3k STR/BnB investment grosses 450k yearly after only 3 years.
Investment Info:
Large multi-family (5+ units) other investment.
Cash invested: $3,000
STR/BnB operation located in downtown Seattle. Through an initial investment of 3k, 3 yrs ago have grown into a 9 unit operation with yearly gross revenue of 450k. Through a policy of income focused re-investment we achieved rapid growth in the lower seattle market. Through automation and streamlined service through technology we have been able to drastically reduce the cost of participating in the hotel industry and created a model that allows us to target niche markets.
What made you interested in investing in this type of deal?
The potential from an emerging industry. According to pew research less that 30% of americans have heard of the STR market and less that 15% have used them. The smaller scale allows a larger ability to penetrate niche markets than legacys hotels are capable of. Through automation we are able to make our operations more cost effective and with the rise of folksonomy and the sharing economy, smaller scale operations are now able to compete on a marketing level with legacy name marks.
How did you find this deal and how did you negotiate it?
I was living at a historical building at the time that was being condemned. I wrote proposal letters offering to take over the building and turn around their trajectory. My offer was accepted and after three years I had both earned my real estate license and increased the multi families housing earning 3x. Upon sale of the building, it was requested that due to my knowledge of the historical aspects that I stay on for the new owner. I offered as long as I was authorized to run unlimited STR.
How did you finance this deal?
Personal pocket.
How did you add value to the deal?
Through attention to detail, a strong work ethic and always doing what is necessary for my clients and guest. If you always provide quality work and effort you will win out in the long run.
What was the outcome?
A 3,000 investment turned into a 9 room boutique hotel that grosses 450,000.00 yearly and provides our family with a large amount of disposable income and freedom.
Lessons learned? Challenges?
The largest challenge with a boutique hotel, or any industry for that manner is staying on top of your game. Find a industry that you love and perform it well. NO ONE enjoys poor service. Be the best at what you do and run your numbers correctly. Remember that your investment doesn't care about your emotional investment. Just because you love it doesn't mean its the right idea. Run your numbers and stick to your ideals.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
Paul Hanken - North By Northwest Real Estate.