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Episode 12: Key West Bed & Breakfast Talk With Rich Pesce

October 11, 2019

We are having a conversation between Mark Baratto and Rich Pesce. 

MARK:           This is the Backyards of Key West Podcast and this is a first for me. Normally I go to other people’s businesses and I talk to them and I am kinda like in their trench. But here I’m pulling up, right on Eaton Street, I’m looking and seeing that this is the Calvin Klein residence. Right?

RICH:            You didn’t know that? 

MARK:           I was just thinking that. I’m sitting outside by the pool in this amazing man’s backyard and it is incredible. This is the quintessential reason why I started the Backyards of Key West Instagram account because not only is the house amazing from the front but then you walk out and it’s just spectacular in this backyard. The pool, the outside lounging area, a little fountain, orchids everywhere, it’s just amazing. Now that you’re jealous by hearing the backdrop of where I am, I want to introduce our guest for today which is Rich Pesce. Not “pesh,” like Zuppa di Pesce, and he has a number of different businesses down here and we connected on Instagram. I really wanted to talk to him because this podcast is really about Key West, the people that are making it happen, the businesses that are down here, why people come down here and all these great questions that I think are great, and hopefully you guys think are great, too. Why don’t we start off with, give me a little background on your current business? It could be the one because I know you are also from New York, so your main business and then we can talk about the businesses down here.

RICH:            Okay, so my main business in New York is construction management. We basically only work in Manhattan and we manage all types of construction, new construction, renovation projects and we also self-perform construction as well. 

MARK:           Is it primarily in the New York state area or are you branched out besides Key West and other places?

RICH:            No, it’s specifically in Manhattan alone, not even in the state, just in the city of Manhattan.

MARK:           Wow, so are you renovating small rises, or how’s that? 

RICH:            I started out doing 6-story elevator type buildings, new construction and then I started building up and my tallest building was like 12-stories. Then the market changed in 2008 – 2009.

MARK:           Sorry to interrupt, but when did you start doing that business? 

RICH:            We opened up my business in 2001. Then I got some experience.

MARK:           Before September 11th

RICH:            Yes, before September 11th. Now that you bring up September 11th we were actually building a building and we were on the roof finishing off the building and we saw everything because in the location we were, the zoning and all the buildings were low, until that financial district where you see all the tall buildings, we had a straight shot and they were actually calling over the radio for any skilled labor at the moment and we sent our guys down there. They chose only a few and then sent the rest of the guys away and it was very unorganized, but everybody was …

MARK:           The whole city was under turmoil.

RICH:            Crazy, crazy, crazy time. 

MARK:           Being a New Yorker myself it’s like I get chills even just thinking about that. Everybody remembers exactly where they were,  but you were right there seeing it firsthand and some of your guys went there.

RICH:            We all went down there to volunteer and we were there, like hours after it happened and it was like a movie set. There were city buses that were just crushed and cabs crushed, fire trucks crushed, in like two-feet of dust which looked like snow like we were going through ashes, two-feet of ashes up to your knees and it was really wild scenario and seeing it firsthand. 

MARK:           You started your business, you’re all excited to get into this business, and then all of a sudden September 11th hits and then, how did this affect your business? I want people to understand that some people give up when that happens. Other people dive headfirst, so what did you see? Did you see the opportunity? Tell me about that. 

RICH:            I lived in Manhattan when it happened and everything below 14th Street was shut down by the Military Police. No cars, you could only walk, and if you were allowed past 14th Street you had to show I.D. that you lived there. So, everything died as far as business was concerned, unless you had business north of 14thStreet and most of my business was concentrated down in East Village and in West Village and Central Village so everything was shut down. Everybody knows in Manhattan that it is the financial capital of the world. 

MARK:           Yeah, shut down Wall Street.

RICH:            And real estate and it’s the highest in the world. Everybody knew it was going to come back it was just a matter of when and everybody was really more focused on helping people and helping people who lost family, friends, I mean I lost a dear friend of mine in 911. It really wasn’t like, where are we going to get business next? It was more like figure out how do we volunteer, what we do, everybody was angry and mixed emotions, but we made it through and it’s bigger and obviously better than ever.

MARK:           Of course. Typical New York.

RICH:            Yeah, typical New York. It was a crazy time. 

MARK:           So, for your business, when things started to settle down were you getting better deals on projects? 

RICH:            You know? It wasn’t like there was a lot of, like all of a sudden there’s a lot of things for sale, but a lot of people moved out of, and specifically out of Battery Park City which is down by Wall Street and the financial, I mean the residential district by the financial district. What the city was doing was offering six-months rent-free.

MARK:           I remember great deals, if you were going to go back into the Wall Street area.

RICH:            There wasn’t really many business opportunities so to speak, in my business anyway. There was a lot of rebuilding, but it was done by the city and the city would hire union companies because it was all televised and we are a non-union company, so it wasn’t something that we could…

MARK:           Okay, so you had to hustle and do your own thing to basically build your business which clearly is a successful business and then we can fast-forward to how did you end up in Key West? Did you come here to visit? And then we can start gearing into that part of the story.

RICH:            When I was, about 12-13 years old, my Dad came down with a friend and we stayed at the Casa Marina. It was the Marriott at the time, it wasn’t what it is today. There was a project under construction called 1800 Atlantic, the condos and it was under construction and my Dad bought a condo off the plan, off the blueprint.

MARK:           Like preconstruction?

RICH:            Yeah, they were offering. So, he purchased that, and I loved it. I was 12-years old and I was like, my Dad was doing his own thing and he was remarried and had his girlfriend and I was by myself pretty much just winding through Key West. 

MARK:           You grew up in New York City?

RICH:            I grew up in the suburbs in Long Island.

MARK:           I was going to say, typically if when you’re growing up in New York City, those kids grow up even faster so being left to your devices, it’s like no problem!

RICH:            Yeah, yeah, yeah. We were in the city; you know my friends and I were in the city all the time.

MARK:           Do your own thing and if you can survive that, anything’s possible.

RICH:            It was something that I wanted to do anyway, I was like, oh my God this is great! So, I just rented a bicycle and just kind of…

MARK:           Did you sneak into any bars? Did they let you in any bars? 

RICH:            I don’t think I went to any bars. No, I don’t think I did. Now, I would be but then I wasn’t thinking about that.

MARK:           You were a good kid.

RICH:            But I looked around and I was so enthused with the architecture and the vibe. For me, that’s was like, I really absorbed it. Then periodically I would come back with my Dad visiting and then eventually into the condominium that he purchased once it opened and fast forward, that condo was in our family for years and my father passed away in 1997, so my stepmother sold the condo. We had no reason to be here anymore and my Dad wasn’t here and it wasn’t the same, and then I purchased my own condo at 1800 Atlantic, maybe 6-years later. I did it really for an investment and also to come down.

MARK:           There was some nostalgia coming here.

RICH:            Especially there as well.

MARK:           Right, with your father and the times you were here and kinda growing up a little bit here on those vacations. 

RICH:            It’s kind of interesting because I knew what he purchased the apartment off the plan for, so he paid $225,000 for the same exact unit because most of them are the same layout, just different views, his was on the second floor, this was on the fourth floor, and it was however many years later, and I got mine on a short-sale. I paid like $335,000 for it. 

MARK:           Right, and that was a deal.

RICH:            Crazy deal because mine was a penthouse unit and fully furnished, it was renovated, so it was a really good deal. I kept that and then I was renting it and doing it on my own through VRBO and I was doing really well with it and then I was going down myself and hanging out, having fun, and then another one came up available. It was top price, it was no deal at all, but it had a transient license which I’ve learned to know how valuable it was and I didn’t know at the time because I am just learning the whole system down here. It was an oceanfront condo with transient license and I purchased it I think for $875,000.

MARK:           Wow, so you’re like holy cow.

RICH:            Yeah, this is crazy! But I rented it out and I mean it was fully booked all the time. So, I kept it for two years and then we would come down with family and we would have two condos at the same time so it was a lot of fun and then I just said, I would love to own like a motel. Just little motels, you know?

MARK:           Right, there are so many boutiques here, and they are just. 

RICH:            And they were like, I saw a couple that were like six rooms, so I looked online and I saw an ad and I answered the ad and it was an old ad so the gentleman said, the broker said, “what are you looking for?” and I told him I was looking for something I can remotely manage from New York, but I definitely want to get into this business because I saw how well I was doing on the small apartment. 

MARK:           When you contacted him, did you let him understand that you were somewhat in this business? You weren’t some newbie getting into it, like you may be new to the hotel business but you were in the construction business or did you hold that as like an ace?

RICH:            No, I told him that I owned at 1800 Atlantic and that I rented through VRBO, so he kinda got the gest of what I was looking to do. So really, at first, my whole direction was wrong because it was like, how are you gonna operate a motel? You are going to have to have staff, cleaning people, general manager and…

MARK:           A slush fund for things.

RICH:            But who, and what are you going to do if somebody calls in sick? You gotta be here, again I didn’t really think of those things. But he found a unique buying opportunity for me that was off the market, that was from clients of his who owned five or six bed and breakfasts down here so they had this house, 824 Fleming, a beautiful -beautiful house in a Victorian style I want to say. Porch on the top, porch on the bottom, built in the 1800’s  and it had transient licenses because it used to be a bed and breakfast. They didn’t operate it as a bed and breakfast, they operated it as a single-family home and what they would do is they would send their people down, more like their executives down from Ohio, that’s where they are based out of as a retreat home. Like a bonus, hey take your wife and kids and go down for the weekend and they found it really wasn’t working for them because it was a seven-bedroom house and most of the time people only needed three-bedrooms, so they would send other employees at the same time and it was kinda weird that they were forced to be with each other’s families so it really didn’t work for them. So they wanted to sell it, only a year after they purchased it, so I came in and we made an agreement and I purchased it and come to find out it had transient licenses but they were different transient licenses, they were transient licenses with ROGO credits. I don’t know if you know what that is? 

MARK:           No, what is that? 

RICH:            There’s two different types; regular transient license which means that you can transfer that transient license to an operator who already has transient licenses on that property. But ROGO credits means that you can transfer that license to any type of property as long as it’s in the receiver zone. So, these made them much more valuable than I think everybody knew. 

MARK:           And a transient license means that you can rent it out daily if you want, compared to monthly which is other homes.

RICH:            Correct. They became more valuable than expected because it had what they call the ROGO credits. It has five licenses, ROGO credit licenses because there were five rooms that were at one point in business and in operation. I currently operate it as a single-family home and I hired a vacation manager/broker so to speak.

MARK:           Right, that handles vacations.

RICH:            That handles all of the vacations and they do a wonderful job. It’s Vacation Homes of Key West and they do a great job and as I said, it was fully booked and what was happening was we were coming down as a family a few times a year and we would come down pretty much in high season like everybody else because the kids were off from school. 

MARK:           Exactly, let’s come down for Christmas. And they are like, what are you doing?

RICH:            Everybody, my kids they are loving it, and I’m sitting back and going… wait a minute, I just lost like $10,000!

MARK:           Right? You could go rent someplace else, go to a hotel. 

RICH:            Like what am I doing? So when I realized that it was a really good business to just leave alone. So, a friend of mine, an old friend of mine from Key West who was taking care of this property here told me that the seller was looking to sell and before it went on market you should come look at it, and I came.

MARK:           And that’s the one we are sitting in right now?

RICH:            The one we are sitting in right now. And I make an off-market deal with that one as well. Which tend to be the best because there’s no competition and there’s no bidding war and depending on someone, if this house would have went up for sale and they marketed it correctly, as you know, oh it’s Calvin Klein’s house and this house.

MARK:           Oh yeah and a bidding war, for sure.

RICH:            A bidding war because people just wanted the history of the house. So, I was able to side skirt that whole process which I think was a very valuable thing. And we did some upgrades and now this is the house that we come to when we stay and we let 824 Fleming just rent. So, you kinda figure and factor that in also, to offset the cost of this house. 

MARK:           Without giving numbers, does one cover the cost of both? 

RICH:            Um, not quite. 

MARK:           But almost?

RICH:            Well, if I didn’t have a management company it would.

MARK:           So just on rental income, it does. And then you have to pay staff.

RICH:            Right, in addition to staff, which only makes it easy for me so that I can operate my primary business in New York. When I do move down here at one point, I’ll take that over and have that income for myself. 

MARK:           Of course, but that’s amazing because I know that two, and I know that other house too, two spectacular homes and that’s what I tell people about what they don’t understand about Key West is, the rental market – if it’s the right house – and it’s marketed correctly is so strong down here especially in season and if you have a transient license, the amount of money you can get in season per week is ridiculous. 

RICH:            Especially if it’s a large home. Those people come down with multiple families and split the costs.

MARK:           Yeah, it makes sense, it’s more difficult to spend $20,000 when it is a family of three, where if you can have three families it’s a lot easier to swallow that pill.

RICH:            And also, cook and not have to go out to dinner, or lunch or breakfast every single, you know. 

MARK:           And location, like walking distance to everything. That saves a lot, too. Then you’re like, what do I have to rent a car? Rent scooters or something like that? If you have a couple of kids, it’s easy because you can walk everywhere. 

RICH:            Right. I think that people also want to get a feel for the island and feel like they are living here. So, I think that’s also a very big attraction. 

MARK:           Yeah, when my family and I – and we came down here a lot – we were living in Miami and we decided it was the place for us, we were like, we are gonna go rent. So, we went on Catherine Street, right down there, one block from Duval and more the quiet area, and we returned for a whole month there. It was funny because we were looking at, you know maybe we’ll just do a couple of weeks, like two weeks, but the two week cost was the same as a thirty-day cost because they didn’t have a transient license, so that was their way of being competitive. But it was awesome and we came in August because we wanted to feel the heat and everything, but being in Old Town and being so close to everything and being able to walk, is what made us fall in love with the whole island. Fall in love with the people and everything that’s here. 

RICH:            I agree. Coming from 1800 Atlantic, it’s all the way pretty much on the other side of the island, which had its benefits as well if you wanted to escape the hustle bustle, you are a seven minute cab ride away, but this is well, you definitely feel the island and you’re more in tune, I think with the whole vibe when you’re down here.

MARK:           As a fellow New Yorker, the walking here is spectacular. So, if you are in this area, you can just walk everywhere. Even in the heat, you just get used to it. You can just walk pretty much most of Old Town just to enjoy the homes, to see the side streets, and get coffee, get food, and everything. You can go to the beach on one side and go do sunset on the other from this location, it’s great.

RICH:            Exactly, we fell in love with the location. 

MARK:           You have the homes that you’re renting out and how do we now get into the Inn, because it’s more of an undertaking.

RICH:            I had found a house, also on Fleming, which before we bought this house we really, and we still do, really love Fleming Street. Great block, not so busy, nice neighborhood and I saw the artist house on Fleming was up for sale. I contacted them and I negotiated with the selling broker and I thought that I negotiated a very good deal. Again, I realized that wait a minute, how am I gonna run this? This is a full operational hotel/bed and breakfast type scenario. I contacted the people that I bought the home from at 824 Fleming, who have a hotel group and a hotel presence down here, they own Alligator and the Mermaid, West Winds, Island City House, Azul. 

MARK:           Yeah, great names.

RICH:            And another, maybe I’m missing one or two, so I contacted them and said, “hey I’m in contract to purchase the Artist House and gave them all the specs on it, and maybe you guys want to go partners?” Actually, when I first started I asked them if they would just manage it for me? They weren’t interested in just managing it for me because they only managed their own properties. So further negotiations and they agreed to come in 50/50 partner and closed and he was amazed on what a great deal it was. How come I didn’t know about this? I own this many properties. 

MARK:           Right, they should be knocking on their door.

RICH:            That’s what’s weird about Key West, you know restaurants pop up that no one knows, or businesses pop up and no one knows, or a house comes for sale. 

MARK:           Yeah, marketing is different down here, I find, than it is in other parts  and other cities because it’s like some businesses don’t have social media accounts, most still rely on print because down here the flyer  business, the print business is big. Especially when tourists come into town because they want to get that magazine and they want to get that booklet and stuff like that, they’re not really looking on social as much. But some of the other companies that I’d started to work with down here, once we get them on and do a social presence with them, it’s like gang busters because it’s so easy because it’s like starting in the early 2000’s on social down here. So, it’s great. There’s a lot of opportunity in Key West, especially if you’ve come from different cities with different things that are working really well like we work, in co-working spaces. If we opened a co-working space down here, I think it would crush it because there’s a lot of business owners and a lot of business people that don’t want to work out of their house, or out of the restaurant, or the  bed and breakfast and it would be nice to go to a place where rent is monthly and there’s opportunities to network and there’s conferences and stuff can be done. That’s just a little tip from me, anybody thinking of wanting to do that. 

RICH:            Maybe we’ll have a conversation later. But that’s one thing that I really fell in love with Key West, it’s a very small island with a lot of talented people in one area. 

MARK:           That’s why I started his podcast because people need to know that they are here. The people I’ve interviewed so far it’s amazing the risks that they’ve taken and how successful they’ve become so far. 

RICH:            Again, at a very young age, I had one eyebrow up and I was like, this place is special. And I’ve seen it through the years in a better directions and worse directions and different directions, but it’s always changing and everybody adapts and it’s positive and I knew it when I was twelve years old that at some point in my life, I’d want to live here. So, my goal is to retire down here and I’m trying to plant some seeds. 

MARK:           I have a sneaking suspicion that retire means just working out of this location for you.

RICH:            Yup. 

MARK:           I don’t think retire is sitting at this pool and doing nothing.

RICH:            Although that wouldn’t be such a bad thing either.  But I hear you. 

MARK:           You’d do that for a couple of months and then you’d find yourself wandering into new hotels that are for sale. 

RICH:            Getting back to the artist house, I brought them in and we purchased it together and they actually run it. They have staff, maintenance, they have general managers, they have…

MARK:           Multiple staff from their other locations so if they need to borrow. 

RICH:            I thought it was a brilliant idea for me, idea for them, because it was something that they could invest in that they didn’t have the opportunity to unless I brought it to them and I really couldn’t do without them as well. It was the perfect partnership and that was running for a few months and then they contacted me and said “hey, we are in the process of purchasing another hotel if you’re interested.” They sent me the specs and they said well, “look this is the deal and what do you think?” I invested I believe it was like 20% of that one which was Coco Plum, which is close to Mallory Square.

MARK:           Right, 611 Whitehead Street.

RICH:            Right, like two houses down from Green Parrot, which is a great location.

MARK:           Incredible location.

RICH:            And we are doing very, very well there because it was operated by a mother and a son. And from what we heard they wouldn’t rent rooms until they were clean, so they only had one cleaning lady and she just didn’t get to it, so they just didn’t rent it. So, it was a very underachieving.

MARK:           Right, their numbers were way off.

RICH:            Now we’ve got the numbers to where they are and seeing great success with it. Then not too long after that, we purchased Key West B&B, which is on William Street and I was really interested in that one because they already owned the Island City House and it is right next door, kinda like the backyards touch. We are putting a gate in there and any people who stay at Key West B&B can use the facilities which is beautiful grounds and I don’t know if you’ve been back there? Beautiful pool, beautiful koi pond and a nice garden, so you kinda get the best of both worlds. It’s like buying a portion of that as well. But our relationship is really really good, we speak once every month.

MARK:           Do you visit the properties yourself sometimes? 

RICH:            I have, I don’t go there to inspect. They are on their game. 

MARK:           It is definitely what I’m hearing is that the partnership aspect of this is really what helped you make this even more of a positive investment. Because you probably could have gone and done it yourself but the problem with doing that sometimes is that it’s a lot of Baptism by fire and it’s a learning by mistakes, but you had a team that already was in place and it was already successful doing this, huge staff and multiple locations and it was really just coming in and understanding that they clearly knew you as a smart businessman and you knew that they knew what they were doing and so that was a stroke of luck that you guys did that together. 

RICH:            Yes, definitely and I had experienced doing construction in Key West and it’s not very pleasant. 

MARK:           No, no. It’s like dealing with it now, and it’s not…

RICH:            Even if you’re not in the business, and I’m in the business, so it makes it even worse. But you hire someone and agree to a price and then you want them to show up, and they don’t show up. Or they show up on a random Wednesday at 2 o’clock to start, guys what happened to Monday? Oh well, you know.

MARK:           How about just letting me know that you weren’t going to come. Or they’ll just show up, and they won’t show up on Monday and then they show up Thursday and you’re like, what happened to you fellows were going to be here Thursday, we agreed on Monday.

RICH:            It’s a very funny way to do business down here and that’s why I think that if I came down here with the precision that we developed in New York and we offer our clients, if we came down here we’d be like “we want them!” Because….

MARK:           Yeah, because you’re like here’s our budget and we are going to stick to it and here’s our timeline and we are going to stick to it, and like…

RICH:            And this is when we’ll start.

MARK:           Yeah.

RICH:            This is when we’ll stop. What else do you need? Updated emails. Especially when you’re doing it remotely and really relying on someone to communicate. I would come down here periodically every two months and actually it was like every month I was coming down to check on the project and every single time I came I was like more displeased and more displeased about what was going on. I located a really great contractor who is probably one of the top contractors here through my attorney because it was, and you know I had some issues with building permit, and once he came aboard it was definitely a different experience. It was not to a New York standard, but it was definitely a bigger and better experience. 

MARK:           Here’s the thing, and you can’t knock anybody even in Key West or anything in any business they are doing most of the time and the reason why the failure rate after one year of a small business is like 70%, is because you are just learning. It’s like being a parent, who’d you learn from? I learned from my parents. And maybe they were like crazy, who’d they learn from? The grandparents in the Old Country. So, with the business you’re like, if you don’t have a mentor you’re just going off either a business book or you’re going on a couple of people you’re interested in and knowing what they do, and then you’re just learning as you go along because that’s always the story. Oh, the first five years this, or the first three years that, or they go out of business. If you’re lucky enough to find a mentor in that group, who is super successful, it is a dynamic learning, so what you’d accomplish in one year if you didn’t have them you’d accomplish in five years maybe. 

RICH:            So true.

MARK:           And then, it’s the dynamic of when the business grows. Because you may be running a business for five years with five people and now you have 20 people and it’s totally different. Now you have 50 people and it’s totally different. Everybody has this stride for a million dollars a year. They don’t realize that the bottom 1% of that and the 1% of the financially wealthy people in the United States, the bottom of that is $400,000. So, this magical million-dollar number, you don’t realize how difficult it is and very rare did anybody make that kind of wealth that didn’t work their face off for decades to get there. 

RICH:            It’s true.

MARK:           And you have to learn and navigate as things grow because like I said, if it’s a million-dollar business then it’s run one way. What about a 10 million, what about 100 million. It’s totally different beasts so you have to understand that and some people down here in the contractor world may be just worked for someone as a handyman first. Then got their contractor license and they are kinda doing things the way they were taught instead of understanding how to run a business first and that’s where your experience comes into play that you know how to run a business. In running a business and tying that to the contracting and being able to have foresight to, well these are some of the things that we could expect when it comes to permitting, when it comes to staff, when it comes that time of year of hurricane, all these things, that’s like a scientific formula and baking a cake the right way.

RICH:            I agree and I think that also coming from New York and working in the city and there’s so many shrewd businessmen and so many rich people who hire you, they don’t take no for an answer. They don’t accept when you don’t show up so we’ve developed such a good rapport and such a good track record and we are like a very well oiled machine from so many years of doing that and then you come down here and I feel like I could, it wouldn’t have to be construction it could be any business, that I applied myself at the same standards that I do where I am, I think that I would be successful. 

MARK:           For sure.

RICH:            Pride, which I think a lot of people do, and I love that also. A lot of people have pride and like you go to breakfast and they have a different flavor bread, homemade baked  bread, you know they don’t have to do that and they’d still get the customers. But they go the extra mile to show creativity and explore.

MARK:           The competition is so strong that it’s like, if you screw up once they can get rid of you and get the ten other people waiting in line that maybe almost just as good as you and that’s because the talent is so strong. I agree. So, come on down and help tweak some things down here.

RICH:            Yeah, yeah so that’s my goal. I have a young, well my youngest daughter is eight years old, so when she goes to college is probably going to be my shift. 

MARK:           And then are you, and I know it’s forecasting, but are you thinking of keeping your eye out for other projects down here? Is that something that’s always in the work right now, not then?

RICH:            You go through your year cash flow wise with your business and sometimes you’re cash poor or sometimes your business is doing very well as far as cash is concerned, but I look every single day. Every single day I’m online, on my phone, throughout my day, I have alerts set-up, I have contacts with brokers and if something comes up in my wheelhouse I’ll either get an alert or a phone call, or I’ll find it myself. Whether I execute it or not is another story. But I love to know what’s going on and I love to know. 

MARK:           Keep your pulse on the feel of what real estate is doing?

RICH:            Yeah, real estate and I’m always looking for hotels or motels, or bed and breakfasts, and will I jump? And there’s a few that are available right now. I feel they are super high. 

MARK:           I’ve seen a couple and they are pretty high.

RICH:            Then what happens is that you can pair it to your deal. And you’re like, wait a minute, either I got the best deal on the island? Or they are way off. So, you now, you kind of stick and move and you dance and all of a sudden, that’s the right partner and you just jump in and you do it and hopefully the timing is right with your cash flow.

MARK:           Sounds like cash flow and instinct?

RICH:            It is cash flow and instinct. And instinct is always first, I think. Cash flow, well you can always find cash and just bring in more partners.

MARK:           Right, exactly.

RICH:            But there’s no real timing to it. You gotta love it. And I love that, that’s one part of it that I love is that the chase and the find and where you can bring it and then watch it grow. That’s the best thing, so there will definitely be more projects and properties that will be acquired by the time I get down here.

MARK:           Nice, that’s exciting. Tell me what you’ve seen from the growth or change of business on the island? Because you have been coming here for so many years now, not suggesting you’re old or anything, but when you were a young lad you came down here and now you’re still coming as an adult and a businessman. What have you seen business wise change? 

RICH:            Definitely everything is more efficient. I think obviously the internet and technology helped that along. I was sad to see one of the big things for me growing up was Fast Buck Freddy’s was… and I would go in there all the time as a kid, as an adult, even if you bought anything or you didn’t, it was such a unique blend of goods that they sold and the way they designed the store. Were you ever?

MARK:           No, I never saw it.

RICH:            No, well it was where the CVS is on Fleming across from Banana Republic, I think? 

MARK:           Yeah, right on the corner there at Fleming and Duval? 

RICH:            Correct. It was like a really high-end department store but with funky clothing and they would do a New Year’s Eve window and they would dress the manikins  in really out-there clothes. So, it was really unique, really cool and they sold furniture, they sold make-up, anything you could think of, bathing suits, flip flops, you know really cool artwork and I think there was even a spot where they sold chocolates if I’m not mistaken. But it was really cool and it was sad to see that go. That was something that I thought was a staple in the neighborhood and another CVS moved in so that was a little bit, you know. 

MARK:           Right, we don’t need another one of those.

RICH:            But I’ve seen much more opportunity, I think. People utilizing the internet more as you mentioned before the social media is kicking in and everybody is getting used to it. It took a while, but you know, it happens, but the business is on an upward. I also saw that this used to be a nine-month vacation spot and now it’s a 12-month vacation destination. Which I think also might be attributed to social media in a way that more people are out and I see commercials in New York about Key West.

MARK:           I mean Florida itself is growing astronomical pace because of taxes and everything like that and the fact that a remote business and the internet is so much better. Remember this just 15 years ago there was no iPhone, none of this stuff, no social media and I mean it’s really like a bleep in time. You may be 50 years ago wouldn’t be able to do what you’re doing now. Work in New York, and come down here and work, what are you gonna get faxes going on? Now with technology being advanced and the fact that it’s paradise down here, I think there is more an influx of more fulltime people.

RICH:            Even if you compare it to Miami, I don’t really think that I could do what I do here in Miami. It’s just a different model. Different people. Different expectations. Everybody is worried about what they are wearing and what Lamborghini they are pulling into the hotel with and…

MARK:           For sure. So much more formal over there. 

RICH:            Whereas here, and I tell everybody, you could walk by someone on a bicycle with long hair, sunglasses, a ball cap and flip flops and he could be the richest guy on the island and no one would know. Which is super cool. No one is flashy and no one cares. 

MARK:           I think that is the appeal to wealthy people that come here that have beautiful houses, in Old Town and stuff like that, and are snowbirds, is that if you’re all about flash, you’ll want to go to Miami over here. So, I think that’s good because it keeps those characters out. But even if some of those characters do come down here? They like put on the flip flops, they take the t-shirt off, and they are like I could just be myself? 

RICH:            Right!

MARK:           And not really care about what I’m driving or any of this crap? I think they like that, it’s appealing even to that type of person. 

RICH:            I agree. I agree, and that’s where the vibe comes in.

MARK:           It’s islandy but we are in America and we can drive back to the mainland which is great. 

RICH:            It’s pretty funny that you say that, so everybody used to say to my Dad, like why won’t you go to Italy? Why won’t you go to the Caribbean? And he would say, “Key West is the Caribbean and it’s in the United States.” There’s no need for me to go anywhere else. He would always say that and it’s so true because it wasn’t like he was a fugitive of anything, he was like…

MARK:           Well, it’s nice to get in your car and go to Miami and now we can take the ferry over to Naples and that area, and it’s like great. And, an international airport, I flew right to LaGuardia, direct. I couldn’t believe that! It was great, but they don’t do back.

RICH:            Yeah I know, what is that? 

MARK:           It’s weird, but they go direct there, which is great. Listen it was great talking to you about business and I learned a lot about it and hopefully people here learn a lot. How can people get in touch with you? 

RICH:            You can email me: [email protected] and I can contact you back. 

MARK:           Social media? 

RICH:            Social media is: @themerrickconstructiongroup on Instagram. So, you guys want to reach out, no problem. 

MARK:           I will put all that stuff in the show notes and I’ll put the web addresses for all the Inns and the bed and breakfasts so people can find you, for sure. Now, before we go, I always end with some of the personal questions, which never are that personal. But they are always funs stuff like, what is your favorite event to attend down here? 

RICH:            Well, it used to be, of course, well I’m thinking and I’m changing it, we used to go to Sloppy Joe’s when they dropped the conch shell and I don’t know if you’ve ever seen that before? 

MARK:           No, I never saw it but I’ve heard of it.

RICH:            Well, my 13-year old daughter was, I want to say three months old, and we were down here and it was like, there’s no cars and it’s packed and kinda like Times Square’ish and on top of Sloppy Joe’s they drop a conch shell and I remember I was with a bunch of friends and I had my daughter and she’s three months and I don’t know if that’s good parenting or not, but she’s on Duval Street and it was a lot of crowds and I’m  kinda keeping people away from her, and they are coming near the baby and…

MARK:           Yeah, you’ve got the guard up!

RICH:            And they were like, why would you have a baby here? But whatever it’s Key West so you can do it. That was really a fun event to go to.

MARK:           Well, that’s for New Year’s Eve, right?

RICH:            Right. 

MARK:           You’re like thinking in your head and remembering being in Times Square watching the ball drop and being like, where do I go to pee? It’s freezing here. I can’t go anywhere. A $10 water over there in the corner but now you’re like it must be surreal that you’re holding the baby and you’re in Key West and life is good. 

RICH:            And Fantasy Fest is always fun but we have small kids, so it’s not really for small kids. We don’t really attend and it’s also a hard time because the kids are in school and you have to get away. But that’s always fun. We periodically come down and we just hit Lobsterfest, and you know, a lot of cool stuff. My dad used to come to the boat races, religiously. That was pretty cool. There’s a lot of events and we don’t really come down for events, we just come down to unwind and be here.

MARK:           To unwind, and if there happens to be an event going on, which is the October 1st they are every weekend, you’re like, “hey I like this one.” Okay cool. I’m going to check out, and of course for New Year’s Even I’ll be there for this, and just to go watch the conch drop. That is pretty cool. What about favorite restaurant? 

RICH:            Oh wow, that’s tough. Blue Heaven is a great find for us, it’s breakfast  and they also do lunch I believe and dinner, but we’ve only eaten breakfast there and we have a great time whenever we go. 

MARK:           It’s so Key West it’s like… you have to go.

RICH:            The live music at 10 in the morning and you walk out of there. 

MARK:           Roosters everywhere.

RICH:            You walk out of there after three Goose hounds and you’re already feelin’ good. 

MARK:           They’ve got that banyan tree there which is beautiful. 

RICH:            Louie’s Backyard is always a favorite, we go and I think they are renovating right now but every trip we always end our last night we eat at Louie’s. A&B Lobster House is always a good one.

MARK:           I’m telling you; it is so touristy but….

RICH:            It’s so good.

MARK:           It’s so good and all those restaurants in that little area you come for fish and shrimp and all that and they are just, I’m telling you… you gotta go! What about for a happy hour? I know Louie’s Backyard is always a top for happy hour.

RICH:            Right, that’s our go-to is Louie’s Backyard, where else for happy hour? I think we did it at LaTeDa. There’s a nice little happy hour there. 

MARK:           Nice, I like LaTeDa, the food is good there, too. Like lunch is really good and the atmosphere is cool, the whole story I found out about where the name came from. I guess there’s that little balcony where they do shows up there and someone was like, I don’t know peering out and looking at something to do with Cuba, you know I’m sure people will write in about that, but it’s interesting the history on the name and everything. 

RICH:            Yeah. 

MARK:           What about a place to watch music if you’re going to go out?

RICH:            Well, Green Parrot is the first thing that pops into everybody’s mind. Also Hogs Breath, they always have great bands there. My friend Matt manages the place from New Jersey.

MARK:           Nice.

RICH:            And, live music, I think that’s my go-to’s.

MARK:           Those are pretty good ones there. Alright, so the last question, always is: a tip of the day? It could be a favorite book? Favorite audio book? New technology? New shoes? I don’t know, new drink? It could be anything. 

RICH:            I would say my tip of the day would be to really seriously think about coming down to Key West and either spending time or investing. That’s my tip of the day and I think if you ask me that every day I’ll give you the same answer. It’s just my thing. 

MARK:           Well, Rich it was great talking to you. I learned a lot. There’s 1,000 more things I’d like to ask you, which I’ll do off-podcast. But it was a real pleasure, thank you very much. 

RICH:            All right, thank you for having me. 

MARK:           Thanks.

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