All Forum Posts by: Nichole Stohler

@Nathan Gesner we were introduced to an experience hotel investor about a year before we moved forward with the hotel.  The numbers work like multifamily but the operations aspect is so different and we spent time learning from the experienced operator.  For example, avoiding kitchen service cuts down on a lot of variable operational costs.  Understanding which "flags" hotel brands offer the best marketing and support, etc.   It took us a year to make the jump...

@Andrew Johnson ,  potentially could have worked but the real problem with the midwest properties was not fully understanding the unplanned expenses and how difficult it would be to find tenants.   In Phoenix, perhaps could have worked... we didn't explore this option because by then we had capital versus when we were just starting out, credit cards were our only source.   It's an interesting concept though if the numbers could work.  

@Francesco Barbati , do you think you could find a SFH that is at a good price, in a good area that needs a little TLC? You could "house hack" where you live in the house while fixing it up and then sell after 2 years at a profit. You won't be taxed on the gains from the sale and can leverage those gains to buy other investments or do the 2 year fix/flip again, etc.

For my husband, travel to every major golf tournament for a year.... The Masters in Augusta, The US Open, The Open Championship in the UK, etc.

@Andre Harris , good question.  We did for some of the transactions but not all just due to restrictions and timing.  

@Chingju Hu could be a great place to start.  How do the numbers look factoring in expenses, any potential repairs, etc. against the possible rent?

@Matt B. great question!  The 50-unit was a fantastic property and we got an unsolicited offer which we turned down the first time.  The second offer was too good to pass up.  We'd been talking with the hotel operator for about a year so this gave us an opportunity to get into a bigger property.  

What is stopping you from investing in real estate? Is it time? Money? Lack of experience? Or maybe even limited deals?

My husband and I have been there. Done that. Failed. And then…. kept going to our recent close on a $5M property. It’s been a long road but well worth it.

In the past 6 years, we have self-funded and “traded up” from a 4-plex purchased for less than $100K to now owning a mid-sized hotel. Our path included: 4-Plex → 7-Plex→ 28 Unit → 50 Unit→ 80 Room Hotel.

Our journey started 17 years ago when we attended our first real estate seminar and then found 3 owner financed properties. We had zero money for down payments, so we leveraged credit card cash advances. And then…. lost money, sank into debt, gave back the properties, sold our house and moved in with parents to repair our finances.

You may think… isn’t this supposed to be a success story? Are you trying to discourage me? Not at all. Sometimes the best success stories come from the biggest failures. Not everything is perfect and easy. So what was wrong? What did we fix when we got back into the business in 2011?

1. Location. What is happening in your market? What are the prospects for job growth? Back in 2000, we lived in a dying small Midwest factory town and those 3 properties weren’t in the best areas. It was hard to keep some of the units rented and vacancies hurt our profitability. We now live in Phoenix and are specific regarding the areas where we buy properties.
2. Price. Have you leveraged the property analysis tools on Bigger Pockets? 17 years ago, we didn’t understand how to do a full analysis of the property to calculate cash flow and opportunities for value-add. We understand now how to determine the right purchase price. This is why when we sold our 50 unit property in late 2016 we pivoted into hotels as the numbers do not work for many multi-family properties in Phoenix right now.
3. Operations. Are you planning to self-manage? Or use a property manager? Either way, do you understand what levers you have to gain the greatest return? We didn’t understand these fundamentals back in 2000. During our break from owning properties, we learned about the operational side of the business when my husband worked in both property management and commercial real estate sales. To avoid making the same mistakes with the hotel due to lack of experience, we’ve partnered with an experienced hotel operator.

Are you struggling to find a good deal? Worried that your property will not provide the cash flow needed? Where do you stand with these three fundamentals? Which one can you effect right now? Would love to hear comments on your current challenges.

great story!  Congrats! 

@Ian 

@Ian Ippolito -- thank you!    There are so many options it has been hard to compare.   Investing in equity is interesting.  Which sites are focused in that area?