242: The Hotel We Almost Skipped — That Tripled Our Money
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In this week’s episode of The Richer Geek Podcast, Mike and Nichole sit down for a quick but insightful chat about their first hotel investment, a deal they almost passed on. They share how a mismanaged Arizona property turned into a 3X return and what it taught them about timing, partnerships, and spotting value where others don’t look.
In this episode, we chat about…
How Mike transitioned from multifamily to hotels
Meeting Vic and forming a strong investment partnership
Finding opportunity in a mismanaged Arizona hotel
Why location and local “drivers” matter more than luxury
The strategy behind selling at the right time
Key Takeaways:
Don’t ignore unglamorous deals, they often perform best
Location + economic drivers = hotel success
The right partner can make or break your investment
Manage smart, not flashy, focus on fundamentals
Timing your exit can multiply your returns
Learn through partnerships before going solo
Resources from Mike and Nichole
+ Read the transcript
Mike: Hi everybody, it's Mike, the Richer Geek Podcast.
Today is gonna be a little bit different. We're going to talk about some of my journeys in the hotel world, what I'm seeing and how I got started in the hotel world. I have my lovely wife, Nichole, join me and she's going to be doing the interviewing process.
And I'll answer the questions as best as I can. Nichole, I'm gonna turn it over to you.
Nichole: Great. It's great to be back on the podcast and I think we wanted to start sharing a little bit about a hotel that you just sold and if you can maybe take us back to how did you get started with this hotel several years ago?
And this is the one that you just sold in July.
Mike: Great question, so I was really big in the multifamily space and I got started in single family homes, which turned into fourplexes and eight plexes, and then on and on and on. And about eight years ago, someone came in and bought our portfolio. One of the things that really worried me, you know, I was buying everything at between 8 to 10 caps
and I sold everything at around four and a half, five, and I had to make a decision. Did I want to now buy something at that low of a cap rate? Which I didn't.
As I've mentioned in all of my podcasts, it's all about networking and as I was deciding what asset to go into. I had a friend of a friend who introduced me to Vic, who ended up being my partner, and he had been in hotel space for about 20, 25 years at the time.
And I was really intrigued about hotels and I sat down with him and talked to him and he was saying that he could buy, and at that time hotels were in the 10 cap range. We really don't use cap rates that much, but if you converted it, you know, it's around 10 to 11 cap at the time. And I was like going, "Yes, this is what I like."
But I didn't know anything about hotels, so thinking outside of the box. I said, "Vic, I don't know anything about them, you do. I have the money. I want you to teach me how to find assets in the hotel space. I want you to look at them. I'm going to go to all the meetings, all the showings, and then if and when we decide to buy something, you're going to teach me everything you know."
And that was eight years ago. That's how I got started and we just sold that hotel, the very first hotel in Arizona.
Nichole: That's awesome. And how did you, and Vic, how did you find this hotel, this specific one that you got started with and then why that one?
Mike: Yeah. And you know what's funny? I was like going, "Why are we buying a hotel in this area?"
You know, it's like going, "Oh my God."
I'd never even think about it but Vic is the hotel guru. Well we went around looking at hotels and what we were trying to find is one that was mismanaged.
Maybe an aging owner that had turned everything, all the operations to one GM and you know, we found this one in Arizona and it was very, very poorly run. And the GM at the time basically did everything and anything he wanted, including I'm not gonna say stealing things, but he put in his own washer and dryers and it was taking the money.
And Roy didn't care. He was just basically abusing the owner. And for us, that's a perfect opportunity. So we found this deal and later, what Vic explained to me is, you know, off the highway, off of a major highway, outside of a major metro, that's where we'll find the deals. It was across from a hospital.
It was on a main thoroughfare and he is the one who introduced me to the different drivers, you know? The things that you need for hotels and why people would come to this particular hotel, which to me, I was like, "Well, I don't wanna buy this hotel."
And he goes, "You want to buy this hotel? It's going to do a wonderful job."
And we ended up buying it.
Nichole: Yeah. That's so great about, I mean, we always talk about location and real estate, and this is the combination of the location plus the drivers. The economic drivers in the area.
You talked about meeting with Vic and Vic telling you about 10 or 11 cap, but how did you actually meet Vic and then what has that partnership been like?
Mike: One of the brokers that was involved in the sale or multifamily, I was talking to him, it's like, you know, he was showing me all this multifamily, and I'm like, "I'm not gonna be someone else's cash cow, you know? and I just didn't want it."
So he said, "You know what? I know a guy that knows everyone that is very good at the hotel space."
So we actually met at a place and did the introduction and what was interesting is Vic had never ever gone into a partnership in his entire life in 25 years of owning and managing hotels. He had never done a partnership and he took a risk, partnering with me and it was just, it was something new for him.
And the partnership was something new for me in the hotel space, and it's worked out fabulously.
Nichole: Now, this particular hotel, what were some of the things that evicted or you were involved in to make it be so successful?
Mike: Great question. It's a combination of finding, number one, we self-managed at the time because it was just so hard to find property management groups that cared about the asset. We focused on doing what was necessary with the franchise, but not going overboard and the renovations and then marketing it as that submarket outside of a major metro type of hotel.
There are some national groups that are with the trucking agencies and so we reached out to them, did some national contracts with truck driving companies.
One of the great things about this hotel, because it was off of the major highway, we were the only hotel in that little town off the highway that had truck driver parking. So that was really, really big for us and that ended up being one of the major drivers for keeping us going during COVID.
Nichole: Now, you just recently sold this hotel. The numbers were very good. Can you talk us through what those numbers look like and just kind of the overall financial experience?
Mike: Yeah. You know, without going into exactly how much we made.
We did it as a joint venture and we bought it at a very good price because the owner knew that he needed to get out , fired the GM of course, brought in a wonderful GM that was there the entire time that we had it and we ended up selling it and we can go into the reasons why we sold, because, you know, that was a very big decision 'cause it was making us a lot of money a year just in distributions. But it ended up being 2% IRR and we made over, if you look at MOIC or the how much we made on top of the initial investment, we did more than three times our initial investment, my initial investment, so I made 3X as much money as I initially put in, which is extremely good for any type of investment right now in 2025.
Nichole: Yeah, this hotel sale was one of those things that made me look at my 401(k) and think "What am I doing here?"
But I digress. It was a very good, very good deal. So you mentioned a little bit about why you guys ended up deciding to sell, tell us a little bit about that.
Mike: One of the big things is you can maximize your returns if you don't use a broker. You know, if you're not paying 5% or 6% off of millions and millions and millions of dollars, that saved us $400,000-$500,000 and this group came in, knew what that little town was doing and how it was grown and wanted to have a hotel in that area.
They reached out to us without a broker and just said, "I want this hotel."
Well, first day bought us. Then it was the second, you know, third, you know, you go back and forth as you build real estate and it finally came down to a price 'cause they were in a 1031. It's a large group out of California.
They have a lot of hotels and they finally came back with the price that Vic and I were like, you know what? It is just, number one, we can't say no to that, but we also thought it was the right timing for that area with the interest rates through the way that they are not knowing if they're going to go down, not knowing if the valuations are going to go down, you know, just economic uncertainty.
We huddled together and just said, "You know what? I think now is the time to cash out.
Nichole: So it was 2017, sold in 2025.
Mike: Yeah. We made a lot of money, you know, during that time, that time period. So it was a win-win situation for everyone.
Nichole: I know I was kind of disappointed.
It was obviously a good selling price, but it had been just a cash cow property for so long. So it's kinda sad to see that go, but it makes sense.
Mike: Yeah cause one of the things it's like, I'm giving up a nice salary if you say, or you know, the distributions on that. We could keep it and make whatever is to be made or we could make a lot now, but I think it was the right timing.
It really does.
Nichole: If you look back on that whole experience, what are the key points or lessons learned that you'd wanna share with others?
Mike: Most thing is, don't go for sexy necessary. Everyone wants maybe that urban metro hotel with the rooftop bars and the pools, you know, and all this sort of stuff and it's kinda like class A multifamily against class maybe B minus or something like that.
This was definitely an outdoor corridor. It was everything that I thought. It was like, "I don't want to own this thing," but you know, what I learned is that people make a lot of money on non-sexy things. It doesn't necessarily need to have all the glam and the chandeliers and things like that.
You just want that hotel that just really, really performs. So that was really one of my biggest lessons is to quit looking for the glam in hotels, the ones that really, really make the money are the ones that are small towns. They're really nice. They do what their purpose is and they just make a lot of money.
That was the biggest thing. And then also the drivers, wanting it on a major highway, wanting it next to a hotel or next to a bunch of different things that drive people to that hotel. And then what I really learned is you don't always have to do what the franchise always tells you to do.
There's always negotiations. That was the biggest lesson that Vic told me. He goes, you know, the franchise wants to do this, this, this. And he just said, "Ah, you know, we'll do one of them and we're gonna do it the way we want it."
So that was another big lesson for me.
Nichole: I would say too, the other lesson is just finding an experienced partner to work with, this kinda relationship.
And it's continued and we'll talk about that in other episodes as well. It's just finding, you know, networking, developing the relationship, finding a good partner that you can trust and rely on, and that brings something else to the table. Maybe it's not capital. In this case, it was expertise.
Mike: Yeah. And you know, the biggest thing that I tell listeners is if you're going to get into another asset class, don't do it alone.
There's a huge, huge difference between multifamily and hotels. Hotels are a business. I would've failed miserably if I'd have said, "I don't need a partner. I have the money. I'll just go buy."
Number one, the franchise wouldn't have even given me the hotel because franchises need to protect their image, their brand.
And they require people with experience to own those hotels.
Nichole: Any other last parting words for anyone thinking about getting into hotel investments?
Mike: The best way may be to start out as a limited partner. Get in with some syndications where people that have a lot of experience and then ask questions, you know, once you're a limited partner, getting distributions, bug that GP, the general partner to death and learn.
The other way is if you don't wanna be a limited partner, do a JV agreement with someone like I did. You have the money, you want to come in, you wanna get into the hotel arena, partner with someone Vic and I as a JV, and then learn that way, but don't do it on your own.
Nichole: So thank you for taking us through that opportunity. It's really exciting. There'll be more to come. We talk about now you're under 1031. There's all kinds of future hotel projects that you'll be working on?
Mike: Yes. Stay tuned.
The information, statements, comments, views, and opinions (collectively, “Information”) provided in this podcast are not intended to be and should not be construed as financial, economic, legal, accounting, tax or other advice. For our full disclosure, click here.
ABOUT MIKE STOHLER
Mike Stohler (STOW-ler), the co-founder of Gateway Private Equity Group which is a hotel real estate investment firm. When the multi-family market shifted in 2016, Mike pivoted into hotel investments for higher returns and better value-add opportunities. As Mike added to his hotel portfolio, Mike he found ways to scale his real-estate business through hiring virtual team members in Mexico. Soon other real estate investors started asking him to help them find similar qualified personnel which led him to start Gateway VA. Through Gateway VA, Mike helps other business owners enhance productivity by hiring highly qualified virtual team members.