Welcome to another episode. Today, we’re thrilled to have Annie Dickerson, Founder & Chief Brand Officer of Goodegg Investments. An award-winning real estate investing expert with over 15 years of experience, Annie has received the prestigious Real Estate Investor of the Year award from the Motley Fool. Goodegg Investments has helped thousands of investors around the country to invest in commercial real estate assets totaling over $1.4 billion.
In this enlightening discussion, Annie shares her journey into the world of hotel investing. She delves into the differences between multifamily and hotel investments, explaining why hotels can offer greater cash flow. Annie discusses the impact of large-scale institutional buying on the housing market and provides insights into the mindset and habits of successful investors. Additionally, she explores emerging opportunities in sectors such as micro-private equity and blockchain and offers valuable advice on networking and decision-making in the business world.
Tune in now to gain exclusive access to Annie Dickerson’s expertise and discover how to navigate the world of hotel investments effectively. Don’t miss out on this insightful episode!
Get my new book: https://bronsonequity.com/fireyourself
Full Transcript:
Bronson Hill: This is the mailbox money podcast and I am Bronson Hill as a busy professional I wrestled with how to grow my income without taking up more of my precious time I learned that managing real estate actively trading stocks or being unable to scale up investments is not passive investing This is the place where you’ll discover new asset classes develop investing skills and learn from experts how to become Financially free with less work than you thought possible and now get ready for truly passive income,
Alright, so I love talking about investments that cash flow. I mean, it’s amazing. That’s why we’re the mailbox money show That’s why I wrote fire yourself and my guest today Annie Dickerson is amazing. She’s with good egg investments her and her partner are with just really trying to create value for people They have an amazing track record and the hotel space has been interesting because it’s like multifamily but it allows for a lot more cash flow And so if you have an asset that may produce two three four times as much as a multifamily deal you’re basically really using an asset very efficient efficiently so it really combines two things that our group were very interested in is, multifamily real estate or larger commercial real estate and also a business a smaller mid-sized business, right?
So, it puts those together in the same. So, let’s get in this interview I think you’re gonna love it.
Let’s go.
All right. Welcome to the mailbox show mailbox money show Annie. How are you doing?
Annie Dickerson: I’m doing fantastic. And there’s nothing I love more than mailbox money so I’m thrilled to be here with you and your listeners Bronson.
Bronson Hill: Yeah, it just has a good connotation everybody wants to you know, it’s funny like I’ve gotten very few things actually in the mailbox but.
Annie Dickerson: Yeah
Bronson Hill: You should felt like direct deposit if everybody understands
Annie Dickerson: Yeah there you go it doesn’t have the same ring to it.
Bronson Hill: I know I know they like somebody. Yeah, it’s like deposit.
That’s not as exciting. It’s you get a check. So any we’ve been friends for a while I’ve been watching what you’ve been guys you guys have been doing a good egg and you’ve grown your team, you’ve grown your program. You have a coaching program you do like us you’ve done a lot in the multifamily space and you’ve gotten into this really exciting asset with hotels and so was that so that you could travel anytime you wanted and you have a place to go.
Annie Dickerson: Yeah, absolutely, that was the number one priority. Although it is a perk No, it we weren’t looking for we weren’t actually weren’t looking to invest specifically in hotels. We’re opportunistic that’s why we’re called good egg investments and not good egg multifamily and so we we’ve always been open to any types of assets wherever the opportunities lie. And back a couple years ago, you know as we had a lot of interest post covid from our investors that wanted specifically cash flow as I’m sure your listeners want as well with mailbox money, you know they wanted cash flow and with multifamily especially in the first couple of years as you’re stabilizing the asset and with multifamily these days sometimes you don’t get that regular cash flow as we used to and so we started venturing beyond multifamily just to see what was out there and we started looking at different types of assets and we came across hotels and we established a phenomenal partnership. And so that’s kind of what got us into this space its partly that partnership but also the the potential that we saw in hotels.
Bronson Hill: Yeah, it really is amazing and it’s something I’ve had my eye on for a while too with hotels because You know if you’re used to multifamily if you’re a multifamily investor, you know It’s kind of a good I call it the gateway drug right you get into investing passively It’s like we can all kind of either we’ve lived in an apartment or some sort of multi-unit or so We so we can relate with it and then we’re in it’s kind of like, okay This makes sense and then from there It leads to all these other things use all these other businesses or other types of real estate or commercial or whatever you can do and hotels are really unique because Um, you know you have a similar structure and even some, you know multi-families where hotels are right.
They’re getting converted either way but uh, they’re very strong in cash flow. That’s one thing that’s really attractive I don’t know there ever can be labor intensive and you know, some are some are more than others I know I mean you could talk about that a little bit but Um, you know talk to us a little bit about and I think you mentioned a couple critical things there that you found a really Good partner and that’s a key that we always look forward to is finding a partner that Has a good track record that’s really good at what you’re doing Tell us a little bit about kind of You know as an investor, what’s the profile of investing in hotels?
Annie Dickerson: Kind of the risk profile and the benefits as well first before I go into that I want to set the stage because there’s a very specific strategy that we use in the hotels that we invest in just as with multifamily where there’s lots of different, you know. There’s the class a properties versus the class b c d and then there’s all the different markets there’s value ad versus buy-in-hold versus lease up. There’s lots of different strategies. And so the same can be said about hotels It’s not like all hotels are the same and everybody has the same strategy so that’s something to think about as you’re getting into hotels is, what do you want out of investing in hotels? Is it diversification? Is it cash flow? Is it the long-term growth and that’ll kind of inform, what types of um hotels and what types of groups you might be looking to partner with?
And so, for us when we got into this It was really because we were looking to supplement our existing investment offerings with more of that cash flow So we wanted to find hotel opportunities where there would be stronger cash flow. Now there’s multiple different types of hotels I’m sure anybody listening to this has experience just like you’ve lived in an apartment. You’ve probably stayed at a hotel and so there’s all sorts of hotels though, right? There’s everything from the Ritz Carlton and the Waldorf Astoria with all the bells and whistles all the luxury all the all the everything right versus the budget hotels all the way on the other end. And then there’s a lot in the middle. So, kind of the main area where we focus Is what’s called select service hotels?
So, you have the full-service hotels, which are like the Ritz Carlton’s in fact my in-laws just had their 50th wedding anniversary in Park City, Utah. And the whole family came out It was like 16 of us all the kids and the cousins and everything and we stayed at a full-service resort. There was a spa on site, there were restaurants, there was an activities club with daily events for the kids.
There were suites. It was the whole nine everything you could want they had it there. That’s called a full-service hotel that’s not the kind of hotel that we invest in.
There’s a different profile, right? There’s a little bit more risk a little bit more a lot more expenses to account for potentially a lot more labor intensive. And so that was not what we were looking for when we got into hotels. What we invest in are primarily select service hotels. So select service are those hotels that have some amenities key amenities. So these are like your Hampton Inn’s of the world your home wood suites your holiday and express where if you can envision it you go into the lobby and you have maybe instead of a full service restaurant off to the side, you have a little mini self-serve market Right and check in you get your key card you go up to your room. Maybe on the way up to your room you pass a little gym, right? It’s not a huge gym, but it’s doable It’s got all the all the things you might need and then you might pass by a pool, that’s you know, a reasonable size better doesn’t have all the luxury lounge chairs and whatnot There’s probably not a spa and you go up to your room and it’s a very you know it’s got all the things that you need the bed.
Maybe a little mini fridge and maybe a view over the parking lot, right? So this is like a select service hotel It doesn’t have all the bells and whistles, but what it’s really good for are people like business travelers and people who are maybe visiting or taking care of partners or relatives who are in the hospital or traveling nurses and other hospital staff. And so there’s a niche that’s been carved out by these select service hotels that cater to a very specific audience and so that’s where we have seen this opportunity. These hotels a lot of them did well even through the pandemic because of that demand for that continuing demand for business travel. Um, especially for those who needed to continue to travel. Um, and so those are the types of hotels that we have focused on and so for us the reason we love those types of investments is it’s a little bit of a lower risk profile. It’s also potentially lower return on the back end, but it’s great ongoing cash flow while you’re holding the asset. Especially if you’re operating, um those hotels well.
Bronson Hill: Yeah, now that’s thanks for the background. That’s really good. I was looking on your website here, too you’ve got a lot of multifamily.
I didn’t realize you guys have 1.4 billion in assets so congrats, that’s huge and you guys are doing some big stuff and yes you had a Spring Hill suite here and I love these typically in funds this is like a fund that you invest in hotels or is it more of like individual deal syndications? Or how do you guys usually structure this?
Annie Dickerson: So we started as we did with multifamily with individual hotel assets partly to test the waters to see if people would be interested and partly to kind of establish our partnership and our flow with this asset class, so we did um two, uh they weren’t they were small portfolios so there was two hotels and then another two hotels but sort of as a single syndication each. And so we did those and we had great interest from our investor community so last year we put together our first hotel fund, because as you know with funds you can kind of diversify and mitigate your risk even further and spread it across multiple assets. So that’s what we’re currently in the middle of is our first hotel fund
Bronson Hill: Okay. I gotcha. That’s great.
Um, so for hotels, I know with multifamily, um, you know, the debt has been an issue for a lot of deals um, you know in in the recent past the last couple years rates have risen and you know There’s been some valuation stuff. Have you seen the same? Kind of like are they are they financed similarly?
Are these hotels that you guys are building or are they ones that you’re buying on a secondary market? And how does the debt side of that work?
Annie Dickerson: Yeah, so the hotels that we um have bought and it’s just six so far across our portfolio, but um These six hotels each one has a kind of unique financing situation a couple of them We assumed the loan with long-term fixed rate debt and one we got new debt on but it was also fixed rate. So that’s something we’ve learned in this process in this cycle Is that fixed rate debt is especially in an environment like this Is super important. So, all of our hotels, um in our portfolio currently have fixed rate debt as for the larger hotel industry, um, I actually I assume that they’re going through a lot of the same things as multifamily, but I actually I don’t know.
Bronson Hill: I assume that they are though Yeah, that makes sense okay, I got it And, you said you mentioned you have a partner in this you have a partner that kind of operates like finds these hotels and helps you and can you talk a little bit more about? Uh the partner and kind of how you develop that I think people would be interested. I’m interested as well Like how did you find that partner and also their experience and how did you vet that?
I just love to know a little more about that process of how I’m always interested to see, you know Some partners I’ve had great partners that partners everything, you know, they’re great But I don’t want to do another deal with them for various reasons but you know, it’s just trying to find a good match is a challenge to talk to us about that process Yeah.
Annie Dickerson: Oh, yeah, especially in an asset class that you’re not personally and we still don’t to this day consider ourselves hotel operators. That’s what’s so lovely about this partnership is this is totally their zone of genius and but they don’t want to raise the capital and they don’t want to deal with investors they just want to do what they do best, which is run these hotels and so this is a partner based out of the mid-west. GHC is their name stands for general hotels corporation they’ve been in this industry for well over 60 years and what we part of what we love about them Is if you look up almost any hotel that they operate and you look at their reviews these are like, you know, like I said Hampton in embassy suites holiday and express these this middle tier select service which normally you’d go to google and you’d see uh, there’s complaints and you know, maybe it’s like a 2.9 3.1 stars out of five, right? Yeah, but almost all of their hotels are four stars and up often, you know around 4.5 stars, which is almost unheard of for this tier of hotel. Yeah, and that speaks volumes to how well that they operate their hotels they’re very they’re like I said, they’re based out of the mid-west. So, they place high priority on hospitality and having that and we’ve been we’ve visited some of these hotels that we’ve acquired you know and we go in and we secret shop them and we go in and we get this just this warm welcome you just feel like you’re part of the family and especially for this clientele that we’re serving, right? These are often business travelers that are coming back again and again and in the reviews you’ll see they say You know. They’ll mention staff members by name and they’ll say this person made me feel really welcome I always feel like I’m family when I’m staying here and that feel is what we’re all about at good egg too.
And that’s why it was such a great alignment when we came together is that they had this expertise over here. We had this expertise over here, but our values were in great alignment yeah, that’s great.
Bronson Hill: And that’s I think that’s a really good principle for anybody who is a passive investor or an active investor? It’s really the same. I mean I’ve invested a lot passively I’ve invested a lot actively and it comes down to those values and seeing the performance and the track record and the history and like you said when you find somebody Uh, sometimes I think there’s this desire or at least I’ve noticed this in myself that oh, this sounds really exciting It’s a great opportunity whatever and you kind of hope the best but you have to just look and see like what are the facts? Like how do they actually do when you stack them up? And like you said that’s huge when all their hotels are rated pretty high, you know They you know that they’re going to come in and they’re going to take something and that’s a huge value yet in itself If they’re taking stuff that’s in that category at a 2.9 to 3.3 out of five stars And they’re taking it to a four or four and a half, you know, that’s their general standard, you know they’re going to really come in and do that well And so uh, but just really the values of what people value and again, I used to think we all wanted the same thing we invested we all want to communicate well with investors.
We all want to have like a lot of groups don’t they don’t really want to have that it turns out it’s not the same. So, uh, that’s great I know you have students in this too. And actually, I’m really curious on this continue this idea of partnership.
But how do you teach your students to find partners is it similar to that? I mean are there any other nuggets you’ve kind of learned when it comes to like hey if you’re going to be a part of the capital side or you’re going to be yet maybe the person who’s operating how do you find partners that really you know resonate with you or how do you how do you bet that out a little bit?
Annie Dickerson: Yeah, a big part of it is just like dating go slow take it slow. Don’t rush into things and don’t get married on the first date. That’s right.
Don’t jump in especially if somebody’s you know, if somebody needs you to come in and raise capital immediately and they’re trying to sell you on their deal and they want you to get in that’s or that’s always been a red flag for us we when we partnered with GHC, for example, they were in no hurry. They said hey, you know, we’re here let’s you know continue the conversation. Let’s talk we had many conversations.
We flew out there. We met them. We talked to them multiple times multiple members of their team they have a larger team and so you know that’s always something we advise is if you can meet people in person that tells you a lot more than what you can learn just from seeing this part of them on zoom, right?
Um, so meet them in person go out have a meal with them and get to know them on a personal level as well as on a business level and you know, of course you mentioned track record. That’s always something we look at but you know as we’ve looked at our own track record, we said well you know our track record to date while it looks phenomenal it’s been only over the last let’s say six or seven years when things have been really great and almost anybody could make a track record look great in this time, right? But then, you know, we look to see do our partners have experience?
Um with downturns and with shifts in the market. How have they done during that time? For example, covet right?
And so, in the hotel industry a lot of hotels went kaput during that time because they didn’t have the operations the cash reserves to be able to hold out during that time and a lot of these hotels in GHC’s portfolio. They actually continue to do well um, not as well as they did before the pandemic but during the pandemic they were able to still at least break even or Cash flow a little bit. So that told us a lot about the strength of these assets and then of course post covet they’ve rebounded significantly um, and so, you know track record is a big piece of it but again digging into the track record and thinking critically about not just what those numbers are but the story behind the track record and the assets and the decisions made on a day-to-day basis
Bronson Hill: Yeah, and I think that’s a really good point. Um, you know, it’s easy to take things at face value, but that’s where multiple conversations and I think dating is a great way to look at it, right? You don’t want to just want to like see somebody in one context It’s like you want to see how they do around your friends and how they do, you know in a social setting You want to see how they do like and you want to see how they do with your family and like all the different things that there’s like a process to get there and it is very much like dating or courtship.
Annie Dickerson: So um, we’ll talk to us a little bit about the risks of hotel investing and kind of how it’s different from multifamily or other types of investing yeah, well with hotels, you know, a lot of it is I mean travel is not as essential let’s say as Living with it under a roof. It turns out humans like to live indoors, right? So that’s like a basic human need and so multifamily serves that need every human likes to live indoors and so multifamily is very important for that and so come rain shine whatever season of the year people want housing So that’s a very basic need with hotels It’s a little bit, you know more of a frivolous thing in good times people tend to take more trips and companies who do well, they tend to be able to have their associates or their employees be able to travel more so business travel increases as well and so you got to look at hotel investments a little bit differently and you got to look at the trends a little bit differently and the data a little bit differently but just as with track record and we talked about looking reading between the lines and getting the story it’s the same when you’re investing in hotels it’s easy to say oh the hospitality industry as a whole is going up or it’s going down but within that band there’s so many little stories and that’s where that’s where the real ROI lies in digging through and finding those unique stories for example one of the first hotels was two hotels that we invested in in a town called Munster Indiana right outside of Chicago and at the time we knew nothing about Munster but these two hotels were doing well and we thought okay. Well, let’s dig in. Let’s figure out what’s going on here How did these hotels do during the pandemic?
And why do people travel to this little town when they could stay in the middle of Chicago if they’re traveling there, right? And so, it turns out that most of the travelers there were business travelers and they were going there because there’s a lot of A lot of warehouses a lot of factories very close to Munster. There’s the I think it’s the steel industry is there they don’t make monster cheese there, right?
That’s not where the cheese different Munster different Munster.
Bronson Hill: That would be good though.
Annie Dickerson: Oh, I would definitely need to go to get us yeah but yeah, so they you know and we It’s easy to think well, you know these days with zoom aren’t most people doing zoom meetings who needs business travel anymore, right? But when you think about this type of industry these factories when they need to set up new lines, you can’t do that over zoom and they need to set up new automations you can’t go and test things on zoom. You have to be there in person and that’s why that travel was continuing through covet is because it was essential to the operation of those businesses and so it’s things like that that we look for is not yeah, we look at the macro trends, but more important than that we dig into the individual communities and the neighborhoods Just like with multifamily and we learn the unique story of these hotel assets
Bronson Hill: Yeah, I think that’s really true I mean, I think I just look for principles to my book fire yourself I just talk about like, you know, how do you vet any do deal?
How do you vet any industry and the story is important the story of what you’re trying to do and really? How you get paid a lot of times as you find where’s the value that is not being seen here? What’s the value-add potential or what’s just the upset?
What do you see in that market? What are the things that and what and it’s all a story It’s all a story that and you know, you could be right in your story You could be wrong in your story, but just at least having the story I think is really important and then also, you know If you know if we’re wrong on the story then, you know, what does that mean? I have a relative that’s done a ton of the, you know west as well as well, right?
My cousin West and yeah done tons of stuff in, you know multifamily and uh, kind of how I got started in multifamily, but you know in small towns in towns that are like 30,000 people in a town and he’s found a way to just create a lot of people say don’t ever buy in small places But he’s done really well He’s bought and hold and just realize hey there’s a place where we just think we’re gonna do well and just you know You tend to get much higher cash flow in those areas. So, it’s interesting whatever your investment thesis or strategy is just having a strategy and being able to see does this fit or does this not but I think one thing I really admire about you guys Is that you’re able to you know, obviously do different assets, but really do your homework and really figure out what you know what is this, you know who the partner is? What’s the story here?
What happens what the risk is? Um, let me ask you this I went to share that we’re both in California so I went to a California lodging investment conference in in orange county looking at it I realized some of the especially in California I know it’s interesting you guys are buying outside and you’re buying other areas where it makes sense for the numbers make sense But what do you see happening in the hotel? Industry as far as valuations and I know if you were to buy right after covet or you probably were some screaming deals going on people just were getting no income and they didn’t expect that all of a sudden. Well, I mean, I don’t know you because you were you guys doing this during covet has been kind of been since covet You guys started right?
Annie Dickerson: Yeah, this is right after not 2020 I think 2021 22 where it was when we started.
Bronson Hill: Yeah. Yeah. So where do you see where do you see the hotel industry headed?
I know we don’t have any you know, people are always going to be traveling They don’t want to travel and sometimes even the remote work idea can mean that people have to travel even more because they’ve got to go once a month or once a week or whatever to go into a place but uh, what do you see kind of like do you feel like we’re keeping up with the man? Are you watching the trends kind of in the space?
Annie Dickerson: I’d love to hear your thoughts on that well, I’ll speak to one angle of it that people always bring up as a concern which is Airbnb people always say well air with the growth of Airbnb aren’t hotels gonna go down? I mean, why would you invest in hotels when potentially you could invest in short-term rentals? And maybe that’s going to grow faster and I don’t know I don’t have a crystal ball in that regard I know that Airbnb’s do really well, and I also know there’s a subset of hotels that do really well um, but again, the key is in knowing the audience and the types of travelers that come to a specific hotel so this is another reason why we invest in select service hotels geared toward business travelers because when you’re traveling with your family, let’s say the recent trip I took with my family we had a choice right because we were just traveling for leisure purposes and we could have stayed at a resort and each get a separate room, which is what we did or we could have rented out a big short-term rental which we’ve also done in the past and we have that choice right and no matter which way we choose that big lump sum of money is going to go one way or the other versus business travel, especially, you know, I spoke about a lot of these factories and these companies will what they do is they will book the travel on behalf of the employee on behalf of the traveler and when they do so, they’re not going to book you an Airbnb. They’re just most company policies because of the inherent risk with Airbnb’s and the you know, the potential unknowns and liabilities and whatnot. There’s just a whole host of things.
So companies in most cases will book at a hotel and not an Airbnb and when they do so often they’ll prepay for the stay and often if they’re traveling again and again they’ll prepay for multiple stays and so again, it comes back to the clientele and so that’s why we like that niche of business travelers because it can have a unique advantage over hotels for leisure travel, but as for the hotel industry as a whole, you know everything that we’ve seen shows that you know I think I heard this on MPR that with the pandemic is like a rubber band, right? You pull the rubber band back and imagine with travel, right? You’re pulling it back back back and you’re pulling it taught well at some point it’s going to snap back and then it’s going to go the other direction and that’s what we’re experiencing now is that travel post-covid has shot up in leisure travel as well as business travel and there’s a lot more room to continue to grow as well.
Bronson Hill: So, I think there’s a lot more potential in hotels yeah, I think so and I travel quite a bit for both I do for work and for pleasure last year I traveled six times internationally and a lot of internationally. I may travel Airbnb. I do hotels as well but for business, I was just at an event last weekend a book writing event. So I’ve got my next book my second book coming up about Rich Brain so how do it’s basically how the wealthy change their brain to change their bank accounts?
But what I stayed in a hotel because when you’re when you’re traveling her business, it’s nice to know I’ve got the gym. I’ve got the amenities. I’ve got what I need.
It’s enough. I can get a snack whatever when you’re on air. Maybe it’s just it’s just more usually you’re like in a resident neighborhood maybe you don’t have a car.
It’s just like I almost always for business I’ll typically stay unless there’s some reason not to and I think that really makes a lot of sense and like you said with the booking as well but Annie, I just want to say I really appreciate you just knowing you over the years and seeing what you’re doing I know we haven’t connected directly a lot but I’ve just you watch what you guys have done and you guys truly are Good egging and investing because that you guys are great people and so that’s you know, that’s you don’t know I mean, there’s anything about an egg.
I’m sure there’s a lot of analogies there but like, you know, no betting was good you can always tell but you can see you know the fruit of what you guys are creating and also for your students what you’re creating you guys have a great mentorship program that you’re doing to help build platforms and the things that we do creating education. So, wanted to I appreciate you wanted to want to just ask if you could if people wanted to reach out to you want to learn more about the hotel investing or any other types of stuff that you’re doing your mentorship can you talk about how people can connect with you?
Annie Dickerson: Yeah, absolutely the best place to go the source of all of our education is on our website. Good Egg Investments calm and of course if you have any specific questions for me whether it’s related to hotels my story anything else you can reach out to me at [email protected]. Awesome.
Bronson Hill: Thanks so much for being here, Annie. Appreciate it
Annie Dickerson: Thank you, Bronson.
Bronson Hill: Okay, so I hope you got some stuff out of that with hotel investing I think a few takeaways for me were just the value of finding great partners really listening looking at track record It really is a transferable skill and I talk about this in my book Fire Yourself uh, which actually now we’ve sold over a thousand copies and it’s become an Amazon category bestseller. So, if you haven’t picked it up yet, please do pick it up and I’ve started writing as I mentioned my second book which I’m excited about but you know really the how do you vet deals? How do you vet sponsors? How do you find the right partners?
It’s really really really important that you find groups that have similar values and you don’t always know going in but you can ask questions you can look at their website you can kind of get a feeling talk to other investors but you’re trying to get for a sense of what really makes this group tick and what it really is their track record. So anyway, I hope you enjoyed this. Um, if you haven’t joined investor club, we’ve got some stuff we’re just really excited about around the corner Uh bronsonsonequity.com/join check out the link below.
Look forward to catching you on the next episode of the Mailbox Money Show!
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