[00:00:05] Speaker A: Welcome to the Short Term Show. The show about short term rentals and long term wealth with real property owners.
[00:00:13] Speaker B: Hosting real properties who are crushing it.
[00:00:16] Speaker A: In the vacation and short term rental space.
[00:00:19] Speaker B: And here's your host, Avery Carle.
[00:00:28] Speaker C: Hey y'all. Welcome back to another episode of the Short Term Show. I'm your host, Avery Carl. Thank you very much for listening. If you have not hit that subscribe button, please subscribe to this podcast and leave us a 5 star review or any review, preferably 5 star. Just send me an email if you don't like it, but leave us five star review. Make sure you're following us on social media. So Instagram at the short term shop. And if you want to follow me personally and see, you know, what the heck I do all day, running a bunch of businesses and what have you, it's at the Avery Carl. And speaking of social media, I started following this guest a while back, maybe several years ago.
He had a really cool development and he is. And he I think sold it for more than I've ever seen anybody sell a short term rental development before. And really, really cool guest. His name is Isaac French. He is an artist, he is an entrepreneur, he is a hospitality developer. All those things kind of go hand in hand except this next one, accountant. Not one of these things is not like the other. How's it going, Isaac?
[00:01:34] Speaker A: Good, Avery. It's such an honor to be on your show.
[00:01:36] Speaker C: Yeah, thanks so much for coming on. So just introduce yourself to our audience, tell us a little bit about who you are and what you do. Tell us about Live Oak Lake. That's how I found you. I started following that. That property has got like several million followers at this point.
[00:01:49] Speaker A: Yeah. So I am, as you mentioned, artist, entrepreneur, accountant. So four years ago though, I was really just an accountant, slash really a bookkeeper.
But I had this dream to create this village of cabins, for lack of a better term. And I've always been artistic and creative.
The story with the accounting part is when I was in high school, I'm really curious and maybe a little too curious sometimes. And so I really wanted to, you're going to laugh this, but wanted to see how much other people made how much income they were making. So I was like, I'm going to learn how to do taxes and that'll be my, my foot in the door. So I took a course, trained myself in income tax prep, then started doing bookkeeping part time for a family business. We had a small construction company, was also working in construction. So that obviously was preparing me for real estate, though I wasn't really doing real estate and yeah, started doing taxes and never was an a numbers person at. At heart, but felt like it'd be a really strong, solid foundation business wise. And I'm really glad I did. So. Yeah. Then rewind four years.
I had that dream. Found property, built what's now Live Oak Lake, seven Nordic inspired cabins around the lake. Designed all the details, managed the project, raised the money, got the construction loan.
We launched, got suspended on Airbnb within two weeks with no reason or warning.
I was forced to think outside the box. We ended up partnering with a local influencer, ran a Instagram giveaway for 950 bucks which generated 40 plus thousand dollars of bookings in a one week period of time and several thousand followers from scratch. Went all in, as you can imagine, once I realized how valuable the ROI was on social media for a property like ours. Went all in on that. Got restored on Airbnb, but they took a backseat, grew our following to, yeah, a few hundred thousand and eighty percent of all bookings and we were 95% occupied that first year. But 80, 80% of all of that was direct. So direct bookings are incredible. You get 15% plus, you know, extra pure margin. You can't be deplatformed. You have their email, you can retarget them and yeah, then fast forward a year and a half after opening, we ended up selling the whole property for a million dollars. A key to an institutional buyer. So now I do a bunch of consulting. I'm involved in a bunch more unique hospitality experience, hospitality projects and actually have a little bit more time to do the art part of my title.
[00:04:27] Speaker C: Okay, okay, hold. Hold up here. So you've done about 17 things here that everybody who comes in the door of the short term shop has said they want to do. No one has done so like you. So like, let's. Let's just start with the. Oh, I want to build a. I call them cabin camps. I want to build a cabin camp. Okay, cool. Like so many people. Especially since 2020. Hey, Avery, help me find some. Some land. I want to build some cabins on land and make it like a glamping thing. Okay, cool. Nobody's ever gotten it off the. Out of like off the ground, almost it out the door, off the ground, whatever. Then they're like, no, no, I wanted to be cool. I want these cabins to be extra cool, like Nordic inspired.
Nobody's gotten that done. Oh, Avery, I want to. I want to do something really cool and I want to get a Lot of followers on Instagram. How do I get Instagram followers for my property? Nobody's ever succeeded at that. And oh, by the way, I also want to build this up and make it really attractive to an institutional buyer who's going to pay me a ton of money to buy it. How do I. Nobody's ever done that. So many people have thought about it or have. Or not even thought about it. So many people have tried to go down that road and just not done it. Because institutional buyers, a lot of times they want such a big portfolio that nobody really has that big of a portfolio. So anyway, you've done not just one thing, but like 20 different things that everybody wants to do that everybody thinks would be so cool to do and hasn't been able to do. So let's, let's start it actually first, before I start asking you about that, what kind of art do you do? I've been thinking about this through my whole monologue.
[00:05:58] Speaker A: I'll show you.
[00:05:59] Speaker C: Okay.
[00:06:01] Speaker A: So I do a bunch of like paintings, but I just did this drawing of actually. So this is like where I'm sitting.
[00:06:06] Speaker C: Wow.
[00:06:07] Speaker A: Behind me.
And I do one of my little boys. I'll do portraits.
[00:06:12] Speaker C: I love that. Oh, well, look at you.
[00:06:14] Speaker A: And I do painting as well, but I don't have any of those to show you Right now.
[00:06:19] Speaker B: We have live one on one coaching sessions available with our wonderful top notch coaches at Short Term Shop plus. And we would love to help you in your vacation rental journey.
The mission remains constant. To provide amazing homes so that our guests can create awesome memories with their families.
If you need help to set up your systems and processes, how to communicate with guests, how to improve your systems, how to find and hire housekeepers, and all of the above. You are looking for short term shop plus. You can find
[email protected] and the best part is the price is right, reasonably priced. And if you are a Short Term Shop client, please use the code client at checkout or an even better deal on SDS plus.com okay, so.
[00:07:21] Speaker C: So we do everything. We're good at everything. You're one of those. And you, I assume. Well, I'm not going to assume anything. I'm just going to ask you questions. All right, so you go from having this idea that a lot of people have. I want to build this really cool cabin camp of Nordic inspired cabins. Talk me through step by step how you actually did that.
[00:07:42] Speaker A: Okay. So I had the dream, like I said, it was probably actually brewing in my mind for two or three years Before I took any action, just because again, I've always been kind of creative, was interested in architecture, never studied it, and so was kind of collecting ideas and seeing, you know, really beautiful residences that were designed. But nope, nobody was really doing what I call now the micro resort model, or you called cabin camp, which is like multiple high design units on a property with some shared amenities. Nature forward, experience forward.
So that part of it was really new, the architecture. I was taking cues for a while from other people in really different regions. And so what I noticed is here in Texas there was a hole design wise in that style of architecture. Nobody was doing it even for high end homes. And now like Nordic architecture, we may have actually hit peak Nordic architecture, I still think it's beautiful and timeless in its own way. But there was a huge demand for it. And Texas, let's just be brutally honest, is not the most beautiful state architecturally or nature wise. There are beautiful parts and I live in one of them. But I figure like, if we can create this oasis architecturally, nature wise, just vibe wise, to be honest, then people are going to, it's going to be a magnet. And especially when you're in the middle of the Texas Triangle, 22 plus million people that are all cooped up, that all want to go somewhere beautiful. Texas is also a very big state. So they would typically have to travel a long ways to go to somewhere really beautiful. And also bear in mind this was just really in the middle of COVID still. So we, the lockdown period was very fresh on my mind and like realizing no matter what happens with this Covid thing, people are going to prioritize these kind of like outdoor experiences more and more. I don't think the world's ever going to be the same even once all this goes away. So those were all kind of like the biggest theses that were like, you know, motivating me. I found this land. I'd been looking on Zillow for two or three months. Found this five acre piece that was just three miles down the road from where I live. I'd driven by this place a million times. And there's a lesson in here because I never thought anything of it. It was just a bramble. I mean, you couldn't really see anything from the road. But when I saw the listing, which was like four hours old one morning, there was a drone photo and I could see this little cow pond in the middle. It was like a muddy, you know, half an acre, little body of water.
I immediately was like, oh, I got to go Check this out. Because water was kind of in my mind, like, that'd be pretty cool to have some water. Element drove over there, met the agent, literally got chills when I walked on the property. I can't really explain it to you, like, logically, but I just knew this was the property. There were two or three of these massive live oak trees, hence the namesake, that were just glorious. And trees are one of those irreplaceable assets, mature trees like that, where you can spend money on a lot of things, but you can't buy a 200 year old magnificent live oak tree. And so I realized, okay, this definitely would contribute to that vibe that I'm trying to create. And then I could also see, like, we could reshape this pond, we could kind of reshape all the ground and make it into like this own little, you know, universe that, that feels amazing. And so I was like, this is the land at that moment. We're buying it. Got under contract, I had $19,000 to my name again, was probably making about 45,000 bucks a year as a self employed bookkeeper. Was 24, just turned 24, just, just gotten married.
So, yeah, maybe it wasn't the safest choice, but I was like, we're going all in on this, this idea. And I think there's another lesson here, which is like, once you have a dream that turns into a conviction. And it, it turned into a conviction for me, I, I went all in and bet everything I had and was maybe a little overconfident, but honestly needed that. And we'll get into some of the why. But like to your point, there are so many roadblocks that come up just in a project like that. I mean, you have so many reasons to either A, stop altogether and blame it on any number of things which a lot of people do, or B, make compromises. And what I mean, what I mean by compromises, like, I had even an aesthetic vision from day one of exactly what that property needed to feel like, look like. And when you're going along in a project that we ended up going hundreds of thousands of dollars over budget, that's another story.
You want to make compromises.
I would boil all this down to a big learning for me, which was build fewer units and spend more money and do fewer things, but do them much better. There's kind of that 8020 principle where, you know, for instance, we were, I was walking the property just by myself for those first three or four days. Yeah, Wasn't even thinking about, like, how am I going to get a loan to do this. But because we were under contract with a 30 day close window, all cash had about, yeah, 15% of the actual cash that I needed. And but those first two or three days, all I was doing was trying to understand every square foot of that property and just. It's going to sound funny, but let the land speak to me as far as like, what is. People talk about highest and best use. And maybe there's different meanings for that. To me, what that meant was what is the absolute most beautiful, harmonious way we can build with nature here to create this epic environment. It was all about the whole, it was all about the experience from, from that day one. And I, I had this vision of like, you know, this beautiful little quaint lake with these stunning cabins jutting out with these light reflections in the lake with a kayak. Like I had that vision on day one. So fast forward the 30 days. I got friends and family to loan me the remaining money to close on the land. Great.
[00:13:33] Speaker C: Well, hang on, hang on. I got a question. Why in the world did you make a cash offer on something that you didn't have the cash for?
[00:13:39] Speaker A: Because that was going to be the only way after talking with the realtor, to actually lock that land up because land was so hot in this market.
[00:13:46] Speaker C: Gotcha, gotcha. Okay, okay, continue. Sorry. I wanted to grab that before I forgot about it.
[00:13:50] Speaker A: And so, you know, I was, I, I had a list of people I was going to call whether they had money or not, just to see if I could get somebody to back me. Thankfully, I mentioned my dad and brothers. This is what I grew up as a teenager working in a small construction business. I mean, we started doing like bathroom remodels when I was a teenager. We ended up doing some bigger projects. It's not a big company. They had an operating line of credit, so they didn't have the cash on, on hand, but they had an operating line of credit through their bank out of state, which were able to funnel creatively for a short period of time to buy this land. So now we were all in. I gave up some equity to do that, 45% of the entire project. But they also committed to helping me co guarantee the loan, which was going to be very important, I knew from day one, and potentially come up with some cash with whatever the construction loan wouldn't cover. So then I immediately started just canvassing banks in our local area, talking, trying to get meetings with everybody you can imagine with all those facts. I got told no and honestly, like laughed at. Like laughed at, like you're crazy. Plus again, this project type, now it's a little bit more known because of my comp and there's others but like nobody knew what this was. They were like, is this a campground? Is this a hotel? Is this an Airbnb? What is this?
[00:15:03] Speaker C: It doesn't really crazy to banks back then.
[00:15:05] Speaker A: Yeah, it doesn't fit any of the boxes. So got told no, finally got a, you know, maybe from a bank. Went all in. You know, I, I was an idiot when it came to like underwriting the, the actual like process of getting a loan. So I didn't know anything about like a pro forma. I kind of like created something in like Apple Numbers spreadsheet and here's a model of like what I think we could do and worst case scenario, we could long term rent these units and we'd still kind of be able to make our payment, blah, blah, blah, blah.
Thankfully they, they showed a lot of like mercy and patience with me. They, they're also like full credit to them. The same lenders that funded, you know, Chip and Joanna Gaines. I'm sure you do. So their whole empire here, Magnolia, which is fantastically, you know, successful now, but was a massive risk at the time, they funded all of that. So they understood like risk, they were more, they had a higher appetite for, for risk and more creative ventures and this kind of fell in that category for them.
So ended up taking us four months to actually secure the loan and get actual like money in the bank. From, you know, day one to actually getting money in the bank. Four months now we didn't wait around for four months. At the end of that, 30 days when we closed on the land the next day, I was out of chainsaw in my hand on site clearing trees was. We ended up spending $350,000 before we ever got an approval from the bank. That's how committed I was. Like we are doing this.
That came from the operating line of credit that I, that I mentioned. Also here's the crazy part.
This was 2021, crazy hot market here in Central Texas. I designed, I built a $750,000 spec home two miles down the road on another five acre lot and sold that. And four and a half months I built and sold that, sold it before it was done, finished up with the buyer, profited 200 plus thousand on that, rolled all of that directly in because we needed every penny of it to the Live Oak project. It was, it was a crazy year full of crazy risks, full of a lot of luck. To be honest, because, I mean, we just got really lucky as far as the timing, all that.
[00:17:13] Speaker C: Oh yeah, yeah, me too.
[00:17:15] Speaker A: Yeah, you understand. So then, you know, I'm designing as we go, I'm managing, which was also an advantage for me. I mean, we cut out a lot of design fees. We cut out GC fees. It also gave me the creativity to like value engineer because I mentioned compromise, but everybody has to compromise somewhere, right? So, you know, for instance, I wanted to do these solid glass front walls on the cabins. But I got a quote. It was going to cost 35k per cabin times 7.
[00:17:42] Speaker C: Whoa.
[00:17:42] Speaker A: Totally blew my budget to do this. I was like, that's not going to work. But we have to figure out a way to achieve this. So I looked around and I talked with the subcontractor and they're like, oh, you know, there's this other product because I wanted to use what's called aluminum curtain wall, which is what's typically used for that. They're like, no, there's this other thing called storefront, aluminum storefront that's less structural but achieves the same effect. So we added a glulam beam in the middle and then we used a storefront above that and a glass slider below it. So it's basically the exact same aesthetic for guess how much? $10,000? No, it was actually 7,500. It was less than 10,000. 7,500 per cabin. So we, we literally saved like 80% of that cost. So, you know, what would have been 230,000 became 60 or 70,000. So there were a lot of those kind of decisions along the way.
I was, you know, there were, of course, lots of holes and gaps where I had to come in and actually do some of the work myself to that point. I one day was in a cabin helping us, actually helping a subcontractor out who was shorthanded that day install a spiral staircase, jumped up on an extension ladder, was holding this 70 pound piece of steel above me. Next thing I know, the extension ladder just slips out and I fall like eight feet onto the concrete. And thank God he held that piece of steel or else it would have come down on me. But I broke my pelvis, which was a very big deal.
So this was two days before Thanksgiving. I'd been working 80 plus, maybe 100 hour weeks on both of these projects and found myself flat out in a hospital bed with totally incapacitated. Multiple surgeries later. Gosh, a lot of stainless steel, 25 stainless steel steel screws, and a big plate in my pelvis On. On crutches for three months after that. But I was over there every day, like, on crutches. My wife was, like, trying to reign me in. But anyway, it was a crazy year. That. That's the. Yeah, that's the big story. And there were a lot of reasons to give up. I mean, look, Avery, you. Did you build anything during 2021?
[00:19:48] Speaker C: No. I have bought new construction. I've never built. I can't even get my own personal house built. So anybody who's, like, doing this, I have a lot of respect for, because I have a lot of. Some reason can't seem to make that happen.
[00:20:00] Speaker A: Well, especially in that year. This is no joke. In the six months of, like, the initial, you know, underground to vertical part of the construction, lumber prices tripled. That is not a joke. They tripled in that, you know, first six months of 2021. Insane. Which, again, lumber was a huge part of our budget. I'm faced with another decision. Do we wait? How long are these going to hold? I was weighing all these. I was like, no, the opportunity cost here is going to be too great. We have to plow through. So we ended up spending 3x. I'm glad we did, because they held for probably 8 months, so we would have been stranded. But it was like, again, so many reasons. We had more rain than we'd ever had, so trying to do utilities was a total disaster.
You know, again, a lot of reasons to give up. Okay, nine months from day one of me with the chainsaw. Later, it's January 10th, 2022. We open the doors to Live Oak Lake. First of all, you know what our first opening was? It was a soft opening. I had all my family and friends, or all my family, I should say a couple friends. But I have nine siblings, and they live in different states, different countries, parents, grandparents, everyone came together. And for, like, a mini family reunion, it was epic. So we got to, like, test drive everything there. And it was also, like, fantastic from a punchless perspective. I thought we were, you know, completed. There were lots of little things that needed to be fixed, adjusted. But that was the realization of that moment that I told you about, that vision of, like, you know, walking down to the water's edge, these reflections, the kayaks. And so it was just an amazing kind of, you know, full circle moment there. So we launch. We have this fantastic launch in the first two weeks. We got, like, 35k of bookings, fantastic reviews coming in on Airbnb. One morning, I wake up, the entire account suspended.
I spent $2.3 million on that project. I'm 24 years old, I'm recently married. I, you know, I have a lot to prove, so to speak. That was a terrible feeling. That was maybe the, the lowest point in the entire journey because I don't know if you've ever been suspended, but if you. At least at that time, there was no recourse. I called customer service. I was on the phone for an entire day. There's nothing they can do. It's like, that's a. They're independent. We can't tell you what's going to happen. You may never get restored.
[00:22:20] Speaker C: Yeah.
[00:22:22] Speaker A: Also, Instagram was not what it is today as far as people in the short term space or hotel space using it. So this was really kind of a new territory. So, as I mentioned, ended up contacting a travel influencer. She ran this giveaway. Boom. I threw up like a direct bookings website overnight. You know, just kind of had to piece the software together.
And we have 40k of bookings off of a 9, 950 investment.
[00:22:48] Speaker C: Wow.
[00:22:49] Speaker A: So at that moment, I call that my eureka moment. I went all in on giveaways.
And there is, you know, there is a. Well, we could do a whole podcast on that. We don't have time. But there's a whole science to giveaways and an art too. But like, just paying a random influencer however much they want does not guarantee success. That's the long and short of it. If I had to boil down all the lessons that I learned from the social media, from really the entire story, I would say, but to apply it to the Instagram, a lot of people ask me, like, how do you figure out social media? What I would say is this.
Do not expect social media, no matter how much money you spend, and for that matter, do not expect any level of marketing or advertising to be the magic elixir to slowing bookings to a mediocre property, to being suspended on Airbnb. You have to focus on the actual route, which is what is the experience that we're providing, how. And this is a combination of the aesthetic component, the nature component, the overall, the hospitality component, which is woven into that. And then the overall, like, experience of is this like a transformational experience. And I know it can honestly kind of sound a little woo woo, and there's a lot to unpack, but it really is the combination. An experience like Live Oak Lake is the combinations the culmination of a million little details all thought through and all executed. And that's that is what's hard to do to your point. Like you have to have a certain level of not only vision and like tastefulness and all those decisions, but then the hard part, which is actually executing it and persevering. So we had that, thankfully we had that, you know, incredible experience. We had guests come back four times in our first 12 months and bring different people with them because it was a cool experience. And there were so many little details. I've talked about the architecture, but I'll give you a hospitality example. So I had two people and you can interrupt me at any time. I'm blabbing.
[00:24:52] Speaker C: Go ahead. No, I've got questions, but I'm gonna hang on to them.
[00:24:55] Speaker A: I'm almost done. Two people that part time ran the entire place. Okay. Two people plus the, the housekeeping staff.
One of them was a maintenance manager. He was coordinating, you know, other subcontractors like lawn care, H vac, whatever. And then the other one, but he was like the boots on the ground. And the other one was guest, basically experience manager, slash cleaning manager, liaison. And so she was coordinating the cleaners. But she was kind of like, again like sort of like a pseudo gm. She was managing the entire guest experience. But I had engineered, you know, kind of that guest journey. So the messages, of course, the marketing, but then the messages they receive once they're booked. Trying to make everything as personalized as off the cuff and fresh and you know, unformalized and un orthodox as possible because it's all about the hospitality part, is all about creating a real connection, an emotional connection with the guests. And if they sense guests have a very fine detector for, you know, formality over formality or mechanization or because you might say, how's automation work with this experiential hospitality? Because they're kind of at odds if you, if you set the stage correctly through the messaging, through the welcome gift, something as simple as fresh baked cookies from a local bakery with a handwritten note. Altogether the cleaners deliver. It costs less than $10, creates an immediate emotional connection with the guest or something as simple as one night a week I'm going to church and I'm not going to be available for two hours. And so I'm going to send a message preemptively. That seems like it. I literally just drafted this up, wrote it on my phone and sent it to the guest. Hey, I'm going to be gone in an hour for a couple hours. I just want to check in on you. Something is. It seems so mundane and that makes A huge difference because now the guest feels like, oh, he's actually like taking care of me. The welcome book, something I customized for 20 hours and basically built this beautiful coffee table book with our story and, you know, taking all of the boring user manual instructions and house rules and, and boiling it all into like a narrative that was fun to read, that everyone wanted to read. So there were all these like little, what would be friction points or mundane moments in a traditional short term rental or hospitality experience that I kind of rethought, reimagined as these opportunities to surprise, delight and ultimately create this bond with the guest. So this overall experience, the architecture, the hospitality, the nature, yeah, added up to like the perfect Instagrammable moment content. And so we ended up growing, you know, 100 plus thousand on Instagram in the first year or so. 80% direct, I mentioned. And after about the first 50,000 of those followers, which we relied on these other influencers pretty heavily for our own content, started kicking in. And we kind of figured out how to play the algorithm as far as what reels went viral. And then we were just kind of a machine. I mean, you can't ever predict virality 100%, but you can know the formula and then basically stack the deck in your favor as far as the content you're putting out. And then it's like a numbers game. Every 10 reels, let's call it, will go viral and you'll get a ton of bookings and a ton of followers.
[00:28:10] Speaker C: So that was a beginning with questions. Okay, beginning of the process. So where I've seen the most people try to go down this path and fail is buying a piece of land and thinking they're about to do something really cool and then permitting messes them up. So you can't just buy a piece of land and plop a bunch of cabins or domes or whatever. Can you kind of explain the process that you went through to understand like how many properties or how many buildings you could put there, what all you could do, and some potential snags to watch out for to get through that?
[00:28:43] Speaker A: The number one thing is get out of areas that are overly restrictive. And that that's a lot, that eliminates a lot of areas. So of course what you're giving up in that though is that you typically have a barrier to entry that you're giving up. So if you go to a place like rural Texas where there's essentially no zoning, the only, the only ordinance that we had to work around was septic. And I'll talk about that. But I could basically build whatever I want or however many of what I wanted was at the time, at least. The only downside there is like somebody else could buy the land right next to me and do the same thing, but unless they had the same vision and the same ability to execute it, I'm going to have that first mover advantage. Even if they did, I'm going to have the first mover advantage and build that following. But to be honest, and I don't want to get, I'm not, I'm not political, but I usually say like, get out of blue states and get out of cities.
[00:29:33] Speaker C: Agree with that.
[00:29:34] Speaker A: Yeah. So you want to be within two hours of a major metro area. Generally speaking. That's like what I call the Goldilocks zone. Perfect. Perfect. Like drive to distance. The land is usually cheaper out there. There's less restrictions just in general. And again, nature can really be the star of the show. I also think I'm like really bullish on Midwest sun belts, honestly. Southeast. Certain regions that are kind of not what you think of when you think of like experiential micro resort, like that sounds pretty sexy and cool, but these are, these are kind of like overlooked, you know, flyover country areas that you, you have a large population base that wants to be cool, wants to go somewhere cool, but they're kind of underserved, if that makes sense. So those are the markets. I'm the most bullish on what you have to look for typically though. So again, those are kind of my rules. But that doesn't mean you can't break them. I know lots of successful properties and really hard to build in markets. They just take a lot longer and then you have to factor in the opportunity cost. So you know, in coastal California, if you even can build, you may be four years in, in permitting and entitlement to get let alone absolutely ridiculously expensive land. But maybe that's a barrier to entry that's worthwhile to you. I'm just, I'm very impatient by nature and I, I couldn't abide that process.
So the main things you want to look for. Yeah, number one, zoning here in Texas, basically zoning doesn't exist. It does exist, but it's name only in rural Texas and unincorporated counties. Not across the board, but in a lot of counties. So you can basically build whatever you want from the zoning perspective. Okay, we, we check that box. If, if it's, let's assume you're not in Texas. If it's, if it's residential, residentially zoned and you want to do a micro resort.
Maybe you have a workaround with doing subdivision and creating separate structures on, on each, you know, lot.
Maybe you can get around that by.
If you can't get say hospitality zoning, which would be like the furthest upstream probably for these types of projects, hotels, maybe you can do like a campground where you can do a structure that's movable, that maybe has like a chassis. So there's a lot of those tiny homes and prefabs that like come that are totally movable. So they basically qualify as an RV park or a campground. So there's all kinds of things you can kind of like get around as far as zoning or worst case, you can rezone. So I have a friend in Georgia who bought this incredible 40 acre piece property with a waterfall, wants to do a micro resort. He ended up, it took him six months. Befriended the city council, was very forthright with what his vision was. Basically showed them how it was going to benefit their economy, that region and through a six month process got them to city government, the county government to rezone his land. So there's precedent for that too. Okay. Separately you have utilities. So this is not just from like a regulation perspective, but it's also like a risk and a cost factor. So you're going to need water, power, septic if you don't have water. You're going to need to drill a well if you don't, if you don't have city water. We ended up having a city line for future development that ran through the corner. So we kind of got lucky there. Power is not usually as big of a deal. There was power nearby. We paid to run it close by to our property. We had separately metered units. That's typically what you're going to need a lot of water too. Like if you're dealing with city, you're going to need separate meters for each, for each unit. And then septic was the big thing for us, so.
Exactly. So many regulations are always changing. But for us we had to do an aerobic system. Wasn't ideal, but we were, we have it on a timer. A timer. So an aerobic is. It treats all the septic and then, you know, you add bleach. It requires quite a bit of maintenance and then it sprays out sanitized water which is supposedly clean enough that you can drink from it. I wouldn't drink from it, but yeah.
[00:33:33] Speaker C: I don't know why they would say that, but okay.
[00:33:36] Speaker A: They're like trying to prove a point. It's just. Yeah.
[00:33:40] Speaker C: And a Lot of things that you wouldn't do.
[00:33:43] Speaker A: Yeah, but basically, you know, so it doesn't smell, it's clean water and it sprinklers a whole part of the landscape. So we ended up having a kind of a buffer zone between the cabins. And the road was perfect for that system. And they, they're on at night so you don't even see them or hear them. But permitting wise, it took us about six months to engineer to hire a septic engineer. This is one of the few things I actually hired an engineer for to design the system. It's a commercial system for the entire property. It's got lift stations because they can't all be gravity fed given the topography of the land.
Two or three holding tanks, the spray field anyway and about $70,000 to install that.
So that was the hardest part. Regulation wise. We also ended up spending speaking utilities like 25,000 to run high speed Internet from about a mile away. Which today I would probably just go with Starlink. But high speed Internet is really important. I mean it's one of those basic things that you gotta check. It's like cable stakes.
So those are kind of like. But let me give you one kind of like pro tip on regulations. Okay. This is a use case for AI. So I've tried. This works really well. If you're interested in a market, go to the county website in the jurisdiction you're in. And they usually have what's called a developer's document that has kind of like the overall process kind of rules, do's and don'ts of what they want, what they don't want in that county. Get that document, download the actual like if you can, like gis like the parcel data for your property or for interested properties. And if there's other overlapping entities, like you know, if there's a statewide. If you're in a zone, let's say that you're in like a coastal area and so there's a statewide ordinance on that or you're in a floodplain. So you need like the FEMA documents for that. Whatever, anybody, anybody who. And you can use Chad GPT to actually find out who these jurisdictions might be if you don't know or call the county, but whoever would have jurisdiction on any level of what's getting built or what's getting operated on your land or in a region, download those documents and throw them into like Notebook, Google Notebook LLM is the best one, but you can use ChatGPT or Claude. But Google LLM is like really good at scrutinizing large documents and multiple documents and overlaying that data and then you know, it'll consume this incredibly like difficult to read 100 page document or maybe times three or four. And then you can just have a conversation with it, a chat conversation to ask it questions about what's permissible and if there's, if one thing is not permissible, how to get around that. So anyway, that's a fantastic way to do like a ton of feasibility and legwork that you would pay 10,000 plus dollars to a consultant for. And I'm not saying in some cases those guys aren't valuable. They are. But you can just do, you can go like a long ways really quickly just using ChatGPT or whatever. And then once you have like some pretty good parameters on, on what actually works and you know, assuming it will work, then you want to actually call the county app. And what I've learned, if I've learned anything in like helping over 100 people now build these all across the country is like, is the sooner the better and the more honest you can be in communicating with your county on what you're doing. Don't try to like, you know, bend the rules. There are, there are cases, but more usually with the federal government actually like a federal agency that's like totally incompetent where you can be like, okay, we're going to bend this, we're going to ask for forgiveness. And they can't really do anything but with the local agencies because these are, these are your neighbors and you know, you really need these folks on your side. Get on, get them on board as soon as you can. You may have to adjust your plans. You need to sell your vision regardless. But you're going to have to do that to the bank, you're going to have to do that to investors. You know, there's other, you better get good at selling your vision because you're going to need that skill. And like I mentioned with the guy who rezoned, it's amazing how quickly like the nembi, the not in my backyard folks can actually like totally get on board and become a supporter with just the right amount of like education, humility and empathy on your part in explaining to them what you're actually trying to do. So those are kind of my big tips.
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[email protected] so I think one.
[00:39:29] Speaker C: Thing that I noticed about your story that you haven't mentioned is that a lot of people when they want to do this, they're like, okay, let me just go find some cheap land. Where am I going to find cheap land? Okay, the middle of Nebraska. And then they go to the middle of Nebraska and try to do something like this, which I don't recommend.
But you, it seems like part of what your competitive advantage was here was it was local to you. So you had that knowledge of the market, you know, the type of person who's coming to that area because you live there, you know who comes there and when and why and what they're doing, where they're coming from. And to me that's a much bigger competitive advantage than saying, okay, let me find the cheapest dirt in the United States and then try to do this.
Do you think that being that having that you don't have to be local to it, but just having that, that what's very thorough knowledge of the market you're building in really made a difference for this project?
[00:40:25] Speaker A: Yeah, it did for sure. And I would say I think it was actually less important from the angle of like knowing what the demand drivers were and more important to actually executing the project because I had to be there. So if you're trying to do one of these projects across the country and you really want the kind of detail we're talking that's necessary to create like a live O click or better experience, you're either going to a spend a ton of money like getting a fantastic team to do that for you that you can actually trust, but you know the horror stories of like trying to build these projects. So ideally, I guess the bigger question is like you kind of need to have some Understanding of what this project was for me was a baptism by fire. In. I already had a lot of the construction piece because of prior experience, but in real estate development, period, in hospitality operations, in marketing and bringing all. And of course the construction piece, then, yeah, raising the money. There were so many different elements. So, number one, you probably want to be a generalist as far as who you are and, and be willing to, like, learn, even if you don't already know, because you probably won't, how to do all these things.
But to your point about, like, being local, that is a massive advantage. Like I mentioned, I was over there 80 hours a week. That's because I was trying to do it in under a year, which I was, was I was able to do. You don't have to kill yourself doing that. You don't have to. You know, you could. I. I think there's a world where you could actually work a 40 hour a week job and in say, 10 to 20 hours a week manage a project like this. It just may take you two, two and a half years to do. But I want to touch on the demand thing because I initially was banking on, like, you know, Waco, for instance. I mentioned Magnolia. They get 2 million visitors a year there. So it's a big. It's actually becoming a pretty big tourist hub. It's basically like the Disney World for home design.
I was banking a lot on that. That was valuable those first two or three months because especially when we were on Airbnb, because, yeah, people were kind of just like, shopping what's in the area? Oh, this is a cool place to stay.
When that Instagram following kicked in. And I don't have any hard data, this is mostly anecdotal because I did stay very in tune with, like, where the guests were coming from and why. But, you know, the 80% direct bookings rate, which pretty much all that was coming from Instagram. So 80, let's call it 75% of all of our bookings came from Instagram. From scrolling through an app being served up content that resonates with your aesthetic. Yes. Region sometimes plays into that. And there were a lot of, like, more regional folks just because, again, it's drivable from Dallas, Houston, Austin, San Antonio. But most of these people weren't coming to Waco. Once they decided like, oh, this place is. This is really cool, then they're like, oh, what else is there that we can do in Waco? So I like to think we kind of created a whole new lane of traffic. Some of them ended up literally spending their entire stay on site because there were all these activities and there were kitchens in the cabins and, you know, they could eat there, they could play there. A lot of like, especially small families or like even romantic getaways. But of course, plenty ventured off for a bite to eat or a drink or go explore Magnolia. There isn't that much else to do though, in Waco. So I think that, like, you really can create, you know, the classic build it and they'll come. I really think that that does factor in here and you can create a destination again. You just have to be. You have to know when you on the, on the front end that we're going to spend what seems like a way too much money for these units when you're kind of used to more of a commoditized approach.
And we're going to have to have a vision. It's not just about spending more money. We're going to have to have a cohesive vision that like, really does add up. And really the elephant in the room here is you're going to have to have a good design aesthetic because design is the biggest amenity that affects every part of the experience.
And there's a lot of people out there that don't necessarily have that. I think they can cultivate that and like build that muscle. But if you don't, then you should partner with someone who does and that'll be your differentiating factor.
[00:44:37] Speaker C: So here's a question that I have about this, the building it and they will come. We saw a lot of people in 2021 who really wanted to get into short term rentals. I mean, everybody in the world was buying all kinds of real estate at that point. And they would tell them so they'd want to buy something like, let's say in the Smokies, maybe a little too far away from the attractions for what people go to the Smokies for. And then when the tide went out on that 2021 tourism, they were kind of left holding the bag because it worked fine when they were. When the tourism was insane, but then when it went back to normal, then they ended up usually eventually having to sell. So what do you think the line is for? For being a successful. If you build it, they will come, like cool property being the attraction. And then you know what lies are people telling themselves to just to justify buying something that they know is not going to work just to like get their foot in the door. Because I feel like there is a very fine line and you can be really successful about it, doing it that way. But there. There's a right way and a wrong way. What would you. And that may be a total loaded question. I'm sorry. But, um, you know, what would be your advice for people who are trying to do, like, make their property the attraction versus, like, hey, I'm just telling myself this to feel better about buying something that I know is probably not going to do as well as I want it to do.
Does that make sense?
[00:46:02] Speaker A: Yeah. Yeah. Um, so one thing that I really get a little peeved about is. And look, I've never actually been to the Smokies. It's probably amazing, and I would love to go. It's probably. What is. Is the Smokies the hottest STR market? The biggest ST market or someplace in, like, the Carolinas or maybe. Or, like.
[00:46:21] Speaker C: So I. I did read that the Smokies is Airbnb's biggest market.
[00:46:26] Speaker A: Okay, yeah, that's cool. That's. That's great.
But. And look, I'm probably going to step on people's toes. I don't mean to, but there's a lot of. When I say commodity, I think of, like, when you go on to Airbnb and you search a market and you just start scrolling and you start seeing the same thing over and over again. So in. In a certain region, that might be an aesthetic. Okay, here's log cabins. Maybe people go to the Smokies because that's what they want. They want the cabin experience. I get it. That's going to always satisfy, like, a good segment of the market. And maybe you have an experiential factor even there. Maybe you have, like, a bunch of amenities and whatever.
It's really hard to articulate, but let's just call it, like, the it factor. And not to play on status. But honestly, when you're talking about social media, the whole game is, if you're going to play it like this, people, it's aspirational. So you are. You're already just weeding out a certain level of, like, undiscerning guests that don't really get it when it comes to, like, great design, cool story, and then the amenities that make sense. What I see a lot of people doing is they don't really get it, whatever that is. And we can talk, try to pinpoint that more. But. And it's more of like, oh, my neighbor has a hot tub. And this is like, a really basic example. Or everybody in this market has a hot tub, or now everybody's moving to sauna and wellness. So I need to just add that. And I call it, you know, it's like, yeah, amenity, stacking, amenities, salad is really what it becomes.
[00:48:05] Speaker C: It's like, I love that. I love. I'm going to, I'm going to steal that.
[00:48:09] Speaker A: It's like, let's throw together as many amenities as we can, as if that's going to like, what's the. And you hear even these terms, and I think they can be helpful, but they can certainly be taken too far. What's the ROI on an amenity? It's like, and okay, I get it, you don't want to spend money that you don't think is going to justify. But I think you're approaching it the wrong way. You're looking at it as, how can I cobble together the most unbeatable, you know, amalgamation of activities that. As if people are just going to come and want to, okay, let's jump in the pool, let's get in the sauna, let's swing on the swing, let's ride the dirt bikes around the track. That may appeal to a certain group of people, but if you what. What it really takes to be successful and especially like from the marketing, marketing angle is storytelling. You have to understand what is the narrative that. What is the status? Like, this is what Apple was so good at. This is what, like all the most successful brands know how to master. They're not selling you the best computer. It may be, but that's arguable. That's very subjective. But they are selling you a certain status. You know, the classic Think different campaign that Steve Jobs engineered that was so radically successful. That man had taste. He understood like the cultural movement and like trying to declutter your life and, and being in the, in the, in crowd of like having the product. And so not that it's all about status, but I do think the storytelling is kind of like the main underlying skill there that you need to master and that. That applies in a. On different scales. It applies on like a, A copywriting scale for your website, your marketing material. But I would say, like, call it design experience. Like, what is the. Or, sorry, experience design. What is the. I mentioned guest journey. What is that process like from scrolling through with, as a cold, you know, user, social media that doesn't know who your brand is or what your property is and they see this content that's luring them in through the way that you're telling and through the way you're telling that story. So there's lifestyle, you know, videography that shows those experiences taking place on your property that shows the architecture that is captured at the right time of day. It's like vibe marketing. It's like, it's capturing a certain vibe that appeals to people because it's emotional. It's not just, I'm on Airbnb and I'm looking at what amenities. I want a pool, and I want this and I want that. You're actually giving the guest something like Steve Jobs did with the iPhone, something they don't even know they need. And you're doing it in ways of, like, selling them. This could be, like, a whole experience. So anyway, from that moment all the way through, they arrive on your property. What are the first impressions?
What is, like, the process through the messaging that kind of makes this an adventure? And any one of these things can be taken too far or overemphasized, and it defeats the purpose. You have to have this cohesive story and this cohesive experience. And so in my mind, at Live Oak Lake, I was building it for me and my family what I would want to experience if I was going there. And so there were amenities. There were hot tubs. There was a shipping container pool with a window in it that was really cool. There were trails and fishing and kayaking. But all those things had to fit into this greater narrative of kind of like. I don't know if you've ever. Did you watch that HBO documentary on Ralph Lauren by chance?
[00:51:41] Speaker C: I did not watch that, no.
[00:51:43] Speaker A: Called Very Ralph. It's really good. But basically, like, he was. He was a master at this because he ended up, you know, making his fortune selling clothes. But again, what he was really selling was a lifestyle. So the way that he would put the outfits together and then, like, actually market them and, like, the whole Polo Ralph Lauren thing, like, there was a whole kind of, like, status he was selling just like Yvonne Chouinard with Patagonia or Steve Jobs with Apple or Andre Balage or Ian Schreger with hotel with boutique hotels. Like, these guys understood they were life's lifestyle marketing. And so I know we're going, like, deep in the weeds here on experiences, but you have to think of this in terms of a lifestyle and a narrative of what people want to tell themselves about where they are and what they ultimately want to experience. So though you converge on, like, I'm not trying to. I don't want to get too, like, manipulative here in the way that I'm talking about it, but because, you know, you do have to think about the marketing angle, and that's kind of like I think where my mind works the best. But ultimately what is the experience here? And real memorable experiences are not just the result of an amenity salad. They are this carefully thought through story that's told. It's a story about the property and the host behind that, that built the place or that managed the place, whatever. But it's also like a setting for the story of your guest to actually unfold. And you're kind of like setting the stage for them and giving them the supporting cast, the characters, whether that's the land or the, the activities or the amenities, whatever for them to have these experiences. I talked about those emotional connections that again kind of like go. That's why I call it experiential hospitality. It's like, it's transformational and that's why I think we had guests coming back so many times. So social media is just the, the megaphone for word of mouth marketing. Word of mouth marketing has been and always will be the most valuable channel in marketing and advertising, I believe, because people, because your leverage gets all based on trust, right? So you can't pay someone. Well, you can, but it's only going to last about one or two times because then the reputation shot, you can't pay someone to shill something that they don't actually like. And people won't usually do that because they care about the reputation. So if you create this foundational experience and if you have this story, then when the influencers come or when the guests come, just whatever scale they're telling the story and they share that with their audiences, you're just leveraging word of mouth marketing to grow. So to get all the way back to your question, don't approach it as a formula of how we, you know, just a profit driven motive formula of like how do we throw together the best amenities to create the highest adr, to create the big, the biggest and best outcome, you have to be more of a visionary and like a taste maker, to be honest, to say, what is the story that we want to tell and the experience we want to give and the lifestyle that we're trying to portray here. People can experience, whether it's for one day or a week, or maybe you want to actually take this to the next level and build like an entire community around this. And you could have residential and you could have hospitality and you could have retail and you could have an entire like master plan community, which is something that I'm really interested in now because the, you know, if people come and they love this experience and it's Incredible. And it's charming and it's beautiful, and they have these great memories. Why wouldn't they want to live in a place? Why wouldn't. You know? They wouldn't. Chances are, if they could afford it, they wouldn't want to just stay there. They want to live in that. And so there's. There's a. There's a whole way of even building that. I feel like us as Americans don't always do the best job with. Especially, like, here in Texas, that's like, you know, kind of like strip mall central. And you drive down the highway and it's all concrete and, you know, just urban sprawl. You go to places like Europe, and they may have a lot of other problems, but they actually get it. Like, there's a. There's a level of charm and history in some of those towns, like in the Netherlands, for instance, that is just You. Have you been there before?
[00:55:49] Speaker C: I've not been to the Netherlands, no. But in the US I was kind of thinking about New Orleans when. When you're talking about.
[00:55:54] Speaker A: Perfect example. Yeah, there's. There's a level of, like, character and charm and soul in those spaces that, honestly, that tells a story, and that's really interesting that you want to be in. And so it kind of goes back to a philosophy of environments affect how we feel. And you have to become a student of that. So therefore, you have to become a student of design, of how do we bring together. You know, there's terminology, place making. That's basically like, how do you create places that make people feel amazing? And so the big components for me are like, nature is number one. Nature is the place where everybody feels the most alive. So how do you bring those components in?
Lighting is another super important thing. Interior and exterior. You got to have the right lighting.
Natural, including natural lights. You know, the actual, like, water. That and the sensory components of, like, the sound of water, the sight of water. Obviously, having views with nature is also a big plus. The architecture. And ultimately, you're trying to create an environment both inside and outside, that is transportive, that feels so cohesively tied together. There's a shared vernacular with the architecture. So in Live Oak Lake, it's very much all one. It's not this. There's another thing I see people doing, whether it's the Smokies or anywhere else. Oh, I want to be an experiential micro resort. Let's go buy 30 Airstreams and 30 Yurts and 30 Domes and 30 Tree Houses and throw all these things together. Into this village. Okay, that may appeal, and that actually may work really well for a period of time. You may have, like, the most flashy design, like fancy wallpapers and fancy plants and, you know, Instagrammable walls and whatever.
I just think that you're kind of missing the big point, which is what's the overall narrative here? You kind of miss the forest for the trees, and you're so focused on, like, trying to be different that it appeals to some people, but it doesn't. It doesn't resonate in terms of that overarching, like, cohesive narrative. And it's also not enduring. It's not timeless. So it may work for, like, a year or two, but then to your point, like, the tide goes out and you become very dated. So there's a whole lot there. And you have to tell me if any of that made sense.
[00:58:12] Speaker C: No, it totally made sense. I feel like Liz Lambert with El Cosmico kind of started that whole. That whole Airstream thing, and she did a really good job of it. She also sold her bunkhouse company to the Standard, I think, for millions and millions of dollars. So she's, you know, she.
[00:58:28] Speaker A: She's a master at place making and design and, like, storytelling, for sure.
[00:58:31] Speaker C: She really is. She really. And a lot of people may not know who that here, but, guys, Liz Lambert, she started with. She was a big Austin person when I lived there. She started with the Hotel San Jose on South Congress and in Austin. That was, like, a total. I don't know if I'm allowed to say crack hotel, but that's what I'm gonna say. And then she turned it into this beautiful boutique. Like, she. I would call her kind of like the pioneer of what is today's boutique hotel movement. And a lot of the boutique hotel people don't even know who she is. Anyway, I'm a huge fan. She's got. Then she had, like, Hotel St. Cecilia in Austin. She's got El Cosmico and Marfa.
She's got. What's the one in New Orleans? I can't remember. She got a big one in New Orleans.
[00:59:12] Speaker A: Vincent, maybe?
[00:59:13] Speaker C: Yes, St. Vincent. So she's got. Okay, okay. We're on the same level. I kind of feel like you have. You have missed your calling living in Waco and that you're a New York guy at heart.
[00:59:22] Speaker A: So I was in New York last week for the first time, really, for, like, four days, and it just blew me away.
[00:59:27] Speaker C: Oh, that was your first time? Yeah. You're a. You're a New York guy for sure.
[00:59:32] Speaker A: I wouldn't want to live in a big city, though. Like, I am a. I've always lived on a farm in the country, believe it or not. And I love nature. So nature is the star of the show. Like, for me, nature, like I said, is the place where people feel the most alive. And I'm just trying to get environments together and even in urban environments where you can bring trees in and you can. Hey, quick, quick note on this. And I liked your thought. Landscaping, hot take is the highest ROI money you can spend, period, in real estate development. I absolutely believe that. Because the day you plant a tree or a bush is the least valuable it's ever going to be. The structure. The day you build a structure is the most valuable. It's only going to depreciate. Now you make. Because it needs maintenance. The law of entropy. The underlying real estate will probably appreciate landscaping, though. It only gets better. That's what I was saying about those live oak trees.
[01:00:16] Speaker C: So I love a good live oak tree.
[01:00:18] Speaker A: Yeah, build. Build for, like, nature and buy for nature, too. Like, spend more money. To your point about Nebraska or whatever. Okay. It might work from a market perspective, to my point about, like, underserved markets, but even if you're in one of those places, pay the premium to get the piece of land that has the components to create this experience from a landscape perspective.
[01:00:40] Speaker C: I agree with that. And we. I've got one more like, category question before we let you go. So talk to me about why you decided to sell it, how you decided, or maybe that wasn't a strategy. Maybe they just approached you selling to an institutional buyer. Because I feel like a lot of people who have, have like, a little bit of business knowledge. They're like, I'm going to build this up and I'm going to sell to an institutional buyer. Well, you can't do that with a single family residential house. It will still be residential. You could do it with a big portfolio of them, but it would have to be a big portfolio. So how did. Was that a strategy from the beginning? Did you just decide to do it halfway through? How did that come about and how did you make it happen?
[01:01:21] Speaker A: Great question. So from day one, when we were building, I had in my mind that we would potentially sell if I was never like, we will never sell this. I was prepared for that. What I wasn't prepared for was the level of, obviously, like, internally, the level of success we hit in year one. You know, we net $550,000 in year one. Or just shy that, like 530. So you met $530,000 your first pre debt service. So just from like an NOI perspective, if you figure in like all of our payments, we were at like 190,000 after paying all the real estate, like everything.
[01:02:00] Speaker C: That's so great though.
[01:02:01] Speaker A: Yeah, it's fantastic, you know, for a 2 million, 2.3 million dollar investment. So I was prepared for it, the potential of selling but then I didn't expect to like get approached. So there were big private equity companies, like names we would all know that approached us and wanted, with a term sheet, wanted to buy. We did. I actually got really close on one of those deals, but it ended up being quite a bit less than what we sold for. Their play and they made it pretty explicit to me was well I think it was two things. One, they kind of, it was kind of a talent play. Like they were like look, we have deep pockets. One of them specifically told me we have $50 million ready to deploy in this asset class. If you will come on, be our guy to do that, we'll give you up to 18% of that as equity and which was kind of a sweet deal. I didn't want to take it and I'm kind of glad I didn't because I didn't feel like I'd ever really have the control that I needed to build and to spend the money that was needed to build these kind of places.
But they, they made it very clear they wanted to bet on these micro resorts, on the experiential hospitality sector. And the, the other big part was the audience we had built for Live Oak Lake in that first 12 months call. It was a huge lever that they could then pull to launch other properties. So we had more followers and more engagement than, and really followers don't matter as you know in social media that much anymore. It's about creating content that actually works and getting eyeballs. But we had more engagement than, you know, several like public hotel companies and several like resort brands even with this puny little like seven cabin camp out in the woods of Texas. So they saw that as like a big asset that they could lever to, to launch other similar properties.
We talked with a number of folks. One thing I, I learned was a lot of those discussions were about six months in and so they really haircut us on the valuation because even though we had super strong numbers, we didn't have a full 12 months to back it up. We were projecting. So anyway, you have to have a T12 trailing 12 months panel with the numbers to base any Kind of like evaluation off of that, that's going to be good.
We ended up like basically shutting the door on all of that. And then we listed the property in like month 13, right after we had that T12. And so then we could actually show the historical numbers, let alone the future cash flow. So then we got approached. We got under contract for 6.5 million with a small group of investors that were pretty inexperienced, let's just say that, and, and I was pretty inexperienced in the selling process. So we got all the way down to the day before we were supposed to close. Due diligence checked out, we're ready to go. Six and a half million. And they, they say let's get on a call, like a celebratory call, I assumed. And they're like, the attorney's with them and they're like, we need some more time. We are. Lender backed out, basically. They didn't tell me that, but I figured out their lender backed out. So as you can imagine, two days later the entire deal fell through.
We only, they only had $15,000 of earnest money down on a six and a half million dollar deal. That again shows how inexperienced I was in negotiating these things. But barely even covered my attorney's fees to get us to that point. And you know, the emotional roller coaster of are we selling? We are selling. Oh, now we're not selling. It was, it was good for me. But you know, the big lesson there was like, if it's meant to be, it'll be, if not, don't stress it. We didn't need to sell. And so that was the best position to try to sell or to consider selling because everything was going in our favor as far as financially, media, press wise, social media growth, all of that.
So then three days later, after falling through, I get another way for 7 million. And the six and a half was the highest we had seen by quite a ways. So now we had 500,000 more.
They initially wanted us to sell or finance a portion of that. We negotiated out of that.
They arranged, we got it all figured out. 200k of due diligence, of earnest money. This time we got down to the week or I think the week before closing, get on a call, sorry, our key investor backed out and I, I said institutional, this is kind of like pseudo institutional. They're small, it's like a spin off kind of of a big major hotel brand.
But they weren't necessarily like a big private equity name. You would know. Okay. It was fundamentally a group of high net worths. That were starting an institutional, a small institutional grade fund and they, so at that point they were past their refundable option. So we could have walked with basically $200,000. But I felt like the 7 million number was like probably pretty, pretty worth it for us.
[01:07:01] Speaker C: Worth pursuing.
[01:07:02] Speaker A: Yeah. For them though, it wasn't as crazy as it seems it was. That's, that's essentially an 8% cap rate. So I mean in our industry, in the str part that, that's pretty insane. But like in real estate as a whole, and granted this is a turnkey business. There's management in place, there is laundry operations on site, there's a marketing component, there's a brand component which was a significant part of that. So 8% cap, including like this hundreds of thousands of followers on social media brand.
And again, they had a, they had a dream to take that, leverage that for other similar properties as well. So anyway, we ended up giving them more time and finally like four months after we first got under contract, we closed. So it was quite an ordeal and I learned a lot through that. Big takeaway is have really good lawyers and have really good accounting advice like don't try to do that stuff yourself. Which kind of is always my natural just scrappy mentality. But like you need really good legal and accounting counsel.
[01:08:03] Speaker C: Yeah, I totally agree with that.
All right, awesome. So before I ask you the final three questions of the show, is there anything that we haven't touched on or that I haven't asked you that you feel like our listeners would benefit from hearing?
[01:08:18] Speaker A: I would just say there are opportunities everywhere for experiential hospitality properties. Whether that's an abandoned farmhouse or an old tenement building in your city or an old train station. A train car. My family and I bought a $3,000, 120 year old rotten train car and, and turn it into one of the most like iconic stays in the country out in the, in the middle of nowhere in Idaho, restored as like an original rail car experience or you know, grain silos. And it doesn't all have to be these crazy structures too. Maybe it's just a beautiful piece of land that you want to create some modern village in. But if you have the passion and if you have the story that you want to tell and you, you believe in it and you're willing to go all in on it like you will become a magnet for everything you need from capital to, to guests and potentially somebody who might want to buy it. So like there are opportunities everywhere and there's a major trend Here in the, from what I can see in the travel industry, where especially our generation is craving these one of a kind experiences. And yes, there are going to be, you know, pricing inequities at time when, you know, maybe I got lucky because I was one of the first. And so people were willing to pay an insane premium at times. I mean we sold some nights for over a thousand bucks a night at a 500 square foot cabin in Waco, Texas.
But like the, I believe to my bones that the fundamental like experiential design, nature driven factor, if you nail all of that storytelling into this one of a kind property, like that's going, that's timeless, that's going to stand the test of time. And so I think it's a fantastic opportunity to capitalize on the experiential trend and create something like this. That's I guess the one big thing I wanted to make sure we made 100 clear. That was not a one of. In other words, Live Oak Lake was not repeated.
[01:10:15] Speaker C: Yeah, yeah, it can be repeated. I love that. I love that. And it's super cool, guys. If you haven't seen it, I don't know if you're running that Instagram anymore, but it's still up. Yeah, at Live Oak Lake.
[01:10:27] Speaker A: Yeah, at Live Oak Lake.
[01:10:29] Speaker C: Gotcha. All right, cool. And all right, last three questions. These are just kind of rapid fire, you know, like one sentence answers. What advice would you give 20 year old Isaac if you knew then what you know now?
[01:10:44] Speaker A: Stay curious and persevere when everything seems to be working against you. There's a silver lining in, in every hardship.
[01:10:53] Speaker C: All right, great advice. Number two. What advice would you give a new investor who's interested in getting started in short term rentals today? Weird, weird time in real estate.
[01:11:04] Speaker A: Yep. Again, I would say build fewer units, buy fewer units, spend more money, care, attention, nailing that story and experience and design.
[01:11:17] Speaker C: All right, I'm kind of excited to ask this one because you seem like you're probably have read a lot of books. What is your favorite book that has impacted your mindset?
[01:11:28] Speaker A: Well, there's a lot of answers, but I'll just say Unreasonable Hospitality is the number one. Have you read that book?
[01:11:34] Speaker C: Oh, yeah.
[01:11:35] Speaker A: So good. And there's still actually a surprising amount of people who have not. But you are doing yourself a major disservice to not go buy that book. I don't get any commission and read it. But in terms of like, yeah, I'm borrowing a lot of ideas even. Well, I didn't, I didn't know that book didn't exist when I built Live Oak Lake, but so much of what he said is so applicable. And he was running the number one restaurant in the world that was charging, you know, 500 bucks a plate or whatever, something ridiculous. But the lessons of unreasonable hospitality, of going above and beyond creating an experience, and of like surprising and delighting your guests are so applicable to every industry. Not just short term rentals, but especially short term rentals.
[01:12:16] Speaker C: Yeah, I totally agree with that. Love that book. Actually had an experience a few weeks ago that I was like, man, I wonder if this chef read that book. So we were at, we've got a condo in New Orleans and we were there with the kids because we live in a super small town in Florida and so we like to go do city things like go to Saints games and stuff. And so we went to Antoine's, which is the oldest restaurant in the country and oldest one in New Orleans. It's one of those white tablecloth like luxury places. And they really do go above and beyond. And my son, who's 4, has been on a big ratatouille kick lately. Like, he's like, I want to be a chef. And I'm like, what kind of chef? He's like a sous chef. Like, he doesn't know what that means. Like, oh, you want to be like an assistant? So anyway, we're eating and the kids are hanging out and our server comes out and. And he's like, looks at her and he goes, are you a chef? And everybody who comes out, are you a chef? And then finally they bring out the chef from the back and they're like, hey, this four year old kid out here is looking for the chef. And so the chef comes out, not only talks to my son and my daughter, he says, hey, do you want to see the kitchen? Takes them in the kitchen shows them all. And this is, you know, like a five star old restaurant, shows them everything, has the dessert chef, I don't know what she was called, has her like whip them up a little something, gives them a plate and they get to walk out of the kitchen through the rest of the, like through the restaurant, looking at everybody like, look how, look, we're special. We got these desserts.
[01:13:41] Speaker B: And.
[01:13:41] Speaker C: And like that was so above and beyond. They didn't, the guy didn't have to come out and talk to them at all. Not only that, he like took them through the kitchen and took time out of his day to do that. So anyway, they got a five star review from me on Google. I Don't. I don't even leave Google. I'd never leave anybody but a five star if I was going to leave a review for something. But like, man, that, that to me, I was like, that is unreasonable hospitality, what they just did.
[01:14:07] Speaker A: What a fantastic example, Avery. And like the best part is not just the five star review, but like you're telling that story publicly now. And when I go to New Orleans, I'm going to that restaurant because of that story. And so again, that's the power of word of mouth marketing. Like, it ripples out. It may not. There's a great piece of advice by a guy named Paul Graham who said do things. He was talking about startups, actually startup founders, but he was like, you need to go and do things that don't scale. Okay. It doesn't make sense. Like it doesn't make sense to go and call up all of your customers, in his case, for your SaaS startup and ask them about their experience, that is critical. But if you can engineer, even in not just the startup phase of your business or whatever, but like, especially in hospitality, the long term, like operations, your staff, the whole ethos, the culture that you're creating, the priority of doing things that don't scale because you're trying to, yeah, surprise, delight and be unreasonably kind and hospitable to your guests, they end up, the irony is they end up scaling far bigger than anything else because those are those moments that you'll remember forever. The story you're not, you're going to tell over and over again and it's going to ripple out and other people are then going to then go and experience that themselves and it all comes back to the business and rewards them. So I love that. It's a perfect example.
[01:15:25] Speaker C: Yeah, really great example. And you need Lita. When you go to Antoine's. Lita is the server that you want to ask for. So, Lita, anyway, thank you so much for coming on Isaac. If our listeners want to follow you, follow your story, all that, how can they do that?
[01:15:41] Speaker A: I'm on socials at Isaac French and I have a seven day free course of how to build a micro resort. You can get it@experiential hospitality.com.
[01:15:53] Speaker C: All right, badass, thanks again so much for coming on.
