Episode 60: Investing in Distressed Hospitality and Resort Businesses!
In today’s show, Pancham interviewed Josh McCallen, a business turnaround expert. Josh owns Renault Winery Resort and Golf and investment firms Accountable Equity and VIVÂMEE Hospitality.
An all-around entrepreneur, Josh takes distressed hospitality resort assets and turns them into wealth. The businesses he’s running are now massive successes. Renault Winery Resort and Golf even ranked at 7 on TripAdvisor Top 25 Hotels last 2016 and 2017!
In this episode, Josh revealed his personal stories and the lessons he has learned. He also shared how he manages his businesses successfully, the values that has helped him in his business, and how he developed his love for the service.
So many gold nuggets in this episode, so please don’t miss it!
Tune in to this show and enjoy!
- 02:34 – Pancham introduces Josh to the show
- 04:32 – Josh’s background information and how he got into investing
- 08:58 – Why VIVÂMEE gained many recognitions
- 11:37 – Josh compliments Pancham’s podcast
- 12:11 – How much Josh earns in VIVÂMEE
- 17:02 – How much change in cost does his businesses have now
- 19:35 – Where Josh generates his profits and what his pricing strategy is
- 23:02 – What makes his businesses different to others
- 24:24 – Positive and negative impacts of the pandemic to his business
- 29:00 – Josh’s morning routine
- 33:27 – Taking the Leap round
- 33:27 – The first time he invested outside Wall Street
- 33:56 – Fears he overcame when he first invested outside Wall Street
- 34:40 – One investment that did not go as expected
- 39:25 – One piece of advice he would give to someone who wants to invest in the Main Street
- 41:19 – Josh’s contact information
3 Key Points:
- Key indicators that helps investments succeed
- Importance of commitment and passion to business
- Major differences of his businesses compared to others
Get in Touch:
- The Miracle Morning Series Book Series by Hal Elrod – https://www.amazon.com/gp/bookseries/B01ILUVCF2/ref=dp_st_0979019710
- Don’t Quit: Stories of Persistence, Courage and Faith by Kyle Wilson – https://www.amazon.com/Dont-Quit-Stories-Persistence-Courage/dp/0998312584
Welcome to The Gold Collar Investor Podcast with your host, Pancham Gupta. This podcast is dedicated to helping high-paid professionals to break out of Wall Street investments and create multiple income streams. Here is your host, Pancham Gupta.
Hi, this is Joe Fairless. If you wanna diversify out of Wall Street investments, then listen to The Gold Collar Investor Podcast.
Hey, this is Mauricio Rauld, founder and CEO of Premier Law Group and if you are serious about investing in real estate, listen to The Gold Collar Investor podcast with Pancham Gupta.
Pancham: Welcome to The Gold Collar Investor podcast. This is your host, Pancham. I really appreciate you for tuning in today. Let’s get into today’s show. German philosopher Friedrich N. once said that “What doesn’t kill you makes you stronger.” Failures are part of life, sometimes when you are in the middle of failure, you feel so low that almost feels like the world is coming to an end. There are a few instances like this that have happened to my friends. One said friend got laid off in 2008. He was into his corporate career for about 5 or 6 years and then could not find a job. He really tried hard to find a job, but he kept getting no from everywhere he applied. He was feeling so low those days and nothing was working out. So, he decided to open his own consulting business out of necessity. Today, his business is thriving and he could not have imagined this level of success in the corporate world. If you ask him now, he would say that the layoff was the best thing ever happened to him. We have one such story here on the podcast. Our guest, Josh McCallen, barely survived the 2008 crisis and decided to go into distressed resort and hospitality business in 2013. For the first year, it failed so bad that they were on the verge of going out of business and then they became the top number 7 ranked business according to Tripadvisor.com. Learn about what it takes to run a 240 acres winery resort with a golf course and the top wedding destination in the northeast. Before we get into today’s show, a little bit about Josh. Business turned around expert and resort rehab specialist, Josh McCallen is a multifaceted maestro in luxury, residential, hospitality and real estate project leadership. The past 20 years Mr. McCallen had led projects generating well over 100 million dollars in revenues in the above-mentioned industries. He has also served as the president of a 400 plus person hotel development and management company and built numerous businesses and brand. He conducts all his projects and operations with the highest caliber taught leadership, energy and expertise. He has a laser focused approach to creating high yield projects through strategic innovation, relationship building and developing cultures that promote a genuine love of service. Key hospitality accomplishment for Josh’s team is The Knot Best of Weddings 2020 Inc. Magazine ranking 2016, 2017 and 2018, Tripadvisor #7 of top 25 hotels in the US for 2016 and 2017, best recognition including hotel business, USA Today, Hotel Online, The Knot, ABC News, US News, etc. Josh, welcome to the show.
Josh: Hey, thank you so much Pancham.
Pancham: Thank you for your time and are you ready to fire up my listeners break out of Wall Street investments?
Josh: Absolutely ready because I appreciate the people who have done it for me. So, I’m here to do it for whoever I can be of service.
Pancham: That is great. I am super excited for today’s show and I know that you’re going to share some golden nuggets with our listeners here today. So before we get started, tell us about your background and the person behind that background.
Josh: Oh, boy, how wise is it to even just talk about the person behind things. We are hardworking people, my wife and I actually do this group called Accountable Equity Investor Community but our family goes back, we are married 24 years so who I am though? Okay, so, I am a land developer during the boom days building fantastic fancy houses working for high net worth people, usually either building a private residents for them or actually doing flips at 5 million dollars. So, crazy, risky stuff in the boom days. Post the boom days, we just needed to shut that development company down and we became a true entrepreneur I say, you know, selling and bought franchise and try to run my own franchise. Did a lot of learning and struggling during the recession until 2012. And in 2012 we had this really blessed opportunity to go back to that same fancy developer who came up with, he said, I’m open-minded Josh, what should we do with the assets we never got out of before the recession meaning land assets. So, we looked that his motel-hotel on the beach and we offered a new concept. We said what if we restore and we make a business out of this. Restore using yours as a franchise prototype because we are Michael Gerber guys. We are like what if we use your very tired legacy asset that you were planning on tearing down until the recession started. What if we could find a new way to capitalize on that and become the best out in the country. So, at first we thought we were land developers again, we thought, oh, you fix up hotels, you make a beautiful 4-star quality level, really high level but not 5-star. Make them great and rent them to the people who love the beaches which are the New Yorkers and the Philadelphia people in our area in the northeast and we did that. We literally—we pulled the trigger, we re-branded, I hired TV designers and everything just to make it as sassy as we could and get as much PR as we could. And when we came to market, the building was gorgeous, but our service standard was delegated to a management company and they struggled so bad in seasonal luxury that they end up giving up and a year later we build around management company. See, that’s the thing that you don’t realize when you get into real estate. At first, you think of yourself as buildings and real estate and then you have to decide, are you also the managers? The operators? Or are you delegating that? Well, in this scenario, we put our 2 feet in the concrete and we said we are not moving. We are gonna become operators. Fast forward 2 years later after getting our butts kicked so much those first few months and years, we became ranked the 7th best American hotel out of 55,000 by Tripadvisor, which is the hardest one to get that high. We got a plaque on the wall, all kinds of accolades on it on even things like Wall Street Journal and USA Today and that convinced us that really our heart was for hospitality and we became passionate about training on incredible service and then as later in life, sorry for this deep dive, later in life we ended up doing this for private investors. Instead of just high net worth, we do it for high earners as you called them gold collar investors. We put together funds and now they join us as partners and this is like a new level of love, right? Because now we’ve been able to take the passion for operating hospitality assets, the very high clip and very high profitability and we’ve taken that same version of hospitality, now we call it investor hospitality and that’s why we don’t just have investors, we have an investor community and like you, we are all about making sure they get incredible value day 1, not only in the asset acquisition but also in the community. So we have this Mastermind we are kinda building, 100 plus accredited investors already invested, incredible, we are so blessed.
Pancham: Thank you for sharing that background and you don’t have to be sorry for going deep dive, I really appreciate that, that you went deep dive into that. So, I want to actually circle back to your first after 2012 and you look at that land and you were like, okay, you know what, what can we do now to actually bring this back to life, right? You did that then you give it to some third party management company and they can’t do justice to it then you decided to create your own company and now you as an overnight success, you are now 7th best ranked Tripadvisor hospitality company. So that was one project, right? So that was the first project that you did and when was that or when did you get that accolade from Tripadvisor, what year was that?
Josh: 2016 I believe we got the plaque and it’s I know everybody says this best that, best that, top rank this, top rank that, here’s the deal I am a big fan of finding ways to be best in things. This one shocked us. Now, we were very good at service. We turned it into this form of hospitality as a culture and I can explain that later, we now call it Viva May, it’s almost a verb of how we treat people. We literally, that means who had more 5 stars and more passion behind our brand than 55,000 American hotels, so we beat every Hilton, Marriott, Four Seasons, and this just means that people were incredibly passionate and Tripadvisor noticed. We had already known we were the number 1 ranked hotel in New Jersey because that’s where our headquarters was and so we thought that’s amazing. That’s good enough by the way. There’s 50 States and be the best hotel for a whole year we thought we were kicking butt. We were so happy and it wasn’t until crazy, a press release and then showing up on all kinds of media like I said Wall Street Journal, USA Today, because of the Tripadvisor ranking and it was our bankers that told us. We got a phone call because we had just negotiated the purchase of our second major property, now that we have built the model, we knew we were making great money for him and his family and I was just a small equity guy. We are like we’re gonna keep doing it. Franchise prototype man, we are going to replicate this model and we were in the middle of a 24-milion dollar acquisition and the banker, the president of the regional bank called and say congrats and we are like congrats for what? And he had seen it first, literally, so it was so extra-ordinary. And then here’s the shocker, the next year 2017, we got ranked 7th in America again, which seems almost statistically impossible. You would think you would have moved or not been on the list but we hit 7 again and honestly it’s now year 4 I guess since those dates and they have been on the ranking even though I’ve moved on and build our own company for investors now, they have never left the top 25, can you believe that?
Pancham: Wow, that is awesome.
Josh: The program continues there. I can’t wait to give you guys who invest with us the same national recognition. We will get there. We are doing much bigger and better stuff now a days. We are so grateful to our investors.
Pancham: Great. Thank you for sharing that. So, listeners if you didn’t get from that, Josh’s team takes all these distressed hospitality resort assets and turn them into gold.
Josh: Yup. Oh, gold collar. Oh, look at you. You are phenomenal. You must be in technology because you’re so witty. And by the way, you talked to me about that the name which I’m like a big fan of your show because of the branding, the content, you, I’m just a huge fan of it on every level because your focus is on the investor, the person, I really appreciate that about you. And the fact that I think it’s a freakin’ the best logo of any podcast I’ve ever seen. That also helps. You have the coolest logo. Good job, Pancham.
Pancham: Thank you. Thank you for that. So, you know, let me ask you this, right, this thing I’m into multifamily, I understand different asset clauses, for example, hotel business, I understand, you know, at a high level how the mobile home parks work and you know, we basically have revenue, we have some expenses and then we have net income. Same thing for any business out there, right? But in your business, how do you categorize, you know, at already high level like how do you make money?
Pancham: Now, I understand you make money with different levels of services that you provide but really like what stage like right level?
Josh: No, you’re right.
Josh: You’re asking a great question. We will keep it high level and then we will drill in on everything you wanna know. But the reason you’ve heard me use the word resort multiple times and not just the word hotel is because we actually have a specialty in these luxury-based high revenue, high-revenue streams, that’s the other surprise to resorts. Now resorts mean they can mean a hundred things to you, mountains, water, beaches, ours are vineyards now, golf courses, we have anything, anything, I mean it could be a ski mountains some day for us. We are agnostic to the type of like amenity that’s on property, but a resort always comes with this fact, that you also have revenue outside of the bedrooms. Outside of the restaurant, there is something else driving revenue. Now, there are I would say 90% of the investors who’ve invested in hotels would consider what I just said bad news. They would be like, no, I just want the room revenue, it’s very lucrative, it’s great. I mean it’s relatively consistent. I buy a Holiday Inn Express, it will be full 80% to 85% every single day and I’ll get 115 dollars every night. God bless you, I agree. There’s nothing wrong with that asset and buy it. Your wealth will increase I think you have security and you bought a heck of an asset. What we are doing though is we are buying such a value. There’s a less competitive market in my space meaning especially where we buy. We buy in the sub 25 million our resort right now. Hopefully, we will be buying in the hundred million dollar resort soon but we are buying sub 25 million so that way too low for the Marriotts and the Hiltons. They are independent. So, let me go back, we love resorts because we have learned ways to sell the auxiliary amenities, number one, being weddings. That in such a way were we can drive so much more revenue to the top line that we can force appreciation on the bottom line because here’s the other secret Pancham, at the end of the day, the bankers look at my NOI just like they do for you and if we are buying a distressed asset that has minimal pennies on the dollar or NOI, maybe break even for god’s sake, some of the resorts we look at, and then we almost within 2 years have 2 million or more on the NOI, that building just astronomically grow in value. For example, so what we can do is radicular forced appreciation. So, let’s go back to the multifamily because all of our friends are in multifamily when it’s a phenomenal thing, you know, many of them at [Inaudible] [15:11] a lot of those guys takes up those many things now but they get to incrementally increase NOI. They get to save money on cost. They get to increase rents. They get to sell some storage or whatever else they can sell. That increases NOI, the building goes up in value and that’s phenomenal operator. And I bet you it goes up incrementally. In our scenario, we will give you the property we just bought, we bought it, well, I don’t know if you wanna deal deep dive, we can do one of those later, but let me just say it went up by 3 times the purchase price in 12 months. So that’s astronomical change in value and it’s because we are buying them so affordably which of course is the number one rule in real estate and then we have a gift, a skill, and a focus on advanced selling. By doing that, we secure the asset faster and change it’s value faster. What I love to tell our investors sometimes is we are selling weddings which we will use that as one of our primary drivers at a phenomenal clip even in Corona and I can’t wait for you to challenge me on all these, you know, what about Corona? What about everything? I’ll explain all of that later. That we are putting 25% of the cash of the wedding in the bank today and the wedding is in the year 2022. Now, Pancham, you can imagine what that does for the valuation of the building that you have cash from the future sitting on your balance sheet. Now, of course it can’t be revenue because the event hasn’t happened, but it’s in your bank account investor. So, it’s almost like a security right here, we are adding value to your asset day one even though we are in the middle of construction and renovation, very interesting, very interesting model. It’s not the same way everybody does hospitality. There’s a few things we do differently and this is one of them.
Pancham: Okay. So, weddings is a big, big one for you guys. So let me go back to that example that you had stopped in the middle, so why don’t you quickly run through numbers if you want to.
Josh: I will absolutely.
Pancham: Right. Like what price have you bought it at and what was the NOI then and then what did you do, you know, high level to get it to a level where it is today and what’s the NOI now and what’s the value now.
Josh: Yeah. So, we will do this all in full disclosure. We are in the 18th month of operating our biggest resort I’ve ever done, but we bought it so well that it already changed it’s value based on our contract. So it didn’t change it’s value on the completion of all the NOI, because a lot of the NOIs in the year 2021 and 2022, but the contractor sign and so therefore the appraiser already gave us a lift in rent value. So, to go specific, this property had a replacement value, it’s so special. It is the second oldest winery in American history continuously operated during prohibition, all kinds of special stuff, the actual wine product is excellent but we don’t even talk about that. We just talked about the revenue from the weddings and everything. We bought it for just 5 million dollars. So we bought it for, you know, a quarter of what it would cost to rebuild what we built, but it will also get all kinds of other assets. But what we did was we invested approximately 10 million dollars in restoring it because it is big. It’s so big, it’s like the scale of a casino. It’s so big I mean it’s 120,000 square feet of usable, rentable space. I mean it’s big.
Pancham: And how big is the land?
Josh: 240 acres.
Josh: With gorgeous golf course. Literally, gorgeous, in the vines. It’s only 10 or 12 years old. Now, it’s 14 years old, when we bought it it was 12. So, it’s young and it’s beautiful and it’s in pretty good shape. We’ve been upgrading certain elements but not much. It’s the best year since this first year opened this year. Corona has been pretty good to golf ironically. It appraised for 1907 within 11 and a half months of us buying it. So, it appraised by Cushman & Wakefield and those are all, you know, in writing and contractual numbers, so based on the sales projections, based on the sales contracts I mean.
Pancham: So what was it—what did you pay for it?
Josh: 5 million.
Pancham: 5 million and then you put 10 into it?
Pancham: So, is that 10 all done?
Josh: You know what, great question. It is done. We would have been completely done without a punch list if Corona hadn’t messed this all up, but I would say we have a big punch list but we are done. I mean you can use everything we built. It’s beautiful.
Pancham: Okay, great. And now it’s already you added 4 million in equity, you know, if you consider that 10 million already and based on all the contracts and you are only starting.
Josh: Only starting, yeah, and so we sold 40% more weddings during Corona this year than the same cycle last year and last year was great. So, I think we sold 98 weddings during Corona virus.
Josh: And we’ve just crossed over I think 390 wedding sold in the first year and a half. That’s unbelievable numbers, you know, so yeah, we are on the right track.
Pancham: Right. And it’s not only weddings that you are charging for, you have all the guest coming and they are using your rooms and because they are using your rooms, they are also using your restaurant. They are also using your golf course to go and play and they are also using your, yeah, they are buying your wine, right? They are drinking, right?
Josh: To take it along with them.
Pancham: Yeah, all that adds up. So, one wedding maybe it’s 100 dollars like you know…
Josh: 150 to 175 average per person.
Pancham: Right. Exactly. And then this is just a wedding and then-
Pancham: -you add the 150 to 200 dollar rooms per night and then you add everything else around it, it just adds up.
Josh: And you wanna hear the crazy thing is, you know, many of your friends and my friends probably have bought into Holiday Inn and things like that and they do great. This is gonna blow their minds whoever is listening who has done this before, our profitability that NOI of 2 million in the first few years and then we hope way beyond that in the distant future is based on 45% room occupancy.
Pancham: That’s awesome.
Josh: You get it? And the reason is because we are over, over demanded. You pointed that out to me before the call. I could sell every guest room 5 times every weekend but it’s more challenging Monday, Tuesday and Wednesday. So, what we do is we basically tell our investors let’s not even plan on selling them. Of course, I’m gonna try to sell them but when you are doing the underwriting, you’re gonna be debating with me. Can I sell? So I just don’t even basically show them this is sold but I basically promise you will sell at the weddings, weekends rooms and our room rate will go up to probably 400 pretty soon. Right now, I think you can get them in the 200 to 750. We have a few penthouse suites that are very high level. But I bet you 2 years from now those penthouses will go for 1200 dollars. They are very, very pretty and they are brandnew but it’s because we will have 5 to 10 women’s families that want that room every single day. So the rate will have to increase and they can increase every year again at a pretty significant level, you know, revenue part every year.
Pancham: Wow. That’s amazing. So, just by listening to you, I’m thinking of changing my RV trip next week.
Josh: And come see me.
Pancham: To come-
Josh: Absolutely, you are welcome.
Pancham: -to play golf there, you know. Okay, great.
Josh: Hey, by the way, everybody who is listening, Pancham, you are welcome here. Where’s home base for you? New York, right?
Josh: Okay. You’re not far. Our number one bride and groom come from Manhattan area. We were just ranked the 8th top wedding venue for Manhattan believe it or not on the internet. So, I’m like how did that happen? We are not even really open with Corona yet. We are open by the way if you are listening. Feel to come on down, golf, play, eat outside. We have the biggest outdoor restaurant in New Jersey, 4-1/2 acres of outdoor dining, it’s amazing.
Pancham: Awesome. Awesome. Great. So anyone listening, if you want to enjoy nice open space and delicious food do check it out and we will put your website on.
Josh: Thank you. But Pancham go back to the first thing you said at the very beginning and I credited you that you are all about the investor and you talked about you have to get to know the people behind these deals, this is one of the unique things about a business like ours, right, Pancham. Unlike our friends that buy multifamily, it’s very hard to go test out what it’s like to be a renter, but it’s easy to test out our level of service, our commitment to the guest and you can actually do all that without me even knowing it, right? You could stay here this weekend Pancham. Actually we sold out weeks ago but you could stay here soon and you could do that, I wouldn’t even know you are here and you would be vetting us the whole time. And I will tell you that happens. Sometimes people come down they ask if well, they usually let me know I’m coming but they just come earlier later and they go do everything and in the end they tend us to talk themselves and to become partners because they know we are telling the truth about the way we treat people, it’s very, very, high level.
Pancham: Exactly and I would say this, we talked about this all the time on the show and every single guest I asked, they say it’s more important to know the jockey than the horse, right? And what you are talking about there is that if you are thinking of investing in a business, go check it out and in your business specifically it’s easier to vet out because it’s all customer service. You can experience it for yourself. That is awesome. That’s great Josh like we already touch upon this, so COVID-19 situation really did not impact any of your resorts at all or would you say there are places which got impacted?
Josh: It definitely, okay, forgive me, no, yeah, I wanna be clear. It absolutely changed so much about what we were doing. The key indicator though is future sales for us and cash in bank. So cash in bank actually went up and future contracts went through the roof. Thank God, however, we are in New Jersey, we lost 2 months of golf even though golf is having the best year ever minus 2 months, that was awful, right? That means zero revenue from golf for 2 months and we have salaries or we had furloughs. Either way that’s bad, right? We had to furlough about 90% of our people, 10% stayed with us to get this through this experience and get back open. Our restaurants were closed for I think 3-1/2 months, so zero revenue. Thankfully, the sales are legally allowed to happen so we kept selling but no, we were changed. We were profoundly changed to be honest with you. So, what it teaches us? Well, a couple of negatives were we lost months of revenue. We thought, oh, well, at least all those brides that were supposed to be here I think we had to move 60 weddings, which is a lot of money, that’s millions of dollars.
Pancham: Mind boggling.
Josh: Yeah. We could had all that in revenue in the bank, but what happened was we thought you know what, it will be over in the summer, so they all took dates in the spring and fall. So we gave all 60 of those Mondays, Tuesdays, Wednesdays, Thursdays, Fridays, Saturdays, whatever was leftover on Sundays and we ended up pushing the entire spring into fall. So our investors I had a lot of every month or so we did a call. I just answered any question to our investor. I said here’s what we are doing, who knows at the end of this year, we may be relatively close on revenue given Corona ending or quieting in the summer, this is us in the spring. Well, until I think it was July we were planning on having weddings again in August and out of the blue, there was a reversal here in New Jersey and they shut down the buildings again. It was one of the more strict states so we ended up having to tell all the brides, you know what, pause, we can’t promise you, you can have your wedding here even though we were told we were gonna have the place open and there was a date that we were allowed to open. Anyway, so we profoundly changed and here’s the big positive. All those are negatives, but you can always get better from a negative. We definitely did. One big blessing though was our business plan did not anticipate large, large outdoor dining. We thought of our sales as the east coast largest tasting room, really special rooms and spaces and bars and restaurants, but outdoor dining was like, hey, we will have it on the patio. Well with Corona in Jersey, we had to become an outdoor dining place and really because we had built this I don’t know if you have a picture of it, I know it’s hard to, you’ll have to see it, but we literally have 4 to 5 acres of outdoor dining area now because what we did is we kind of have like a fancy formal garden like something you’d see in a magazine and ponds and water features and vines, and we just anticipated those like walking areas, well, now, we put chairs and sofas and theaters and stages. It is something out of a movie here, Pancham, its so nice that on a weekend, this weekend, you have to call ahead a lot of times you have to say is there space because there’s Corona, because we are outside and we have the space, we literally never even come close to the 6-foot, even the 8-foot distancing. We are very good, very luxurious. We already had 500 people who ask for a seat here on Saturday which was never in our business plan. We never thought we would have 500 guest on a random Saturday, just for eating and drinking. We thought we would have a thousand guest every single Saturday for weddings. So, now if we have a thousand guest every which we already have this booked for the next year, about a thousand guest every Friday, Saturday and Sunday, that’s 3,000 on weekend, because all the wedding venues can happen at the same time, and then you throw in a few thousand extra guest outside over the course of the weekend, we could be really additive, you know, so we got our fingers crossed. I would say it’s probably gonna be a heck of a great year next year as long as Corona does not change things again next year and we are weathering storm by just holding on to, you know, reserves and making sure we have a safe asset.
Pancham: Oh, thank you for sharing that. If it doesn’t go your way, it makes you stronger. That’s what I believe and that’s what it seems like it’s happening and it’s great and good luck for this year to you and your team.
Josh: Thank you.
Pancham: So, my last question before we go to the next part of my show is you know, I’ve been asking this question lately to all the successful people and you know, I’ve seen this pattern that everyone has some kind of a morning or daily routine that they follow and my question to you is that you have any such routine and if so what is it and does it really attribute to your success?
Josh: Pancham, I think the thing that people appreciate about me is I’m honest and the truth is sometimes, which is better than zero because it used to be zero Pancham, I feel terrible. I mean I don’t know for years and years and years I was such a voracious learner, I would—I drive a lot 2 hours a day usually because we drive and commute to this property, so I do just voraciously take down books, you know, I’m a big Patrick Lencioni really understand the organizational health principles there and Ryan Holiday on the dignity of people, so I’m just kinda always learning that and then real estate investing. So, know that I wouldn’t call that a routine I just call that as like using your time wisely. Well, now, I’ve been doing The Miracle Morning and I’m sure you’ve heard of that, that’s Hal Elrod.
Josh: So we met him through GoBundance which we joined years ago now and GoBundance is a great Mastermind and we are so grateful to be part of that. So, it took a year and a half before I even open the book. Then look it’s a simple presentation of content but what a great idea, you know, you’d begin with the S.A.V.E.R.S, silence, affirmation, visioning, exercise, reading and scribing, that step by step I know it’s—he did that, he goes I didn’t invent this, I just put it in the book, but wait, it helps so much Pancham, so I would say I’m doing that 40% of my week. I know it’s not even half I apologize. So, when I do it I feel better but I commit so much time to it that I’m constantly debating with myself, should I get to the meeting earlier, be there or I’m not where I wanna be with them, my brother.
Pancham: So, I’m a big, big fan of S.A.V.E.R.S. I started incorporating it last year and other than the last test which is scribing, I don’t do that part, but rest of everything else today it just happens to be today and happens to be that you’re talking about it I finished 150 days of it.
Josh: Congratulations. See, I feel like look I could be defeated by how much better you are. Thank God I got started. I’m like you got to be appreciative for where you are each day.
Pancham: Yeah, I know, absolutely.
Josh: I am very happy with it.
Pancham: Oh, great. We will be back after this message.
If you are an accredited investor and have been thinking about putting your money to work for you then I have a good news for you. I have created an investor club which I call The Gold Collar Investor Club. I will be putting together investing opportunities exclusively for the group. These are the opportunities where I have done the due diligence for you and will be investing my own money alongside you. If you are interested, please sign up on https://thegoldcollarinvestor.com/club/. I repeat https://thegoldcollarinvestor.com/club/. I will reach out to schedule a 30-minute phone conversation to discuss your investing goals once you sign up. This can be a good opportunity to diversity and take some chips off the hands of Wall Street to produce some passive income and in case you are wondering what is an accredited investor, accredited investor is someone who has more than $200,000 as filing single or more than $300,000 filing jointly for last two years. In other way to qualify as an accredited investor is if your total net worth is more than 1 million dollars excluding your personal home. It includes your stocks, 401(k), IRAs, cars etc. just not the equity in your personal home. If this is you, I would highly encourage you to sign up.
So, let’s move on to the next section of the show which I call Taking the Leap Round. I ask these 4 questions to every guest on the show, so Josh my first question for you is when was the first time you invested outside of Wall Street?
Josh: You’re gonna be surprised, it was when Melanie and I were 23 years old, we just got married and we bought a duplex instead of a house. That was a great accident, I don’t even know how we got that in our head but it changed our minds about owning, earning at the same time. Remember Wall Street, you don’t earn until you sell. I love how main street and outside of Wall Street you get to own and earn.
Pancham: Great. Okay, and what fears? Did you have any fears that you had to overcome when you first invested in that duplex?
Josh: Let me think first, you know what, I probably was afraid that everything was gonna break all the time but I also had, look, I also had to get it done attitude so I thought, yeah, we will just figure it out. So, honestly I think the only fear I had was that real estate you feel like it comes with a lot of problems.
Pancham: Okay. And you’re young at that time, right?
Josh: Oh, yeah.
Josh: By the way, this is the surprise you and I have come across over the years of serving investors is all the goods that you and I were doing on single families I was doing on single family first are happening for our investors and they get to put me to work instead of them to work.
Pancham: Yeah, exactly. Exactly right. Great. So my third question for you Josh is that can you share with us one investment that did not go as expected?
Josh: Actually I have two, so I’m gonna just—I’ll skip, I already told you about the first investment we did as a resort, this is just a teaser, that one went really bad for one whole year to the point where, you know, you are losing weight because you are like I’m going to turn this around. So, no, there’s at least 15 stories I could tell you in that one. Now, I can tell you another one that I think it would be grateful for because maybe some of your investors are thinking about buying any old franchise business, so in 2009 the recession is pretty rich, remember it’s pretty thorough and I’m a tenacious developer happy to do whatever it takes but there’s nothing to develop back then. There were no houses to flip in 2009.
Josh: So I asked my wife she wasn’t so happy I bought a franchise and what we did was we bought a franchise that I thought was recession resistant because it regulated by the fire code, it was a serviced restaurants, but it took care of their fire stuff. And that I actually got featured in a book that you may have been featured in as well, I don’t know if you heard Don’t Quit with Kyle Wilson and when you are featured in a book called Don’t Quit and you may have had reason to quit. It went very rough and we ended up again taking the only good we took out of losing the franchise having to hand back the keys was that we learned how to sell. So, there was this time in that business where we had bought it, we thought, oh, you buy a franchise, there’s gonna be leads. Zero leads, nothing coming in. I’m called calling restaurants and service places, may I come in and give you a bid and they are all saying we got people, we got people, oh yeah, come give us a bid and the price points were so, they were very bad like I had to give them very low prices that I wouldn’t even made much money and I still wasn’t winning the bid. So, there was this point where they—I knew I was in real jeopardy about 5 months into it because I had made good sales that a flip, switch, flipped and I remember going into this next sales call I knew I was in danger of losing everything so I said to myself, well, we are good at it. We are gonna do a great job for him, so I’m gonna charge him full price, no discounting, none of this. And we ended up charging a very robust price and gave my bid to the vice president of the big regional franchise business that had many restaurants that I could have made a whole living on and he called me up, a salty old Philadelphian guy, the franchise was Chick & Peas, it’s actually parent owned really successful even they are in the recession they were doing great at that time and he calls me up, the salty old dude and he goes “who the hell do you think you are?” And I’m like, what? You know, I’ve never seen a bid this high like 20% higher than you’ve ever seen. I said well you’ve never worked with our level of quality before. We will back that bid up then you’ll be very happy. So after a really fighting back and forth, he won’t pay the bill. He won’t accept the bid. So, I barter with him for his what you call restaurant dollars and I got my full price counting the bar and boy did he love what we did. So we ended up really learning how to sell on value not on discount and boy that changed so much in how we do our life now and why we feel like we are doing well for investors. We call it accountable equity by the way because we wanted to be a fair trade, you know, and we know we have to be accountable with your equities so it changed the whole way I understood value propositions and even though we lost the business, there was a period of time where I learned how to sell it just wasn’t enough to pay back all the debt, so even though we got the cash flow positive, I didn’t get the cash flow positive plus pay back and when they offered to take the keys, I said, ahh, I’ll let you do that. So pretty bad. That was 2009 to 2010 and it has left a deep scar that I feel made us better, you know, by losing a business like that and knowing it’s your fault, you’re not gonna let that kind of lack of intensity happen again.
Pancham: Yeah, I know you do and you learn and these are real world lessons and I can see the deepness in your voice that when you’re talking about it and I can totally see that it still feels as if it happened yesterday. So, I feel sorry but again at the same time it has made you a very strong person and someone who you are like defines you who you are today and where you have taken your current company so that’s great.
Josh: Thank you, sir.
Pancham: So, my last question for you is what is one piece of advice would you give to people who are thinking of investing in main street that is outside of Wall Street?
Josh: You know, Pancham, you and I are saying the same thing and this is really the number one rule is it is the deal provider and the team. In fact it’s more the fact that they have a great team even then just a personality of whatever. That’s part of it all because you have to understand who is kinda driving the ship but the team has to be great and what we have been blessed with is we know how to attract good people, we treat people right, you know, we have this whole principle of the infinite dignity and worth of each of the people that work with us and we try to live that and that’s how we try to share our staff, we try to do that for our guest as well is share their dignity with them and always keep that in front of them. So that has led us to have really a stellar team from operators to financiers to and these are actually in house, that’s a little different about us than most of the other colleagues you and I know well. We are not a one-man band or two-man band or two-lady band, we are literally a robust company that’s why we create funds now and these funds have staff. We have a fund manager. We have asset manager. We have underwriters. Now the underwriters are on contract but the fund manager is full time. Associates are all full time. I’m full time. And we have a design team then we have operators. So, it depends if you want to really know the operator, we are going down the path of believing that we are building for the future of scale, so we put the people in place. We are not trying to make too much money ourselves right now. We are trying to build a base that is solid and like an oak tree.
Pancham: Great. Great advice there. So, thank you Josh for your time. You’ve been very generous with your time and how can listeners reach you and connect with you and give us the website for your winery resort as well so that, you know, if they wanna come and enjoy nice food and round of golf, you know, where to go.
Josh: Well, the fastest way to reach us and we literally have a staff that helped get a hold of us right away if you need anything is accountableequity.com. Accountable equity, two full words, just dot com. So now that–I would love for you to just hit a contact sheet up there and let us know if you are interested in finding on how we do our investing, two funds are open right now very attractive and like Pancham said, you are allowed to come check us at any time you want in real life which is great.
Pancham: Great and do you have any website for the…
Josh: Oh, the restaurants? The best one for all of us here in the northeast would be Renault, spelled like the car from France https://www.renaultwinery.com/. That is just the gateway into the entire list of services and assets and all that great stuff we have there.
Pancham: Awesome. Awesome. Well, thank you so much Josh for your time here and I’m sure listeners are going to get a lot of value from what you’ve shared today.
Josh: Thank you so much and thanks for what you’re doing because look there’s a growing number of smart people that are out there that are higher earners that are looking to diversify into main street and because of shows like yours they are getting to meet people and to get content and I know how hard it is to do your job because we have a show as well and boy it’s energy time and commitment and I appreciate you doing this. Thank you so much.
Pancham: Thank you for your kind words, Josh. Thank you.
Thank you for listening to The Gold Collar Investor Podcast. If you love what you’ve heard and you want more of Pancham Gupta, visit us at www.thegoldcollarinvestor.com and follow us on Facebook at The Gold Collar Investor. The information on this podcast are opinions. As always, please consult your own financial team before investing.