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[00:00:00] Sarah: Hello, listeners. Welcome back for another great week. My name is Sarah Karakaian.
[00:00:03] Annette: I am Annette Grant. And together we’re–
[00:00:05] Both Annette & Sarah: Thanks for Visiting.
[00:00:06] Sarah: Let’s kick off this episode like we do every week, and it’s sharing one of you, our amazing listeners, who is using our hashtag, that is #STRShareSunday. If you use that hashtag on Instagram, we will find you, and then we are going to share your short-term rental here on the podcast, on Instagram on Sundays, to our email list, anywhere we can. Annette, who are we sharing this week?
[00:00:27] Annette: This week we are sharing @elylogcabin. Again, that’s @elylogcabin, and that is E-L-Y Log Cabin. And I love to share Ely Log Cabin, and I also just want to say that the owner of this cabin was on the show way back in the day, Episode 219. So I want to give Addie a shout-out. Please listen to this episode.
[00:00:51] She’s off the grid. I get nervous just even saying off the grid because it’s cold in Minnesota where her property is. But she has got it down on how to host a off-the-grid remote property. But I noticed over time Addie’s been adding properties. Addie’s adding. She’s true to her name here.
[00:01:16] She highlights, she shows this off-the-grid, dog-friendly winter haven because we’re in the thick of it right now. But I love how much the snow is showing up, and it’s a positive. She’s leaning into that, and she has to lean in on the remoteness, the off-grid of the property.
[00:01:37] Her photos, I just feel like they’re getting better and better. She’s doing a ton of reels, so I just want you to go through her feed and take note of all of the work that she’s putting in and diversifying, what she’s putting in her Instagram feed there. Enough about that, but let’s go.
[00:01:55] She’s, again, direct booking. If you don’t have this linked to your Instagram, please take a look at how Addie is doing that. She has it at the very top. One thing I noticed, I’m actually interested in how she does this. It’s actually interactive. When you go to her link tree, the Book Direct and Save is pulsating. It is animated.
[00:02:17] Sarah: Click Me.
[00:02:19] Annette: I have not seen this before. So please take note of this. Go check them out on Instagram. Click there link in bio, and you’ll see how it’s the very top, and it jumps out at you. It’s animated. It wants you to take note, book, direct, and save. That, to me, is genius. This is using technology to your favor.
[00:02:38] That’s something that every single person has seen every time, and I love that. She also has discounts available to her cabins there. It’s like, get that right out of the gate. And then she shows some of the podcasts that she’s been on so her guests can get to know her.
[00:02:56] We’ve just watched her over the years continue to build on not only her real estate portfolio, but her direct booking site, these other cabins. And we just want to say good job to Addie, but check her out. Check her episode out, check out her listings. Well done.
[00:03:14] Sarah: Today we’re going to chat with one of our Hosting Business Mastery members, Tanya Rooney. Tanya joined our membership years ago and has always been a champion of masterminds and networking.
[00:03:28] Annette: Doing the thing.
[00:03:31] Sarah: Doing the thing, but for the exact– now, this episode, we’re not talking about a deal that she did and is now unpacking. This is about a deal she chose not to do.
[00:03:43] Annette: She went far down the road.
[00:03:45] Sarah: Far down the road.
[00:03:47] Annette: Lots of money, lots of time. But we love her attitude about the education that she garnered from doing the reps on this deal. Her attitude is awesome. But we want to share this one because, spoiler alert, it’s about a very hot topic right now, which is, everyone’s talking about how motels are better investment than short-term rentals, how you can make more money, and that’s where a lot of people are pivoting to motels or midterm rentals.
[00:04:15] And we want to bring Tanya on because she’s someone that it wasn’t that she wanted to completely pivot. She still has her short-term rental portfolio, but we want to share her due diligence and what she did on this no deal. And wait to hear about her inspection process. It’s a doozy.
[00:04:35] Sarah: Tanya, welcome to the show.
[00:04:37] Tanya: Thank you. Hi.
[00:04:38] Sarah: Hi. We are so excited to have you here. Everyone wants to know how you got bit by the short-term rental bug. So take us back prior to that and how the heck you got into–
[00:04:48] Annette: Did she get bit or did she get stung?
[00:04:50] Sarah: Yeah, she’s been held captive. She’s really in it. So yeah, what was that like for you?
[00:04:57] Tanya: Yeah, we’re going to go with held captive is probably the best way to explain that.
[00:05:02] So in late 2020, I flipped a house, and we weren’t able to sell it for what we wanted. So I was talking to somebody in my network who’s in one of my flipping groups, and he asked me some questions about it, and then he asked if I’ve ever considered short-term rental. And I was like, what are you talking about?
[00:05:19] So he ran me through things. He put everything into AirDNA and showed me, and he’s like, Tanya, you’re pretty attentive. If you can do even half of this, it’ll still be awesome. So that’s literally how we fell into short-term rentals. And ever since, it’s been absolutely fantastic. It’s very clearly the path I was supposed to take. It’s far better than flipping.
[00:05:40] Annette: I know you do this with your husband, with your life partner. Did you have to convince him at all, or is it all you? Is it shared?
[00:05:48] Tanya: No, I don’t usually have to convince my husband of things. And mainly because he’s my biggest cheerleader. So he trusts me, and sometimes I’m not positive, but mostly I think we do pretty well together, so that’s why we’ve been together almost 16 years, and he supports all the crazy ideas that I have. And I think now that we’ve been together so long, he knows to just let me do my thing and that it’ll all work out in the end. So yeah, we have a pretty good partnership like that.
[00:06:20] Annette: And have you flipped any homes since you started hosting, or have you been flipping them into short-term rentals?
[00:06:27] Tanya: We have actually flipped since we started hosting. We’ve flipped every property that we have. Right now we have five, and all of them have been at least touched. The last one that we bought was a really minor– I wouldn’t even call it a flip. We had to remove a ceiling and put a new one up. We had to change fixtures out. We made it prettier, and we painted some stuff, but no, we didn’t really have to flip it. So I haven’t done any heavy flipping for at least two years.
[00:06:54] Sarah: So talk to me, Tanya, about– I think some people got into the short-term rental industry in 2020, in 2021, right? You were not alone in that position. But they found out “how much work it is.” It is a lot of work. They found out how much work’s involved, and sometimes that work doesn’t offset the extra cash flow. So what is it about the short-term rental industry that has you jazzed?
[00:07:16] Tanya: This lends more to my personality, I think, more than anything, and that’s the reason that it work so well for me, is I get really excited. This is my personality through and through, that I get to talk to people that I don’t know, that I get to be excited when they’re coming to town for all the most random reasons.
[00:07:36] The reason we get to host is so fun, because you hear some stories that will make you tear up. You hear stories that are just the most exciting thing. We had one guest that they had a book club for 15 years, and they hadn’t seen each other in seven years. So they decided to meet in Minneapolis of all places.
[00:07:56] None of them are from Minneapolis, and book one of our houses and have book club. That kind of stuff is super cool. So this just lends– like I said, my personality is totally like, how can we welcome more people to come into our lives and do super cool things and match them up with a house. So really what comes down to it, I’m just good at communicating, and this area makes me really excited. So I’m doing something that I’m probably supposed to do, I think.
[00:08:24] Sarah: I love that.
[00:08:25] Annette: And your five properties, Tanya, how close are they together? I like to give listeners, when people have their portfolio, giving them an idea of the geography of the five.
[00:08:37] Tanya: Yeah, so we’re in Minnesota, and we’re in the Twin Cities. So it’s Minneapolis and St. Paul. And Minneapolis and St. Paul are like maybe six miles away from each other or something. And all of our properties are there. So our main properties are in St. Paul. We have three of them there, and they’re all within a mile of each other. Two of them are on the same street actually.
[00:08:57] Sarah: And I think this will lend itself to the story that we’re about to get into with you, but talk to us about your team, Tanya. What do operations look like for your business?
[00:09:05] Tanya: So my husband has a small part in the business. He helps me out with security every week. So that just means when we’re putting in people to our security system, he checks them, makes sure everything’s okay. So he’s part of the team, and he does some maintenance stuff. And then I have a part-time, heavy on the part, I’d say part-time assistant that helps me out with all my cleaning and laundry coordination.
[00:09:30] We have some really big houses. We have a six bedroom and a five bedroom. And because of that, we send laundry out on those two plus one other one that’s a three-bedroom. And the coordination to that it’s logistics-heavy. And especially when it’s busy season and you have that many houses, there’s a lot going on with cleaning.
[00:09:47] We don’t have just one cleaning team. We have a few individuals. So because of that, she helps me the most with that and some reporting. I have a bookkeeper that helps me part-time, and then my accountant. I don’t only have anybody else, so it’s a pretty small team. But I feel like it’s pretty mighty because I work– I can’t say I work a ton, and a lot of that is because of the stuff I have set up, either the systems and processes or the people that help me.
[00:10:14] Sarah: 100%. You said something real quick that I do want to take a small pivot. You said your husband helps you do security each week. I know that direct book and just security in general is a big topic. So will you share with our listeners what it is that you guys do for your security measures each week?
[00:10:30] Tanya: Yeah. So we have locks at our house, or we have push button locks, I guess is what I would call them or something. And so people have to put in their code. We have multiple people coming through our houses every week, plus we have cleaning teams and all the other random people that might only check into the house once a year.
[00:10:51] All of those people are in our security system. So we have an API connection from Price Labs and Hospitable into our remote lock, and remote lock puts everybody in there. And then my husband has to go and just change everybody’s code.
[00:11:06] We do a little bit of checking just to see what kinds of people are trying to get into our houses and things like that. But other than that, we have cameras on every exterior door, and then we have those put into any of our listings. Everybody knows that we are going to have cameras. We don’t put them in the house. Everything is just securely outside.
[00:11:24] Sarah: Right. Okay. You mentioned that, and I was like, I love that. He’s your security. That’s great.
[00:11:28] Annette: Head of security.
[00:11:29] Sarah: Head of security. All right, Tanya. So Annette and I have the back story to this deal that we’re going to talk about today, and when we were talking with you, Tanya, about sharing it, I loved it for so many reasons, listeners. Number one, because Tanya, you’re such an action taker. So as we get into this story, the deal came across your desk. How you knew that you wanted to pounce on it and what that meant, pouncing on it. And then it’s different than short-term rentals.
[00:12:03] This deal was a motel. I know that’s a really sexy topic right now, and I want to talk about the numbers involved. The underwriting you had to do, you had to learn, the people in your network and thank goodness you had the network that you do to help you do the underwriting on this property, because it’s, again, very different than a short-term rental, and then of course, you know what happened here at the end. So let’s talk about this deal coming across your desk. Why did it appeal to you? What was the deal? Where is it? Give us the basics. Lay the foundation for us.
[00:12:37] Tanya: Yeah, so I found the deal by reading a post and your mastermind website or your mastermind Facebook group. You actually posted it because you happen to know the girl that was trying to get rid of it. And I saw it just as a post. It was just from LoopNet and it said it was a motel.
[00:12:58] I started looking at the pictures and I’m like, oh my God, look how much potential this thing has, because it is not great right now. And it wasn’t super far from our place. Honestly, it was like a holiday weekend. I think it was Memorial Day weekend, and I had showed it to my husband because he was off and I was like, hey, Matt, do you maybe want to go look at a motel? This isn’t super far away.
[00:13:19] I am like, it’s got quite a bit of potential. I don’t know if it’s anything we can do. It doesn’t seem like a super high price, but do you just want to go look at it? So he’s always up for a road trip. We love hanging out in the car and going and seeing things. So we drove up to Balsam Lake, Wisconsin, which is about an hour and 15 minutes from the Twin Cities.
[00:13:38] We were living in St. Paul at the time. So we drove up there to take a look at it, and it was all of the things. Because of my flipping background, I know where there’s potential. So it was the drool worthy feeling that you get when you have something that you’re like, oh my God, I could make this so much better.
[00:13:56] And it gets you really excited. So we started out by looking at it. We called the realtor. I think I didn’t even have a realtor that I wanted to work with quite yet, especially since it was in Wisconsin. Most of my people are in Minnesota. So we drove up there, took a look at it, decided had a huge thing of questions and things that we probably needed to think of.
[00:14:17] So we took it home and started running numbers after that. And yeah, I started calling a couple of my realtors trying to find somebody who had the commercial experience that I needed because I couldn’t just use a random realtor because there’s more things in commercial that I wasn’t quite comfortable with quite yet.
[00:14:34] So I just targeted a broker that I know he always does multifamily and does a few other things. So now he’s in commercial or he has been in commercial for a few years. So I called him first, and I was like, hey, I really want to talk with you because you have the brokerage experience that I need because this is a commercial deal, which is different than a house deal.
[00:14:55] There’s similarities, but there are definitely things in the background, in the underwriting process that you need somebody to know what the heck they’re talking about. And it’s okay if you don’t know. That’s not that big of a deal, but you have to find somebody that you trust that you can ask the questions to, and you need to be able to ask all the dumbest questions or that you feel silly asking them.
[00:15:13] You need to be comfortable with that person because he was totally cool with all of it. He jumped in and he is like, hey, I just need to talk to my broker and find out if I can do a Wisconsin deal. So we actually added in a realtor, a Minnesota-Wisconsin realtor in addition to his brokerage, so that we could do all the paperwork.
[00:15:30] Annette: With the motel, when you’re running the numbers, where did you go to first? Because is this a Price Labs? Were they giving you any of the numbers? I’m overwhelmed thinking about how you would start to run the numbers. Where do you start with that?
[00:15:45] Sarah: And actually, tell us like your first– you said you went home and you run the numbers, so tell us the numbers that you ran at first, and then if you ended up running them again with someone else, with a different angle, what you did then.
[00:15:58] Tanya: I think by the time I was done, I actually had 17 iterations, and that’s probably not counting the first two or three because the first two or three, I didn’t know what I was doing at all. So the first bit, I came home and I was just like, okay, let’s see what a one bedroom, one bath goes for, even though these are probably considered studio.
[00:16:15] So I ran those numbers. I always try to run at least high-level numbers before I would even consider putting in an offer. So I ran those number on– I think I just looked at Airbnb and VRBO. That’s normally what I do. I did a little bit of Price Labs stuff, and we’ll park that on some of the intense underwriting I had to do because there wasn’t a lot of things to go off of.
[00:16:38] Because you can compare it to a one-bedroom, one-bath house, or even a duplex, but you really can’t– you can’t compare it to the other properties that are up there because most of them are lake properties. They might be a four-bedroom house on a lake. We weren’t on a lake or anything like that, and we’re still a motel, there’s definitely people right next to you, so it’s more considered. It’s almost like a condo building or an apartment building.
[00:17:04] So yeah, in the beginning, it was just running a couple of those numbers. I was just taking into consideration my own vacancies and occupancies. Minnesota is strange. You would think that when it’s really, really cold here that nobody wants to come here, so we would have no renters. That’s actually not true. People still do travel here because there’s a lot of winter sports, and people that like the nasty cold.
[00:17:29] Sorry, I’m coming off of a -12 day. Yesterday was really gross. So you have to consider stuff like that. So I just went through using my own vacancies and stuff like that, and I started running the numbers. I’m like, well, we could probably make money, but we have to figure out what maybe the scope would be. I put together at least a high-level scope, and that’s how we actually made our offer. But then we had to go way deeper once we got it under contract.
[00:17:51] Annette: Can you tell us what the original listing price was, and then what your offer was?
[00:17:57] Tanya: Yes. It was on the market for 600,000. I think we offered 500, or 520, or something. We ended up doing some back and forth, and we got under contract at first for 550, and eventually, through the process, we got it down to 525, and it ended at 525 anyways.
[00:18:18] Sarah: Okay. It wasn’t on the lake. I know there was room for improvement. So as a flipper or someone who really loves a good renovation project, that got you jazzed, but this was a buy and hold project for you. You weren’t going to flip this. So what was it about the motel and holding it that also got you excited or thought there was potential?
[00:18:37] Tanya: I think a lot of people in short-term rental land have this feeling too, is you just dream up the coolest things. I know you ladies do it. I know anybody that’s listening to this, if they’re listening to this, they’re likely somebody who has done that. You put it in your head that you’re going to be able to bring these people together, and it’s going to be around a fire pit, and it’s going to be this super cool thing that you made in the back, and then the rooms are going to be so cool and you’re going to see them on Instagram because you did a deep dive into watching The June Motel and the ladies on The June Motel. That’s totally research, by the way.
[00:19:10] So I feel like you just make this dream of, oh my God, this could be so cool. And that’s the reason people make commitments like that. There are definitely people out there that will buy a 200-room hotel, and they will still have dreams and cool stuff. But honestly, a smaller motel, this motel was an 18-unit motel with three buildings.
[00:19:30] That’s almost getting to the point where you could scale a business like that and just keep buying them. But truly the way me and Matt would’ve done it is we would be so passionate about this thing. We’d be up there all the time. That’s the kind of dream that somebody’s typically building, and you just give it a try.
[00:19:49] Sarah: Who would’ve been your guest? Would they have been there on holiday? Would they have been just passing through?
[00:19:55] Tanya: Yeah, that’s like a little cabin town. So in Minnesota and in Wisconsin, we do this thing. We go up north on the weekends. I’ve told people that from Texas, Florida, and they’re like, what do you mean up north? You’re already north. Actually, we go further north. So anywhere north of the cities is up north.
[00:20:15] It starts to become cabins and lakes and these kinds of sleepy little towns with really cute shops and just things like that. And this town of Balsam Lake, Wisconsin, is one of those adorable towns. There’s some pretty awesome affluent areas in the Twin Cities, and that’s where a lot of those people go.
[00:20:32] They have cabins on that lake. So we would be targeting the people that are the overages. It’s like, oh, we’ve only got a four-bedroom house, but we’re going to have 15 people over for 4th of July. So that would be those overages. There’d be people coming into town for fishing tournaments, like little girls’ weekends.
[00:20:49] There’s all kinds of cool things that they’re doing to that town, and that was one of the reasons that I was excited about it. There’s some really cute shops. There was a new brewery in town, new restaurants, things like that. So people spend time there. And I even got my hands on a hotel study that was done a couple of years prior to me even making the offer.
[00:21:08] It talked about how Balsam Lake, Wisconsin, could use a hotel. They were talking about bringing in some national chains, and they never actually did it, but I still had all the information that they were talking about of people coming to town. I think the biggest problem with the motel, it would’ve been there was no shared space. Whereas a national hotel chain can actually bring in a conference room and things like that, but it was still super cool project.
[00:21:34] Annette: You said you brought in a broker, obviously your husband. You brought in 17 iterations of this number crunching. I want to know how much time and what were some other people during the underwriting? What was other people that you brought into this? And I’m already feeling what you’re– I know you’re going to say so much time because I feel like you would get emotionally invested in this deal.
[00:22:02] What about the time involved? Were there any deposits put down? Was there money spent before you even recognized how far the deal was going to go?
[00:22:11] Tanya: Most definitely. All of the above. It does suck. The kind of person that I am, I’m an emotional driver, and I’m not as logical, so I actually have to bring in logical people so they can kind of help me, bring me back to earth. I think in the end, our decision making was a logical decision, but if I would’ve stated it emotionally, I’d be knee deep in things right now.
[00:22:35] Annette: You’d be coming to us live from the motel. We’d be doing this episode– yeah.
[00:22:38] Tanya: Yeah, pretty much.
[00:22:40] Annette: Yeah.
[00:22:40] Tanya: And it’d be cold there. But yeah, so money was definitely put down. I pretty much have told people I spent a semester of college this whole entire summer figuring out how to underwrite a commercial deal, go through that whole entire process, who the kinds of people I needed to engage were.
[00:22:58] And I spent all that money, and I didn’t get any money back. So we lost our deposit. We spent money on an appraisal. We had to spend money on an inspection. We spent money on lots of things. And I just assume that it’s a semester in college. I paid about the same or the equivalent of what I would’ve spent, or maybe two semesters, I guess.
[00:23:20] I don’t remember how much I even spent on the semester at college. But to me, it wasn’t a waste of money because I learned so much. It is so crazy the amount of things that I learned over the summer and the people that I had to engage.
[00:23:35] So some of the people that I added in besides my broker, I decided or I opted to have an inspection done by a professional, and it was mainly– there’s things in these walls that I cannot see. I spent so many hours up there and we went through actually a couple of inspectors that didn’t show up, and it was an hour and 15 minutes every single time I went up there.
[00:23:57] And I tried to make it so that I was up there for everything that we had to do. So we got a very thorough inspection, and it was awesome seeing all the things that I needed to capture in our budget because I can’t see behind that. There’s probably a bee problem on this wall. And then every single outlet, every single thing that was leaking, that kind of stuff. So I engaged an inspector.
[00:24:21] Annette: Is that a normal home inspector or a specific commercial inspector?
[00:24:25] Tanya: This guy actually is a home inspector in Wisconsin, and he has done motels before. So it was a very specific question because it’s this teetering thing because it’s so many units, it’s considered at least multifamily. It was like I’m this in-between person, so it was hard to find somebody.
[00:24:47] I think I made 18 phone calls to try to get somebody quick enough and to actually get somebody that knew what the heck they were talking about, because they are little mini homes. Honestly, they specifically didn’t have this big, huge commercial presence under the slab or anything like that, but it was still the volume of things he had to do.
[00:25:08] He was there for eight hours, and then I think– no, he was there for 12 hours, and he inspected every single room. I think only one room he couldn’t get into and he had to come back or something like that.
[00:25:19] Annette: Wow. And can you share with us the total on having a 12-hour or two-day inspection, if you can remember even?
[00:25:26] Tanya: Yeah, I think it was about 4,000 or something like that between four and five, and it depends on the area. This guy, he was really nice. He essentially just matched the price of the guy that didn’t show up. I was there waiting for four hours for a guy, and then he kept calling me and telling me he couldn’t come, and then he just never showed up, which is totally the nature of real estate.
[00:25:46] I feel like that in a nutshell, is if you haven’t had that lesson, you 100% will have that lesson soon enough, because all of us have had it. It was like somebody’s saying they’re going to be, they’re on their way.
[00:25:57] Annette: Broker, inspector. Who’s next? Anybody else you hired?
[00:26:02] Tanya: Well, of course. So one of the first things that I do, personally, I’m a mastermind person, which just means I join groups of people that already know what the heck they’re talking about or things that I might want to do. I’m in short-term rental groups because I want to learn, get better. I want just to have the networking.
[00:26:18] When I was flipping houses, I was in a flipping group, so I actually went to some of my flipping friends and was like, guys, I need help. I have no idea what I’m doing. I don’t know how to underwrite a hotel. I don’t know how to underwrite a multifamily unit or multifamily housing unit, any of that stuff.
[00:26:35] So I got connected with one of my friends and he connected me. He’s like, oh, you need to talk to Blake. I just called Blake, and he connected me, and I was texting this guy, and I was on a phone call within a couple of hours, and I told him like, dude, I’m so far over my head. I do not know how to run these kinds of numbers. I just don’t understand.
[00:26:53] Well, this guy, I think he was on his seventh motel. I think he just bought his eighth. He just closed, I don’t know, this month. And so he’s got some experience. He had actually just started a mastermind, so I essentially was like, please help me. So he spent a couple of hours on the phone with me.
[00:27:11] He’s the one that gave me the big, huge spreadsheet that I have 17 informations of. And he had to go through the spreadsheet with me at least two or three times, if not six or seven times. I learned by fire. Trial by fire is totally my thing. I could learn a concept in a book, and it will mean nothing to me until I’ve been punched in the gut by that thing.
[00:27:36] So essentially, that’s what I had to go through. So Blake helped me a lot. Once we were under contract, I joined as mastermind to figure out– I just needed somebody that knew the heck what they were talking about. And I don’t care what the price at that point is, if you want to do cool things, big things, you need to find somebody that can help you.
[00:27:55] And it’s either some kind of coach, somebody that has some kind of experience, it doesn’t matter who it is. The likelihood is if you take a free version of that though, you’re not getting the whole story that you’re going to need to jump. We’re jumping over this cliff, and we’re hoping that the bungee cord is still attached when we get to the bottom.
[00:28:17] Sarah: Awesome. So he gave you the spreadsheet, he explained it to you 6, 7, 8 times, which there’s no shame in that, Tanya. Those things are massive. And the information it spits out sometimes it’s like, okay, well then– anyway. So you went through the iteration. Were you plugging in these numbers yourself into spreadsheet once you had it? And then were you reengaging with Blake to have those numbers give you the narrative you needed to take that next step? Talk us through that a little bit.
[00:28:42] Tanya: Yeah, we were talking weekly at that point, and sometimes daily because I would tweak a number and I’m like, dude, did this just break? What did I do? So he hopped on a call or a Zoom with me a few times. He fixed a couple of things because he had formulas that he needed to make updates on.
[00:29:00] Seriously, there are so many lines on a commercial– commercial underwriting is just different. You can do it a lazy way, or you can do it a way where you feel like you’re safe. Whenever I’m doing a deal, if I’m bringing other people into the deal, so that means I’m raising money, I take that very seriously.
[00:29:19] I want to be a good steward of any of my private investors’ money. So because of that, I feel like I owe them the due diligence, as I owe myself, but I want to make sure that if I’m giving something to a bank, they actually know what I’m talking about. So he was able to go through all these numbers.
[00:29:35] Some of them were his, some of them were estimates. Some of it was stuff I actually got from the motel owners. They didn’t have a worthwhile T12 for me to actually utilize which just means it’s the rolling 12 months of money coming in and money going out, all the expenses and whatnot.
[00:29:54] I had to do a lot of due diligence on, like, I saw their insurance number, and my mom actually is in insurance, so she’s been in insurance for like 30 years, and she has been a lifesaver because I actually know what I’m talking about when it comes to insurance. So I sent her some of the insurance information and she’s like, is this only for one of the buildings? Because there’s three buildings. It was like under 1,000 bucks.
[00:30:17] And I asked the question a few times, and they’re like, no, that’s for all of them. And I’m over here freaking out, like, oh my God. What happens if it burns down while we’re under contract? You won’t even be able to rebuild it for this amount. This is crazy. Truly, you have to dig into every single thing.
[00:30:32] You have to call the city. You have to call the water company. You call all these people to make sure that you do have the right numbers, because who wants to get shut down in a year or something because a formula was wrong or they didn’t have the correct unit? Insurance is going up right now. There’s so many crazy things happening in America. And the Florida insurance– truly, some insurance is going up 2, 3, 4 times as much.
[00:31:02] So if all of a sudden your spreadsheet says 800 and all of a sudden it’s going to be $5,000 for insurance, well that’s a pretty big dip in what you were seeing as profits. And so it’s underwriting those kinds of things. And then it’s also knowing that you are eventually going to need a property manager. If you’re on site, that’s totally fine, but you have to assume that someday you’re not going to be on site, and that needs to be in your numbers.
[00:31:23] You need to make sure, if you’re going to have cleaners, multiple cleaners, maybe you need a cleaning manager, you know that you’re going to need a part-time handy person that’s going to come once a week for eight hours, whatever it is, and you need to put numbers like that in. So that’s the kind of stuff I was drinking from fire hose all summer.
[00:31:38] And I was really grateful to have Blake and his group because truly they gave me so much information. We don’t think about it. And as a short-term rental owner, I already have a lot of this stuff on my radar, but time’s up by 18, every single thing. And then realize that, well, if you spend $300 on your five-bedroom for electricity a month, well, it’s not necessarily that. It’s times 18 for the other place, but you do have to take into consideration there’s jumps that you have to make and some of it you don’t have to pay as much for, but some of it you do.
[00:32:11] And then when you’re thinking about rehab numbers and you have to buy 18 beds or you have to buy 18 lights, and 18 toilets, and 18, fill in the blank, every single thing you want new of, or whatever you have to make the changes for, you have to have solid numbers for things like that. So you need to spend the time underwriting appropriately.
[00:32:33] Annette: What was the most surprising sell on that spreadsheet from short-term rental to motel that you were like, if you hadn’t joined the mastermind, if you hadn’t done your due diligence– what is something that was so surprising that you just would’ve completely left off the spreadsheet? Or you might have had a few things.
[00:32:53] Tanya: Honestly, the cleaning manager, the property manager, that, for some reason, is so surprising to me. But I live so close to my properties that I don’t necessarily think– and an hour and 15-minute drive isn’t really that big of a deal, but you still have to have somebody that’s around.
[00:33:08] It’s just like somebody has to walk that property at least once– I prefer once a week, but once every couple of weeks. In the Twin Cities, I can just drive you. My properties are 10 minutes from me. It’s not that big of a deal. Those kinds of numbers are really important. And then I would say the laundry cost is a thing.
[00:33:26] I send my laundry out now. Well, up there, there’s all these different things that I had to worry about. So I went in and saw that they clearly had hard water because they had these washers and dryers that were orange. Well, you have white sheets and you have orange water. There’s something there.
[00:33:41] So they were sending things out and at a certain price. Well, I send things out at my price. Well, their price was double or triple what my price is in Twin Cities. So it’s just making sure those kinds of things are happening. And then I would also say the pool of work.
[00:33:58] I know what I pay in the Twin Cities. I know what they were paying. They were paying less than $15 an hour for somebody to clean, which is completely fine, but for their business. But in the Twin Cities, I don’t do that kind of stuff. I pay double that. So it’s making sure that you have that to leverage to find good people to do whatever. I feel like those are the main surprises. I’m sure there’s more. Some of it is in a dark hole of how much time I spent on this.
[00:34:28] Sarah: Correct me if I’m wrong, Tanya. I saw it our Facebook group, you shared a picture, I don’t know if it was a rendering or what it was, of essentially your ideation of what you wanted the hotel rooms to look like. So you engaged with an interior designer. At what point in the underwriting process did you think that was important? Was that for fundraising? Was that just your fun outlet? Was that so you get a really good idea of what the interior design scope of work was going to be? Take me through that process.
[00:34:58] Tanya: I did engage a short-term rental specific designer, and I think it’s important to point out that they’re short-term rental designers and then there’s home designers, and interiors, and stuff like that, and they’re all different people. Short-term rental people are specifically looking for items that have longevity, that are going to be timeless, those kinds of buzzwords.
[00:35:19] And she’s fantastic, the one that I actually engaged. And I did that because I needed some kind of renderings to figure out, okay, I have this idea in my head, and it needed to come out. And it was so cool because I gave her all the stuff and then she flipped it around in a day or two. And what I saw was better than I ever could have imagined.
[00:35:37] And that helped give me the confidence to keep going. And then the other one was definitely for banking. There’s a whole package that you need to put together for banking. And if you want to put your best foot forward, that’s the kind of stuff that you would have to do.
[00:35:51] You want to show them, like, these are the kinds of changes I want to make. This is the vision that I have. Because, honestly, anytime you’re trying to get money, whether it’s from a bank, or a human being, or maybe not hedge fund– I don’t really know how they give their money out. But no matter who it is, you’re convincing them. You’re convincing them to hook their trailer to you in your truck or your tractor and [Inaudible] down the road with you.
[00:36:12] So if you want to do that, you either have to be a really, really good salesperson that can actually help them visualize, or you just show them a visualization of it. And it’s really hard for people to get a visual. Some of us are visual people. I can see a set of plans, and I know what it’s going to look like, and it’s so exciting. And I am like one of, I don’t know, 100,000 or something because not very many people can do stuff like that.
[00:36:35] A lot of people need some kind of rendering. They can’t necessarily picture it. They just hear your words. And you can get people excited. I’m okay at getting people really excited about a vision, but when you hit it home– you want to knock it out of the park? That’s the kind of stuff you need to do to knock it out of the park.
[00:36:51] Annette: When did we know that the deal was no deal?
[00:36:56] Tanya: It was so sad.
[00:37:00] Annette: Oh, and we want to hear about that too. We want to hear about the emotions of going so far with the deal and then no deal.
[00:37:06] Tanya: Yeah, definitely. Well, I actually engaged one more person that I feel like was very, very important for people to know about. It is a dude that I met through Thanks for Visiting. His name is Kenny, and he’s with STR Insights. He puts his best foot forward when it comes to helping people figure out numbers.
[00:37:27] I could not find the appropriate numbers. I did not know how to figure some of them out because there wasn’t a lot of data in the area because it was so small. AirDNA, Price Labs, those kinds of things, they really just didn’t have the data. So I hopped on a call with Kenny, and he’s like, Tanya, I checked around.
[00:37:44] So he did some legwork on the front end because I had talked to him. I told him I was concerned about it. So he went through all kinds of things, and he is like this, these are safe numbers. I think if you can make it work at these numbers, then you’ll be okay. So when he started looking, he did those numbers.
[00:37:59] I finally felt really good about my ADR and the stuff that I needed to care about for occupancy and vacancy throughout the whole year. I felt more confident after that, and he had very conservative numbers, and that’s what I tend to try to work with as well. I’d rather be conservative and blow it out of the water than not be conservative and get caught in a terrible situation.
[00:38:21] So we ran numbers after that, and they still worked in my spreadsheet, but I think a lot of it was surrounding raising money. So I like to raise money for deals. We tend to put private money on every one of our deals, and then we just, pitch it to a bank deal or a bank loan. In this case, we had to raise a certain amount of money. I think it was $500,000 or something like that, and we got to 300 and we just couldn’t get over that extra hump of the other 200.
[00:38:50] So I tried different iterations. That’s why I have 17 different analysis sheets, is because I’m like, okay, what if we cut some scope? So we cut scope. We switched things around. Honestly, in the end, I was able to figure out a way that we would’ve been able to come in, which is $100,000. We would’ve been able to do a small business loan. I would’ve qualified. Everything would’ve been fine. We would’ve just come out of pocket for the 100,000.
[00:39:15] And just did the deal. But then, by the time we got to that iteration, it was a sad version, if you ask me. So this kind of project, I would have to chalk it up. Especially when I’m learning something brand new like this, it has to be a passion of some kind. And once I cut all of that scope out, I think I had to cut about $200,000 worth of scope. At one time, we probably had about $400,000 worth of scope to change all kinds of things, make it better, make the outside better, upgrade all the electrical, because the electrical panels, they were fine-ish.
[00:39:47] We needed new water heaters, and the water heaters are every few rooms, and stuff like that. So the cost is pretty exponential once you start putting it times 18, like I had mentioned earlier. So we were able to cut some scope. We could probably do the deal, and then we cut more scope, and then we could 100% do the deal.
[00:40:05] We could figure this out with a small business loan. We’d be able to get it closed in a month, whatever. And it was not fun anymore. If I want to do a deal, if I want to do a project, and if I’m going to put that, I know how much time and effort I put into things. When I actually have something that I like to do, I don’t eat, I don’t sleep. I don’t go to the bathroom. I’m just in there doing whatever it is I have to do.
[00:40:31] Flipping isn’t my favorite thing for our marriage, I’ll be honest. It’s really stressful for my marriage. It’s one of the reasons I don’t flip houses anymore, is because I’d much rather be married to my husband than bossing him around being a jerk because I’m mad at a plumber.
[00:40:44] And because of that, I just decided, if this isn’t going to be the coolest thing at the end– if it was still a pretty cool thing at the end, I probably would’ve done it, but it wasn’t going to be the coolest thing. And if I’m going to hang out at this place that much, because I would have to– in the first two years, you have to commit. You commit commit.
[00:41:06] And I would’ve been up there a lot for all the holidays. I’d be inviting people up there to come hang out with me because I wouldn’t be in the Twin Cities hanging out with anybody because I’d be working. So because of that, we decided it just wasn’t worth squeeze anymore. And again, it was logical. Once we ran the numbers more, I don’t know what’s happening. Everybody’s talking about this impending economy, or I don’t remember what that word is.
[00:41:32] Annette: Recession.
[00:41:34] Tanya: Recession. Thank you.
[00:41:35] Annette: Yes. I’m glad that you’ve just erased that word from your memory. Good job, Tanya. I like it. I like your style.
[00:41:40] Tanya: There’s just so much drama around some of that stuff, and I don’t know. There was a lot of doubts that creeped in, and some of them were logical doubts, and some of them were just not good enough doubts. They’re not good enough doubts. I can stamp those out pretty easily, but it’s just in the end, I have to be a good steward of anybody’s money that I put into any deals, including our own. Rooney money is important too.
[00:42:02] So we decided to make the decision. It was pretty difficult, instead of losing a lot of money. That’s something me and Matt are really good about. We had a very heavy conversation, a couple of heavy conversations about this. I actually canceled the deal three times, not just once, and was not so much talked back into, but I felt like, okay, I should try it again. I should try it again. Is this the right thing?
[00:42:28] And then eventually, once I made the final decision, it was like so much weight was off my shoulders. It felt so good. It was a really hard decision to make because, man, that research was so fun. Getting to watch The June Motel stuff, getting to watch all kinds of motel shows and figure out how to do this and that and make it really pretty. Real estate isn’t just about being able to make things pretty. There’s a lot of other stuff you have to take into consideration and not sink yourself.
[00:42:54] Annette: Oof. Thank you for sharing all that because when you say you canceled three times, was it you canceled behind closed doors, you and Matt together? Or did you actually go to–
[00:43:06] Sarah: The sellers.
[00:43:08] Annette: To the sellers and–
[00:43:08] Tanya: It was with the brokers.
[00:43:09] Annette:Oh wow. Okay.
[00:43:10] Tanya: Yeah. It was a conversation with one.
[00:43:12] Annette: Because I cancel a lot of things every day. I just don’t tell people.
[00:43:17] Tanya: No, I did actually tell people. I canceled with the broker. I almost got talked back into it a couple of times. I have good relationships surrounding a lot of people that are involved in this project, and I still have them, which is great. But yeah, I had to have a lot of hard conversations.
[00:43:35] Sarah: What would’ve happened, Tanya, if you would’ve gotten that extra 200k? What if you would’ve hit that fundraising goal? Or do you think it was less of that and more of like inner Tanya telling the world that, hey, this wasn’t the project for you? Do you know what I’m asking you? What would’ve happened if you would’ve raised enough money to do all your big, grandiose ideas? Do you think you’d be working there today?
[00:43:58] Tanya: I think it wouldn’t have happened anyways. I really think that there– I’m a firm believer in everything happens for a reason. I think I got a ton of experience out of this situation that I would’ve gotten even more if I bought the motel, obviously. I would know how to run a damn motel. But in the end, I really think it wasn’t supposed to happen because there was enough hurdles that I try to temper life with. Okay, which hurdles are actual hurdles and which ones aren’t actual hurdles?
[00:44:27] Some things I will work my butt off. I feel like I put so much effort into trying to figure out that deal, so I don’t feel like I failed in the way that I didn’t close. I got so much experience, and I think that was probably the exercise that was supposed to happen because now I think there’s probably something that’s going to happen that’s going to hit me in the face.
[00:44:46] It’s going to be so fun, and it’s going to be exactly what I needed and exactly what I need time for. And I think all of that underwriting experience, all the networking that I got out of doing that deal, I think that stuff is going to be utilized on a different deal, to be honest.
[00:45:03] Sarah: I told you this, but I want to let everyone else know too. When Tanya, from the time we posted this opportunity to the group and she hopped on it, the time when she announced that she wasn’t going to be going through with it, I was so impressed by you because, first of all, when we’re more vulnerable, especially as investors, on top of that, women investors, I think that’s such a superpower because I don’t know about you ladies, but there are times where I don’t want to be vulnerable because I’m a woman in this space.
[00:45:36] And if I ask a question and I’m meant to feel like, or I allow myself to feel like I’m less than those people I’m asking from, it can stop me from doing incredible things. But I didn’t see that from you, Tanya. I just saw you wanting to get the answers to your questions, and you were dedicated to it. And I know that even if you didn’t buy this deal, you inspired our whole membership, me included, and I know you’re right.
[00:46:01] You have created this foundation for yourself. And hey, there might be another two, three deals before the one you actually execute. So I just want to take a moment to just share with you how inspirational you were, and that’s why I wanted to share this story. It’s not that story of you actually at the closing table because those are great stories, but it’s what you learn going through the underwriting process, especially if it’s something that’s similar to what you do, like short-term rentals, but motels are so different.
[00:46:27] Hotels are so different. And we can get lost in that romantic idea. And again, impressed by you. Those renderings were gorgeous. And I was like, I don’t know if I would’ve had strength to walk away from that dream. So I’m just really proud of you. What’s next? Are you now on the hunt for a motel actively? Are you just resting right now and just taking care of your short-term rentals? What’s going on in Tanya’s world in 2024?
[00:46:53] Tanya: Yeah. So I think the resting thing is probably the most prominent. After that, I was super bummed. But I had done enough throughout the year that I was able to just cool it, is what I would say. And 2024 is for thriving, if you ask me. That’s what I’m trying to do in lots of areas of my life.
[00:47:14] So, if somebody knows of a crappy motel in a decent city, cool, let me know. I’d really like something in Utah. Me and Matt, we’re really good at dreaming together, and we were dreaming about–, he’s like, where’s the dream spot that you want a motel on? Where would be the coolest spot?
[00:47:31] And I told him, it’s Moab, Utah, hands down. That’s the place I would love to just hang out all the time. And I think of doing a project, and so having to be there a couple of years, that would be so cool. So that’s happening. I just wrote a chapter in a short-term rental book that’s coming out in a little while.
[00:47:47] So I’m thinking a lot more about writing things. I’ve done some short-term rental coaching here and there. I help people set up whatever they need, and that kind of stuff. But mainly it’s low key until we do find something that just– it’s got to be something that’s cool. We have been looking for– I just want a creative deal.
[00:48:05] That’s one of my favorite things about the mastermind, is I got to meet a man named Mike Hicks. Mike Hicks likes to do creative deals. And so I get his advice, I feel like, all the time. Whenever someone calls me about a deal, I’m like, okay, how could we do this creative?
[00:48:20] And to me, creativity is maybe a bank is involved, but maybe a bank isn’t involved. And how can I get into a deal with the least amount of money possible, but I’ll be putting in the most amount of effort, that kind of stuff. So that’s what I’m waiting. I think I’m probably going to manifest that in 2024, is just some random deal that’s going to be like, how did you even do that?
[00:48:42] And I want it to be worthy of writing a chapter in a different book about some random creative thing that I learned from four different people, and these five people were involved. And that kind of stuff is what makes it exciting. I’m not as excited about just offer acceptance anymore. That’s boring at this point. If you’ve been in real estate long enough, some people are okay with just cookie cutter. This is what we do every single time. I am not one of those people.
[00:49:07] Annette: We’ll save the episode for that creative deal, especially if you do it with Mike Hicks.
[00:49:12] Sarah: Oh my God.
[00:49:12] Annette: Listeners, if you don’t follow Mike Hicks, he is a coach inside our membership. We’ll put his Instagram handle and TikTok in the show notes. But he really is the person to know when it comes to creative funding, and he’s just an amazing human.
[00:49:27] Sarah: We wanted to share you and your personality on the show because you have been so much fun to hang out with and have inside of our membership. So I do want to give you just a few moments before we sign off to share with our listeners the importance of networking and why this is such a big part of who you are.
[00:49:43] And can you give them a little sneaky things you do when you’re on networking calls or when you’re at a– you do some really fun, sneaky things, but they get you connected with people that you don’t even know. It’s not even about how they can help you in the future. It really is just about that connecting. So I just want to give you a minute or two to share because I know a lot of the listeners are like, are we, am I going to get duped in a mastermind? There’s so much money.
[00:50:07] Annette: Sarah, no one thinks that. Tanya and I don’t. We go head to head with how–
[00:50:11] Sarah: Let me tell you about the rest of the world.
[00:50:14] Annette: Tanya and I go head to head with how many courses we bought in our– check out our Kajabi class.
[00:50:19] Sarah: But Tanya, tell us about your networking, why you believe in it, and the sneaky ways you meet people.
[00:50:24] Tanya: Yeah, I think networking is the most important thing. I think every single area of my life, I can look back and it’s all because a form of networking. When you’re in college, you’re just making friends. Well, you’re actually networking. You’d be surprised at the people in college that might help you later on in life if you need something, if you ask for it.
[00:50:42] And then same with networking. I joined masterminds or I go to events, and I talk to people, and you’re right, it’s not necessarily like, what am I going to get out of this later? It’s like laying groundwork. I have no idea if these seeds– I don’t even know what kinds of seeds they are.
[00:50:57] They could be cantaloupes. They could be an apple trees. They could be walnut trees. I have no clue whatsoever, and it doesn’t matter to me because you’d be surprised at what you can get out of something by just remembering a couple of things about a person. So I think networking, it’s my top three things you’ll always need in anything you do. And then building your tribe.
[00:51:16] But I feel like a tribe is different than networking. So find your network and, then start talking to people. I know it’s really uncomfortable. It’s kind of funny because I don’t necessarily love going to a room and just meeting people. I like to go to a room and ask random questions, and that’s one of the things that I know that– I have a list of random questions that I might ask somebody, like, where’s the tallest place you’ve ever been?
[00:51:40] Or what’s your favorite sea creature? It’s just silly things like that that you might think are silly, but people remember that. There’s other people in real estate that wear really shiny outfits, truly. Head to toe, they wear literary confetti, whatever. And it’s because you remember that person. You’ll remember that person because of their outfit.
[00:52:00] So I probably am one of the people that get remembered because I tend to swear a lot. And sometimes it turns people off, and that’s okay. Because they’re probably not my people. But then some people know that about me, so they seek me out because they know I might be a little more easygoing.
[00:52:15] I don’t know. That’s maybe my thoughts. But people remember me because of it. And that’s one of the things. But I also like to be remembered by just helping somebody, saying like, what are you working on right now? And then, oh, do you need any help, or can I connect you with anybody?
[00:52:30] Those kinds of things are helpful just in everyday portions of life. And then when you’re in a mastermind group already, you need to be really good about answering things. So if you’ve got a Facebook group, I used to tell people, just set a timer for three minutes. Three minutes is not very much.
[00:52:46] Five minutes is not that much more, but is truly helpful as well. And spend five minutes a day or 10 minutes a week in a Facebook group that is a networking group that maybe not one of the free ones, one you actually pay to be in and then answer questions and then ask questions. Do that constantly, and you’re going to move up on people’s list because people already think that you’re an expert, because you’re giving them the information you already have anyways because you’re good at that thing.
[00:53:14] And then when you’re on networking calls, or actually when you’re on any call that is involved in a mastermind, one of my secrets to success is I message people about other people and not in a really crappy way, but there’s been times where I’ve been on networking, or conferences, or events, or something, that are on Zoom, and I see somebody sleeping, or I see somebody chewing like a hamster, when all of a sudden they have all this food packed in.
[00:53:40] I literally will reach out to other people and say, oh my gosh. Did you just see what Jeremiah put in his– or do you see that Howard is sleeping right now? These are true things that have happened. Or I might comment on something you guys say on a call and I might be like, oh my God.
[00:53:57] That’s how I started talking to I think Jermaine. I just started messaging her, and I was saying like, hey, did you actually do this thing? And then I picked up that she was saying some stuff about herself, and I literally messaged her, and I’m like, hey, give yourself more credit than that. You’re actually really good at what you do– just things like that.
[00:54:15] That’s the persona I want to bring. I like to do stuff like that regularly, and then people all of a sudden start liking you. It’s great. So I feel like those are the kinds of things. It’s like you just go back door. Or if you’re really needing something, like something is missing, like a group of people is missing, I created something in our group, and we call it the grade 8.
[00:54:38] I literally just reached out to a couple of people and said, hey, do you guys want to meet once a week and just talk about our goals? And I created this group and now we’re a group in the group, and now we talk all the time about short-term rental stuff. I have my short-term rental besties, and that’s how I feel like a tribe is different from networking.
[00:54:56] You might need to tight-knit your group. Well, then find the few people that you think are doing awesome things and ask them about it, and then say, do you want to meet on a call once a week, or once every other week, or once a month? And just watch things flourish, and hold each other accountable, and cheerlead for each other. And it’s the most beautiful, cool thing ever.
[00:55:14] Sarah: Yeah. You’re really good at it too. You stick out in the best way possible. And I know a lot of people really love the energy. They do because sometimes it can be like, God. It can be daunting. It can be lots of things. But when Tanya’s in the room, you know it’s going to be fun. So Tanya, thank you so much for your time today. How can people connect with you if they want to ask you more questions or if they have that deal for you in Utah?
[00:55:36] Tanya: Oh yeah. Instagram’s probably the easiest spot. It’s @tanyarooneymn, and my first name is spelled T-A-N-Y-A.
[00:55:45] Annette: Don’t forget that, people.
[00:55:46] Tanya: And then our short-term rentals are YYH Minnesota. I have a website, tanyarooney.com, where I do some coaching stuff, and I am starting a blog because I just want to write things. And yeah, everything else is short-term rental-centric, truly. And then Hospital Host three is coming out, I think in a couple of weeks, or sometime in February of 2024. And I’ll have a chapter in that, and I’m really excited because it’s stuff like this. We’re already talking about it. It’s communication tribes and networks. These are three of my favorite things.
[00:56:21] Sarah: We’ll make sure all of those things are in the show note. Tanya, thank you for your time today. Everyone, I am Sarah Karakaian.
[00:56:26] Annette: I am Annette Grant. And together we’re–
[00:56:28] Both Annette & Sarah: Thanks for Visiting.
[00:56:29] Sarah: Talk to you next time.
