A (1:37)

Yeah.

B (1:37)

So last time you were here, dude, you were, you were hustling and whatnot. Now you're buying and, and, and running hotels.

A (1:44)

Yeah, we're, we're buying and operating boutique hotels. We had. When I first came on the show, three, three and a half years ago, we just bought our second hotel. Today, we own and operate six Hotels. We got a phone with Summers Capital and we're going to put 10 hotels total into this phone. Our investors are diversified across all sales, passive income tax benefits upside on the back end when we go to exit. And we're taking advantage of all the tightening Airbnb regulations, the, the 40 million retiring baby boomers that are happening across the country right now. We saw what happened in New York City. We saw what happened in San Francisco. We saw what happened in Los Angeles. I live in San Diego. They slashed the Airbnb supply in San Diego from 17,000 Airbnb listings to 5,500. And as this happens and continues to occur across the country, it's bringing all the demand to the boutique hotels, the days of millennials, the Gen Z wanting to go travel and stay at the same hotels, the big box branded hotels that our parents and our grandparents, grandparents once loved. The Hyatts, the Marriotts, the Hampton ins. Those days are over. And so these, these millennials, the Gen Z years, want to go stay at these vibey experiences, these small boutiques that have these Instagrammable experiences that they can share with their friends.

B (2:56)

Yeah. So are you curating all those? How do you pick them?

A (3:00)

So we love California coastal stuff. So you start with the search criteria first. Right. We, we want to go into areas, Airbnb regs. California has a lot of bureaucracy, a lot of red tape. With that comes very tight Airbnb regulations. I own a luxury Airbnb in Scottsdale at Crushes. I never want to own a boutique hotel in Scottsdale because there's 6,000 Airbnbs in the city of Scottsdale. And so number one is Airbnb regulations, California coastal. We love the stuff that's on the beach. People are always going to visit the beach. And those assets tend to appreciate the much the, the best over time. Look at Hotel Dell and Coronado, San Diego. You've been there? Yeah. Okay, so Hotel Dell Blacks, Blackstone bought it about a year and a half ago. They did a $500 million renovation. That asset just appraised for $1.7 billion with a B because it's beachfront and they're not building more beachfront real estate. And so for us, we like the beachfront areas that are supply constraint and we like targeting mom and pop owners, these sellers that, you know, have these tired boutique hotels that we can pick up at a discount. A lot of them are not using any tech, they're not using any AI and a lot of their properties haven' renovated in decades. And so we can come in, pick them up at a discount, add a lot of value through a bunch of different levers which we'll get into today, force a lot of appreciation and cash flow, these assets. And by the way, because it's commercial real estate, these things are valued like a business. So the more we can increase the income, the more we can decrease the expenses, the more we can force our appreciation. Unlike investing in single family Airbnbs.

B (4:34)

Airbnbs are making it a lot more difficult lately, aren't they?

A (4:38)

They are, man. So New York City, ban them. San Francisco, a lot of these cities around the country are banning them. And by the way, there's 8 million Airbnb listings in the world right now. And so as this phenomenon continues to happen, you know, it's the next logical progression for a lot of these Airbnb investors around the world. And so when I go speak Brad, at these real estate conferences around the country, hands down, the most popular panel is the boutique hotel panel. And every other person I meet at these Airbnb conferences is like, yo, Rich, I am operating Airbnbs right now, but I cannot wait to do my first boutique hotel. And so I believe, and I'm speculating, I'm always want to be wrong, but I believe that boutique hotels will be the next big thing in two to three years.

B (5:18)

So what kind of experiences are you putting in them?

A (5:21)

So for us, we're targeting, I think the important thing here to remember is let's define a boutique hotel. What is a boutique hotel? By definition, it's any hotel that's non branded, non flag. So it's not going to be a Marriott, it's not going to be a Ramada Inn, it's not going to be a Hilton, it's independently operated in less than 100 rooms. For us, our sweet spot is less than 60 rooms, but north of 30 rooms, that's kind of the sweet spot. And so for us, as far as amenities, we'll, we'll do a bunch of different things. A couple of things we're doing right now to really separate ourselves from the competition is for one, we've gone all in on AI. So we have AI revenue management platform that does anywhere from 100 to 200 AI pricing adjustments throughout a 24 hour period, similar to how the airlines do it based on supply and demand. The other avenue is I went all in on an AI concierge and I've implemented an AI concierge last year in 2020, live at every single one of the hotels. They each have their own name and personality based on the market the hotel is located in. They will text the guests in blue iPhone message. They will use emojis, stagger response times and even intentional spelling errors so it feels like a real human component. And they will help the guests with check in instructions prior to check in. They will help the guests with restaurant accommodations, things to go eat at the restaurant that the locals like in the area, daytime activities like hiking trails, things to do out in the water, but also driving fast drawer reviews on Google and bringing in additional revenue in the form of early check in fees, late checkout fees, pet fees, and bringing in additional room nights, which is pretty cool. And God, by the way, you know, for anyone listening to this right now, if you are a real estate investor and you are not using AI, oh, you're leaving a lot of money on the table. You know these AI coners, we're spending $1,200 a month for one of these coners and they can have 500 conversations at any given time at each hotel.

B (7:05)

And personalize them.

A (7:07)

Very personalized.

B (7:07)

Yeah, like if I text in and it knows it's me, it could scan the Internet, find out everything I like and, and literally like curate all the things to do based on my freaking profile. Almost as if like the data that Facebook collects and all those people are collecting all that data. Yeah, using it. Which makes your concierge almost like they know you.

A (7:30)

Yes, they do. The other cool thing is this is, you know, when we tested it at Hotels in Dell, which is our 24 room boutique hotel in the Little Italy neighborhood of San Diego. And by the way, anyone listening to this, if you guys have ever been to San Diego or maybe you're going to go visit Ghost in Lit Italy, it is the hot spot to be at 30 of the best restaurants, coffee shops, etc. It's probably the trendiest neighborhood in San Diego. Now. We tested it first at that hotel. Her name is Brooklyn. And I went, I popped into the hotel during the weekend and I just started talking to guests. Hey, Brad, how's your stay? And all the guests are like, oh, stay has been great. Brooklyn has made our stay amazing. I'm like, oh yeah, tell me more. She's like, oh, she helped us with restaurant accommodations, things to eat at these restaurants, rooftop bars, daytime activities and all these. Yes, her 20s, 30s, young 40s. And so, you know, we're not talking about old people. And all these folks had no idea they were talking to AI, which is pretty cool.

B (8:24)

That was real cool. How, who, who developed that?

A (8:26)

One of our investors. Actually one of our Investors, big shout out to our guy Ephraim. He's actually has a company called AI Integrators. And, and they're, they're great. And so if you're a business owner and you're looking for an AI employee, they will integrate that into your business. This is the first time they ever did the hotel thing, and it worked really well. It took them a little bit of time to build it out, but they will do it regardless of whatever business you're in. And if you listen to this, you're looking to, to get on a call, see what that might look like. You can go to aiintegrators.com Rich Summers,

B (8:59)

you got it down, don't you?

A (9:00)

Yeah, yeah, we're spitting bars today, Brad.

B (9:03)

You've been hustling since how old, dude?

A (9:06)

I was a air traffic controller for 11 years, and I didn't know anything about business or real estate until I was 33. I had been 11 years into my air traffic control career, and I overheard a co worker in the break room talking about how he just closed on a four plex in Cleveland. And I thought it was the coolest thing ever. And I was like, yo, Mike, how did you do it? And he said, go listen to this podcast. It was the Bigger Pockets podcast, and that was my first taste of entrepreneurship, real estate investing. And that was. That was seven years ago. I cashed out the only thing I had in my name, which was a 401k after working 11 years. And I went all in on my first couple real estate deals, started a podcast, started building my brand, learned how to raise private capital, and I started taking down bigger deals. But that was the, the start of my real estate investing journey, man.

B (9:49)

The podcast is called Rich Summers Report. The Rich Summers Report.

A (9:54)

Yep.

B (9:54)

What is it about?

A (9:56)

Business, real estate mindset. We talk money, we talk wealth, we talk leveling up. I'll bring on a lot of business owners, real estate investors, professional athletes. I've had on Grant Cardone a couple times. I brought on Dan Martell a couple times. Multiple NFL pro Bowlers and super bowl champs. But it's all about growth, mindset, leveling up. And, yeah, check it out. We do three episodes a week. Apple Podcast, Spotify, YouTube, the Rich Summers Report.

B (10:18)

What do you, what do you gain most from those podcasts? Like, because I get to sit here and pick brains. I hear about all the newest, like, you know, a lot of opportunity that sit in front of you.

A (10:31)

Yeah, I'll say. Like, man, if you're a business owner right now, listen to this. And you don't have a podcast. It is. It is the sauce. Because one drives more leads for your business. I would say 90% of all the leads that we get to invest with us come through the podcast. Also us buying these hotel deals. A lot of the deals that we buy come through the. The personal brand. But it's not just leads for your business, Brad. It's not just the ability to hire and retain good quality people, but the biggest hack of the podcast, and you know this better than me, is it gets you access to people that you otherwise wouldn't have access to. It gets you into the right rooms. And I've learned so many freaking countless, like nugget from every single one of my guests, whether it's on air or. Or off air to where I'm like, damn, that is so good. Like, I'm going to implement that into my business, my personal life today.

B (11:18)

Yeah, sometimes I've thought about airing the. That's said after the podcast, but I don't want to miss.

A (11:25)

Sometimes that's a better conversation.

B (11:27)

I know. Sometimes it's like, you know, okay, we're done, and then we sit here for another 20 minutes talking. I'm like, dad, I should have been on the podcast. So. So, folks, if you guys want to follow them at Rich, underscore Summers on Instagram, if you're into the business, it's at Summers Capital. But so is it your. I mean, obviously, if your name's on it, it's your. It's almost like a fund. So you just raise money from private investors and then you go buy boutique hotels and then what's been the average, you know, performance.

A (12:00)

Yeah, so all of our investors are all retail individual investors. We, we get, get like family offices and more institutional, like, like groups of capital, larger checks that like, want to come in and be involved. But then I'm like, I don't, I don't want to give up, like, voting rights and decision making and all that sort of stuff. And we have a wait list of investors, but all retail individual investors. A lot of my podcast guests. And by invest with us, but it's primarily business owners in high net worth, high income earning, like W2, like doctors, attorneys that, you know, they're making good income, but they got a tax problem. And so we'll give them passive income, we'll give them tax benefits, and then we'll give them equity upside on the back end when we go to exit. As far as how we structure the returns, we have a preferred return, which basically means you're gonna get some cash flow every single year. A nice drip. And investors always get paid first. And so until the investors receive 100 of their initial investment back plus the preferred return for each year they participate with us, we don't take a split, which really creates an alignment of interest for these deals to do good, we have a target IRR of that 17 to 23% tax deferred. So, remember, this is passive income. You're not trading your time for it. And this is tax deferred, which is. Which is huge.

B (13:14)

Yeah. Where. Where did you learn all this, dude?

A (13:18)

Just getting in the right rooms. And so, you know, again, in 2019, I started listening to the Bigger Pockets podcast and then cashed out my 401k to, you know, go do my first.

B (13:28)

How much was that?

A (13:30)

$320,000.

B (13:31)

That's a good chunk.

A (13:32)

Yeah. And do you think someone could start

B (13:35)

nowadays with, like, 20?

A (13:38)

No. I would say go work on your active income first. Go pick up a couple skills and go work on your active income. And then once you're making more money, then start investing into the real estate game. I think I got a little lucky because I had 320, and I used that to buy my first couple apartment deals. But the timing was good. In 2019, we had, you know, 3% interest rates, and those first couple of deals went full cycle by 2021, before the rates hiked. And so I had some decent pools on those deals. But shortly after 2019, I started my first podcast, which was in the apartment investing space in the old. With my two old partners at the time. And through that, we just started interviewing apartment investors. One of them was Grant Cardone. Another one was the mentors that. That we actually paid to learn the game from. And these guys didn't have, like, a mentorship program or anything like that, but they had bought and transacted 7,000 apartment units out of the Southeast, Tony Azar. And we paid them for the information, and they taught us everything. How to underwrite bigger deals, how to raise private capital. And we ended up doing two larger deals with them that we still own today. The Arborstown homes in Greensboro, North Carolina, 150 units. Also the Timber Creek Apartments, also in Greensboro, North Carolina, 145 units. And through those two deals, I learned everything. And so when I started Summer's capital back in 2022, when we really pivoted hard into boutique hotels, I took all those principles to really roll it into what I'm doing today. But I think my biggest takeaway, looking back, Brad, is this you know, because when I cashed out my 401k to get into the game, everyone told me it was too risky. Friends, co workers, family members, everyone told me it was too risky to go invest out of state. Everyone told me it's too risky to cash out my 401k. I was working 56 hours a week, 6 days a week, nights, weekends.

B (15:27)

Stressing.

A (15:28)

Yeah. And on the way to work, after work, in between my, my breaks, work in air traffic, I did nothing but study real estate investing for nine months. Strai, like I just became obsessed. I started a real estate investor meetup in San Diego before I even owned any real estate. I literally started my apartment investing podcast before I even owned any real estate. And everyone told me not to do it, but I cashed out the 401k and I took that 310 401k and I parlayed it into an eight figure net worth in less than six and a half years. And so my biggest takeaway looking back, Brad, is this. All those risks that people allude to are real. So put some weight on them. But on the other side of the balance scale is another risk, and it's this. I could be 80 years old one day, laying in my bed, staring at the ceiling, kicking myself because I never tried anything in life. How about that risk? That's a risk too, that a lot of people don't allude to.

B (16:18)

And what's the worst that can happen? You go broke and start over? It's not that big a deal.

A (16:22)

Yeah, yeah. And honestly, like when you're young and you got nothing to lose, like, that's when you should be risky. Right? And so, so yeah, I mean, look, a lot of people in their mid-30s, they might be listening this right now. Or even if you're in your 40s and you're like, hey, dude, like I, I, I haven't learned the game of business for real estate. I'm late to the game. I'm like, dude, I thought I was late to the game too. Most people get into the career I was in. You get a pension after 25 years and that's, that's what you do. No one leaves that job. But look, at 33, I knew nothing about business or real estate. At 36 years old, I knew nothing about the content game online. And today we got a top 1% business real estate podcast. We're averaging 24 million organic views per month across all the different channels. And I didn't start posting content until three and a half years ago. And so you Know if you're listening this right now and you feel stuck, it's like, hey, it's never too late to reinvent yourself. Things can change really quickly if you get in the right rooms and you're willing to bet on yourself. But you have to be willing to take risk.

B (17:23)

I don't drop many bombs anymore because the sound effect doesn't sound.

A (17:27)

It doesn't hit the same.

B (17:29)

I'm gonna make that thing explode while we're in here.

A (17:31)

Yeah, yeah, yeah.

B (17:32)

I gotta work on it. But that was a bomb. Folks needs to pay attention to that one because I'll tell you, there's so many people that literally act like I'm, you know, a billionaire when in reality, I mean, yeah, I guess I'm somewhat successful based on most people's, you know, average. But at the end of the day, man, you got to take risk. You got to be willing to freaking pull the plug and say, I'm done with this nonsense. It's going nowhere. Because, dude, where would have air traffic controlling went a nice little pension comfort, but nothing major. You got a yacht. Now you're freaking styling. That wasn't going to be part of the plan otherwise, dude, it's funny because,

A (18:15)

you know, when I go to. I go to Catalina all the time and you go out there and Avalon, which is like the place to go, you go out there in the summer, there's 300 yachts in the bay. And you look around, all those yacht owners, the only. There's only two ways to get there. Business owner, real estate investor. Those are only two ways. What about crypto that I, I don't, I don't. With stuff that I don't understand. So like, you know, the steel market, crypto, I don't understand that game. And so I don't play there. For me, like, I understand real estate. Like, you know, if you look at The S P 500, there was 500 original companies in the S P 500. It started in the 1950s. 80% of those companies are out of business today. But real estate has been around forever. There will never be a replacement for two things. A place for people to sleep and a place for people to store their belongings. And so the hotels that we buy, you can look them, you can touch them, you can feel them. Real people go there and stay there. Our investors are diversified across all the hotels. Unlike investing into multi family self storage and some of these other asset classes, our investors can go and stay at our hotels at any time. They're all in really dope locations.

B (19:21)

Waterfront they would pay like everyone else, right?

A (19:24)

No, no, we comp them. Unless it's a busy sold out holiday weekend in the summer, as long as we have some vacancy, we will comp them and they can go and stay at these properties and see how their money's working for them.

B (19:33)

Well, that's a good perk.

A (19:34)

Yeah, it is a nice perk and I encourage, I encourage them to do so because they're all in like really cool locations.

B (19:38)

How do you identify, like, which one's which, obviously locations, one. But how do you, like, if there's people listening right now and they have one, rather than sell it to you, why don't they just do what you would do? Which is what?

A (19:52)

What? Improve the value. Yeah.

B (19:54)

Make it look better.

A (19:55)

Pull on a bunch of different levers, implement the tech, implement the AI and you know, I'll give you a good one right now. So a big one is implementing the, the amenity fees. So when you go stay at a hotel anywhere in the country, regardless of where it is, everyone's expecting to pay some sort of fee. Today I was at Hotel del Coronado with my girlfriend during December. They always do the ice skating on the beach. And we're ha. We're having a drink, I'm having a glass of wine at the bar and we close out. There's a little fee at the very bottom of the receipt. And it's, it's a 1% fee that they charge all the people that eat at the restaurant. That goes towards Blackstone's renovation of the hotel. And so my point is this. All these people that say hotels are expecting to pay some sort of fee. And so what we'll do with these hotels is we'll implement some cool, you know, amenities. You know, jacuzzi. We have a dry sauna at one of our properties. We got cold plunge at one of them.

B (20:48)

I was gonna say we have, that's Big Sur surf surfboard.

A (20:51)

Rentals. We'll have beach cruiser bike rentals, which will include, with the amenity fee, free of charge. And then we'll figure out a way to serve breakfast, even though I don't want to be in the restaurant industry. So, like, some of our hotels will partner with like the local restaurant across the street. And we'll be like, hey, like, we're going to send our guests here, we're going to offer them free breakfast. Like, what's the best you can do? And so they might say, hey, like, we'll do an American breakfast with a cup of coffee for nine bucks to you guys. And then we'll charge our guests a 25 a night amenity fee. It allows us to check the box on these OTAs hotels.com booking.com Expedia is like, hey, breakfast included. But let me just give you an example. Just, just to kind of drop some, some game for your listeners right now. So, you know, 25 a night amenity fee. Okay, let's just say that you had a 24 room boutique hotel multiplied by 365 nights in a year. And let's just say you average a year round occupancy of 72%. That's an extra 157, $157,000 to the bottom line. And let's just say, hey, you're going to have some overhead for that. Let's just call it, let's just call it $118,000 to the bottom line over the course of a year. So that's like, you know, a little bit more cash flow is great. But here's the real value, Brad. So hotels are valued based on the income approach. So noi, which is net operating income divided by the cap rate equals value. And the average hotel in America is valued around an 8% cap rate. But the average hotel that's beachfront in California is going to trade at a 6% cap rate. And so that extra 118k that drops to the bot divided by a 6% cap rate increases the value of the property by $1.9 million. And so if you're listening to this right now and you're like, hey, I'm, I'm investing in Airbnbs right now. I'm thinking of buying an Airbnb. I'm like, dude, Airbnb is going away in a lot of markets around the country. Like, that's the old man's game. This is the new man's game. This is where it's at.

B (22:39)

Well, these little rundown motel sixes you see on the sides of the road, you know, they're just, just no one stays there because they're, why couldn't you just buy one of those, renovate it, turn it into a little boutique hotel?

A (22:52)

Because they got to be in a good location. A lot of those rundown motels that are on the side of the road are not in great locations. And so no matter how much you renovate that hotel, people like yourself or someone like me that wants to go stay at a nice place, they're not going to drop 400, 600, a thousand dollars a night to stay there. So the key is, can you find that little rundown motel that's like beachfront in a really cool surf town that's owned by mom and pop and then go buy that from them with some seller financing. A lot of these mom and pops are not on the OTAs, so they're not on hotels.com, booking.com, expedia, Airbnb. They're certainly not on social media and they're certainly not using AI. And then you go in there, pick up the deal at a discount and then implement all the tech, the AI, the revenue management, pull on all these levers and then boom, you force a lot of appreciation, refinance the sellers out and, and that's the game right there.

B (23:42)

But how do you get it at a discount when it's on the beach? Because I've been at some beachy towns, even the little holes that are on the beach, as long as they're on the beach, that's the key. You know, it doesn't seem like they're upgrading their rooms. They're usually.

A (23:58)

They don't need to.

B (23:58)

A little bit shoddy.

A (23:59)

Yeah, they don't need to because they, they got good year round occupancy and the mom and pop mentality is like, hey, I'm not going to reinvest in improving stuff. We have good year round occupancy, why would we? And so the key is, you know, targeting those owners. And because these things are valued based on the income approach. If those owners are underperforming based on, relative to what you can do under your operations and you have an ability to go in there, pick it up at a discount, buy in a good location, you can't replace the location and you have a clear path to add value, then I think it's a deal that you should look into.

B (24:32)

How often do you try to exit those?

A (24:34)

For us, we have a long term hold period. So our target hold period is 10 years. And the reason for that is a couple things. Right now we're in a high rate environment, right? We've been a high interest rate environment for 48 months. And so I don't know what's going to happen in the short term. Right. When we started our phone a couple years back, I'm like, I don't know what's going to happen in the short, the midterm, but I do know that the Federal Reserve has printed 80% of the money supply since 2020. All those chips are on the sidelines because of the high rate environment. I also do know that if you look at the history of Beachfront real estate in good locations, it doubles every 12 to 15 years like clockwork. And so for me, I want to buy in a good location, I want to let time do its thing, I want to let inflation do its thing, I want to let the interest rate environment normalize. And then I'm going to find an opportune time in that 10 year cycle to have a nice fruitful exit. And as far as the exit strategy, Brad, we got two. So all the hotels are individually branded. They all have their own direct booking site, they all have their own Instagram handle. And so when the time comes ten years down the road, we can exit to individual buyers individually, one at a time. Or the more fruitful exit, which is what I'm going to look to execute, is I can go to the marketplace and package up all 10 of the boutique hotels as a portfolio sale. By doing that, I can go and attract institutional buyers. The institutions are willing to pay up for the economies to scale and those institutions are not interested in these one off boutique hotels. It's just too small. But a portfolio 10 cash flowing boutique peak hotels in California that are well located, they are interested in paying up for the economies that scale. And the last thing I'll say is this is, I believe Instagram is going to be the next big booking engine. And so we've gone all in on Instagram influencers, okay, to separate ourselves from the competition. And so we have Instagram travel influencers staying at every single one of our properties every single week around the clock. And this does a couple things. For one, a lot of these influencers, they just want a free night stay, they want two free nights. Well, I'm like, dude, the only time we're 100 sold out is like Memorial Day weekend, weekend, Fourth of July weekend, these big holiday weekends in the summer. But what about all these other times of the year where we have extra rooms? It's like we might as well give them away to these travel influencers. And then they go and shoot the content. They have travel audiences and they go and like basically shoot our content for us. They give us more visibility in the platforms which allows us to bring in more bookings. But here's the kicker. When we go to exit 10 years down the road, there is no doubt, Brad, when we go to exit that these buyers are going to pay out multiple and a premium. If we can sell these hotels with the Instagram account that has a sizable audience, 300k, 400k, 500k, engage followers, that is huge. And so that's kind of our play right there.

B (27:15)

How do you get them to follow you?

A (27:17)

So we'll do giveaways with the travel influencers. So we'll do like, hey, we're gonna do a giveaway. So let's just say it's two free now nights. The we'll do it to the travel influencers and then we'll allow them to do a giveaway to their audience. And so they'll shoot a piece of content and then they'll give away two free nights to their audience. If they go and follow us and do a couple things and, and boom, next thing you know they'll put out the reel and it gets a lot of visibility, gets a lot of engagement because everyone's looking for a free two night stay. And then they'll be like, hey, by the way, if you don't want to wait for like, you know, the free night, saying you just want to like come experience the same property like the way that I'm doing right now, click this link and you can come book for 15 off and we'll give them their custom codes.

B (27:59)

Do you find that works?

A (28:02)

Yeah, 100 crazy. It depends on the influencer. And so a lot of people think, oh, like I'm just going to bring in someone with a big audience. Like if you came and say one of our hotels and did content like that, it, it wouldn't convert because your audience is like business owners, people with money, investors and that sort of thing. But these influencers that specifically have an audience of people that love just like going out to eat and they love going to like hot and experiences, it does convert with those types of people.

B (28:30)

What type of influence are you looking for?

A (28:33)

We're looking for people that ideally have travel audiences in the California area.

B (28:39)

Are you all in California?

A (28:41)

Primarily in California? Yeah, we, we have, we've gone out of our California search criteria a couple times because those deals came through personal relationships. But outside of that, our core markets are California coastal and supply constraint areas. Our best performing deals are in these areas of California that are well located. And we're one of only five hotels in the market. For example, like Hotel Dega, it's a five room, I'm sorry, a 44 room boutique hotel in Bodega Bay, Sonoma coast wine country. Now we're north of San Francisco and we're one of five hotels out there. All the other hotels are very mom and pop and so 15,000 visitors each weekend, tight Airbnb regs. And because the competition's mom and pop, we come in, do a good Job with the renovation, implement the tech, the AI do a good job with the marketing, the revenue management, and we can create a huge list shift with the adr. On the flip side, Brad, you get into these markets that have a ton of hotels. Like for example, you know, downtown Los Angeles, there's thousands of hotels. Well, it's hard to compete. No matter how good of a renovation you do, no matter how good your operations are, if you got to compete with thousands of other hotels, I mean, you're not going to get that much of a lift with your, your adrs. You see what I'm saying?

B (29:53)

Yeah, I do. Coincidentally, I'm surprised that I'm following all this, but yeah, I've been, I've been around the block a few times. It's all making sense. How come the, the big boys aren't like swooping in and just knocking them all out? Yeah, so the, the Cardone, like I asked him once, why don't you just develop these things, bro? He wants instant cash flow. But you know, the people that are developing these properties, dude, they're obviously selling them and they're in business. And I've never met a broke developer, have you?

A (30:26)

Well, Cardone says this, I mean, he's been on my podcast a few times now, but he says like builders lose all their profits at the, in the last year or two of the cycle. Right? And so look what happened in this cycle. Interest rate environment doubled in early 2022. And then all those developers that have these two, three, four year projects, they, they got caught. A lot of them. If you look at Phoenix right now in the multi family game, Phoenix was like, it led the country in year over year rent growth in the multifamily industry across the nation. It was like 10, 11% annualized rent growth for like 10, 12 years. All these operators kept buying in Phoenix and assuming, hey, they're going to continue to get 10 year, 10% annualized rent growth. And guess what? Phoenix is in trouble right now. Scottsdale. I mean I was just in Scottsdale not too long ago and there's a lot of brand new multifamily deals out there that have just been developed and they are struggling to lease these things up. And now Phoenix has negative annualized rent growth. A lot of people that have bought out there recently, multi family, like they're, they've been pretty quiet on social media lately.

B (31:25)

So are you staying away from multif family properties? Are you only boutique now?

A (31:30)

I own multif family and we're holding that stuff. I'm just not buying it right now, like our niche that we're going all in on is, is boutique hotels. And you know, I, I'll, I'll probably buy some more multif family down the road. I do like the asset class, but no, we're, we're, we're, we're going all in on the boutique hotel game. I've been calling this phenomenon for a few years now with Airbnb going away. And here's the other thing, Brad. The 8 million Airbnb listings around the world, like, think about all these like social media kids that are getting in the real estate game. What asset class they buy? First single family Airbnb. Right. And so this whole generation of these young kids that are, that are getting their feet wet in real estate investing in the Airbnb game. As Airbnb regulations continue to happen, as, as Airbnb goes away in the country, what's the next natural progression for all of them? If they're already operating 2, 3, 4 Airbnbs, they already have the baseline fundamentals to go and do a boutique hotel. And so the next logical progression for all these kids is to get into the boutique hotel game. And that's why I believe, and it sounds more fun, it was way more exciting. Sexy. Dude, unlike doing C class, B class apartment buildings, self storage. Like you're freaking designing these dope Airbnbs. We're bringing in travel influencers, we're bringing in models to do shoots with us. All the marketing photos, you put it on Instagram, like people love that stuff. It's like sexy, It's a sexy asset class and you get to go stay at these hotels and see how your money's working for you. And so I believe, I believe, like I said, I'm speculating, I'm always willing to be wrong here. But I believe in the next two, three, four years, air boutique hotels will be the next big thing because of all these Airbnb investors that are, are going to be looking for that next thing.

B (33:08)

Well, that puts you over the, the nine figure mark.

A (33:12)

I'm hoping. I wanna, I wanna build a billion dollar thing with summer's capital. That's, that's my goal.

B (33:17)

On your head, on your hat for it's built.

A (33:19)

It's built. They, they sponsor me, I have a brand deal with them. But it's built premium basics. They make men's and women's clothing. Freaking some of the best fitting clothing out there. If you're a guy listening this dude, like they just fit great comfortable, all that sort of stuff, you can, you can Check them out@built basics.com free plug use the code summers for, for a nice discount. S O M E R S at checkout.

B (33:44)

Well, the one I, the one I went to that has I think killer fitting clothes. The only, the only store that like is meant for like if you're buff is I think it's called State and Liberty.

A (33:55)

Okay.

B (33:56)

Freaking everything there just fits like a glove. That's, that's probably like a state in Liberty.

A (34:01)

Yeah. Yeah. I was telling Anthony. Yeah. Anthony was asking me about the build game. If you want I can hook you up for like all your, your like light speed swag. If you guys are looking for swag, I can hook you up with the build team. They can do all the wholesale stuff, but it's like high quality stuff.

B (34:14)

They make the good.

A (34:15)

Yeah. All the good. Hats, hoodies, like shirts, even workout stuff.

B (34:19)

Yeah.

A (34:19)

Personalized with your, your company. I can hook you up, dude.

B (34:22)

Yeah. Because I always look, I, I like quality.

A (34:24)

Yeah.

B (34:25)

Like, I don't know why people, I mean I give away T shirts but I still buy the good.

A (34:30)

Okay.

B (34:30)

Because like dude, you want people to want them. And I have people that call me and say, hey, how do I get more of those T shirts?

A (34:38)

Yeah.

B (34:38)

Now I again, I just send them a couple shirts. I don't try to sell them. I don't have a big merch game.

A (34:43)

But, but it's a nice touch, right? Like you know, for any business owner. It's like, hey, whenever you get a new client or investor, it's like, hey, like, you know, give them a nice little win right off the bat. So like with all of our investors that invest with us, as soon as, as soon as they invest we're like, boom, hey, what's your address? What's your, what's your shirt size? And then we'll sell them like a, what's. What's not selling? We'll send them like a custom thank you and like swag box with all of the custom summer's capital built merch. Nice little handwritten car. But it's just a nice little touch, you know, And I think that goes a long way, especially in today's age with social media and AI and you don't even know what's real and what's not anymore. I, I think just like a nice little handwritten car, nice little personal touch goes a long way these days.

B (35:22)

Well, I try to always ask the, you know, audience in my head, you know, how can the audience win from this? So a, obviously investors, they want some kick ass, passive Income and a little sexy boutique hotel business. You got it on lock y. Where do they reach out?

A (35:37)

SummersCapital.com invest. If you're a business owner and you're like, hey, I got a tax problem. You want some passive income tax benefits. Benefits and diversification across all the hotels. SummersCapital.com invest. And if you are listening this right now and you're like, hey, dude, I'm in the Airbnb game. And, like, this sounds like the next logical progression for me. I want to buy a hotel actively. We have a hotel community with 120 members. We teach them the A to Z on how to buy, operate, source, analyze the hotels. That's HotelInvesting.com.

B (36:08)

source is the one I'm thinking while I'm talking to you.

A (36:11)

Yeah, source and analyze.

B (36:12)

Yeah, Because I don't necessarily want to just throw somebody money money. Like I threw Grant money I've been getting. I only threw him 100 grand. It was kind of just like, here, I'm in. Leave me alone. Yeah, because he was on me.

A (36:26)

Yeah.

B (36:26)

You know how he was.

A (36:27)

I was just recording with Ryan Pineda right now. I was walking out. Grant was. Grant was walking in just now.

B (36:31)

Well, he's crushing it in the. In the real estate game. And now he's merging real estate with bitcoin, creating a asset class all on its own.

A (36:40)

I think. I think that's a little crazy. Crazy. I'm like, I don't understand how the. The crypto thing works. And, you know, I love Grant, but, dude, I mean, he. He talked about how he didn't understand crypto for all these years, and now he's. Now he's, like, bringing it into his investment offering, which is kind of strange.

B (36:55)

Well, he's big into crypto now.

A (36:57)

Yeah.

B (36:57)

Because he's merging. I don't know what change real estate. I don't know how. Yeah, I just called him one day and I said, what's going on, buddy? You know, I'm watching. You're killing it. And he basically said, take all your money and put it into car to own capital. I'm like, well, the last 100 grand I gave you produced 155 bucks a month. 155 bucks a month off of 100 grand. I could make more than that in the bank account. So he's got. He's got other things going because he's crushing it.

A (37:27)

Yeah, well, there's. There's less returns in what he's buying. I mean, he's buying multifamily class A Which is going to trade at the lowest cap rate, which means the lowest cash flow. And so, you know, that's why he's got, that's why he's making a lot more money in his education business.

B (37:43)

Yeah. And again, I mean he, he, he's, he knows what he's doing, but he's been doing it a while.

A (37:48)

Yeah.

B (37:48)

I'm wondering what he would say about this because this just sounds cooler. I'm just wondering where do you find them and how do you get them at a discount if they're on the beach and, and how much inventory is there? Because there's only so many. So where you go after that?

A (38:04)

Yeah, the key, the key is networking. It's like anything in business, right. Like if you're not making the kind of money you want to be making, you're not finding the deals that you want to be buying in the real estate game, like you're not shaking enough hands. And so, you know, for one, figuring out who the brokers are in the core markets you want to be in. The brokers are the gatekeepers of a lot of these deals. 95 of hotels are traded through a broker. They've been building these relationships with these sellers for 10, 20, 30 years. And so when someone wants to sell, well, they know first. And so getting in with them and that doesn't mean just calling them. Like you got to go visit them, you got to take them out to lunch, become their friends, get to know them, get to know their kids names and all that sort of thing. And you got to be able to talk to lingo. You got to know the game. Because these brokers are sizing you up. Like if they spent 30 years building a relationship and finally that seller wants to sell, like why are they going to give it to someone that can't even talk to lingo? Someone that they don't trust can get to the finish line. Someone that, that, that they don't trust is going to perform. And so you have to give them the confidence that you can perform if they bring you a deal. And then like I said, like if they bring a deal, like take care of them. Like some of the brokers I've transacted with invest with us, right. We'll send them gift cards and you know, I'll call them all the time to hang out, all that sort of stuff. Because everything that we do is a people's game, man. So that's number one. Number two is make friends with all these bridge lenders, all these bridge lenders around the country. That lend on commercial real estate estate. They all have deals that go bad. They all have borrowers that miss on their business plan. And when these deals go bad, they have the basket. And you want to be the first person they call when these deals hit the bad basket. And if you can do that, you can pick up some nice deals at a discount because you're solving a problem for the lenders. One of the deals on our fund, we acquired 40 rooms up in Lake Chelan, Washington. And this came from our bridge lender that we have a good relationship with. They fund a lot of our deals. They call me November of 2023 and they said, hey, Rich, we got a deal that was built in 2021. We just repossessed the property from the developer. We got to get off our books by the end of the year. We think you guys would be the perfect buyer. We can sell it to a discount and we can finance it for 0% intro financing. We moved relatively quickly, smooth transaction. We were solving a problem for them. We close on it for 4.87 million. This is 40 rooms. Just to kind of give you guys perspective, about 120 a door. This is below replacement cost for basically a brand new asset. Asset. It last appraised in 2021 for 7.5. When it's developed, we just picked it up in 23, two years later for 4.87. And so these opportunities exist. And my, and my, my point is, and my takeaway for anyone listening to this is like, dude, build the relationships, take care of people. And you do that. If people like you, they trust you, and you actually a man of your word, they're going to bring you opportunity.

B (40:46)

Last question, because I know you got another one to go to.

A (40:49)

We got, we got big Michael Sartain on the, on the calendar.

B (40:51)

Oh, Michael. Michael. Yeah, Michael. He, he believes we landed on the moon.

A (40:55)

Yeah, I, he's been on my, my show a few times now. And I'm like, dude, every time he comes on, the girls in my office, they're like, they're like, they're doing one of these.

B (41:05)

He's funny.

A (41:06)

Yeah, he's smart. Dude, I love.

B (41:07)

Michael, my question, my last question for you, which if I were listening, is what? I'd want to know why only mainly California. Lake Chelan's not in California. You bought one up there. So what if people have boutique hotels, they're just not in California. Should they reach out? What if they're looking to move them? Because if I were you, dude, boutique hotels is the concept. I don't care where they are as long as there's a cool little upscale, badass, experiential boutique hotel.

A (41:36)

It doesn't.

B (41:37)

It could be on a river, it could be on a beach, it could be on a lake, it could be

A (41:40)

right in the middle of a town,

B (41:41)

as long as it's freaking. Because to me, that's what I think of when I think boutique hotel, like a really cool, vibey, nice vibey place somewhere in a town. I don't want it out in the middle of freaking nowhere. But you know why only California?

A (41:55)

For us, it's. It's number one. It's the expectation that we've set, you know, with our investors and.

B (42:00)

But the taxes and the. There's got to kill.

A (42:02)

But see the bureaucracy in the red tape. A lot of people that don't invest in California, they always poo poo California, Brad. But I like the bureaucracy in the red tape because with all the regulation tight Airbnb wrecks, right? So that bodes well for boutique hotels. Number two is it's very. It's very difficult to get permits and entitlement to build and develop there, which protects our investment. So we don't have the risk that you see in Phoenix right now, that you see in Orlando right now with all this new cranes and supply popping up left and right. You never see that in California. And so we don't have to worry about that, which protects our investment. And then the last thing I'll say is this. If you look at real estate, California coastal beachfront real estate over the last 60 years, every 12 to 14 years, it doubles like clockwork. You can't. They're not building more beachfront real estate.

B (42:52)

But there's beach in North Carolina.

A (42:54)

There is, but like, you know, you're gonna take your kids on vacation in North Carolina beach. Are you gonna take them to take them to Coronado, San Diego?

B (43:01)

Well, yeah, but.

A (43:02)

Which one are your kids gonna like more?

B (43:03)

Yeah, but like you're gonna run out of inventory eventually.

A (43:06)

I mean, Blackstone just refinanced the Hotel Dell in San Diego. 1.7 billion dollar valuation, 1.5 million a door. So, you know, I want to, I want to buy in good location. Now if you listen to this and you're like, hey, you're investing under price of country. Look, don't get it twisted. You can buy and make money in all different parts of the country, the middle of the country, mountain towns like East Coast. We have members in our community that are buying hotels all over and they're making money. It's just for us with Sunrise Capital. I'm a, I'm a big fan of California coastal. I'm also a big fan of staying hyper focused on on you know, your core markets and not spreading yourself too thin and that's why we're, we're all in on California coastal stuff. We understand it.

B (43:46)

Okay so if you got money and you want to throw it in where do they go?

A (43:49)

SummersCapital.com invest and if you want to learn this go to HotelInvesting.com that's it. Yeah. Book a free call. You can check us out and everything else is on Instagram at rich Underscore Summers. That's S O M E R s and if you like this long form conversation and you resonate with what I'm saying go check out my podcast. It's the Rich Summers report. Three episodes a week Apple podcasts and Spotify.

B (44:14)

There you go. Appreciate you. I'll be I'll continue watching till next time folks. Keep that real.

A (44:20)

Let's go.

B (44:32)

It.