towel robot. That's nice.

It's crazy what you can do. But yeah, and that's the future of hospitality. And if you can have one person working instead of several, you know, that really, you won't believe how much money that's they can save you in the long run.

And I don't doubt it for a second. Now, Mike, I have to ask a question. Do you teach the stuff? Do you offer classes or what do you do what stuff there for helping?

Yeah, you know, I don't have anything set in stone. I'm just too busy. But there are people that I on the side, they'll say, hey, you know, how much for you to sit with me and zoom with me, you know, once a week? Or, you know, if I show you these, you know, I have someone that I met on LinkedIn. It's like, hey, you know, can I pay you to look at this deal? And I'm like, okay, you know, I'll do that. But it'll still be hit their decision, you know, you have to have those things. It's. I'm not going to tell you to buy it and then if you screw it up, you know, you're not going to come to me.

Oh, yeah, no, no.

It's, you know, things like that.

But in the commercial spot, it's definitely, hey, buyer, but where versus, you know, yeah, it is.

But, you know, that's one of. If you look at goals, you know, the goal is our goal is probably a dozen hotels on our portfolio. We want to get to there and then, you know, we're kind of flipping some and kind of selling some. And every seven years. Great thing like I said about this business is, you know, you don't have to retire. You, you just have to then hire people that take, you know, workload off of you. But my partner and I, my main partner, we are wanting to get into coaching. We just see a lot, a really big need for those people that want to make the transition from multifamily to hotels. So we are working on getting that course down and what it's going to look like. You know, that's just another thing that load on us. But we'll eventually get there, maybe soon. The acquisitions right now are number one.

Are you seeing any opportunities on some of the lower value or even some. Some of the shutter hotels to turn those either back into operating or converting them into multifamily?

There's a couple of things that I'm seeing now is if you can. It's a lot better if you can find an older extended stay because they'll have like a Kitchenette, and they have a lot of those types of things. We're seeing a lot of assisted living. The baby boomers are getting older, and there's a lot of them. And what is nice is you can actually own that. The land and own that property and then have a. An assisted living company come in and they're basically leasing that space from you. And it's a lot higher rent, you know, the daily rates, the adrs. So that's. That's. We're seeing that a lot. Especially if it's near a hospital, we're seeing that.

I saw an article where it made me think about that, you know, when you brought it up, a guy who didn't have a lot of money in retirement, but he's living in Holiday Inns across the country for $40 a day because there's. There's 4,000. And so he's. I got a gym, I got hot food. I got a little happy hour. I got a pool. So the grandkids can go. I can travel.

Yeah, yeah. You just have to be careful that they don't stay more than like, you know, 28 days in a row, because then they become tenant.

Right.

And then the exact FD victim from a hotel.

That will all vary on the city and the state and on the eviction rates. That's never a good thing. You don't want a towel delivering to them at that point.

That's right. That's right.

Good stuff. But, Mike, I see the guitars hanging on in the background there, you know, Play a little bit, I imagine.

A little bit. Something that you always need is downtime, stress relief. I like to work out in the morning to get my day going the right way. And then at night, you know, just to kind of forget about all the. The fires and all the stuff. You know, I just put on the headsets and just kind of wind down, play some guitar. You know, it's so important to not overwork yourself. You know, you need that downtime.

Amen to that. Who's your top two guitarist you're a fan of? I know there's many out there, but if you had a couple.

Yeah, yeah. Well, I love Slash. That middle guitar. I know everyone else can't see it, but that custom Les Paul, one of the ones that actually Slash plays very nice.

What year is that?

That's brand new.

Oh, very nice.

It's a brand new. It's actually a custom Slash. So Slash actually makes his own custom Les Paul. And so that is his special pickups, his humbuckers. It's his own type of strings, his own type of tuning, his own. So it has that very nice. That Slash can't play like him.

Hey, but still, though, we can all dream and act like it there for you, right?

Yeah. And you know, I play a lot of like AC DC and things like that, so I love Angus.

There you go. We came across the Kiss Cruise that they've had for a year. Have you heard of that?

No.

There's a cruise that Kiss puts on most years where it's all Kiss fans and the whole Kiss band and everybody.

Comes out and makeup.

And makeup. They have a jam session with Gene and you get a guitar as part of it, with a part of it. So it's an interesting. The Kiss Cruise, they didn't have this last year, but I have. We've got a friend who's been on it like 10 years in a row. And, you know, they jam out. It's just.

That'd be cool.

Four days just with everybody from the band.

Yeah, that'd be very cool.

Very cool. Well, Mike, thank you for jamming with us today.

Absolutely.

It's been a fun best way for folks to get a hold of a via or reach out to you. LinkedIn or website. What do you prefer?

Sure, yeah. Well, LinkedIn's under Michael Stoler S T O H L E R and website is Gateway pe as in private equity. Gateway. Pecom.

Right. We'll have those links in the chat. Roll everything there for you. Mike, thank you so much, bud, for coming on the no Close show. Look forward to talking more with you. Go out, rest your voice now for the next round of stuff. Right?

Yeah. There you go. Thank you.

All right, guys, you heard it here. Something definitely take a look. As you're reaching out to banks and ask managers. Take a look at that. Mike shared some really great nuggets to look for. It's something you're thinking about diving into or looking into. Definitely worth checking out. It's an asset class that we've got. We see a lot of stress out there, but a lot of opportunity. If you know how to step in and operate that or know how to look at the P&Ls and identify opportunities to go out there. Take some action, everybody, and we'll see you all at the top. Bye.

Sam.