The Hotel Investor Playbook
Welcome to The Hotel Investor Playbook, hosted by real estate investor and hospitality operator Michael Russell. Michael is the co-founder of Malama Capital and Howzit Hostels, and has built a personal real estate portfolio exceeding $20 million.
With an operator-first mindset, Michael brings a practical perspective to hotel investing. On the show, he breaks down what it actually takes to scale from short-term rentals into boutique hotels, covering deal sourcing, operations, capital strategy, and risk.
Each week, Michael shares real lessons from the field as he builds toward a $400 million real estate business, giving listeners an honest look at the decisions, challenges, and strategies behind the growth. Subscribe and follow along as he documents the journey in real time.
The Hotel Investor Playbook
Attorney Reveals Why Most Hotel Syndicators Are Breaking the Law | Bethany LaFlam E65
Most first-time hotel syndicators are already breaking the rules; they just don't know it yet. If you've ever taken money from friends and family without the right structure, you may have accidentally sold securities. And if you're paying someone just to raise capital? That's another violation waiting to happen.
In this episode, you'll learn exactly how to raise money for hotel deals without putting yourself or your investors at risk.
A securities attorney who's structured hundreds of capital raises and lost $1 million on her own failed fund shares the hard lessons that transformed how she builds partnerships today. Bethany LaFlam now co-owns a boutique resort in Belize and is building a luxury hospitality portfolio, all while helping Main Street operators avoid the costly legal mistakes she's seen kill deals.
In this episode, you'll discover:
- The #1 way sponsors accidentally break SEC rules (and how to stay compliant)
- Why 506B vs. 506C matters and how to choose the right structure for your raise
- The capital raiser compensation mistake that can get you investigated
- How to vet partners before you commit (including the exact questions to ask)
- Why "investor perks" like free hotel nights require careful legal structuring
- The mindset trap that kept her broke for years after a failed $50M fund
If you're planning to raise capital for a hotel deal, this episode could save you from a costly legal mistake or worse, an SEC investigation. Don't skip the compliance conversation.
About Bethany
Bethany LaFlam is a seasoned securities attorney, real estate investor, and Managing Partner at Premier Law Group, where she helps syndicators navigate complex SEC regulations to raise capital safely and effectively. With over two decades of legal experience, she champions the "Power of OPE" (Other People’s Everything), a strategic framework designed to help entrepreneurs scale their wealth and businesses without burnout. Bethany is also the author of the bestselling book The Power of OPE and the founder of the Conscious Capital Collective, a community dedicated to intentional wealth creation and luxury hospitality investing.
Connect with Bethany
Connect with Bethany on LinkedIn.
Follow Bethany on Instagram or visit their Website.
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You're raising money for your first hotel deal and you think you're doing everything right. But there's a good chance you've already broken SEC rules without even knowing it. Today, a securities attorney who structured hundreds of raises reveals the exact mistakes that get first-time sponsors into serious trouble and how to avoid them before it's too late. Let's dive in. The Hotel Investor Playbook, your guide to building wealth and freedom through hotel and hospitality ownership. On this podcast, we talk story about everything you need to know to make money investing in hotels and in hospitality assets. My guest today is Bethany LaFlam, a securities attorney who structured hundreds of raises, and she's also a hospitality owner herself. So she understands the real world side of getting a deal funded and operated. Bethany, welcome to the show.
Bethan LaFlam:Thank you for having me.
Michael Russell:Absolutely. So listen, for a boutique hotel sponsor who is raising money for the first time, what's the most common way they accidentally break the rules?
Bethan LaFlam:The first way is they don't realize that they're selling security. So it's like, oh, it's just my friends and my family, my mom, my uncle, whatever, and I'm getting money from them. So I'm not really selling securities or call it a note or whatever. So they don't realize that they're selling security. So I think the first thing to know is even what is a security? I'm sure a lot of your listeners are like, what's syndication? What's security? Those sounds scary. And they do sound scary. And so a security really is just when an investor puts in their money and they intend to be passive, so they're not doing any of the work, they're relying on you and your efforts to do the work to generate a return on their money, then you've sold a security. Right. So if it's really pooling of money, the expectation of a profit based on someone else's efforts, that's a security. And usually when I tell people that that, they're they go kind of white, right? And they're like, oh, I think I've sold a security. And I didn't mean to. Probably not going to jail. That's okay. But don't keep doing that. It's it's a it's a bad practice.
Michael Russell:Yeah. I mean, I imagine that it's probably a little painful to think about going through this process the first time because you know, you're nervous, you're raising equity, equity, you don't want to do anything wrong. So I guess just if you could share, maybe give our listeners maybe one rule that just in general just keeps them out of trouble, let's say 80% of the time, what would that be?
Bethan LaFlam:Besides knowing if you're selling security, making sure that you're giving the appropriate risk disclosures to anybody who's giving you money. That is, if you tell them all the things that could possibly go wrong, it's gonna protect them from investing if they can't handle that. It's gonna protect you if they invest anyway. Right? Because you could say, I told you all the risks, I told you you might lose your money, I told you you might not make the returns that I said, I told you all the bad things, and you still chose to invest, knowing all of that. That's you know, we're grown-ups, we invested. I think that's the biggest thing is tell the truth, be really transparent, and you're gonna be protected. And it goes a really long way.
Michael Russell:Yeah, well, I've had a look at one of these disclosure documents, and I think that is a key word disclosure, disclosure, disclosure. So just in general terms, just tell people, hey, here's the risk. And, you know, this way people don't feel like they're getting burned if something does go wrong. But hopefully things go right. I want to know, you know, if someone is preparing for a raise, and let's say they're, you know, unfamiliar with all the vernacular and all the things, before we really talk like legal structures, maybe what are like, I don't know, one or two strategies that sponsors can use to help them raise money the right way.
Bethan LaFlam:I think the first one, well, two big rules, right? Know who your potential investors are and know how you're reaching them. So who they are, are they people that are accredited, meaning do they have a net worth over a million dollars, excluding their primary residence, or do they make more than $200,000 a year? Or are they all accredited? That is accredited, or are they non-accredited rather? So who your potential investors are is going to determine the rules of how you can talk to them and who can come into your deal, right? So accredited or not accredited, it's okay to take people into your deal who are not accredited, meaning they make less than that or they have a lower net worth, but there's just a little bit stricter rules on how you're allowed to reach them, right? So let's talk about there's two different exemptions. The main thing about securities, when you're selling securities, is you have the SEC is looking at what you're doing, right? The big thing is if you're a public company, you're gonna register those securities, go public. You've probably heard people say Microsoft goes public, better win public. In a real estate deal, we're not going public, right? So then what? You have to find an exemption. So when you hear people throwing around 506B, 506C, those are just exemptions to registering. So what that does is it tells the SEC, the Securities and Exchange Commission, that's who governs all of this, right? It tells them, I'm not going public, but I am gonna raise some money, I'm gonna stay under an exemption, and they go, fine, then you got to do it one of these two ways. There are other ways, but the main way that people do it are these two ways that I'm talking about, right? 502 or 506C. Again, you don't have to memorize this. That's okay. But the main thing to know who are the potential potential investors and how am I getting to them? So if you want to take mom and dad who aren't accredited, right? They don't have a million bucks yet, you're gonna help them get there through your investments. Okay, that's fine, but you can't advertise that. Right? You could take up to 35, still sophisticated, they got to know what they're getting into, but not yet accredited investors. If you do that, you're not shouting it out on Facebook or Instagram or TikTok or whatever, you're not putting out a billboard, you're not talking email blasts or whatever, no ads. You're talking to people you know really well already because there's no general solicitation. Okay. Okay. That you could take up to 35 non-accredited, you could take still a bunch of accredited investors in those deals, still, and that's a 506B. So no general solicitation, you're you're on the down low here. You're doing to your internal network.
Michael Russell:Okay. So look, I think sometimes when people hear 506B and 506C, their brains kind of just shut off, right? Yeah, I did. So what you're describing is 506B is up to 35 friends and family, right? Like in simple terms, people that you already have an established relationship with.
Bethan LaFlam:No, up to 35 non-accredited.
Michael Russell:Okay.
Bethan LaFlam:Everybody in a five, so this is actually you bring up a really good point, though, because people do sometimes get confused on 506B of they call it the non-accredited one or they call it the friends and family. It is friends and family. Some of them are gonna be accredited, some of them are not gonna be accredited. That's okay. But you do need to know all of them. Okay, everybody, even the ones that are accredited. 35 of them could still be non-accredited, right? 100 could be accredited. Probably not gonna have that many, but it it could be, right? And you could raise however much you need to raise on a 506B, okay. As long as it's close personal connections.
Michael Russell:All right, so that's the caveat there I want to be clear on because it is non-accredited up to 35 people, but you do also have to have a connection. So technically, you know, a friend or a family member would they would qualify as a connection because you have a relationship. Typically, yes.
Bethan LaFlam:Yeah. So the rule, and this is where people do also get confused, right? The rule is that you can't generally solicit or advertise, right? Again, Facebook, Instagram, email blasts, that's a big one. Or if you have a community, podcast, whatever, you're not doing that. So you have to keep it to people. The easiest way to show you didn't solicit or advertise is to have a substantial pre-existent relationship. Those are the words that the SEC uses. Substantial pre-existing. So if the SEC starts poking around and saying, I feel like maybe you did generally solicit Michael, you can say, No, I already knew these people. I didn't because I already knew who these people were. I had a substantial relationship. And if the SEC starts to poke around further and investigate, they can go and talk to these people and interview them. And those people with a straight face can't say, I didn't know this guy. He just stole my money. Right? So you should have backup. You should have a CRM, your client or customer relationship management software. You should have records of how you know all these people if you're gonna do a 506B, just so that no one can ever claim you generally solicited or advertised.
Michael Russell:Okay. Well, let's say that I'm, you know, I'm active on Instagram and I'm just posting, maybe not specifically about this deal or specifics of the deal, but I am communicating with people that are generally interested in the persona that I present online or in social media. Is that considered like an existing relationship, even though we haven't necessarily met in person? Maybe, you know, we've not gone to lunch, but we've exchanged some messaging on Instagram.
Bethan LaFlam:Probably not enough. So the SEC has actually given us some guidance on what constitutes a substantial relationship. And there are eight steps of taking a stranger, let's say, from Instagram to being a 50B eligible investor. And they're not easy steps. So it's probably not going to be just a couple of DMs about, hey, you like, you like boutique hotels? Cool, me too. You know, it's gonna be like, I know your investing goals, I know what your risk tolerance is, I know, you know, I know how much you've invested before and how much experience you have in investing, right? I know you at this point. We worked together, so I know you pretty well. I've I've hung out with your children or whatever, right? Those it's gonna have to rise to the level of of more substantial, right? And it there's a lot of people that'll say, well, it's a three-touch rule. I'll just email in three times. There's no such rule. That's that's that's a made-up thing. It's not about the quantity of the interactions, it's about the quality. It's possible that we could go to a three-day retreat somewhere and get to know each other on such a level that now I would say that's substantial in three days. You could maybe not accomplish that in six months if we're just doing email exchanges. So it's the quality of the interactions, right? How much do I now know about you and your goals?
Michael Russell:All right. Well, I mean, it seems like just, you know, if you're looking to whether or not you can justify it, there's probably a good chance that you can't. Because it should be pretty blatant. It should be like just common sense. Like, yeah, we we're we're connected, we know each other.
Bethan LaFlam:Yeah, yeah. Yeah. I mean, and you got to think about, think about it this way. Let's say I come to you, you don't know me from anybody, right? And I and I say, Oh, we we've been in the same groups for a while, whatever, put in $100,000 into my deal. And then I lose your money, right? It's a bad deal. Maybe it's my fault, maybe it's not. Doesn't really matter. The SEC says, I'm pretty sure she advertised and they interview you. You are not my best witness unless you really, really know me. If I just lost $100,000 of yours. So you have to assume that people aren't gonna be your best advocate. So you better know that.
Michael Russell:Yeah, that's a really good way you set that up, that perspective. Absolutely. Yeah. It's like everything is fine and dandy until something goes wrong.
Bethan LaFlam:Right, right. So just assume it went wrong, and then what would that look like?
Michael Russell:Yeah. Okay. So that's that's 506B in a nutshell. Now let's talk about the other one, the 506C. These are for accredited investors that meet the qualifications, but there's some advantages of this one, right?
Bethan LaFlam:Yeah. Yeah. The advantages are you can generally solicit or advertise. You can actually go and take out ads. You've probably seen a bunch of sponsored ads that we're raising for a new hotel. This is great. Everybody who comes into that deal has to be accredited and you have to take reasonable steps to verify that they are in fact accredited. You could use a third party to do it. It's like maybe a hundred bucks most to do that, but you do have to take that step. But in exchange, you get to you get to advertise. So you get a much broader net cast that way in exchange for having everybody be accredited.
Michael Russell:Yeah, that makes sense. And so is there anything that you can't do if you are advertising publicly? Are there any like red flags, things like absolute no-nos, don't do that?
Bethan LaFlam:Yes. And I'm glad you asked that question because people think it's a free-for-all if they're new, oh it's 5060, I can do whatever. Never, never, never guarantee returns. Even if you have a preferred return that is not guaranteed. So let's say an 8%, a preferred return just means that the investor is getting paid first if there's profit. So the guarantee is if there's profit, you get yours first, then I get mine. That's the only guarantee. So no guarantees. No, we guarantee we're gonna three extra money in four years. No, you're not. You can't guarantee that, right? Even if you call it a note and it's an 8% interest rate on the note, if it's a security, it's not guaranteed. So no guarantees, no promises. We promise that you are going to pay 0% in taxes because we have we're doing a cost segregation study. You cannot promise any kind of specific tax results because you don't know what everybody's tax situation is. You see where I'm going with this. This is why, by the way, you see all these disclaimers because lawyers get cute and someone finds a loophole, and then another lawyer goes, okay, fine, then I'll plug up that loophole. Here's one more disclaimer. Here's one more page of a contract. That's why contracts are so long, is because someone found a loophole and then we go, okay, fine, let's close that one, right? So that's why you see those documents are so long.
Michael Russell:Yeah. So, you know, you're talking about these two options, and I let's just say, you know, I'm in a scenario where I want to raise capital. How, how do I do I have to just pick one option? Or, you know, how do I know which option I I need to choose?
Bethan LaFlam:The first thing is to think about who are your prospective investors, right? Do you know enough people that you can get this done without advertising? So let's say you have a two million dollar raise. I don't know about you, but with me, when I first started raising, I did not know enough people. So 56 B wasn't going to be an option, at least by itself. And there is another option. So I would have needed, I did need to advertise. So I was stuck with 506C, right? Because you can do both if done properly, but you have to start with the B. So you start in stealth mode, you go get everybody you know in, and you disclose that you're doing this, by the way, up front. You say, Hey, everybody, if we don't close, if we don't get done here, I'm gonna reopen this for 506. It's gonna be a separate class of investor. It's it's actually technically a separate offering, even though it's for the same asset. You start in stealth mode, you get your 506B, you raise as much as you can, you stop that raise, you take no more money from anybody in that raise, and then you close it, you have another set of documents, and you can start advertising. But the minute you start advertising, B is off the table. So you can't go the other way around, right? I see you can't you can't advertise and then go get grandma in, who's not accredited.
Michael Russell:Right. Okay, so from a timing perspective, you got to completely exhaust whatever resources or people that you're you're planning on raising money from first, and then you go into the 506C. But is there a deadline? Like, are there any timing constraints that should be aware of? Like, or can the 506B be as long as you have the liberty in order to close the transaction?
Bethan LaFlam:Yeah, it's up to your deal and you decide. Okay.
Michael Russell:For someone like me that's constantly looking to acquire deals, you know, I'm out there talking about investing in hotels. You know, my social media might as podcast, for example, I'm constantly trying to be bring awareness to what I'm doing. So I'm wondering, like, you know, if I'm building this personal brand around hospitality investing, is there any specific type of content that that really ultimately crosses the line from, I guess, building authority to, I guess you could call it illegal solicitation.
Bethan LaFlam:So you're doing it exactly right. If you're consistent, right, you start building up that brand, you talk about why boutique hotels are the best, you're educating, you're providing value, you're doing all those things outside of the context of any deal. That's perfect. That is allowed. It's when you're quiet, quiet, quiet. You don't talk about anything on social media, then you have a deal, and then suddenly you start talking about boutique hotels are the best or whatever, trying to get people excited so they'll call you about your deal, even if you're not asking for money. That's actually called conditioning the market. So you can't do that. So be loud now, build your brand now, exactly the way you're doing it, right? Tell everybody why boutique hotels are the very best asset class. And I agree. Tell everybody why you are such a good operator and why your team is so great before you have a deal, because the SEC does not govern social media, it governs capital raises.
Michael Russell:Wow. Right. Yeah, this is really critically important because in this day and age, look, people are connecting with you on social media. Like people you haven't talked to in years might be your best investor, someone that you know you went to, let's say, high school with, you know, a decade ago. Like you're not necessarily on the phone with them every day, but they're following you on social media. And so the lesson, the takeaway that I'm getting from this is if you have an intention of raising capital and you don't necessarily have this whole list of qualified accredited investors, you're gonna logically start with your friends and family or known associates, and so start publicly broadcasting what you're working on, even if it's not specific to a particular property, the sooner the better.
Bethan LaFlam:Yeah. Start building those relationships before you need the money. That is the best advice I could give you right there is start developing meaningful relationships before you have a deal, before you need the money. I don't mean crease, I don't mean having anybody to give you money. I mean develop the relationship so when it's time, they already know like and trust you.
Michael Russell:Hey guys, quick favor if this episode is helping you, text it to one friend who is either trying to buy a hotel or owns and operates one already. Sharing the show is the best way you can support what we're building here. Now, back to the episode. Okay, so this hybrid approach is appealing, right? Because provided that you've got enough runway in the deal to where you have a long enough timeline to be able to raise and to, you know, I guess essentially two stages. Is there any, I don't know, screw up areas that we should be aware of? Like, you know, you said it's got to be a hard stop, but where do people sometimes get in trouble? I imagine there's like a conversation that may have initiated. And, you know, I guess can you give me an example of of an area where people find themselves in trouble?
Bethan LaFlam:Yeah, is a hard stop. And the reason that is, is because again, if you if you don't have it be a bright line between the 506B and the 506C, you could then get accused of generally soliciting and getting those people in earlier from a general solicitation, which takes all of the non-accrediteds out of the running. If it looks like you advertise, then nobody who's non-accredited is allowed to be in this deal. So if you don't have it be a bright line, you run the risk of having to prove how all those people came into your life. Yeah. So you better hope you have backup at that point, right? So I'm giving best practices of how not to get get yourself set up for an investigation. But worst case is let's make sure you survive it.
unknown:Yeah.
Bethan LaFlam:Right. If you are investigating, at least nobody wants to get audited, but at least if you have all your receipts, you're gonna survive an audit, right?
Michael Russell:Okay. So let's say I get through the first stage. I'm going on to the 506C, and my responsibility as a sponsor is I need to make sure these people are accredited. They could tell me, like, sure, I, you know, I'm I meet the qualifications. You said there's a third-party service that will validate this. Can you just maybe touch upon how that works?
Bethan LaFlam:Yeah, absolutely. So I never recommend that a sponsor does this themselves. There's a lot of potential liability and you are conflicted because you want them to be accredited, right? So there are third almost every portal, investor portal that people use Investnext, Cashflow Portal, almost all of them have a relationship with a third-party service that will take the investor's information and then send you a letter that says, yay, they're accredited, right? Or even send it to the investor and the investor will give it to you. But you get it in the portal. So we use InvestNEX for our deals and they work with, I think it's Parallel Markets is the name of the company. And then there's another one actually called Verify Investor or something really obvious, right? And it's it's like 60 bucks, maybe a hundred bucks tops to get it done. Some people have their investors pay for it. We pay for it for our investors. And they upload all their information and then they make the determination, the third party makes the determination. You get a letter that you can rely on legally now. Right. So it's called a safe harbor. You are allowed to rely on this. That is considered to be by the SEC reasonable efforts to check. Right. There are a lot of people that are like, oh, just give me your give me your dots and I'll do it myself because I don't want to pay the 60 bucks. You might be able to get away with that if it's W 2, because that's the end company that's like, oh, they made 200,000. That that's easy for the past two years. It net worth is a lot. Harder. I've had so many people send me, like, here's my Ameritrade that's got two million bucks. And I'm like, Yeah, I don't know what you owe. That's not net worth. I don't know how much you're, you know, how I don't care what's in your Ameritrade because I don't know if you hawk everything else and you're in debt to your eyeballs. I don't know.
unknown:Right?
Michael Russell:Yeah. So before I move on, recap again, to be accredited, what are the conditions?
Bethan LaFlam:So you either have to have a million dollars net worth, excluding your primary residence, or you have to have made $200,000 annually the prior two years and reasonably expected in the current year, or $300,000 if you want to count your spouse. So if you both make $150,000 you could qualify. Okay. That's it. There are other ways that so people can go in there. There's other ways you can do it. Yeah, there are. Those are the main two ways.
Michael Russell:Okay. So fair enough. Now I want to move on to one that might another topic that might be a little bit controversial, but because it's a there's a little bit of gray area here. A lot of times, first-time investors or smaller syndicates, what they'll do is they'll offer an opportunity for someone to break into a hotel deal by allowing that person to just raise money. Quote, just raise money, right? And so, you know, if you're a GP, your general partner, your sponsor, and you allow someone to raise money for you, what are the conditions that they need to comply with in order to be compliant legally?
Bethan LaFlam:This is the best question you could have asked because I have this conversation several times a week. And this is actually, other than not knowing when you're selling a security, this is the next big one where people get in trouble. And you're absolutely right is that if you get into this space, inevitably somebody is going to offer you some part of a deal to raise money for them. That is not allowed. Full stop. You cannot get paid just to raise money. Let me back up by telling you why we are allowed to raise money. The SEC has rules, FINRA has rules that if you're if you're going to raise money and you're going to get compensated for it, you have to be a FINRA registered broker dealer, not a real real estate broker, FINRA registered broker dealer. That is highly regulated. Almost no one does it. And when you do, that's a whole regulatory body that you have to then deal with. So a lot of these people that are in our space, they're not licensed. There is something called an issuer exemption. That is what almost all of us are relying on. What that says is if you are raising money to operate your own business, you don't have to have a license. You're not getting paid to raise money. You're raising money to operate your own business. Now you will get paid from your business, sure. Right. But that means that anybody who's raising money, it better be their business. So that's not a giving you 10% of my deal to raise money doesn't make it your business. Right. You've got to be substantially involved in the business for it to actually be your business.
Michael Russell:Okay. So let's let's double click on that, right? Substantial duties. Like what qualifies as substantial duties?
Bethan LaFlam:I'm glad you asked because the SEC is a little vague on this one, right? And so it's like, it's like the IRS. I don't know, you guess. If you get it wrong, you're in trouble, but you guess, right? It's like the IRS. It's substantial duties, though, means that something that you would ordinarily have to go pay someone to do if it wasn't a partner doing it, right? Which raising money, you you can't really pay someone to do. Right. So, like if you're gonna raise money, you should also probably be in at least involved in the underwriting or understand the underwriting, but you should be involved in the decision making. You should really be doing some diligence. Because if you're gonna go out and get your investors to come into this deal, how are you doing that? What are you basing that on? Are you basing that on just something I told you? Because you're on the hook if you're gonna bring these investors in and you're gonna call yourself a GP, you're on the hook for the whole thing with me. And you're gonna put that all on me. That's not really a smart move, even if I'm paying you, right? So you want to be involved just as much as I I need you to be involved because you're putting your reputation on the line by bringing these investors into the deal, first of all. Second of all, it's required. So substantial duties would mean anything that's required to operate this deal besides raising money. And then whatever I pay you should be commensurate with those duties you're doing, meaning it cannot fluctuate up or down based on whether or not or how much you raise. So, and we're both on the hook here, right?
Michael Russell:I didn't know that. So, but this happens all the time. So GPs say, look, if if you raise, let's say they allocate, they'll do that. This is how it works. 30%. Look, I'm guilty of it too.
Bethan LaFlam:So hey, if you're listening, I'm most of your listeners, sorry, you're in good company. No, most of your investors are because they don't know. This is why I'm shouting it from the rooftops and trying to because I don't want you all to get in trouble because you all get in trouble, and then we, you know, it the whole industry suffers, right?
Michael Russell:Okay, so here's a scenario 30% of let's say your GP promote, the amount of money that you're gonna earn as a general partner gets split up, and you might allocate 30% of that to capital raising functions. And I know this was uh you can't do this, right? I'm just saying the scenario, but it's like, okay, if you go and it's a two million dollar raise and you raise one million dollars, then technically you would get 15% of the GP, half of 30%. But you can't do that. So that's the technical, like law-abiding rule. But how do people get around this? Because obviously what makes the world go around is incentivizing work. People are incentivized that if they're gonna go raise capital, they want to get compensated for that. So, what's the legal, legally compliant way to do this?
Bethan LaFlam:Well, the first thing is somebody saying that they want to raise capital, get compensated for it, then be a broker dealer, because those are the rules. And most people don't want to do that because there's a whole other set of regulatory crap there, right? Most broker dealers, if you hang your license with a broker, there's rules against selling away and they don't like real estate. And most broker dealers are not gonna invest or not gonna allow their their agents to work with you. One, so if you're just gonna be a capital raiser, you could do a fund of funds, which I've been hearing people talk about a lot lately. And that one in theory is great. And what a fund of funds is is let's say I'm gonna go out and I'm gonna raise money from passive investors, and then we're all gonna be passive in your deal. So I'm a fund of funds, I'm gonna come, my fund of funds is gonna be a passive in your deal, right? Fine in theory, but almost no one does it right. Right. They do it and then they basically do it as a way to sort of get around the rules. I'll raise for you, you pay me, everybody's good, these are my investors. But that means I'm in charge of the investors. I'm in charge of getting them separate K1s when I get it from you. I'm in charge of vetting you, I'm in charge of vetting your deal. I'm on the hook, and I get paid for my investors for the service I'm providing by placing them in a deal, which means I'm acting like an investment advisor. So I have to either register as an investment advisor or find some exemption or figure out that I'm accepted from that rule. And that's state dependent. So now I'm not gonna go into detail. I know that you're like, wait, what? The reason I'm doing it that fast is there's a lot more to think about. It's not so simple.
Michael Russell:Yeah. Yeah.
Bethan LaFlam:So I I don't want people to go, oh, I'll just do a fund of funds. What I just said, it's complicated. It's not as simple as people think, right? You've got when you're doing this business, you've got to put the work in somewhere. You just have to decide where. And you're gonna be answering to some regulatory body, you just have to decide who. There's no getting around it. It's you're gonna pick your poison, right? Yeah, it's a lot of work.
Michael Russell:Yeah. I mean, uh, you know, look, you you gotta pick a role. So it could be due diligence, could be asset management, could be property management, whatever the case may be. But if someone is strictly raising capital and they don't have any justification for their role other than just they brought money, then yeah, you're gonna be in hot water. What about strategic advice? If you're an advisor, does that qualify?
Bethan LaFlam:It could, depending on the level of interaction. I we want to see it be a decision-making role, right? If you're gonna be really giving strategic advice and you're raising money, you want to be fully involved in this deal, you should have some a vote. It might not be the deciding vote necessarily, but a meaningful vote, right? And as a capital raiser, if I'm a capital raiser, I want to have that too, because again, I'm on the hook. I'm out there raising this money. They're gonna look to me for any mistakes you make because I'm supposed to be a GP, right? So I should have some oversight.
Michael Russell:Okay. Well, let's let's just bring this home then for our listeners to take away something tactical here. If you were to kind of package this, what does a compliant compensation structure generally look like conceptually?
Bethan LaFlam:So it's gonna split up the equity based on what other duties we're doing besides raising capital. Let's assume that the capital raising duties fall on Fra1, evenly, even. That might not be realistic. It might not even pan out that way, but you're dividing up the equity based on what else we're doing. So if I'm really best at raising capital, if I'm being really diligent in that, I'm probably gonna dig into the diligence. I'm gonna at least understand the financials, if not have a hand in it. I am probably gonna want to be involved in investor relations, which by the way, by itself is probably not enough, right? Because otherwise, what ends up happening is I'm just calling my investors to make sure they're not pissed off that I brought them into this deal and then you're handling everything else. So investor relations is a really big deal if done properly. That's a big one. And maybe even if I'm because if I'm that personable and I have maybe I'm doing marketing for the asset, right? If I have really good, let's say Investor Girl Brit's a really good example of this. Okay, right. So she's my partner on the hotel, and she put out there, she didn't raise all the money and she didn't get paid based on the raise, but she did put it out there, right? And so she got she got some equity, but her equity was for marketing in the hotel because she has a brand. Hotels are an easy way to do this because it's always gonna need marketing.
unknown:Right?
Bethan LaFlam:That's that's really important. A meaningful is it's so much easier than if you're in multifamily, right? So Brit going and hanging out at our hotel brought people there. So if she uses that platform to also raise money, great. I'm not paying her for that, I'm paying her to fill the hotel.
Michael Russell:Right, right. Okay, so for our audience here that maybe doesn't know, so you bought a hotel in Belize and it was a syndication, and investor girl Britt. It's Brittany, what is her last name?
Bethan LaFlam:Uh Arnison.
Michael Russell:Okay, so she was involved in promoting this all over social media. You guys had a successful close, you own this thing today, and she's still very much involved in marketing. I want to bring this up because I want to shift gears a little bit here. But what I found interesting about this opportunity for investors, beyond the incentive to earn capital returns, from what I understand, you offer investors experiences to go and visit the property, right? You've structured it so that there's an investor perk, like they get free nights or maybe even discounts. How do you structure these usage perks legally to ensure that they are treated as you know, owner benefits rather than taxable income or some sort of violation of the rules?
Bethan LaFlam:Yeah, that's a great question. Well, we we first of all we do all the risk disclosures around it that say, you know, it's at our discretion. You know, we we don't want to hurt the profits by giving away all the free nights. It's not a timeshare, right? So we want to make sure that we're we're prioritizing profits. So we we kind of push people into staying in the off season or, you know, so there's the discounts are a lot steeper when it's off season, but there's a limit to the free nights. And we just disclose, you know, you've got to pay any related taxes on that. If it turns out based on your certain situation, it ends up being taxable. But we're talking and we also disclose it for if you are investing through a self-directed IRA, it's not a good deal for you because you're not allowed to have any personal benefit at all when you're investing through a self-directed IRA. A lot of people don't remember that or realize that. We we will accept self-directed IRA money, but we will not let them use the free nights because it's I don't want to put somebody at risk of losing or having a taxable event or losing their benefits from their IRA because they got a personal benefit.
unknown:Right?
Michael Russell:I see.
Bethan LaFlam:So in in a hotel situation where that's not the best place to put IRA money, just generally speaking, just an added tip. But we just did the risk disclosures and we explained to everybody, and we have the right to change the free night or the the personal use component.
Michael Russell:Okay, cool. So there's some rules related to this. And you know, you're the key term again is disclosure, which you've referenced, and for good reason. Let's talk about the like the benefit to the investor. So if you're trying to raise money, I mean, the resort, like I've seen Investor Girl Brits marketing, like I want to go there. It looks cool. Like, oh, I get to invest in this and I get to stay there. Sounds awesome. So is this perk, does it actually help raise money, or is or in your opinion, I mean, is it kind of gimmicky?
Bethan LaFlam:No, I think it raises money. I really do. Like, I so this is the first time I've been active on a deal. I've seen actually thousands and thousands of deals. I'm passive on some deals. Um, this is the first time I've been active, and and it's kind of a nice seat because I get to take a look at at so many deals. So I I knew out of the gate, I'm like, hospitality is for me. I really believe that it's just an easier sell to say you get to go enjoy your actual investment. And by the way, when you stay there, you're improving sales because you're spending money at our bar and you're gonna get a little bit of that back. And when you send your friends there, you send your friends and they're gonna be like, oh my God, thanks for this recommendation. You're making money when your friends go there because it it's sales. So I just think it's it's it's fun, but it makes sense logically to say this thing you're enjoying that adds all this value to your life is also a way to get paid. I really do believe that that this sort of luxury is the the wealth of the future because I mean, why not? Right? You you instead of spending a ton of money on a luxury vacation after you've made a ton of money, why not have that thing pay you money? I don't think that's a gimmick at all. I think it's just smart investing. And that's why boutique hotels are my very favorite asset class.
Michael Russell:Yeah. Well, look, from a marketing perspective, I think one advantage, and you've touched upon this, but it's like there is a sense of pride of ownership in owning something that's cool, right? When you own an industrial warehouse, like how many people are impressed when you're like, yeah, I own this industrial warehouse, look at this, and you show them a photo of some like mechanic shop or something. But if you're like, look at this, and people are like riding mopeds through the jungle and then jumping in the ocean and surfing, and it's like, you own that? Well, yeah, people can say, investors can say, Yeah, I own this. I own a hotel. I own a hotel in Belize or on the beach in the Caribbean or in Hawaii, wherever it may be, they don't necessarily have to go and disclose, like, well, actually, I am one of a hundred investors that own this. They just get to say I own a hotel. With partners. It is partners. Yeah. So from a marketing proof, if you're raising capital, heck yeah, it seems a lot easier if you can just position this as like, hey, do you want to be a part owner of a hotel and then show them awesome photos? I think it's it's an awesome way to enhance that perk by not just allowing them to say they're an owner, but to actually go there and experience it and share that within their own social media on how they're staying at the hotel that they own.
Bethan LaFlam:Yeah. Even more than that. I mean, it is a feel-good and it is cool. And, you know, there's a little bit of the ego thing to it. But on top of that, boutique hotels are so awesome because there's so many levers you can pull for cash. I mean, there's like a bunch of operating businesses on there too. So yeah, you have the real estate, that's great. You have the hotel, you have maybe a restaurant and a bar, maybe a spa, excursions, golf cart rentals. Like there's a million things, not a million things, but there's a lot of different levers you can pull. And it's, in my opinion, just it doesn't matter what's going on in the economy. There's something else you can do. I mean, if travel shuts down, of course there's risk and COVID and all the things, right? There's always risk. Disclosure, disclosure, disclosure. But I just feel like there's so much more flexibility with boutique hotels and so much more you can do to round out if it's slow. We just came out of our slow season. So we had a bunch of restaurant specials for locals.
Michael Russell:Yeah. Well, you struck a chord there. You you just brought up some of the things that can go wrong with hospitality that you need to be aware of, you need to disclose. Yeah. I want to press into this a little bit because look, you've given us the playbook for what works. Now I want to hear about what didn't work because I think that's where the real wisdom comes from. And so I want to bring up a moment in the past, years ago, early in your career, but you tried to launch a $50 million fund. This is like again, years ago, and and it failed. Walk me through what happened.
Bethan LaFlam:So I think I got a little ahead of myself. Well, first of all, I don't think I did good enough diligence on my partners. And that's not to say that I'm blaming my partners. It's to say that it wasn't a good fit all around. So I'm not saying it was my partner's fault or my fault. It just wasn't good a good fit all the way around. One, but the biggest mistake I think I made was one, I did not get the the help from the right people. One, and two, it was way too I got a little too smart for my own good. Right. So I'm like, oh, and a little hubris in being a lawyer who's seen a bunch of deals, right? I overlayered it. I made it too complicated and I couldn't explain it. So luckily, my failure was I didn't raise the 50 million, not that I raised it and lost it.
Michael Russell:Well, what do you mean though? Like, like in plain English, like what do you mean it was too complicated?
Bethan LaFlam:So the here, I'll I'll give you the high level and you're gonna go, what? And that's the point, right? Investors went, what? So we had a $50 million fund where we were gonna use EB5 money, which EB5 is the visa that foreign investors can get by investing into the United States and creating jobs. Okay. It was really popular back in like 08, 09. It was a little bit of creative lawyering back then. And so a lot of real estate investors were using that money to invest in real estate and create jobs. So we were like, okay, we'll use EB5 money here, we'll use US money here, we're gonna do developments in underserved markets where they needed jobs because that was a requirement. And then we're gonna fill that with companies we were gonna incubate that were like minority and female-led companies, right? So another underserved market, we're gonna use that money to invest in them. So we've got real estate development, we've got venture, we've got creating jobs, we've got foreign money, we've got US money. You could see there's a ton of moving parts. Legally, it was all structured properly because I did it, right? So these are areas of law I'm familiar with. It it would have passed muster under any of these regulatory schemes, but the investors were like, what? Yeah, I don't understand.
unknown:Right.
Michael Russell:Yeah, no, I'm comparing what you just described to the image of sitting barefoot in the sand at an oceanfront restaurant in Belize, a lot easier to put myself in that picture than what you just described for that scenario. So I get that. I want to talk a little bit about though the I guess the emotional impact of this, because look, this is relevant. Investing is tough. Like I've gone through this this year alone, that there's been, you know, some some deals that we we worked really hard on. And for a variety of reasons, we had to pull the plug, we had to withdraw from those. And it's just, it is a blow to everything, to your ego, to your just your mindset, like all the struggles that you experience when you go through something, it doesn't work. Take us back. What was the hardest part of that season in life, both emotionally and professionally?
Bethan LaFlam:The hardest part was that I felt like I let my partners down. Some of those partners put up a significant amount of money. So we didn't go raise the 50 million, but there was, you know, there was over a million bucks getting this thing going that wasn't mine. Right. And so I felt like I the mindset blow was I felt responsible, even though it wasn't necessarily my fault. I still felt like it was my responsibility. And so I got into this trap of who am I to go on and succeed after this. And I kept myself struggling and I kept myself broken. I like, I ruined my credit. I spent every bit of savings I had to try to chase this loss. I tried to turn it around, figure out some way to make this back and make this up for the investors. Long after everybody else had quit and left, I was still trying to make this thing work. And I had this mindset of who the hell am I to go succeed now and thrive after I was a part of all this money being. Lost, right? Like for a million bucks being lost. And I kept myself stuck and I kept myself broke. And it took a lot of work, like coaching and mindset work on myself to figure out no amount of my struggling is going to give them their money back. It was, it was a bad deal. It was already failed. I was just sitting in the failure for way too long. Right. And it took a lot for me to figure out that I get to still go on. Everybody else went on and did their own thing after that, right? And I was still just like, no, I'm going to do this. I'm going to do this. And it was just, it failed. It was done. Right. It was, it was dead. And it was hard for me to let myself succeed after that. Like, what are they saw me? What if they saw me succeed? You know?
Michael Russell:I bring this up, you know, not to pour salt in the wound, but I think it's so relevant because look, you've been resilient. You've been able to overcome these challenges. I want to know from that experience. We know what it cost you, but what did it teach you?
Bethan LaFlam:You know, experience and failure is the best teacher. I mean, she's she's a B of a teacher, but she's a good one. And first of all, that that wound is now healed, right? I did a lot of work to heal that wound. So there's no, you know, that's fine. And it is part of my story. And I think what it taught me was I wrote a book called The Power of OPE, Other People's Everything. And one of the things it taught me was one, to allow myself to ask for help and not try to manage everything by myself. But two, to shed other people's stuff that doesn't serve me anymore. Other people's junk is the name of the chapter in the book, right? I was taking on other people's responsibilities that weren't mine. I was taking on other people's goals that weren't my goals. And I learned that that I need to get rid of the other stuff that isn't working for me and go and get help from the right other people and not try to be this martyr, right? And, you know, the person that outworks everybody, even though it's not my area to be working in. So I learned to leverage the right other people. I learned to trust myself enough to ask for help. And I also learned to trust myself to allow myself to really work in my lane and not try to do everything and be everything to all people.
Michael Russell:Yeah. Yeah. Well, if you're talking about your referencing partnership, you know, I think that in every partnership, there's always going to be a certain amount of leadership and teamwork and things. And so when you go through a setback like this, I think you build resiliency, you become stronger. And ultimately that helps you become more aware. Well, it helps you to become a better leader, a better partner. So I think there is, you know, there's a certain level of awareness that when you go through this, you you learn that, hey, I I can get through anything. So I think for anyone listening to this that is not taking action because they're fearful of something like what you just described happening, your proof of, hey, just push onward because the worst case scenario is you can get through anything.
Bethan LaFlam:That's right. That's right.
Michael Russell:I want to say, so I know that you have experience in your career working with the tech crowd, like tech investors and things early on in your career. And you mentioned that, yeah, that was that was a bit, you didn't enjoy that that experience as much. And you said you actually prefer to work with main street operators over, you know, the tech executive crowd. So why is that? And what did you learn from working with that?
Bethan LaFlam:I learned that I am not a regular lawyer. I am I am entrepreneur first. And when I was working with the you know, the venture folks and the the public company guys and the executives or whatever, they treated me like I was the help. Right. I told you what project to do, go do it. And I had ideas. Like I have, I you I feel like you guys are leaving money on the table. There's strategy we could talk about. And I actually had a partner at one of my law firms. We had this big public client and they were doing a bunch of acquisitions, right? And I noticed the theme of they were buying companies for one specific piece of intellectual property, and then they were shelving all the other things in that company that could have been very valuable.
Michael Russell:But there was And all the people that worked on them.
Bethan LaFlam:Right. That's right. And so, you know, back then I was like, look, I mean, they don't have to, if they don't want to use it, they don't have to use it, but they could set up an incubator to have someone go develop all that other technology. They're just gonna throw it away. It's valuable. They're paying for it. They could make a bunch more money, they could create a bunch more jobs. And the guy said, Don't you dare bring that up in this meeting. That's not why they hired us. They hired us to paper this deal. And I was like, okay, but the worst case scenario is they say no. What are they? They're gonna fire you for coming up with an idea. Like they're and if you want to take credit for it, take credit for it. Cause, you know, he did that anyway. Take credit for it. Or if they don't like it, blame me. You've got cover either way, right? And he's like, Don't you dare bring it up. And I was just like, I feel like my talents are being wasted here. And I actually wanted to leave the practice of law altogether. I that's one of the reasons I left to start this fund that failed ultimately. After that fund failed, I started working with my former partner in the real estate syndication space. And I said, I will help you because he had gotten sick and he really needed someone to help him with his firm while he got well. And it couldn't be the single point of failure anymore. He's like, I just need some help. And so I started doing it. I'm like, okay, I'll help you and I'll help you turn this around and whatever. But then I'm out of here. This is not, I'm done. And I started meeting the clients, which are eight street operators. We're talking about mom and pop real estate investors, right? And they wanted me to help them solve their problems. They wanted to almost partner with me, not really partner in the sense of I didn't take a piece of their business, but they were like, what are your ideas? I'm learning. And I thought we can build stuff here. We can create. These are people, they're real people trying to create a legacy for their families, maybe leave their W two, maybe just enhance their W2. I don't know, but they're like real people, like how I grew up, right? I didn't see a trust fund where, you know, I had one of these trust fund kids tell me, Oh, I know what it's like to be poor. I had a couch surf until I got my next trust payment. And I'm like, did you not know where your next meal was coming from? Because that's where that's where I was, you know. And so I can relate to these clients better. And I was like, this is what I want. I want to help these people build a legacy for their kids because that's what I can feel.
Michael Russell:Yeah.
Bethan LaFlam:And so that's why I prefer it.
Michael Russell:Yeah, yeah, I can't help but just when I'm listening to you think about like everything is relative, right? Like, you know, people where you are now in your position. I mean, you're working on a $50 million fund now. You're buying these luxury properties and you're sending, you know, I guess, yeah, syndicating money and buying these properties. You've made it, right? But your roots growing up in a working class family, I think in Ohio, is that right?
Bethan LaFlam:Yeah.
Michael Russell:You know, you worked your way through law school. You, you helped, you know, you developed who you wanted to be, not overnight. And everything being relative, like I think that there's a lot of people that are wondering, am I good enough? Can I do this? And I think that you are just proof of, you know, when you're focused and when you're honest with yourself, it's not just about raising money and making money. You found that look, at the end of the day, no matter how much money this tech executive crowd could give you, like you didn't feel like you were being appreciated. You were you called it, you said you felt like you were the help. That's a terrible way to feel. I think as it relates to raising capital, though, that there's probably going to be some scenarios in which you're having to solicit to raise money from people and maybe you don't always connect with them, or worst case, they're just jerks. How do you draw the line? You know, where you need the money, but you don't want to take money from someone who's just an a-hole. Have you ever experienced that? I won't take it.
Bethan LaFlam:I won't take it. Not all money is good money. And I've done it, by the way. I have taken money from someone where it was just not a great, it wasn't a great fit, and I regretted it. And every client I've ever met who's taken money from someone that they were like, oh, I should have known, they regret it. If it's not a fit, it's not good money because you're gonna spend more time managing that bad relationship than you are the thing that makes you money. And it's not in anyone's best interest, not the investors or yours, to be doing that. So I have a no a-hole policy. I'm not square on here. So I'm not doing at this age, I'm old enough. I don't, I'm not doing business with people that that I don't I don't vibe with, right? It's and is that a privilege? Kind of, but I think you get there faster if you don't deal with people that you don't vibe with. That's actually one of the big reasons my fund failed in the first place, right? Uh-huh. It was not a good partnership, it wasn't a good match. I could have avoided so much heartache by not doing that partnership. Learned a lot. So I'm I'm not saying that. I I learned a lot from it. So I can't regret anything that I've done in my life because I love my life now. But that's why I have this community. That's why I teach people because I want to help people get to the place where I am without making those same mistakes. You can make fresh new ones of your own, but don't make my same mistakes. I can help teach you.
Michael Russell:Yeah. So, you know, you I want to go back to something you said just a little bit ago where you you referenced the book that you wrote. The I think it's called The Power of Other People's Everything, right? Is that the name of the book? OPE. Okay. And so it's a book about not just other people's money, but leveraging other people's time, their expertise, networks. Can you kind of walk me through how that philosophy actually works in practice? Like real examples.
Bethan LaFlam:Yeah. And the whole book is, by the way, made up of stories about examples of the words. And what I found is I've made a fair amount of money in my career helping other people make money using other people's money, right? And and it's, I think other people's money, OPM, you've probably all heard it, right? If you, if you read Rich Dead, Poor Dead or a million other books, you've heard of other people's money, right? I think it is the best way to scale a business to get past your own borrowing limits, get past your own cash limits, to get past your own credit limits to scale a business is to use other people's money. And I saw a lot of people doing that. And I still saw a lot of people burning out or failing. So it's not enough, right? And so I was like, okay, people talk about OPM, but they don't talk about how to do that right. They don't talk about what else does it take? You know, if I'm bringing other people's money in, am I still doing literally everything else? That's probably not a good business still. You're scaling and you're using all that money. Now there's a lot more to do. Are you doing all of it? You're not. At least not well, right? So I just almost as almost as a joke, I came up with the acronym. I'm like, okay, that's fun. And I'm from Ohio, and OPE is a thing that people say in Ohio. I don't know if you're familiar, but I've had people say, I didn't know if you meant like, oh, excuse me. And like from Ohio, people just say it's like a size sound people make. And I was like, all right, let's let's just break this down. And I would pick words and I would write a story about a word, right? Other people's technology or other people's expertise or wisdom or whatever, right? And I, and then I started, I went back and rewrote the beginning where it's other people's junk that you don't want first. Let's clear that out first, right? And and just like have a clean slate before we start bringing on other people's stuff. And practically speaking, what it allows you to do is spend as much time as humanly possible in your magic, in your lane, is what I call it, right? Your zone of genius, as some other people call it, but it's your lane. And your lane is three things. And it's got to be all three. And as entrepreneurs, we sometimes get stuck at one or two, right? And the one is the first thing is what are you amazing at? What are you better than anybody else in the world, at least in your business? Your unique superpower, right? What people want to pay you to do. A lot of us get stuck there. I'm good at a lot of things as an entrepreneur, right? Second thing, what lights you up? Like makes you jump out of bed in the morning and say, I cannot believe someone's gonna pay me to do this day. I can't believe this is my job. I can't believe this is my life. It's got to let you up too. And a lot of us don't let ourselves get there, right? But the third thing, unless you just want to have a really busy hobby, is it's gotta move you closer to your goals. So what are your main goals for your life? What does a successful life look like to you? And it's not a number, I can promise you that. It's some variation of some kind of freedom, usually, right? And it's time freedom. It could be money freedom. Money does buy you a lot of that freedom, but it's what does that money buy you? What does that freedom buy you? What feeling is that for you? You got to be working towards that. Everything you do in your business should be working towards that. If you leverage other people's everything, you can spend the most amount of your time in your lane, and you can get other people to do the other stuff in those other lanes. And believe it or not, as much as you think something sucks, there's somebody who loves it. I freaking hate underwriting. Hate it, hate it, suck at it, don't want to do it. There are people that that's all they want to do. Can you believe that? There are people that's all they want to do. And if I'm doing it, I'm doing it not so great, and I'm depriving them of the ability to do it. And so that whole a lot of times people say, like, who the hell do you think you are to get to only do the things you like? We're entrepreneurs, we've got to struggle and we've got to hustle, and we've got to you gotta hustle, sure. You gotta work hard, sure. You don't have to struggle, it doesn't have to suck. You stay in your lane and you let other people stay in their lanes, it just doesn't have to suck. So that's so well.
Michael Russell:What is your lane? Then I mean, you obviously look, there's a there's a definitive skill set that you have in the legal aspect, of course. But beyond that, like what brings you happiness in terms of this work?
Bethan LaFlam:That's what I had to figure out, Michael. I did so much work and spent so much money on coaches to figure out that actually writing PPMs, so not my lane. I'm super good at it. I do not love it. I don't love it. And it actually doesn't get me closer to Michael's because there's somebody who I can pay less than I need to make to do it, right? Or somebody who's still like my partner Jonathan, he's so good at it and he loves it still. You know, I there was a time when I did love it. And by the way, you get to evolve out of things you used to love. Your lane can change. You get to decide that, right? My lane really is take it like this. I love doing this right now, breaking things down that are super complicated and making them manageable and usable in your daily business, right? It's something that's kind of scary. I I like to say I can make people feel uncomfortable and otherwise comfortable or comfortable and otherwise uncomfortable situations. I can make you take the SEC stuff and go, oh my God, I don't know. And have you go, Oh, I can do that with your help, right? So I think my sweet spot is in helping people understand how they can grow their business without killing themselves, without having it stuck all the time.
Michael Russell:Okay. So you've talked about starting with recognizing what you don't want to do in order to find out what you do want to do. And so if you're outsourcing the stuff you don't want to do, and you have this experience of, in your words, you know, you went through, you've made the mistake of not vetting your partners well enough. Let's bring this forward here. How do you vet a partner who is going to take over the, in your case, the financial analysis and still be able to sleep at night knowing that it's going to be done correctly?
Bethan LaFlam:So I think you still have to have a level of knowledge of what you're expecting from other people. So I still need to know what's going on with the underwriting, right? I need to know what I expect from somebody before I can really hand that off. It doesn't mean I need to know how to do it perfectly. It means I need to understand what I'm on what I'm asking for, right? But the other thing beyond that is you really need to treat this like a marriage, right? You need to get to know each other. I guess that's probably a bad example because not everybody gets to know who they're married, but you should, right? You need to really get to know people on a pretty deep level if you're gonna partner in a meaningful way. And that is, it can be the the really tactical stuff. Like, are you good at math? Can you use a spreadsheet? Are you, you know, is it technically can you do the job? But I could find the best underwriter in the world, but if they hate how I communicate, it's not gonna work.
unknown:Right.
Bethan LaFlam:If they're like, no, I need to be having a Zoom meeting every single day with you to understand where you are, that is not gonna work. Right. Because I'm like, we can check in once a week, we have to have an agenda. I don't think we need to spend all day on Zoom, right? And if that's if someone needs that kind of communication, is it gonna work with me? So they need to, we need to be on the same page, like the bibe check, like we said. Sometimes it's the softer things, right? Is my risk tolerance the same as yours? That's really important if you're investing. There are some people that are like, I want, I want things that are gonna, they're gonna create cash flow all the time, and I'm not willing to wait for that. I don't want to develop something.
Michael Russell:I mean, I hear all this, but look, this is all important. What you're saying is really important and accurate. But like systematically, you know, what do you bring? A clipboard and you have a checklist, and you're like, do you have a high low, medium, or high risk tolerance? Like, how do you actually expand this?
Bethan LaFlam:There's uh yes, yes. There, there are there are questions you should go through together. Absolutely, yes. And and kind of and have these hard conversations. Give bad examples or bad, give bad scenarios. How would you handle if this happened? What if an investor called you screaming? How would you handle that? You know, or would you? Maybe you would want me to handle that. One of us is gonna have to handle it, right? Which one? Do we know who? So that's gonna be important. So I yes, I do think you could have a checklist. And I actually have a tool that I use in our community that's a downloadable tool in the community that you can use to go through with partners, even sometimes with investors, to see if it's a good, if it's a good fit. You could even do something. I I won't I almost said cheesy, and I don't mean cheesy because I actually think it's a good tool. Is there are personality indicators that you could use? Some people use disc, the Tony Robbins group uses disk, like Enneagram for working with uh people on an interpersonal level. There's Myers Briggs, there's a bunch of them. You pick one you like.
Michael Russell:So you actually give these these tests, these like personality tests to whoever you're considering working with and say, hey, do we align?
Bethan LaFlam:Yeah.
Michael Russell:Wow.
Bethan LaFlam:Interesting. How can we? That way we know our communication style too, right? And we know we know more about each other on a deeper level. I do think it's very important. You can imagine what it's like to date me. You know, like, hey, have you taken this test? What are you on? Any ground? But it's like, but I think it's important because we, you know, I we don't have a lot of time to waste and it's risky. You're dealing with other people's money. You know, you better be sure that the fighting isn't between you and your partners.
Michael Russell:Let's use the Belize Hotel as an example. We know what investor girl Britt does. We know that you have a background in the legal SEC compliance stuff, but what is your role with that hotel?
Bethan LaFlam:So I was the lead sponsor in that, which just means I I brought the deal to the table. I asked for David to come in and partner. I asked for Britt to come in at the table. And a lot of the vision of where the hotel is going was suggested by me, agreed to by everybody, but suggested by me. Like I wanted to bring it up to a four-star hotel. I wanted to add these tree houses, but the partners were, they were all on board. I chose partners for very specific reasons to fill gaps that I am not a marketing person, right? That's I'm not the brand person or that's marketing person. That's Brent. Our other partner, David, lives in Belize and has other resorts in Belize, knew the prior owner, knew the staff, knows the staff, boots on the ground. That's not a thing that I physically can do. You know, I'm sure I was still in high school, whatever. So there's very specific things. And then we talked about, you know, are we all on board with we want to build new tree houses first? We're gonna have to forego distributions for a while. Are we all on board with the fact that if we don't make a lot of money, we're not gonna take fees? Right? And so we didn't take fees for a long time. And we all you have to agree on those things because technically speaking, the paperwork says we can. And if one partner was like, too bad, I'm taking my fees.
Michael Russell:Yeah. Right? All right. So you so you're strategically, you are quarterbacking this thing. You know, there's there's boots on the ground, there's marketing, and then there's really just like the general that is commanding, like, okay, here's how we're gonna operate this thing. I want to I want to ship gears a little bit because you've got a lot spinning. You know, you've referenced a couple things, you kind of breezed through it. You you talked about a community, which I'm not aware of, but you have a community, is that correct, where people can go to and learn how to like operate a business. Is that what it it does?
Bethan LaFlam:Pretty much, yeah. It's called the Conscious Capital Collective. And there's a bunch of downloadable tools, a bunch of people you can do idea or bounce ideas and network within the group with the other members. We do a QA every week with between myself and my part, my law partner. So there's a legal QA and just a general QA. Um, we have a book club in there where we talk about, you know, books that that have helped us in our businesses. And then there's like courses that spin out from that, right? If you want to learn how to a lot of stuff is related to raising capital because that's, you know, a sweet spot for me. So there's a ton of resources in there. So I built that community that I kind of wish had existed when I was coming up of just a lot of tools to help people shortcut the burnout and and a lot of the mistakes and just giving a lot of free education to people uh as they get going in their business. And it's expanded out beyond just real estate syndicating now.
Michael Russell:Okay. So yeah, I was gonna ask that. It's not specific to real estate, but if someone is a principal in a business and they need help in growth and raising capital and delegation or whatever, then this is just a community where you can find the resources on how to do so.
Bethan LaFlam:Yeah.
unknown:Cool.
Michael Russell:All right, well, we've done that, we'll put that in the show notes. So if someone wants to check it out, they can they can do so. Look, I could probably talk to you for hours longer, but out of respect for you and your time. We'll we'll wrap up here. Maybe we'll do another episode here in the future. I definitely will be uh reaching out if I'm gonna need help again, by the way, because we've used your services before. But Bethany, I appreciate it. Where can our listeners stay in touch with you?
Bethan LaFlam:Instagram is probably the easiest place, Bethany underscore LeFlam, because there's a little drop-down that tells you all the places where I am.
Michael Russell:All right, sweet. So for our listeners, thanks again for listening to the Hotel Investor Playbook. If you got value from this episode, please send it to somebody you know that's either trying to buy a hotel or is operating one and could benefit from listening to this show. And we'll catch you again next week. Aloha.