GI296: Luxury Vacation Rentals with Stephen Petasky

GI296: Luxury Vacation Rentals with Stephen Petasky

Stephen Petasky is a luxury real estate and short-term rental expert. His company has divisions in the US, Canada, and Italy, focusing on luxury development projects, memorable vacation experiences, and epic restorations of historic estates. Since 2007, they have serviced over 20,000 client vacations.

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Transcript:

Charles:
Welcome to another episode of the Global Investors Podcast; I’m your host, Charles Carillo. Today, we have Stephen Petasky. He is a luxury real estate and short-term rental expert. His company has divisions in the US, Canada, and Italy, focusing on luxury development projects, memorable vacation experiences, and epic restorations of historic estates. Since 2007, they have serviced over 20,000 client vacations. So thank you so much for coming on the show today, Steven.

Stephen:
Thanks for having me, Charles. Looking forward to it.

Charles:
A very unique business plan. I love getting into that. But before, so give us a little background on yourself professionally and, and personally before getting involved with short-term rentals in general and what you’re doing now. Yeah,

Stephen:
For sure. So my family, my parents had me when they were kind of ripe, young age of late teenagers, so not, not totally planned, but they were high school sweethearts. I just probably came a few years earlier than expected. And so they really had nothing to begin with, obviously starting at a very young age, and it was fun. Of course you’re blissfully unaware at that age of what of what they’re going through financially and, you know, through the whole family process. And they sent my sister a few years later and then they went and started their own business. And I remember at these kind of forms where we went is remember coming into their the house was like eight years old, so the 88 and the eighties baby. And they had this person at the, at the desk here at the table, and they’re signing all his papers.

Stephen:
And when they left, I asked what it was, they said, well, that’s our, our banker. And they said, oh, well, what’s a banker? And they give you the rundown. And, and they said, well, what are you doing? They’re like, we’re taking a second mortgage on our house. I’m like, okay, what’s a mortgage? And you start to learn. I’m like, well, what are you using the money for? They’re like, well, we’re buying a business and we’re gonna try to, you know, grow our own thing, which was in the grocery stores, our grocery business. And that’s where they kind of had their history and, you know, teenagers and early twenties working their way up through the channels and had an opportunity. So for me, very lucky because I got a chance to watch front row seeds, you know, entrepreneurs go through all the hardships and ups and downs and challenges and opportunities that come along with entrepreneurship.

Stephen:
And so kind of for my whole life, that’s what I was always groomed, destined program. I don’t know, whatever you wanna call it. I mean, just following along, I didn’t know there was any other jobs, you know, in the world. I mean, everyone just starts their own business, right? And of course, as you start to get a little later life, you start to realize that, oh no, this is, this is pretty unique and pretty special. And so started a couple of small businesses kind of through college days. And then I went into the family business for a number of years at oh 1 0 7 in the grocery business, which is totally different retail than real estate. But through that journey I just had a, a love of travel. My wife and I were married in oh five and we, you know, pregnant with our first in oh six and said, you know, we just wanna continue to travel once we have children and what would be like the right conduit to travel? And then I’ll give you a bit more of the story, but ultimately equated luxus. And then, then we exited the grocery business a few years later, and I’ve been full steam ahead on trying to build this this machine over the last 18 years. Why

Charles:
Did you choose going into real estate and more specifically going into what you’re doing now, vacation

Stephen:
Rentals? Yeah, so it was I think it’s a good story. I’ve shared it before, but I think it’s good, it’s good to hear, but because it was a problem we had as a family. So I think when a lot of people start real estate, they’re looking for like, what’s gonna cash flow or what’s the best investment? But for us, it was solving a problem that my wife and I had, and that was a problem of continuing to travel the way we were used to while we’re still having a family. So obviously when you’re traveling as a couple versus traveling with a a baby, things change dramatically. So our challenge was thinking, what does travel look like post, post first child? And we kinda looked at three options. We said, okay, we can stick with hotels, but babies and hotels and parents, it’s just, it’s just not easy, right?

Stephen:
It’s, you know, baby’s in the, the hotel room and you’re eating out three meals a day and it’s expensive. It is just kind of complicated. So then we went down the rental road, and this is like pre Airbnb days, so it’s just vrbo and back then, just not totally dissimilar, dissimilar to as today I’ll get to the main, you know, core what we’re doing now, but inconsistent. And as a new family, you just, it’s very difficult to coach with something that you’re not sure what you’re going to get. So you overpack and you overplan and, and you hope that the home is illustrated correctly in reality versus what you saw online. So we just couldn’t deal with the inconsistency and, and unknown. And then the third option is of course, buy our own home. And my parents had bought a couple second homes, had a chance to watch ’em go through that.

Stephen:
They were very good at picking homes the right time, selling them at the right time, getting utility out of ’em in the journey of personal use, which obviously could have rented as well. They chose not to, but they just used them. And but we didn’t have the money to buy our own second home. And it also limited the variety. And, you know, they, we wanted to travel to different places. So when we took all that in oh six, we said, well, what if we had a portfolio of homes that we owned and multiple destinations around the world set up exactly the way we would want them set up as a new family? Wouldn’t that be the ultimate? And we get all the boxes checked in one spot. Obviously we didn’t have millions of dollars to do this nor to make financial sense. So we went and syndicated three properties.

Stephen:
We went and found 16 friends. My parents came in and we came in as the first two checks and we went in 16 friends and family syndicated three and a half million bucks and a little mini fund. And we’ve acquired a condo of Maui, a homeless Scottsdale and a ski summer place in Western Canada. And that was perfect for us ’cause we had variety of, of a beach, a golf and a ski summer, and we had the consistency of each of the homes and we had equity in the homes. And that was a kickoff to Lexus, which then snowballed obviously to many variations and kind of where we are today. But we ended up growing and raising, you know, pretty close to about a hundred million of value, 50 properties around the world, serviced those 20,000 vacations you mentioned. And and had a really kinda good experience for call it version 1.0 of Lexus before we transitioned to our new journey. So yeah, it was a fun ride. I’m still humbled that those initial people gave us their money in the early stages because I wasn’t sure I was deserving of it. I might have been very passionate about what we were trying to accomplish, but I had nothing to prove that I was good at real estate. But I still thank those people every single day. I see ’em because with all that we would not not have what we have today. That’s a great story. Thank you for sharing that.

Speaker 3:
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Charles:
So give us a little like background kind of, of where Lexus is now, and you’re saying, you know, 1.0, where are you guys right now at 2.0? Because it seems like there’s a number of different divisions you guys are developing, you’re restoring and you’re renting.

Stephen:
Yeah, so we and kind of for seven, eight years we had that really big growth spurt raised a lot of capital. We had our 400 investors, these 50 properties. And then like any entrepreneur, you get a little distracted and think maybe there’s other opportunities to make money within the space. And we thought, wouldn’t it be great if we started developing our own like Lexus communities so we can build the homes the way we want, specifically for our industry in the short term rental industry. And so we did a project in Hawaii, a project in Palm Springs, California, and then a restoration project in Italy. It seemed like three random places, but we had connections in the right we believe the right opportunities of pieces of land to do something pretty special in most three markets. So definitely bit off more than we can chew, I would say.

Stephen:
You know, like it’s a three totally separate spots, two total, three totally separate places. And we had, you know, kind of one win, one middle round and one punch in the throat and you know, you’ll live and learn what you become good at. And that took us kind of through the next seven years. And then that brought us to Covid and that’s when, and in addition to other businesses, we tried to launch in different variations. Covid was almost a blessing in disguise and much as it really, really, really was painful during that first six months to a year, it paused. Everything in our business allowed us to regroup and get hyper-focused on two, two divisions. So there’s really two primary companies that represent the Lexus group now. There’s Lexus vacation properties rental model, which I’ll get into, and then there’s a Lexus Developments model.

Stephen:
And so Lexus Developments is based outta New York with my partner there in his office. And then underneath that is the Italy office which in Sienna Tuscany, which represents the restoration division. And then we have the Lexus vacation properties based outta Edmonton, Canada, and we’re looking to start an office in Western us. And so through that journey, and I was ramble on for a minute, but we got really focused on saying, okay, these development projects are hard. If we can make them bigger, it could be worth the same as I getting a little later in my career. It’s like, well, if they’re gonna take five to seven years anyway, they’re gonna be very stressful and very challenging. Let’s target larger projects now we have some experience behind us. And to give the short version, we end up partnering behind a great JB partner.

Stephen:
We end up finding an amazing piece of land. We have the right landowner, all the right things lined up, and we end up creating four seasons. Private residence is Las Vegas, so partnering with that brand on a very meaningful project, it’s very special. It’s gonna be over a billion dollar sellout. We obviously have partners, capital partners, it’s like, it’s a very significant investment, but we’ve got the right people on our team and we’re surrounded by and we’re gonna create something pretty special there. So that development arm kind of, you know, took off and it’s got its own new trajectory working with Four Seasons and some other brands. And then once we kind of get that, that stabilized, we launched this new Lexus vacation properties rental model, which I’ll come back to a little bit later, but I’ll pause there, let you ask some questions. But the new vacation rental model is is pretty special and it’s gonna hopefully change the industry and change the way people travel.

Charles:
How does developing and restoring your own unique properties, you know, while building a brand kind of around some of those properties, those higher end ones separate your, your vacation rental business from other competitors in the space where they might just be renovating one property, they might just be renting it out nothing special or buying something that’s already renovated or already, you know, ready to go, let’s say to the most part and they’re just kind of offering this. How does yours differ from them? How does that make it a more unique opportunity and a unique experience for your clients? Sure.

Stephen:
So when we, the first, the first version of the development side, kind of 2014 to 2021, we were creating specifically rental products. So when you create out a home that’s designed exclusively to brands, you design it a bit differently than you would design a traditional single family residence. You have more master bedrooms that are equal, like when someone books a house together collectively with four couples that want to go down to Palm Springs for a golf trip it, you know how it typically is someone gets this opulent master bedroom and then there’s three junior suites and one has a Jack and Jill. So you all pay equally, but who gets the short straw? So we were creating these products that are designed really for the rental industry to take care of, you know, corporate retreats, you know, generational travel and create this like you kind of uniform experience for the for the end user.

Stephen:
The development shifts has shifted now, now the projects we’re building, it really the overlap of the two companies now primarily is my ownership. We actually have a much overlap on operations. We’re not developing for ourselves anymore. We’re developing for a different clientele around four seasons and kind of branded residential type projects. Still in Tuscany we still do restorations for for families of restorations of kind of ancient ruins and converts ’em to be luxury private estates. Some of them rent with us after some of them use them personally. So we kind of provide the full vertical of experience over there. So again, in that scenario we’re developing for rentals. We can create, you know, the one we just completed a couple years ago, five master bedrooms. So it’s excellent when you have couples that are all going collectively. No one feels like they got the short end stick and Tuscany is very di you know, differentiated between like generally old villas, you know, the master bedroom versus like this, the junior suites. So we have a little different lens on it. When you have the ability to have gone through 20,000 vacations and understand what the client wants at the end to when we can create a product that is going to serve a certain type of clientele, it’s gonna appreciate our option basically, you know, versus maybe someone else on Airbnb or somewhere else.

Charles:
One of the things I see with these unique properties, which that makes perfect sense about the whole bedroom thing. ’cause Traveling with my wife and with couples, I, I understand exactly how that works and it’s not something you think of, right? If I was gonna become a short-term rental investor, right? But as someone in the business, obviously you’re hit with this all the time with, with people. How do you effectively measure the demand for new property? And, but I mean, maybe it’s easier with developments or with when you’re doing like a hotel or a vacation type rental, but for a unique one-off project restoration type project, how can you you know, effectively you’re, it’s, it’s so unique. There’s gonna be such a niche for it. There’s only an so few end buyers, like you said, usually do, or having a ri a rental clientele that can pay thousands of dollars per day. You gotta really have to know that, you know, there’s that demand there, which is, you know, something, it’s much easier if you’re like say, you know, we’re renting a I’m buying an apartment building or something, or we’re gonna build an apartment building and I can say, oh, I see rent here. I can do, you know, you can do all that. So how do you effectively measure that demand for new property, especially in a different country that might not have as much data? You know what I mean? Accessibility like, like Italy for example. Yeah,

Stephen:
You know, it’s a good question. It’s, we never really look at it. I mean, exclusively in the underwriting of a financially how and performed cash flow wise, we look at it to say, is there demand for the market at a macro level? So Tuscany, Italy has demand and will always have demand. You know, Tustin’s done a great job at preserving this countryside to make it one of the most special, you know, vacation destinations in the world. So then it comes down to of the thousands of villas you can go find on VRBO to go rent there. How do you stand out as your own? And this is tricky because there’s no perfect science to it. But first off, you wanna differentiate a product, which I explained earlier. You create something that when someone does go there, they’re like, whoa, this is a differentiated experience and others I’ve seen, I will read book this or I will tell my friends or I’ll give ’em a five star rating or whatever it might be.

Stephen:
But the second component, particularly in the luxury side, if they can build its own brand and its own following, then people start to become drawn to it. So a lot of them just get lost in a sea of red out there. ’cause There’s so many and they all look wonderful from the outside of the pictures. But, so we had our first one Pary Panko, but there’s the tell I word for farmhouse. We created a Pari Pinco website, Instagram page, you know, all these various aspects, storybook like an actual book that kind of explained the whole restoration journey. So when people are actually there, they, they understood and they kind of felt the journey that we went through to create it and adds this level of, you know, special flare that others just don’t have. And that created, you know, a really, you know, successful rental model within that product.

Stephen:
But it took three years to do that. Not a lot of people can kind of wait, wait along that long to build that up, but ultimately triggered a really good sale when the time was right to sell it and, and, you know, triggered a disproportionate return and we set a record on the sales price in kind of Sienna province as a result of the efforts of building that brand for that property. Now it’s hard to build a brand for a 500,000 condo because this doesn’t have the revenues to support, you know, the efforts of investing in a full brand, but in your luxury side you can create its own unique kind of following. And that’s what we really worked hard to accomplish. Yeah,

Charles:
You definitely did it. That website is fantastic. The property’s beautiful and it really outlines everything. I mean, it is like you said, a you’ve achieved that in that brochure that I’ve already sent the multiple people, so I mean I

Stephen:
Appreci it’s that appreciate that it’s work. <Laugh>

Charles:
One thing you talked about before, and you mentioned already on the show and I was reading about, and you partner with a lot of top hospitality brands such as Four Seasons, Marriott, Rosewood. How does the process go for partnering with one of those companies? I know we had someone on the show years and years back and they were telling us about the different kind of cap rate they’re getting for regular hotels. Obviously we’re getting into these are much higher end brands and properties. So how does that process, do you begin kind of the conversation with going to one of these brands? Because as I understand it, they’re not owning the property, they’re just gonna be providing service. Is that how it works? Maybe they, as I understand, like Marriott, they own maybe some of their really their top properties or like, you know what I mean? But the rest of it’s just a service model. Is that correct?

Stephen:
Yeah, so I’ll, I’ll give the, you know, I’ll use Marriot of Four Seasons as two separate examples. So first off of the process is if you have a very special property, some, quite often the brands will solicit you because they’re like, you guys have a one of a kind asset, particularly a company like Four Seasons where they’re looking for front row grade AAA plus plus type projects. If you can find that particular piece of land and create that vision of the project, they’re gonna be first in line to kind of solicit you to say, Hey, now there’s a soliciting process and that maybe it should be Ritz or maybe it should be a Bear’s or Aman or someone else. So the typical thing if what should be is you use a branding agent and a branding agent will help prepare, they’ll take it out to dozens of different brands and they’ll go, I would say trade off each other, but negotiate ultimately the potentially the best deal for your particular project.

Stephen:
So in the case of Mexico, that’s what we did. So we’re creating a Marriot project down there, but originally went to, I’m gonna say 15 or 20 brands and offer different incentives for it to be less well known. Brands will pay you more money like it’s called Key Money, but basically effectively like a bonus for signing with them. We ultimately chose Marriott because, you know, world’s largest hotel, to your point, they don’t own anything. I feel like they own of their, I’m making this up of their tens of thousands of hotels. They own like 20 or something now. Like they really do have use other people’s capital. So there’s this really nice advantage of, obviously it’s, it’s really an art, but picking the right brand for the right project, project and the right location and and so it’s, it’s you ideally you can use a third party to help you with that.

Stephen:
Now we have a specific relationship with certain brands, so we know what they want and we can help kind of curate a, a model that works for them and how it works from that point on. Maris will different than Four Seasons. So Marriott is purely the sales engine and that’s a, kinda like most brands, they are purely about driving their Marriott Bonvoy and their guests to, they actually don’t do anything operationally. They hire a third party company, we hire them, but they have to be approved by Marriott to do the operations. So even though they say Marriott on their t-shirt you know, at the front desk, it’s actually a third party company that ultimately does the management. So we could, Marriott really got out of the actual servicing of that side. So Azimi as the owner of the hotel or partners is you got Marriott driving all the business, a third party operator running it.

Stephen:
There’s obviously various incentives that each party takes and then the leftovers come to the, to the hotel owner allowed these hotels to scale up, especially Marriott, which is, has tens of thousands of hotels. Four Seasons a little different. So in the high-end brands, and I can’t speak to some of the other high-end brands like say Regis and Aubert, but Four Seasons does still run their own service component. They’re not willing to give it up to a third party. So when you see a Four Seasons employee it isn’t a third party operator, it’s actually four Seasons employees trained by them on their payroll because they want to make sure that that service experience is uniform across their portfolio globally. I respect that. I think they do. It’s, they really have a very high standard, that’s why they become, you know, the best hospitality brand in the world based on that control. So they’re less concerned about scaling to thousand hotels, you know, and resorts and residential. They just want to have a hundred or 200 or 300 of the most perfectly immaculate operated hotels and resorts in the world. So slightly different models, depends on the brand you choose. In some cases you can self-manage like a Marriott courtyard. It might be your employees with Marriott Courtyard on. So depends on the brand determines how the operations work, but that’s generally how it works between luxury and call it mid-tier brands.

Charles:
Interesting. Very interesting. One of the things you were circling back on was the, the vac vacation rental model. Kind of what you guys are working on. So after you have a property it goes from one of your joint partners and it goes, it’s developed or it is restored, whatever it might be, then it comes back seems like back onto your, your plate and you guys are working to handle all of the marketing for it. Is that how that really works in operations?

Stephen:
No, it’s, it’s a good question. It appears that way, but actually not. So the residential side or the, the development side completely separate the rental. So in certain cases, yes, like in Italy we do actually take over the management of the rentals from the rental arm versus the development arm but’s very limited. We’re talking a handful of properties. The rental side is a, is a fun story because I, I’m very, very excited about this and very bullish on what it can be. But you know, we’re trying to solve a very hard problem. And the hard problem is basically combining the benefits and the familiarity, the service, the grand standards of a hotel combined with a vacation rental model. So for illustration purposes, four Seasons meets Airbnb. So Airbnb and DRBL, their single biggest challenges in volume, they control 90% of the market is that they each host around the world delivers a different service experience and a different in residence experience to their clients.

Stephen:
So when they distribute this inventory globally, they actually can’t control the experience at the ground level. That’s why they send people through five star ratings and Superhost status and various things like that. But what we believe wholeheartedly, I think you can anyone would attest to, if people desire certainty, you know, happiness is a function of expectations met. And at the end of the day, consistently expectations are not met through those platforms because some hosts do a wonderful job. If you’re a host that does a wonderful job, good for you, keep doing a great job, you’ll create loyalty for your, your house. But a lot of hosts are very good. Oh, they’re, they’re just not, they, they don’t take care of the linens, they don’t take care of the kitchen, you know, they’re not responsive when there’s an issue with the dishwasher, whatever it may be.

Stephen:
So what we’re trying to do is say, okay, can we combine the wonderful benefits that come with the certainty of the hotel space, but with the size and and capacity that comes with the rental space? And no one’s really done this before. There are, there are certain companies out there that have created like a vertical of, of management with some brand, but we’re trying to do a global portfolio where when you go to our Italy property or Cabo or Hawaii or San Diego, Phoenix, Caribbean, wherever you’re to get same sleep, the same bathroom set up, the same kitchen set up and san electronic setup. So you have familiarity. The homes will vary in size. The condos are vary in size, the furnishings will be different, the art will be different. But you know, if you’re gonna go there for Thanksgiving, you have everything you need to make a full Thanksgiving meal for your family and you know that you’re gonna have great night’s sleep.

Stephen:
‘Cause It’s the same linens and the same pillows and the same ves in every property. So that’s the, the code we’re trying to crack with this new model. And the biggest challenge of it, of course, is convincing homeowners that they have to invest into our brand. But that’s what Marriott does, that’s what all these people do. You take a Marriott, you can’t pick your own lens, you’re using Marriott lin it. So it’s not the hard, hard conversation, but it does require a commitment from the homeowners to say, yes, I believe in this and I believe this is gonna generate me a higher average daily rate and a higher occupancy because people are going to, you know, flock to certainty. And so now we’re, you know, coming up on 20 properties, we’ll be probably 60, 70 by the end of 2025 and we want to grow to four or five, 600 in five to seven years.

Stephen:
And of all vary sizes, you know, so we’re gonna have from three, 400 bucks a night to three, $4,000 a night and everything in between. So you can kind of pick your mission based on what the travel is. But it’s definitely a fun journey and something we’re very excited about because I think if we can do this, and when we do this, clients and guests can travel knowing what they’re actually going to get every time without going to a hotel. And that’s what we’re trying to accomplish. Yeah, definitely. I, you could have said it any better about, I do a lot of traveling with my wife and that’s one thing that we’ve kind of like,

Charles:
Unless we’re in a certain situation with many people or other couples or something like this where you’d wanna stay together, it’s like where you go the hotel route because for that, for the certainty and for the hassle free type experience, which is too bad. I mean, but it’s true. You, you can only look at so many reviews and they’re just not as accurate as one might hope that they would be,

Stephen:
Well you don’t have to worry about that anymore, is you can go to a Lexus property, you, you know exactly, exactly what you’re gonna get. And so it’s just solved that problem for your family. <Laugh> one

Charles:
Thing here is kind of like we’re moving, we’re moving forward here is is, you know, you guys made it through you 2007 you got started, you made it through the, the the GFC right? Global financial crisis. A lot of people didn’t I would imagine the majority of your competitors didn’t especially from what happened with real estate, put that together with people kind of not spending as much traveling. How did you guys do it? How did you make it through right after you started?

Stephen:
It was a great question. I don’t know if you did your research on this, but it’s a very good, I’ve never been asked this one because it’s a, and it’s, it’s a good story. When we started in oh seven, a similar company started with a similar model in Atlanta. We’ve become good friends over the years. And we both started with this equity model with, within our industry, it was this non-equity kind of club model where you invest into this club, invest I ever thought they were investing, but they were actually buying a non-equity share. And these guys had all these properties all around the world. We were, you know, there’s 50 properties, or pardon me, 50 companies in the industry. We were 49 and 50 in terms of size. But our models were based on equity. So people have actual share of the homes of the real estate buy a fund, and secondly we had no debt.

Stephen:
So what we found out, of course we’re like, ah, why are we losing, like, I would say losing steam, but why is everyone growing so fast? Well, once the great recession happened, it was amazing. People started getting burden bankrupt, merged up V up, circling the drain refugees everywhere, and were quickly found out that their models based on either massive debt loads, almost universally like 80% and that’s what debt was free and plentiful and or that people didn’t actually have ownership. And there was lawsuits galore. These people said, you told me I had ownership, I don’t have ownership, whatever it may be. So we were able to kind of weather that storm on these two companies. Then we, we both jumped, became the number one and two in the North America after about another four or five years, we added many tens of millions of dollars of equity and grow to the portfolio.

Stephen:
And and I say within our specific, in part of the industry equity based or still club-based, like exclusive resorts, it’s owned by billionaire Steve Case. So he was able to weather the storm purely through massive financial capacity. But we know that they struggled financially, but they just have a financial capacity of a, of a backer like that, which is great. We didn’t have that. We had to make a go on not going bankrupt. And because you had no debt and our operating costs were recovered from the investors, we were able to survive that storm. And the nice thing about that, at the end of the storm, we were one of the few standing, so everyone came to us and they were able to grow very, very quickly. So if you can manage, you know, projects with no debt without the heavy liabilities, it’s not, it’s not easy in development world, you know, debt is a very important part of a capital stack in order to generate returns. But if you can, you know, you know, limit your leverage in certain situations, get through the storm, you may be able ask Man, Sandy, and then the clients have nowhere to go, but to you, and we’ve got this phenomenal run from 2011 through 2016 that may not be replicated again, frankly because of just simply all the right factors working in our favor.

Charles:
Interesting. Yeah, that’s a, that’s a great way, yeah, it kind of, every time I ask a question or a part of a question like that, that includes the GFC, the people that made it through, there’s always a conservative debt approach. It’s just, I mean, it gives you the flexibility to go weather all the storms, whatever way it might be going. So, well,

Stephen:
I’ll, I’ll give you the opposite example. Covid happened and instead of weathering the storm, we liquidated quickly and we lost out. And so we, we were a little bit too leveraged. So to give the the opposite example you think I would’ve learned from version 1.0 of how to do it right, but then you’re heavily leveraged, you go into Covid, which triggered what appeared to be this massive decline in desire for real estate. We liquidated, you know, a lot of properties in a short period of time within a year, and then everything doubled and triples and stuff, you know, a year or two later. So I like to say I was smart, let’s call it lucky. And now I’ve been through both types of cycles and I definitely wanna position ourselves in future projects to be able to manage any storm, have a plan B, CDE, F so that, because the other side, if you can make it generally there’s a bright light and just some, you just don’t know how long that trough is and how long the story is gonna last. And that’s the scary part.

Charles:
Yeah. Whenever I speak to, let’s say mom and pop real estate investors that have own property maybe a small portfolio of their own properties in 10, 15 years, and one of the most things you find in common is that there’s little to no debt, you know what I mean? They have, they’ve paid off that debt and it’s, it’s very straightforward, it’s very simple. It’s not sexy, but it is cash flows and it doesn’t have much risk. And I mean that’s what people really get into real estate for, for the most part is, you know, cash flowing investments. And, and

Stephen:
I think the thing for you, obviously a great real estate investor following the, the hard part is time as assure people can imagine to build a, a, you know, a debt free portfolio, a cash flows to your lifestyle, hundreds of thousands of millions of dollars takes decades. You know, you can compress that time with debt by leveraging, but then you’re taking on risk. So really is, I am not saying there’s a perfect answer to it, it just know that it’s, if anyone’s eliciting to this is time generally solves everything in real estate, you know, obviously you do have to make very good decisions, well-informed on the buy side, you know, well-informed on the rental revenue management side. Like there’s, there’s obviously plenty of aspects in the early stage, but over time, if you can be around long enough, it gets there. And that’s why you see these legacy families that have these massive real estate portfolios that are all debt free. They didn’t build that in a day, you know, it took ’em many decades, but now with their kids and their kids, kids and their kids, kids kids, they’re gonna be good, you know? So is it, is it worth it? I think so, yeah.

Charles:
It’s, it’s not get rich quick, but it’s get wealthy, right? So

Stephen:
Yeah, it’s a good wealth, it’s a good way to put it. It’s get wealthy. Exactly. Before

Charles:
We wrap up here, I have one question because I like asking people, obviously you came from an entrepreneurial family, which I was not aware of before this and you’re a lifelong entrepreneur you know, entrepreneurs are notorious for getting caught up with chasing shiny objects. I mean, how have you maintained your focus throughout decades of building out Lexus and then probably other proper projects prior to getting involved with Lexus?

Stephen:
Well, I would say up until about two years ago, I wasn’t very good at it. And and I do believe, you know, I, my journey anyway is that chasing the objects for the first call it 12, 14 years was what I needed to figure out what we’re actually really good at and where my passions deeply lie. And so I chased a lot of things. So I say these are all the successful things, but I can share all the failures as well in a much longer podcast about where we, you know, buying restaurants and real, real know chains and set up these service businesses and, and they failed, you know, in various degrees of failure. But is because I was chasing lots of shiny objects. But I do think that entrepreneurs over their journey do have to try multiple things. It’s hard to pick the one thing on day one that’s gonna be your thing for life.

Stephen:
I think the stats often, like your seventh idea is actually the idea that you take to the moon. I could probably say it was around my seventh idea or eighth idea, whatever it may be. But now now that we are laser focused, I give a lot of credit to my team and because they help me get focused, we’ve helped to that, you know, together to say, okay, we are no more looking at all the other fun stuff. We get so many opportunities now. It is, you know, it was simply because of obviously some of the partnerships we have out there, the opportunities are so plentiful and I would’ve been jumping on them like, okay, let’s underwrite this and look at that and do this. Now it’s like we have, we have two plants, we have two very important businesses that can do very well if our focus remains laser.

Stephen:
And I just really good at saying no now and I was not very good saying no for a long time. And it’s, I again, I think if you’re early in your career, you kinda have to say yes to a few things to see what you’re good at. But you get a little later on, a little more mature with it, you start to figure out where, where your skills really lies. And now I can say no, like, no one’s business, I’m doctor, no now unless it supports these two businesses then then we’re out and that’s gonna help my team be more successful and our clients and everyone else.

Charles:
Awesome. Yeah, focus equals power for sure. Steven, how can our listeners learn more about you and your business? Lexus? Yeah,

Stephen:
Thanks. Probably best website to go to is Lexus vp, so I didn’t share, but Lexus is the landlord for luxury. So not, not a spin off the car company, but it’s actually got its own own meaning. So Lexus VP is on Lexus vacation properties.com and that’s the main rental portfolio. So if you’re someone that wants to travel just like you and your wife Charles, you go there, look at properties, book stuff, we’ll be growing very quickly, a few properties a month, every month going forward. So have lots of options. And that if you’re a homeowner of a a vacation property that’s looking to have a manager rent it, streamless self plug here, but certainly give us a call to see if we can earn your business to see if, if it fits our portfolio. So that’d be the main spot. I’m on Instagram, I’m on Instagram, Steven Petoskey and I don’t post a lot frankly. We’ve, I’ve, I’m kind of anonymous in the space, but you know, it’s a good way to reach out to me on DM and never know if there’s a partner partnership or opportunity to collaborate. Steven,

Charles:
Thank you so much for coming on today and looking forward to connecting with you here in the near future.

Stephen:
Thanks, Matt. Thanks for doing this, by the way, for all your listeners. This is great. You did a wonderful job.

Charles:
Thank you very much.

Stephen:
Thanks.

Charles:
Hi guys, it’s Charles from the Global Investors Podcast. I hope you enjoyed the show. If you’re interested in getting involved with real estate, but you don’t know where to begin, set up a free 30 minute strategy call with me at schedulecharles.com. That’s schedulecharles.com. Thank you.

Announcer:
Nothing in this episode should be considered specific, personal or professional advice. Any investment opportunities mentioned on this podcast are limited to accredited investors. Any investments will only be made with proper disclosure, subscription documentation, and are subject to all applicable laws. Please consult an appropriate tax, legal, real estate, financial, or business professional for individualized advice. Opinions of guests are their own information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of syndication Superstars, LLC, exclusively.

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About Stephen Petasky

Stephen Petasky is the CEO and Founder of The Luxus Group & Luxus Vacation Properties. For over 18 years, Stephen has been on a journey to help others discover how luxury vacation real estate investment can enrich their lives. The Luxus Group now has divisions in the US, Canada, and Italy, focusing on outstanding luxury development projects, memorable vacation experiences, and epic restorations of historic estates. Stephen’s knowledge and experience span multiple industries and continents, partnering with top hospitality brands such as Four Seasons, Marriott, and Rosewood. He has been recognized as one of Canada’s Top 40 Under 40 business leaders and Innovator of the Year from the Alberta Business Hall of Fame. He has served as a board chair for one of Canada’s top children’s hospitals.
Stephen has a deep passion for travel and adventure. He prioritizes creating luxury vacation experiences that allow clients to immerse themselves in new cultures and environments. Under his direction, Luxus has undertaken exciting passion projects such as restoring farmhouses in Italy and transforming a remote fishing lodge into one of North America’s few private club membership models.
Outside of work, Stephen enjoys spending time with his wife and two children, leading a healthy and active lifestyle. He firmly believes that caring for one’s physical and mental well-being is crucial for success and happiness in all areas of life. Stephen’s diverse interests and passions make him a dynamic and innovative leader in luxury real estate and beyond.

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