How Investors Can Own Turnkey Airbnb-Style Condos in High-Growth Real Estate Markets

Meg Aubale (00:00)
Sure, so we build a condo product that gives people, so investors buy it or people that want to own a home in Nashville but want to rent it out when they’re not using it. like I said, 1031 or Opportunity Zone investors will purchase a unit and then we place it in service for them and rent it out on a short-term rental basis. And that gives them a…

you know, like a decent, strong return, especially in this market that provides cashflow and depreciation and all the reasons why people invest in real estate. But it kind of offers a more.

institutional professional asset at a retail price.

Michelle Kesil (02:17)
Hey everybody, welcome to the Real Estate Pros podcast. I’m your host, Michelle Kesil, and today I’m joined by someone I’m looking forward to chatting with, Meg Aubale, who is a real estate developer in the Nashville area. So excited to have you here today, Meg.

Meg Aubale (02:36)
Thanks for having me.

Michelle Kesil (02:38)
Yeah, let’s dive in. So first off, those not familiar with you and your work, can you share what your main focus is these days?

Meg Aubale (02:48)
Yes, I am a real estate developer based in Nashville. started the firm 10 years ago.

mainly focused on institutional asset classes like industrial and multifamily. ⁓ But throughout that time, I did condos as well and decided to really lean into our condo segment because we outperformed all the other asset classes this last decade. And there is specific type of condo that we sell to individual investors that want to rent them out on a short-term rental basis. And we take care of all the management for them. And

⁓ basically give investors an opportunity to own, you know, a retail type piece of real estate, cashflow it, and also can use it if they want to.

Michelle Kesil (03:37)
Awesome. And how did you get into real estate and the role that you’re in now?

Meg Aubale (03:47)
I was in very high end home construction actually in California where I’m from. went to UCLA and built homes around the Bel Air, Beverly Hills area. And I met my husband in 2015 and when I moved to Nashville to follow him, there wasn’t high end homes like there were in California. I was doing like $50 million homes and that market didn’t exist here. So I transitioned into commercial real estate when I got to Nashville.

Michelle Kesil (04:18)
And is Nashville the only market that you are serving?

Meg Aubale (04:25)
⁓ Nashville is the main market where we’ve built, now that we’re very focused on condos, we’ve built five condo projects there. We have several under construction right now, but we are now branching into other markets throughout the southeast as well as Colorado, like ski towns.

Michelle Kesil (04:47)
And what do you feel are some of the main keys that have allowed your business to grow and run successfully?

Meg Aubale (04:56)
⁓ I think that it’s been, you know, when I look back…

Nashville has been in a very exciting market. I don’t think I could have started a business with no capital or track record from the beginning ⁓ in any other place. It was just an incredible time to start a real estate development company. So I think having really strong market fundamentals in the beginning was very attributed to the momentum that I gained. ⁓ We did round trip over $400 million in real estate projects, development projects, and that was great.

awesome cycle. I think I was very opportunistic at the time, but I would say that the largest success is from leaning into one segment that I’ve specialized in now and found my niche and really honed in on it and refine the business strategy over and over and have come up with a product that’s very unique, a unique offering that, you know, not competing with a million other people trying to do like value add multifamily for

example.

Michelle Kesil (06:52)
Yeah, can you expand on what in particular makes your brand unique from others?

Meg Aubale (06:59)
Sure, so we build a condo product that gives people, so investors buy it or people that want to own a home in Nashville but want to rent it out when they’re not using it. like I said, 1031 or Opportunity Zone investors will purchase a unit and then we place it in service for them and rent it out on a short-term rental basis. And that gives them a…

you know, like a decent, strong return, especially in this market that provides cashflow and depreciation and all the reasons why people invest in real estate. But it kind of offers a more.

institutional professional asset at a retail price.

So if you only have a couple hundred grand to invest in real estate or we have some bigger funds that have bought chunks of units, it’s a really unique way to get into the Nashville market as an example or our pipeline markets like Charleston, Savannah, know, Winter Park, Colorado, other areas. So people can own and have a completely turnkey investment that we manage for them. There’s a lot of

mom and pop management operators that charge roughly 20 to 40 % depending on the market. We charge about 60 % of that. So in Nashville, we’re 12 % ownership. And it’s a more professional hotel management model.

Michelle Kesil (08:27)
Yeah, amazing. And so do you work directly with investors or what does that process look like?

Meg Aubale (08:34)
⁓ I have a sales team and they sell to individual buyers. don’t work directly with them, but my sales team does.

Michelle Kesil (08:43)
Awesome. And yeah.

Meg Aubale (08:45)
And we don’t sell them

the units as investments. We’re just selling the real estate, but we have third party, you know, we have third party companies that provide pro forma so the investors, so they can understand what type of returns they can make on ⁓ a unit that they buy or units.

Michelle Kesil (09:04)
Yeah, amazing. And would you say majority of your audience is investors?

Meg Aubale (09:12)
Yes, or my clients, yes. I mean, I would say most of the people purchasing are investors. There are a lot of people that do like splitting their time or they are gonna be spending time in a market that we’re in, especially like in Nashville where maybe they live in New York, but come to Nashville or California and split their time and they don’t wanna just have an asset to empty, so they will run it out when they’re not using it and we take care of all that for them.

Michelle Kesil (09:39)
Yeah, amazing. And what have been some obstacles or challenges that you’ve faced and overcome in this role?

Meg Aubale (09:51)
⁓ so many. ⁓ I think, obviously, navigating the capital markets has been challenging when I started. Nashville was a darling investment market. There was tons of institutional dollars chasing ⁓ multifamily industrial, so it was a great time to start a business. I round tripped a lot of…

deals at that time had very high returns, so built a really good track record. But when the capital markets changed, I think I really had to hone in on my focus, which is this new Modernest Brand that I’m focused on now. you know, I mean, there’s been a lot of hurdles. I just to do one development project, you have to overcome, you know, 10,000 small steps to go from identifying a piece of land to delivering

⁓ building completely done, you know.

So entitlements of there are always something to navigate, making sure you have the right investors, ⁓ building the team was something that was very challenging. We were growing very quickly. I think at one point I had, you know, over 15 employees, 15 to 20 employees, and it was a lot to navigate. I’ve kind of learned a lot of those lessons the hard way and ⁓

changed my model to where I have less employees, they’re a lot higher caliber and ⁓ don’t have as many personnel issues, things like that. So it’s been a long journey, but it’s been fun, I guess. And I’m very grateful for having the success that we’ve had as a company.

Michelle Kesil (12:00)
Yeah, amazing. And what are you most focused on solving or scaling to next?

Meg Aubale (12:06)
I think I’m most focused on bringing the brand to other markets. So we’ve historically mainly built in Nashville, but I think there’s a lot of markets that don’t have any product like what we’re offering, ⁓ particularly in cities that have similar demographics to Nashville or similar

growth trajectories where a lot of people are starting to move out of like the New York, California, Chicago’s more to Florida, the Carolinas, Texas. And so really

navigating ⁓ building and constructing in other markets and getting to enough scale quickly.

Michelle Kesil (12:46)
Awesome. And what do you think investors need to know in order to fully understand the market or the things that are changing right now?

Meg Aubale (13:03)
I think it’s definitely for an investor if they’re not super experienced, it’s a very difficult market to navigate or at least start in. I think that right now, I I hope we’re coming to the end of it because this sort of recession started in 2022. And so if you look at cycles, you know, hopefully by next year, we’re kind of coming out the other end and starting to see growth figures again. But for

You know, newer investors or inexperienced investors, it’s very, it’s really tough to find something that actually makes money, particularly in the ground up space or buying existing cash flow. So I think that, you know, monitoring, obviously when interest rates go down, that should help. Inflation has to curb for that to happen. Also just cost of operation as well as cost of construction. A lot of those things have had a lot of pressure on. ⁓

you know, there’s just been a lot of pressure on the real estate market for those reasons. And so I think looking for opportunities that are off market, finding inefficiencies, finding niche asset classes to invest in, I think is where, ⁓ is a good place to put focus.

Michelle Kesil (14:22)
Yeah, absolutely. And are your units sold individually to each investor? Or what does that look like?

Meg Aubale (14:33)
Yes,

so our units are sold to the either investors by one or some by several. But our investors own the unit fee simple, which is why they like it because they’re not investing into like a fund or another sponsor. So they own the unit. We can provide the management for them. We can provide the furniture if they want or they can furnish it themselves. And then it gets placed in service. ⁓ so and they can decide.

I want to rent it out 365 days a year or I want to live in it for half the year. And so there’s a lot of autonomy, which is a lot different than like a typical like hotel condo model. We also keep the management fees very low by making very tech enabled.

operations. So it’s definitely limited service, but I would say that the experience for the traveler or whoever’s renting it on a short-term basis is it’s a much more elevated experience and as opposed to like going to a typical Airbnb, it’s pretty sophisticated. We use a lot of hotel systems, ⁓ but we do save on the HOA costs and the cost of operation by not having tons of personnel, which I think is a little bit ⁓ antiquated in the traditional hood

tail model.

Michelle Kesil (16:33)
Yeah, absolutely. Can you expand on what makes it a more elevated experience? What are some of those services?

Meg Aubale (16:43)
Yeah, so I mean typically

like someone like me I have four kids I want to go travel I have traveling with a nanny You know staying in three hotel rooms and having a tiny little fridge that you’re trying to stuff food into that you ordered from Whole Foods is like not a great model, but I’m also You know, I want something really safe and something professional and so I’m not really willing to just go an Airbnb whatever and so our brand is a you know full operating

building with over 100 units usually depending on the location and ⁓ it’s you know you have there’s an on-site manager you have all the tech systems so you get texted your key code you’re not picking up keys from a random place you can stream your Netflix and ⁓

you know, online streaming for television, for example, there’s ⁓ onsite security, towel service, the amenities are professionally managed. We offer, usually have a standard of a really nice built out gym, cold plunge sauna, pool, pickle ball in some cases. So it’s a highly amenitized product and. ⁓

strong standard of service so sheets, towel, know, frittier robes, sheets, towels, like an elevated, I would call it like a four star plus Airbnb experience which you usually only get that if you’re going to a much more expensive hotel.

Michelle Kesil (18:14)
Yeah, sounds amazing. And what are the clients that you serve usually looking for?

Meg Aubale (18:17)
Mm-hmm.

A lot of our clients are looking to invest several hundred thousand dollars in real estate for, you know, a lot of them use do 1031 exchanges as an example. They just want a cash flowing investment and take advantage of cost segregation, tax advantages and or.

you know, just want a cash flowing real estate asset for many reasons. I mean, a lot of people aren’t in real estate, maybe they’re doctors or attorneys, but they want to invest in real estate, especially in places like the markets I mentioned where there’ll be a strong sense of appreciation of value. Like in Nashville, you know, the condos that I built five years ago are worth much, much more today than when I originally sold them. So there’s just that wanting to invest in a certain market.

⁓ And so that’s mainly, and you know, it’s not their primary, it’s mainly not their primary source of income, so they don’t have the time to, you know, manage it and go meet someone if they’re renting out their apartment and drop off keys and take care of all the things. So they want something turnkey that’s ⁓ hands off.

Michelle Kesil (19:40)
Yeah, absolutely. And are the investors involved in the development process at all?

Meg Aubale (19:48)
⁓ no. I mean I have…

I have ⁓ investors in my development projects, obviously, before they get built ⁓ that are typically family offices. I also had institutional investors in the past, ⁓ but in the actual development projects, I don’t take on retail investors. So they’re usually a minimum of like five to $10 million checks. I’ve had many repeat investors and built that database up over the course of 10

10 years of delivering successful projects. you know, usually the people that are purchasing the units or the individual real estate investors are coming in. I mean, one project we have is finishing in April and we just started selling that now. So we’ll start selling the units about a year or so before completion. ⁓ But, you know, if people want to reserve, but we’ll sell all the way through it being complete till it’s sold out.

Michelle Kesil (20:51)
Yeah. And what opportunities are you most looking forward to creating next?

Meg Aubale (21:00)
I

I’m very excited about going into markets where there’s nothing like this.

There are some markets like Miami where there’s some semblance of what I’m doing, but there’s a lot of markets. The next ones we’re really excited about are Charleston, South Carolina, Greenville, South Carolina.

Winter Park, Colorado, Steamboat Springs, Colorado, these sort of markets that don’t really have a need for this type of product. There’s a lot of travel, it’s strong hospitality based. A lot of people like splitting their time. There’s empty nesters that own there, but there’s really nothing like this being offered. And so I’m really, think that’s the largest opportunity for our brand.

Michelle Kesil (21:45)
Yeah, absolutely. Thank you for sharing all of that.

Well, before we wrap up here, if someone wants to reach out, connect, learn more, where can people find you and connect with you?

Meg Aubale (22:00)
⁓ My website’s ⁓ great. You can reach out to my assistant if anyone’s interested in looking at the Modernest Brand or purchasing a unit. ⁓ My website’s great or LinkedIn, Modernest at LinkedIn. ⁓ Live Modernest is the website.

Michelle Kesil (22:25)
Well, I appreciate your time and your story. Thank you so much for being here.

Meg Aubale (22:31)
Okay, thank you.

Michelle Kesil (22:33)
Yeah, of course. And for the listeners tuning in, if you got value, make sure you have subscribed. We have more conversations with operators like Meg, who are building real businesses and we’ll see you on our next episode.