All Forum Posts by: Alex Scattareggia

Just wanted to give this a bump. 

Is anyone out there getting 10%+ of their reservations through TA? Or does anyone have any insight into the algorithm/ tricks and tips to generate more bookings through the platform. 

As I have repeated a lot here, it is the most owner friendly platform and I am constantly trying to get more business there, but we are averaging about 2 bookings/ month across a big portfolio, so not really making a dent. 

Any insight would be appreciated.  

If you have some inside secret and don´t want to share on a public forum I would be willing to pay for an hour of your time, just DM me!  Cheers

Quote from @V.G Jason:

Quote from @Alex Scattareggia:

Quote from @V.G Jason:

Would you own this property under your own title or own LLC title?

Again, this is Mexico so we don´t have the same corporate entities down here as in the States. But everything we buy is in the basically the Mexican equivalent structure of an LLC.

There is a lot less liability concern down here as well, but never hurts to be protected. 

I'm aware, but are you in single holder of this LLC? Every investment I've looked at down there if I wanted to buy, I cannot be the single person of this LLC.

We have always used S de RL structures, which allow essentially unlimited participation.  I am not the sole person in any of our entities, but I don´t believe that there is any rule against a single holder.  Perhaps in S.A´s (Sociedad Anonimas), but I am not positive.  We have a great attorney who has structured everything for us, and generally participates as a minority partner. 

@V.G Jason also FWIW you could purchase by yourself through a fidecomiso, without having to form a corporation at all.  I am assuming you are American? Without derailing the thread, depending on the purchase/goals sometimes this might actually make more sense.   

Quote from @V.G Jason:

Would you own this property under your own title or own LLC title?

Again, this is Mexico so we don´t have the same corporate entities down here as in the States. But everything we buy is in the basically the Mexican equivalent structure of an LLC.

There is a lot less liability concern down here as well, but never hurts to be protected. 

If it seems like everyone's really down on arbitrage it´s because there are more negative experiences than success stories. There are definitely opportunities out there, but I would just caution you to:

1. use really conservative numbers, whatever data you gather shave some significant % off the top

2. completely throw out late 2020 and all of 2021 data, especially for a market like Nashville.  That post Covid boom is skewing a lot of peoples idea of what is normal. 

3. again, using conservative numbers, figure out what your hourly would be over the course of a year. Because this is a job, not investing, look at it like that.  If you end up making 25$/hour is that worth it to you?  You might very well say yes to that proposition + the experience you gain. This is going to be different for everyone based on goals and earning potential at their primary job etc. but at least objectively look at it like a job and determine if your time is worth it. 

Cheers, good luck!

Reduce your income by 20% and increase your expenses by 20%.  Does it still pencil out?  

If it´s not the most obvious deal using ultra conservative #´s, you are taking on a huge amount of risk/liability in the form of a job, and not capturing any of the REI upside.

Quote from @Alecia Loveless:

@Alex Scattareggia I owned 2 smaller B&B properties in resort towns and found that as rates rose occupancy rose with them. We did do some upgrades to the rooms to justify going from the $60-80 price point when we bought them up to the $135-185 price point but with added marketing and internet presence both properties doubled their occupancy rates.

Also both properties had a “small” room. And we found that by keeping a dynamic pricing structure where we could offer people the small room for maybe $85/night with no breakfast or a regular room for $135/night with breakfast during off season or if we had several rooms open allowed us the option to capture the Canadian and European tourists who came in off the street and usually wanted the cheapest room they could find.

I think the idea of bringing in a limited partner and with the ability to expand this could be a great opportunity. If there’s not too many regulations regarding having a bar the rooftop lounge might be a great additional source of revenue. Especially if you could cheaply serve some food as well perhaps. I know often when I travel I just want 1 night to stay where I’m at particularly if they’ve got a decent restaurant/bar onsite.

@Alecia Loveless Thank you this is awesome stuff. I am cautiously optimistic that we can replicate everything you said in the first paragraph. 

If you went the way of a rooftop restaurant or lounge, would you run that in house or rent the space to a third part?.  

Quote from @Michael Baum:

Well @Alex Scattareggia, the fact that they are just sitting there with no advertising could be an issue. I will say that people who travel would be able to find that place for that cheap.

I think it is a reasonable risk if you have the cash for this, but it is going to take some doing to get it rolling better.

Do any of the rooms have A/C? I see some mounted fans.

Almost everything in Mexico is Mini split air, very little central air.  Each room has a relatively new 1-ton inverter minisplits which are efficient and inexpensive to service.  I wasn´t planning on changing them. 

Quote from @Michael Baum:

Hey @Alex Scattareggia, looks like a cool place.

The thing that jumps out to me is th3 $60 a night with 59% occupancy.

If the ADR in the area is more than double this properties rate, why isn't it in the 90's for occupancy?

I would drill down on that. 

It could do very well if  you could increase the nightly rate and occupancy. It could be close based on the 1.8m plus salaries.

It´s a totally fair point.  I am trying to make it a positive, (room for growth) but the reality is that I don´t have a concrete answer on why that is the case. 

I have some ideas but how would you even determine with certainty the reason?

My two main ideas for the low occupancy despite the rate are:

1. They have very little OTA presence, even if you are searching directly for the property, it's hard to find.  No online direct booking. No Airbnb, no VRBO. 

2. This is more a feeling than a provable fact (which I generally try not to do). But I think because the price is so much lower than anything comparable, it actually keeps people away, it seems too cheap to be nice.  It really is priced in the same category as a roadside motel or hostel.  I think it's dangerous to try to attach emotional ideas for why a market does or doesn't value something, but like I said I don´t have a great reason. 

Thanks for the response. Cheers

Quote from @Don Konipol:

Get an experienced operating partner; have him contribute a moderate amount of capital for a minority ownership stake, and allow him to acquire more equity “units” if certain target profitability benchmarks are obtained.  He can implement your earnings increasing ideas and you won’t have to be tied up in the day to day operations, which is always a PIA and not exciting like deal making. 

I may be in the minority, but I enjoy the implementation of new ideas and the day-to-day operation, at least in the beginning of a project.  This will ultimately be passed on to someone to run but I at least want to be able to hand off a detailed system when I do.  The property is a 3-minute drive from my office. 

I do like the idea of bringing on a partner on this deal but someone that doesn´t necessarily have overlapping skill sets.  

Quote from @Shane Crockett:

There are several companies out there who BRRRR single family dwellings into high performing STRs, then package multiple together and sell to investors based on NOI and CAP. I understand this does not happen in the consumer world, it's definitely happening in the institutional spaces which would undermine your "never" assumption.

I wasn´t familiar with this practice.  But even what you are describing is taking a SFH and essentially making it commercial real estate by making it a single purchase with multiple doors (commercial or multi family).  

So yes, this would naturally appraise like commercial.