From STRs to Boutique Hotels - Expert Insights with Mike Sjogren

welcome back everyone to the short-term rental riches podcast we know that we can accomplish a lot uh in a year a year is actually a long time and so is three years and so is five and the reality is is when we're putting in good work these results compound year over year and we can do incredible things today's guest I'm really excited to have on Mike shin last name's a little little challenging there for me sometimes Mike um has accomplished a lot uh I actually just

got back from a conference that he put on the largest conference in the Str Str industry it was this short- terminal wealth conference with his co-host Bill Faith who we actually had on uh not too long ago so I'm really excited to have Mike on he's accomplished a lot I know he's going to bring a ton of value to today's episode welcome to the show Mike thanks for having me man it feels like we were just doing this a few years ago time's flying by it

it definit is flying by yeah in fact I before um jumping on with you here I went back and I was on your guys' podcast the short teral secrets so awesome podcast as well anyone out there if you haven't tuned into that one yet please do but that was back in 2021 right after covid when it's all this craziness was going on and uh it's just crazy to see how much can change in a few years yeah man it's uh it's a lot of fun right

I just remember to to have fun we are in a a fun business it's easy to get sucked into a lot of the craziness that can happen when you're running a lot of properties but uh overall it's a really fun business to be in it is it is and and there's a lot of ways to be successful at it too and so I know you've branched out into some really cool thing boutique hotels and we're definitely going to jump into that that's exciting uh but before

we do I want to talk about your conference cuz yeah I was out there it was in Nashville you guys had a huge turnout tons of people you had excellent vendors there you had excellent speakers and I know that was a ton of work can you tell us a little bit about the conference yeah I mean it was it was pretty special it was pretty special so I don't even I don't even have the final numbers but I'm guessing somewhere around 2 200 people somewhere between

2500 and 3,000 people uh down in Nashville's Music City Center which was a massive venue it was like a city block um was our third year doing the event the first two years sold out with a thousand people we used to have it over at the Wild Horse Saloon which was a super cool venue um but we kind of outgrew that fairly quickly and uh bill and I just had a talk we're like all right we got to go big now so you know it took

a lot of planning and huge huge kudos to Bill faith and Chris Wharton who live down there so they were you know the boots on the ground doing a lot of the physical planning and execution of that but it came together so well um and it was cool because uh we ended the conference where Bill and I interviewed Damon John on stage and it was like stepping into a dream for me because back in 2019 I went to Grant cardone's 10x conference and this was before

I had a podcast or you know anything like this I think I had like five properties at the time and I remember on the way home I made a vision board and I photoshopped myself on Grant stage and I used to visualize myself like interviewing Damon John and Steve Harvey and all these other people and uh five years later almost to the day it was literally Super Bowl weekend when I was at that conference it it was almost five years to the day I was the

one on stage interviewing Damon which was pretty pretty cool yeah man it was amazing amazing uh so I loved your story you you kind of covered your journey uh a little bit in in your specific talk you had you had several up there uh and we'll unravel a little bit of that uh but yeah thank for putting it on I know that's a ton of work mik we've done a few little live conferences pretty intimate and I know that those were a lot of work you

know having 30 people there so 2 200 people I couldn't imagine it but you guys definitely pulled it off um we actually we did a live interview there with one of your excellent vendors too that we're going to release on next week's uh episode so excited for everyone to hear that but you know it it really only takes a couple nuggets you know you just have to find a couple little gold nuggets when you're at a conference or when you're at a networking event and there

was a lot to take away I mean you guys covered everything from pricing to uh strategy and you know air DNA and price labs and all the big vendors are there all the technology companies which seems like you know there's five new ones every single day doesn't it so I definitely took a lot away and thanks for putting it on so my pleasure let's you guys think you'll do it again so I will be honest we don't have anything booked for next year part of that

was the uh the venue didn't have any dates available that we wanted so I think we're just going to take a little bit of time and enjoy enjoy a little peace and quiet because this has been over a year of planning to get this thing done so uh lot of planning a lot of execution a lot of money to uh to get into an event like that but it was totally worth it the the thing that the vision that bill and I had was to to

create a space an event that was entertaining educational but just brought a lot of good energy and some of my favorite parts of those event are just going and networking with all the people that are there and everybody's just so excited and so open and willing to share and just it was just a really cool environment to be in definitely definitely uh well thanks again for putting it on and let's let's go ahead and jump back a few steps uh I think when we last met

up um I know I know you had some cool thing you had a lot of cool things going on already but before we can really be successful with things and accomplish a lot at the same time without the wheels falling off is is setting up systems right and having help and I know you're really big on that um and you guys actually train vas for other people now is that right yes yes okay yeah so like the my you want me to start from the beginning

because I think it'll tie into why big on this so the the reason I got into this and it's it's interesting and ironic because tomorrow we were talking offline tomorrow we're going back to the hospital my wife's having our second child but 7 years ago when she was having our first child um I'll give you the cliffnotes version basically he was born with a very rare lung disease and we spent a lot of time at the hospital and it was it was crazy for like two

years and this was before I got into real estate I was a CPA for 10 years you know had a good income you know stable career nice house in the BS all that jazz but then when was born you know we spent so much time at the hospital that at a certain point I ran out of vacation time I ran out of sick time I had all these hospital bills piling up and I had to leave my wife and my son in the hospital to go

back to a desk and trade time for money and I was just absolutely crushed um and I told my wife when I left the hospital I said I don't know how I'm going to do it but I'm going to find a way to build us a business that gives us the income we want without ever trading time for money again and I knew real estate was going to be the vehicle you know ever since I read Rich Dad Poor Dad in my 20s I'm like all

right this makes sense like I'm going to figure this out but um shortly thereafter I met a gentleman in a mastermind group who was doing what we now know is rental Arbitrage and this is back in 2016 I had never heard of it I didn't even think it was legal to be honest but he was showing me his numbers and I was like this is nuts he was making anywhere from a th to 2,000 bucks on these properties every month that he didn't own and I'm

like I told my wife I said this is going to be our ticket I don't know about this whole weird leasing thing and like renting it without telling the owner like it just felt weird but I'm like let's let's go all in on this thing so I pulled a loan out of my 401k got a 0% interest credit card bought a little two-bedroom condo up in the mountains in New Hampshire and I'm like this we're GNA just go all in and you know when we launched

it was just like this guy showed me we were netting about 1500 bucks in cash flow a month I was like this is amazing I can't live off of 1,500 bucks a month but we have proof of concept and so I started thinking about how could I scale this because now I have no money left at all um and so I thought about like what people were doing with syndications and apartments and I'm like well what if I just find these investors that have these small

duplexes and three families or single families and I show them this model and I've run it for them and I just take a piece off the top because there's so much spread and so it took me nine months but eventually I got my first co-hosting deal and then you know a few short months later next thing I know I've got it went from like 1 to 2 to 5 to 15 in a very short period of time across five different states and was able to retire

my wife myself and my mom within like a year and a half of getting into this it was just a wild journey and you know fast forward now we've got 82 doors in three different states couple boutique hotels um and it's just completely changed my life man it's it's been such a blessing and a crazy ride but uh I wouldn't trade it for anything so yeah getting back to your original question there longwinded way of getting there but the whole point was again making building a

business that would give us income without trading time and the only way to do that is if you build good systems and you get good people that can run those systems for you and I fumbled through that a lot I I hired my first VA when I had eight properties which is probably a little too long to wait in my opinion but I was terrified to hire anybody to be honest and I went through four or five vas they'd last a month or two months and

then I get rid of them and then eventually I found uh this gentleman named Mark and hired him and found out he was employee number three three or four at airbnb's call center in the Philippines and he grew that office to 5,000 Airbnb reps and so when we needed to scale he just would go back through his Rolodex and grab people that used to work for him and offer him better pay and a better opportunity with us and so we built up this team and then

as I started coaching on this stuff a few years ago my students were like hey can can you recruit vas for us so I was kind of doing it on the lowkey like here and there for people and then the demand just got crazy and eventually Mark couldn't run my portfolio anymore he was so busy recruiting so now we stood up a whole uh we call it our vpms our virtual portfolio managers to just recruit those for people and then the biggest lesson though is is

you get the right people but then you need the right systems and the right arm boarding and training and like weekly Cadence with that team like the mistake I made was I was okay spending a lot of time and money investing into a property you have to look at your team as the same as you would a piece of real estate it needs time and money and you got to nurture and and pour into them and then you get the most out of it you get

the best returns and so when I started to do that instead of just handing them this giant sop Playbook and say figure it out it's all in there you know we created a really good onboarding process with training and working with me and then eventually working with the team and all these things and you know if I didn't have that there's no way I'm doing any of these hotel deals and anything else because it's just a team sport when you scale up into the commercial space

yeah yeah I know it absolutely is uh and that's that's one of the exciting things about the space too and just where the industry where the world's going right I mean we can hire people from all over the world we can live wherever we want in the world as long as we have good internet right um and so yeah we've been fortunate with our team we have a a fabulous team too that are spread out in Philippines and Europe and um it's just it's it's really

exciting tons of opportunity um and it's with these teams that we can accomplish bigger and better things right we can't we can't uh do it all on our own especially in this industry there's so many moving pieces so um when we were last on together I think you had already acquired a hotel I'm not sure how long you had had it but I know after being at your confence conference recently that you've grown that a lot too so can you get us up to speed yeah

so the first deal that we did was a a little 13 room boutique hotel right on the water about an hour north of Boston great location um needed a lot of love right so we basically repositioned that property got the nightly rates up uh it's done very well financially it's one of my favorite properties still um we'll be doing an addition on that in the fall actually we'll add eight more rooms so we'll have 21 rooms on that one and then um two of the partners

that I had on that deal they ended up I think they did a 1031 off of some apartment and they bought a 21 unit hotel and they asked if I would manage it so I did that for a couple years and then um this last deal uh three of us went in on it and it's a 57 room Hotel uh not too far from where I live over by Salem Massachusetts great property great bones um and we're about halfway through we just finished phase one and

launched 30 rooms 10 of them are very crazy themed immersive rooms which is super fun we do a lot of stuff down in the Disney market so we took that up here and uh the response has been amazing people are loving it um and we'll have another 27 rooms live in about a year because that's that's basically a full full gut Renault that's awesome man that's awesome congrats I I know you done a lot of work so um well where where do you think that the

world of short-term Reynolds leaves and just becomes the hotel world I mean is there like a unit size there for you or um do you think no it's because they both have their place right so like at the beginning I would take any deal that would generate cash flow right to just build that up now I'm at a point where you know the hotels are great they're amazing for forcing appreciation and Building Wealth and cash flow and all these things so those are those are always

going to be good to keep growing and doing those um and they're fun but I also like to just get some nice Str strs and places that I like to go to like I was just looking at one in Hawaii the other day I'm like H I've never even been to Hawaii but it'd be cool to own a house in Hawaii that I could go and visit and make me money right so they both have their place um what I would say if you're brand new

or you have like a couple properties I would wouldn't necessarily jump right into a hotel unless you have a partner that has some experience because there is a pretty big learning curve there's some similarities for sure but there is definitely a lot of differences and uh the stakes are just a lot bigger when you're dealing with commercial property um it's totally doable I've done it I've helped a ton of other people do it but I wouldn't necessarily Dive Right into that as like my first or

second deal um without a partner that has maybe done it before yeah gotcha so um well I want to pick your brain about Partners uh but before we do that I want to just dive into commercial property a little bit more because it is a totally different animal right we have Residential Properties up to four units and then when we go to five units or more we enter the commercial World which is valued differently there's different loan types uh I personally think uh that there's a

ton of opportunity coming up because of deals that people got into over the last few years not having fixed financing we've seen multif Family Properties devalued quite a lot uh Nationwide I a lot of my properties are smaller multifam stuff so I've sort of been in the commercial world but hotels are valued the same way as a large um apartment building do you want to talk just a little bit about the opportunity with the way commercial properties are valued yeah the the thing that I love

about commercial and again I'm a numbers guy right so it's just a very simple formula but the the value of a property is directly based on the net operating income that you produce with it so if you bought I'll give you an example I bought a an 11-bedroom House near Disney World and the most that a property had ever done in that market was I think $175,000 in annual revenue I bought that property we fixed it up optimized it it did 300,000 in its first year

that's amazing for cash flow but it doesn't mean that it's going to almost double the value of the property right in the commercial World it does which is why it's so cool because you can really force that appreciation you have a lot more control over the value of the property so we could do a whole class on this but they're you know you take your net operating income divided by a capitalization rate and again we could do a whole webinar on that at some point but

let's just assume it's 8% so for every dollar that I increase my net income or net operating inome it increases the value of the property by $12 so there's a 12x return so you know you compound that over you know 50 Grand 100 Grand half a million a million dollars in net operating income you create some serious equity and some serious wealth very quickly and you have a lot more control over it which is why I got so excited about it because I was like okay

this math is ridiculous and you can really Force some crazy numbers um with a lot less deals right it would take me a long time to go buy 57 houses or I could just buy one 57 room hotel right so one transaction again there are a bunch of nuances like you said uh Insurance Works a little different lending Works a little different a bunch of other things are a little different but it's the next logical progression for somebody that wants to scale a Hospitality portfolio and

there's also like you said a lot of opportunities for people that bought deals that you know they're going to be underwater but there's also a ton of mom and pop Baby Boomers that have owned these things forever in that 10 to 40 unit size that want to retire they want to get rid of them they haven't updated them and there's just a lot of uh a lot of room for opportunity and creative financing with those types of deals yeah yeah uh great insights there and I

guess with that creative financing that's sort of a nice segue into you know a lot of people when they think about bigger deals you know I I I can't go out buy a $5 million property or whatever it happens to be and so there's there's lots of ways to do it right PE we talk about OPM all the time so of course there's creative financing options but you can also partner with people and it sounds like that's maybe one of the routes that you've gone with

some of your properties you want to talk a little bit more about that yeah so our our first deal um we got some seller financing because again it was going to be tough to finance that type of property just based on the condition and the finan that it was in so we get some seller financing and then uh I was the operations guy and I brought in two partners as the capital partners and we just did a three-way split um with the goal of repositioning it

to refinance and get their Capital out and so that was what we executed on and it went well and then uh in the latest deal it was important for me that I wanted to be also a Capital Partner so we just went even you know three ways um but you don't have to right like if you're a good operator and you bring that skill set there's a lot of people out there that are successful entrepreneurs and business owners and high W2 earners that want to get

into real estate but they don't have the time to learn this stuff and execute on the plan you can be that Workhorse and earn your Equity that way and earn your paycheck so there's a lot of different ways to do it um as long as you have the right skill set right so there's there's a lot of opportunity and with commercial there's just so much more meat on the bone that you know if you bring in Partners everybody's still making a good amount of money because

there's such a bigger deal yep uh I agree it's exciting my my first entry into real estate was working as a commercial broker and um this is what my boss did you know these big deals and they always partnered and they made a lot of money and they shared resources and expertise so um well that's great so let's say you know we've got some good partners and or maybe we have the money or we think we can get the money how do you actually go about

finding deals and I know this isn't like you can't just answer it in a couple words but uh just any tips around that so the commercial world is very different than residential and that the commercial world is an Insider's game and what I mean by that is if somebody if Tim is going to list one of his commercial properties he's going to call his broker he's going to say hey you know I don't really want this out there that much I'm thinking about selling it do

you have anybody that might be interested in buying this so that broker is going to go back through their cell phone and reach out to every single investor that has bought a deal from them in the last five years and he's gonna say hey I've got this deal uh here's what we're thinking is this something that you'd be interested in if all of them pass on that deal then it ends up on the Internet getting fully marketed on loopnet and kxy and all these other places

so the more relationships that you build with Brokers and investors and other people in real estate the more deals they're going to get first dibs on now the first deal we did I was off a loop net it was just sitting there for a long time and the seller wanted way more than it was worth and finally just got tired of it and we were there at the right time and right place to just make an offer so I'm not saying you can't get deals off

of loot net and those other sites but typically um all these other deals you're going to find off Market through your net yeah I couldn't agree more um that's exactly how it worked when I was working as a broker you know um but I I also have gotten properties off a loop net you know that were just sitting there they were sitting for a long time uh I wouldn't say they were in my experience they weren't as good as the ones that the Brokers brought me

right so um you know if if you guys out there have your eyes set on a certain Market you can get on these broker lists a lot of times you know you go to their website start seeing what they send out publicly just remember that uh the good deals are probably getting snatched up before those public list go out but it's a good way as Mike mentioned to start building relationships uh and to sort of get your get your uh head in the door well Mike

can you tell us I know you know these big projects there's a there's a lot more going on it's nice that you could use a lot of systems from your Str space in the hotel space um can you talk a little little bit about some of the things that carried over really easily and then maybe some of the biggest differences between the two spaces yeah so I mean the the locks I use the same locks um I use the same PMS I use guesty Pro shout

out to guesty um I have tested other hotel pms's if you're GNA just do hotels and it probably makes more sense to use a cloud beds or a true like Hotel PMS but when you have a blended portfolio like I do you can run them both through guesty uh I use a software called links that integrates the locks to guesty um we use the ring cameras the noise aware sensors you could use minute whatever all that Tech is very similar the big curveball that I did

not anticipate was the volume of phone calls that you get with hotels people are just trained to call the hotel right you get phone calls with Str strs but it's like usually only if there's an issue everybody seems to call the hotel so we'll have 500 to a th000 inbound phone calls per month per Hotel uh which was very overwhelming at the beginning I did not anticipate that so again we added more of our vas got them trained up on answering the phone and talking to

guest and do all that stuff like they do on the sdrs but we needed to add more bodies quickly just to handle the call volume because there was so many calls coming in um the other thing is less than 10% of my bookings come from Airbnb so if you're used to getting a lot of bookings through Airbnb hotels most people aren't going to Airbnb to book a hotel they're just not so it's a totally different game on that side um we obviously push for direct bookings

if you know Mark Simpson my guy he's always pushing direct bookings um we're 60% uh at our hotels on direct and then the next largest is going to be booking.com and Expedia those two are the big ones for the hotels and a little tip for the hotels is anytime you get a guest I always push them to leave us a review on Google I don't care about the other platforms I ask them to leave me a review on Google because when people go to travel they

go to Google and then they search hotels in whatever the city is so we show up organically just based on the number of five-star reviews that we get and we don't pay a lot for like SEO or marketing or anything like that we just push Google reviews over and over and over again I don't care what platform they booked I want to review on Google what's up awesome that's awesome wow 60% uh direct bookings that's that's a much higher net margin there too right not paying

um all those booking fees uh and also makes it more secure for you guys right I mean we know that Airbnb actually right now they're they're changing their international fees right I think they just added 2% for international transactions or something an Airbnb which gets tagged onto the guest side and so they can do that whenever they want but if we're booking directly uh we've got all the control so that's awesome um you know one of the nice things when I think about hotels is just

the economies of scale right you've got a lot of rooms a lot of rentals under the same roof uh and I know one of the biggest challenges with short-term rentals is housekeeping and so how are you guys handling the housekeeping and how helpful have those economies of scale been for you guys so when we first got into it I had a very very strong thirdparty cleaning company that did a lot of my portfolio around here and so they were taking care of the hotel and that

worked for about a year and a half and then once we added the second Hotel then it just got to be way too much and they got overwhelmed and then quality started to drop and they're having panic attacks because it's like such a tight turnaround and you have so many rooms uh that we got to the point where we're like okay we have to take this in-house right so we built full in-house cleaning teams for all three of the properties um set it up so that

you know we have a supervisor at some of the properties they would manage the cleaning teams for some of the ones that we were running remote you we would look to see who the strongest cleaner was that had some leadership skills and then Coach them up a bit and then they became the lead cleaner so they were our like eyes and ears on the ground almost like a supervisor that would manage the team manage the schedules uh reorder the supplies when we needed them those types

of things so yeah we ended up having to take everything in house because I just found it wasn't uh sustainable with third party companies that that probably helped you guys out quite a bit with your profit margins too I would imagine right bring it in house yes and no and I think it's more about when you're when you go to High when you have two turnovers in your slow season or say five turnovers out of 20 rooms you're you're still paying these W2 people whether you

have 20 rooms or five rooms to clean because you have to keep they want a they want an income right and they want a consistent schedule so managing that it wasn't as big as a cost savings as I thought but it was more of a quality control uh that we really benefited from that our reviews started to climb again they got familiar with the property they could even help guests out here and there if we needed them too so it was originally I thought it would

save us more than it actually has and again there's always operational efficiencies to to tweak but it was more about the quality control and the overall guest experience that became much better when we took it in house yeah gotcha gotcha and that goes a long way right if we're dropping the ball with our quality and we get bad reviews that's a that's a place we don't want to be and uh that that affects our margins so gosh well I feel like I could pick your brain

all day Mike I think hotels are are really exciting um I guess we talked about some of the big benefits just in the way that the properties are valued um we we talked about the economies of scale and some of the things we can do there some of the things you didn't expect like the huge inbound phone uh phone call volume what's uh what's next what do you have next on the drawing board where do you see things heading I mean for for me right now

I'm going to take a breather I'm G to have this baby tomorrow and take a beat tomorrow congrats by the way that's that's very soon um and then you know we've got another 35 units in development right now uh between those two properties so that'll take some time and then I don't know we'll see if I pick up another hotel this year or I really want to get another one or two high-end Str strs again more of like lifestyle assets that earn a good return but

they're fun to travel to so um I've been grinding pretty hard the last year year and a half and so now I'm just gonna take a beat enjoy the summer hang out with the baby uh just join the Freedom Boat Club we just moved and now we're right by the water so spend some time on the boat on the golf course just enjoy the fruits a little bit this summer and then re-evaluate well that's great to hear that's that's good to hear it's good to have

a good uh a good balance and enjoy the fruits of our labor right that actually that leads me into my my next question which I ask everyone that comes on the show um the the name of the show is short-term rental riches and so a lot of people when they hear the word Rich they think of finances right that's sort of the first thing that comes to mind but we know and as you were just talking about the world is not just about having a more

money than we can spend so what's one thing in your life that maybe you've adapted or you've changed change recently that's enriched your life but in a nonfinancial way I don't know if this is the best example but one thing I did recently was I've tended to always be a night owl um I love getting up early but if I burn the candle at both ends it doesn't work well so I've been going to bed earlier and getting up around 4:30 5:00 but instead of doing

what I used to do should be like all right get up out do meditate all that stuff and I got this from Alex horos I flipped it so now when I get up I'll take a shower I'll go get my coffee and then I'll crank out work for two to three hours before anybody else is awake so I take all of like my big things most important things that I need to get done and I get them done right away in the morning and I've been

really liking it because just it's like this liberating feeling that by the time I drive my son to school I have this freedom to kind of focus on whatever I want to do for the day so I can go get a workout in at 10 or 11 it doesn't matter but all of those big rocks that I need to get done during the day I've already knocked them out before anybody else was awake and so that little shift has been very relieving I I didn't expect

it to be but I've I've really enjoyed it and it's just such a change from what I used to do which is I got to do my Miracle morning type stuff before I start my day I kind of flipped it over a little bit and I've been liking it so have some fun with your morning routine there's no perfect way to do it so yeah that's that's good Insight yeah there's no one size fits all model is there so it's good to experiment good to reflect

uh Mike gosh great having you on I know that we could chat for hours you got a lot of lot of cool things going on and you've accomplished a lot of cool things I'd love to have you on again in the future but in the meant time where where can people find you uh what's the best way to connect yeah I mean actually what I would love is give me a follow on YouTube so when I get back from this little daddy sabatical I'm going to

go pretty heavy on YouTube we have a lot of content on there but I'm going to be reworking the YouTube channel uh if you search strr Secrets you'll find it you'll find my mug up there um and I really want to push to basically build you know a lot of free training a lot of almost like mini courses in YouTube especially for the folks that are getting into it because there is a lot of a lot of fluff a lot of misinformation so I just want

to put a lot more free trainings together for you guys um you can check out Str strr secrets you can find me on Instagram I was the Airbnb guy for a long time I recently changed that to uh mike. shogren so because I'm doing a lot more than Airbnb these days so it didn't really fit anymore but um yeah you if you search for me you can find me on all the platforms awesome Mike well well thanks for everything you put out there and it was

great having you on thanks for having me talk soon I've dedicated years years figuring out how to manage my personal portfolio remotely and it wasn't always easy and it took a long time but now my amazing team can professionally manage my properties without me and good news our team can also manage yours let us save you the stress and headaches and some money by offering you an industry low fee to find out more about partnering with us head to Str Str riches.com hit the property management

button answer a couple quick questions and meet with me personally that's strr riches.com rest easy knowing that with my team your properties will be in excellent hands