I started managing this six unit building at the time I was practicing law I had my own Law Firm 4 few years we have 320 active properties we're in the process of onboarding about 20 properties when you look back at that time what was the main lesson that you took out of that difficult time I'm a lawyer I'm risk adverse I had a very set path Co made me realize that there is no set path running a business you do whatever you have to do you have to adapt and you have to survive how are you as an investor of a multi-unit property able to get the best of both worlds in terms of the financing for the long term while also getting the cash flow and liquidity of the short-term we never raised money we never borrowed money we just needed to keep growing it's not every day that you get to talk with someone that's doing this that also has that low background what are some of the things from a liability perspective that operators might be missing out on if something happens who's responsible and did I do everything I could reasonably do to protect whoever I owe that obligation [Music] to hello everyone and welcome to the hospitality Edge podcast where we bring together what we think are two sides of the same coin real estate and hospitality and where we really bring here leaders entrepreneurs investors operators and Founders in the space so they can tell us more about the stories uh of you know how they've built their companies the lessons that they have learned along the way maybe even some of the mistakes that they have made so we don't don't have to say to make those same mistakes ourselves and uh very excited here to be with uh duni co atj uh DC uh duny thank you so much for being here uh can you please tell us where you're taking the call from and at a high level what you do for a living and what so is all about and I messed up the pronunciation twice but you'll do it right uh thank you again for being here okay no it's my pleasure um and no worries it's just a nickname so um if you screw it up it's okay uh so I am sitting in what is going to be our new office uh although we don't have much furniture yet uh we are moving in here we're very excited because well we're at 411 East Capital which uh for those of you you who know Washington DC we're literally for blocks from the capital uh which we are preparing for Halloween on East Capital which is a huge deal um so uh yeah so that's where I physically am this is where soan got it start um in Washington DC um this is where I live and where at the time my partner Nicole and Co my partner and co-founder Nicole uh lived uh so we are a Hospitality property management company uh located in Washington DC and the Tidewater region uh which is the Norfolk area Virginia Beach sanbridge uh which then connects through to the Outer Banks uh and then we have sort of um we call them OMS other markets just like a spattering of properties in other markets that people have asked us to manage so we help them with their Management in a couple of other markets uh we are a Hospitality brand and with that um associated with that also a property management company uh we are very very Diversified uh we as I said started in an urban market doing a hybrid approach uh which means doing both short-term and 30 plus days um and then uh during covid had the opportunity um to expand in Norfolk uh and then really expanded down through Virginia Beach to sanridge um which is like true vacation rental and so we sort of are as I said completely diverse all the way from like the urban micro Studio to like the 8 bedroom home in a vacation rental market wow and also uh quite quite large operation as well past uh 300 properties on their management yeah we have uh 320 active properties we're in the process of onboarding uh probably about 20 properties uh so yes we are growing all organically um yeah so we've grown from I don't know we started probably with about 30 units uh in June 2019 and have just uh been prodding P prodding along yeah just been cing and we'll have to dig deeper into that and and understand how that happened but before we do that help me understand how a lawyer ends up working in this Hospitality vacation rental industry yeah and not even a real estate lawyer um but a Canadian trade lawyer so yeah it is it is very strange but basically uh close to where I'm sitting now uh on Capitol Hill um my husband bought a building around the corner from our house uh that when it was delivered the developer suggested that we furnish it and put it on Airbnb and this was 2015 and we said what's that um anyway so we tried it we furnished all the units and we put it up on Airbnb and Springtime in DC is like the best time time to be doing short-term rentals uh and Capitol Hill like this unit was five blocks from the capital so needless to say we made a lot of money in a very short time um and so I started like most people I think in this business just kind of started managing this six-unit building at the time I was practicing law I had my own Law Firm at that time um and I had two small kids and so I couldn't really man six units and so I uh this guy who was working for my husband at the time found me guesty back in 2015 and uh I think they had just started and through that I was able to sort of uh maybe perhaps using my logic skills from uh law school figured out a method by which I could manipulate the calendars and um do both short term and Midterm so plus 30 days and my rationale at that time for doing that was that um I couldn't manage six short-term units I just I couldn't handle all the turnovers I couldn't I just couldn't handle it um and so this gave me some reprieve uh because you know if I got someone in a unit for three months then I didn't really have to deal with them um and the short stat you saw them as a way to fill in the gaps or as a way to make more money when it was you know High season and then the rest of the year just kind of like leave it I started not really knowing what I was doing so I started just on Airbnb doing um uh shortterm and then I sort of figured out all these other platforms where I could get these midterm renters some of them have you know gone away we used I mean corporate housing by owner I think is still around but it's not a very active site using uh sublet back then which then was purchased by Nest pic which was then purchased by blueground so you see like things are changing so quickly um and so yeah it just kind of happened and then I realized that um in the summer I'd like to go to Canada where I'm from and uh and so I would fill the fill the building with interns and lead for the summer so it was partially good time good time to go to Canada by the way good time of the year to go to Canada yeah yes well especially wiip Peg um anyway for me it it I started doing it out of necessity and to relieve some of the stress but then I realized yes DC has a very distinct Rhythm and you know there are certain times of the year where the nightly rates are so high it's wor worth the stress you know and then other times like if I could get a midterm renter from November through to the end of February then that would be great um because the rate nightly rates are low enough that it the monthly rate was almost equivalent uh and so I started doing that and that's what I was doing and then I got sick of it and at the time um um Airbnb was sort of um highlighting professional hosts which I think they're doing again um and I went on there and I found my now business partner Nicole so I um but to be fair before I did that I went out into the market and to find someone to manage my properties and at the time you could only find people that either did nightly or monthly nobody did both and so there I was looking at this thinking okay so you want me to give you 20% and I'm going to make about 20% less profit because yes there is that whole idea of backfilling uh so even if you went with a monthly provider they wouldn't backfill so there'd be so much more lost Revenue uh and so I decided I couldn't take like a 40% cut in what I was making that just didn't make sense I might as well not practice law so then I I saw these co-hosts so I thought okay I'm gonna see if this will work so I found Nicole we started meeting we got along great um and five years later we still do um and uh interviewed her she was doing um uh lease Arbitrage at the time she had her own business doing lease Arbitrage um and so she was only doing shortterm she had no exposure to uh midterm rentals so I taught her how to do that and how to work the calendar right because sometimes you would have to like move people around and things like that which is again not as easy these days uh but um so then I went home for the summer and left her and it was great um and then I came back and um had lunch through my husband was someone um who I had no idea I didn't know who he was I didn't know anything about him so he asked me how you know about our property and I told him how I was managing it and he was very interested in this hybrid model for his properties okay uh turns out that he had I mean like six properties at the time I want to say and when I say properties that you know this is not this is DC so these are not big vacation rental properties these are you know six to 12 units within one building so a multif family but uh not a huge multif family and not a huge house uh but a lot of units and so um anyway the long and the short of it is I offered to introduce him to Nicole and my husband was like you can't do that you know you can't like develop a process um find a client you know train someone in that process give her the client and walk away you're going to have to participate so um I did that uh we started working together we created the brand we created the website and then I was supposed to be relatively hands off uh but then Co came and uh there was just so much to deal with uh that I started working in the business and then we started just to grow so wow okay it was just kind of progressive yeah no and I want to I want to break down the the the timeline even further because you did a great job at at helping us understand you know how it happened progressively but but then like couple of things first of all when you're when you're looking at management companies to potentially give them your your property and and you realize nothing quite solves for what you needed was there something other than um the fact that no company was doing both long-term midterm and short-term that you identified as an opportunity where you decided to go find a co-host instead or was that the main thing that you couldn't find out there yeah I didn't know enough uh to know anything but the numbers at that point um what I did know though was I knew the clientele was pretty demanding which is one of the reasons that I chose Nicole without knowing her was because she had worked as a bartender at the old debbit Grill which um is I don't know if what still is but at one point was the highest grossing restaurant bar I think um it's right across from the White House and so the clientele it's extremely busy and it it is extremely demanding clientele um you know there's a lot of lawyers in this town There's a a lot of lobbyists there's a lot of people who like you know want things a certain way yeah um or are in high stress jobs and don't want to deal with certain things so all that to say is that my building had at the time certain things certain to make people comfortable you know what I mean I guess I had certain standards uh but I didn't even know enough to know that they wouldn't have necessarily met those standards okay okay it really was just a numbers thing MH okay and then you uh essentially decide that you'll participate right you'll you'll start this new project and and this this is born what what are some of the things that if you think back about that brainstorming phase of of of you thinking about the type of company you wanted to build and the type of brand that you wanted to build like what what did you want um to be unique about about your company your brand or what what were some of the things that you had envisioned as far as like we're gonna differentiate ourselves through doing this I mean all of it sounds so trit now because it's all been developed by people but we really we wanted to um have concierge level Service uh we wanted you know to back up a little bit I for a certain time period of my life I worked at a Bay Street law firm in Toronto and um and met my husband moved to DC I continued to work in Toronto for six years living in DC uh and only stopped after my second child all that to say that I understood what it was like to have to travel for work in a high stress environment leaving home leaving maybe a kid at home sometimes I took them but the point being is that um I tell this story it's kind of boring but I used to stay at this you know once I had to give up my apartment I used to stay at this hotel and I used to stay in the same room every time I came and that sort of like need to you know I had my route to work I had the things that I knew what I was doing but more importantly what I noticed is one time I went and my room wasn't available and they put me in a the same room but it was turned around the other way and when I walked in I was thrown off because I now everyone's going to know how neurotic I am but anyway I I uh I you know went to hang out my stuff in the same place i' always do but it was on the other side so it was it wasn't like a huge deal but I remember noticing that so we wanted to create a place where people that were coming to DC you know I don't know argue with the Supreme Court you know where we would be like what is important to you where do you want to stay like is it important for you that you have a grocery store near you or is it important for you that you have this near you so like really provide that concierge level service and then have like on the ground people to service what they needed um so that was one aspect and then because there's so many people that come to DC repetitively right living on the hill or even in Dupont or wherever uh you know there's a lot of people that will come for like three days out of the week uh so we had conceptualized uh the idea of a membership of some kind so we really set out to create like a known operational High service brand that's so interesting and then you you you end up finding this owner that uh gives you that multif family asset of around Properties or so and then and then Co hits you say and then that's where you know what happened then well it just well first of all like I think our primary um obligation is to generate revenue for our owners and that became very difficult uh and people weren't traveling and so uh and we didn't really have that much of a Workforce um and so we I mean you should interview Nicole she is she is a true entrepreneur she figured out um you know we started um changing units around the configuration of them because a lot of students once you know even though school was online if you lived out west and you went to let's say American or Georgetown or GW you really needed to be on the East Coast right so so there were there were kids that were coming and so we changed them all a lot of them into like dorms we like moved out the queens and KingSize beds and moved in single beds and we just we looked for renters wherever we could we were um we were new and so you know there was there was a lot of scamming going on we got caught up in some things that really that's when being a lawyer came in handy um so just were still really learning and yet we were thrown into this like absurd environment so none you know we couldn't exactly Implement our business plan we just had to survive and figure out how to generate revenue for our clients and and ourselves wow and and tell me something because you mentioned that you know at first your your mindset was I'll put someone in place right that became your your partner and then uh you would most likely you know continue practicing law and and doing other things but then you say that when covid took place and there were so many things going on that's when you kind of is that is that when you left your your job no so I mean this is probably TMI but after my second child working in Toronto became unsustainable and so um I was actually sorry my own Law Firm yeah right right right right right okay was your La you're right yeah so I was practicing Canadian in trade law but living in the United States and I also was in-house counsel to a Canadian startup that ironically they specialized in the hospitality industry and so covid hit and they had to do a complete pivot and they actually uh so they were a part-time Staffing they are still they're they were a part-time Staffing platform for the hospitality industry and they pivoted to healthcare oh wow so that actually still took up a lot of time okay um yeah so so so was it that you decided to um to just start investing more of your time on on the business when Co happened because you just saw that you know help was needed and resources were limited and you know Talent was limited and and there were a lot of challenges and and and and at what point I'm just curious to know at what point do you or or did you ever stop your uh law practice ice to focus on on on the business the hospitality business uh full time uh yes so probably about God time goes you know I would say probably two years ago I started so I stopped really practicing law per se like having my own practice and then I still was in h counsil for staffy while I was doing this but this is like I mean we have 22 employees I mean this is a full-time job yeah yeah so it's just that as we grew uh I was just needed more and more and more and so you know I'm not trying to answer your question but it wasn't like I said to myself I'm G to stop practicing lot I'm going to start working here it was very Progressive okay so um yeah there wasn't there wasn't a day where you decided oh I'm gonna stop doing this focus on that it just happened and then what did Co teach you as far as that resour resourcefulness or or just you know having to like you were saying just go after guests wherever wherever you could find them like when you look back at that time what what was the main takeaway for you uh or the main lesson that you took out of that difficult time the uh running a business you do whatever you have to do you just you have to adapt and you have to survive kind of like in life but um yeah I think I don't know what did Co teach anyone I mean hopefully it taught us resilience but you know I am not an entrepreneur I'm I'm a lawyer I'm risk adverse you know I had a very set path um so I guess that Co made me realize that there is no set path and uh sometimes you just have to go with it you just have to go where the path is leading you and see where it takes you and and what out of all the different things you try to get guests um during times where there was not that much demand for travel and whatnot what what did you think was the thing that allowed you to survive like was there one thing that you like okay if we had not found this way of getting some some guests coming in or if we had not then done this you know U sort of Crisis approach to cost cutting or whatever that might have been we would not have survived the cost cutting thing is very funny because you know I tell you we're trying to create this brand that you know really focuses on the customer and and the senses so the sensory experience of the guest and uh during covid we kind of had to pull back on some of those standards and I just H remember that I was just so aass at the fact that we had single ply toilet paper and me and Nicole got on this big fight I'm like we can't have single ply toilet paper she's like we can't afford tup toilet paper so anyway yes that sometimes you have to cut costs in order to keep going forward I guess yeah it's so toilet paper L your expectations cut where you have to okay and then when when um do you think that for you I mean at this point where you even thinking about adding more properties uh as you were also trying to just survive because again we're we're talking about like big big gap between where you started and now with 320 property so during Co was it just survival or was it survival while also thinking about hey let's grow this yeah I mean I think growing a company there's various ways obviously that you can grow it and you have to analyze what is the best for you um I think that uh you know the idea we we we never raised money uh we never borrowed money we just needed to keep growing in order to generate more Revenue because that was the only way we could grow mhm uh so you had to grow to survive well I think you don't have to I mean it really and I think this is an issue that our business really has it it I find it very interesting I had I don't know what the right answer is but certainly you know we've been approached probably once a year by private Equity um and so I think that first experience uh uh was very um uh determinative for us because um you you realize that like we're really just a service industry you know some people come into this so either you're in it for the real estate play and that that's great chances are you're not great at Hospitality which you know is one thing but you know you will probably do well and and make money because real estate is a pretty solid investment uh and so that's one play Then another play is you know if you live in a vacation rental place and you just want to provide a service I don't think you have to grow but um I don't think that either mine or Nicole's character is um just by virtue of our characters just continuously want to improve something and so you know uh and so we just kept moving forward and people kept asking us to manage their properties and so we kep saying yes and you know there's always um the market pretty much also drives a lot of it so like what's interesting is during covid uh we did get some larger clients because they also needed occupancy and and we seem to be pretty good at getting it so uh we that's when we onboarded some bigger clients uh and what's interesting is we just saw like a big um blip in in condos which you know condos are hard because most of them have HOAs that require a six-month minimum but because of the market people can't sell their condos and they for would either have to leave or they've gotten married and they no longer want this small condo at downtown DC uh and so we've had a lot of inquiries for condos um and another interesting reason that people do furnished rentals in DC is um by nature of the guest so if you're thinking of selling your property in DC uh but you want to wait till the markting conditions change which arguably they are changing but you know two years ago or a year and a half go um you don't want to rent your place unfurnished and the reason you don't is because you don't want to get a professional tenant in there and then you can never get them out right whereas if you're renting furnished on corporate platforms chances are you're not getting someone who's even interested in staying in DC so you know your chance of avoiding that scenario which is a real scenario um so people come to us for that reason or if they just lot of property and they uh you know need to go through the permitting process which could take two years they don't again don't want to rent unfurnished and then end up having to buy someone out so they come to us um and we help them furnish and yeah and then we put them up on our platform no that makesense and and I'm curious to know because you mentioned that when when private Equity approached you a couple of times there was something that click there is is it clicked in the sense that you know you realize okay this is this is a business that that can be valuable throw it okay it's actually the exact opposite and this you're right thank you for bringing me back here I realized that we're not we don't own our assets other than you know I own that property but we're not in this to buy property and so what we are is we're a service company and the multiple you can get for a service company what are you selling you're selling service contracts so it's like buying a doctor's office or a law practice right those they're just service contracts unless you have a brand right uh and so we didn't set out to develop a brand for that reason uh but the long and the short of it is like at 30 units a property management company is not with that much so you're almost better off continuing to run it and generating income for yourself um and so you know that first due diligence with that uh potential purchaser was very eye openening for us because remember it's not like we did all this research and we entered this industry because this just kind of happened so um we've been learning as we go along and and I think as this industry becomes more and more professionalized it gets harder for those small companies um to compete because it just it's you know there's so many professional tools and and then they incorporate these huge expensive Tech stacks and they're not making enough money to cover their Tech stacks and you know so all of a sudden at 30 units it's a real business and if you just went into it for the hospitality like often what we hear from people with like 30 to 50 units is like I hate doing the books and I mean you know just the administrative aspects of running a business any business right you don't think about that when you get into it so so a couple of things there one what what changed strategically for you from that point onwards from the moment you had that due diligence with a potential potential buyer like what what clicked what changed was it like let's dou down the was it let's just continue operating and running this and getting that income like you were saying but like what what changed specifically well I think we realized um one that we needed to grow and continue growing because that was the only way to fund all the things that we wanted to do was to create sufficient Revenue to fund all the things that we wanted to do uh and that at the end of the day if you if we were successful in creating an operational brand in the disperate market a sort of like upper middle class brand I guess is really what we are I mean we're not pure luxury although we are starting to get some very very high-end units and homes and so um I guess that's the evolution part uh we're really good at what we do because we have focused on being an operational brand and so we have focused on operations so while we knew we had to keep growing we didn't want to just grow until we could provide the level of of service SLC comfort that we set out to do because we didn't want to dilute our brand and so we've really focused on perfecting our operations and let's talk about that so prior so you're at 30 properties now you're thinking we need to perfect our operations right well not now back then when okay but at that point we thought we could just be a Hospitality brand okay and in fact um the person our big first client he had a property manager for his buildings so we really could just were a Hospitality provider we were basically finding the guests putting them in the units and hosting them but that becomes really difficult on a number of levels uh first of all becomes difficult for the building owner remember we're not talking about huge Class A multi- uh family we're talking about like six nine 12 units uh and so um during covid we discovered that we had to become a property management company okay so up until that point you were as you said you were it yes and I think that so talk to me about that that what what had to be put in place and um you know before you could say okay now we're ready now we're ready to grow oh well had well I think operationally we discovered that we could not control the guest experience if we didn't become property managers okay because um even now to be honest we've built it an in-house maintenance team because it's impossible to um control third parties so if you're a guest and your toilet's broken and we have to call an outside plumber and we tell you oh the plumber will be there between 1 and three and the plumber doesn't come I mean what kind of guest experience is that right or they come and they're rude and they don't put the shoe things on and they make a mess or whatever you know what I mean so our in-house Lance team is very aware of our Hospitality standards and they can communicate with our customer service team who can then communicate with the guest and ensure that whatever is occurring is not fully upsetting the guest experience gives us some control over the guest experience so so that's that's great and and and eventually getting to a point where you can afford to have all of those things in house but when you first were thinking okay we're we're doing this transition from Hospitality brand to property management company did you start by Outsourcing some of these things cleaning maintenance and then brought it on on like C we never cleaning we Outsource but we more find our cleaners and help them build their own businesses okay and then they are they're not they are 1099 but um and they have their own businesses they work for other people but they are very much part of soier um okay and similarly you know we had third party providers that we we certainly used third party providers yes uh but we had certain people that we used okay so it's kind of like a like a mix in there and then what what was the the most challenging part of making that switch from Brand Hospitality brand to to property management company and Hospitality operations company yeah well it's a lot more operationally challenging and you have a lot more responsibility and a lot more potential liability so uh so then we focused on perfecting that uh and discovering sort of what was the right model for people because the truth is is like it a lot of the short-term rentals now in DC are people's primary homes so a lot of them are accessory dwelling units or English basement or that kind of thing where the person is living in the unit so you're not really going to manage the property but you're managing the unit so you're not going to be um executing HVAC um contracts on their behalf okay but you have to make sure that the HVAC works for the guest so it's you have a little bit less control so the more control you have the better you can control the guest experience um yeah but again the more diverse your portfolio I mean why do you think everybody wants to get into class A multi-units it's a lot easier from all perspectives first of all you don't have people running all over the city they're all in one building you don't usually have to do Property Management right whereas if you're in these disperate environments and you have to do all those things it's operationally challenging that's interesting and so what what was sort of that well before before we go there I I want to understand from a liability exposure perspective because it's not a day that you get to talk with uh someone that's doing this that also has that low background what are some of the things that for you were must haves before you even thought of continuing to add clients as far as protecting yourself from a liability perspective that you think operators might be missing out on when they're not thinking about this as deeply as you for sure have yeah I mean uh well obviously general liability and Eno Insurance uh and then the contract right that those are the the places on the owner side that you have to be concerned about and I guess general liability also protects you from the guest side uh but as a property manager you are the agent of the owner so you well you owe a duty to the owner it's actually the owner that owes a duty to the guest and you're just an agent um so but once you start in Property Management um then you're you're responsible for a lot more things and when you're responsible to another person for certain things there's a potential more potential for liability um and then it's Our obligation to protect the owner so um from a liability perspective I think um you have to be careful who you let in the units so before we started we were talking about verification different verification providers uh if you're doing midterm plus 30 days that's a whole other ball game because in most jurisdictions once you go over 30 days you're in a landlord tenant relationship which is very different than a transient relationship so I don't know if I answered your question but I think you that's one thing I would fle for the people that are just jumping into 30 days if you are in a jurisdiction that is very very Pro tenant you have to make sure that you're um crossing your tees and dotting your eyes uh and that you are going you're screening the tenant you're doing all these things um or that the platform from which you're getting the tenant is screening them somehow or that they're executing Contra contracts with corporate clients that you know in the contract are taking on liability for things that could possibly happen you just want to think about it like if something happens who's responsible and did I do everything I could reasonably do to protect whoever I owe that obligation to and is there something something that you wish you had in place either from what you just mentioned or other things that you sort of uh realized afterwards again from a liability exposure protection perspective like something that when you look back you're like H this we put in place after we had an issue but I wish I had put it in place from day one I mean yes we had a very very big lesson during Co when we just started and we didn't really know what we were doing and we didn't think of ourselves as property managers we thought of ourselves as Hospitality providers and we had somebody move in that didn't move out and then you know they had started as a short-term guest off of Airbnb uh and then came back to us and said I mean we were so green and said you know um I need to stay for another week or can I pay you weekly and we let him into the unit and he never left and it was it was a terrible experience that was one of those Co lessons I mean there were just more people out there taking advantage of people and you know people were desperate people were isolated uh so that would be the biggest lesson we learned so what what what how did you solve that well uh a claim on our Eno insurance and a long legal battle with to get the tenant out okay interesting wow tough all right and then let's let's go back to the the concept Rea to you know uh sort of that that give and take um you know we talked about um a guest app I don't know if we were if that was on the show or it was before when we were chatting before we press record yeah yeah having a guest app we went through that we sort of looked at it in 2020 2021 as well as we were of the view that we could not do direct bookings unless we had some kind of verification mechanism um and I really wanted to have Assurance for the owner so what happened something breaks what happens if there's an accident or Not an Accident resulting from a guest when you're on Airbnb you have the host guarantee when you're not on Airbnb what do you have nothing so that is why we went with what was once called super hog because they allow you their verification is not as good as some other companies uh but it's sufficient for what it does which is if there is somebody a bad actor the second you ask them to upload their ID most of them disappear uh but they also if you verify a guest with them you pay us an extra fee and then that stay is it's not insurance but they will cover any damage resulting from that stay and so for me from thinking about liability and thinking about protecting the owner's interest I didn't feel that we could do direct bookings without that and then we had a really hard time uh coordinating the guest experience with a guest app and that because remember this was 2021 I think uh and so things have evolved a lot since then but um yeah I we got so much push back because we were using a guest app that had an identi we were using a verification system that had an identity and we were using a platform to book it and so the guest had soour had barely any visibility in the transaction and so anyway we kept the guest verification and we dropped the app that's interesting yeah no we we this is something that uh that has to be thought of cuz the idea of getting direct bookings can sound good in theory but in practice it does come with a lot of additional risk and exposure that has to be thought of as well and um and let's let's talk about that a little bit so the the concept of a brand you you were saying earlier how as a as a small to midsize property management company you know your asset is the the contracts right the service contracts you have with the owner and that that in and of itself if you're small to midsize is not very valuable and you said unless you have the brand how do you attribute value to a brand what what does that mean to you and why why and how do you think that that actually you know brings more value to a management operation well if you create a known brand a brand that's known in the market uh and you do that by providing a consistent Service uh and a consistent experience uh I think I mean the one thing people return to hotels for is that consistent experience so um you know especially when you know if you're traveling for a long time or if you have kids you're tabling with kids Etc a hotel is not necessarily the best place for you but at least you know what you're getting and so I think there's a lot of companies out there that are trying to create known Brands uh so that they know if they book a soour they know they're going to have certain pillows they know they're going to have certain Linens they know that the unit is going to be clean for the most part unless something happens and if it does we'll do everything we can to make you comfortable and make it up to you um you know you know you know that there's going to be somebody available if you need them do you know what I mean you we're trying to provide that security and comfort to someone so the value of a brand is uh the value of being able to attract guests and fill your units and generate Revenue um so that is the added value so let's just say we were to stop growing today which is not happening but we kept our 300 units and we excelled we put all of our effort into excelling in what we do the jurisdictions are large enough that there's value to that so if you want to purchase us you know that we have a dedicated following now you have to maintain those standards like you know I I just think there's a value in uh Market awareness right yeah no absolutely and now when it comes to let's say you thinking about this brand right and then building it and developing and and scaling also the operation at the same time you have a couple of things right you you have consistency which you mentioned that's you know what a brand is right it's it's a a certain set of associations between something that is consistent and and your brand and then the thing that is interesting is that you have kind of like two sides of a of building a brand in in in the property management space because you have the guest facing side and you have the owner facing side and then you know there's only so much budget in place that you can allocate towards either choosing to what some people would refer to as trying to compete with Airbnb if you're trying to go on the guest side to yeah but yes and no I mean I don't really I mean I like airb I don't know why everyone's so against it I mean we've built our business on Airbnb and they do provide services like you are paying for it but they provide services for both parts of the transactions just think about the processing fee I mean they are provide services providing you you know some verification they're providing you some insight into the guest they're providing you that host guarantee yeah that's that's worth a lot for sure but they are just a platform right they are a Marketplace uh and so I see them as a partner like yes I do want to get more direct bookings but I don't know that we'll ever get to a place where we're not going to have to you know everybody's on Airbnb it doesn't matter how even the major Hotel Brands get a good portion of their bookings from OTAs so it's true that you know it's it's I agree with you on that view but my question was more around okay so you you have a limited marketing budget you want to build a brand and you can do that on a on an owner facing side of things to try to get more owners or on a guest facing side of things to try to get more guests direct how do you uh see those two sides of of that brand in terms of where you deploy most of your resources and your capital and in your case was that even a need to to to invest resources into the owner acquisition side or were you just so good that you know referrals were just coming at you I mean I'm I'm not very boastful but uh yeah like our growth has been organic and we focused our resources on the guest and not even necessarily guest acquisition I mean the first few years we didn't have a marketing budget it was only last year that we started putting any effort into marketing and it still is is relatively small um we're very focused on providing excellent service and I think very old school I think if you provide excellent service on either side of the equation you will continue to grow and you will continue to get brand recognition and so all of our resources have really gone into you know it took me three years to find a our Linens wow because I wanted a certain experience for the guest in our Linens which was impossible to provide in a disperate environment and really that experiences 100% perkel long staple Egyptian cotton uh which you can't do in a disperate environment because how do you get the sheets to not be wrinkled but we did find eventually a product that may or may not be 100% gone but feels like it is and therefore doesn't wrink go so we have put like I said so much of our heart and our effort into perfecting the guest experience so whether that be on how do you go fix the toilet or how do you uh answer a guest or how do you make sure that the guest has a comfortable night's sleep all those things are really really important to us and then on the owner side what allowed you to scale so fast I mean is it a lot of owners that have multi-units or one client for you represents on average more properties than for the most than for the average you know property manager or again I I I agree you know service service is good referrals come but yeah for DC it is a lot of of small multif family owners and individual properties uh but we probably get like five five inquiries a week from Individual right because DC is a very restricted Market uh in the Tidewater area it was more um uh investors and so we've added larger multi-units which has allowed us to um um increase our um inventory okay okay and it's all been organic as in like they reach out to you they learn about you from someone or they go to your website like has there been any or networking networking right right right so it's not it's not like you've been out there trying to chase and get owners they they've I mean of course we are but uh but we haven't really committed Financial Resources to that I got got it okay so so we're always looking for great clients uh and um yeah I was just trying to find if there was something that you had you know cracked the code or something as far as homeowner acquisition that because some people are very technical on that side you're you're more so on the guest side which which is amazing to see that when you care about the service like the results will come because yeah you know I I I always repeat this saying you only sell because you don't know how to Market you only Market because you don't know how to do product or service if you do product or service well you don't need marketing you don't need sales the product should sell itself so um so that's that's what I believe I believe if you provide a good service people will come to you a that's amazing and and I want to talk on something too which is the the intersection between long-term rentals midterm rentals corporate housing shortterm rentals I see a big opportunity in that you know looking looking forward at the industry primarily because of how many Industries are being affected by regulations and you know just overall the stability that in some cases that that recurring sort of uh Revenue can can bring to the table but it's hard to ex execute right cuz even from a tech stack perspective I mean of course that's changed a lot that has changed a lot from when you started to now no maybe not okay it hasn't and and and and like from an OTA and distribution perspective like talk to us about what are some of the challenges in trying to be that company that bridges that Gap and connects you know all those different sources of of of bookings yeah I mean it takes a lot of um it takes a lot of work it's complicated uh and so you know back to co I remember talking to my neighbor who had just sold his tech company and I said Steve can you just go build us software that Services short short-term rentals and Midterm rentals right uh and he he's like no I can't do that and he said and I said well should we build it and he said no you should not build it he said you you don't have the expertise and you can't like it's not just building it you then have to like manage it and you have to continuously improve it Etc so um we have operated two different softwares the since our Inception so we have traditional property software and then we have guesty What would guesty have from a features perspective for you to be able to let go of your other PMS you know you to have me back on in a year and I will tell you because you know we have been out there in the market searching for some relief um on the tech side uh and everybody is trying and maybe the product is out there and I just don't know it which is possible but uh traditional property management software uh one is the ability to tenant screen to the level that you need to tenant screen for an actual tenant then execute a lease then the lease goes into The Ledger right and then you have a running Ledger the and you know on the tenant side also there's a lot more expectations I mean these multifamilies have like the big multifamilies have been putting so much money into their tenant experience right uh and their software is now unbelievable I mean I think they they're getting some push back now at least in DC on the fees they're charging uh for all this Tech but uh you know the ability of the tenant to go in and pay their Ledger right because they're not paying it all up front they're paying it monthly right they have to be able to go in on the first of the month and pay um so these are all all things that you can't really do on traditional property management software and then there's the task side also the traditional property management software has um you know come much I don't know if it's much farther and I'm not even familiar enough with it to say that like if you if you just have a vacation rental SL transient short-term company I I think there's certainly fabulous software out there uh but the way we've built our company we've just built it on the basis of these two softwares so interesting and um that that's super interesting what what else have you not found a solution for from a from a tech stack perspective what else is something that when you look around at all of the pieces of your Tech stack you you're like hm I wish there was something that did this one thing but I just haven't found it uh yeah I think there are some softwares out there that again that do it uh like I really what's important to me is like the task aspect um and making sure that that gets build properly uh without human intervention so if someone puts in a task how does does that task then get dispersed how does it get addressed how does it get communicated to customer service and the maintenance team and then how does that cost get properly apportioned and I think there is software out there that does that uh but it's the connection between operations and the guest experience uh that we've had to manually address and that's interesting been operationally challenging uh and has required a lot of Human Resources interesting and then what what do you think that this model of combining midterm long-term and shortterm uh some people are referring to it as Flex Flex lising where where you where you have both but like what do you think is the impact for our tagline has always been flexible furnished relasing oh okay because that's what we do right because and again it's by virtue of experience a lot of people come here and they think they're coming for three months and then next thing they're staying for six months I have somebody who moved into my building uh who came to work for someone on the hill uh she thought she'd be saying three months she's now been there five years she's been there five years so you know she came for three months then we gave her a year lease then I mean she extended a couple times then we gave her a year lease and she's just been signing your leases ever since then so again like we're focused on the guest and their needs um and and the owner as I said but uh so they don't know what's going to happen they're in a transitionary state unless you're doing a again purification rental in which case that's probably not happening but um yeah so we just adapt to what our guests need and we have the capability to do that so so because because you also have the the perspective from the investor side I mean you started by managing that building that your husband had acquired nearby so what do you think is the impact of this Flex leasing model on the investor side because the way I see it is you know you always have more liquidity when you do short term or most of the times uh and then but on the long term fin not the financing there you go so how are you as an investor of a multi you know multi-unit property able to get the best of both worlds in terms of the financing for the long term while also getting the cash flow and liquidity of the shortterm like what does that look like depend I mean it really depends on the investor the size of the investor you know like if you're talking about big institutional investors I mean they are so Savvy and really I think they're either trying to generate Revenue in the lease up stage or uh you know when they have to transition from a construction loan they need long-term renters because they need that consistent Revenue so uh I mean there's people a lot smarter than me in this and I think at that stage you have to be very very sophisticated to understand what their needs are and how you fit into them like for instance placemaker when they started and I think they're still doing this why Hotel like they came from a very very large uh I don't even know what verando was or verando um but he understood the financing structure and how he could fit that in so what they did originally This Is How They started is during the lease up phase they would literally go in and they got special um zoning from the city to do this for a defined period of time and they were able to do short-term rentals while the building got leased up and then they would leave and they'd go to that developer's next building but I think they obviously I think they still do have a little bit of that business model but they've now really I mean they now are in actual buildings um and doing mostly I think corporate rentals but to get back to your original question which I find fascinating is the convergence of all of these things right what is the difference between an extended stay hotel and a part Hotel tell uh you know what makes a short-term rental a short-term rental as opposed to a midterm rental you know what I mean and as the owner when you're constructing the place that's something that you have to consider do you want to be able to do midterm because if you do you need a full kitchen pretty much uh you need washer dryer like those are the things that are important to people if they're staying for a long period of time and one of the reasons they're choosing to stay in a part hotel instead of a um an extended stay hotel right so um I don't know where it all pans out and where all the distinctions are but and right now like currently from a from a revenue management perspective in in terms of dealing with this uh Flex leasing model what what have you learned right we were talking about it on how at first you were just kind of like putting putting it out there and on Airbnb and seeing what what came right now what have you learned in terms of okay are you trying to optimize those high demand High ADR months with shortterm and the rest of the year you'll just leave it you know for for midterm or longterm are you are you trying to like only allow people to rent midterm longterm for certain months of the year with certain booking windows and then when more last minute you become flexible or what's what's your philosophy around from a revenue perspective how you can deal with with flex leasing well from a revenue perspective yeah from a revenue perspective I mean if you get an insurance client that's going to pay $112,000 a month you don't care how long they stay you're happy for them to stay a year why wouldn't you be but um really the the first hurdle is the regulatory environment and what is that unit permitted to do from a uh zoning perspective so that's the first step in defining what a building will do and then yes and then I think it is a matter of um all of those factors have to come into play right I'm not you know I'm not going to take a $33,000 a month lease that goes through till June in a unit that can do shortterm in downtown DC that doesn't make any sense but in a different Market or a different month or for a different time period you can't fully control all of that but these are all the factors that you have to think about would you agree that there's also less data available on the midterm rental side of things to make those kind of decisions yeah that's why you have to know your Market there there's more data now than there ever's been uh like as far as like a dynamic price tool like there are so many in the vacation rental side of things or Market data sources that scrape OTAs and whatnot are there tools like that but that scrape you know the long-term midterm rental sites I there there are some tools out there uh but again the other thing is like combining there's so much data out there and there's so much product out there and there's so much techn ology out there but like how much is too much I mean again go back to we're really just service providers only making a certain percentage plus whatever upsells you have plus if you're running different departments Furnishing maintenance wherever you can generate more Revenue but at the end of the day if you spend all your money on a tech stack you're not going to have a profit and um you know you're running a business so your obligation is to generate a profit and I think that is like it's almost like uh people have to have a discipline over their Tex deack because it all looks great and it all sounds great and actually all would be great if it didn't cost anything but it does so you have to be a business person and decide what do I truly need what's the cost going to be how much money am I going to save you know and is it realistic and then understand you might have the best tool in the world and we use the analogy of of a tool being a plane but if you don't have the pilot available to on board it and learn how to use it and monitor it and tweak it and set it up then you have an expensive toy that's all you have right exactly yeah so and you have to also have the time to properly leverage the technology and learn it yeah and we're a very operational time consuming business so you know yeah this is so interesting and and just just wrapping up thoughts um what would you do differently if you were starting over you have anything oh God maybe not start right before covid so um the timing uh I mean I don't know I don't know the answer to that because it's just you know we're constantly evolving and constantly looking at where we are and where we want to go um I don't really look back up so much but maybe something you would have avoided double down on earlier um you know just just as far as advice for someone that's looking at you and is inspired and he's thinking wow I wna I want to build this I wanna I want to grow my operation to that level I want to I want to maintain those quality standards even at scale like what advice would you give to someone that's um you know in that stage of maybe being small midsized as as an as an operation but looking to to get into that next level of growth I mean I would say think about what it is that you're trying to accomplish you know why why do you want to grow and then that will help you decide on a path forward so like I said if you want toow grow because you want to acquire properties then you know that is the path you should follow um if you want to grow because you want to develop a brand then you should focus on the service you're providing and the brand that you're creating and you're I mean I don't believe in just image I like you believe that you have to provide this the solid service or good in order to create a brand but in today's world you might be able to fake it for a little bit um uh so I would just look inside and see why you're building this business are you doing it for the hospitality but you actually genuinely enjoy the experience then why do you need to grow like I think they call it like is this a lifestyle business you know what I mean like it's okay to have a business that you enjoy doing that generates enough money for you to live and hopefully retire well that's okay M so I would why do you why do you want to grow why do I I want to grow because I want to accomplish something which is create a known operational brand in the disperate market yeah and so tell us a little bit about that Vision when you look ahead maybe I don't know how far out you do your planning but uh you know what do what do you see you know a year away five years away what's what's the future uh in in the way you see it in your mind for sojourn well I think that we would like um to maybe operate um in the more like have the opportunity to operate in more contained units so whether that is like um a condominium complex or a boutique hotel motel um so I see and then we could really really really focus on um the guest experience and um perfecting that I'd like there's some things I'd like to put in the unit that we haven't been able to really effectuate and afford because you know the larger you are better deals you can get there are some things that like are just too expensive to buy 30 of but if you have to buy 600 of them you maybe now you can afford them uh so I would just like to Perfect all that and um and then obviously we are looking at what growth in other markets looks like um and I think one area that I would like to crack is sort of how to provide some kind of framework for those people that are at like 30 50 units and struggling uh i' like solve that issue how do is there a way we can support them in achieving their goals and objectives um grow sojourn and grow the brand kind of like a franchise perhaps model that could but not franchise because you can't control the brand in a franchise so it's not franchise and it's not a rollup you know all those things are being tried some successfully but but you know I don't think we can be the brand we want to be in a franchise model so I don't know what the model is so I'd like to figure it out so stay tuned for part two so we can know what the model uh looks like that's exactly and if you have any ideas feel no definitely I think that it's it's been super insightful and there's listen I could keep you here for hours and hours but I just want to ask one last question because I feel like a lot of companies have tried to build a brand and and scale a brand and and have it go National or perhaps even International why do you think that no other company has succeeded at at building a recognized guest Fielding guest guest facing brand in the vacation rental space like the hotels have been able to do and and what do you think is needed for for you to become the the first company to to be able to do that at a at a national level perhaps or International level perhaps at some point as well oh wow you are um well I think uh one is we haven't taken on investors once you take on investors that you know changes the dynamic you can't you can't make choices in the same way uh and so and maybe they took on a lot of money and tried to grow too fast um I think there are some people out there that are are creating Brands but I think it is very very difficult to create a brand in this market and I think a lot of them are you know becoming again this is that convergence concept A lot of them are then taking on large buildings large multif family buildings and and then branding that building but then how are they different from a hotel like look at Saunder how is saund striving right now because the only reason they're still alive is because they signed that licens agreement with Mary and they're just going to become another Marriott brand MH so I don't know the answer but it's certainly interesting and I mean I like to figure things out I'm a lawyer that's what I like to do try to figure them out definitely no no that's awesome well thank you so much for taking the time really appreciate your your generosity here with all the learnings the insights you know the lessons the stories uh we'll stay in touch and looking forward to uh seeing uh where you take this this company me too yeah all right have a good one okay you too thank you bye bye