This project is called The Grape Vine Gold Mine Opportunity
We have identified a problem in Paso Robles, CA. This small town of 30,000 residences generated $355 million in tourist revenue last year, but there are currently very few places for them to stay. The number of tourists is only going to increase each year along with the amount of money they spend, so where will they sleep? There are only 21 hotels in the area, including near by Templeton and Atascadero, of those only 10 are kid friendly, and the reality is that only 12 of them are really in and around Paso Robles, only four of them that rate four or five stars. After analyzing the situation and contributing factors, we have the solution and a great business opportunity, which is a short term rental business.
The factors we analyzed for success are; the continued growth of tourism to the area, the current number and quality of hotels and short term rentals in Paso Robles, the cities growth plan over the next ten years and the housing market over the next five years. All of this information adds up to our solution, the project we call The Grape Vine Gold Mine being a winner.
Tourism has solid numbers year round in Paso Robles due to 24 annual events that include horse shows, rodeos, historians, art & music festivals, a beer fest, a wine festival and the Mid-State Fair, know as the biggest little fair anywhere. These events will continue to bring visitors to the area and will grow, but the main reason tourism is increasing at the pace it is, is Paso Robles wine region. However, last year it only accounted for $1.56 million of the $355 million tourist dollars. The great news is that it leaves a lot of room for its continuing growth.
Wine makers are being drawn to this area for its unique terroir that is earning it a reputation as a center of excellence for top-tier wines because of its climate, soil and unique microclimates. There are currently over 200 wineries and more than 100 vineyards throughout the Paso Robles appellation, well-known for its heritage grape varietals Zinfandel,Cabernet Sauvignon, Merlot and Chardonnay and the Bordeaux varieties cultivated are Petite Syrah, Cabernet Franc, Petit Verdot, along with the Rhône Valley trio of Grenache, Syrah and Mourvèdre. These wine are climbing the charts of the nation’s top 25 wines and the international top 100 best wines in the world, yet if you Google “best wine country in California”, today, you will not see Paso Robles anywhere on page one-yet.
In addition to the annual events listed above, there are also a growing number of events exclusive to the wine industry in Paso, as well as to its individual wineries, but again, there are limited places for them to stay. There are the 12 hotels, as well as only 454 short term rentals around in Paso Robles, 60 of the rental properties are exclusive to Lake Nacimiento, leaving less than 400 in the immediate area. More than half of that number are one and two bedroom units that average a 48% occupancy rate. There are about 125 three bedrooms with a 43% occupancy rate and the remaining 75 or so units are four and five bedroom.
Housing the increasing number of tourist is a problem for Paso Robles, proving short terms rentals is the solution and a great business opportunity. Studies prove that 61% of travelers prefer short term rentals to hotels because they are less expensive, they are private, provide more room and include amenities like a washer and dryer. Our focus is four and five bedroom units that charge an average of $521 per night, have a 56% occupancy rate and generate an average of $8,750 in monthly income each. Besides already being underserved in the short term rental market, no hotel can compete with this need or market. This is important when considering the 10 year growth plan recently passed by Paso Robles City Counsel.
The plan includes adding rooms to existing hotels and approvals for new builds, but it does not affect our target market. To compare our rentals to a hotel you would have to base it on two or three hotel rooms, this only increases the value of our units in all areas; cost, spaces and amenities. Our business plan also supports maintaining a well above average occupancy rate. First, more than half of the current short term rentals serve as the owners part time homes, our units are dedicated to being rentals. Most importantly, our business is focused on our guests experience and hospitality. You will not find one short term rental that provides either, and even hotels will not be able to compete with our level of guest experience.
Our guests’ experience will begin prior to check in when they answer a brief questionnaire that will provide us with the information we need to best serve them and their email address to add to our list. They will also have the opportunity to request us to make reservations or pre-purchase event tickets for them. Upon arrival each party will receive a welcome basket including any reservations or tickets, a complementary bottle of wine from a local winery or micro-brew (based on the guest) and items from local businesses, who we are networking with. It will also include a brochure to give them the local perspective of Paso Robles and recommendations of places to dine, shop and visit. It will include a list of events going on, microbrews/the Microbrew Trail and, of course, the vineyards, the seven wine roads and wine tours. A local map of their locations, distances and transportation recommendations will also be included, finally our hashtag will be given with a request that guests include it in their vacation posts to social media.
We will always be contactable during our guests stay, if needed, then on the day of check out a “thank you” card will be delivered and will included a scan code for them to easily store our contact information for their next visit and to share with referrals. Lastly, each guest experience will focus on a clean, fresh unit that offers a most comfortable night’s sleep from the mattress and pillows to the linens and every unit will be equipped to fully anticipate our guests needs. However, hospitality is only one aspect of our guests’ experience that differentiates us from everyone else.
Each property will offer its own individual style and amenities to complete their unique guest experience. Guests will return for the experience they want to have again or return to experience something new. The experience we choose to create will be determined on a property to property basis by its individual characteristics, some possible ideas are; a hands on experience, a micro vineyard is included in the landscaping where guests can learn about the grape growing process first hand, as well as learn about the wine making process doing it themselves. One property may be a wedding destination with an event venue and there is a property that we have our eye on that is built up, surrounded by trees, which could offer a great tree house experience. The possibilities are endless and right now is the perfect time to purchase those properties.
The timing couldn’t be better from the real estate market perspective, amost every market expert is in agreement that the downturn in pricing will continue for the next two years or so. At that time it will level out, then begin increasing in value once again. Over the next two years our goal is to acquire as many properties that present an opportunity to increase their value and create that unique guest experience. The After Rehab Value of each property and its continued appreciation are one way we will receive a return on investment. The second is the monthly short term rental income from each property.
This Grape Vine Gold Mine project is the solution to the growing problem for Paso Robles and the timing is right. We do understand that there is nothing in our plan that others cannot copy. What we do have is a great business plan, a unique product with value, the team and experience to execute it and a management system/process to operate and maintain it and we have it first! With the brand recognition we are creating and our marketing plan, we will be a known destination before they can say “wine”.
Our rental experience itself is set up to provide us with organic promotion, but we will also be on every short term rental site and recommended on as many local winery, vineyard, microbrew and local business websites as we are allowed, as well as the mid-state fair website, chamber of commerce and every tour information site. We will also advertise in the top wine and travel magazines and on their websites. Shortly we will be a well known brand with at the least a 80% occupancy rate and a destination in itself.
This is all achievable with our backgrounds, experience and our team of professions. My husband and I co-own Caza Investments, llc. My husband has been a commercial lender for more than 30 years and along with his strong financial background, he is also a small business expert. My background provides the other piece to the puzzle. I received my BA in graphic design and marketing and I am a Certified Construction Project Manager through Columbia University, as well as being certified in Home Staging. I have worked in hospitality for many years and I have not only worked as an event planner, but have volunteered my services to charitable events many times throughout the years and I have hands on experience in home remodeling. To complement our backgrounds is our team of contracted professionals which include; a real estate agent, a designer and a construction manager. We are structured to work together from the beginning of each unit project to the end. Our collaboration style is based on the Integrated Project Delivery System, which is the most effective and efficient way to deliver a quality product and save time and costs. The first two property specifics are outlined below.
Thank you for considering to invest in our business opportunity, we greatly appreciate your interest. The amount of our request covers the budget to complete our first three rental units over the next three to six months. We are open to negotiating different ways of structuring the terms of your investment and we look forward to discussing it with you. Please reach out with any questions or concerns.
Best regards,
Tracy Mandell
We currently have identified two properties that meet our criteria;
Property 1-Located downtown Paso Robles is steps from shopping, fine dining, wineries and wine tour bus loading this unique historical home is 1,789 sqft, has 4 bedrooms, 2 baths and a loft that can be converted to a primary suite. The Victorian home was built in 1895 and has a unique historic charm, as well as the opportunity to create an outdoor venue, surrounded by trees in the middle of downtown. It is on a 6,441 sqft lot and has been on and off the market for more than a year, most recently for 49 days. The best comparison is a near by five bedroom that rents for $560 per night, has an average occupancy of 57% and generates $9,576 in rental income monthly on average (not including income projections for the venue).
The immediate upgrades necessary to increase value are mainly cosmetic. The kitchen upgrade is estimated at $2,500, refinishing the flooring and painting both the interior and exterior are budgeted at $9,500, to upgrade two baths is $1,500, we have budgeted $4,500 for landscaping and $7,000 is budgeted for furnishing the rental for a total of $25,000 plus a $10,000 contingency, our target is to spend $20,000.
It’s current estimated value is $929,000, we will make an offer of $900,000, we have the down payment or property 1, the carrying costs will be $5,398 including mortgage, P & I and utilities and this project will be completed in 30 days.
Turning the loft into a primary will be phase 2 of this project along with replacing carpeting with a hard wood alternative throughout and creating the event space out back, phase 1 is focused on adding value and to be generating income in the least amount of time. When the Reno is complete we will have the property appraised and document the increase in value, which is projected to be $975,000 the renovation’s and carrying costs will be less than $35,000 for a profit of $40,000.
We will begin marketing on closing the purchase and schedule the rental opening 30 days out. We will start renting at $550/night and we are expecting an average occupancy rate over 70%, but we are estimating the first month at 50%($8,250), month two at 55% ($9,350) and month three at 60% ($9,900). The first three months will generate $27,500 in rental income and $11,306 in profit, then combined with the property value increase, we will be up $51,306 after the first 90 days when project 2 will already be bringing in rental income.
Project 2 is a property located near the exclusive country club estates. It is listed as a 3 bedroom, 2 bath, 2,004 sqft at $649,000 and sits on a 8,200 sqft lot, a few blocks from downtown. There is the ability to create the fourth bedroom in the living space to separates the two upstairs bedrooms and upstairs there is also a screened in balcony with beautiful views.
We will not pay more than $625,000 and investment money will be used for the 20% down payment and rehab budget of $55,000, including carrying costs and contingency. The comparable rental to this property is $521/night, an average occupancy rate of 56% with an est. rental income of $8,753/month. Our carrying costs will be $4,568/month all in and the target finish date is 45 days from closing. The rehab budget will cover; exterior paint and curb appeal-$5,000, fresh interior coat of paint (including vaulted wood ceilings, leave wood beams exposed)and refinish wood floors throughout-$4,500, resurface double sided fireplace-$2,500, update kitchen cabinets, countertops and hardware-$10,000, upgrade both baths-$11,000, convert living space to bedroom-$1,500, replace some lighting fixtures-$3,000 and landscape backyard-$7,500.
This property exudes a cabiny gathering space for family and friends, so the back yard will include a bbq and seating area, a fire pit, bocce ball and putting green. The interior design and amenities will be there to encourage meals and spending quality time together with a variety of games and puzzles to choose from. Phase 2 will include a hot tub, sand volleyball court and additional landscaping. Post reno, we estimate it’s appraisal at $715,000, an increase of $90,000. We will complete the reno for $45,000 and have one and a half months of carrying costs at $6,852, totaling $51,852 and a profit of $38,148. We will again begin taking reservations at closing for 45 days out at be listed at $530/night. Our target is 70% occupancy, but are estimating 50% month 1 for:$7,950, 55% month 2 at $9,010 and 60% month three at $10,070, totaling $27,030 in rental income over three months. The carrying costs will total $20,556 leaving $6,474 in profit and a total profit for property 2 of $51,852 in three month.
The first two properties earnings for three months work combined is $109,632 and will continue to generate an average monthly rental income profit of $8,403. The appraisal values of both homes together will be $1,690,000 and continue to increase within the next two years. I can estimate, based on the first two properties, that each additional unit will bring in, at least, another $4,000/ month in rent. Only at four units will we consider bring on a gardener and house keeping and after six units, a property manager.
The investment we are seeking is to complete the first three units and, based on how our terms are structured, we plan to return your investment plus interest within the first year, 12 months. We plan to have four units complete and renting at six months, more than $200,000 in property equity and an average of $17,000 in monthly income profit, with a profit balance of almost $90,000. At that time we will increase our overhead by $4,000/mo to include the property manager, gardener and housekeeping, reducing monthly profit to $13,000.
We will spend the next six months doubling our number of units with a goal of 10 units year one. Our goal is to have more than $500,000 in equity, more $7.5 in property value and an average monthly profit of $35,000, which includes adding an assistant property manager and marketing budget.