Real Estate Investing School Podcast - Episode 179

Title: Boutique Hotel Secrets from Blake Dailey
Date: July 29, 2024
Host: Joe Jensen
Guest: Blake Dailey

Overview

This episode features Blake Dailey, a returning guest who shares his journey from starting with one Airbnb to now owning and operating boutique hotels across multiple states. Blake reveals the inner workings of scaling short-term rental businesses into successful boutique hotel operations, discussing the challenges and opportunities at the intersection of real estate and business. He delves into topics including business systems, work-life balance, forming and dissolving partnerships, structuring and selling hotel portfolios, and creative approaches to value-add renovations. The episode offers practical wisdom for investors aspiring to grow beyond single-family rentals into larger, more scalable hospitality-market ventures.

Key Discussion Points & Insights

Blake's Year of Transformation: Life & Business

• Major Personal Changes:

  • Became a soon-to-be father (first child, a boy, due October 2024).
  • Separated from the Air Force, gaining more freedom but also confronting new challenges in time management.
  • Sold a business and purchased a large 130-unit hotel property (10 acres, 10 buildings, plus an event venue).
  • Moved cross-country and embraced extensive travel.

  Quote:
  "I separated from the Air Force just a couple months ago now, and it feels good to be a free man. We moved across the country. We've been traveling a ton and doing all this movement while my wife's just getting bigger and doing a lot of foot rubs." — Blake Dailey (01:38)

• Adapting to New Freedom:

  • More free time paradoxically led to being busier; tempted to fill open hours with more work.
  • Importance of re-establishing discipline and intentionally scheduling personal life, not just work.
  • Instituted "date nights" and a regular "state of the marriage" meeting to maintain relationship priorities.

  Quote:
  "The family is the glass one. Don't drop that. So I really had to start scheduling in that. So we have date night every Friday night...We call it the state of the marriage meeting." — Blake Dailey (08:33)

Work-Life Balance & Entrepreneurial Grind

• Seasons of Hustle and Rest:

  • Blake emphasizes that intense hustle is sometimes necessary, especially early on.
  • Advocates for a "seasons" approach: grind hard in certain phases, then intentionally scale back to invest in relationships and personal well-being.
  • Eventually, with the right systems and hires, the business becomes more scalable and less personally demanding.

  Quote:
  "The hard truth is probably that you need to be doing more...But I think a lot of times in the beginning, just keep going until you're like, all right, now it's time. I can pull off a little." — Blake Dailey (11:15)

Boutique Hotel Investing: Business Meets Real Estate

• Business Model Differences:

  • Boutique hotels sit at the intersection of real estate and active business management.
  • Success relies not just on property acquisition, but also on building teams, managing systems, and prioritizing customer experience.

  Quote:
  "It's the intersection of business and real estate. We buy and operate commercial real estate, but I have to build systems, I have to manage people...All those different things that lead us into getting guests at our short-term rentals and our hotels." — Blake Dailey (16:46)

• Scaling Up:

  • Blake started residential, then moved to short-term rentals and finally to boutique hotels and large commercial properties.
  • Advocates getting into commercial as soon as it fits your risk profile and skillset.

  Quote:
  "If you can get over a million bucks in revenue, you're going to have a good chunk of buyers because there's going to be the margin there to have the team." — Blake Dailey (29:06)

Structuring and Selling a Boutique Hotel Portfolio

• Portfolio Structure:

  • Sold four hotels and the management company as a combined portfolio.
  • Sale included both the real estate (PropCo) and the operating company (OpCo).
  • Shows how value is created both in property improvements and operational systems.
  • Buyers for portfolios are typically hotel operators; as portfolios get bigger, private equity or REITs come into play.

  Quote:
  "We built that OPCO infrastructure [management company] to manage everything...Amicable partner split and we just sold the portfolio that we owned together." — Blake Dailey (21:22)

• Benefits of Scale:

  • Operating multiple units centrally reduces costs (cleaning, supplies, maintenance) and improves efficiency.
  • Smaller individual hotels may be too large for single investors and too small for institutional ones; bundling increases attractiveness to buyers.

Deep Dive: The Latest Hotel Acquisition (Tremont Hotel)

• Project Details:

  • 130-unit hotel near the Smoky Mountains, full staff (GM, maintenance, housekeeping).
  • Blending modern amenities (self check-in, smart locks) with traditional hotel operations.
  • Goal is to modernize operations, streamline booking, improve reviews, stabilize income, and eventually refinance or sell at a profit.

  Quote:
  "It's a hotel. Like this one, like they were all hotels, but this one is the most on the spectrum of hotel because it's an actual hotel. But we have front desk...people come there." — Blake Dailey (32:45)

Cash Flow, Profit, and Syndication

• Approach to Returns:

  • Prioritizes investor returns and deal sustainability over personal profit, especially early on.
  • Now targets deals where he can personally net at least six figures, noting smaller deals aren't worth the time given the scale of operations.
  • Profit comes both from management fees (ongoing income) and the eventual equity/appreciation upon exit.

  Quote:
  "I'll delay my satisfaction all day long. Right. Like as long as I can promise what I'm delivering to my investors...Now yeah, like I won't look at a deal if it, like if I can't net six figures on it personally. It's just, it's not worth the time." — Blake Dailey (41:47)

• Deal Structures:

  • Early deals: owner partnerships, private debt, or "BRRRRs."
  • Latest project: full syndication with management fee.

Conference Announcement

• Boutique Hotel Investing Conference:
  • September 13th–15th, 2024 at Blake's Tennessee hotel, featuring live, hands-on instruction.
  • Attendees can see an actual boutique hotel renovation in progress, learn about deal finding, operations setup, and raising capital.
  • Includes lodging and food.
  • Website: boutiquehotelcon.com

Notable Quotes & Memorable Moments

• On partnership splits:
  "It was basically we went into it thinking it was a big BRRRR deal...But my partner wanted to slow down and I'm the crazy one. I was like, I want to keep going. So we just high five, tag team each other out here." (23:14–24:07)

• On scale and systems:
  "When you have a business, when you have people, you have managers in your company, you really steer the ship and they help you get the work done...The time you work right, you might work less, but you get way more done because you have the infrastructure." (14:07)

• On career advice for beginners:
  "Find a good local meetup...get crazy good at finding deals...do a small multifamily and then, like, once you raise some capital, work with contractors, get through...all that kind of stuff. It's just the same thing, the same base actions." (50:05)

Timestamps for Key Segments

• 00:00–01:33 — Blake's background and quick personal/professional review
• 01:33–04:31 — Life transition from military to entrepreneurship; family updates
• 04:31–11:15 — Time management, work-life balance, and transitioning out of a structured job
• 11:15–16:15 — Entrepreneurial grit: seasons of hustle vs. intentional balance
• 16:15–21:02 — The business of short-term rentals/boutique hotels vs. conventional real estate investing
• 21:02–28:19 — How Blake structured and sold his hotel management portfolio; mechanics of valuation and exit
• 28:19–32:27 — How scale impacts efficiency and value in boutique hotel operations
• 32:27–37:23 — Breakdown of the 130-unit hotel project: operations, staffing, renovation, and modernization
• 37:23–41:47 — Scaling up, the appeal of boutique over branded hotels, and the bigger vision
• 41:47–46:45 — Cash flow, profitability, and structuring deals for personal and investor returns
• 46:45–49:17 — Upcoming conference, further networking, and educational resources
• 49:17–58:08 — "Final Four" questions: best advice for new investors, favorite book/podcast, biggest mistakes, and why Blake loves real estate

Final Four Questions (Rapid Fire)

1. If you had to start over, what would you do?
   • Attend (or start) local meetups, master finding deals, assemble partners, target a value-add multifamily STR as a starting point.
2. Recommended Book/Podcast:
   • "The Book on Investing in Real Estate with No (and Low) Money Down" by Brandon Turner.
   • Early episodes of BiggerPockets; recommends bingeing first 300 episodes.
   • The Real Estate Investing School Podcast as a helpful ongoing resource.
3. Biggest/Most Interesting Mistakes:
   • Six-figure loss due to contractor licensing mistake on a commercial job.
   • Costly refinancing delays with USDA loans—emphasizes relentless, proactive communication with lenders and agencies.
   • General principle: Make mistakes small enough not to wipe you out.
4. One word/phrase for why he loves real estate:
   • "Scalable" — It’s simple, anyone can do it, and it rewards consistent, compounding effort.

How to Connect with Blake & Resources

• Instagram: @BlakeJ.Dailey
• Conference: boutiquehotelcon.com
• Podcast: Real Estate Investing School Podcast

Tone & Takeaways

Blake brings an open, practical, and ambitious energy. He’s candid about the work, mistakes, and discipline involved in building an empire—and equally honest about the importance of relationships, intentional rest, and keeping perspective.
The episode is packed with actionable insights for anyone looking to scale up from single units to commercial real estate, or considering a shift toward active hospitality operations.

Memorable Closing Thought:
"Find your niche within the niche." — Joe Jensen (58:41)