Ready to maximize your hotel’s cash flow potential? Join host Bronson Hill and co-host Nate Hambrick for a dynamic conversation with Mike Stohler, a former Navy ops specialist and airline pilot turned real estate and hotel investor. Recorded in late April 2025, this episode traces Mike’s journey from owning 1,500 multifamily units to mastering hotel investments over the past nine years. After a lucrative 1031 exchange exit, Mike partnered with a seasoned hotel operator to learn the ropes, now owning limited-service cash cows like Motel 6 and high-end lifestyle brands in Scottsdale and Spain. Learn why hotels outperform multifamily with 10-15% cap rates, how cost segregation yields massive tax savings (like $1.24M on a $5M hotel), and how AI-driven automation—like towel-delivering robots—reduces staffing needs. Mike shares risk mitigation strategies, from aligning with experienced operators to splitting land and operations LLCs, plus insights on navigating tariffs and a potential recession.
From high-yield deals to centuries-old castles, Mike’s path will inspire you to think beyond conventional real estate and seize bigger opportunities.
Get my new book: https://bronsonequity.com/fireyourself
Full Transcript:
Bronson Hill: Welcome, welcome, welcome to the Mailbox Money Show. I am your host, Bronson Hill. I am super excited to be here with my co-host, Nate Hambrick.
We have an amazing guest today, Mike Stohler, who’s done a lot in the real estate and hotel space. Nate, why don’t you tell us what are you most excited to hear from Mike about today?
Nate Hambrick: I am pumped to learn a lot about the hotel industry. As you know, I’ve owned a lot of single families, owned a lot of multifamilies, oil and gas, etc. But I know virtually nothing about hotels, so I’m excited for Mike to drop some knowledge.
Bronson Hill: You know, it’s interesting with real estate these days. We were talking about this kind of in the green room before we started. Just how real estate, there’s been some challenges. It’s like we’re paying a lot to get real estate and not getting a lot of cash flow out of it. And so, I look at hotels as really being a cash flow business that involves real estate, which is great.
So these two things I love, cash flow, well, two things, real estate, cash flow and businesses all together. So I’m excited.
Anyway, in the studio, we’ve got Mike Stohler.
How are you doing today, Mike?
Mike Stohler: Doing great, Bronson. Thank you.
Bronson Hill: Good to see you. You’re in your cabin, which is a gorgeous cabin with, I was told that’s a, no, it’s not a deer, it’s a moose.
Mike Stohler: It’s an elk.
Bronson Hill: It’s an elk. Okay. I was close.
And you hit the bear in the corner. So you’re out doing your stuff. Awesome.
Well, you’ve been hunting deals in real estate and in hotels and other things for a long time. So why don’t you give us a quick background of what you’ve done. Kind of how you made your shift and kind of what you’re doing now.
Mike Stohler: Yeah, very quick. Started back in the PG days, which is, I call it pre-Google days. And it was very quick, very easy to buy.
I could not Google or research how to be a landlord. So went to a seminar. They said, just go buy.
And I’m like, okay, yes, sir. Went and bought eight units, then 10 units. And then I was like, oh, are there any forms necessary?
How do you evict? Is there app like, can I just, you know, change locks? And you know, I can just show up and kick, you can’t Google any of that. There’s no books.
There’s no, there’s nothing. So I failed miserably and it took me a long time. I ended up being a airline pilot, which was, was one of my dreams.
I had just gotten out of the Navy and fast forward. I was like, oh, you know what? This is, this is what I know.
This is what you need to do. So Google existed. And what I did is I just started researching.
I started doing a lot of things. I actually pretended to go to be an applicant at apartment complexes and stole all their forms. I did anything and everything.
Bronson Hill: That’s like gorilla, gorilla efforts. You go in, I’ve done that going out to look at the skies. You’re looking at your painting property.
You always say like, actually, while you’re there. Awkward moments with partners where it’s just like, we’re all living here together. And what’s going on?
Mike Stohler: I did. And I’d interview attorneys like, how do you evict? Are there any? Can I just like, they didn’t pay me on Tuesday, I evict them. Is there any laws I didn’t know anything, but anyway, fast forward.
I got back into the single family, really heavy and multifamily. I ended up owning and managing around, I think we’re close to 1500 units. And then someone came in with a huge 1031 and said, I’m buying it.
I’m like, nope, I am nope. I am golfing.
I am doing whatever I want. And I’m just, I could sit on my ass all day. You know, I was like, I am happy.
Bronson Hill: So you had a buyer coming in. I was going to say, we’re going to pay you whatever you want. And you’re like, I’m good.
I’ll take it. I’m out. How many years ago was that?
Mike Stohler: I was like, I’m not doing it.
Bronson Hill: Yeah. Oh, you’re not.
Mike Stohler: I didn’t want to do it. But they came out the fourth time, came to Scottsdale, met me at IHOP and gave me a price. I couldn’t refuse. So I was like, damn now what,? But it’s all about networking.
So then I got into hotels and that was eight or nine years ago.
Bronson Hill: Eight or nine years ago. Okay. So then, yeah, let’s talk about this for a minute.
And I want Nate to jump in here too. Cause I know he’s a lot of questions about hotels. So, so a lot of investors, I think a lot of our investors listening aren’t familiar with real estate. Kind of similar to Nate and I, they’ve done the single-family, they’ve done maybe multifamily as a passive investor or an active investor.
And so, a lot of people look at, especially these days with multifamily and it’s tough right now. It’s tough. There’s not a lot of cash flow.
I mean, for me, a few years ago, we had a great run between 2010 and 2022 probably. And then things started just kind of like, okay, debt costs went up and inflation, all these things. Rents weren’t going up. So we had some interest rates. It’s a real challenge, especially on the cash flow side.
So hotels have been very interesting to me. Now, the thought that I don’t like about them is that they can be very labor intensive. Kind of like a restaurant, but I guess the good part is someone’s there all the time and you’re expecting people to be there all the time. And it’s not like a restaurant where you’re kind of like, I hope they come in to eat.
You know, it’s like, you kind of know people are generally going to be there. But Nate, why don’t you talk to us a little bit about what kind of, what are some of your questions about hotel investing. And just somebody who’s been in real estate for a while. Maybe you can kind of start with that and kind of take it from there.
Nate Hambrick: Well, maybe a good place to start, Mike, is I’m curious. So you made the leap from the multifamily to the hotels. Probably a good place to start is how did you make that transition?
What are some of your favorite things about the asset class now that you’ve been in the industry for nine, 10 years?
Mike Stohler: Yeah, a great question. So ladies and gentlemen, number one thing and everything is networking. Networking, networking, always, always talk to people, always meet with people. I don’t know anything about it.
I didn’t know anything about hotels and thank God, I didn’t just jump in and say, “Hey, let’s go buy something”. I knew a guy that had 25 years experience in hotels and he just kept saying, it’s like, I kept looking at him. I was like going, you know, hotels, that’s interesting, but you have to be like a mega mega rich or something.
I mean, you just don’t even, you don’t even think about it. So I went up told him, I said, look, I’ve got a lot of money. I want you to find me hotels and I’m going to be like your shadow.
You’re going to teach me how to find them. You’re going to teach, and I want you to operate them. You’re going to teach me how to operate them.
I will give you some property management fees, but I’m not going to pay you another salary. But what I will do is give you a piece on of the action in the end.
Bronson Hill: Yeah.
Mike Stohler: Okay. So now they have meet an incentive for me to make money. And ladies and gentlemen, that’s the best way to get into another asset class, is to get ahold of someone with a lot of experience
And let’s just say you don’t have money to pay them, but you give them an incentive. Give them a cut. And that’s how it works out.
Bronson Hill: This is a real quick way. I just want to jump in real quick. This is how we buy businesses as well. When we buy a business, we almost always leave an operator or the person operating in there.
We say, we’re going to build an incentive and they will put half the money down and then half the money’s in earn out. They got to perform and get a certain amount of things down the next two, three years. And what happens is you learn the business along the way and there’s incentive for them to actually stay in and do it.
So when you have, that’s one thing we love about this versus wall street, right? I was a registered investment advisor for years. I call myself a recovering investment advisor now, but like, there was no alignment of incentives, right?
People, most people that were managing money didn’t have any of their own money in deals. So, so you’re doing this. So you found somebody when you were starting to say, “Hey, you’re in this, you got this background, you’re in here”.
So there’s an alignment of interest. And then you started to learn as well. I’m sure along the way you learned some things.
And what did you learn?
Mike Stohler: Yeah. A lot of things I learned his, there’s a reason I was getting kind of bitter owning all those multifamilies. I don’t know if all of you that own a lot of multifamilies, you start hating people.
Bronson Hill: See the worst of humanity, right?
Mike Stohler: The worst of humanity, a lot of times the tenant -landlord, there was not a lot of love right there. Here’s what I love about hotels and now I’m not saying that, I can give you guys stories that like, Oh my God, are you freaking kidding me stories that are you find in hotel rooms?
But the best thing is number one, I get your credit card up front.
Bronson Hill: Yeah.
Mike Stohler: I’m not chasing rents. Thank God, I’m not chasing rents anymore.
Number two, I get to change my rent as many times a day as I want.
Bronson Hill: Yeah.
Mike Stohler: You’re stuck in a six month or a one year lease. Okay. I can go from 78 bucks to 200 to 250 depending if there’s a rock concert or something coming in that night.
So I get to change my rent. It’s kind of like gas stations where you all of a sudden you drive by on your way to work. It’s three bucks.
You drive back. It’s $3.20. I mean, they they’re changing.
So that’s another thing.
Bronson Hill: It’s surge pricing. Surge pricing with Uber, right?
Mike Stohler: Surge pricing. It’s like surge pricing. There’s a ball game in town.
All of a sudden it costs 40 bucks to get to downtown, $40 more. So I like those type of things. The other thing is according to the government, according to different states, hotels are a business.
It’s not real estate.
Bronson Hill: Yeah.
Mike Stohler: Okay. So everything that I own, I’m a business owner. So I was able to get, I have a lot more grants, a lot more loan products. There’s just a lot more out there when you’re buying a business than if you’re just buying real estate.
So that’s another thing that I learned, which is really nice. And you can also automate as much as you want to alleviate some of front desk. You know, so you don’t, in today’s hotels, you don’t have as many employees as you used to.
Bronson Hill: I want to ask you a question about that real quick. So, Elon Musk recently is recording this kind of late April. He had a Tesla bot, which is like a humanoid robot in the kitchen. Making meals with, I don’t know if you saw this or heard about these. And they’re making, you know, they’re basically cooking dinner.
So they think we’re probably five to 10 years out of us all having for like $10,000. Having one of these bots in our house that cleans our house when we’re gone, does the dishes, does the laundry. Who knows what else, but like, I, what’s the point of like, it’s like the Jetsons. We show up somewhere and there’s like a robot we’re talking to and it’s doing all the cleaning. It’s doing all the work.
And is that, is that in the horizon or am I just like in sci-fi land here?
Mike Stohler: Well, it is on the horizon. You know, they already have robots that can go, that’ll go to the laundry room. And let’s say you, you call in your room 300 and I need two new towels.
I’ll bring them out within two minutes. There’s going to be a little robot…
Bronson Hill: The little sushi restaurant where it rolls up with your drinks or something like that.
Mike Stohler: It looks like kind of like a little R2D2 type thing on a little, it’s belly opens up and there’s two towels in there. They have those things. They have kiosks right now.
You have software where you don’t need really front desk on the app. You can say, “Hey, I need this or what’s going on, or this is broke”. That message goes to the GM that’s onsite or the maintenance guy that’s onsite.
And then they just do it. So you never have to call down on the front desk, call down somewhere. It’s all automated now.
Bronson Hill: Well, that’s amazing. Nate, I want you to jump into, but how is that changing or is that for seeing to change the staffing requirements? Obviously some of these I’ve heard extended stays are great because there’s no restaurant, there’s like much less to maintain.
Obviously you have laundry and you’ve got kind of the basic hotel stuff, but some hotels are like the four seasons. Where they have all these different services, all these different things. Some are much more basic. Are you doing more basic?
Are you doing the more kind of higher end ones or is it kind of.
Mike Stohler: Well, it’s a great question. So I like both the limited service. You’re right.
They did best during COVID. The limited service, the ones that are off the highway. They have truck driver parking. Those types of things where they just need a place to sleep and they get a free breakfast and they’re gone. Almost zero overhead.
Our biggest cost right now is the free breakfast that I have to give you. And then if I don’t have enough eggs, which are $10 a dozen. You give me a one star review, even though everything was fantastic. I was like, they didn’t have enough breakfast.
And I’m like, oh, it’s free, man.
Bronson Hill: Yeah. Yeah.
Mike Stohler: You know, take your breakfast and go back to, you know. Sorry, that was a little hotel rant.
Bronson Hill: No, that makes sense.
Mike Stohler: But then some of them, as we start hitting economic times like this. Where it’s just more expensive to do everything. The higher end ones do a little bit better because the people that stay there aren’t in effect. They don’t care what the price of gas is. They don’t care about these recessions and things like that don’t hit them as much.
So I’d like to do both. The one that I’m building in Scottsdale is a high end. It’s called a lifestyle brand, which is a new brand that, that they have. But the whole thing is there’s so many different brands, so many different concepts and they all work in different.
Nate Hambrick: What are your favorite types of hotels to own by the way?
Mike Stohler: Well, the limited service, select service. You know, the cash cows are like, my God, Motel 6’s. They’re the mobile home part of hotels, you know, mobile home part. They just make, they just cashflow. Motel 6 is just, I liked the limited service. And then I liked the lifestyle brand because I don’t have to do the cookie cutter. Every three years, not making me change. You know, I know your couches are great, but they have to be red now.
I’m like, yeah, those types of things, lifestyle brands. You don’t have to do that. You can do whatever you want.
I can do the Scottsdale vibe and there there’s, it’s not cookie cutter, so I like those too.
Nate Hambrick: Like, give us an example with the lifestyle brands. Like what does it actually mean? Are there any chains that I would recognize are these basically mom and pops that you’re joining?
Mike Stohler: No, no, they’re no like a Hilton. So a lifestyle brand, what that means, all it means is you go into, let’s say Scottsdale and if you go into a courtyard. A quality and comfort and double tree, they all look the same. No matter where you’re at in the United States, right? But a lifestyle says, you know what?
I’m in Scottsdale. It needs to have some Scottsdale. Glitter desert, desert fields, desert field with cactus and Southwestern. But also because it’s Scottsdale, you may have a chandelier. I can do whatever I want because the hotels vibe is whatever that lifestyle, wherever that is at.
Okay. So as long as I’m up to a certain standard. The franchise, so you have the curio collections, you have the tapestry collections, the autograph collections. You know, like the Marriott, you have there a collection and some of them are more boutique than others. Some of them are more urban.
So if you go into a hotel and you’re like, wow, this is cool. I’ve never seen something like this. It’s because it’s not a double tree or it’s not something that is cookie cutter.
It’s probably a lifestyle collection.
Bronson Hill: Go ahead buddy.
Nate Hambrick: I was going to ask with that cause it sounds like, and feel free to add it. It sounds like that’s one of your, that’s one of the ways that you mitigate risks. That’s one of the ways that you don’t have to change your couches every three years.
Just cause some branding person in Idaho thought it would be a great idea. You know, just like any new asset class, people get nervous going into it. And I think one of the things that I love about the way that you got into it is you just hired. And then gave equity or bonuses to the person who knew what they were doing.
But I was going to ask you, what are some of the biggest, I guess, areas. That you need to mitigate for when it comes to a risk perspective when getting into the hotel business?
Mike Stohler: Great question. So number one is don’t get emotional on a brand. I stay at Marriott’s therefore I need to buy Marriott’s or it’s like sometimes class B’s work.
Sometimes class C’s work. It depends on where you’re at and where the location is. So the mitigation risk is knowing what works in certain areas.
Okay. If I’m in a small town where it’s right off of a highway and there’s a Denny’s in the front parking lot and a Walmart next to me. Am I going to put a really nice hotel?
Bronson Hill: Probably not.
Mike Stohler: Probably not. Am I going to put a quality in?
Bronson Hill: Probably.
Mike Stohler: Probably something like that. So the mitigation is, and this is where I find opportunities is people put in the wrong, the wrong franchise. And then I’ll change the franchise out.
The other one is how flexible are the franchises to that? What we call that PIP where you have to change things out. I bought a hotel and it was a Radisson.
And I had just changed out everything. All the case goods choice, but Radisson and I didn’t like that. So I switched it to a wind gate by Windham and I went in and I was like, and look, I know this doesn’t look like a wind gate, but I’m not changing.
And I just spent X amount of freaking lot of dollars in changing things. If, how bad do you want me as a wind gate there? Cause I’m not changing these things.
They allow you some franchises like, nope, haven’t to change. Sorry, you know.
Bronson Hill: Got to negotiate. They talk about that. They did whatever flag you have.
I was curious on this too. So I’ve seen, you know, I was a part of Facebook group and the people can join these as well. These hotel owner, Facebook groups or seller finance. Some of these are like, they’re kind of the turnaround situations you go in.
It’s like revenue, you can tell it’s not doing great. The staff probably needs to be changed over. It has a high potential for upside, but how risky is it?
I get it going up on the risk question here. If you’re going to go into a, to a hotel that’s going at 50% occupancy and you can tell there’s just some issues with the way it’s being run. How difficult is it?
And how risky is that to go in there? And how, I guess from a bank loan perspective, how do they look at that as being really risky as well? Does that look like if it’s 50% typically occupied?
I mean, obviously it depends on location. But you just kind of talk a little bit about that versus some of the multifamily, they’d say like 80% or more as good, 90%.
Mike Stohler: Yeah, 80, 80%, 90% would be fantastic in hotel.
Bronson Hill: Yeah, sure. You probably don’t get that.
Mike Stohler: You don’t get that seasonal. So, what they look at is number one, the operator. And here’s also the thing is, is the franchises look at the operator.
If Nate and Bronson want to go buy a hotel, you probably won’t be able to. I don’t care if you’ve owned 3000 multi-unit doors, they’re not going to take the risk. And I’m giving you a franchise there. Their brand is more important than who owns it.
That’s the number one thing. The number two is if I go in and say, okay, you know what? This hotel stinks and the franchise is wrong.
My number, the biggest thing is how can I get out of that current franchise? What’s it going to cost me? Cause you may have to break a 20 year, 15, 20 year contract and it might cost me six figures just to switch the flag.
So that’s another mitigation thing. How much is it going to cost me? Now here’s, here’s something else that if a flag really wants in that city, in that area, they’ll give you what’s called key money.
I have had franchises say, Mike, here’s $1.8 million or $6,700,000 per we call them keys instead of rooms, doors, just to put their flag there. Cause they want it. Okay.
So I have all of these things going into my head. How much are going to cost me to break? If anything, how much is it going to cost me to renovate and rebrand?
What franchise can I use that actually give me money to use them?
Bronson Hill: Yeah. Wow.
Mike Stohler: So there’s all of these things that are circling in the brain.
Bronson Hill: Yeah. That’s so, I guess for you when you were, cause I always think about like busting into something. So if somebody is like a retail investor or they’ve been doing real estate, they want to get into this.
And I think it’s when I first got into medical device sales, I did this for 10 years, I’ve sold the surgeons. They’d always say, “Hey, you know, it was all the programs that we want to have. You’d have this many years of medical device sales experience”.
And I was like, well, how do you get medical device sales experience? If nobody would give you experience to get medical device experience. So it’s the same with this.
It’s like, how do you get, and there was a way around it, but what’s the way around that you partnered with somebody who had that experience? But were you able to then go say, “Hey, it’s not just Mike. It’s Mike and Tom or whoever this guy is”.
Mike Stohler: Yeah. Yeah. They had to, he had to be, even though he has zero money in the game. He had to be on that initial franchise agreement and bank loan.
Bronson Hill: Yeah. Wow.
Mike Stohler: He had to. And then, after 18 months and we did well and we turned it back around. I went out without him and what I was able to buy another hotel.
And then we partnered with him on other ones. And now we’re going into Spain, Portugal, Italy.
He lives over there half the year. So now I’m back with that original partner. So you just, it does, it takes time.
So you have to prove yourself.
Bronson Hill: Yeah. Yeah. It’s amazing about experience, how you have to shape. Like it’s the story you tell and who you’re with and it’s team.
It’s not just you, but it’s also a team that’s similar to. Do you own the land on these as well? Or do you not own the land you do online?
I’ve heard cases for both that like owning the land is great because then you don’t have to worry about leases or duration. And other ones will say, well, “Hey, if you have the land, you can quickly sell it as a triple net and kind of sell it to yourself”. But then you kind of like.
Mike Stohler: That’s what I do is talk about that. So what I do is it’s a great question people. It’s called how can you get the most and how can you create income. Which means you don’t pay a lot of the taxes. So I create two LLCs.
One LLC runs the operations. One LLC owns the land or the loan. Okay.
The operations group pays rent to my other LLC that owns the land. So I’m creating rental income. So what am I doing is I’m decreasing the amount on the operation side, that’ll be taxable by paying a rent, even though it’s to me.
Does that make sense? So I’m creating an expense. It comes off the total revenue that the hotel makes because it has an extra expense. Which is leasing the land or renting the land, even though it’s still going to me.
Nate Hambrick: So it’s just the tax implications. Are there other benefits to splitting those two into different LLCs?
Bronson Hill: Probably liability, I imagine.
Mike Stohler: Yeah, the biggest one is in owning hotel, there’s probably four or five different LLCs that go into owning hotels. Because you’ve got operations, you’ve got the land, you’ve got the mortgage. If you’re in the syndication, you have a holding company and then you have another holding camp company. It’s just, it’s crazy, but it’s all about sure.
You can sue the, this one company that runs it. But they have zero in the bank.
Bronson Hill: Okay. That’s a mitigation strategy.
Mike Stohler: Yeah.
Bronson Hill: Yeah. So I guess, and that’s really interesting.
And I think it’s interesting how you do that because you know, it will save you a lot on taxes and liability as well. I’ve heard some people would say, okay, now we’re going to take the land and we’re actually going to sell the land while we have the business. We’re going to sell the land.
We’re actually going to sell to somebody else knowing that there’s a 20 or 30 year lease in place by the business. And then that can pretty quickly generate you millions of dollars from the sale. And, but again, it kind of a challenge for the hotel though. For the business, because then you don’t own the land anymore, right?
And so there’s a kind of a window to win that kind of eventually as far as there, do you guys ever do that?
Mike Stohler: No, well, then it becomes hard to sell that hotel.
Bronson Hill: Right. Cause the people don’t want to buy it because they’re like, well, you don’t know the business.
Mike Stohler: And it’s people are like going, they start freaking out even though, like, I don’t mind land leases. Those types of things, my big one in Scottsdale is going to be on lease land. But it’s a hundred year.
Bronson Hill: Yeah.
Mike Stohler: Okay. All of us are not going to be around and I don’t care what happens in a hundred years to that hotel.
Bronson Hill: So would that be a strategy though? It’s you’d sell off something as a triple net for a hundred year lease. And just, Inca or the rents go up two and a half percent per year every year.
And, you know…
Mike Stohler: Absolutely. And well, what I’ve thought about doing is selling just the hotel and I keep the land.
Bronson Hill: Keep the land. Yeah, exactly.
Mike Stohler: So I do it the other way. Now I have, I just sit and make money.
Bronson Hill: Well, this is the thing too. We, we actually know a guy, uh, who’s actually does work in the Scottsdale area we were talking about before. And, and he loves, I mean, a lot of people, I know they just love cashflow.
Just give me something that steady cashflow, whether you’re really wealthy, your cashflow is awesome. Cause it’s just, Hey, what’s my cash doing for me? And then if you’re not wealthy, it’s like, this is like the first step to become financially free, right?
Is to get your, your passive income or your investment income to cover the living expenses I talk about in my book, fire yourself, which is just like replace your working on going with passive income. Well, how do you, you gotta get cashflow. It’s great to make a lot.
And that’s the problem with a lot of real estate these days, right? Mike, is that like, we’re going to make a lot of money someday, but like, I don’t know about single families. Cause like, it’s going to take 10, 15 years for it to actually start generating cash.
So going to things that are higher cashflow, but if you were to convert these into like a cap rate situation, we were talking about that earlier with cap rates of cap rates are just, you know, if you own a property in cash, how much cash percentage would you get per year and multifamily now, I mean, depending where you’re buying kind of four to seven ish kind of these days, maybe a little higher, which is, but that’d be pretty good these days. But what would it be in, in, in hotels? Just in general, obviously it varies, but what’s kind of, is it range if you were to convert that?
Mike Stohler: Yeah, 10, well, unless you go like high end, kind of like the eight classes, yeah, you know, if we were to buy a Ritz Carlton is two, oh, two, two and a half. Well, just because for instance there’s a resort here, their payroll is 25 million a year.
Bronson Hill: Yeah. Yeah.
Mike Stohler: So when you get into those, that’s why the REITs, the Blackstones, they’re the only ones that own them because they’ll take two and a half percent over a dozen different properties. Okay.
The ones that we talk about are that, that we would own are 10 to 15. If we did cap rate, we don’t do cap rates. God does the business, but if we did, it’d be, well, I think all of them are got eight to eight to 10.
And then we’re seeing some that are 12.
Bronson Hill: Yeah.
Mike Stohler: So that’s, that’s a minimum. You have to understand, you have to understand that if I had a hundred key hotel and a hundred key multifamily, that hotel just grosses so much more than a multifamily. Now, then now I have expenses and vendors and things like that, but it’s still, when you look at what you, if you put down the same one of your 30% and then what you cash and then what it grosses, the numbers are just so much higher.
Nate Hambrick: It makes sense. I was going to ask you real quick, Mike, cause obviously you’ve been very successful, not just in the hotels, but with a lot of other things. One of my favorite questions to ask people is what do you believe about money that most people don’t?
Right. Cause obviously you’ve been really successful. Hotels are not something most people know how to invest in.
So what’s something you believe about money that most people have either never heard of or wouldn’t, wouldn’t agree with.
Mike Stohler: Well, I wouldn’t agree with, cause I think everything that I, that I agree with this comes probably from, it’s probably in some of your books that I’m seeing in the background. I don’t do, I don’t like to do a lot unless I can, there’s an ROI on it. Okay.
The first thing it’s, it’s that you look at all three of us and we have that strange warp brain. How can I make money off of this? The entrepreneur said so, and then I sit there and it’s like, okay, where do I like to vacation?
Okay. You know what? I need to buy an asset, a hotel so I can go visit it.
And a lot of people don’t realize, I’m getting ready to buy something in Spain every time. Now I go to Spain or Europe, it’s a big expense. How can I business expense everything that I own?
Yeah. And then you do, section 179 is you can do the cost segregations, which is not as popular. It’s like, how can I mitigate everything?
So a lot of what I say, tell people really quick is don’t just buy something. Just, oh, this is cool. So what’s in it for me and my bank account.
Nate Hambrick: Well, you brought up a great question with that. Our cost segregation studies done in a similar fashion to multifamily is on a completely different schedule. Are there differences there?
Tell me about that.
Mike Stohler: It is different because remember, I own a business and not a residential property or multifamily. The, here’s the thing is I get to cost-seg every stapler, every lamp. I have 200 lamps.
I have how many bedsheets, I have how many mattresses, how many pillows, how many irons. How many hair dryers, how many, every thing and every single thing that you see in the entire hotel has a depreciation schedule. And they’re all different based on its lifespan. For instance, one of the hotels I bought about for 5 million, it grosses 1.5 million, my first year, cost-seg savings was 1.24 million.
Nate Hambrick: And I’m guessing you bought that with a decent amount of debt. So roughly 90 to a hundred percent depreciation if you factor in the debt.
Mike Stohler: Yeah, absolutely.
Nate Hambrick: Cool.
Bronson Hill: That’s amazing.
Mike Stohler: It’s amazing numbers and you just keep doing it.
Bronson Hill: I wanted to ask you, you were talking about the lifestyle business. I thought it was really interesting. And what part of Spain are you looking in right now?
I’ve been to Spain a few times.
Mike Stohler: Yeah, it’s Northeast. It’s called Costa Brava.
Bronson Hill: Okay.
Mike Stohler: Northeast of Barcelona.
Bronson Hill: Yeah. It’s kind of built under the water there.
Mike Stohler: Near the water Northeast of Barcelona. That’s amazing.
Bronson Hill: So for you, so I guess a lot of people don’t realize this, and there’s some lifestyle businesses that are not good businesses, right? Like owning horses or like people want to have a winery or they do things like, they’re hard to do. People do well with them.
Mike Stohler: Scuba diving shop.
Bronson Hill: There’s a lot of things like that where it’s like, you can do it. And it’s like, it’s cool. And I didn’t imagine Ritz Carlton, but like it’s a hobby.
But I like the idea of what you’re talking about because where you go a certain place, it does give you a reason to go there. It gives you something that you can do. It’s big with hotels.
Like, well, like you said, you’ve got a place to stay there. You can go. And have you done some other like smaller boutique hotels as well that are kind of like, 20, 30 rooms, like smaller kind of places that are a little more.
Mike Stohler: We had one with my partner, that same partner. We had one in Sedona, which is really nice. And that’s in Arizona, everyone. And the ones in Spain are the one is it’s a thousand year old castle state that was it 11 rooms sits on 42 acres.
Another one we’re looking at is it was only, it’s only 650 years old. I think it was built in, no, it was built in 1610. So it’s still older than the United States sits on 104 acres.
Has 12 rooms has the whole turret, you know, the whole castle, the whole. So those are the, what’s called lifestyle boutiques. So the investors that we bring on don’t ever want us to sell it. It’s a different approach because they want to enjoy and go there.
So they’re like, why would you ever sell it? Why not buy five more? People don’t say that with our comfort ends.
I can’t wait to go to Arizona state discomfort and said, nobody.
Bronson Hill: I know. Do you syndicate these or how do you find your investors?
Mike Stohler: Yeah, I syndicate.
Bronson Hill: So you have retail or minimum people come in and people work with me a long time. And he was probably some of the multifamily investors you worked with have come over and stuff.
Mike Stohler: People that want to diversify is the biggest thing. It’s like, and I just think it’s cool to tell my friends, I own a hotel. That’s what I get most of the time. I’m like okay.
Oh, let’s be cool. Give me money.
Bronson Hill: Yeah. How is your, your background, you have a military background, one of my business partners, Bryce. He’s a former special forces military. And he like, it really affects the way that he looks at a business and analyzes it and operates.
And like, how do you, like, what was your role in the military? And how do you feel like it impacts?
Mike Stohler: Yeah, yeah, it’s huge. And people said that probably most during when COVID happened. So I was in the Navy.
I was an ops specialist, OS. And when COVID hit, I said, and thank God, the hotels that we owned were what I call free States. They allowed me to choose whether or not to stay open. They didn’t force me to close.
And that’s how I learned, man, I’ve even changed the way that I even think about buying hotels. It’s like, I’m not to get political or anything, but why would I ever buy a hotel in a state where if COVID 2.0 hits, I go out of business.
Mike Stohler: Anyway, so what I did really quick is I sat there almost because of the military. They teach you that you never panic. You just sit, you analyze and say, okay, how can I get myself out of this situation? Or what do I need to do in order to turn the tables and make this work?
So well, Gavin Newsom actually did the best. I never thought he did something really great for us by shutting the entire state down in California to where you couldn’t even play sports outside. It’s crazy.
I’m like, so we, I actually had people call every single travel sports team and said, Hey, Arizona’s open.
Bronson Hill: Yeah.
Mike Stohler: Come to Chandler, Arizona. We have a huge sports park. You’re allowed to play outside and that kept us open.
It’s like all of a sudden I had teams that were four miles apart in San Diego travel all the way to Arizona just to play. And so we had those things. And then I was like all of the industrious, all the Regis, all those types of things closed.
So I did these big ads say for 50 bucks, you get shower, free coffee, internet, a desk. And how about all of you people that all of a sudden you have to work from home and you don’t have an office. You’re sitting at your kitchen table.
Your three young kids are now not at school. Your spouse is not at work and you’re going nuts. So I’m like, come to our hotels.
Bronson Hill: Yeah, that’s all right.
Mike Stohler: It made us, it, we survived.
Bronson Hill: Yeah, no, it’s like that, that song. I will survive, right? You just find a way to survive and move forward and all that.
Well, that’s really interesting. Well, let me ask you a kind of some forward question, a couple of questions here on this. And then obviously we’ve kind of give it a number of time. But where do you see, obviously right now as we’re recording this late April, we’re seeing tariffs.
Obviously I probably have some impact on you. Probably not substantial. You’re not an e-commerce business or something bringing products from, from overseas.
But where do you see kind of things going as far as, and especially with all the AI developments and as far as real estate investing. As far as hotel investing, what are some things that you, do you think it will continue and grow? Do you think we’re in for a slowdown? Do you think just even in the next six and 24 months, what sort of changes do you see coming?
Mike Stohler: Yeah, it’s a great question because I mean, my whole team’s analyzing this, right? So instead of buying something in Spain two months ago, or last month, we’re like going out, you know what?
We may hold off till the fall because we don’t know worldwide. We don’t know just what’s the, the alignments and what’s going on. And I don’t want, Spain to say, now we’re mad at the United States and now there’s a hundred percent tax on. If you buy something and you just don’t know what’s going on.
The US, if there is a recession, if interest rates stay up, what we’re going to see is the, that limited service type of hotel will suffer a little bit more. So it’s the opposite of COVID and COVID. Nothing really changed as far as financial, the stock market, the United States is still pumping.
But we’re going to see the mom and pops here. We’re going to see the people not taking vacations again. It’s kind of a little more like 2007, 2008, where the limited service, the normal mom and pop people are just not going to vacation because vacation is something you do when you have extra income.
Don’t just stay at home.
Bronson Hill: It’s become a very much a wait and see environment. I’ve seen it we’re going to acquire business and it’s kind of the lender. Kind of started holding out. It was a company that imports products and it’s just, this will happen.
And so I think, in a challenge to a lot of people. I mean, in different industries, people come on the non-profit. It’s really tight right now because of this, and it’s related to government work. And then government work is this.
And then in other industries, we’re waiting. We’re not going to hire people or whatever. It’s just an interesting time right now.
And every time it’s interesting and there’s always opportunity. But I guess when challenges happen, it creates new opportunities. We’ve got to kind of be able to reinvent and flex.
Mike Stohler: And just like the higher end hotels are going to be doing a little bit better because those people don’t care what the cost of eggs are.
Bronson Hill: Yeah, that’s true.
Mike Stohler: They don’t care what it doesn’t affect them. You know, the high end boutiques, those lifestyle type hotels, you get to a certain level where they’re still doing it.
Bronson Hill: They’re still doing it. And they can, Blackstone can pay for the eggs costing a little bit more or they just raise their prices a little bit because people don’t care. It’s a little less elastic on the price.
But awesome. Well, hey, Mike, just really appreciate you being here today. Just wanted to say we really appreciate your experience both in real estate and just what you shared about hotels.
Really a great time. Hope you enjoy the rest of your time in your cabin there. It looks lovely.
And good luck on the Spain, other acquisitions that you’re doing. And just so appreciate you being here with us today.
Mike Stohler: Thank you. And I’ll see you in a few weeks, Bronson, so you’ll be on my podcast.
Bronson Hill: I can’t wait, man. I’m looking for the two bald guys together hanging out.
Watch out.
Thanks so much, Mike.
Mike Stohler: All right. Thank you, guys.
Bronson Hill: All right, Mike Stohler, man. That was a great interview. Nate, what do you think, man?
I’d love to know some of your takeaways from that about buying hotels. And yeah, give me some feedback, man.
Nate Hambrick: Yeah, that was a blast. I learned a bunch of things. It was really cool hearing him talk about the different ways that he does cost segregation studies.
And it was really cool for me to know that you can still get a much higher percentage amount of depreciation with hotels than you can in multifamily. Obviously, Congress has been phasing out the multifamily bonus depreciation, which made me cry many tears of sadness and sorrow. So it’s good to know that there’s another asset class where that is still very much alive and well.
And then I’d never heard of a lifestyle hotel. So just hearing him talk about some of the benefits as far as not having to change his furniture for branding, not having to deal with some of the nuanced, annoying challenges that some of the chains have. So that was really cool, the way that he mitigates risks and the way that he thinks about that.
Bronson Hill: Yeah, it’s interesting. We’ve looked into this before. I’ve been very interested in hotels because of the cash flow I went to.
There was a big hotel lodging conference in California I went to last year. It was very interesting. And we’ve done all kinds of things.
We’ve done venture stuff, oil and gas. We’ve done real estate and multifamily. We’ve done a development process of living.
We’ve done all kinds of different things. And as long as we never ever do it, unless we have the right partner. And that’s one of the takeaways for me is he found the guy who’s like in this market with this hotel would come in and do it and it worked well.
And that guy was like on the docks for the loan and here’s our guy that’s in here. And so sometimes too, even buying a business, whether it’s a hotel or a local business, just getting somebody in there who really knows how to do that. Like it’s amazing.
There’s so many people that are very skilled in running a business, but they’ve never had equity. And so if you give them just a small amount of back-end upside, they’re thrilled, right? Because they’ve only been working transactionally for money.
So it’s great you can kind of have that partner. A couple of the takeaways I got is interesting right now about the wait and see approach. I’m seeing this more and more right now just with, whether it’s tariffs or recession or just things, people kind of holding off and waiting.
And so I think it’s not a bad time to invest. I think it’s just interesting to figure out what your goals are and then to really move toward those things. And so I’ve been kind of watching that approach and then just talking about the challenges that come up, right?
He said that there’ll be some of them may not have as many people traveling or other things they have about higher-end hotels are actually more solidified, which is different. There’s a lot of times different than multi-families, usually higher-end apartments and a lot of markets actually suffer a little more when times aren’t as good because people in A class move down to B and B move down to C and things like that. There’s a lot of dynamics here, but really great interview, really a lot to share.
And again, I just love talking to people like Mike because I always learn something. So hopefully you got something out of this and I really wanted to say to our listener, thank you for taking the time. We really are building this community here.
We love that you’re a part of the Mailbox Money Show community. And if you haven’t joined our investment club, you can click the link below. Also, if you haven’t checked out Nate’s book, new book, The 18 Laws of Leverage, phenomenal book, great book to gift to family members or kids or even read to understand how finance works.
And how to leverage yourself, your brand and your finances. So thank you everybody.
Thank you, Nate, for being here as well.
Thank you to our audience and look forward to seeing you guys on the next episode of the Mailbox Money Show.
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