Leave Something For the Next Guy
Back in the late 70’s, former Alachua County Judge John Connell and I purchased a 94-room motel in Atlanta from a real estate investment trust. Due to the motel’s very low occupancy rate, they were going to tear down the motel sell the property for its land value. When John learned of this via a contact in Atlanta, he asked me if I'd go in as a 50/50 partner.
After looking over the physical condition of the property, I inquired of the motel manager about their occupancy rate. When she told me they averaged renting 16 rooms a day from that 94 room property, I went in to problem solving mode.
I asked the manager if they tried renting rooms out on a weekly or monthly basis, and she said, “That would be disastrous! People who rent by the week or month would wear out the carpet because they will walk the same path to and from the bedroom to the bathroom, and that wouldn’t be good.” You know that quizzical expression a dog makes as it cocks its head to one side? Well, that was me. Was she seriously saying something that bizarre?
With the good physical condition of the motel, it potentially had some good years left but I needed to check the market to verify my thoughts.
So, I immediately bought a newspaper and began looking in the classifieds (this was well before Internet and Google) to see if there were weekly/monthly rooms listed and see how much they were renting for. Indeed, there were such rooms and I noted the rental rates. Using an average rate, I ran the numbers, which proved very positive, shared them with John and we purchased the property.
Since we didn’t live in Atlanta, an honest and efficient management team was a must. We were extremely fortunate that John’s daughter and a friend of hers were available to operate the motel.
With that important step completed, the next thing I did was to prepare an announcement stating ‘The Dinkier Belvedere is now renting rooms by the week and by the month.” I then mailed it to area trade schools, colleges, hospitals and construction companies. Because the daily rental rate was higher than the weekly, we reserved 16 rooms to rent by the day and the remainder would be for our longer occupants.
Within a couple of months, the concept had worked and the motel was running at full occupancy. This trend continued month after month. We were making good money and all was well.
Noting our success, a man from India, Mr. Patel, inquired about purchasing the property. Mr. Patel’s offer was more than double what we had paid, but I thought we should wait for a higher sales price. The motel was making the money to warrant a higher price and I thought we should hold out and get all that it was worth.
When I discussed this with John, he laughed and said, “You know, we’ve been fortunate to have Mary and her friend running the place for us while we continue to live 300 miles away. But, there is no guarantee that they will continue to manage the motel in the future.” He went on to say, “Furthermore Ben, remember to always leave something for the next guy.” Those words resonated with me as they came from a man whom I very much respected. John was a wise man, and I learned from him a great lesson that day.
What he was saying was not to hold on too long. The motel was having a good run, and it was time sell, book our profits, and celebrate. If the motel continued to succeed, well, you've still made good money, so why worry? You’ve left something for the next guy.
So we sold it.
With my portion of the sale proceeds, I purchased a farm and within a year, I made a handsome profit from it as well. That would not have been possible if John and I hadn’t sold the motel. And if I’d have waited, the potential was there for the business to slide and with a distinct possibility for a smaller sale price.
Business is about relationships. When you create a win-win situation in a deals you let the business world know that you have integrity and creates other opportunities. I’m in a true believe that you get what you give - good or bad.
To leave something for the next guy is not only good business, but it’s just simply a good thing to do.
