If I Had To Build Live Oak Lake All Over Again… (Part 3)
By Isaac French
Welcome to Part 3 of the how I'd build Live Oak Lake if I had to do it all over series.
You can find parts 1-4 in the first two emails here if you missed last week. Let me warn you again—this is a bit dense, but I'm packing so much in, and for anyone actively interested in creating or investing in experiential properties, this is gold.
And now, let’s jump straight in. Here are steps 5 through 8...
Step 5: Find A Lender
We set up meetings with a few different local community banks, and we're going to bring our one-pager, as well as any other project info and personal financial info we have. We're going to ask about both construction loans and SBA loans (7a and 504).
We need to effectively communicate our conviction in the project to the loan officer (who's going to have plenty of hesitations) and the support we've mustered from our rich (at least richer than us) friend(s). Most likely, they may need to co-guarantee our loan, especially if it's a traditional construction loan. And we will too, of course.
If 2 banks tell us no, we’ll find a 3rd. If 20 banks tell us no, we'll find a 21st. "No" means nothing to us. We have a dream (a conviction actually), investors, a plan, and a property under contract!
We'll go back and forth a bit, and then deliver to the bank a polished presentation document showcasing our property, site plan, unit types, and a simple but well-formulated pro forma including estimated build costs (rounded 20-30% high) and future operating income and expenses.
We're going to model out 60% occupancy our first year, then 70-80% over the next 3 years. We can use data from AirDNA, along with comps from other micro-resorts in our region (or similar regions).
By this point, we're pseudo-experts in high finance (not really), running a LOT of numbers. We're calling a ton of contractors. And we're doing more than our share of educated guesswork, too, to stitch it all up.
But this is what bootstrapping is all about!
(If we really want to get fancy, we're going to do some recon in advance, and find out the real estate appraisers that our bank uses. Then we're going to engage said appraiser privately, based off our plans and pro forma for the project. Chances are we'll get a much more favorable (higher) appraisal that we can proactively submit to the bank. They'll at least have to reconcile their own estimates with this...)
And now, ladies and gentlemen, it's time (just in time) to close on our property. Loan approved. Congrats, us.
Step 6: Build!
It's finally time to rock and roll with construction! We've chosen a plot of land close to where we live (checks all the boxes - lucky us!), and this will be super helpful as we proceed.
Though we could attempt to be our own general contractor, we're not going to try that just yet.
We need to hire a general contractor and so we're going to talk to other developers in our area and interview a few candidates. Ideally, we'll find one who's already done a project or two not too unlike what we want to build.
We want our GC to be able to innovate and provide clever solutions to problems (aka value-engineering).
And we need someone who can maximize the vision on the budget we have, with the particular piece of land we're building it on. For potential GC's, one good question to ask is, “If you were building this yourself, what would you do differently?”
Most importantly, we want someone who prior customers have fantastic things to say about. References (and lots of them) are key.
Alright, we found our guy (or gal) and we're ready to go!
As construction begins in full force, we're going to hire a landscape designer (could even be just a landscape contractor with a good eye), and we're going to come up with a plan to enhance the natural features of the land, and create little oases around the property, at each cabin, and at a commons area.
There’s nothing like a great landscape to create vibe. It’s the highest ROI money we can spend on this property (though that’s a tough competition!)
Related to the landscape, there’s also nothing like water to create vibe. And views. And some kind of hammock or swing.
We can think through exactly what we want for this place, but ideally we’re able to simply enhance what’s already here: perhaps that’s taking a low area and making a charming little lake. This may involve a bit of earthwork, and the installation of an aerator or two to keep the water clear.
Or maybe we have a natural stream—even better! Is it only seasonal? Then can we figure out a way to recirculate it? We’ve got to be creative here!
Our commons area (which we strategically placed in one of the best spots on the property) needs to have outdoor space for small group events so we can sell-out the whole place to groups (family reunions, startup retreats, and perhaps even micro-weddings). It will also be available to the individual guests, and will provide an excellent photo/video op which can be used to market all the cabins individually (since it's accessible to everyone).
We’re going to go with a cool container pool at the commons, along with a couple barrel saunas.
Each of the cabins will have a private water feature—perhaps a cowboy pool built-in to the private deck. Perfect vibes incoming…
On a more practical note, we need a small laundry facility onsite: something where we can store overstock inventory of everything we're going to need (towels, supplies, small appliances and utensils, bird food, etc). And we’d better plan for 2-3x the space we THINK we need…don’t ask me why:)
Let's go with a simple, affordable pre-fab shed, with utilities run to it and finished out.
We want SpeedQueen and Unimac washers and dryers (only need one of each for this size of resort). These aren't cheap, but will be some of our best-spent money in the grand scheme of things...
As construction of the units takes place, we're over there as much as possible, still as intentional observers. This is really where so much of the design work will happen.
On the fly, spur of the moment, lightbulb moments!
But we're able to make design decisions thoughtfully, always referring back to our bible, and to the adjacent factors and finishes rapidly developing around us.
That trusty, tasteful, design sounding board/friend we talked about, along with an equally-trusty construction pal to run things by, are our two best friends during the build. Let's give 'em a hand!!
Step 7: Furnishing and Pre-launch Operations
Fast forward about a year (maybe even less!), and construction should be wrapped—or wrapping—up! Our design friend is guiding us with furnishing all the interiors. In fact, we've stockpiled an entire shipping container full of elegant stuff we've found on Etsy (and various corners of the internet), so we're ready to go!
As cleaners polish out the spaces after construction punchlist is complete, we're in right behind, setting up furniture, rugs, kitchens, beds, art, plants, all the fun stuff!!
The project's finally done!! Whew that feels good!
Now we're going to vet and hire a small team of cleaners. We can look on Facebook, and talk to other hosts in our area. We're going to work directly with them the first couple weeks and develop a simple checklist and process to clean each cabin and the commons area.
Along with a maintenance somebody, these are our most critical part of the whole thing. What's the point of investing $2M in a beautiful project and piece of property if a guest is going to show up to a cabin with a dirty toilet?
This is important: they can't be merely technically proficient at their job; they also need to be personable. Since this is a micro-resort and we won't have any front desk or onsite staff, the cleaners/maintenance will be the only people associated with the property that the guests may encounter.
This is hospitality after all!
We're going to train the cleaners how to interact with the guests: warm, polite and gracious. We're going to train them to handwrite a welcome card for each guest, and leave it along with a locally-curated gift basket and all the other thoughtful touches like the personalized welcome manual we've created. These first impressions are so, so critical...
Step 8: Branding!
(This part could happen earlier, but to be tidy we'll throw it in now).
High time we formally come up with our "brand."
We want a great, distinctive name (ChatGPT might just be capable of helping us brainstorm this). We'll take into account our local region, the property characteristics, our personal story, and our dream for the guests.
And we're not going to overcomplicate this!
We'll narrow it down to a shortlist, ask our friends (at least those with taste). Oh—and we mustn't forget to check out socials handles and available domains...really important that we lock those down immediately.
Now it's time to give our name (the best one, of course:) to a few friends (or freelancers on Fiverr) who are creative graphic designers, and workshop a great logo and typeface. At this point (crazy as it sounds, we'll even start dreaming up copy for the website).
Up next…Step 9: Launch Marketing
Ok, going long again, so we'll stop here and resume next week... Stay tuned!!