HIP E79 Dustin Feider - 600K Treehouse Earning 200K

[Music] The Hotel Investor Playbook. Your guide to building wealth and freedom through hotel and hospitality ownership. [Music] Welcome back to the Hotel Investor Playbook. I am Michael Russell, founder of Malama Capital and your host. On this podcast, we talk story about everything you need to know to make money, investing in hotels and in hospitality assets. Today, my guest is Destin Fighter. Destin is developing or he builds these incredible tree houses. These modular tree houses are out of this world. I've never seen anything like it before. So I am really excited to have you on the show. Let's talk tree houses. Destin, welcome to the show. Awesome. Thank you so much, Michael. A great to be here. So let's talk about what you build. Because these aren't just any ordinary tree houses from what I gather. These are unique. I don't even know what the word is. Geo something. Just incredible looking shapes. It's like something if you were a child and you drew up like the ultimate Lego assembly of like the most amazing tree house ever, you know, describe it. What are you building and how do you do it? Nice. Yeah, that's. It is hard to put your finger on. You know, it's funny. Like whenever I'm introducing myself somewhere and you know, say that I build tree houses, you know, I do need to describe it. Because you get the storybook picture in your head of cabin up in the tree, big beams and wooden that kind of thing. Just started in a completely different place approaching this context of tree house building with the idea to build something that was basically a flat packed unit that could basically fit in any tree. Well, your work has been featured in major publications, right? The New York Times, business insider, HGTV, architectural digest. You're gaining, I mean, you've been out this number one a long time, two decades and you've gained a lot of notoriety. But when you started this thing, I mean, you had very humble origins, right? Like did this, so is the pine cone? When I go on your website, you see there's a pine cone and there's a lot of, there's some articles written about this. Was that the first like commercial use property? I believe it's your own that you still own to this day. But prior to you going and building this for other operators, you built this tree house called the pine cone, right? Can you walk us through like, where's the pine cone tree house located and what are some of the details that make this special? Yeah, nice. The pine cone is located just north of Santa Cruz, California, in Bonnie Dune. And yeah, this one is the first rental that we did. And it's just, has gone gangbusters. I'm just kind of a bucket list item for folks these days. And it was a very unique opportunity actually the way that it came about was through an ad campaign by SC Johnson Wax through a marketing firm called OgleVee and Johnson, El Chicago. And they kind of gave me carte blanche. Just said, design us crazy trails who wanted to have it in this commercial and gave me a great budget. And I went forth and built my dream structure really, which ended up being this zone, the name of the geometry is called a zone. And then built the windows, that kind of thing. I didn't intend to kind of design a pine cone, but just by the nature of that, with that shape and then adding forms to the exterior and repetition, you kind of like became a pine cone. Well, okay. So just to kind of set the context, this thing looks like it's got just mirrored glass and layered so that it looks just like this massive pine cone. But it appears that it's suspended in mid-air in between the series of trees and the forest. I'm telling you, it looks freaky scary to stay in that thing. Like, how high is that thing in the air? It must be 40, 50 feet in the air, right? That's good, guys. Yeah. It's 40 feet on the uphill side and 60 feet on the downy side of it because it's not a pretty steep hill. And when the wind blows, is that thing rocking and rolling? Most definitely. It does move around quite a bit. And we have, it's suspended from the top, but then it's also stabilized by cables at the bottom. But yeah, in the wind store, man, the thing really moves around. And it's built to kind of flex and move around. And of course, it's suspended in that way. So, is there a restroom inside this thing? So, there isn't in this one. We have a small tree house bathroom and shower facility on the ground. Uh-huh. And so you come down, you go across the catwalk into another stand of trees and that's where the bathroom is. It's got a big opening kind of glass door there and you can kind of like have the shower amongst the trees and looking into the view of the forest from the hillside. It's pretty great. But we're designing, we're really actually quite a few pine cones for hospitality clients right now. And very excited about that because now we're actually doing the pine cone purpose-built for hospitality. So we have all the included amenities and comforts of home inside of that single space. So it's a much bigger structure, around 60 square feet versus the 100 square foot floor space on the original pine cone. Of course, this is a larger structure. I'm here to pass all regulation with tile 24 here in California Energy Efficiency standards. The slate glass units, sprinklers, like all the things. Oh, see, I jumped from 11,500 pounds to around 23,000 pounds for those new structures. It is, we can get it into some trees that they need to be some really big trees. And but the ones that we're building now are likely to be stilted. I see. Okay, that makes more sense. So this original is suspended with ropes. It's got some huge trees. Looks like redwoods to me. I'm not sure. But imagine for the viewer who can't see this, just these huge massive trees that look like redwoods and this massive glass pine cone suspended in the air with, I mean, if you're inside looking out like it's just 360 degree view of the entire forest, it looks spectacular. Let's talk about the economics of this though. You know, you built this and it is currently a short-term rental. Like what kind of nightly rate do you get for this thing and what type of occupancy? So we're kidding. 80 are at about 850. 850 dollars per night. Yeah, that's the top. That's the top fee that we're building. But it range down to like 550 per night. And its occupancy is I think it's around 85%. I think so the unique situation with this one is that it's actually on a residential property. And so we actually don't allow bookings money through Wednesday and respect with all the residents on the property. So it's not a full-time operating thing with the traffic. But yes, it does very well. So we love that property. I mean, that's incredible, right? 850 bucks a night for a tree house. That's like, well, I had this conversation previously where it's like sometimes you look at buying hotel and you could have a lot more units. But if they're bringing in 125 dollars a night, like it sometimes it just makes more sense to just build more luxury. And you have less occupancy to fill and you can charge a higher rate because of limited supply. All of these reasons, if someone wants to go down this route, but one of the limitations of doing something like this and replicating it is these are one of a kind. They're unique. They look expensive to build. Like what is something like this cost? If someone said, hey, I want a tree house that looks like a fine cone suspended 40 feet in the air that I can charge almost 900 dollars a night, what would you tell them to expect it to cost for them to build it? Yeah. So the current model pine cone potentially built for hospitality with them and it is included is around 600,000 fully installed with a required engineering and with some fees in there for permitting. Now the context in which it's built like logistics to get that structure to the location, you know, it's going to vary. So it's going to be plus or minus some percentage there. A lot of times we're like taking materials like deep into the woods with ziplines and that kind of things. Of course, that's going to affect the price. So ballpark 600k. All right. Yep. All right. Well, quick math here. Look, if this thing rents for let's just say because on average, maybe it's 750 per night, it's not always going to rent 850. Let's say you run 80% occupancy. So your rev par is 750 bucks times 80% occupancy is $600 rev par per night. So I mean, you're looking at over 200 grand in annual revenue pretty reasonably and it's been cost you 600 grand to build. So that's a 30% cash on cash if you're unleveraged, if you're unlevered, I should say to me, that seems incredible. Is it scalable? Can you build? I mean, if each one of these could be built and you could go by the land and like add four or five six of these, like is that model sustainable in terms of our capacity to manufacture them or I just mean like in your opinion, if someone were to go and buy four or five of these for let's just say maybe you get some unit economics at $500,000 if you do six of them. I mean, you could build for $3 million. You could have yourself a nice little micro resort that is going to $600 rev par. I mean, that's that's hard to beat like is that? No, it's fantastic. Yeah, it's absolutely feasible. I don't know why we weren't we haven't been busier than we have been in terms of of the pine cones and people coming coming after us for that. I think because that so there has been a lot of interest in the past for the pine cone, but because we haven't had a pre-done model built with all the amenities included, people haven't wanted to take that initial risk on such a high price thing. We have a, you know, other echelon clients is our our customer essential and those folks wants something new, of course, they want something custom that only they have. So not really looking to be like, oh, I want the pine cone, or they're not looking for, oh, I want this pine cone union like with amenities included. And so it really was, we needed to take the initiative to design this unit and then offer it as a hospitality piece. And so now we're doing that plant, you know, we're building one in Wisconsin, we're building two here in California, and likely one in Georgia. Two of those projects are our and prefabrication. But we're planning on, we actually have the conceptual model sun for the medium size, larger square footage, and a large as well. So we really up size the size of the interior square footage and the amenities that we can include in it. And I'm really excited for that. And that catalog to be completed because I'm really intent to take that, to clients that get the vision of that and see if you pass see. And hopefully go to camp with some of these larger units of the pine cones. So I'm like, I'm going to take it to Albu Nabi or wherever it is for they have budgets for that. Well, I'm looking at your reps there. And now I didn't realize it's more than just the pine cone. I mean, it is, you've got all these different. It looks to be like absolute custom designs, right? So is that basically your business model? Someone comes to you and says, hey, I want a one of one. I want a unique tree house. And then you just go and design a specific to that particular location. Yeah, most definitely, that's been our main business for the predominant history of the company. However, now we have these production ready models that we're running. Those include the pine cone, the equilibrium home, which is a building system really not necessarily specific models. And the tree walkers structure, which is a tree house clamping tent. And that's based around actual business model to launch hospitality camps. Well, let's talk about that. What do you mean tree walkers? What separates, what is the tree walkers product in relation to the other things that you're doing? What makes this product unique? Yeah, so it's really related to what I started the conversation with the initial project that I did. This G-desx fear tree house with intention of scale it as this clamping style structure, getting back to the roots the intention that I had originally launched company with. That's what tree walkers is. Tree walkers is, it's really primarily this engine-pringian-year trust system that allows folks to easily have suspended or stilted elevated platforms that can weave in through the forest in a modular way. So it allows a developer to create initial camp, save, and then continually add to that trust system and basically create like an elevated meandering path in a p-walk in a forest. Or you have both what I call socialized units that are in greater proximity to each other and a part of that organized architectural system. And then all the units that are kind of like off in the forest, go down a separate path, that kind of thing that have more privacy. And on top of this trust system, we've designed basically like a swooping, teepee tent type, glamping tent enclosure. And with that, we have basically these Legos that we can expand on and use the modular tent capacity and design to create different floor plans, layout, that kind of thing, and scale this idea of tree walkers. So tree walkers, it's a unique state, short-term hospitality or treehouse camp. And we had originally structured and launched as a franchise. So we have franchise, legal documents, that kind of thing to be able to sell folks on franchises. But that was a bit of a logic to scale in the show or intention for scale method for that. But right now we're basically working with a couple clients to build camps. - Hey guys, if you're getting value out of this conversation, do me a favor and take 30 seconds right now. And leave me a review on Apple Podcast or Spotify. It literally takes half a minute, but it makes a huge difference in helping other hotel investors find the show. Okay, now back to the episode. So let me just make sure I understand it. So you've got experience building these unique lodging units. And then you come across this idea of like, hey, why don't I just build this modular trust system and then we can franchise sort of the brand that someone who stays at one tree walkers location is gonna have a certain level of experience in terms of the type of accommodation. And then the franchise model is if someone wanted to open up another true walkers location, you could provide them more of a turnkey package of modular units. Like how does that work? Do they buy these individual units from you? And then as a franchisee, they pay you royalty. Like what would the cost be? How does the business model work? Like I get franchise if I wanna open up a fast food quick serve chain, but I don't understand how a franchise model works for this hospitality industry. Can you walk me through the model? Just from a high level of like, not necessarily the structures, but the business model if someone wanted to buy into tree walkers, like what are they getting? Yeah, nice, great. So if you buy into a tree walkers franchise and this is not fully developed, I should say. So right now we are trying to build our first and foremost our camps here. So try to build one to three operating camps that would really be more like, corporately own kind of places. And then once we kind of iron out all that, like the intent to offer them as franchise camps that you can kind of buy into. So but from a high level, potential franchisee would approach us and we would basically do the master planning for the entire camp to provide all the structures. So that includes the actual units and lounge area using our structures and our kind of vernacular that we developed here. We would be as a franchisee or responsible for getting all the gas to the door of our franchisees as franchises typically are. And so for that, you pay royalty that pays into our marketing services, which will include online ads, social media programs, guest loyalty programs, of course, actual main website booking platform promoting each individual. So you guys wanna be the Mary out of tree houses? The Mary out of tree houses, absolutely. Yeah, and expand this idea as a global vision. And that was the intent to use a model that had legal protections on both sides that you could easily expand on and then provide to an existing legal mechanism. I won't say easy, but a way for people to control territories in other countries and domestically here in different parts of the countries. - Yeah. - It's a big vision. And like here I am, we don't have a freaking operational camp bill yet. So this is all been way too theoretical for too many years in my mind to be critical of myself in our operation here. I bid off a really big vision here and with the fundraising, the franchise concept and model. And some of that was intentional 'cause we did crowd fun equity raises. So using that as a mechanism to show our long term vision and the global concept. But now we are here just like everybody else in the weeds. - Well, I wanna tap into that a little bit. Like let's talk about that. So you just pick my interest at crowdfunding, right? I hear crowdfunding and I go, "What the heck does that actually mean?" People just give me money. I just say, "Hey, crowdfunding, give me money." Like what do they actually get? If they go and invest in your company and maybe I think the idea of crowdfunding is they can invest smaller amounts. Like I don't know, I'm just not asking because as an investor, I give you $1,000, let's say. Like what do I own at that point? Do I own a company or do I just do this out of like, "Oh, I'm at my good will. I wanna see a succeed." Like what am I getting? - No, yeah, you are getting a part of the company in owning stocks in that company, purchasing that stockhead, whatever the valuation and individual stock price is, just like the stock exchange, right? But in 2015, the Jobs Act Obama brought forward this opportunity, fantastic opportunity, to allow unincredited investors the ability to invest into small startup stage companies that they believed in, basically, and where you could use the power of the internet, social media, et cetera, to gather grassroots support around your idea without having to go to venture capital. What a revolution it's inspired because so many things existed, of course, like through this model and the very different platforms that have popped up to support it. So we raised initially on Start Engine and we offered a common stock, which is in this case through Start Engine, and they're offering, it was a non-dividend paying, non-voting stock. So really, it is a long-term investment. That's really important. If you're looking to go into doing investments into crowdfunding, you should know what type of stock you're getting and what powers that comes with, right? So in this case, people are investing into the vision for a long-term, basically, saying, okay, when these guys either reach IPO or sell the company, I'm gonna get a payout at that point. - What about beforehand? Is there any liquidity if someone bought into this with common stock? Can they sell it? - Not really. Not really. And generally across the board with crowdfunding that isn't an option, if you're looking for liquidity that crowdfunding is not an investment strategy for you. If you're looking to make a very high risk investment as a small number into something that could 100x something, then you make a lot of small bets. And that's what people do in non-dividend platforms. The only thing. - It's like average investment sizes on these platforms is like $250, $500. It is almost like, hey, you know what? For a lot of people, it's like, I don't really get the full numbers on this, whatever the evaluation logic and that kind of thing, but this is freaking awesome. And I want to put my two cents in and know that I support this company and hopefully they'll go big. And it's a conversation around inner too, I don't know. - Yeah, there's pride of ownership. I mean, people like people-- - Right, and all the shape hackers. They own common stock and the green-backers. And what does that mean? They just like to be on the sidelines and be like, this is an owner team. Like I get that there. - Right, right. - $250, $500, whatever it may be, I think that there's a lot of value in just rooting for someone and I don't want to discount the value of that money, but it's not like people are gonna potentially go bankrupt. So from an owner, operator perspective, crowdfunding makes a lot of sense because you can get out there to the world and raise money without having to go through probably some of the major cumbersome things that would be required from a regular, like going public stock filing, Whatever's up. involved with that. Tell me how much money did you raise from from crowdfunding? Yeah, so not a ton. We'll raise around six hundred thousand. Okay. Yeah, with about 700 individual investors. And then we did a second round this last year with WeFundre. And we did actually a different mechanism. Did a revenue share, which is basically you're investing into debt as an investor there, where we will pay a percentage of our gross revenue to pay back the loans that basically that we got from folks. Yeah. So that would in honestly, I we tried this mechanism out. And I think I would have restructured the deal a little bit differently if I could do it again or done an actual another equity round, but live and learn. So we raised about 130 on that last round, not nearly what we wanted with their goal, but definitely helped. Why do you I mean from an outsider's perspective, it seems like debt is way better than equity. If there is true upside, I'd rather just borrow and get loans than give away equity, which ultimately that could be worth a lot of, you know, your porn, your life force into this thing and giving away share of ownership. The debt seems more favorable. What did you not like about the debt model? Yeah, a very good point. That's that is why we went and then I'm going with it because I was at a point in the company where I felt like if I had just a little bit of additional capital that we could increase evaluation by a lot greater amount than if I were to sold and establish another valuation at the point that we were at. And so the reason I would have done it again is that in the end, more people were interested in owning equity. They're just simply from an investor's standpoint were interested in that and probably in that crowdfunding marketing community, we're more understanding of the mechanics of buying equity through crowdfunding. So it's like this is a little bit of a different new model through the context of I'm like, what are your phrase? Yeah, I mean, I guess if I loaned you $100 and my upside is, let's just call it 10%, I'm going to get $10 back at the end of the year. I'm not that excited, right? But if you said, hey, for a hundred bucks, there's an upside over the moon opportunity, potentially you can make $1,000 whenever it is, right? That seems more exciting. So that makes sense. Plus you have to pay out of your revenues. If you do the debt model, you have debt, you have to, you have to service that debt with equity. You don't have to service the investors until there's an exit. So you've got no like debt obligation that doesn't constrain your cash flow. So there's three other make sense. There's a lot of advantages. Yeah, absolutely. We really split hairs on the little thing before we launched into that round with wheat funder, but it's really works for a lot of folks. It makes more sense for your companies that for like restaurants, that kind of thing where it's not necessarily like a huge scale or there's not like an IPO kind of thing or an exit clear with a restaurant and other small businesses like this. It makes more sense. There's also like these models that I've heard about where people will like the offer pre-booking. So what's his name? Travis Chambers was talking about this. So he opened up this like exotic, like crazy. It feels like you're on another planet type experience, like somewhere in the desert and knowing it ever seen anything like this. It kind of resembles a little bit like what you're doing in the sense that it's very unique and it's an experience. But the whole idea was if you could get access to this before anyone else who would pay ahead of time and then he'd be able to use all that money to build the resort. And that's the way I understood it could be wrong. But are you familiar with this model of selling like pre-booking and using the funds? And how does that work? Where are the pros and cons of that model? I haven't actually run that myself, but I've spoken with folks, spoken with Travis in fact about that whole model. And those little now companies are advertising agencies like Launch Boom are really servicing that niche. I think that the major pros to it is that just like crowdfunding, like you do all the advertising and grow your community upfront. And then of course, you can actually capitalize your build strategy. Oh my god, how incredible is that? It's just amazing. It's just so cool to see some new locations that are finding great success in this and doing some really cool new projects. Crowdfunded in this way is more or less, right? I mean, I think that in the same way that like you said, pride to invest or pride of ownership. A lot of times people are like, oh my god, I totally want to see this amazing location, landscape hotel or whatever it is like built. And they forget that just like a rebate, they forget that they booked it or they just like don't end up like bringing it forward, but they never end up booking, right? Yeah, they never end up calling that in. And then so it's a little bit tricky here with the financing foreshermic, because you're like, how much does money do I need to stow away for operational costs later? Right? But there's some percentages that are starting to come out if you're chatting with people. And it's like, oh, this is, you know, you can expect this much actual, what's the word? I'm like missing the bike to have to validate that. Yeah, there's like, there's fallout or leakage or whatever breakage, but basically, let's say you raise a million dollars, right? And 60% of the people end up booking while in theory, you get to keep 400 grand without actually offering those reservations. But if all million, you know, all million dollars that you were, was raised, you were expecting that you were going to earn a million dollars in revenue. And then you have to cut that off because you have people that prebooked and you're like, this is another like pre booking that I don't get to collect here and now. So there's that, yes, you got to be very careful to plan for that. Yeah, but I mean, if you have that, if you're able to raise a million dollars, that's a good problem to have. I would rather be in that position. They're not having the million dollars in the first place. Right? Right. Absolutely. I think I think that the buzz about it too, like if someone has invested into this, they're going to be excited to share it. So that's like the marketing piece too. It's not just the raising of the capital. It's something that someone gets to enjoy. Like, if you go and invest in like proctor and gamble or something, you're, it's like, okay, well, what is that? Like, that doesn't serve me. But if you go invest in a really cool, unique experience, then yeah, you're going to post it on Instagram. Be like, I invested in this. There's pride of ownership. So there's, there's value in that. All right. Cool. You know, what I want to talk to you about? This is something that would keep me up at night. I'm thinking about what you build and these structures are so incredible and so unique looking, but they're built into trees oftentimes. A lot of these are like actually built in trees. I think about the like development of a hotel or any real estate in general. And I'm thinking about like footings and foundations and like, you get a small earthquake in California and all of a sudden there's a crack in the foundation and you're like, oh my gosh, it's my structure compromised. You are building in literally a living organism that is growing and shifting and I'm thinking about how in the heck do you build a structure to where like sustainable over time and safe and what the heck does permitting look like for that? Yeah. So it's risky. I'm not going to try and deny that it isn't. It's just plenty of places to build and reduce your escalation more than what we're doing. Of course, I think that any tree house builder you have to have a bit of punk in you to do this and to stay in this. You need to just be like, I'm going to do this because it's something cool and the world needs it and we're going to send it. Now we do tons of things to mitigate a risk, of course. So major what you're talking about is tree health, right? And so having just various different ways that you can really like to determine the, of course, the health of the tree, the capacity of the tree by understanding what the trunk and the volume of wood there, the integrity of that. So there's actually the sound equipment that you can map the interior of the tree and the density of the wood within the column is also a test called a resistograph test, which allows you to understand the same thing the density of the wood at various different points increments along the trunk. These tools are kind of engaged on trees where there might be some telltale signs that they're, they've been compromised at certain points within their life and their growth. But generally, just try avoid trees where there's any question of that whatsoever and then make sure that you have the right, the right species, that right age within its lifespan, the right soil conditions, root structure, make sure there's not any sort of pests or blade taking place root rod. There's all these different factors that you can do to inspect the health and the risk of the assessment and profile of trees. Easy to build these environments for these. Like if I'm a building per, I'm just like such a sticker right? I'm going to be in there and be like this six inch step is not to code. Like you're in a tree house man. Like what do the perv people say when they go and look at these things? These structures hanging from trees? Well, shoot, if they're going to look at it and they don't know about it, they're probably going to give you a red tag of it. You take it. Yeah. But otherwise, you know, if you're going through their proper steps, yeah, you can't get a tree house permanent. Definitely matters what you're sitting around in. Who is the plan check engineer and how do they approach or accept the engineering related to tree house attachment? And so we've seen all situations, like look at Pete Nelson with the tree house masters. They've permitted and built hundreds of tree houses, right? And how many of those have been in California? Not them. I don't know. I don't know anything about Pete Nelson. Is this like a tree house development? Oh, yeah. Sorry. I just saw a name other. Pete Nelson is a star in the tree house world. He had, I think it was eight seasons or nine seasons had, I think it was the top show on animal planet. Basically following his team across the nation, parts of the world building is amazing kind of cabin based very big timber. timber frame style triuses. And yeah, it is wildly popular. And it did amazing things with entire trius industry because it's more people were interested of course, but then actual building departments knew more about the context and the engineering, the real engineering that went behind these three attachment hardware pieces. And so it became much more understandable and acceptable. And you weren't having to like fully educate from ground zero when you approached building and safety department. - Well, speaking of safety, what about insurance? As a hospitality operator, insurance prices have skyrocketed over the last few years. How is it affecting tree houses? - Yeah, absolutely. I mean, it's absolutely affects tree houses. Like it just California loans like with defensible space in terms of the vulnerable fuel and cracks in me into the structures. That's a not sequitur, not starter in a lot of cases. So it's unfortunate, but like for me as like someone who has like created a lot of truly tree supported tree houses moving more into the hospitality space, we are doing way more siltist structures. And just trying to have them be of the spirit of a tree house, which is subjective and hard to define. But you kinda know it when you see it and like maintain that spirit of what we're doing versus just building something that is like elevated and like shouldn't be called a tree house, you know what I mean? - Yeah, yeah, yeah. - A lot of it, I get it. A lot of folks are making structures and jumping on the bandwagon calling them tree houses. But they're like, that's just like a deck. - Yeah. (laughs) Well, I think to your point, the spirit of the tree house is to immerse yourself in nature, to feel elevated, to feel like you're, and you've got this view that's unique. But yeah, these things are interrelated here. So I'm talking about permitting, I'm talking about insurance, but those two are really prerequisites to getting financing. Right, that's the big one is, can you finance these things? 'Cause in real estate, that's how you, that's how it oftentimes you can, I don't wanna say make money, but you can preserve money because you go and you build something, you refinance it, you take your money out, you go build it again somewhere else or you apply that money. But unless you sell the thing, there's no real way to recapture money unless you refinance. And so how does that work? How would a bank say they see these, where were there elevated structures or tree houses or hanging pine cones? How do the banks feel about these? They don't like it at all and it's very difficult. And that's why you don't see a ton of true tree support of tree houses out there. Sorry to break it to you. Yeah, yeah, it's something that they can't with 100% of insurance be able to resell if you were to default on that loan easily, if it is without a foundation in the ground that is completely engineered and permitted. So if they definitely a challenge there, I mean, that's with tree walkers, we have the structure that is this trust system that has capacity to be suspended, but we have the fully engineered stilted versions and we'll likely build more of those. And in the locations where they're gonna be accepting of the engineering, we're gonna go for that. Right. But let me ask you about something. I imagine that you got to sort some of your products from abroad and these days, there's a lot uncertain to here on tariffs. If you're importing, if you're building anything these days, chances are your product costs have gone up. How are tariffs affecting you and how are you navigating this these times? Yeah, so our canopy manufacturer for the New York intense are out of the Philippines. And so we're incurring a 19% tariff there. And yeah, unfortunately, where we had a really good thing going there, we are looking domestically to try and get our prices back down and where they were. We're like doing any sort of product modifications to reduce the cost of it. And that's like currently happening. To see if we can actually find a domestic manufacturer where we at least end up at the same cost, right? But then at least have like swifter deliverable capacity. Yeah, so on and not show. You may save on some shipping costs, and it might be quicker so you can be more efficient. But ultimately, anything made in America is presumably gonna be more expensive. So if you import it, you got paid a tax. Yeah, we're in a little bit of a quandary. I'm feeling the pain right now. Are you two ways? I'm feeling it right now with rebuilding our home in LaHina. The cost has just gone up in like the crazy. Like the whole that we received 18 months ago isn't even relevant anymore. And this is for just building a single family home. When I start underwriting renovation costs for hospitality assets. My knees should look at hotels. It's very difficult right now to predict what those costs are gonna be. Once, I'm sure under contract, I ultimately want you buy the thing. It's just prices, especially now I've got this worn Iran and there's this potential for the cost of oil to go up which affects everything. As a small business owner, how are you taking all this into consideration? Like do you have any contingency plans on what you're gonna do or what are your expectations with like, let's say the economy over the next 2026? Yeah, it's you know, affected our strategy completely where there was a huge focus and push for tree rockers in 2025. Really entirely pivoted and we're focusing all of our marketing budgets and strategy toward back towards custom. But trying to get the really high end billionaire type clients who are doing the one-off structures in their backyard which is kind of our bread and butter. And just making sure that we can really stack our pipeline with those types of clientele to mitigate the risk of the war and the tariffs and all this kind of thing where I don't really know what's gonna happen in this age of uncertainty, right? As they're calling it with the short-term rental market and what people are willing to pay. You also add AI on top of that. I'm kind of seeing the blunt of that here in being the Bay Area a little bit probably more viscerally than other folks in the rest of the country. But it's like wow, the block, the big story, like laying off 2000 people and this kind of thing. It's just the first edge of that starting to show is like these are the people that are paying these high ADRs for unique experiences. There's a lot of money in the country. Obviously it's not gonna go away overnight. But it's a little bit concerning with all these factors of the layers of this onion, what is gonna happen? So yeah, we're definitely burrowing down, investing into our core competency doing custom unique structures for residential clients. And you know, not totally turning our attention from tree walkers that's still continuing or pushing that forward, but not as aggressive really as we were. - Yeah. - Well, on the hospitality front, here's what I'm experiencing right now. - Yeah. - I keep hearing about this K-shaped economy and like I'm no economist, but I could tell you, my own anecdotal experiences, my luxury vacation rentals are still plugging along. Actually probably outperforming what even they did last year. The budget accommodations that we have, completely softening, like remarkable. It's a little scary to be honest. It's like wow, we're seeing a huge drop off. Now part of that could be for some of the reasons that you just explained, the more AI gets implemented, we're starting to see people affected by job losses and those typically affect the lower stront of workforce. I don't know, but I would say your tree houses are more of an upper level. What's your experience? Are you seeing a softening in demand or ADR or are you still on the same level from previous years? - We're on the same level from previous years. And in terms of just like custom clients, no change and to only an increase. - Yeah, yeah. - So I think it's just the, we're also investing more into that. So it's a little bit hard to gauge. We're investing way more in the online ads for custom work right now. So in the company's just been expanding. - Cool. Dustin. - Good questions. Thank you for those questions. - Yeah, thank you so much for being on the show, man. - How can a listener stay in touch or continue to follow your journey? - Yeah, so sign up to our email newsletter and go to our website, drop us a call or an email and let's conspire together. Let's build some amazing cool things that the world needs. So I would invite you to get in touch. - Cool. We will drop the website in the show notes. So thank you guys listeners for tuning in to another episode of the hotel investor playbook. We will catch you again next week. Aloha. (upbeat music) (upbeat music)