The $1M Airbnb Hack: Turning Hotels Into Cash-Flow Machines

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Show Summary

In this episode of the Real Estate Pros Podcast, host Michelle Kesil interviews Jeff Dickinson, a real estate agent and hotel investor who shares his innovative approach to hotel management using the Airbnb model. Jeff discusses how he focuses on workforce housing, the challenges he faces in transitioning properties, and the investment opportunities available in the hotel space. He emphasizes the importance of social vetting for guests and the efficiency of his operations, while also addressing barriers to entry for new investors. The conversation concludes with Jeff’s vision for the future of his business and how interested individuals can connect with him.

Resources and Links from this show:

• • • Investor Fuel Real Estate Mastermind
    • Investor Machine Real Estate Lead Generation
    • Mike on Facebook
    • Mike on Instagram
    • Mike on LinkedIn
    • Jeff Dickinson’s Email Address: [email protected]
    • Jeff Dickinson’s Phone Number: (206) 852-9711

  Listen to the Audio Version of this Episode

  Investor Fuel Show Transcript:

  Jeff Dickinson (00:00)
  we bought a townhome for like $1.2 million in Seattle and we’re gonna Airbnb it. ⁓ And we just found that that’s a lot of money. ⁓

  to invest in a property to maybe get a little bit of return on. So ⁓ a friend of mine in Arizona said, hey, I just sold all of my Airbnb properties.

  So he sold all his, a hotel and he says, you gotta join me on this. So I figured that for 1.2 million, I paid for a townhome. I can buy an 80 to 100 door hotel for the same price and I can generate $80,000 in revenue a month and.

  40,000 in expense, so there’s $40,000 in profit. So it’s like, wow, it was just mind blowing to me. And ⁓ it’s just really supersizing investment opportunity out there.

  Michelle Kesil (02:31)
  Hey everybody, welcome to the Real Estate Pros Podcast. I’m your host, Michelle Kesil, and today I’m joined by someone that I’m looking forward to chatting with, Jeff Dickinson, who has been making serious moves as a real estate agent, as well as hotel investor and Airbnb connoisseur for his

  hotels and properties, so excited to have you here on the show today, Jeff.

  Jeff Dickinson (03:03)
  Thanks so much, Michelle. Happy to be here.

  Michelle Kesil (03:05)
  Of think our listeners are really going to take something away from how you’re approaching building resort communities and just working on creating new processes with your hotel investments. let’s dive in. First off, for those not yet familiar with you and your world, can you share what your main focus is?

  Jeff Dickinson (03:30)
  Yeah, yeah, so again, Jeff Dickinson, ⁓ I’m from Seattle, Washington, and ⁓ my main focus right now is investing in hotels ⁓ using the Airbnb concept to ⁓ drive revenue and reduce expense and just operate hotels on a totally different format than we would typically think of.

  Michelle Kesil (03:59)
  What does that mean to you, a different format? Can you expand on what the typical format is and what makes yours different?

  Jeff Dickinson (04:06)
  Yeah, yeah, so the typical format would be, know, hotels are operated with walk-up guests, with ⁓ more vacation-minded guests. ⁓ We’re really focused on that workforce housing for local, maybe oil field work, building wind farms or the…

  on warehouse. ⁓ So, know, very blue collar in nature, again, workforce housing, ⁓ very few of our guests are vacationers, they’re typically longer term stays. And with the Airbnb, ⁓ or just using Airbnb as our main ⁓ reservation source, ⁓ these guests are socially vetted. ⁓

  So we find a higher quality guests. We don’t have any

  real trouble with them where with walk-up guests, we tend to have some more trouble. ⁓ So, you know, they’re socially vetted. If they don’t toe the line, then they’re just going to be banished from Airbnb. We also ⁓ have some liability help.

  chargebacks on credit cards. So Airbnb actually takes the liability off of our hands. So we don’t get any chargeback. And we’re able to operate these hotels at a greatly reduced labor. So typically three full-time employees are able to handle an 80 to 110 door hotel property.

  ⁓ So just, you know, we just operate them just much more efficiently and totally different than typical hotels.

  Michelle Kesil (06:48)
  Awesome. How did you get started with all of that?

  Jeff Dickinson (06:53)
  Well, you know, the epiphany I had three years ago is

  we bought a townhome for like $1.2 million in Seattle and we’re gonna Airbnb it. ⁓ And we just found that that’s a lot of money. ⁓

  to invest in a property to maybe get a little bit of return on. So ⁓ a friend of mine in Arizona said, hey, I just sold all of my Airbnb properties. We’re just seeing the dilution down in the Phoenix ⁓ area. Everybody’s doing Airbnbs. We had the Phoenix open. We had the… ⁓

  the Super Bowl in and there were still Airbnb properties left unfulfilled. So he sold all his, a hotel and he says, you gotta join me on this. So I figured that for 1.2 million, I paid for a townhome. I can buy an 80 to 100 door hotel for the same price and I can generate $80,000 in revenue a month and.

  40,000 in expense, so there’s $40,000 in profit. So it’s like, wow, it was just mind blowing to me. And ⁓ it’s just really supersizing investment opportunity out there.

  And I think it’s a genre that.

  a lot of people don’t think of or they think that it’s just way beyond their capabilities. And here these hotels are just suffering in many communities and they’re easy to obtain and finance. So just really dug in. We’ve got a number of properties now and growing. So just really excited about the concept.

  Michelle Kesil (08:38)
  Yeah, absolutely. That’s such a unique approach that most people aren’t aware of. And a lot of the listeners on the show are investors. So how can investors get started in the hotel space if that’s something they’re not looking into yet?

  Jeff Dickinson (08:57)
  Yeah, so we actually have a federal securities registration. So if there are any investors looking to get into the space, know, I’d love to have a conversation, you know, whether they’re looking to put all the money in themselves and would look at us to help manage the properties, evaluate the properties, you know, that’s certainly an opportunity there. Or most of my investors have put in 50 to

  300,000 and they’re getting a 12 % return on their money and then after three years it goes up to about 24 % return so it’s not a bad not a bad invest you know investment I think a lot easier to get into than going out and buying your own Airbnb property in a

  education spot, for instance. So, great entry point, ⁓ lots of education opportunities. We can hold investors’ hands and really educate them on what…

  Michelle Kesil (10:40)
  Yeah, absolutely. So is your method more of partnering with these people for your existing projects?

  Jeff Dickinson (10:50)
  It is, yeah. Primarily just ⁓ growth, ⁓ know, new projects. So typically we’ll have ⁓ three investors go in with us on a new project. You know, the typical property ⁓ acquisition requires about three to four hundred thousand in total cash down payment.

  We’ve been lucky historically in that we’ve been getting the sellers to carry the contract for us for five or 10 year period at a lower interest rate than market right now. So that’s been another benefit.

  Michelle Kesil (11:34)
  Awesome. Yeah. So what are you most focusing on solving or scaling to next in your business?

  Jeff Dickinson (11:45)
  Yeah, so we continue to find ⁓ new efficiencies to ⁓ operate the properties. We find ⁓ some new revenue opportunities ⁓ to increase revenue, advertising opportunities. All of our advertising we direct, no matter what it is, social media, Google, et cetera, we are directing ⁓ these clients to

  Airbnb to book. So we don’t have a reservation system internal. We don’t take walk-up guests. So we just send everybody to Airbnb. So we’re finding new sources on that to increase revenue and other sources to be more efficient on supplies, on labor, things like that just to drive our program.

  Michelle Kesil (12:45)
  Yeah, so is there a reason that you’re working particularly with these blue colored workers versus another group of people?

  Jeff Dickinson (12:59)
  Well, what we’re finding is that there’s a lot of them out there. ⁓ get, we actually get accolades and calls from the mayors of towns that we’re in from even, even the police SWAT team commanders ⁓ saying that, boy, this is great. You guys have come in, you’ve cleaned up this hotel property, you know.

  Historically, we’ve had to bring the SWAT team out a couple times a month because of problems, but you’ve really helped clean up the neighborhood. ⁓ You guys are model citizens. ⁓ And from the mayor’s standpoint, they’re saying you’re really helping solve homelessness. so we just offer a really great.

  accommodations package for people that may be on the street. So we’re really proud of that. ⁓ I think there’s just a lot of. ⁓

  a lot of value conscious travelers out there that have an affinity to what we’re doing.

  Michelle Kesil (14:10)
  Absolutely. What have been some of the main challenges that you have faced as you have, yeah, been working on these projects?

  Jeff Dickinson (14:22)
  Yeah, probably our biggest challenge has been just the transition of the clients that have been staying at the hotel when we’ve acquired them. You know, a lot of drug and alcoholism.

  lot of criminal activity. So we go in and with Airbnb and socially vetting these people over about a two month period, we’re able to clean up the property, get a whole new clientele in there. We fence the property. That’s been a big, huge benefit.

  You know, our clients really want a safe environment. ⁓ know, many of these hotels are in transitional areas, you little challenge areas. So we try to do everything we can to make the safest environment for them. We increase lighting, put the fences around. So I think that’s been one of our biggest challenges to overcome. ⁓

  Michelle Kesil (16:08)
  Yeah, absolutely. That makes a lot of sense. Are there lot of barriers to entry for people that are also interested in these types of investment opportunities and business ventures?

  Jeff Dickinson (16:23)
  Excuse me, I think the barrier to entry is just really being able to plug in either as a simple

  just looking to, they like the concept but they don’t want to do the whole thing. We can certainly help them on that. Two is,

  really trying to find the right hotel opportunity to go into. We look at two story properties ⁓ maximum, try to stay away from elevators, swimming pools, ⁓ trying to get 80 or more doors, trying to get into a community that has 200,000 or more population. ⁓

  So we have a very, ⁓ very defined buy box, we’ll call it. ⁓ So, you know, we just have to do a lot of due diligence when we go in to acquire a property just to make sure it checks off all the boxes. ⁓ Other than that, ⁓ you know, it does take some prowess for an investor to go in and do what we do. You know, we’ve got the experience, we’ve got the background. ⁓

  And so, you know, it’s not for the lighthearted, it’s not for your average investor. So, but, you know, again, we’d love to have a conversation with anybody that has any degree of interest, you know, love to share the concept.

  Michelle Kesil (17:56)
  Yeah, absolutely. That makes a lot of sense that there’s so many different knowledge and skill sets. It’s not your typical, you know, residential or multifamily building that maybe people are accustomed to.

  Jeff Dickinson (18:10)
  Right

  exactly. Yep.

  Michelle Kesil (18:15)
  Was there a certain education process that you underwent in order to develop this skill set?

  Jeff Dickinson (18:24)
  You know, not really. think it’s just, you know, both Josh, my partner and I just having our background, you know, me being involved in the formation of Verbo back in 1995. ⁓

  timeshare industry building 17 resort communities up and down the West Coast. ⁓ So, know, definitely, you know, we’re both definitely heavy in the hospitality side of things and just taking a real holistic approach. And our philosophy is really we start from ⁓ inside a hotel unit and work our way out. So we want that experience. We have our own certain linen ⁓ and bedding. ⁓

  So it just working from the inside out and it’s just worked really well for us. And there’s definitely some secret sauce that we have that I think others don’t.

  Michelle Kesil (19:22)
  Totally. Why do you prefer hotel, Airbnb over other types of investments?

  Jeff Dickinson (19:32)
  Well, what I see is really ⁓ the return on investment just seems to be a lot higher. And ⁓ to me to go in and buy ⁓ a single family home and an Airbnb, personally, it’s like watching paint dry. It’s just ⁓ too low of investment for me. It takes a long time to get an ROI.

  I’m seeing many communities banning Airbnb or short-term rental activity where, you know, with the hotels, we’re a hospitality zone. We can do anything. There’s no restrictions. The city or the municipality isn’t going to take that away from us. So I think it’s really safe harbor as we continue to go forward and as, you know, local hospitality.

  associations ⁓ put more and pressure on the municipalities to tamp down or eliminate short-term rentals by individuals. I think that we’re just in a real safe zone. So that’s probably one of the biggest.

  Michelle Kesil (20:50)
  Yeah, definitely.

  So you mentioned that you were one of the supporters in the start of Verbo. What did that role look like?

  Jeff Dickinson (21:03)
  Yeah, so I provided quite a bit of the early inventory for the concept and just some conceptual ideas for it back in 1995. So I was pretty proud of that involvement. And I had a large vacation rental company in Dillon, Colorado.

  Verbal was founded in Breckenridge. So yeah, was just excited about that. So, and ⁓ it’s paid off in spades just in our current concept.

  Michelle Kesil (21:39)
  Yeah, absolutely. What are some of the goals you have for where you want your business to be heading?

  Jeff Dickinson (21:47)
  Yeah, so the whole goal would be to get to about 20 properties over the next three or four years and then just manage them very well, increase efficiencies. Typically when we acquire these properties, let’s say for $1.5 million, we’re building them pretty quickly to be valued at 3 million, literally doubling.

  the acquisition costs. So, you know, we’re quickly building, ⁓ you know, some, probably a hundred, $120 million portfolio. So pretty exciting, you know, about that.

  Michelle Kesil (22:30)
  Yeah, absolutely.

  Jeff Dickinson (22:31)
  And really,

  and really right now for just long term hold, you know, they’re profitable. So there’s really no reason to, to sell them right at the moment. ⁓ you know, there may, it may come a time years from now that, ⁓ converting them to apartments. ⁓ you know, that seems to be, I think right now a bigger trend, ⁓ with, these types of hotels, ⁓ than what we’re seeing, then we’re seeing other people just going in an Airbnb and so.

  So lot of upside potential as time goes on.

  Michelle Kesil (23:00)
  Yeah.

  Definitely amazing. So before we wrap up here, if someone wants to reach out, connect, learn more, where can people find you?

  Jeff Dickinson (23:15)
  Yeah, please feel free to email me or call me. My direct number is 206-852-9711 and my email is my first and last name, [email protected]. I’d love to have a conversation with any of you and answer any questions ⁓ and go over the concept with you. Yeah, I’d welcome that.

  Michelle Kesil (23:47)
  Perfect. Well, I appreciate your time, your story, and your perspective. Thank you for being here.

  Jeff Dickinson (23:53)
  Michelle, thank you so much for having me. I really enjoyed it.

  Michelle Kesil (23:57)
  And for those listeners tuning into the show, you got value, make sure that you’ve subscribed. We have more conversations with operators like Jeff who are building real businesses. We’ll see you on our next episode.