Who's On Your Team?

Every investor I talk to can recite their buy box from memory. Market, bed count, price range, target returns — sharp, specific, rehearsed. Then I ask a different question: who's on your team, and how does each of them get paid? And the confidence drains out of the room.

That question matters more right now than at any point in the last decade. Because there is a structural problem in real estate today that almost nobody will say out loud, and it's costing first-time hospitality investors dearly.

I'm going to say it out loud.

The incentive problem

Transaction volume in most markets is a fraction of what it was a few years ago. Rates did their damage, inventory stayed thin, and the deals that used to close themselves stopped closing. That's an inconvenience for buyers. For the professionals who eat per transaction, it's an existential problem.

Agents eat when deals close. Lenders eat when loans fund. Plenty of attorneys, inspectors, and "investor-friendly" advisors eat when files move. None of that is sinister — it's just how the industry is built. But understand what happens when the food source dries up: hungry professionals don't become villains. They become optimists.

They start playing in the gray. The marginal deal gets a sunnier pro forma. The objection gets a smoother answer. The pitch stops being "here's a property" and starts being "here's a story about why this property works when the numbers say it doesn't."

Most of these people aren't bad actors. They're ordinary people inside a bad incentive structure, in a lean year. That distinction matters morally. It does not matter one dollar to your outcome.

The two stories being sold right now

In hospitality real estate, the gray-area pitch almost always arrives in one of two costumes. You should be able to recognize both on sight.

1. The tax-loophole deal

"Between cost segregation and bonus depreciation, the STR loophole basically pays for the property." You've heard it. Maybe this week.

Here's the truth: the tax treatment around short-term rentals is real, and in the right hands it's genuinely powerful. But a tax benefit is a seasoning, not a meal. If the deal only works because of the write-off, the deal doesn't work. You're not buying cash flow — you're buying a deduction bolted to a liability. And the pitch conveniently skips the fine print: material participation requirements, your actual tax profile, what happens in year two when the first-year fireworks are spent. Those details belong to a CPA who works for you — not to the person whose commission depends on you nodding.

2. The hot-tub pro forma

"Add a hot tub, refresh the kitchen, and the revenue projections double." The renovation is always minor. The upside is always enormous. The projection is always built from the top sliver of comps in the market — the best-performing listings, run at their best month, extended across the whole year.

I own hot tubs. I've done the renovations. Amenities matter — as part of a disciplined repositioning with real capital, real brand work, and real operational excellence behind them. What a hot tub cannot do is transport an average property out of the bottom 80% of a saturated market. Anyone telling you otherwise isn't projecting your future. They're projecting their commission.

Everyone at the table gets paid at closing. You get paid over the next decade — if the deal was real.

Why you find out too late

Here's the cruelest part of the mechanism: the feedback loop is more than a year long.

You close in spring. Your first summer looks decent — the listing is new, the photos are fresh, the algorithm gives you a honeymoon. Then winter arrives and the calendar goes quiet. Then your first full tax season, where the loophole turns out to have conditions. Then the reserve account starts breathing hard. Somewhere around month fourteen, the data becomes undeniable: the property was never going to do what the pro forma said.

And by then? Everyone who advised you into the deal was paid over a year ago. They're not in the deal. They were never in the deal. You are.

That lag is why this keeps working. The people selling the story are never present for the ending.

Six tests for anyone at your table

First — follow the paycheck. Ask every professional on your team, directly: "How do you get paid, and when?" It's not a rude question. The good ones answer instantly, because they've thought about it themselves. Anyone who bristles just answered a different question.

Second — ask for the kill list. "Tell me about the last deal you told a client to walk away from." This is the single best filter question in real estate. A professional who's genuinely on your side has a graveyard of dead deals and will talk about them with something like pride. A professional who can't name one has never once put your interests ahead of a closing.

Third — make every projection show its work. Which specific listings is this revenue number based on? Is that their actual trailing performance, or their best months annualized? Does the expense load include real cleaning costs, management, a capex reserve, and the new supply entering the market? A projection that can't name its comps isn't a projection. It's a brochure.

Fourth — demand the case study. "Show me the properties you've done this with." Not properties you've heard about. Not a client of a colleague. Yours. This one matters most for the agent selling you the vision: open up the listing, the before-and-after, the actual trailing twelve months of revenue against what was projected at purchase. Someone who has genuinely done this will light up — operators love showing their work. Someone who hasn't will get vague, pivot to "the market," or crater the moment you press for facts. When that happens, don't negotiate, don't give the benefit of the doubt. Run.

Fifth — bring your own CPA. Not the one the agent recommends. Not the one the lender knows. One who does short-term rental work regularly, understands material participation cold, and sits entirely outside the referral chain of everyone else at the table. If the tax story is real, your CPA will confirm it. If it isn't, you just saved yourself the property.

Sixth — put one person at the table who gets paid either way. If you only take one of these six, take this one. You would never close without a property inspection — yet the inspection only protects you from a bad roof. Almost nobody commissions the equivalent for the deal itself: an independent assessment of the business they're buying, by someone with zero stake in whether it closes. That's backwards. A bad furnace costs you thousands. A bad deal costs you a decade.

So put an operator or advisor on a flat fee or retainer at the table — someone who underwrites the deal like their own capital is going into it, because their reputation is. One salary that doesn't depend on the outcome changes the entire conversation. Suddenly the pro forma gets defended instead of presented. That's the moment you learn what you're actually buying.

Full disclosure: this is work I do, so discount my bias as you see fit. But hire someone who fits the description — me or anyone else without a dollar riding on the closing. If the deal is real, it survives the review and you buy with conviction. If it isn't, you're out a modest fee instead of a mistake that takes years to unwind.

The bottom line

The market is hard right now. Hard markets don't just punish bad properties — they bend the incentives of everyone whose living depends on transactions happening anyway. That's not cynicism. It's arithmetic.

So before you fall in love with a property, do the colder exercise. Look around your own table and sort everyone into two groups: the people who get paid when you close, and the people who get paid when you win.

You can't always tell by the title. You can always tell by the paycheck.

Build the second group before you write the check. It's the cheapest insurance in real estate.