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Action Academy | Millionaire Mentorship For Your Life & Business
How He Bought a Million-Dollar Motel WITH $0 DOWN w/ Ian Joseph
00:32:13
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- [00:00]
A
Dude, I just saw that you landed. I've got spurs tickets tonight. You want to come sit courtside with me? I remember that you said that. I was like, oh, crap. Yeah, I absolutely do. There's so many opportunities that can be presented if you guys just like, share your story, share what you're doing, and people come out of the woodwork.
- [00:14]
B
The Billy Motel acquisition is a masterclass in its own of deal finding and making process. The Purchase price was 854,000. Purchase price for the motel and the restaurant, well, it's not for sale, but you heard the Billy Motel is. From the time I called the local bank to the time I got a commitment letter was two weeks. They were very supportive and we're willing to provide the 20% down payment assistance.
- [00:35]
A
And that, ladies and gentlemen, is how you get a zero dollar down.
- [00:38]
B
We're looking at roughly a $3 million expansion project. I think we should be anywhere from 5 to 6 million in value upon stabilization.
- [00:45]
A
And that's how you do it. All right. All right. Welcome back to another episode of the Action Academy podcast. Today, ladies and gentlemen, we are doing a new segment where we are going into a specific deep dive of a deal. Not a deal deep dive like we've heard about before from Brandon Turner, but a deep dive of a deal with one of our action Academy members, Mr. Ian here. So this is the first episode of an acquisition Academy episode of the podcast. So we're going to do a new little segment where we go super deep into why the deal was done, how the deal was done, and how you guys could be able to implement this in your lives and your businesses. So let's start first and foremost, Ian, who are you and what deal did we get done?
- [01:28]
B
Absolutely. Brian, super glad to be here, man. Thank you for having me. So the deal that I got done is a motel in a town called Davis, West Virginia, and the motel is the Billy Motel.
- [01:40]
A
Super cool. Now walk us through a little bit about some, maybe some information about the deal itself and then we'll walk backwards into where we were before and what kind of got us here today.
- [01:51]
B
Sure. So the motel is currently a 10 room motel and it's got a, a pretty kick ass restaurant, which is one of the things I really liked about it. The restaurant and the motel have the symbiotic relationship. The motel kind of relies on the restaurant and the restaurant relies on, on the motel for, for success. But I found out about the, uh, the opportunity actually from another town I'm involved in in West Virginia called Berkeley Springs, which I'M sure we'll get into a little bit, but uh, just talking to people, telling them what for and networking in Berkeley Springs uncovered that this motel was for sale. It was not very widely advertised and so that's what, that's how I found it. The purchase price was 854, 854,000 purchase price for the motel and the restaurant. And that also included some land behind the restaurant which and motel which will be key to what we want to do next and really make this, you know, a really nice acquisition and long term investment beautiful.
- [02:55]
A
So walk us through your hospitality. So you've chosen hospitality as your investment class here and then this is what you're obsessed with overall. So walk us through where we were before with your short term rentals and why are we pivoting here slightly over to the commercial side?
- [03:11]
B
Absolutely. So going back even a little bit further than, you know, than my short term rental background, I've always had an interest in real estate. You know, all the way back to my undergraduate degree. I was a civil engineer, I went into commercial construction, changed careers and have been in commercial banking the last 18 years where I had the opportunity to finance commercial real estate projects which has given me a, you know, skill set that is really useful in hospitality development. So being having an interest in real estate, I dabbled a little bit in long term rentals and just didn't really find the energy and passion in real estate until I bought my first short term rental back in 2023. And it was that experience that really kind of got me hooked and addicted to hospitality. I just love the feedback. I love, you know, guests giving feedback, both positive and negative. Although we've had much more positive feedback than we have negative. But everything's a learning experience. But you know, I just, I don't know, I still read all the review and just being able to design a space and an experience for, for a guest to make memories just, it just means so much to me and maybe it's, maybe it's because I value that myself with you know, my, my whole life and now with my family. Being able to create memories and do that for others is just kind of really where it's all about. So I got into short term rentals for, for that reason and have now, you know, unlocked the power of the commercial side of hospitality and you know, made a pretty quick pivot back, you know, just from 2023 to now to what I'm interested in doing in the future is basically developing kind of ground up micro resorts which I'm doing in Berkeley Springs as well as buying, you know, roadside motels from, you know, from operators that have owned them for a while and just, you know, need that, that next boost. I think there's a real resurgence in kind of the roadside motel. But you know, it's not going to be your parents roadside motel. It's going to be something really cool that, you know, that everybody, you know, wants to go to in the area. That's what we, that's what we're doing with the, with the Billy Motel.
- [05:30]
A
Beautiful. Can you explain to somebody that's listening to this and they say, Ian, that's sick. You know, I have a few short term rentals myself, or maybe I have a few long term rentals myself. Can you explain how wealth building and how the economic models work between single family versus commercial? When somebody joins commercial and starts investing in commercial rather than single family, it's a completely different valuation method. Like, what are the pros? Why is this kind of the path that you see for most people?
- [06:00]
B
Absolutely. The single family model is a great place to start and it's a great place to start if you think you're interested in hospitality but don't know for sure because it's a little more accessible to most people. And part of the reason is, like you said, the way that single family residential real estate is valued versus a hospitality asset which is valued obviously on a commercial basis. So single family homes are valued based primarily on resale value. So comparable resale value. And in that space, you know, if I'm going to buy a single family vacation home that I plan on renting out, there are other individuals and families that are also looking for that same type of property. And the value is based primarily on what is sold recently, whereas on the commercial side the value is based on the business primarily. So it's based on cash flow, it's based on the net operating income and a cap rate which determines your value. It is then, you know, back to the single family. It's, it's very, it's very difficult to increase the value and increase your wealth on a single family home because you can have a very profitable single family home, but if you go to sell it, it's still only going to sell based on comparable resale. You don't really get credit for all of that time and energy and effort you put into making it a profitable single family home. Whereas on the commercial side you do get that credit in the form of higher noi and therefore a higher valuation if you were to sell.
- [07:38]
A
Yeah, and I can Point to this specifically when I was doing co living because I remember when I bought my, my second co living property, it was next to this newly renovated one and it was super nice and the owners put like they weren't renting it out before, but they finished out this whole in law suite and it all, it was like so pretty and so well done and they did all of this work to it but at the end of the day it didn't really matter what it could rent for. It didn't really matter, you know, all the additional income opportunities. So as an investor I was able to benefit from that because I could make extra income from that. But what we pointed to when they were trying to price their house and we got a $30,000 reduction was the house is down the street. And so while this one was very obviously positioned for maximized income and noi that's not what the market cared about. It's, you know, if somebody fire sells in your neighborhood from a divorce, you know, death, divorce and distress, that's going to drive down all the home prices in your neighborhood. So that's why after that and I realized the math, I was like, man, all roads really lead to commercial real estate for, for true wealth building. Because it's just if you take an NOI of a hundred thousand dollars and you add an extra 100,000 or 200,000 to it, like you're seeing a dramatic, dramatic difference in your wealth creation from that maybe. Before we get into the motel, a question that I get all the time is how do you scale with short term rentals? And I haven't yet found an answer. I like short term rentals. I think they're amazing, they print out cash. The issue is I haven't found a way to really scale the asset outside of just kind of like the revenue snowball. Like you make it, you get a short term rental, it just prints out more revenue. You take that revenue, you reinvest it back into another short term rental. You kind of do that once or twice a year. That's how I've seen the top investors in the space kind of do it. Is there any other way to scale that or do you think it's better positioned for people to just kind of make the leap into commercial hospitality just.
- [09:38]
B
To scale short term rentals? I mean one path is that's ownership, so owning your own properties. And for me I still want to buy more short term rentals, but it's not because I'm trying to scale a short term rental business necessarily. I just want to have places that I own, you know, eventually all over the world that I can call my own and go to visit. But that kind of scaling is a much more slow process. Like a much slower process. You can't, you know, unless you have a ton of capital at your side, you can't just go out and buy, continue to buy individual single family homes to operate as short term rentals. So that's a slow growth. Owning your own properties. You could scale faster if you manage others. And so if you're into short term rentals and you've done a good job managing 1, 2, 3 of your own, you're probably set up pretty nicely to have a property management business. That's actually something I'm doing without really trying just because I have now four properties that, that I manage myself, three that I own and one that I manage on a contract for somebody else I'm about to sign up, three more and potentially a fourth. And you know, once you build the systems and processes to manage your own house or two or three, you can really get to, you know, a dozen or so without adding much in the way of expenses and team, you know, and people to your team. So that's one way to do it a little bit faster. You could also go out and buy a property management business as well. But you know, larger, larger scale property management is a, is a tough business to be in. It's one of the reasons that, you know, the, the larger property management businesses typically start to, you know, start to get poor reviews. You know, they, it's just difficult to, to scale to large size as a property management company and keep an eye on quality. It's one. I don't, I don't want to be, be a big property manager. I just want to manage, you know, homes that make more than $100,000 a year minimum in annual revenue and do it really well and have high quality guests. And for me that's the best, that's the best way to do it. But if you really love short term rentals, then, you know, property management could be something that's, that's good for you.
- [12:02]
A
Beautiful. So walk us through the deal finding process of this motel. So I know it was a lot of local networking. Talk about the importance of local networking. What does that look like and what can somebody that's listening to this podcast implement in their life and business today to help better their chances of getting their next property?
- [12:23]
B
Yeah, the Billy Motel acquisition is a masterclass on its own of the deal finding and making process, mainly in networking. And you Know, one thing I've, I've learned is being a part of Action Academy especially is just tell your story, talk to people. And so I was, I'm always doing that wherever I am in, in any town I'm in, you know, whether it's a new town I'm looking to invest in or the ones I already have properties in. I'm talking to the business owners, I'm talking to the shopkeepers, you know, I'm going to the bar, I'm talking finding out who owns the bar, asking if they need help for something with something. And, and that's exactly how I found the Billy Motel. I was talking to a shopkeeper who also happens to be a short term rental host in the Berkeley Springs area. And I made a kind of flippant comment to him about an interest in buying the hotel that's right in Berkeley Springs if it ever came for sale. And he just kind of like fired back, well, it's not for sale. But you heard the Billy Motel is. And at the time I had never heard of the Billy Motel. And so he tipped me off to it and I actually asked him, you know, why wasn't he buying it? And he just said he didn't have the time or the capital. And I said, well, I could probably, you know, I'm thinking to myself like if I like it, I'll find the time in the capital. So I went and, and looked at it and you know, I, at first I kind of thought it was, it was a little too small, but the, the opportunity opened up when I dug a little bit deeper than the listing itself and went on the, the GIs, the county GIs map that actually shows parcel by parcel who owns specific properties.
- [14:06]
A
And I know, explain, explain what that is. What is the GIS map for somebody that's listening?
- [14:10]
B
So the GIS map is a, is a national service and it basically lists, it shows property information, publicly available property information. Now not all states participate in the same level of disclosure of property information, but the ones that, that disclose full details of property ownership, you can go to the map of, of the, of the county. So basically, you know, if you know the county you're looking in, you type in the name of the county and then you type in GIS map and it will come up with the county's website GIS service and then you can drill down to the specific parcels and addresses and it will show you the exact lot size of the number of acres, it'll show you other details if it'll, it even be down to, like, the covenants restrictions on a property, if there's been anything filed with the county. But in this case, I was specifically looking to see who owned property around the Billy Motel, and I found that the owner of the Billy Motel also owned the property behind, which has a fairly sizable residential home on it today. And. And that is what really made me interested, because that unlocked the possibility of expansion. So it went from an opportunity that was probably too small to one that I think will be a really good opportunity to expand and make it something, you know, that'll be a really nice piece of our portfolio.
- [15:46]
A
I think that people over complicate their acquisition metrics and stress about them unnecessarily when really just talking about what you're doing will literally be it. I have so many. I can't tell you how many times that I've just said, this is what I want. This is what I want. This is what I want. And you just tell everyone. That's why I don't understand people that say, oh, I want to keep it. You got to keep it to the chest to get it done, because people are going to try to crap on it. I'm like, dude, how are you going to have anybody help you if you don't say it? An example of this outside of real estate is I used to say all the time, like, I had a couple of friends that I saw that had, like, they were sitting courtside at NBA games. I was like, dude, that's on my bucket list. Like, to sit court set at an NBA game. And they were like, oh, dude, yeah, that's super cool. Yeah, and enjoy my tickets. And then one day, like, because I just kept mentioning it over and over and over again. And then one day I landed in Austin, Texas, and my friend said, hey, dude, I just saw that you landed. I've got spurs tickets tonight. You want to come sit courtside with me? I remember that you said that. I was like, oh, crap. Yeah, I absolutely do. And it's like, there's so many opportunities that can be presented if you guys just, like, share your story, share what you're doing, and people come out of the woodwork. Yo, what's up, guys? One sec. You're listening to a podcast right now, and I freaking love that. But this is not making you more money. What makes you more money, more wealth, more equity, is being in the room with the people that you're hearing on today's episode. If you want to be around hundreds of other people like you leaving corporate America, doing big deals in business, Commercial real estate in land. Check out action academy.com go in the show, link the show description and click the link to book a call with our membership director team. We'll give you the resources, the connections in the community to actually pull off the stuff that you're learning about on this podcast and we'll hold you accountable to the actual implementation of the information that is actionacademy.com now let's get back to today's episode. So talk to me about the financing of this. So you're about to go buy another short term rental for about a million bucks. You see this and you say, well, why not just go ahead and do this? And there's also some tax benefits as well to it as well. So walk me through. How did you finance this? Were outside investors used? How did you structure the actual debt?
- [18:04]
B
So one of the beauties of this acquisition, but generally my overall strategy in working in kind of underappreciated small towns that are, you know, within a driving distance of large metropolitan areas and also have some history of hospitality already. So one of the advantages of that strategy is that there are, there can be, not always, but there, there can be really supportive local banks. And so what I have learned as far as financing and, you know, getting the capital to do a deal, the order for me, the order of preference is a small local bank, regional bank, then a national bank and something like an sba. In the case of the Billy Motel, as soon as we were under contract, I made calls to the two local banks because it's a very small town. And both of them were very interested. Both of them knew the property already. One of them actually had the financials already because they were actually already a customer of that bank. And so it just made things very easy on a timeline basis, from the time I called the local bank to the time I got a commitment letter, not just a term sheet, but an actual commitment letter approved from the bank was two weeks and that was to purchase. So it covered the full purchase price of the motel, but it also gave us an extra $105,000 to do some interior renovations to the rooms that, that needed to be finished. So the, the former owner had renovated three of the, of the 10 bathrooms and the other seven are original from, you know, the 1970s. And so the bank was willing to lend us not only the full purchase amount, but also the, the additional amount we, we needed to renovate the remaining bathrooms and give the exterior a little bit of a facelift as well. One comment on how that was even possible so kind of started with the local bank knowing this motel, knowing what a great place it was before, believing in what it could be with us coming in and continuing the great work that the former owner had done. In addition to that, again back to networking and talking to people. I just, you know, started talking to everybody I could in the town and one person who was asking me about the purchase and if I needed any, you know, help. Once they believe in me and our team as the right folks to become part of this small town, people just line up to try and help, which is really, really neat. And I think it's a characteristic of these small towns. So one person had told me when I was telling what we were doing, they said, oh, if you need any help with the down payment, there is a community development bank that's supported by the state of West Virginia that helps with down payment assistance. And so I of course was very interested. I called them and they also knew the motel, said that they come to the restaurant all the time. I don't know if that's a conflict of interest, but they don't get free drinks, so maybe it's not. But they're paying customers. So I talked to them and they, they were very supportive and, and were willing to, to provide the 20 down payment assistance. So the senior debt from the local bank is for 80% of the, of the purchase price plus the renovations. Community development bank is kicked in the other 20% which has allowed us to keep our cash and powder dry for the soft costs related to the expansion that we're going to do.
- [21:50]
A
And that, ladies and gentlemen, is how you get a zero dollar down almost million dollar property plus construction and renovation that will force equity. What are we projecting the force equity to be? Post construction forced equity.
- [22:05]
B
Then how much equity will we add above like the.
- [22:08]
A
Yes. And yeah, when it's fully renovated.
- [22:11]
B
Yeah, I think, I mean, I think conservatively, I think we'll probably force about a million dollars of equity into it. You know, we're looking right now, you know, roughly a million dollar purchase and initial renovation budget and then we're looking at roughly a 3 million dollar expansion project. And you know, I think we should be anywhere from 5 to 6 million in value upon stabilization.
- [22:33]
A
And that's how you do it. It's crazy. It really is crazy when you just change how you're thinking about things. Can you point to a moment or a conversation or, or an event where you finally realized that this was possible?
- [22:50]
B
Oh boy, there are, there are, there are so many moments. But the one moment that sticks out that I knew this was a good investment and was when I first met with the, with the now former owner and sitting down to talk to her about the history of the motel, what she had done with it. And I asked one question and that was, if money was no object, what would you do today to your motel? And she said, oh, I would add at least 10 more rooms in the back. And when she said that, that's. I had already decided that's the only way I was going to move forward was if that was possible. She said that and then she basically pulled out of a folder this sketch she had of what she had dreamed of being able to do. And not only did that validate the thesis that I had going into it and the reason that I was interested, but it also gave me the opportunity to form a deeper bond with this, you know, owner who had really put her, you know, entire savings and all this energy to make it this really cool different place. And, you know, she just, she just ran out of steam, you know, and so helping to solidify that bond with her, you know, helped helped make the transition to me and you know, the, the acquisition possible. I mean, the whole, another big learning experience through this whole acquisition is just how important it is to, you know, build rapport and be genuine with, with the, you know, the, the folks that you're, you're buying property from or buying a business from because they've put so much into it. They just, they don't want it, they don't want to see it be erased. I mean, they, they want to see what they've done, be respected and appreciated and if possible, continued. I mean, we're certainly going to do some things differently, but the foundation is going to be the same. And you know, that's, that also made it so much more meaningful to me because now, you know, she's going to be a great friend as well.
- [24:56]
A
I love it, man. And then especially in a small town, building those local relationships, like relationships are everything. That's, that's the 8020 is like just do the small unscalable stuff. Just pure hospitality, peer to peer, just going out and helping people and building up your local community. So speaking of communities, man, you've been a member of Action Academy and I'm curious about how, how that has impacted you, how that's helped you along your journey. And are you, are you going to be over in Cancun here coming up?
- [25:24]
B
Yeah, so I, I'm definitely going to Cancun. I will go.
- [25:28]
A
I get to finally Meet you, man.
- [25:29]
B
I know. I'm really excited about that. Yeah. So I, I joined, you know, I listened to the, to the podcast. Listen to your podcast for two years. I mean, it's been at least two years since I've been listening and never really, you know, considered joining just because I, I, you know, honestly, I like my job, I donate my W2. And so I, and I also, you know, I'm a little further along in my career being, you know, almost. I hate that I'm not going to say almost. I am 46. I'm not almost anything.
- [26:02]
A
So I'm 46.
- [26:04]
B
And why is it we get older, we say like, oh, the day after 46. You always say, oh, I'm almost 47. No, you're not. You're 46.
- [26:11]
A
You're 46 and a half.
- [26:13]
B
Yeah.
- [26:13]
A
Yeah.
- [26:14]
B
So I am 46 and a little further along, you know, in my career and the expense side of things, especially with family. Yeah. And so I didn't really think it was for me, but then I got laid off. And so that's when I thought about joining. Still wasn't certain. And then I spoke one on one with the man, the legend, Mr. Nate, and he told me why I would never regret joining. And so he convinced me I joined the next day. And that was just like the day after Thanksgiving last year. And you know, the, the tools that Action Academy has given me are just invaluable. Like Nate, Nate was 100% right when he told me that whatever, whatever the cost is, you will get back like multiples over. And it's, you know, the main thing is mindset. I mean, I have over here on my wall, which I could show you, but my, my really nice vision board. So I did all, yeah, you know, month one stuff and you know that the, the mindset is just, just huge. I mean, a year ago I never would have thought I would be a motel and restaurant owner because I had no idea how to do it. But what Action Academy's taught me is you surround yourself with the right people. It doesn't matter if you know how to do it. Today, you know, what you need to know is that you'll figure it out. And you have the people around you to rely on to help you figure things out. And that's, that's what Action Academy has given me.
- [27:44]
A
Dude. It's the, the tyranny of how, like, you just need to be around people. Where Hal stops being like. How is a swear word, you know, just like, try. Because what I have found to be True. And the reason that I did buy a. The hotel that we're. That we're doing with Ben and that you're going to be a partner that you're a partner on. And I'm honored to have you along, man. It's just like, dude. To do a $14 million hotel as our first deal, you know, together, I was just like, let's just go for it, man. Because we're going to learn through this process, and we're going to build this new, new cornerstone of a market in South Florida, and it's going to be amazing. And so it never stops. It never stops. At the end of the day, it's all about just, like, truly community, both your local community that you're involved with and then finding just your tribe of people that are going to help you through it. Because we all have these stories that we tell ourselves about what we can do and what we can't do. And at the end of the day, one of my favorite quotes is, is hell would be hell on earth would be to meet the man that I could have been.
- [28:45]
B
Yeah, that's a good one.
- [28:48]
A
Yeah. So it's all about maximizing your potential while we're here. Another one I really love is let's not go to heaven. Well rested. I hope we don't get there. Well rested, man. So if people want to invest with you, if they want to do something with you in the future, if they want to follow along on your journey, especially as we build up this micro resort community, because I'm super excited about having you back on when that's complete. Where can they go? Where can they find you?
- [29:12]
B
The best place to find me is on our Instagram page. It's staywith Branch, that is the parent company and the one that's building the micro resort in Berkeley Springs. But I'd love for you all to follow along at the Billy Motel as well as we build that Instagram page out. And my email is ian staywithbranch.com Perfect.
- [29:34]
A
And how do you spell the Billy Motel? What's the app for the Instagram?
- [29:37]
B
It's T H E B I L L Y M O T E L. The Billy Motel. Awesome.
- [29:44]
A
All right, Beautiful, man. We'll have all those links in the show description. And if you could leave everybody with one last closing piece of advice, what would you leave him with?
- [29:51]
B
Before I leave him with a piece of advice, I want to. I want to hopefully make Action Academy podcast history. I don't know. You tell me. But I have two brands, and since I'LL see you in a couple weeks in. In Cancun. This is, this is the Branch brand. I was going to bring this for you.
- [30:10]
A
It's freaking sick. Yeah, I saw it in the email signature. What do we got here?
- [30:15]
B
This is our. This is Boom Billy Motel shirt. So if you tell me your size, I'm hoping I can be the first one to. To convince you to wear my company swag at some point. So those are going to be for you in a couple weeks.
- [30:31]
A
Done. Large, baby. Let's freaking go large. Bring it. Yeah, bring it to Cancun. We'll rock it.
- [30:37]
B
Gotcha.
- [30:38]
A
Let's go, dude. Oh my God, man. I love watching you win. Love watching you thrive. Everybody please go follow the Billy Motel on Instagram. Follow Ian at Stay with Branch. Correct?
- [30:49]
B
That's right.
- [30:49]
A
Yep. Follow him on Instagram. He put his email there. We'll put it in the show description as well. Guys, don't blow up Ian with random stuff. Come up with very good structured questions. If you're going to reach out, reach out well and see if you can add him to Yalls community as well. Ian, thanks so much for being you, man. Thanks so much for being active in the community and and being such an added value to everyone else that you meet, man, and love having you on the show, man. Long time coming, Brian.
- [31:14]
B
Thanks for having me. This is great.
- [31:15]
A
Let's go. It's been Ian and Brian with the Action Academy podcast after two and a half years signing off. Boom. Thank you guys so much for listening to another episode of the Action Academy podcast. My one ask real quick before you go. If you enjoy this episode, if it brought value to you, please share this episode with one to three friends that you think could get value from it. This is how we grow the show and at minimum, if you could leave us a five star rating and review on Apple podcasts, Spotify or whatever platform you listen to that would mean the world to us is how we get in front of other entrepreneurs. If you're done sitting on the sidelines, you're done listening to the podcast. You want to be the freaking guest on the podcast podcast, go into actionacademy.com, go in the show description, the show link and book a call to speak with our Action Academy community. We have hundreds and hundreds of people just like you buying businesses and commercial real estate with full coaches, full mentors, full support, full capital, everything. ActionAcademy.com is where you'll find us.