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Active Commercial Real Estate Investing Show

How to Scale from Residential AirBNBs to Profitable Boutique Hotels


In this episode, Blake Dailey shares his journey from the Air Force to commercial real estate investing, starting with single-family homes and transitioning to multifamily before landing on boutique hotels. He highlights the benefits of house hacking and the power of the VA loan to get started and then discusses his pivot to commercial real estate, specifically syndicating an apartment complex and eventually entering the hotel space. He explains the challenges of raising capital for his first multifamily deal and the importance of presenting the opportunity to investors. Blake also discusses the decision to switch to boutique hotels and shares the process of renovating and flipping his first eight-unit motel. By listening, you’ll learn:

  • Why Blake decided to invest in boutique hotels over residential real estate and commercial multifamily
  • The benefits of pivoting to boutique hotels for higher cash flow
  • Tips for renovating run-down motels into attractive destinations
  • The importance of a strong team and solid property management systems


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Meet The Expert

Founder of Boutique Hotel Con

Blake Dailey has built a $25 million portfolio of profitable boutique hotels and multifamily properties. Across those purchases, millions have been added in equity and hundreds of thousands of cashflow have been distributed. Blake started his career in the Air Force doing construction, project, and contractor management and began applying his skillset to renovating single family homes. Over time, he increased the size of properties he was renovating and purchased six boutique hotels across the Smoky Mountains, Lake Tahoe, and the Gulf Coast.

Boutique Hotel Investor

Blake Dailey


Patrick (00:22)
Hello and welcome to the active commercial real estate investing show brought to you by the one and only school of commercial real estate investing. I’m Patrick, and today, I’m joined by Blake Dailey. Blake has built a $25 million portfolio of profitable boutique hotels and multifamily properties. Across those purchases, millions have been added to equity, and hundreds of thousands of cash flows have been distributed. Blake started his career in the Air Force doing construction, project, and contractor management and began applying his skillset to renovating single family homes. Over time, he increased the size of properties he was renovating and purchased six boutique hotels across the Smoky Mountains, Lake Tahoe, and the Gulf Coast. Blake, welcome to the show.

Blake Dailey (01:04)
Patrick, thanks for having me. Good to be here.

Patrick (01:06)
Yeah, my pleasure, my pleasure. So, let’s just jump right in. I always love hearing the background story and the transition story into commercial real estate. So, can you share your journey from going from the Air Force and managing projects to translating that skill set to single-family homes and then eventually getting to boutique motels?

Blake Dailey (01:26)
Yeah, yeah, I would love to. So I think I was kind of lucky because I got started, and I had like the best loan product known to man— the VA loan— available to me. 0 % down, can negotiate and seller finance or seller closing costs, not financing, seller closing costs. And because my first one had no VA funding fee, I got in for a very, very low down. I think we had like a 2500 bucks of like closing costs that we got into our first $200,000 property that had an extra unit. So small multifamily, we rented the other unit out on Airbnb and like had positive net cashflow. And I was like, this is pretty crazy. Like after wifi, after utilities, after everything, we’re still making money to live there for free and have no living expense. Like that’s how we started out in real estate. And I was like, I think we’re onto something here. We need to keep going with this and did that on a few more deals, looking for houses with guest houses down in Panama city, Florida and the panhandle of Florida. Because I was like, if we could get more houses like this, the main house would essentially be all added to cashflow other than the cost of cleaning, you know, incremental utilities.

So we did that and did really great. And that led to us having a portfolio of eight short-term rentals and three long-term rentals at the time, mostly small multifamily properties. We had one, I think, single family rental. And with that portfolio, this is about a year in, we surpassed my W -2 income as a, as a Lieutenant in the Air Force with the net cashflow of our real estate. And I was like, mind blown. I was like, that was my five -year goal. Like I wanted the option to not have to work after my commitment was up and I got in the position where I was like, dude, I’m a year in, I’ve got four years left, no matter what. I was like, I need to up the goal a little bit, right? That’s what brought me into commercial real estate. And I love commercial real estate. Started with syndicating an apartment complex. And that taught me how to underwrite commercial deals, how to finance them, how to piece it together, how to do my first capital raise and put myself out there in front of investors and try to get them to trust in me and in my deal to raise the money for it through the syndication route and then at that point, it was kind of a pivot point of having the background in short -term rentals in commercial multifamily. And that led me to into the hotel space.

Patrick (03:34)
Beautiful journey. House hacking for the win. I can’t tell you the number of times that.

Blake Dailey (03:37)
Absolutely. Yeah. Such a good way to start. It’s like zero risk, you know, like you put low down, you get the best financing terms and the lowest interest rate. And if you know, it’s like you lose a tenant, have to do an eviction, or, whatever it is, you still live there. And it’s like, you’re not going to lose your home. That’s the last thing you’re going to be able to lose. And you just find another tenant or maybe switch to short term or switch to medium term. Like you got so many things and you live right there. So you can handle it pretty easily. It’s great.

Patrick (04:03)
Yeah, yeah, I think for the onboarding process of learning how to, especially in, you know, know, learn how to manage tenants, like you’re on the property 24 24/7 and. Exactly, exactly, yeah, yeah, so you learn the business really well, hands-on. It’s a great, great way to get started. So with that first multifamily deal that you did, you said you went out, you’d already done some small multifamily, but then you made the jump into larger multifamily.

Blake Dailey (04:12)
Yeah. You’re the living property manager, not the owner.

Patrick (04:30)
And that was a capital raise deal. What type of mindset hurdles did you need to get over to make that first jump into your first commercial multifamily property?

Blake Dailey (04:33)
Yeah, so I’ll preface and say it took like 10 months, I think, to get my first multifamily deal. So there’s a big learning curve there, which I think like most people probably experience, like unless you have, you know, the connection into it or you get brought in, like, you know, somehow through a connection or partnership or whatever. If you’re trying to go out and do this, you have a big learning curve. You have a lot of new things to learn, right? If you, if you don’t have the money to go close this big deal, right? If putting down a couple of million dollars of your own money, you probably need to learn how to raise it from investors.

So then it takes you down the route of, you know, what’s a 506B versus a 506C and how do I stay SEC compliant with raising money to close my deal? So I did all that stuff, you know, went through the underwriting, just underrided, you know, dozens and dozens and dozens of deals, hundreds probably of these multifamily deals to really get comfortable. I was taking tours to, you know, I was in Panama City Beach. I kind of identified I wanted to buy in that area in Bay County, in Florida, Panama City beach or Panama City, or in Huntsville, Alabama. So I took a couple of trips up to Huntsville to tour properties with brokers, put in offers, did LOIs. I did all of this, to get the momentum going, but it took a long time, right? Cause I was, I was new to it. I was green behind the years. I didn’t know what I didn’t know. Like there’s a lot of, I think assumptions you have to make on your underwriting that either show up as expenses that you might not see or don’t show up and you like get into a deal and like, then you start operating. crap. That’s something I didn’t account for in my analysis. You just don’t know those things before you get into a deal. and through that amount of time, I was obviously, you know, networking, kind of sharing what I was doing with other investors. I hosted a meetup in Panama city beach at the time. and one of my friends at the time was doing multifamily was in a few deals in the minority position and then brought me in as a partner. So it was a strategic partnership that got me into my first multifamily deal. A group found the deal that needed help with the underwriting, the capital raise, the investor relations, and a little bit of the asset management piece. So, we combined the skill sets of the team. I think commercial real estate is such a team sport, right? Like you don’t have to do everything yourself because you have these big tasks that need to get done like asset management, like capital raising, like you’re underwriting and your finance and your acquisitions of finding deals, talking to brokers, getting the leads, all that kind of stuff. It’s like each one of those is the lane of responsibility. And when you try doing it all yourself on these big deals, making the jump from residential into commercial, it’s a lot. And you get, I think, a lot of traction much faster if you align yourself with the right people. And I was lucky enough to find the right people and bring what I could to the table, pair that with what they brought to the table, and knock down the deal together.

Patrick (07:29)
Yeah, very exciting. And as you did that first capital raise, you know, what was your experience in terms of asking investors for money? Because you went from a position in the Air Force where you’re doing a lot of construction and project management and whatnot. And then all of a sudden you’re basically in the sales role trying to raise capital.

Blake Dailey (07:39)
Yeah, exactly. I will say it did not go as well as I wanted or as well as I thought it would go. And I hear this a lot. You probably do, too, of people getting into their first big raise. It’s like you got all these potential investors, right? You’re building your list. You’re having the discussions. You’re setting up the phone calls and all this kind of stuff. And everybody’s like, yeah, like I’m down. I want to invest. I want the passive income, all this and that. And then when it comes down to it, you get like 10% of those to actually commit to invest in the deal. So that’s pretty much what happened with me. And I think what I learned was like on the residential side, really in any real estate case, like if you start with the basis of a good deal, you can find the money in most cases to close that deal, right? The investors, the partners, whatever it is, while the residential side, it’s easier, right? You might only need a hundred K for the equity piece from a partner, from an investor, from a private lender, whatever it is to close that deal. Cause it’s a smaller deal, a smaller purchase price, not as much capital as needed. So if it’s just a hundred K, you can go through your contacts, your email, whatever, and find one person to invest in that or two people at 50K, right? Like you can, that’s pretty manageable. Now when you’re on the commercial side, you add a zero to that. Now you need a million bucks. You’re looking at 20 people at 50K or 10 people at a hundred K and that’s a little bit harder to do. Now, if you have a good deal and a big enough network, you can do that. And I think that’s the problem that I had is, you know, I thought I had, you know, X amount that I could commit to the deal ended up bringing like half of that. I think the amount of raise is like 475 or something like that, 525 maybe. So right around 500 ,000 bucks, which is a lot more than I’d raised previously, probably six, five, six times. I probably raised 80, 90 K on a single deal before that. So this was like 500 K on one deal in a matter of whatever, 30, 45 days. I can’t remember the exact timeline. So it was a big jump, a lot of phone calls. And I think, like, anybody listening to this when you get in that position knows it’s going to take a lot of calls. You’re going to get uncomfortable and you ultimately got to get to a point where like before you pick up the phone you have to be okay with getting told no and not let it hurt your feelings and affect you like picking up the phone for the next call and it’s all about like presenting the opportunity more so than asking for money right so you’re presenting the the opportunity of that deal to the investors, they get the passive income, the appreciation, the tax benefits. It’s not giving you money to push your agenda. Like you need to look at it through the lens of how you help them reach their financial goals. And something you kind of just pick up, right? As you have a bunch of these phone calls with investors, but you guys can keep that in mind. I think you’ll have a better time and not get so distraught when there’s like, no, you know, my money’s tied up or I don’t like the deal or, you know, I’m not whatever comfortable with multifamily. I just want to do single family. It’s like, you gotta just find your niche, find your groove, be okay with the rejection and keep going.

Patrick (10:38)
Yeah, yeah. And you did that first larger multifamily deal. Why not just keep pushing forward with multifamily? Why did you decide to make the switch over to boutique hotels?

Blake Dailey (10:49)
Yeah, really good question. And this is like for context, this was we got our contract at the end of 2020, right? So this is COVID year. March is when COVID hit. We got our contract, I want to say like November maybe, and then closed in February of 2021. So in that amount of time, think back to the stimulus that was happening, the economic stimulus from the federal government and asset prices were like hurting at that time, like 2021 they ran out. But like at that time, everybody…hedge funds, private equity, REITs, like big money people were putting their money into real estate as a physical asset and a hedge against the inflation that was happening at that time. And good for them because you bought good deals then. I mean, there was a big run up after that on really all real estate as long as they finance it right. Because now there’s like a commercial real estate bubble in multifamily because a lot of bad loans done after that time in like 21 and 22. But before that, it was like all this big money. There’s a lot of competition. Cap rates were compressing, which means deals were getting slimmer, right? The cap rate goes from 7 % to 6%. You’re like you just lost a lot of economic value on that and like the purchase price is going up. So then if your basis is higher and you’re making the same amount of money, you’re you know, your return is going to be less. So that was happening and there’s just more competition. So it was a pivot away from, you know, from into a less competitive environment which I saw hotels at that thing, right? Because I was in Panama city at this time, COVID shut down the beach, the Florida and Florida for like two weeks, three weeks maybe. So while everybody else around the country was shut down for like most of 2020, it seemed like it happened in Florida for like two weeks. And then after that, by, you know, the end of March, early April, like the beaches were full and that summer was crazy. Like there were so many people coming down to Florida, driving down because we were open.

I didn’t have to have a mask on the beach, all this kind of stuff. So it was a really good time for hospitality in Florida. My short term rentals that I owned the eight at the time were absolutely crushing it. And that had me looking into how do I buy, you know, a hotel that I can either transfer and, you know, repurpose, rezone into multifamily. So I have small studio units like these Metro areas where you could get high rents per square foot or do the pivot, just rent it as a true hotel. So the first deal that I found was a small eight unit hotel. I had eight units in Panama city, all in different locations at the time. So I thought eight units, one site laundry, on site cleaners, all go to one site. Like you get economies of scale there and those eight wouldn’t be like doubling what I’m doing already. It’s maybe adding whatever 40, 50 % instead of like adding the workload of eight new units cause it gets more efficient. And then I had 16, right? So then I could hire the admin and get more efficient from an operations perspective. And that’s what happened. And then I saw the numbers from that and I was like, shoot, we gotta go buy some more hotels while it’s hot. And that’s what got me into it. And just fell in love with the space, the creativity, the higher cashflow, the tax benefits, like just love it.

Patrick (13:52)
Yeah, amazing. And with that first eight-unit motel that you found, what type of condition was it in?

Blake Dailey (13:59)
Like literally about as bad as you could imagine. Rent by the hour, yellow siding, light blue trim. We did a demo, and it had needles in the walls and in dime bags and all kinds of crazy stuff. And the walls of the interior wasn’t drywall. It was like painted particle board. So like just wood walls, compressed particle board that they had just painted over with like interior paint. It is ahhh I mean, it was bad. But I saw the opportunity. It was about five minutes from Ocaloosa Island in Fort Walton Beach. It sat right between Holbert Air Force Base and Eglin Air Force Base. And then I think it’s Pope Field Army Airfield up there. So you got three military bases around there. You have big medical facilities, a lot of construction work, and a lot of transient people, obviously, for beachgoers and stuff like that. So really well situated. And we got it for $357,000. So, it’s a great entry price.

Patrick (14:59)
Yeah. And then, what was your process for renovating it and flipping it? I mean, you clearly kept the particle bar on the walls, right?

Blake Dailey (15:07)
Yeah, those are still there. No, definitely took all that out. So when we went to demo, they actually put the particle board over concrete block and for like some of the walls separating units were concrete blocks. So I was in there on demo day just swinging a sludge hammer. I could not bust through this particle board. I was like, what is going on? Is this titanium wood? It’s like some kind of indestructible materials because it was just pressed up against the block. So finally, it’s like I busted through the block and I was like, well, now we got to take down like this whole wall. But because of like the framing and the structure, we pretty much like it would have been cheaper in hindsight to have just tore the place down and rebuilt it. I mean, I think we’re all in for like 850 ,000 with everything, including the purchase price. No, we’re all in for a million 50. So yeah, it was like $800 ,000 renovation. So what is it? 3 ,600 square feet, it would have been cheaper to just rebuild those eight units. But we had to take it all to commercial code. We took down the whole front wall, all the walls in between units and had to redo that. So like literally just had like three walls and no roof at one point. It was just like Lincoln logs holding this thing together. So all new framing, four hour firewalls all the way up, new whole front facade of the building, windows, doors, electrical plumbing.

We had to relay the floors as well. So like they poured really thin concrete that was like less than an inch thick in some places and just cracked. And they just like concrete, they didn’t put the tile in with mortar, they put it in with concrete. So that was a, that was really fun to get up. So we essentially redid everything. And then we wanted to go with something a little bit unique. And we did like eight different designs in the eight units. So we had like different splash wall colors, different art and decor and kind of like pop colors. But we put kitchenettes and all of them in closets because we wanted them to conform to multifamily thinking about our exit strategies, right? We could sell to a hotel operator or short term rental operator, but we could also sell to a multifamily investor as well because they would be fully conformed as like a studio unit with the bathroom standard sizes and the closets, like it’d be a full studio unit. So we were thinking about that in our, in our design plans as well. So that’s how we did that. I raised debt on that property. So this was basically a big BRRRR or like a BRRRR B and B. So bought it, renovated it. And then when I refinanced, I just had private investors in at 10 % annualized.

So when I refinanced and I structured this to where I paid them at the end instead of like monthly debt service payments or interest only payments. So we refinanced, paid all of them back and I owned the property 100 % after that with the new bank debt to replace the, you know, the bridge loan from the seller that I had, I got it with seller financing plus the investor capital that they put in it to renovate it, got all of them paid back plus their interest and then held it for cashflow since.

Patrick (18:11)
Wow, wow. So a couple of questions following up with that. One, you know, you you the entry price point, eight unit. It’s like, OK, this this feels like a manageable first. first property to get into for the for the motel side of things, then you hear about the renovation, the $800 ,000 renovation and basically needing to scrape the whole thing.

Blake Dailey (18:22)
Mm -hmm. My gosh. Yeah. It was, it was just every mistake made in the book, right? Like if I would have known now or known them when I know now it would have been, you know, probably half that. Like my original budget was 500 ,000. I probably would have beat that. But then you gotta think, you know, the time was during COVID. So we had the COVID delays. We couldn’t get contractors to show up cause they were, you know, making whatever, I don’t know, 1200 bucks a month to not do anything or if they were married, 2400 bucks. So down the pin in the Florida, you know, you can live off of that and not have to work. So we were having people show up. We couldn’t get materials in time. It added to our delays. The city shut us down for like three months because of me not doing things correctly in the first place. I hired a residential contractor who is not licensed to do commercial work. So that one hit me as well. And it’s just like little things like it had. I know now, like since then I’ve checked every commercial or every contractor’s license to make sure that commercial license to do, you know, that scope of work in the state that I’m getting the bids on. And it’s like, those things right there would have saved me a hundred hundred fifty K on that. And I just, you know, paid the ignorance tax on that deal. But I will say it was the momentum that I needed to get the next five hotel deals. Right. I was working. We did we did five hotel purchases in the 13 month or in the 12 months after that first purchase. So within 13 months, five hotels and every other hotel after that was so much easier because of the lessons learned the hard way on this one. And that’s what I try to tell people now is like, you need a good enough deal to kind of like weather the mistakes and, you know, kind of learn from me and not, you know, don’t make these same mistakes because I’m here kind of talking about it. That’s what I do on Instagram and stuff like that through my mastermind and help people not make those same mistakes. You can get profitable faster with hotel deals. But for me, it was like going through the ringer made it way better or way easier on on the next five, six deals.

Patrick (20:24)
Yeah, and on that first one, how long did you have it open and operating before you did the refinance?

Blake Dailey (20:31)
So we refinanced it right away. I refinanced to a bridge loan to like another hard money loan to get the investors out because my like seller financing was coming due. And then a year later, refinanced it to like local bank debt, lower interest rate for the long term hold. It was like, you know, I don’t recommend refinancing like bridge or like seller financing into bridge, like bridge to bridge. But it’s like, you know, it’s a product you have available when you’re not fully stabilized, when you don’t have the income, because they will go off the pro forma and the projections that you have, and, and base the value off of that, as long as like the appraisal comes in and takes your data into account. so that’s what we needed because my investors were in long enough on that. I didn’t want to keep them in any longer. I mean, God bless them. They kind of weathered, through it with me with how long it took with the COVID delays and you know, the things I had to learn just going through it. So thank you to those guys for having the patience with me. And they’ve reinvested with me now, which is great. But yeah.

Patrick (21:35)
Yeah, amazing. So then over the next, you said 13 months, you did five more acquisitions.

Blake Dailey (21:42)
Yeah, four more. So it’s five in the 13 months. And then he recently purchased the sixth one, which is the 130 unit in the smokeys.

Patrick (21:50)
Okay, so let’s take this one step at a time with the next, the kind of the bundle of the next four that you did. Walk me through just like general size of those location. And did you take a very similar approach in terms of trying to find really run down motels and make them really nice? Or did you look for slightly better condition motels? So the renovation wasn’t as heavy.

Blake Dailey (21:55)

Yeah, kind of the former all of ours has been have been big renovations and I like bad assets in good locations and good markets. Now I like, you know, better assets. I want to buy like B class at a minimum. I don’t want to mess with any more C class stuff, but these are all like C class assets that we could put renovation work into redesign it, refurnish it, you know, upgrade the brand and the marketing, change the names and a lot of cases, bring them online and just put them on Airbnb and and Expedia create Google profiles for them because they didn’t have any before just get them accessible to guess who would want to book in those markets. So that’s like my whole strategy is good assets and great destinations and like good market like good areas within that destination market as well. So our next two were in Panama City Beach and in South Lake Tahoe. So these are four that after I saw the numbers kind of proved it out on the first one that I did myself with just debt investors. I then brought on a partner to help build out the next round of hotel purchases. I brought two of the deals in Panama City. He brought one of the ones in Tahoe and then after a couple months of operating and being in those markets I got a lead off of another one in Tahoe and we brought that in as well. So we then there’s are all 20 units or less Panama City Beach was 15 and 18. So we had 33 units there Tahoe was 14 and 20. So we had 34 units there So about equal unit size but different revenues because they’re you know different markets, but we wanted to get to that like similar scale to where we could have the same like operational structure of our team in each location, because me and my partner were both active duty Air Force. So we didn’t want to like, we couldn’t really be the person operating the day to day. I did it for a long time. And man, on top of the construction management, I wanted to like pull my hair out every day for like a year during this time. We got through it, you know, got better because of it. So we were really focused on our markets and what we liked about, Tahoe and Panama City beaches, they have differing seasonality. So Tahoe is high in the summer, Panama City beach is low, low, low in the, excuse me, high in the winter and Panama City beach is low, low, low in the winter. So, and like the summer in Panama City beach is obviously the high season. So it really helped to flatten our revenue curve and take on the risk of buying four more projects in the next year because it allowed us to get up to an economy of scale where we had enough revenue to build out the team and manage them efficiently and in the locations that flattened our revenue curves from a portfolio level, we could keep consistent cash flow, keep returning to investors, keep making money ourselves, keep making money through the management company and paying our employees and ourselves. And it was a good structure.

Patrick (24:49)
Yeah, so you mentioned management company. Have you did you launch your own management company as well and you’re paying that separately or using just a third party management company entirely?

Blake Dailey (24:57)
Exactly. Yes. We have the prop co and opco structure started there. I sold that business and rolled it into the new hotel. Same, same structure. So we have the prop coach is the real estate company and the opco, which is the property management company. And those two are linked with a property management agreement. So me as the owner of the management company also manages the real estate that I own that I raise money for and bring in investors for and like that allows like the separation of powers of liability of cash flow of all those different things. I’ve never managed for other people yet. I’ve always been like bought enough of my own real estate to keep myself busy on the management company side. Might someday but but we just always manage our own stuff. So we have the separate management company with you know all our staff and that it takes to manage all the hotels and on the real estate company. It’s very light with me and you know the VA right now really which just kind of drives that side of thing. We’re looking to hire some more people, but it’s much more light on like the personnel and costs than the opco management side, because that’s really where all the work is once you close the property.

Patrick (26:01)
Yeah, yeah. And what would you say, you know, with those five at the time, before you got this sixth one, what were some of the biggest bumps along the way, like as you’re getting to this operational scale?

Blake Dailey (26:10)
Mm -hmm. Really learning how to manage people I think when I started I would kind of just like hire whoever I could find right like I like if you apply for a job if you look like you had experience and you seemed upbeat and I liked you I’d probably hire you and over time I like went through enough hires and fires and went back to hiring and training and then firing and I think in Tahoe at one point we went through four property managers in four months. And I was like, all right, this is a problem. I got to fix. And that’s like our main person in that market who does a lot of stuff when they’re not there. It’s very stressful on me because I’m picking up a lot of that slack. So got really intentional about not just how I hire people, but how I market to them in the first place, how I screen them from those job ad and postings and how I do like the first interview with them and kind of like once they make make the screening through okay? They’ve got the right experience their resume makes sense Let me talk to them and then get deeper in the interview process to really assess this person’s character traits their experience You know their background what it is they bring to the table and personality index? Indexing as well to get a better feel for how they would match up with this position It’s our since we started doing that turnover went way down performance, whatever, we had more of the right people in the right seats. And then once you get them in, you know, you’ve got to manage them. And we run on EOS. So we’ve got a system of accountability. We have our level 10 meetings every Monday. We have our tag, tag up meetings throughout the week. And it’s all about the performance and being hard on the problems, not on the people. And a lot of people push back on that accountability to start because it kind of exposes the underperformance. But that’s exactly what you want out of the system. And, you know, you just got it. It’s like a cultural shift of getting people in is like, we don’t hide the problems. We talk about them so we can all get better together. And I think once you get over that hump, then everybody’s humming along. They buy into the system. They see the benefits from it. And I think all of that was a big learning curve of really being an operator, learning how to run a business, hire people, manage people, and lead people. And thankfully, being an Air Force officer, that’s a big part of the training and background there. So I think that was an area I was naturally good at. But reading books like, you know, multipliers and good to great, those like really put the people side of a heavy operations business like hotels into context and give you a lot of tools to go out and run your business better. So those are the big ones for me. And then I think about like just as you bring on, you know, as you go into commercial real estate, right from residential into the commercial side, I think that jump into boutique hotels from short term rentals, which is a lot of people’s backgrounds that make that jump. That’s my background. You get the same economies of scale of single-family into multifamily, but then you’ve got to manage your finances better. And you’re really managing your cash flow because hotels are a seasonal business, right? You might swing from 70, 80, 90,000, whatever six figures of income in months in June and July, and then drop down to 20, 30, 40,000 in December and January. So managing a $70k, $80,000 swing in income is big, right? So you have months where you’re breaking even or might be losing money just so you can make it back up. So you got to, like, build a budget, analyze on a monthly basis, and just do cashflow projections. But if you do that, it’s not that hard to do, but just knowing to do it upfront, like saves you a lot of headache when you get into the low season and stuff to make payroll. And yeah, so those are big lessons, takeaways from those those kind of building years.

Patrick (29:57)
Yeah. And in those, you know, you mentioned a handful of property managers in a handful of months, just rotating through them. When you had to step in and cover that responsibility, it sounds like everything’s set up where you just have to jump into. And I don’t say just as simply, but you can still remotely jump into the different Airbnb and verbal platforms and just take over. Or what type of systems did you still have in place to where you could do that remotely?

Blake Dailey (30:27)
Essentially, yeah, because we’re very big on the systems. I think that’s something that I’ve been good at from the beginning, knowing that, hey, we’re about to, you know, we just closed these eight units. We’ve got what, another 50 units kind of on the chopping block that we’re in negotiations on or under contract that we know we’re going to close in the next couple of months. What I do not want to do is be the person messaging all those guests, dealing with the admin, the resolutions, the refund, the complaints, the check-ins, you know, that their lock goes out and the batteries are dead or whatever, I didn’t want to deal with that. So what we did from the very beginning is I would find people from the Philippines, and I would train them up on the same standards and systems that I created. Managing my own portfolio is how I, you know, message guests. These are kind of like my automated replies and we made that much more robust to where they had a whole system that they could utilize. So most of the guest relations and the admin, was off of my hands and by that time we had hired a revenue manager as well that I trained took through the same thing of like here’s how I do you know manage our revenue here’s all the training videos here’s our you know document and our training resource to go through and get familiar with and then it’s managing the implementation of that so we already had functional responsibility in the business systems and processes in place for each function so as a person you know came out before we could replace him with a note their person to run that system I would kind of just fill in and run those roles of you know, now the housekeepers are asking me questions or the assistant managers asking me questions. I’ve got to like have more interactions with, you know, people down the chain and about property, property specific things and, you know, complaint escalations and all those kinds of things. Just make more decisions, which is why I hired the person to do that job because it’s, you know, a whole nother job on top of me running the business and, you know, focusing on like the high level strategy, you know, revenue growth, property acquisition, all that kind of stuff. But it’s essentially, built it up to where like, you know, there’s the position it just needs filled by the right person. And if that person leaves, which happened, you know, over and over and over again, I was just constantly training. So I guess really through that time learning the position even better myself, because I had to train it four times or really five. After we got the last person in there that thankfully stayed for a while.

Patrick (32:41)
Yeah. And another position that I, I don’t know if you have in particular, but someone’s doing it. So I’m curious who is responsible then for creating the theme for each location and the decor and the marketing of each location.

Blake Dailey (32:55)
Yeah. I think that one usually starts with me. I think there’s an intuition that comes in on the purchase side of getting informed by the market, by the guest avatar who’s traveling there, what brings them there, what would attract somebody to stay at your place versus another hotel in that market. So, you know, you’ve got to take your, your location and consideration, the local hotels around you, and the guests who are coming there, what they expect, what they want, you know, what they value and kind of like, picture that person in your head like is it a Stacey or is it a John or a Tricia that’s coming to stay kind of build a profile around that. And that’s kind of what informs your design vision. Now I’m not a designer. So what I would do is hire a professional designer like designer or would start with maybe less professional in the beginning. And now we’re up to the very professional designers who do this on a lot of different projects. And now we give them that vision, let them run with it. And then we’re kind of like, checking off to make sure it fits the vibe and the intention and that’s going to be the best allocation of our funds to get the best return, right? The highest rates, highest occupancy. So that’s kind of how that process would work. And now on the marketing and branding is very similar. It’s like how, what’s going to resonate with the most people that come to that market. So you can draw them in and then a big piece of the marketing earliest to get out on all the listing channels, right? Airbnb,, Expedia, Fervo, TripAdvisor, your own direct booking website, Google Hotels, all that kind of stuff so people can find you from everywhere and then have in there that, hey, this is X Hotel by X company or whatever. And then the heads up people will search you. They’ll Google you. They’ll be able to find your direct booking website. So then you’ll convert those OTA bookers, the online travel agencies that I just mentioned, convert the OTA booker into a direct booker and then just collect all the contact information for the people that stay with you and then retarget. And then, you know, you’re just building your guest list, building up your repeat guests and things like that. And of course you can always, you know, depending on how good you are with social media, build out the brand, but the profiles on there, do your organic posting, put boost behind posts, post for holidays and events and all that kind of stuff. We can get really deep on hotel branding and marketing, but that’s the high level.

Patrick (35:11)
Yeah, yeah. And you’ve now got your sixth one, which you closed on after these first five, obviously. One question I’ve not asked, which I’ve been curious though, is how have you found each of these? Are these on Crexie? Are you like driving by them and sourcing them and then reaching out to the owner directly? Like what’s going on for your acquisition?

Blake Dailey (35:25)
Ooh, yeah.

A lot of different ways. It definitely does not hurt to be the boutique hotel guy. So like a lot of times, like people that I know or that are like mutual friends or whatever know of me will kind of like send me deals. So I do get a lot of deals now sent to me that I’ll just kind of repurpose and put into the mastermind if it’s not a location that I’m looking in. But yeah, Crexie, Loopnet, I found one on Loopnet. I’ve also been really good about finding my own deal. So calling brokers, driving for dollars.

People that know me doing you know in like will send me deals has been two out of the six So it’s a slew of those things, but I think if you want to get started looking for deals They call loop net the place deals go to die But I think it’s important for you to understand you’re not going there looking for a deal You’re going there looking for how you can make a deal and create value with what’s there, so don’t just take it at service level. Don’t just take what the financials are there. Like how can you add units? How can you add revenue streams? What’s the upside with designing, like redesigning and renovating the property? Like that’s what really makes a difference. Like Crexie, Loopnet, you can get these online listings. You can even do a broker search on Crexie or Loopnet. So you can find the active brokers and sort by hospitality. If you’re looking for boutique hotel deals by that area, and then just start calling all the boutique hotel or hotel brokers and start to tell them, who you are, what you do, what you’re looking for. And it’s just a repetitive process of that. Reminding them, getting on their email list, having conversations with them, building rapport, all that kind of stuff. And I think the one that’ll surprise you the most is just tell people what you’re looking for. At networking events, at meetups, on Facebook, on Instagram, whatever it is, let people know what you’re looking for because not many people are in boutique hotels. So if you’re already gonna be standing apart by doing something that kind of sticks out in people’s minds, and just let them know and you’ll be surprised at what comes your way.

Patrick (37:21)
Yeah, great. And I know we’re coming up on time here, so we’ll wrap it up and I’ll just ask you if you want to provide a quick overview of, you know, this this last motel that you purchased and what you’ve got going on there coming up.

Blake Dailey (37:35)
Yeah, so just recently in December, we purchased 130 key hotel and resort in the Smoky Mountains on 10 acres, eight different buildings. We’re adding a bunch of cool amenities, fitness center, game room, pickleball, pool bar, pavilion, outdoor movie theater. It’s going to be a very, very sick property, probably one of the best in the Smoky Mountains. So I’m pumped for that. Just got news today, actually, right before jumping on here that we got our environmental approved through the USDA. I’ve been waiting on that for what seems like my entire life and it all culminates in this moment. So we’ll be refinancing in the next couple of weeks to be able to get our renovation funds to actually start. so what we have coming up in September, the 13th through the 15th is boutique hotel con here at the hotel. We’re going to be hosting it in our event venue, onsite. the tickets are going to include lodging food and drinks for the whole weekend. So you get a stay at the boutique hotel, talking and learning about how to invest in boutique hotel, see it in person, get to see the renovations that we’re doing, why we’re doing the renovations that we’re doing and like how we’re maximizing the use of this property. So you can like see and talk about it kind of in one setting. We have an intimate group of boutique and tell investors and short -term rental investors looking to scale into the commercial space. We’ve got some awesome speakers lined up. So really excited for it.

Patrick (38:52)
Amazing, it all sounds phenomenal. If people are interested in learning more about that or purchasing tickets, where should they go?

Blake Dailey (39:00)
Yes, you can go check out boutiquehotelcon .com. Tickets are live on there. We’ve got options. If you’re in like driving distance, you can buy like a we’ll call it like a locals only ticket that doesn’t include lodging, but all the rest do include lodging, which, you know, I own the venue and own the hotels are able to keep ticket prices pretty low considering like you get the hotel and the lodging you since you just have to get here yourself and then we’re hitting the ground running. So yeah,

Patrick (39:29)
Amazing. And if people are interested in connecting with you personally, where should they go?

Blake Dailey (39:34)
Yeah, best place would be Instagram. So you can find me at Blake J daily. If you guys have commercial real estate questions, but Tico tail questions, short term rentals, whatever, like hit me up and be happy to answer it for you guys. Point you in the right direction. I’m about helping people. So anything I can do to be a resource, I’m here.

Patrick (39:49)
Fantastic. Well, Blake, thank you so much for coming on today and sharing your journey and your wisdom that you’ve gained along the way. Really appreciate it and look forward to cashing up with you again in the future.

Blake Dailey (40:00)
Yeah, man. Thanks for having me. You guys have a good one.

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