[00:03:45] Robert Leonard: Yeah, I had a professor like that too in, in, entrepreneurship. He had never started a business and I was like, I mean, this is all great in theory, you know, when I think about that stuff, what I think of is Mike Tyson. And the reason I think of Mike Tyson is because Mike Tyson has that quote. Everybody has a plan to get punched in the mouth, and that’s how, that’s the difference between theory and school and what happens in the real world.

[00:04:04] Robert Leonard: You could talk about theory business and what they teach in school for entrepreneurship, real estate, all that. It’s great, but when you get out in the real world, you’re going to get punched in the mouth and it’s a little bit different. You got to figure out that stuff. So, but anyway, what did you learn?

[00:04:15] Robert Leonard: You refer to a book. Yeah, exactly. Exactly. What did you learn in that real estate development program that actually did help you and translate to your real estate business? Was there anything?

[00:04:24] Alex Jarbo: It’s going to sound a little weird, but I learned the power of, so when I first started in real estate development, outside of like getting your general contractor license, there weren’t really too many materials out there on what I was working on.

[00:04:36] Alex Jarbo: What I learned in the MBA with the real estate development was the power of like textbooks, actually reading school textbooks. Outside of school, like outside of my degrees and everything, I’ve picked up a lot of textbooks. I didn’t have, I don’t have to go do the degree on whatever I’m interested in. You can just go purchase a textbook and read that.

[00:04:55] Alex Jarbo: So that like some real estate development textbooks that I’ve picked up have been super helpful. And like I said, just the power of actually reading a textbook, but you don’t have to be in a degree path to get obtained a certain textbook. Like when we started doing like micro resort development, I picked up like resort development textbooks where it’s like the books behind me, like those are just small books that you can get on Amazon.

[00:05:16] Alex Jarbo: None of those are going to teach you how to like really develop a resort. That’s one of the things I learned is like you can, there’s an immense amount of information out there in like textbooks that isn’t theory, that might not be in the degree path that you’re in, but you can just get ahold of those textbooks.

[00:05:32] Robert Leonard: When you left the Marine Corps, you did, so to pursue this career in real estate, what did that look like? Were you able to go full time in real estate right away, or did you get a corporate job to kind of pay the bills while you built your real estate?

[00:05:44] Alex Jarbo: For anyone who’s a veteran, so I was going to school online full time, and then the GI bill pays a portion of your living expenses while you’re doing that, I also had some money saved up about maybe six to eight months of expenses that was saved up, and then I immediately got my real estate license when I moved here.

[00:06:01] Alex Jarbo: So I started working on a team immediately when I got here. That’s how I was making money initially was I had some reserves. I had some money coming in from the GI bill, and then I was essentially relying on like commission checks, which was, it took about what, like six months to get my first one, but yeah.

[00:06:17] Alex Jarbo: Are you still an agent to this day? I am an agent to this day, but I have an agent that’s way better than me. I use her.

[00:06:24] Robert Leonard: How long were you an agent for? When did you decide to stop selling?

[00:06:27] Alex Jarbo: Two years, I would say. Yeah, two. I did it partially fulltime until I really got into the development piece. That was about a year into my license a year and a into my license where I picked up my very first real estate investment was a development short-term rental.

[00:06:45] Alex Jarbo: I would say a year and year. Year and A until I from it.

[00:06:50] Robert Leonard: Why wasn’t being a full-time real estate agent the career path for you? Why wasn’t that where you wanted to.

[00:06:56] Alex Jarbo: I moved to Asheville, North Carolina, where I currently live. I’ve moved, lived in DC where I was stationed out originally from Detroit.

[00:07:02] Alex Jarbo: But what I realized was I moved here for those short term rentals for real estate investing in short term rentals. What I realized was real estate agents, even the top ones, a lot of ’em don’t even own their own property. It’s the same thing what we were just talking about with professors teaching on a topic that you don’t know any like, that you haven’t experienced in the real.

[00:07:21] Alex Jarbo: So it was very interesting to me that like, I mean, some agents obviously did, but like a majority of them that were doing it full time for, extended, like a year or two had no real estate. Like that was the reason I got my license, was to purchase my first property as a real, and also just to learn the intricacies of a contract and stuff.

[00:07:38] Alex Jarbo: But yeah, it was, that was really interesting. That’s the reason why I stepped away from that was I was trying to build. I’m not going to say passive income, but like residual income that was coming in on like a monthly basis or even a weekly basis without me having to put in the work essentially of trying to get a deal every single month or like just listings and stuff.

[00:07:57] Robert Leonard: Why did you choose short-term rentals as your strategy? Why not go with the traditional long-term rentals and then even kind of more niche or more specifically, why’d you start developing cabins and doing development rather than just buying a property that already existed for short term rental?

[00:08:12] Alex Jarbo: I had originally, while I was still in the Marine Corps, originally joined a flipping mentorship and we’re on a group coaching call and the person who ran the mentorship was on that group coaching call and he had mentioned that all of his long term wealth was tied into Short-term rentals.

[00:08:25] Alex Jarbo: This is back in like 15 and 16. And so I got him on like a one on one call and I was like, if you wouldn’t mind, like I, I would like to know like what are the numbers compared to like long term rentals? Cause when I was in the military I was aggressively reading like real estate books. And he showed me like, here’s my cabin in Gatlinburg or wherever, and it’s making like cash flowing, four to six grand a month after debt service and everything compared to if it was a long term rental, it would make this much.

[00:08:51] Alex Jarbo: So the cash flows are what really caught my eye. And then when I, what I, why I really got into real estate development was because when I fir as an agent, when I was first starting to look for a property for myself, I couldn’t find anything that was in my price range or if it was in my price. At that time, it was it wouldn’t have done well as a short term rental.

[00:09:09] Alex Jarbo: It probably as a long term rental, if you put a long term tenant in there, it would’ve done well. But there was nothing unique about the property. It just came out of necessity to build my first short term rental. My first short term rental was like an 800 square foot a frame that we own to this day. But yeah, it just came out necessity.

[00:09:24] Alex Jarbo: Like everything I’m a firm believer in developing unique properties. I like to say Instagramable properties, where the properties itself is an experience outside of the city that the guest is visit.

[00:09:35] Robert Leonard: How are you building these cabins? Are you buying a raw piece of land and then you’re hiring a developer to build it?

[00:09:40] Robert Leonard: Or are you buying land with existing structures and then kind of building off of that? Like what does that look like?

[00:09:45] Alex Jarbo: So it’s a little bit of both. So prior to Covid, that’s what we’re doing was raw land. So raw land, and we’re still doing that to this day. But once Covid happened and all those supply chain issues happen, what we did was we purchased, already built properties with some partners so we could purchase these larger, proper.

[00:10:00] Alex Jarbo: That had some acreage attached to ’em, whether it be like two to 10 acres with the cabin, with the A-frame, with the cottage or whatever, where we can cash flow and break even on the property while we were developing, while we were doing the future development. So now we’re finally moving into the development piece.

[00:10:15] Alex Jarbo: We’re developing 10 million worth of real estate as we’re speaking right now, and we’re hoping to triple that next year. But yeah, I, we purchase raw land. Ideally, we like to purchase raw land, and I’m the developer, and then I just hire a GC to handle most of the work. I handle all the design, so I handle what the properties are going to look like.

[00:10:32] Alex Jarbo: Right now, at this point in my business, what I’ve realized is the best use of my time is to be developing these like six to 12 like cabin cluster developments, like micro resorts, what I originally mentioned. That’s what I realized with the best use of my time is doing stuff like at a bigger scale like that.

[00:10:48] Alex Jarbo: But yeah, it’s raw land mainly, but I’m also open to acquisition if there’s some land tied to the deal where we can develop more cabins down the road.

[00:10:56] Robert Leonard: Take us through kind of your process when you’re building a cabin. Say you buy a piece of raw land, what comes next and what comes after that? So on and so forth.

[00:11:03] Robert Leonard: Kind of take us from the beginning to when you get your first short term

[00:11:06] Alex Jarbo: rental tenant in. We can even start before land acquisition. Cause that’s probably one of the most important things to think about when you’re acquiring your land. Even before that, I do things a little bit backwards. I like to have my floor plan or an idea of what type of property I want to build prior to even looking at the land.

[00:11:22] Alex Jarbo: So a lot of times it’s like cabins, a-frames, whatever. I have an idea of what the cabin’s going to look like. I might even have the preliminary floor plans done without the foundation plans, and then I go look at the land. So the next step is looking at the. I’m a firm believer that your guest shouldn’t be driving 30 minutes up a gravel road to get to your property.

[00:11:40] Alex Jarbo: A lot of times your guest is, you gotta think of the entire guest experience. So what does that mean? That doesn’t just mean the property itself, it also means the drive and from the property. So a lot of times your guest is going to be driving in at night. A lot of times your guest is going to be new to the area.

[00:11:53] Alex Jarbo: Sometimes they might lose cell phone reception. You don’t want your guests to be scared or annoyed by the time they even get to your. So access to your land is super important. I like to be off of some sort of state maintained or some sort of paved road by the time we get to my land, essentially. I’m not against like going through neighborhoods and stuff cause we have properties that are like that, but then it’s a paved drill that leads onto our property and we’ll put in gravel roads anywhere between like a couple hundred feet all the way up to like a thousand feet.

[00:12:21] Alex Jarbo: But beyond that’s going to be the second step is you’re finding your floor plans and then you’re finding a piece of land with the help of a land real estate agent that specifically deals and land to help you find the land That access is number one. From there, you can put together the financing.

[00:12:34] Alex Jarbo: There’s many different financing options that exist. As we’re recording this, when I first started, there was almost nothing like six years ago. You’re putting together the financing. A lot of times they’re debt service coverage ratio loans compared to debt to income ratio loans, which are easier to get.

[00:12:48] Alex Jarbo: And then a lot of these lenders will go off of like projected income on the property. And then from there it’s just, I mean, it falls on the gc, but it’s anywhere from start to finish. Like from identifying the land to turnkey, you’re ready for a guest is anywhere between nine to 14 months, depending on how big the project.

[00:13:06] Robert Leonard: How did you fund that first development that you did? Did you have partners? Did you just kind of save up and what did that down payment look like on a DSCR loan? Was it 20, 25%, 30%? What does that look like?

[00:13:16] Alex Jarbo: So when I first started, there was net no debt service coverage ratio loans on, the short term rentals.

[00:13:20] Alex Jarbo: At least what I couldn’t find, I ended up getting a second home construction loan, which you can still get to this day it was only 10% down. Right now, I think it’s like 20% down. I think that 10% had gone away. Yeah, it was 10% down. All in all. Like I can just give the whole number that first A-frame. We purchased two acres and turnkey.

[00:13:41] Alex Jarbo: 830 square foot aframe. It was 250 grand with the land building and furnishing. It was about 30 to 35 grand in my own pocket. Take that back, 35, 40 grand outta my own pocket, so say 40 grand to be conservative. And that property last year, grossed 82,000 in revenue, and it netted 46,000 after debt service.

[00:13:59] Alex Jarbo: So after my mortgage payments and all my expenses, so my ROI on that property has been close to like over a hundred percent. Granted, that’s prior to Covid. Now I would discount those numbers by like 30%, maybe add 30% to the budget. But you’re still looking at like a 70 to 80% ROI on your money every single year.

[00:14:18] Robert Leonard: How are those financing terms on the DSCR loans that you’ve done over the last couple years? How are those changing given the interest rate environment? Everything that we’re experiencing right now?

[00:14:26] Alex Jarbo: Yeah. Surprisingly, a lot of people are actually, like I just spoke to an investor, so usually they’re 20 to 25 year ams.

[00:14:33] Alex Jarbo: I’ve heard of 30 year amortizations as well, but it, I mean, it’s pretty normal. You can get SBA seven A loans on these types of developments as well, which I recently discovered the last couple months. Those are anywhere between 10. You can get 10% down. It’s a little difficult. You get a, have a really strong financial backing, but anywhere between 10 to 25% down.

[00:14:52] Alex Jarbo: And then a lot of, I, I just spoke to an investor that was comfortable doing an adjustable rate loan currently through the, just the, what the lending environment looks like right now. He didn’t be, he didn’t want to be fixed in a rate because they might go up like in, in the next couple months, but they’re expected to go down sometime next.

[00:15:08] Alex Jarbo: Right now we’re playing around with adjustable rate mortgages, which I’ve never done before, but I understand the reason for it because those adjustable rate mortgages got like a bad wrap during co during nine. But it makes sense the way we’re sort of implementing right now. All my outside of that, the debt service are fixed rate mortgages, 20, 25 year ams.

[00:15:31] Robert Leonard: What are repairs and maintenance like on a cabin? Is it pretty standard like a normal house or is it.

[00:15:38] Alex Jarbo: So the biggest difference I would say, if you have a hot tub, that’s going to be your number one thing that goes wrong with the new development stuff. I mean, stuff outside of change, they’re on well and septic.

[00:15:47] Alex Jarbo: All of our properties a little bit more rural. Most of our properties are not, there’s barely any maintenance the first six months to a year because they’re brand new. When it comes to the properties that we’re purchasing, we do some light rehab work prior to renting ’em out, but I have a maintenance person that’s on a retainer.

[00:16:02] Alex Jarbo: I don’t like to hire full time anything. Most of my stuff is subbed out. Even my cleaning company, I have a maintenance person that’s on retainer, and then I essentially, they get called if anything goes wrong, and then they’re paid hourly from there. But yeah, there, I mean, there’s no, all these properties are permanent foundation stick-built houses, so there isn’t really much difference in terms of maintenance compared to a normal.

[00:16:23] Robert Leonard: Totally understand where you’re coming from in terms of like new development, not having a lot of issues in the beginning. Well, what about tenants? Just like trashing the place, I mean, I know that’s not always common, but like it happens it, especially with short term rentals. So how do you deal with that?

[00:16:37] Alex Jarbo: We’ve been renting out for five years now and I think it’s the way, it’s the price point that we’re at, like these unique properties, rent for hire anywhere between two to 600 a. And I think because of that higher price point, we don’t get some of those crappier guests. We’ve never had major issues with our properties, and we allow pets at our properties as well.

[00:16:54] Alex Jarbo: So we’ve never had these like crazy, knock on wood, I’ve never had to deal with like a guest punching a massive hole through a wall. Or we’ve had one time where like a tree fell on our deck and we had to get the deck replaced. But in terms of that just falls on making sure that you have the systems in place that you’re screening the guests prior to them even book.

[00:17:13] Alex Jarbo: Airbnb has their own screening procedures that we lean pretty heavily on if they’re booking through Airbnb. But outside of that, it’s, I think the type of properties that we develop at that higher price range sort of push away some of those crappier guests.

[00:17:26] Robert Leonard: So I rent an rv and it’s kind of like my short term rental.

[00:17:30] Robert Leonard: It’s like my version of a short term rental. And people always ask me that. They’re like, aren’t you worried about people trashing the rv? And at first I was like really worried about it. But then after I started my first 3, 4, 5 rentals, I learned, and I came to the exact same conclusion that you did, is this RV is $250 a night and most people are going 7, 10, 14 day trips.

[00:17:48] Robert Leonard: So I mean, that’s not cheap and that’s just the rental rate. Plus they have to pay insurance on top of that and some other. It’s not a, it’s not a cheap thing. And so from my experience, a lot of the people that are able to afford this and go on like little trips like this, are not the type of people that are going to trash your place and knock on wood, that’s been my experience so far.

[00:18:06] Alex Jarbo: And it’s like one of those things where like we have a property that sleeps 14 people, but the average daily rate on that’s anywhere between five to $700 a night. And we’ll, we’ve had 14 people at that property. You’re technically throwing a party with 14 people, but it’s not like, it’s not like a massive party.

[00:18:21] Alex Jarbo: It’s like they’re very respectful and a lot of times when you hear these like, oh, my Airbnb got trashed, or my Airbnb, like, something happened at my Airbnb. Those are usually like the anomalies in the baseline where it’s like, those are the horror stories that you hear about compared to the tens of thousands of guests that are being hosted every single day.

[00:18:38] Robert Leonard: How do you decide where you’re going to buy and build these cabins, and how are you thinking about the different locations?

[00:18:44] Alex Jarbo: I love developing in mountain communities or mountain markets, not communities, markets. And the reason being is mountain markets tend to be a little bit less seasonal than say, like beach or lake markets.

[00:18:56] Alex Jarbo: And what I like to say is like our high season here is summer and it’s fall falls the highest season, but Summer does really well as well. Outside of that, when you’re looking at like December to maybe the middle of February, late February, that’s sort of the slow season, but nothing gets more iconic than like a cabin in the woods with a hot tub, with a mountain view in the winter, right?

[00:19:15] Alex Jarbo: That’s like the picturesque scene. These type of properties that we’re developing are a little bit less seasonal because of that.

[00:19:23] Robert Leonard: When I see creative real estate projects like this online for Airbnb properties specifically, whether it’s Instagram or. I almost always wonder about the resale value of them compared to more traditional forms of real estate.

[00:19:35] Robert Leonard: How do you think about that and the potential sale of these properties in the future?

[00:19:41] Alex Jarbo: Usually the question I get asked is like, why did you decide to build an A-Frame? How did you know that was going to do? Well, I didn’t know it was going to do well. My backup plan was to underwrite it as a long term rental and if it was going to do terrible as a short-term rental, I was going to it out as a long term rental.

[00:19:55] Alex Jarbo: Right now, after Covid with how construction prices are still pretty high, they’re not at the, to hide up what they were, but they’re still pretty high. You can sometimes make it work as a long term rental, but sometimes the numbers wouldn’t work. And the backup plan is just selling the property. The square footage numbers we’re developing right now, outside of that 14 person cabin I mentioned, that was a purchase.

[00:20:16] Alex Jarbo: We’re developing anywhere between 500 square foot to 1600 square foot. I’m very confident that there will always be a market for that price point of 500 to 1600 square foot. I consider that the affordable housing price. When it comes to resale value, I think I see like a small family or a couple living in the properties if we ever do decide to sell them.

[00:20:36] Alex Jarbo: And that’s if we sell them off as just normal single family houses. The resale value, if we sold it off as a business, is going to be way higher because there’s a lot of, there’s built in income that’s, I mean, the first property’s been making money for the last four or five years.

[00:20:52] Robert Leonard: How much of your business is reliant on third party platforms like Airbnb and VRBO versus like direct listing?

[00:20:59] Alex Jarbo: We still rely really heavily on Airbnb and VRBO to bring us the guests, but what’s changed in the last six months is that I like to tell students that I coach, that you don’t want to look at, you want to look at Airbnb and V R B O as just the marketing arm to your business. You do not want your business or your property to live exclusively on any platform.

[00:21:19] Alex Jarbo: Because something could happen to that flat board. The algorithm can change. I know it’s happened with other people’s businesses, with Google, YouTube, Instagram, whatever. And then it recently happened with Airbnb in the summer. Airbnb completely redid their algorithm and their platform to sort of accommodate.

[00:21:35] Alex Jarbo: Luckily it helped us to accommodate for these unique properties that we’re developing, but a lot of people got crushed cause of that, that didn’t have anything unique in their proper. What I say to that is what we usually do, we get the guests from Airbnb and VRBO, and then we use a service called Stay.

[00:21:50] Alex Jarbo: And what scifi is, it’s a little disc that plugs into the back of your router, your internet router, and it creates a landing page for your internet. So the guest has to essentially put their contact info, their email address, their first and last name to be able to get access to the internet with the person who usually books the property.

[00:22:05] Alex Jarbo: You already get that, but say if your property sleeps 14 people, you’re not getting those other people’s contact info. If you’re just relying on the booking side with this, you we’re getting all everyone’s contact info and then we’re remarketing to them with seasonal. Pushing ’em towards our website to rebook either with the property they currently stayed out or whatever our other properties are.

[00:22:25] Alex Jarbo: So that’s how we’ve gotten ’em off the platform. And I write for bigger pockets for their short term rental blog. And I had written about this exact topic we’re talking about using stay. And the email capture thing, and people like gave some kickback to that. They said that’s illegal. But everything that I had read on Airbnb’s terms of service, there’s nothing against taking the guest off of the platform after they’ve stayed with you.

[00:22:46] Alex Jarbo: It’s if you’re trying to get them off the platform when they’re first booking with you.

[00:22:51] Robert Leonard: And I mean, you’re just collecting emails like as, I don’t know. I guess. I guess I see both. Yeah, I see it both ways. Do you get a lot of repeat people from that list? And this is entirely anecdotal. I have no hard evidence, no research to kind of back this up, but I have never stayed at an Airbnb more than once.

[00:23:07] Robert Leonard: I’ve never, I don’t think I’ve, maybe I’ve stayed at an, a hotel twice maybe, but like generally speaking, I don’t stay at the same hotels. I don’t stay at the same Airbnbs. I generally don’t even go back to the same vacation locations all that much. So I’m curious what you have for repeat, repeat.

[00:23:22] Alex Jarbo: It’s usually not the same property that they’re staying at, but we are, I forgot what the number is, man.

[00:23:27] Alex Jarbo: I’ll have to look. But we are seeing, like usually we see an uptick in our bookings. It could be a random Wednesday. If we push out that email. We do see an uptick in our bookings. If we push out an email like that, it’s usually just a different property. Same market, but different property.

[00:23:42] Robert Leonard: Let’s say somebody stays in your property, they go onto the wifi, they put in their email, you start marketing to them.

[00:23:47] Robert Leonard: When they book now to stay with you again, do they book direct or do they go to Airbnb and book that property through Airbnb?

[00:23:54] Alex Jarbo: So right now it’s Airbnb, but we are literally, we’re Bo boost Lee is the company. I’m plugging them, but Boost Leaf is a company out of the UK that builds these direct booking websites out for relatively cheap compared to what they can.

[00:24:05] Alex Jarbo: But like you have to, what I’ve told everyone in the last couple years, because it’s already happening with the current correction we’re going through, is you need to be, even if you have one property, you need to look at your property as a hospitality business. You don’t have an Airbnb business, you don’t have a vacation round business, you have a hospitality business.

[00:24:22] Alex Jarbo: That’s what you’re running. Taking that line of thinking, all of the hotels, I mean, you can book on booking.com, Expedia or whatever, but they have their own personal booking sites that they push guests towards. It’s the same idea just on a very small scale compared to like Marriott or something.

[00:24:37] Robert Leonard: How have your construction costs and interest rates been impacted from, and all your development projects been impacted by everything that’s going on right now with construction costs, going through the roof labor, going through the roof, interest rates, et cetera.

[00:24:49] Alex Jarbo: I mean, we definitely had to renegotiate because we did have two budgets that were caught in the middle of Covid, like budgets that were done prior to Covid, and then they were getting developed during Covid.

[00:24:59] Alex Jarbo: We had to renegotiate with the bank with that, just essentially refinancing the loans to borrow more money. So that was number one. I mean, they refinanced and they were comfortable with the, instead of getting a debt service coverage ratio of four, it was like 2.2 or 2.5, like it was still a good number.

[00:25:13] Alex Jarbo: That’s a big change. Huge change. Huge change. It’s almost cut in half compared to what they’re Yeah, I mean at that, I mean, you look at lumber prices and things are getting better for sure, like we’re having trades, people calling us compared to the other way around. Like work is getting scarer with the custom home building so that, that’s why it’s become easier to find people.

[00:25:32] Alex Jarbo: In the last like three, four months, ever since June, ever since the interest rate started going up, it’s started to become. But when it comes to interest rates, I mean, you can’t stop that, right? And I just wrote a bigger pockets article about this is like, you should not, no matter what the interest rates are doing, you should underwrite a deal.

[00:25:48] Alex Jarbo: Do not discount real estate investing or whatever business you’re in. Do not discount it completely, just because we’re going through a correction right now. The number one thing to do is just avoid the news completely and just underwrite your deals, put your deals through the ringer and see if they’ll still cash at an 8% interest.

[00:26:05] Alex Jarbo: That’s what we did. We just got seven cabins under contract that our interest rates probably going to be pretty close to seven and a half, 8%, and the numbers still worked at that point. And this is what I’ve been telling everyone because it’s easier said than done, but imagine where you’re going to be at if you can make that cash.

[00:26:21] Alex Jarbo: If you can make that property cash flow in this, invest in this lending environment. Because two years down the road, whatever, eight, 18 months down the road, 12 months down the road, whatever that timeframe is, when interest rates start to drop again, you’re going to be able to refinance out of that loan. And then imagine what position you’re going to be in if you already, if you can make, if you make a cash, the position you’re going to be in, refinance.

[00:26:45] Robert Leonard: You have a pretty big goal of building 650 cabins in the next three years. One, are you having to kind of tweak that a little bit because of these construction costs, interest rates, the environment that we’re experiencing, and then two, how are you going to make that happen? Yeah. What does the roadmap look like?

[00:27:01] Alex Jarbo: Yeah, so what I’ve tweaked is not necessarily the number, it’s the type of units. What I want to get into, I mean, we’re already getting into it next year, is not stepping away from the cabins, but I, we’re all in the same market right now. Like all my properties are in the same market. I would love to develop a couple boutique hotels of like anywhere between 20 to 40 units per like some themed unique boutique hotels is probably the next step to get to that 650.

[00:27:26] Robert Leonard: Why are you focused on the unit number specifically? Like why does units count for me? Isn’t it just the dollar amount? Like, let’s say you can make the same amount of money with 500 cabins as you can, 650. Why do you care about six 50? Why not 3 50, 5 50?

[00:27:40] Alex Jarbo: It’s about 30 million in gross a year, and that’s a big number, but that’s before investor splits or any of that.

[00:27:45] Alex Jarbo: That’s just a top line. I have some pretty lofty goals on the personal side when it comes to, I didn’t mean to get into this in the podcast, but in terms of like we’re, my wife and I are putting together like a, like a3 stuff that some causes that we believe in and we donate pretty aggressively to those causes.

[00:28:02] Alex Jarbo: So that’s the big why over everything that I’m doing.

[00:28:06] Robert Leonard: Do you read Vivid Vision? Is that part of it?

[00:28:09] Alex Jarbo: I have not, no, but I’m going to write that down. Is that a book.

[00:28:12] Robert Leonard: Yeah, it’s a book from, and I know you write for Bigger pockets, and Brandon Turner is like the, almost the spokesperson for Vivid Vision.

[00:28:19] Robert Leonard: I know he, he loves that book. And he talks about it a lot.

[00:28:22] Alex Jarbo: Yeah. Brandon Turner. Yeah. I’ve never heard of it before, but yeah, no, I ran into Brandon Turner at the Bigger Pockets event last year, like in the bathroom. I was like, oh.

[00:28:32] Robert Leonard: So what mistakes have you made in your real estate career and what are some of the common mistakes?

[00:28:36] Robert Leonard: You said you coach people. What are the common mistakes you see people making with short-term rentals or their development?

[00:28:42] Alex Jarbo: I hate to use the word fire, but transitioning a GC off of a project that’s not making their timelines or their budgets. It is an easier bandaid to rip off to do it. It’s easier to do it upfront than having that like snowball one, two mistakes are fine, but if you’re going over by like 15, 20 grand on specific things, if timelines are consistently not being made, you need to transition that gc.

[00:29:04] Alex Jarbo: And it might be a little difficult if that is the only person that will work on that project. But I’ll tell you right now, if you’re investing in this lending environment and in this economy, it’ll be easier to find a gc right. So that’s the biggest thing is I sort of held onto a juicy for like six to eight months that when work was barely getting done, just cause he was a really good friend of mine and that I wish I would’ve separated that because in the long run it cost me like hundreds of thousands of dollars to wait on that person.

[00:29:30] Robert Leonard: What do you wish you had known about short-term rentals and real estate development back when you were getting started? What could you have known that would’ve really helped you scale faster, be more profitable, and really avoid any of the mistakes that you’ve.

[00:29:45] Alex Jarbo: So not necessarily the mis two things to, to avoid the mistakes.

[00:29:47] Alex Jarbo: Just getting a high level mentor, which I have in my life right now that he lives and breathes real estate development and I’ll plug him. Greg Dickerson is one of the best mentors out there for that. If you guys are looking to get into high level, he mainly does multifamily development, but it’s all the same in my eyes in terms of like landmines to avoid and.

[00:30:05] Alex Jarbo: And then the second thing was, I wish I knew how to raise capital the way I do now. Because if I was able to raise capital when I first started, compared to what I know now with the development piece, I mean that is one thing that I could have skilled, like I could have skilled way faster. Cause those first couple years were just me, just like my wife and i’s like, like we were getting qualified for of our income.

[00:30:26] Robert Leonard: So how are you raising capital? Yeah. So the, yeah man. You opened up, you opened up the box. I had to jump in.

[00:30:32] Alex Jarbo: I know. The fastest way I did it. So outside of friends and family, that’s the easy button. But if you’re trying to raise an aggressive number, like we over raised, but we raised 5 million in three months at the beginning of this year.

[00:30:44] Alex Jarbo: And the way I did that was actually getting on like podcast like this, similar to this, but mainly real estate and multifamily like apartment podcast, and the host knew that I was going to be plugging that I’m raising capital for deals and making the trans, having people who were the listeners of those multifamily podcasts and making the transition from multifamily to short term.

[00:31:05] Alex Jarbo: It was relatively easy. I was pushing ’em towards my, investing site and they were just self accrediting and sending their information through my website, and then I, we, they would just get a phone call from someone from my team. And it was, some people were like, okay, I have a hundred grand.

[00:31:18] Alex Jarbo: Some people say 50 grand, but like some people were coming at us with like a million, million and a half. And I know it’s like, some people say you don’t want that big investor to own a big portion of the fund. But yeah that’s how I did it originally was just mainly getting on and it, these weren’t massive podcasts.

[00:31:32] Alex Jarbo: I did get on some pretty big multifamily ones, but raising through podcasts, like on real estate podcasts was one of the easiest. It was one of the easiest things that I had done surprisingly. Cause I, I didn’t, originally, I didn’t think it was going to be that easy.

[00:31:45] Robert Leonard: What structure are you using when you’re raising?

[00:31:47] Robert Leonard: Are you doing funds? Are you doing 5 0 6 B, 5 0 6 C? Like how are you structuring?

[00:31:52] Alex Jarbo: What we did originally was joint ventures, just with one I had mentioned like the million dollar one. We had done joint ventures with all the bigger people and then all the smaller people. I’d actually done one of those podcasts where the host, after we were done actually pitched his fund to me where I would be the deal finder and I would be the operator and then he would use his fund and his contacts and his investors to fund the deals I was working.

[00:32:16] Alex Jarbo: I’m working with a syn. I’m working with two syndication funds, one out Michigan and one out of New Orleans. That’s all I am now is the operator and the deal finder, and I put the deals together and manage the people. I get a portion of the joint partners or the gp, the general partnership, and then the investors own everything else.

[00:32:33] Alex Jarbo: They bring everything to the table and have guarantors as well that have their own equity splits and stuff, and every deal is different. We tried to shoot for like a 6% pref, but every deal is.

[00:32:43] Robert Leonard: How’d you get involved with those two funds? If somebody’s listening and they’re like, that’s exactly what I need.

[00:32:47] Robert Leonard: I have a little bit of experience. I’ve done some deals. Yeah, I need somebody else to kind of bring that capital. How do I get involved with a syndication?

[00:32:54] Alex Jarbo: Like I said, get on these podcasts and pitch yourself to these funds after. because a lot of these podcasts that you’re hopping on, they have funds.

[00:33:01] Alex Jarbo: That’s one of the reasons why the podcast exists is to pitch the fund, which everyone knows that. But that specific one that I’m working with now, it was just a conversation we had. It was like, are you looking for more deals? Are you looking for more capital? And then another thing is, I mean, if you already have those relationships with some of these fund managers, you can just ask them.

[00:33:18] Alex Jarbo: Cause at the end of the day, it’s just real estate. It’s just numbers at the end of the. Different operations, but it’s just numbers At the end of the day. It’s underwritten. It’s underwritten. Really similarly.

[00:33:29] Robert Leonard: Alex, as we wrap up the show, I want to give you a chance to tell the audience where they can go to connect with you, learn more, a little bit about your cabins, kind of what you’re working on.

[00:33:37] Alex Jarbo: I have my free YouTube channel that you guys can check out. It’s called Alex Builds, where I just document all, everything that I’m going, like with my properties going through with my proper. We’re starting to do more onsite stuff, which is really fun. But I go everything from development to management tools, everything that you guys need to run your own business.

[00:33:53] Alex Jarbo: And then I recently put together a short-term rental development course that I essentially put, you had asked like all the mistakes that I made, like what I wish I knew, I wish I would’ve had this course when I first started. That’s essentially the course I created, and that’s going to be at my personal site, which is alexjarbo.com.

[00:34:08] Alex Jarbo: You guys just click the button at the top right corner. It’ll take you through the whole like sales video. But yeah, between that and the YouTube channel, you guys can check out the bigger pockets articles I write. I’m pretty, pretty active in the community there, like with the comments and stuff. Awesome.

[00:34:22] Robert Leonard: I’ll be sure to put a link to your resources and the show notes below for anybody that’s interested in checking ’em out and connecting with you. Alex, thanks for joining. I appreciate it, man. All right, guys. That’s all I had for this week’s episode of Real Estate Investing. I’ll see you again next week.

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