Making $10,000/Month PER Rental with These Guaranteed Cash Flow “Contracts”

Dave:
Henry, is this the coolest interview we’ve ever done together?

Henry:
I’m fairly certain. This is probably the coolest interview I’ve ever done. I usually like to stick to my guns, my bread and butter, but boy, I am definitely looking into this strategy

Dave:
And the bar is very high. We get to interview incredible investors with amazing stories and strategies, but I don’t think we’ve ever immediately upon concluding an interview said that we were going to both try and do this exact strategy together.

Henry:
Yeah, today blew my mind. So let’s go make some money.

Dave:
Definitely. Welcome to the BiggerPockets Real Estate Podcast everyone. I’m Dave Meyer. Joined today by Henry Washington and today we’re talking with Noble Crawford who has cornered an extremely cool, profitable slice of the midterm rental market, noble books, long-term contracts with government clients and other types of businesses and agencies. And today we’re going to break down why direct booking makes sense for so many investors and why it’s different from other platforms like using Airbnb or VRBO. We’ll also talk about how you can actually get started yourself securing long-term contracts for more consistent cashflow and higher profits. Yeah,

Henry:
I think we’ve got people on the edge of their seats, so let’s jump right in.

Dave:
Noble, welcome to the BiggerPockets Real Estate podcast. Thanks for joining us today.

Noble :
Thank you. Thanks so much for having me.

Dave:
Oh, it’s our pleasure. So noble, you work in sort of the hospitality side of the real estate investing world, short-term rentals, medium term rentals, and you focus on direct bookings. Can you just start by telling us what that is in the first place?

Noble :
Yes, absolutely. So direct bookings would be considered B2B business to business. And so unlike someone who focuses on B2C business to consumer or business to customer, like an Airbnb host for example, we typically go after direct business with corporations, with different entities, different organizations. So that’s our specialty.

Dave:
And what kind of organizations are the businesses you’re working with?

Noble :
Great question. It ranges. It could be corporate, it could be healthcare, higher education could be relocation, military, federal government, aviation. So it kind of ranges a little bit.

Henry:
All the businesses is what you’re telling me.

Dave:
Yeah. Did you leave anything off there? Anyone who travels basically? Pretty

Noble :
Much.

Dave:
And why do you focus on this subsection instead of going direct to consumer?

Noble :
So what we have found is that it’s very much what we consider a blue ocean strategy. So unlike folks who are focused on the transit guests, those weekend travelers and three to four night stay guests, we focus on a guest that there’s not as much competition there. And so because we’re dealing direct with these organizations and these corporate entities and things like that, it’s just a different type of customer and it produces higher revenue. So that’s why we like it.

Henry:
Okay. You could have just said the end part. I think that’s what, there’s more money, Dave. That’s why we do it. Okay. So on these contracts, what do they typically look like? How long are they, are you renewing every month, every six months, every year?

Noble :
Great question. So typically more often than not, they’re 30 day plus opportunities. Those can last anywhere from as something as small as 30 days to as much as five years and then everything in between. So they can go from midterm to long-term pretty quick.

Henry:
Did you say five years?

Noble :
Absolutely. Five years, yes.

Henry:
That is incredible. And it’s cool that there are 30 day stage or more then you avoid all the regulation and issues that short-term, less than 30 day people may have to worry about

Noble :
A hundred percent.

Dave:
And just so I understand, noble, the contract is with the business, so it’s not necessarily the same person staying for five years, but you, I’m just going to make it up. You say you start create a contract with an airline and they just use it as employee housing essentially for whomever needs it at whatever point during those five years.

Noble :
That’s correct. So it differs a little bit between each of those verticals I described, however, that’s the general concept. So yes, it could be someone, an organization sending their employees or their people or their contractors in and they change at different intervals, or it could be a specific individual within an entity or a corporation that staying for a much longer term.

Henry:
So I think this concept, I think people generally have understood this concept but maybe not known quite how to execute it or what it looks like. Would you be able to just briefly give us an example? So we’ve got, let’s do government, medical, airline and business. Give us an example of a contract, what kind of property they would typically demand and what kind of rents or profit you’re able to make.

Noble :
So on the government side, for example, so the government pays a specific rate per night. It’s called a GSA lodging per diem. And so with that rate, it is capped at a certain amount per market. And so when a federal contractor, a federal employee, a military service member, whatever, what have you, it’s coming to stay at a specific lodging facility, then that’s typically going to be at a specific rate per now. So lemme give you an example. So there are contracts whereby a pilots and mechanics, they come to the area, they’re going to do training or recertification. And so with that training and recertification, the pilots staying 30 nights, the mechanics are staying at two week intervals. So because they’re going to be there for an extended period of time, they qualify for this GSA rate. So in our area as an example, that rate will be one seven a night.
So for a pilot coming in at 30 day intervals at 1 67 a night, that’s $5,010 a month for a mechanic coming in at two week intervals at the same rate. That’s half of that amount. And so one of the beautiful things about this space, particularly with the government, when you have that happen, you can use different types of real estate assets. For this use case, we found that apartments work best. So it’s very much an arbitrage player lease arbitrage. And so mechanics coming into a one bedroom apartment might cost you $1,500 a month in rent, a couple of hundred expenses, but then the cashflow is sizable because you’re generating $5,000 a month per door in revenue. Conversely, with the mechanics they’re coming in and two week interval. So you can actually double them up. You can double them up in a two bed, two bath, it’s going to generate 1 67 a night per individual times two. So that two bedroom could generate $10,000 a month and it might cost you a couple of thousand bucks. So it’s crazy.

Henry:
Yeah, go ahead Dave. My head,

Dave:
I have so many questions about this. This is amazing. So first of all, you don’t even need to owe these properties. You’re just doing arbitrage, which for everyone who doesn’t know what that means, there are ways where you can get a lease on an apartment, you can rent it from a different landlord, and then if the lease allows it, you can rent it out to further people. So that’s a perfect example here. And the thing that seems crazy to me about this good, crazy is that you’re just guaranteed exactly how much money you’re going to make, right? So when you take out that master lease, you already know exactly what your revenue is going to be because the government’s paying you a set rate every single night and they’re paying for every night for the extent of that contract, even when maybe they’re not doubled up or maybe no one’s even there that night.

Noble :
Correct. So the great thing about the government as a client, right, when you become a federal vendor with the government is very much guaranteed revenue first and foremost. And then a lot of times, especially for lodging, accommodations, housing, those type of contracts, those are three and a lot of times five year contracts and sometimes even beyond. So these are long-term contracts and they’re guaranteed revenue over time. So it is beautiful.

Henry:
So if I’m hearing this right, every

Dave:
Speechless by the way,

Henry:
He can’t even talk. I’m doing the math in my head. So essentially what you’re saying is, and correct me if I’m wrong, you can go out wherever these government contract requests for proposal are, see what they are, apply for them, get them, and then go get the asset to service that because you already know what your income is going to be. Am I hearing that right?

Noble :
You’re hearing that 1000%. So the beautiful thing is you can run the numbers on the front end. You can actually go look this up. So people listening, maybe watching the YouTube just go Google GSA lodging per diem, put in your zip code of your city, it’s going to tell you what that nightly rate is. So then typically you just multiplying at times 30 nights and then for the length of the contract terms. So you’ll know on the front end you have a very good indication of what your profit margins will be before the ink is even wet on the contract. Then once you have the contract, you can leverage the contract to then go get the inventory IE arbitrage to service the contract. So it’s a beautiful thing

Dave:
And this is just government contracts one of the different categories of entities that Noble works with and I want to hear about the other ones later on in the episode. But first, let’s take a quick break.

Henry:
Welcome back to the show everyone. We’re here with Noble Crawford talking about how to secure long-term contracts for long-term cashflow. Let’s get back to it.

Dave:
So noble, let’s just back up for a second here. What were you doing before you got into investing?

Noble :
So immediately prior to this I was running a marketing agency. I did that for a few years and that was on the tail end of being just a normal W2 job. I worked a normal W2 job, I did that for years. I actually came, I have a hotel background, so I have a hospitality background. I worked for all of the major brands you can think about, and then I went into the tech industry. I was doing tech sales. Long story short, my wife gets sick, she has a brain tumor and we have to get it removed. And after that time when she had the surgery or whatever, we ended up having to, I had to make a decision to either stay home and care for her if she recovered or go back to work and I decided to stay home. So on the tail end of that recovery, I get called into the office and the CEO just ripped me in front of everybody for having dismal sales numbers while I was home.
I was a commissioned sales rep while I was home caring for my wife. So I just decided in that moment I’m going to grind and work myself out of this W2 job. And so I have my time freedom and I’m able to execute and do things like I want to and be there for my family. And so that’s ultimately what led me to being interested in real estate. You guys were around back then. I have been listening to your podcast for years, but I was introduced to short-term rentals in 2017. That’s kind of where everything started.

Henry:
I feel like a lot was said there because there’s a lot of people kind of in this boat where they want to be able to do something like you did, which was stay home and take care of your spouse who needed you to be there and didn’t have a job that allowed them to do that. Fortunately, you did have a job that allowed you to do that, but your income took a hit and because your income took a hit, you had one of those epiphany moments at work where you realize when you’re in the office that like, Hey, I need to put myself in a position where I don’t have to be in this position anymore. I had a very similar epiphany experience at work when we all got shuffled into an auditorium one day and everybody knew a layoff was coming. We didn’t know if we were getting let go or we were getting to stay, but we knew one of the things was happening.
And I remember standing in that hallway waiting to go into this auditorium to find out if I was going to lose my job or not, that I said, I never want to give somebody the power to put me in this position again. And so I think it’s commendable that you didn’t just have that feeling, but you took action on it. And I think it’s extremely commendable that you were able to make a choice to stay home with your wife and do what you had to do for your family, man. So I just didn’t want to gloss over how special that is.

Noble :
Thank you. Thank you. I appreciate it. Appreciate it.

Dave:
I’m sorry you had to go through that difficult situation, noble to arrive at where you were. But yeah, I agree with Henry. I want to commend you for handling it with grace and figuring out how to make it work for you and your family. So this was back seven years ago it sounds like. What made you choose short-term rentals over other strategies you might have considered

Noble :
A good question. It is a funny story really because I had no idea what short-term windows were. And it was actually, my dad, if I remember correctly, he was watching a guy on YouTube watching YouTube videos about short-term rentals. And I had just exited my job. I was trying to do the entrepreneur thing. I started a podcast. I was interviewing entrepreneurs and all this stuff, and he said, well, here’s this thing in real estate called short-term rentals. And so I went and watched the podcast link with a gentleman, went to a mastermind out in California, and then me and my wife, we were like, we could do this back home in Texas. We came back, put our heads down and went to work and then the rest is kind of history.

Dave:
That’s great. I love that. It was a family affair too. You all bought into it together. Given your hospitality background, did you go straight into these B2B businesses? Did you feel more comfortable there? Or did you originally start where I think most people who are interested in short-term rental start, which is with the direct booking platforms like VRBO and Airbnb?

Noble :
Good question. Yes. We started very much, we were introduced to the idea starting as a kind of Airbnb operator using the rent rental arbitrage model, lease arbitrage model. And so that’s how we got started. But quickly into the first couple of years, we realized that we didn’t really have control over what happened with these other platforms, the guest experience. We didn’t have control even over that per se. And so I had a background in my commission sales job where I worked specific verticals. Ironically enough, the ones that I mentioned at the top of the show were the same verticals that I worked in my commission sales job. I had this epiphany moment. I had a light bulb moment where I’m like, wait a second. Why am I not leveraging what I know and learned in my previous W2 job in this business? And then more specifically, certainly with the government contract stuff, I was doing that in my previous job and once we hit that switch, it was just up and to the right.

Dave:
So you decided, you went from doing sort of the traditional way of doing it, then you moved on to more direct bookings. Was it easy for you? Did you have a Rolodex or how did you land that first contract? Because I’m sitting here thinking, man, I got to start doing this, but I wouldn’t even know the first step to start looking.

Noble :
It’s interesting because the first vertical that I applied the strategy in was in the healthcare side. Now for most folks, they’re thinking about travel nurses and stuff like that because very common in this space, entertaining that audience. So for me, my background actually one of my verticals was higher ed healthcare back in my W2. And so I had a contract with a university, had an osteopathic school of medicine, and a lot of postdoctoral students and stuff were having to attend there to get ready for their practice. And so they very much were staying in off campus housing at the time. And this is what I realized when I worked there. So I thought, why don’t I go back to that same university where I had some warm connections and find out how I can leverage some of our housing for these same type of students. That was my first inroad into a vertical that just happened across healthcare and higher education. And then it just kind of doubled down from there over across different verticals.

Henry:
That is so smart. I think I know we as real estate investors still don’t have any clue about how many different verticals are out there and the need for housing for these different businesses. There’s really, what’d you call it, a blue ocean strategy. I understand why you call it that now because there’s definitely a need and these businesses aren’t set up to just be able to service housing. And so what happens, and correct me if I’m wrong, but what I imagine happens is these businesses need to service housing. And so they end up doing it, but they do it in a way that’s probably not super desirable for the people who have to live in that housing. Because if you’re not good or don’t understand how to go find quality housing for your people, then you probably just end up with bland properties that don’t have amenities that the people need. They don’t meet the needs of the tenants. And so I’d imagine you as somebody who can curate spaces and has more of a background of being able to provide serviceable housing that you really can probably set yourself apart because you’re not just renting a hospital room with a bed. You’re actually providing them a decent place to stay.

Noble :
100%. I can real quick, I give you you guys a real quick brief case study. So a student of mine, a student of mine, we’re looking at this contract opportunity we identified and it was calling for hotel rooms, it was calling for hotel rooms. Now both of us, we have a background, short-term rentals, so we know how to furnish a property, make sure it’s nice, warm, inviting for the guests and all that stuff. So what we said was, Hey, this contract opportunity is called for hotel rooms. However, we want to introduce a corporate furnish apartment. Short-term rental is an option because we know product versus product, there’s no comparison. So more square foot is just a nice, everything included, the whole nine yards. And so we actually bid this opportunity using apartment complexes. So we found a new development complex. It was class a new development community negotiated with the ownership to say, Hey, we want to take 50 doors.
This was a 50 door minimum opportunity. We want to take 50 doors. We know you guys are in a lease up. We’re going to take ’em furnished, we’re going to put a government contract client in there, five year deal, should we win it? Right? Went to the bid that right. The agency contacted my student and said, not only do we want to award you the contract, we want to award you the contract because we have never seen this before. We really love this option as compared to the traditional hotel room space that we listed in the contract. He won a $7.5 million five year contract. Whoa.

Dave:
Oh my God. Using

Noble :
That. Geez.

Dave:
Oh my god. Wow. That’s unbelievable. There’s a lot to unpack with that story. So I want to start with the first sort of foundational question here, because recently we’ve talked a lot on the show about how to compete as an Airbnb host. There was this gold rush over the last few years, and now you have to be better at the business, you have to be good at generating demand. I imagine that when you’re working with an agency contractor, the things that they’re looking for are different than what a family going on vacation is looking for. So can you just give me an overview of how do you compete as an operator like yourself to get these contracts? What are they looking for and how do you distinguish yourself?

Noble :
Great question. Great question. So first and foremost, one of the key things to understand when you’re dealing with the federal government, so the federal government, because they’re as large as they are, there are only 400 federal agencies. A lot of people don’t realize that. And so they’re all buying different products and services. And so when they have a need, typically that need is in bulk. There’s no different for housing. When there’s a need for housing lodging accommodations, that need is in bulk. So it’s not uncommon for them to all ask for multiple of something. And so probably one of the biggest differences is versus being kind of a traditional operator, is that you need a lot of something. And more often than not, that means you’re going to be executing an arbitrage model because of that, unless you just happen to own an entire subdivision, this available.
And so that’s one. In terms of the actual units themselves, government, employees, contractors, service members, those type of people, they’re really no different than the regular civilian type of person. It gets down to location, location, location. They want to be in a nice property. Everyone wants to be in a property that’s nice, that’s safe, that’s in a good neighborhood, all of that stuff. So that doesn’t really change too much in terms of what their needs are inside of that property. That’s really not too different. If you’re used to providing an STR level property with all the different things in and amenities, then that’s more than what they’re accustomed to because again, they’re more accustomed to hotels than they are traditional corporate furnish department style properties. And so I think if you understand that you need to typically provide it in bulk. If you can do something similar to an STR level property, it doesn’t have to be fully outfitted like one, and you can present them a property that’s in a decent location at a reasonable price point that doesn’t exceed that GSA rate, then you’re locked and loaded. It is go top.

Henry:
Essentially what you’re saying is you go and you look for the contracts, you need to have the ability to service the contracts. You want to provide a decent place for people to live, right? That’s what would be expected. So what I think I’m reading between the lines there is there’s not a ton of competition bidding on these contracts. Is that accurate?

Noble :
A hundred percent. So good question. So here’s what happens. So the government congress allocates these funds for these federal dollars to be used by these different agencies, and a lot of that is in the form of government contracts. Well, it is very much those are used it or lose it funds. And so if those funds aren’t used by the end of the fiscal year, then they lose them. And so you’ll be surprised at the number of opportunities that go unfulfilled. And so the agencies either lose those funds or they find themselves having to rebid that opportunity again or even during the next fiscal year. And so absolutely, I

Dave:
Just want to explain that to some people who haven’t been through the budgeting process before, either with the government or in corporations. But usually if you’re a department, you get allocated X amount of dollars, let’s call it a million dollars. If you only spend $800,000 instead of getting rewarded for that cost savings, usually the next year you get $800,000 to do the same job. And so what a lot of people, right or wrong, what they wind up doing is trying to spend exactly 1 million. And so that is one reason I’m sure that these agencies are motivated to work with someone who can help place all the dollars that they have to spend.

Henry:
So what I hear when I think about this strategy is similar to people who apply for grants. That’s how my brain is working, right? There’s grants out there, you got to go apply for them, and then if you get them, that’s awesome, but you’ve got a lot of other people that are applying for the grant, so you need to be able to stand out, yada, yada, yada. But in that world, you probably could write a hundred grant proposals and maybe get ten five two. So help my brain understand what that looks like in terms of these contracts. If you’re out there and you’re perusing contracts and you see four or five of them and you apply, what’s the likelihood that you land any of them?

Noble :
Yeah, great question. Excellent question. So a couple of things to keep in mind. So what we’ve discussed up to this point are specific to biddable opportunities, which is kind of what you described. And so one thing to realize is that the US government is massive. Their accounts payable apartment is just massive larger than any other company, corporation, entity or country. The US accounts payable is just ridiculous. And so there’s constantly stuff coming down the pipe, including in the housing and LOD space. There’s always something coming out. This is year round, so this is nonstop. It’s just coming down the pipe. And so one of the things that keep in mind is that there are biddable opportunities and then there are also opportunities that you don’t have to necessarily bid on. Okay? So then that’s the other side of the coin with the biddable opportunities, it can be a bit of a numbers game.
So maybe you go after 10 and maybe you land one or two, but then that one or two that you land, that could be a multi six figure, even a multi seven figure thing, but it could be based on the amount that you go after. Now there are non biddable opportunities so that you don’t necessarily have to bid on. So those are sole source awards. So I’ll give you an example real quick. Had a student take him through the process. He received a phone call, usually the phone call to his business number. They said, Hey, this is US Army Corps of Engineers. We see that you’re in the Atlanta market. We need inventory, we need housing. Are you able to accommodate us? He’s like, no, I don’t have enough. I find out about this opportunity two weeks later. I’m like, OMG, don’t say that because that happens.
They will pick up the phone and they will call you and it’s called a sole source. That means they are going to award you an opportunity. They’re going to provide that opportunity to a sole entity. And regardless of what you have at the time, say yes, that was a seven figure opportunity that he said no to basically, right? And so that’s a non biddable. It just happened that he had the industry code that they were looking for in the location that they needed the inventory. So that’s one. The second one is called a setaside award. A set aside award is one where if you fit into a certain socioeconomic group, so maybe you’re woman owned, a minority owned disabled veteran service, disabled veteran or veteran, you’re in a hub zone. Any one of those socioeconomic classifications, what the government do, they will set aside, I set aside, they will set aside opportunities specific to those folks that fall in those classifications. And so those are very much low hanging fruit opportunities. I could go on and on, but you get the idea. There are biddable opportunities that are kind of numbers based, and then there are non biddable opportunities that you can also go after.

Henry:
And this is still one vertical we’re talking about. Yeah,

Dave:
We’re still just talking about the government. We’re going to be here for four hours. I hope you blocked off your whole day, noble.

Henry:
So I know there’s a lot of folks listening right now screaming for us to ask Noble, how the heck did they do this too? We’ll answer that right after the break.

Dave:
Welcome back to the BiggerPockets Real Estate podcast. Let’s jump back in. So tell me how reasonable is it for someone who’s brand new to get out there and get a first contract? Because in some ways it just sounds so great. It makes me wonder why more people aren’t doing it.

Noble :
Excellent question. Excellent question. I love this. So the reality is first and foremost, the government loves experience. And so you don’t want to come to the table having zero experience at all in whatever that product or service is that you’re looking to resell to the government. They don’t want to see a fly by night mom and pop shop that just started yesterday trying to go after a seven figure deal. That’s just not what they want to see. So you want to come to the table with some level of experience for that product or service. So with that being said, there’s a couple of fundamental things that you really should do in order to position your entity, not you as an individual, but your entity to land these government contracts. So really some primary fundamental business. One-on-one stuff. So you want to have an entity. First of all, you want to make sure you have a professional phone number, a professional website, a professional email address.
Government is picky about that, believe it or not. So you can’t use a Google Voice or something like that. You need old cell phone numbers. You need a specific business phone line. So your grasshoppers, your RingCentral Dialpad services like that. You want a professional email address. The government does not like Gmail, Yahoo, that sort of thing. So you need to be set up in a way that you have professional email [email protected] in the same vein.com, preferably a website at the very least. But if you can capture the.com, then you want to capture that your business address for most. Now because there’s been some recent changes, you can use your home address. I would actually recommend that to get started. Once you’re in the system as a vendor with the federal government, then you can go and change it to a business address or a suite number. You want to have your EIN set up and you want to have a business checking account. Those are the fundamental 1 0 1 things everyone needs from square one to be set up as a vendor with the federal government, and then you get access to these opportunities.

Dave:
Awesome. And is it similar, we’ve talked a lot about the government, noble, but is it sort of a similar process with private companies or even public companies but not government entities?

Noble :
Yes, very much so. All of those things that I just rattled off, those are just your prerequisites really, in my opinion. For any business, you should have those fundamental things in place. And so yes, whether you’re going into other verticals like corporate, which also will require much of the same to be set up the same information, healthcare, higher education, aviation, whatever the case is, a lot of that information is the same. And what I like to say is when your company is set up as a vendor at the federal level, that’s very appealing to every other industry underneath that, when you’re able to say, my entity is a vendor with the federal government that holds weight. And so you can leverage that then to go do business, get business in other verticals.

Henry:
Real quick, I do want to talk about at least one of these other verticals that I’m very interested in. But before we move on, what I don’t want people to think is that, well, you got to live in a place where there’s a military base to get government contracts. You got to live in a place where there’s a strong military presence. I know you said there’s over 400 government entities, but dispel that myth for us if you can. What are some of the contracts or agencies that really don’t rely on a base being nearby

Noble :
Or a hundred percent? A hundred percent. So the reality is that there’s housing demand, lodging, accommodation, demand everywhere across the country, really even outside of the us. But for the most part, we’re talking US based. And so you would be surprised at some of these secondary, tertiary markets where you find these opportunities. I’m working with a student right now who there’s opportunity in Iowa. There’s been opportunities in North Dakota in places that you would just think, and I’m talking about significant size opportunities, dozens and dozens of doors. And so don’t put yourself in a box. I would say to all the listeners and viewers, don’t put yourself in a box and think, what are these hot markets? There are some hot markets. I’ll just rattle off a couple. The Virginia DC area, Alabama, Florida, California, those are some hot markets. Just side note. But you don’t have to operate in those markets. You don’t have to be in those markets. You don’t have to have inventory in those markets. These opportunities are literally everywhere.

Henry:
Yeah, absolutely. Because a lot of the times these government agencies may be running some sort of test or project in some non-military related market. So they have to send people from a base over to a market where there is no base. And if there is no base, there’s no housing. So they need, housing is I think what I’m hearing here

Noble :
A hundred percent. And then a lot of the opportunities are not specific to military installations at all, right? They may need a small opportunity, they may need 50 doors and maybe they only need it for a week. There is a play for that where you can actually go after that type of deal with that short of time and put significant profit in your pocket just with something that has that smaller window to it.

Henry:
Okay, noble. Okay, I’ll bite. I’ll bite. Okay. Tell me how I could service that week long need.

Noble :
So there’s a model, I call it hotel brokering, but basically the government has a lot of opportunities, a lot of opportunities where they’re looking for short-term hotel base stage. It could be a weekend, it could be a week, two weeks, whatever the case is, right? Very short. But a lot of doors are required maybe 50, sometimes a hundred or more. And so what I’ve taught is there’s a strategy where you can actually go and get these rooms, this inventory of rooms under contract and then mark ’em up and resell ’em back to the federal government. That’s very common. And so when you do that, then what’s the benefit of that? Well, I’m not using the corporate furnish department, so I don’t have to deal with housekeeping and cleaning. I don’t have to deal with checkin and checkout. I don’t have to deal with shuttle service. I don’t have to deal with maintenance. I don’t have to deal with any of that. I’m simply getting the doors under contract. I’m collecting my payment from the department of whatever, and then I’m paying the hotel and I keep the spread in the middle. So low hanging fruit, high profit

Henry:
Margin. Wait, so you’re saying the government says I need 50 doors for a week, and they need short-term hotel stay. So you go to your local extended stay in that market, and the government will tell you, I’ll pay $200 a night, let’s say for an example. And so you go to the extended stay and you say, I need 50 rooms for a week. What’s the best rate you can give me? And they’ll say, I’ll give you a room for $125 a night. And you say, perfect, and then you go collect $200 a night from the agency because the agency, I assume, pays you. The deal is with you, and then you turn around and pay the hotel and you keep the $75 difference per room.

Noble :
A hundred percent. A hundred

Henry:
Percent. Why would the government just not go straight to the hotel? Why go through you? Why have an

Noble :
Intermediary? Excellent question. Excellent question. So here’s the other thing. So there are what are call a small business size standard. So basically what does that mean? That means that per industry, there is a cap of revenue where they will no longer consider a business, a small business. So for example, in the hotel space, I want to say that CAP is like 30 million annually. So if you have an entity X, Y, Z corporation that owns four or five different franchises, then because those collection of properties under that franchise model do more than 30 million a year in annual revenue, they can’t participate in the bid. It is a small business set aside. And so then they need the small business operator myself, like all of us, to then come in and facilitate that contract. And so that’s how it works. So that’s why the big boys a lot of times can’t participate. So then someone like ourselves comes in. There you go.

Henry:
We need the DJ board. Bomb drop the

Dave:
Air

Henry:
Horn.

Dave:
I’m just here clapping for this. It’s unbelievable.

Henry:
This is incredible. Dave, you got to talk. I don’t know what to say out

Dave:
Of, I’m realizing that we’re just going to need to have Noble back because we’ve gotten to one of the four different types of entities that we wanted to talk about today, but there’s been already so much good information. So let’s just keep going on the government for a few more questions. And noble, we’re going to force you to come back, hopefully you’d to. But let me just ask you this. So how do people get in touch with these agencies? Can you just walk us through some steps that people who are listening to this and are as mesmerized as Henry and I, how they can start learning a bit more?

Noble :
So probably one of the best opportunities is Google, right? Quite frankly. So there’s a lot of agencies. There’s a big boys, the biggest one, department of Defense for obvious reasons, right? Billions and billions of dollars in transactions happening through the DOD, right? But the majority of the agencies have what are called BU offices. That’s the acronym Office of Small Business Development Utilization. I always mess up the acronym, but anyway, osdbu, O-S-D-B-U. So that office in particular, a lot of the personnel in that office work with the small business entrepreneur to help us go after uncover and get access to these types of contracts. So that’s very much an office that you want to engage with Other offices, a lot of ’em have small business liaisons. Again, a similar concept. Those personnel are put in place to work with us as small business owners to uncover opportunities.
And then I would also say, because what we’ve described so far has been very much bid based. The other side of that coin is getting access to opportunities based on developing relationships that cannot be lost. That is very important. Just like in a lot of other industries, real estate included relationships can help you substantially. And so you want to get to know these people. You want to go to conferences, you want to go to events, you want to get on their virtual meetings and things like that. You want to get in front of them. You want to be in the room where they’re having these conversations at because you can get access to an opportunity that’s relationship driven, and they can create a sole source award directly with you because you fit the bill for what they’re looking for. It never goes out to bid.

Henry:
So Noble, this is obviously probably one of the most incredible untapped resources I think I’ve heard in the real estate space in a long time, and I’m sure there is tons of people listening to this episode who are very interested but wondering, what is my first step besides having your entity set up and all those things set up correctly? I assume there’s two probably fundamental steps that you need. You need to have your entity and your business set up, and then you need to get registered as a vendor for the United States government. But once those two things are in place, what’s the very next step people should be focused on in order to take advantage of some of these contracts? And I’m asking for a friend. Okay,

Noble :
Got it. So one of the key tools, the key tools that we use in this space is called a capabilities statement. So I’ll work on drafting that document. That is simply a one page business resume. It’s a capability statement. There’s some bits of information you want to include on this one page business resume. Part of it is showing your past performance. Now past performance. That doesn’t mean past performance with the government contracts. That means what is your experience level with that product or service that you’re looking to resell to the government. You also want to list what are your core competencies? What do you feel like you do well in this space that you’re servicing that you have a command of? You want to list your core competencies. You want to list your past performance. So there are also what are called industry codes. They’re called NS Codes, N-A-I-C-S, north American Industry Classification System.
That is how they identify your company in the federal vendor database. So I’ll give you one right off the top. So for us in this space, that code is 53, 11 10 lessers of residential buildings and dwellings. Okay? There’s another 1, 72, 11 10, that’s for hotels and motels. You can’t actually include both of those. There’s probably like seven, eight to 10 of ’em that you could include in the space where we provide real estate services. So you want to put together your capability statement, you want us to include all this information, including your company information and contact information, all that stuff that is the single, probably most used marketing asset and tool that we use in this space. And you’ll need a digital copy. You’ll need a printed copy, but that’s when you reach out to people on LinkedIn because a lot of federal agencies, employees are on LinkedIn. You want to be able to pass that document off. So that is the very next step, I would say.

Dave:
All right. Well, I know you don’t have any questions, Henry, because you’re too busy writing down notes and probably starting to write out your capability statement here while we’re still on this interview.

Henry:
Yeah, I mean, that’s accurate. That’s accurate. I mean, I’m not going to not lie about that. Yeah, that’s

Dave:
Fair. All right, well, I think this is all we have time for today, but Noble, you have been such a great guest and shared such valuable information for our listeners here. I certainly learned a lot, and for everyone who wants to connect with Noble, learn more about the strategy and what he does, we’ll put all of his contact information in the show notes below or in the description if you’re watching this on YouTube. Noble, thanks again. This has been super fun and I meant it. We’d love to have you back sometime soon. Thank you,

Noble :
Noble, thank you so much. I appreciate it.