Cold open

SPEAKER_00 0:00

Welcome to Live Let Thrive, a podcast about the Airbnb life, the share economy, and everything in between. Here are your hosts, Micah and Steve.

SPEAKER_05 0:12

Hello, hello, hello. And welcome back to another exciting episode of Live Let Thrive.

SPEAKER_02 0:22

What's up, Micah? Man.

SPEAKER_05 0:25

I am chilling, Stevie Stacks. How you doing?

SPEAKER_02 0:27

Good, man. Good. Excited to get into today's podcast. It's been uh a long week. Friday's here. I'm ready to uh ready to unwind, have a little fun, and have some fun on my wife's birthday today. So it's gonna be a cool, a cool day. Podcast straight into birthday night.

SPEAKER_05 0:44

Happy birthday to Lupita. Let's go.

SPEAKER_02 0:46

Thank you. Thank you. Well, this is episode 254 of your favorite Airbnb, VRBO, short-term, mid-term, long-term rental podcast in the world

Joe Riley founded Patriot Family Homes in 2018 near military bases

SPEAKER_02 1:00

coming at you from Fort Worth and Arlington, Texas. Yes, sir. And what do we who we got today, Steve? We got a special guest, Mr. Joe Riley has joined us. Who's Joe Riley? Well, he has an impressive resume from what he wrote here. Uh, Joe Riley founded Patriot Family Homes in 2018 to meet the need of for affordable, reliable housing in the south, particularly particularly near military bases. Until 2021, Joe was an infantry officer in the Army. Thank you for your service, sir. He deployed to Afghanistan and Ukraine and served as director on the National Security Council at the White House. After leaving the Army in 2021, Joe rapidly grew Patriot family homes from 100 houses to 400 houses as of January 2023. An East Tennessee native, Joe and his wife Rachel, moved home to Chattanooga with their two boys, Jacob and Jonah. They live on a working farm just outside of Chattanooga, which doubles as Patriot headquarters. Joe earned a BA from the University of Virginia and a master's and doctorate in the internet in international relations from Oxford University as a Rhodes Scholar. Welcome to the show, Joe. Man, thanks for having me. Well decorated. Yes, sir. Very well decorated. Man, I don't know where to start. There's so much to go over. Yeah, let's start with uh with the company, man. This uh so how did you what what made you get into this part of real estate? And what exactly you say 100 homes to 400 homes, what exactly what part of real estate is this?

SPEAKER_01 2:40

Yeah, so we uh so um we're all short-term rentals, um, mainly in single family homes, but we do actually do an increasing number of uh multifamily as well. Uh we've actually launched a bed breakfast concept, some tiny homes, street houses uh concept, uh uh and some multifamily. So, you know, kind of spread throughout. But we started, I was in the army deployed in Afghanistan. My wife works for McKinsey, so kind of travels through the week and needed something to do with the house while I was gone. So threw it up on Airbnb and home away and realized no surprise, there's a big need for furnished short-term accommodations around military bases. And so came back and you know, actually moved my wife and I into one bedroom of our three-bedroom house, uh, and then started renting out the other two rooms. So my wife's a saint to to deal with that, and then uh um, you know, started buying other houses, fixing them up, uh, flipping them, and then you know, setting them up as Airbnbs and refinancing them and kept on going. And so um we're now up to uh over uh we'll soon be over 500 homes, and we're we're including a pretty substantial merger slash or acquisition of a bunch of contracts. It'll hopefully take us north of um 750 homes within the next month or so. Uh so we're moving, moving relatively fast.

SPEAKER_02 4:08

Wow, to say the least. Oh man. First of all, there's a lot there. But first of all, why why is there such a need for furnished short-term rentals near military bases?

SPEAKER_01 4:18

Families constantly coming and going. And so, you know, whether it'd be coming in to watch somebody graduate from basic training or whether it's you know, military families like my wife and I moved, I think, seven or eight times in eight or nine

High turnover near bases creates constant furnished housing demand

SPEAKER_01 4:30

years. So, you know, uh families constantly on the move and going from place to place, and that creates the need for temporary housing as they work way on their permanent place to stay.

SPEAKER_05 4:41

So question for you, because wow, that that is a impressive portfolio. And I love the military family strategy as well. I do that right outside the Little Rock Air Force base. Um, now these homes, because you said you're up yeah, you're up to 500, you're about to get up to 750. Are these places you manage, places you own, or arbitrage, or all three, or what's your portfolio look like?

SPEAKER_01 5:02

We do all three. The majority of the current portfolios owned through an affiliated series of prop codes. Uh, but we do third party management, and a lot of what we're acquiring in this next big tranche will be third party management. Uh, and then we do have rental arbitrage as well.

SPEAKER_05 5:21

And what like what what do you guys see as the best return uh in out of those three models?

SPEAKER_01 5:26

Oh, it just depends on the asset, right? So, you know, if uh you know arbitrage works well on some properties, um, particularly bigger or larger properties in downtown cores, uh management tends to work best when you have consolidated owners, you know, because it's then less, you know, headache for you know, you know, if you can get one owner with 10 properties, they're uh as no more trouble, if not less trouble sometimes than the one property and one owner. Uh and uh so that uh and not trouble, not trouble, but just you know, you know, in terms of time that you have to spend getting them comfortable. Um and then, you know, for kind of buying homes, it's often your kind of run-of-the-mill homes that do really well.

SPEAKER_02 6:17

So and so so it's so it's interesting in your bio, you said you to provide affordable and reliable homes, right? Uh uh, I guess to to military families. Correct. Um, so because whenever we we talk on this show a lot, you know, and we have people on, it's we're trying to get the biggest bang for the buck out of a furnished rental. Now, is there a different model? Are you, I mean, because I I assume well the the government helps pay their their rent, and so you can't really try to maximize the amount you can make on these houses. How does that work?

SPEAKER_01 6:56

Um, no, I would, you know, most of the time the government's not paying it. You know, we are um, you know, we're just uh you know, we're working with them directly. They just happen to be a military family. Oh so the government, you know, maybe one day we'll try to contract with the government, but uh, you know, uh that's that's a whole nother can of worms to open up. Um so right now we just work directly with the with the you know guests, and uh, you know, obviously, you know, we kind of you know start, you know, guests come back and stay with us and word of mouth and stuff like that. But you know, like most people, still a large volume of our traffic's coming from the OTAs. Um, but it's you know, we're in military markets that have a heavy density of military travel.

SPEAKER_02 7:46

Okay, that makes sense. I I just um yeah, because it's not like um uh you know, someone that's in the in the in the military that's gonna rent it for like months at a time, it's just for short, short periods of time.

SPEAKER_01 7:59

Correct. Yeah, we're still, you know, you know, even when we rent to military families, it's often a month or less

Buying distressed properties, renovating, refinancing to 300+ owned units

SPEAKER_01 8:06

stay.

SPEAKER_02 8:06

So okay. So how how were you able to pick up, first of all, 100 properties? Uh how do you how do you do that? I mean, we're we're we're trying our best to pick up a handful, you know, but you got how did you how the hell did you get 100 properties?

SPEAKER_01 8:21

Uh, you know, bought stuff that needed some work and fixed it up and then you know refinanced it out and then was able to get a couple, you know, loans that would work off of cash flow and stuff. And so just, you know, kind of uh you know buy low and do a good job renovating them and then uh you know fill them out, you know, fill them with guests and hopefully do a good job and rinse and repeat.

SPEAKER_02 8:48

So so that many, and so so there's 400 and you're well, it's going on 500, but uh and you said there's a mix. So how many of them are are actually owned?

SPEAKER_01 8:58

Uh probably 300 or so are owned. Jeez. Um, and then probably 60 or so arbitrage and 70 or so third-party managed, or you know, somewhere or 75 third-party managed and 70 or 75, you know, arbitrage somewhere in there.

SPEAKER_05 9:20

Okay. So let's let's hop into the weeds of that. So you have seven, 500 short-term rentals, that's 500 turnovers, whatever. How are you managing that? Like what's your PMP? What's your how do you manage all of that?

SPEAKER_01 9:34

Yeah, so I mean, we've got a team. Our I think we're up to about 90 or so employees, full-time, you know, employees. And then we've got uh, you know, uh obviously 1099 staff who do cleaning and other things like that. So we've got an awesome team, mainly military spouses and veterans who work, uh, but a lot of uh other folks as well. Uh so yeah, we've just got a great team and built up a management company to do that and got different departments that do different things.

SPEAKER_05 10:00

So do you do you just since you're you're on mostly the OTAs, do you just get oh you manage everything just through like Airbnb or what OTAs are you using?

SPEAKER_01 10:11

Airbnb, BRBO, booking expedia, trip advisor, hopper, marriott, um uh PCS CDs, uh we've got furnace finder, um or regular, you know, either then there's a ton of different, you know, more niche sites.

SPEAKER_05 10:30

So okay. Oh, okay. And and you just you uh you don't use like a property management system to manage any of that.

SPEAKER_01 10:38

No, yeah, we do. We use our back end, is we use guesty.

SPEAKER_05 10:40

Guesty, wow, okay. Man, it's a lot of property.

SPEAKER_01 10:44

What do you use?

SPEAKER_05 10:46

Uh well I'm currently using hostfully. Um that's what I've used to manage mine, but man, guesty, yeah. That's a yeah, that's what I would tell people mostly use either guesty or hostly to manage a portfolio of that size.

SPEAKER_02 10:59

Right. So now okay. Go ahead. Sorry. Yeah, yeah. I'm just interested in in the purchasing side. So do you you utilize the VA loans? How many how yeah, can you explain how that works?

SPEAKER_01 11:13

Yeah, we use some VA loans. Uh well, I'm sorry, with some of our clients use VA loans. We don't use VA loans because you can only have one VA loan. Uh, and so that's intended for people's personal residence. Now, the way several veterans will be able to, and this is pretty common in the military, somebody will buy a house. You know, I moved to get stationed at Fort Campbell. So I buy a house in Clarksville, and then a year or two later, the Army moves me to you know Fort Bragg. So now I'm stationed in Fayetteville. So then I'll use my you know VA loan to buy a home there, right? Because the VA acknowledges that the military is obviously moving you around. And so, you know, you can't buy a vacation home with your VA loan, but you can buy a home that you live in, and then when you PCS again, you can buy another home, right? Um, now there's a lot, you know, there's a lot more nuance to it than that, but that's generally the way you know we've seen people do that.

SPEAKER_05 12:12

And okay. And then I know you said you use the uh basically you're saying you use the Burr method, right? You're buying them, yeah, refinancing them. Now, are you still using that method in today's market? And if not, like when were you using it? Like, was it a couple of years ago? Are you still using that method?

SPEAKER_01 12:31

We still buy stuff that needs rehab work. You know, now in many ways, now is more important than ever to do that because you know uh prices have gone up so substantially.

SPEAKER_05 12:42

Okay. And then are you still like refinancing them into traditional loans, like with the you know, the higher interest rates, or how's that working out?

SPEAKER_01 12:51

Um, so we have a variety of loan products. I mean, we have uh, you know, we have some lines of credit. This is a little bit unique to us. I mean, we we raised in this last prop co round, we raised 60 million dollars to go, you know, buy another, you know, 150 million, 140 million or so worth of homes. Um, and so you know, we're using some pretty large warehouse facilities to put those on. That wasn't what we started doing, but that's what we do now.

SPEAKER_02 13:20

Wow. So you utilize investors then to help you buy these homes.

SPEAKER_04 13:26

So how does that work?

Opco-propco structure: $60 million raise for operations vs. asset ownership

SPEAKER_01 13:28

Um variety of different ways. You know, we have every we have a bunch, we have a couple different propcos, and you know, those propcos, you know, some of them are smaller owners who have them.

SPEAKER_02 13:40

So, real quick, could you explain what a prop co is? I've this is the first time I've ever heard that term, sorry.

SPEAKER_01 13:44

Okay, so in a lot of real estate structures, you'll have what's called opco propco. So you'll have an operating company that provides all of the actual property management services, all the activity that's where everyone works. And then you'll have propcos and people um and you know who invest to buy homes, you know, they own the propcos. And the way that the reason you do that is because you know, the prop cos are very bankable, obviously, because they hold uh you know, uh, you know, hard assets in the in the form of homes. And so it's easy to get leverage and financing on that. And secondly, it's just that you know, if you're looking for investors or debt, you know, capital partners, debt or equity, and it's very different return profiles and risk profiles to be investing in the homes themselves versus the man the operating company, which is higher risk, higher reward, lower capital. Um, so that's so when we say opco propco, we talk about who are the entities that are going and buying the homes. Those are propcos, and then who are the entities that are operating the homes and we're getting paid a management fee to do that? That's opco.

SPEAKER_04 14:48

Hmm.

unknown 14:49

Cool.

SPEAKER_02 14:50

Yeah, like I said, the first time I've ever heard that. So um, yeah, man. So so um you settle, you're from Tennessee, you settled there, and you have most of your properties there.

SPEAKER_01 14:59

Uh no, actually, most of our properties, our biggest two states are Georgia and Alabama.

SPEAKER_05 15:04

Oh.

SPEAKER_01 15:06

Now are you on the coast in Alabama or we have we are on the coast in some areas, and then we're up in several other markets throughout Alabama.

SPEAKER_05 15:15

Okay. So in a in a place like Alabama, because I tell people all the time, anything east of Texas, Arcana, Texas, you're gonna need short-term rentals, right? So are you finding more success in like the places on the coast or the places that are inner inner city in like a rural market like Alabama?

SPEAKER_01 15:32

Um, so we typically buy more in cities, is is historically what we've done.

SPEAKER_05 15:39

Okay, gotcha.

SPEAKER_02 15:42

That makes sense. Um all right. This is uh a lot of info. So so how were you able to start doing this while you were uh while you were in the military? Where did you have the time to do all this?

Building the business while deployed in Ukraine

SPEAKER_01 15:56

Uh I just didn't sleep for a couple of years. No, I mean the most productive time when I was building the company was actually I was deployed in Ukraine. And uh, you know, the Ukrainians would wrap up most days around two o'clock in the afternoon with their training, which was you know about eight o'clock in the morning, seven or eight o'clock in the morning US time. And so then I would plug in and I would put it, I'd work till like two or two o'clock in the morning or so Ukrainian time, work through a full day, and that was really you know, a kind of critical period in helping getting everything up and running.

SPEAKER_02 16:29

See that listen, uh uh our fans want to hear that right there because there's no excuses to hustle. He's hustling over there in a war zone after hours, and people are, you know, a lot of people complain about oh, uh, there's not enough hours in the day, man, dude. Never mind. You you get out there and hustle. Um, that that's crazy, man. So so you were out there, um, if I could ask, well in the Ukraine, were you helping train soldiers and what what all are you doing over there?

SPEAKER_01 16:56

Um, yes. So we were um uh we were working with their soldiers and helping them, you know. This was back before Russia invaded, uh, but they were still fighting out east, and so we were helping them, you know, get prepared to go do a you know, to go fight. Uh so we you know train them and help them uh you know learn different tactics, whether it be at the smaller unit level or up at the staff level. And you know, so that was kind of what we did for a while.

SPEAKER_02 17:26

Wow. I mean, I'm just um yeah, as uh not to get off topic of the real estate, but man, it's just uh what do you what do you think about the whole the whole mess over there?

SPEAKER_01 17:38

Uh I mean it's yeah, it's a it's a mess. I mean, so I mean I'm I've been very happy with to see how well the Ukrainians have done of kind of defending their homeland and standing up to Russian aggression. Um you know, uh I think it's you know sad and terrible and you know yet in some ways unsurprising to see what Putin and Russia have done. Um but you know, the Ukrainians have put up an incredible fight. So and kudos, you know, they've defended their homeland.

SPEAKER_02 18:11

So why why is it so important for like us or other countries to help the Ukraine against Russia?

SPEAKER_01 18:19

I think it's just that you know, it's important to you know make sure we take a stand when you know we're you know uh you know telling, you know, demonstrating that you know we're not gonna allow other countries to you know invade and you know demolish the kind of freedoms and rights and even basic, you know, basic life necessities, uh the way that the you know, the way the Russians have.

SPEAKER_02 18:45

So that's that's uh sorry to get off topic a little bit. I just it's it was in your bio and I was like, wow, Ukraine, you know, I don't know enough about the situation. Uh just I've heard both sides, both arguments, and it's uh how someone that was actually there, and I think your opinion is very valuable to us.

SPEAKER_01 19:03

Well, thank you. Thank you. All right, so back to real estate. Yeah, back to real estate, real estate to stop being fumbled by Russian, uh Russian bombs.

SPEAKER_02 19:13

Exactly. That's like we don't know how lucky we have it here in this country.

SPEAKER_01 19:17

Although, you know, one of the one of the best ways that people have been able to get money to folks in there in um in Ukraine is through Airbnb. Because people in Airbnb, you know, that you list they list their house for rent or apartment for rent. People then book the house, right? And it's like a international funds transfer, right? Because they don't actually go stay there, but you know, you can people in Ukraine can list their house for rent, and somebody in Germany or the UK or the US or wherever else wants to support support them, you know, rents their house, they don't actually go there, but then the funds get transferred.

SPEAKER_05 19:54

Hmm. That's awesome.

SPEAKER_02 19:56

And uh, well, what what happens if someone actually shows up with with their bags?

SPEAKER_01 20:00

Hey, I'm you know, I rented this probably probably throw them a rifle and tell them that you know time to go.

SPEAKER_02 20:07

Airbnb experiences, right? Just get it grab.

SPEAKER_01 20:10

Yeah, that's fine. Yeah, that'll be a new, that'll be a new Airbnb experiences, you know, fighting fighting uh uh international invaders.

SPEAKER_05 20:20

So people that would do that near death experiences, man.

SPEAKER_02 20:26

So so okay, you were a road uh what they call it, a road scholar. They go into that a little bit because I mean it's like it's a cool cool resume. And and the only you know, road scholar comes to mind. I I think of uh like Bill Clinton, and he became president, and he was a road scholar. So like you could be up, you could be a president, dude.

SPEAKER_01 20:46

Uh you could be a president, everybody can be a president. Well, yeah, half way more way more presidents who've not been road scholars than ones who have.

SPEAKER_02 20:53

So yeah, that's true.

SPEAKER_01 20:55

Be a reality TV star and become say, yeah, they say road scholars are people with a bright future behind them.

SPEAKER_02 21:00

So that's pretty funny. So uh so yeah, so so you're a smart, you I mean, smart dude, and just um just surveying the the landscape, you you figured that uh real estate was the best way to to make the most money in a the quickest manner, I assume.

SPEAKER_01 21:21

I don't know if it's the easiest uh or the quickest. It seems that you know, you know, technology companies and some others, you know, everybody's business is easier than yours. You know, it's like you know, every time somebody tells me one of their business, you know, how their business, I'm like, man, I just wish I had that business. That business seems like it's so much easier than mine. Uh and I'm sure that and they did the same with me. They're like, man, I just wish you know I had an Airbnb business. That'd be so much easier than running a you know Domino's chain or something like that. Like everybody's business is hard.

SPEAKER_02 21:52

So I I guess to get uh to you know, you want you in in your bio 100 to 400. Now you're over there, you know, getting to 500 and you'll be at 750 soon. You must um you must have some pretty sound systems. I mean, does the military help you have military experience help you develop these systems?

SPEAKER_01 22:12

Um yeah, it's uh, you know, that it was really helpful for sure. You know, we hire a lot of veterans who are coming in, and oftentimes they'll be like, oh, you know, I'm great at you know, creating systems. And I'm like, uh, you know, people in the military, and look, I I mean, I wasn't, you know, like to think they were entrepreneurs and be like, no, I created this from scratch, I created this. And I'm like, you worked in the most bureaucra bureaucratized organization that you know, literally 200 years of systems development and process development, like everybody goes to the same courses, speaks the same language, has a unified rank structure, has common terminology. Like, you know, even when you think you're innovating, you're actually just refining, you know, processes on the margins. Whereas like starting your own company, building a short-term rental portfolio is truly a white sheet of paper. How do we do this? You know, start from scratch. Um, so we have to once they kind of acknowledge that and kind of get that through, then yes, you know, the military does a great job of teaching you how to, you know, how do you build teams, how do you structure teams, how do you create repeatable processes. Uh, the other challenge we have with folks who are coming from the military is that, you know, thanks to the taxpayers of America, if you're a military leader and you're like, I've got a problem, you know, the first thing you need is like, I need more people. And you know, if you have to like balance the budget and you have a problem, you know. So what I tell people is, you know, if we have a problem, we don't need more people, we need a better process, you know. And once we've got the process in place, then we'll talk about if we need more people. Because if you throw more people into a bad process, you're gonna have more problems, not you know.

SPEAKER_05 23:56

So love that.

SPEAKER_02 23:59

Yeah. So I guess when while you're scaling your business, uh what are some of the best ways, or what are some of the biggest like bottlenecks you you've been able to get rid of along the way?

SPEAKER_01 24:13

Oh, bottlenecks. Um, well, when COVID hit, we had a huge supply chain issue with uh obviously furniture. And so it's taking us longer to get homes live.

COVID furniture shortage solved with reclaimed tractor-trailer wood

SPEAKER_01 24:26

And so my grandfather runs a Christian rehabilitation center for men leaving prison and recovering from drug and alcohol addiction. And so, and he'd been a carpenter before he did that, and so I went and I was like, look, let's let's just build a wood shop, and you get lots of guys coming out of prison that need to learn a new skill, and let's have them manufacture a lot of our furniture. So then they started building our furniture, and then I was like, Well, now we got to warehouse the furniture, right? So then we, you know, and we had problems with shipping. So we had to you know we started using my grandfather's barn, and now we're in warehouses and stuff, but then we, you know, now we gotta get it shipped there, so we had to buy our trucks and trailers, right? And then you you know had to work with freight brokers, and um so you know, it's constant refinement of processes.

SPEAKER_02 25:16

You you're the you're definitely the first um guest we've ever had, short-term rental guests, that has built and shipped their own furniture, man. That is that is nuts. That's a way to solve a problem, right there. Hey, I can't get no furniture for three months. I'm gonna I'm gonna build it myself. None of us have ever thought of that.

SPEAKER_01 25:33

Yeah, and even better, um, when we uh so then it was like, well, you know, where do you get the wood, right? Because then there was a wood shortage. So we approached a company, a couple companies locally that have tractor trailers, and we then would get the flooring out of used tractor trailer beds, uh, and then use that. So it's like reclaimed wood, and it's sturdy. I mean, you cannot break this furniture, you can take a sledgehammer to it, and uh because it's literally designed for tractor trailer beds. It was free, right? So then the wood was free. Um, and so we were getting we get furniture at a significantly discounted cost.

SPEAKER_02 26:11

So I know what you mean by that because like you know, where where I was working at at a warehouse, we trucks, you know, tractor trailers would back up and and unload and load, and we'd go on there with forklifts on these panels of wood, they're strong as hell. So, yeah, so I can imagine the furniture being strong as hell as well, right? Yeah, that's cool. Um, so so how how were you able because I obviously you can't, I mean, to grow it this big and getting bigger, you know. How were you able to pull yourself out of daily day day daily operations?

Hiring Sonder's North America COO and building a 90-person team

SPEAKER_01 26:51

Have I pulled myself out of daily operations?

SPEAKER_02 26:54

Oh, you did say you did say your is a busy day today. You were swamped or something.

SPEAKER_01 27:00

Uh uh I'll let you know. When I pull myself out of daily operations, I'll let you know. Uh uh no, we uh we've got an awesome team, and uh we hired uh uh uh Christian Hemple ran all you know you know Sonder. So Christian ran all of Saunder's North American operations, and we hired him away from Sonder to come and run our uh he's our president and COO, so he runs all of our internal operations and you know does, you know, and then we've got uh one of our employee number one, Kate Hami, uh, you know, started out as kind of customer service rep and has grown all the way up through the company, and she's now our chief growth officer. And so she oversees all our acquisitions, renovations, installing the F F and E in the home, zone of recruitment. And then Luke Brennan's our chief strategy officer, and he you know is a BCG, you know, uh then went to Duke Business School, back to BCG. So it's got a great hospitality background, photographic memory, which is super helpful. Uh we've got uh we've got uh just hired a new CFO who started week and a half, two weeks ago. Um uh has a real estate background from a finance standpoint. So we've got an awesome team, and they they they truly do make the train run on time every day, and uh I just usually create more problems than I help whenever I get involved.

SPEAKER_05 28:21

So no question for you what year did you guys start?

SPEAKER_01 28:27

So we started we had our first Airbnb in 2018. In 2019, when we started 2019, we just had four or five, and so we've you know grown pretty quickly.

SPEAKER_05 28:41

Wow, so you guys went from to 500 and from four basically four years now, five years? That is crazy. Wow, that is crazy.

SPEAKER_01 28:51

We want to our goals to be at a thousand by the end of the year, so we have gone from you know four or five to a thousand in uh four years or so.

SPEAKER_05 29:01

Okay, and and with you going from your your goals to get to a thousand. So are you do you guys have like a like a a portfolio goal? Like, hey, we want to own this many, manage this many, arbitrage this many, or you just like let's just get a thousand up.

SPEAKER_01 29:16

Yeah, uh, we'd like to buy a couple more hundred this year, probably another hundred or two, you know, probably two hundred or so this year. Uh and then the rest will come through management and arbitrage.

SPEAKER_05 29:29

Love that. Okay. And so with you actually, because how you're buying, you're buying low, fixing them up, putting them back on Airbnb, these interest rates, and I guess you guys are doing because if you're doing all short term, you guys got to do some really good market research, and plus you guys are probably dominating the market. When you're going and doing this, you're you're not really worried too much about like these higher interest rates, or you're just like, oh well, we'll make the money on the back end because it's a short-term rental anyway.

SPEAKER_01 29:58

Um, I mean, we uh we still fight for interest rates, don't get me wrong. I mean, you know, uh so interest rates are brutal right now, there's no doubt about it. Um, so that's uh yeah, that's a that's a big focus for us, is how we try to control our rates and uh you know, and deciding what lock periods we want to have, what prepayment penalties we want to have. So a lot of that stuff are big question marks for us.

SPEAKER_05 30:24

Okay.

SPEAKER_02 30:25

Do y'all do any uh creative financing at all? What do you mean by creative?

SPEAKER_01 30:30

Uh what's the what's what's the threshold?

SPEAKER_02 30:33

So something that comes to mind, and it's a buddy of ours from the sh uh from the show, Adam James. I don't know if you know Adam James, ex-military dude, and he's he's out in Tennessee. Oh shit, my bad. Adam Johnson, my bad. Uh he's uh he's out in Tennessee, right? And he's um he buys houses from military peop families subject to. And he, like you said, they move, you know, sometimes they get you know stationed somewhere else. They have this house they bought, they don't have a lot of equity or any equity into it sometimes. And he's able to buy these houses subject to, and then you know, he turns them into Airbnbs himself. He has like 20 or so properties. Uh, anyways, that's the only way he never he said he'll never deal with banks again. That's the only way he's gonna ever buy houses in the future is is subject to. So that's what I meant, yeah, by by creative financing.

SPEAKER_01 31:25

Yeah, I'd be interested to learn more. Um I'll link y'all up. I'll link y'all up.

SPEAKER_02 31:30

Yeah, that'd be great, a great meeting of the minds. That's right. But you do you know the the gist of subject two? So they're you mean they're assuming them? Yeah, yeah. So mortgage taking over the deed. The mortgage stays in the in the original, you know, buyer's name, but you take over the deed and you take over the payments and and they they go about their they go on their way, you know. Yeah, um, so pretty, yeah, pretty much that.

SPEAKER_01 31:57

Yeah, I haven't looked, I mean, that'd be interesting for sure to pursue and see learn some more about that.

SPEAKER_02 32:03

Especially if they got locked in at you know three or four percent interest rates. Oh, yeah, sure. Beautiful. Um, anyways, I'm gonna link y'all up, y'all are both ex-military, both in Tennessee. I mean, yeah, so yeah.

SPEAKER_05 32:16

How was Adam when you said you were military in Tennessee? That's all I was thinking. I'm like, oh, he's out there with Adam.

SPEAKER_02 32:21

Okay, right. Or some gas on the fire, right? Um yeah, so so um man, this is really cool how you how you're able to scale. And I like how you you recognize, I mean, you went after the son the son the dude from Sonder. I mean, that's you recognized you needed somebody with a lot of experience and you you landed a big fish.

SPEAKER_05 32:42

That's that's pretty crazy. You know, speaking of that, Steve, like how would you go? How would one person go and find someone like who used to work at Saunder to hire into their business, especially someone who's over operations of all the North America?

SPEAKER_01 32:56

Well, uh, there's a lot of people who worked at Ricasa and Sonder and Avante and others that are looking for jobs, so uh, you know, but uh LinkedIn, you know, no no secret there.

SPEAKER_05 33:08

So yeah, that is true.

SPEAKER_02 33:13

Yeah, I'm not in LinkedIn. I have a profile. I need to get on there, but uh Mike is always saying that it's it's uh crucial to get on LinkedIn. Yeah, great. And um yeah, man. So this is this is cool. This is um y'all keep growing. Um you got investors. How do you find investors to help y'all grow?

SPEAKER_01 33:37

Um, you know, most of our investors are now kind of large, larger investors and just word of mouth. And you know, we'd like to think hopefully we've done good jobs for folks and they introduce us to other people and we go there. Sometimes people reach out to us. Maybe they heard us on a podcast or something and want to learn more information. But uh, for the most part, we're working with larger, you know, kind of uh investors. But we love we love working with smaller investors as well.

SPEAKER_05 34:04

Okay. So you guys are using more private money?

SPEAKER_01 34:07

Yeah.

SPEAKER_05 34:08

Okay, okay. Um, this is one thing I'll throw out there, especially for people listening right now. How would how would you one approach someone to get acquire private money for like an Airbnb

Using portfolio data to pitch private investors

SPEAKER_05 34:20

investment? Are you presenting like the Airbnb numbers? How are you making that presentation?

SPEAKER_01 34:25

Um you know, there's a variety of data sources out there that you can use. There's you know, air DNA, there's uh key data, mash visor, rebu as a data provider. So there's a lot of different sites out there that you can use to go and look for um data um and kind of pull those. But you know, if you're you're looking to help somebody acquire or manage a short-term rental, you know, ideally you have your own or you have or managing some others, and so you can give them some actual you know historical information from other properties that you manage.

SPEAKER_05 35:03

I love that. So if you have a big enough portfolio, you can basically you run your own, use your own data. I love that. Yes.

SPEAKER_02 35:11

And and why, because we always hear people that that you know that scale pretty big, they say, you know, focus on one thing. Why, why uh do y'all focus why do y'all do all three? I mean, why not just focus on purchasing and instead of just management and arbitrage? Why do you why do you do that as well? I ask myself that sometimes.

SPEAKER_01 35:35

No, um, you know, the reason we do it is to have more diversification across the portfolio. So there are, you know, there are positives and negatives to each of those three business models. We also do a digital-only kind of management model. Um, so we've got those basically four business models owned, leased, full service management, and digital management. Uh, and we find that you know, different ones of those models, you know, fit the needs of different partners. Uh, so it gives us some you know you know flexibility to work with multiple folks and uh gives us a nice kind of diversification in our risk profile.

SPEAKER_04 36:14

Love that.

SPEAKER_02 36:15

And what's uh what's a a good way? What's the best way it's worked for you all to to pick up a uh really potentially great arbitrage? Well, how do you talk to the owners?

3-to-5-year arbitrage leases offer guaranteed rent in uncertain markets

SPEAKER_01 36:28

Um well we we uh in terms of what property we're looking for, how we describe it to owners.

SPEAKER_02 36:37

Well, how yeah, how do you like okay, you find a a property that you think is gonna do pretty good for you guys, and then you go reach out to the owner and say, hey, we want to arbitrage this. I mean, how do you how do you get them to say yes?

SPEAKER_01 36:48

Um, you know, well, we've developed quite a bit of a track record, and so we can refer them to other people who've worked with us. Um, that usually helps some. You know, we emphasize that we're you know not out, you know, throwing frat parties and everything, that that's not you know kind of who we're catering to. Um, and you know, in an environment like this, it's actually easier now than it was a year ago, right? When everybody thought rents were going to continue to go up, up, up, up, up, up, up, you know, and now landlords are starting to get a little bit more leery. And so the idea of having somebody who's gonna pay guaranteed rent for three to five years is uh more attractive.

SPEAKER_02 37:27

Oh, three to five year leases. Yeah. Wow.

SPEAKER_05 37:32

You also said you were in the multifamily space. Have you touched the boutique hotel space?

SPEAKER_01 37:38

Uh we have, yes.

SPEAKER_05 37:40

Okay, how how are you liking that space?

SPEAKER_01 37:44

Uh still early, but we think we're gonna like it. Yeah.

SPEAKER_05 37:47

Okay, okay. That's one space that I'm looking to get into, and I've always looked at it to have you know multiple multiple units under one door, and it seems like you can cater to the you know, have a better experience in that in that space.

SPEAKER_01 38:00

So right.

SPEAKER_05 38:02

Yeah.

SPEAKER_01 38:04

Yeah, no, it's there's there's definitely some benefits there.

unknown 38:08

Yeah.

SPEAKER_02 38:10

And management, who do you, who do you man? I mean, that's the same. So this it's kind of like that's that's I mean, that's the best, I think, because you don't have to go in there and furnish the place, right? You just go you go in there, you find an owner of a house or um someone that's arbitraging, but that doesn't work too well that often. But you find an owner and you you convince them that hey, let us help you to furnish this place and turn it into a short-term rental. How do you do that?

SPEAKER_01 38:39

Um, I mean, honestly, it yeah, people typically seem to be pretty receptive to it. We haven't had a lot of you know, a lot of problems. I mean, we have to get people you know, again, comfortable that we're not gonna tear the place up or anything like that. We emphasize you know, if there are bad reviews on the property, or I mean if there are you know problems with the property, it leads to bad reviews, bad reviews lead to lower revenue, which makes it harder for us to make money. So um yeah, that's we that's a little bit about how we I don't know, we we haven't had a huge problem with trying to convince folks.

SPEAKER_02 39:16

So cool man, it's been working out pretty smooth for you guys then. That's great. Y'all even survived uh COVID pretty good, apparently.

SPEAKER_01 39:26

Uh we were we were very blessed for sure to make it through.

SPEAKER_05 39:29

Yeah, because you how oh go ahead. Oh how did oh go ahead, Steve.

SPEAKER_02 39:34

How did you make it through COVID?

SPEAKER_01 39:38

Um we just kept uh you know, we just kept on going, you know, and kept renting the homes and we filled the properties with more long-term stays when a lot of the you know short-term traffic dried up, but um you know, we just didn't quit.

SPEAKER_02 39:56

Sound advice right there. What were you gonna ask him, Mike?

SPEAKER_05 40:01

Yeah, because I I think earlier in the uh podcast you said that you were actually picking them up during COVID, right?

SPEAKER_01 40:08

Uh we were, yes. We were adding more properties through COVID.

SPEAKER_05 40:12

Woo! I mean, most people were slowing down during that time.

Buying aggressively through COVID: sell when others buy, buy when they sell

SPEAKER_05 40:15

What made you guys say, forget it, we're gonna start picking up units? Some people were dropping units or you know, finding what struggling to get what's on rent. What made you guys take that approach to pick up units?

SPEAKER_01 40:26

Well, when other people are, you know, when other people are buying is when you should sell, and when they're selling is when you should buy. So simple as that.

SPEAKER_05 40:35

Yeah, simple as that.

SPEAKER_01 40:37

So Joe. Yeah, we we felt we could fill the space and you know, just took advantage of some you know discounted pricing and ran with it.

SPEAKER_02 40:47

Nice, man. Oh, well, cool, Joe. Thank you for hopping on the show. This has been really, really interesting and and inspiring. How to how to scale uh, how to grow. I mean, god dang, you're gonna have 750 units. And your goal, and you make big goals too. Mine was like to get a couple more houses at the end of the year. You're going for I want a thousand. I want a thousand houses. That's I should make my goals bigger. Maybe I'll I'll accomplish more.

SPEAKER_01 41:12

That's right. You know what, what's the what's the you know, great say? I don't even want to say it. Shoot for the moon, land among the stars, right?

SPEAKER_05 41:20

There you go.

SPEAKER_01 41:21

There you go.

SPEAKER_02 41:25

But isn't the moon closer than other stars?

SPEAKER_01 41:28

Don't apply rationality to uh you know that's the sort of thinking that's gonna, you know, you gotta be like, no, no, the stars are closer than the moon. Okay, yeah, you can touch them.

SPEAKER_02 41:40

Oh, cool, man. Well, thank you for coming on. Uh, where can people find you, Joe?

SPEAKER_01 41:45

Go to www.patriotfamily homes.com. That's patriotfamilyhomes.com, and you can share or you can shoot us an email at info at patriotfamilyhomes.com and love to see if there's any way we can help you out.

SPEAKER_02 41:59

Let's do it. Awesome, brother.

SPEAKER_01 42:00

Well, thank you for hopping on and good luck and yeah, good godspeed. All right, fun on the anniversary dinner or a birthday dinner.

SPEAKER_05 42:09

Oh, yeah, thank you so much. Thank you for coming on. Thanks. See ya. All right, that was a good episode 253.

Debrief: scaling to 1,000 units without guru hype

SPEAKER_02 42:23

254. 254. Yeah, 254.

SPEAKER_05 42:26

My bad.

SPEAKER_02 42:28

We've done so many of these damn episodes, we lose track.

SPEAKER_05 42:32

Yeah, man. That's an interesting man. And man, that's killing it. Killing it.

SPEAKER_02 42:37

Just even kill, you know, you know, just even kill dude. Just straightforward. Yeah, I don't know. We just picked up more houses.

SPEAKER_04 42:48

Okay.

SPEAKER_02 42:51

He's definitely if you if you ever if you're thinking like, okay, these guys are just interviewing gurus that are full of shit. You can tell this dude's he's not exactly a guru, he's just out there doing it and just matter-of-factly doing it. A dooru. I like that. Yeah.

SPEAKER_05 43:07

Shout out to my guy on uh what's my guy? Uh the real estate guru. I loved it. I've been saying dooru ever since he started saying that. So yeah, shout out to him. Yeah.

SPEAKER_02 43:18

I mean, we've had people on the show that are you know passionate as fuck and ain't done shit. You know, it's just the facts. I'm just saying facts, and you know, and then he comes on, just yeah, I just you know, we're gonna get a thousand properties by the end of the year. That's it.

SPEAKER_05 43:32

For real, man.

SPEAKER_02 43:33

I mean, it's not gonna, it's not gonna make great Instagram reels and all that stuff, but it's gonna, I mean, it's just he's just doing it, yeah.

SPEAKER_05 43:41

Straightforward with it, man.

SPEAKER_02 43:43

Putting the right people in place, sniping great talent, you know.

SPEAKER_05 43:46

Yeah, that was a good one right there. Yeah, sniping the talent off uh LinkedIn. That was a smart one right there. That is cool, man.

SPEAKER_02 43:54

Um, so yeah, he I mean, Joe he recognizes he can't do it himself, and he's putting big Big goals together, so he's getting big people to accomplish big things, as simple as that.

SPEAKER_05 44:05

Joe Riley, man. That was a good episode. He actually looks like Joe Burrow. Uh, but yeah, like Joe Riley looks like Joe Burrow. I was noticing that the whole time. I couldn't, I was gonna say it, but I was like, oh never mind. But yeah, um, good episode, man. A cool way to scale your business. How to manage, buy, manage, and arbitrage 500 plus Airbnbs in four years. Damn, he's been doing it.

SPEAKER_02 44:30

That is nuts, man. And and uh it's funny because it automatically made me think like of these other teachers, whatever gurus that have their courses and say, okay, step one, you gotta pick one thing and stick with that and be the best at that, blah blah blah blah. But I've always been on the fence of that, you know. I was like, okay, that sounds great just to do one thing, but what if a great, you know, these arbitrages come up and you're like, man, I could I could rent that thing for a thousand bucks a month. I know I'm gonna make three thousand on that thing, you know. What's wrong with picking that up? Especially if you already got a built-in management system in your company, you know, that manages your multiple units, and and then why not manage for other people? Hey, can you manage my properties? Let's see. Yeah, it looks like it's gonna do pretty good. Sure, you already got that mechanism in place. Why not do these three things that have this um synergy, right? So, so I yeah, I don't see uh uh in that regard a reason you have to stick to one thing, you know.

SPEAKER_05 45:29

I'm saying definitely not. Whatever opportunity presents itself, man. If an opportunity comes knocking, be ready to answer, just have the tool on your tool belt.

SPEAKER_02 45:38

I mean, you'd be otherwise, you'd become a like a Dennis Rodman and just rebound.

SPEAKER_05 45:42

Hey, but you're rebounding getting runs. You can give me three boards, keep rebounding, bruh.

SPEAKER_02 45:49

Now, if he was his own basketball team, it wouldn't be too successful, but he had Jordan on his team to make the button. One dude, except for Durant's teams.

SPEAKER_05 46:01

But you know, hey, you gotta play your part, man. But yeah, man, that was a really good episode. Uh, I love the you know his drive. He's just straight laser focused, straight military focused, man.

SPEAKER_02 46:14

Oh yeah, we always we always find some good people to come on this show.

SPEAKER_05 46:17

I love it for sure, man. But for everyone out there listening, I don't know. I think this episode probably dropped before then, but next Thursday, Thursday, May 18th, is this is already dropped. Sorry you missed it. Thursday, May 18th. We are having another live recording session in Irvin, Texas. The tickets are in the bio. Click the click the link tree. Um, you can grab your tickets if it's already passed. Oh well, sorry. But uh yeah, go check that out. We're gonna have a live podcast recording in Irvin. Uh, and then afterwards we'll go out and have some dinner. Repeat with me, we are not buying you dinner. If you come, you can get some drinks, but we ain't buying you drink dinner. We'll have drinks there. We may have a few drinks and eau d'oeuvres, or hand food as we call it. I ain't talking about a damn eau d'oeuvres, but uh some hang good hand food for you, some chips. And uh yeah, come through, kick it with us, and at the end of the show, you will be able to answer ask any questions you have about the show that was recorded or about any short-term rental things that you're running into. Um, but yeah, definitely come kick it with us, hangout. You know, it's always a good time, drinks, and uh food on you, but we'll go out and have some dinner after this.

SPEAKER_02 47:26

Y'all can buy us dinner. You're always welcome to buy us dinner. Right.

SPEAKER_05 47:30

No complaints.

SPEAKER_02 47:32

Well, thank y'all for listening. Uh Livelet Thrive.com, livelethrive at gmail.com. Uh, we're gonna do some more live events, we're gonna do some more meetups. We're I mean, we're all over the socials now. We're we're finally, you know, we're tightening up our social game and we're uh um back on Clubhouse. You know, find us on Clubhouse every day. Um, yeah, man, we're out there. Find us, touch base with us, tell us your beautiful, wonderful stories and and and connect with us because we love to hear them, we love to give advice and just love to connect.

SPEAKER_05 48:02

Well, yeah, and by the way, like what Steve said, we're on Clubhouse Daily. Yeah, definitely go check out our 24 by 7 Clubhouse room that's usually running what daily mostly daily, right?

SPEAKER_02 48:11

Every day 24-74-7 all of our episodes, and we're this is just the beginning. We're gonna have we're gonna do some coolers, you know, real cool stuff with it. You're gonna have some chopped up, you know, mini mini uh segments and stuff chopped up on there. We're gonna throw some and we could throw some news on there too. We hey every now and then me and Micah might just hop on there and start talking, say, hey you guys, we got we're gonna do a meetup this week. Come check it out, you know. And so, and there's gonna be the the what's it called? The chat rooms always open. Ask your questions in the chat room, go to Live That Thrive. And I call it right now. I'm calling the LLT Pod 24-7. Um, submit questions, be a guest. So if you think you could be a great guest on the show, put it in the box. You have some good questions for us, put it in the box. If we can't answer it, we'll find we'll find the answer for you.

SPEAKER_05 48:55

Yes, sir. Let's go, man. Lt to the moon, landing on the stars. We are out. Peace later.

SPEAKER_00 49:04

Thank you for tuning in to this week's episode of Live Let Thrive. Be sure to tune in next week for all the latest in the world of Airbnb and all that entails. Bye-bye.