Hotel CPA Reveals Tax Efficient Hospitality Fund Strategy - Covered Land, Cash Flow and K 1s
Featuring: Slocomb Reed (Best Ever Podcast) and James Bohan, CPA, MRED
This conversation originally aired on the Best Ever Real Estate Investing Advice Ever Show, hosted by Slocomb Reed. In this episode, Slocomb interviews James Bohan, a CPA, hotel operator, fourth-generation real estate developer, and CFO of Exodus Development.
James brings a rare mix of institutional fund experience, family office perspective, development background, tax strategy, and hands-on boutique hotel operations. Together, they unpack covered land plays, boutique hospitality, modular development, positive leverage, and how a CPA views risk, returns, and K-1s.
If you are a fund manager, operator, or LP looking for yield and tax efficiency outside crowded multifamily, this interview will reframe how you see hotels and covered land.
Summary:
Most investors think about hospitality as an afterthought. James explains why it can be one of the most tax-efficient and resilient strategies available today, especially in high-growth mountain markets.
In this episode, you will learn:
How a CPA and fund CFO thinks about real estate beyond simple IRR
What a covered land play really is and how to use it
How James bought an underperforming 7 key motel and turned it into a 10 key boutique lodge and event center
Why hotels can outperform in high-rate and high-inflation environments
How AI and modern revenue management tools let boutique hotels operate like institutional assets
Why Coeur d’Alene, Idaho, and the Spokane MSA are compelling hospitality markets
How land banking and covered land interact with tax strategy
Why James moved away from options and stocks into hard assets
His “SWAGGER” investment framework: Silver, Weapons, Agriculture, Gold, Entertainment, Real estate
This episode is ideal for hospitality-curious fund managers, family offices, CPAs, and real estate entrepreneurs who are serious about tax-efficient yield and institutional-grade operations.
Watch the Full Episode:
FAQ's
1. What is a covered land play in hospitality?
It is a strategy where you buy a property primarily for the land value while the existing use (like a small motel) covers carry costs such as taxes, insurance, and interest. That gives downside protection while you wait for a higher and better future use.
2. Why can hotels outperform in high inflation environments?
Because room rates reset daily. Hospitality can adjust pricing far faster than assets with long lease terms, letting operators keep pace with inflation while maintaining or improving margins.
3. How does AI improve boutique hotel performance?
AI driven revenue management tools analyze search trends, OTA data, and demand patterns to optimize ADR and occupancy automatically, which lets small hotels operate with big hotel sophistication without the overhead of a full revenue team.
4. Why is Coeur d’Alene, Idaho, compelling for hotels?
It is part of a larger Spokane Coeur d’Alene MSA, has strong population growth, four-season tourism, outdoor recreation, and a limited hospitality supply relative to demand.
5. What is the S.W.A.G.G.E.R investment framework?
S.W.A.G.G.E.R stands for Silver, Weapons, Agriculture, Gold, Entertainment, and Real estate. It reflects James’s focus on hard assets and real economy plays after learning hard lessons in options trading.
📞 Book a Tax Strategy Call with James:
https://calendly.com/jamesbohan/book-a-call
📨 Connect With James:
LinkedIn: James Bohan, CPA, MRED
Instagram: @jamesbohancfo
Website: stonehan.com
Chapter Breakdown With Timestamps:
00:00 - Intro And James’s Background In Funds And Development
03:34 - From Fourth Generation Developer To Boutique Lodge Owner
04:00 - Buying A Run Down Seven Key Motel As A Covered Land Play
05:21 - Using AI And Tech To Run A Small Hotel Like A Big One
05:59 - What A Covered Land Play Really Means For Investors
07:18 - Why A Covered Land Play Made Sense In Coeur d’Alene
08:27 - Pivoting To Value Add Cash Flow In A Hotel Deal
09:04 - Hotels As Inflation Hedges And Positive Leverage Plays
11:03 - Covered Land Plays Versus Land Banking And Tax Strategy
15:09 - Why James Moved From California To Coeur d’Alene
16:30 - Spokane Coeur d’Alene Market Drivers For Hospitality
18:00 - Pandemic Bump Versus Long Term Growth In Coeur d’Alene
20:26 - Lightning Round Books, Giving Back, And Swagger Investing
23:03 - Best Ever Advice And The Power Of Kindness In Business
23:37 - How To Connect With James And His Hotel Fund
Original Episode:
This conversation originally appeared on the Best Ever Real Estate Investing Advice Ever Show. Listen and watch here:
https://www.bestevercre.com/podcast/mastering-the-covered-land-play-leveraging-ai-in-boutique-hotels-and-the-growth-potential-of-coeur-dalene
Full Transcript:
Slocum (00:00):
Best Ever listeners, welcome to the Best Real Estate Investing Advice Ever Show. I am Slocum Reed, and today we are joined by James Bohan. James is joining us from Coeur d'Alene, Idaho. He is a CPA as well as a real estate investor. His firm, Stone Hand, advises real estate investors on tax efficiencies and helping them deliver timely K–1s.
Slocum (00:23):
He also works with his family's family office. He is a fourth-generation real estate developer and the CFO of Exodus Development, a modular construction development company with over 200 multifamily units currently in development. James, can you tell us a little bit more about your background and what you are currently focused on?
James (00:42):
Yes, thanks for having me on the show, Slocum. Excited to be here on the Best Ever Podcast. My real estate experience has really been there my whole life. As you mentioned, I am a fourth generation real estate developer. I learned about cap rates, financing, tenant management, and construction at the dinner table growing up with my father, who developed some homes and multifamily in Las Vegas.
James (01:00):
From there, I went to college at USC, where I majored in accounting with a real estate finance specialization in my business degree. I graduated when the world fell apart the last time in 2008, so I leaned on my accounting degree and started my career as a CPA. That is where I started to see how the real estate industry was evolving into a more institutional-level asset class, where people were starting up funds and this idea of alternative investments was being thrown around a lot.
James (01:40):
The firm I ended up with was great and a specialist in this space, called Rothstein Kass. They were a premier boutique accounting firm for hedge funds and private equity funds. Given my background, I slotted right into the real estate private equity fund department. I cut my teeth doing that, saw a lot of deals that went bad through the last cycle, and saw how some of the players were running the game, raising billion-dollar funds and basically having a leveraged bet on inflation with a two-and-twenty hedge fund model.
James (02:00):
I realized this was where the future was and where I wanted to be. When the firm merged with or was bought by KPMG, I stayed with KPMG and went to get my master’s in real estate development from USC. During that time, I was hired by one of my professors who was starting a real estate debt fund. I onboarded as the first employee and CFO.
James (02:24):
I saw over a billion dollars of loans across my desk while I was there and onboarded over 1,400 limited partners. Toward the end of Q4 2018, there was some style drift and I did not like where the firm was headed, so we parted ways in 2019. I started my own CPA firm and that is when I started working with my family to do some investments.
James (02:47):
I moved to Idaho in 2020. That is where the personal real estate portfolio that I was managing and owning really took off. Up here in Idaho, I have a single family rental. I live on a ten acre farm that we run as a market garden, and with the family we bought an old seven key motel that was really run down. Through both physical and operational value add and repositioning, we turned it into a ten key boutique lodge and event center.
James (03:15):
You can check it out at lakevillagelodge.com. We are hosting people up here in Coeur d'Alene and we have had great success with the market out here.
03:34 - From Family Office To Boutique Lodge Operator
Slocum (03:34):
Give me a second here.
04:00 - Turning A Seven Key Motel Into A Boutique Lodge
Slocum (04:00):
An underperforming seven key motel seems like a pretty tricky investment to execute on. The size is small, and it is also a much more complex business model than a lot of other real estate plays. Tell us how that went.
James (04:17):
That is a really good question. We did not set out to do this when we first bought the property. We viewed it as a covered land play. We were hoping that the motel would simply cover the taxes and interest. At the time we did not have debt, and once we brought on debt, we wanted it to cover the interest as well and the insurance. That was the other “I” word I was looking for.
James (04:40):
We were planning to demolish this and build a hundred room hotel or apartments. During due diligence we saw the market was not quite ready for that. There was something going on in the actual submarket that would not make development feasible at that time. So after running it only on Airbnb for the first year, just trying to get some cash in the door, we added three more rooms.
James (05:01):
That is when we did the operational value add. There is so much technology out there today that allows you to run small hotels with the efficiencies of a larger hotel. For example, artificial intelligence has had a big impact, and one job that it has replaced to a large extent is revenue management for hotels.
05:21 - Using AI To Run A Small Hotel Like A Big One
James (05:21):
There are a lot of AI software tools out there. We are currently working with a great company called Life House that also does management for boutique hotels. I have been through a few of these tools. They track trends by picking up what is being searched on Google and what is happening on the online travel agencies such as Booking.com and Expedia, and they use AI to build out a price forecast that adjusts daily or even hourly in some cases, to really match the demand from people searching for hotel rooms in these markets.
05:59 - What A Covered Land Play Really Is
Slocum (05:59):
James, at the beginning of that explanation, you used a term that I have never actually heard before, but it makes a lot of sense, especially the way that you described it. You called it a covered land play. I imagine that means that you were buying it for the value of the land for future development. You hoped that the development would be immediate, but you saw that there was still value in holding the land long term, as long as the expenses of holding the land were covered. Covered land play.
Slocum (06:30):
That makes a lot of sense. Tell us more about why you thought a covered land play in that part of Coeur d'Alene, Idaho made sense.
James (06:40):
The asset is really prime. It is right by the resort’s golf course here. There had been a lot of blight in the area that had been removed over the past five to ten years, so many of the locals might not have fully realized that. They may still have thought the area was a little dilapidated.
James (06:56):
There is only one site left that I would still call underperforming that needs to be brought up to match the neighborhood aesthetics. We did what we could with fence screening and visual screening to separate our property from that remaining site.
Slocum (07:13):
The question was, why does a covered land play make sense right now in this area?
James (07:18):
Got it. The other reason we really like covered land plays here in Idaho and in Coeur d'Alene is that Idaho is one of the fastest growing states in the country, and Coeur d'Alene is one of the fastest growing submarkets as well.
James (07:29):
If you look at property market values here over the past four to five years, they have increased exponentially. In 2020 and 2021, there was about 25 percent growth just in our submarket. It is a very desirable area to be in and we expected land values to continue rising in the future.
James (07:47):
We obviously wanted to develop it if we could, but going through this process helped me understand how amazing these boutique hotels can be in this market, both at the macroeconomic level for a lot of economic reasons and at the microeconomic level in this submarket of Coeur d'Alene.
James (08:04):
It is a very tourist focused town. In the summer we get a lot of lake activity. In the winter we get many skiers. We can capture a lot of rental demand throughout the year from seasonal tourists and hotel guests with our property.
08:27 - From Covered Land Play To Cash Flow Value Add
Slocum (08:27):
So it is more of a cash flow play now that you have had the opportunity to execute on a value add business plan.
James (08:36):
Exactly. With this covered land play idea, it has evolved into a value add cash flow play, to follow up on your last question. A lot of the macroeconomic factors I love for hotels include the ability to reset your price daily and even by the hour or half hour.
James (09:04):
When you look at other asset classes that have to reset their prices in a high inflationary environment, it is harder for them to meet where the market is. For example, in office, you are locked into a ten year lease. You might have escalation clauses, but you are guessing at what inflation will be unless you tie it directly to a consumer price index increase.
James (09:23):
Retail leases are usually three to five years. Even in multifamily, that is typically a one year lease. If inflation really takes off and your market rents at the start of the lease are around 2,000 dollars, six months later the market rate could be 2,500 dollars.
James (09:43):
In a hyperinflationary or stagflationary environment, I really like the hotel asset class because of that ability to reset prices daily. Second, since we are in this high inflation environment with rates staying higher for longer, we are able to get positive leverage on the going in cap rates or stabilized cap rates on some of these assets we are looking at.
James (10:01):
I have a pipeline of about four hotels I am evaluating for our hospitality fund. The going in cap rates for properties with decent profit and loss statements are in the 10 to 12 percent range. We can borrow between 6 and 7 percent. That is really hard to get in the multifamily world, where you are often buying at four to five percent, or sub six percent cap rates, and you have to accept negative leverage.
James (10:24):
As someone who has grown up in real estate for decades, buying assets with negative leverage feels like speculation, not investing, because you are really banking on rent growth, which may happen but is not guaranteed. I like going in on the front end knowing I am going to be able to cover my debt service with positive leverage from day one.
11:03 - Covered Land Play Versus Land Banking And Tax Strategy
Slocum (11:03):
Yes, that makes sense. It is not a particularly trendy time for finding cash flow in multifamily for a variety of reasons. I am based in Cincinnati, Ohio. There are still deals being brokered that cash flow in a Midwestern market where demand continues to outpace supply. Both are growing slowly, but there is still a gap.
Slocum (11:30):
I want to put one more pin in the covered land play. Being here in Cincinnati, the closest thing I have seen executed well in that regard, where it is not necessarily an entitlement play planning to sell to a developer as quickly as possible, is that there is a lot of new development along the Interstate 75 corridor between Cincinnati and Dayton, where much of that was farmland ten to fifteen years ago.
Slocum (12:06):
That farmland is now subdivisions and trendy suburban neighborhoods. I know there are investors buying up that land, but that is not necessarily what you would call a covered land play. Let me take a crack at defining this and you tell me where I am right and wrong, and then we will transition the conversation.
Slocum (12:27):
A covered land play, which is really a long term land play, makes sense for investors who are capable of deploying capital for a long time without seeing significant return on it, because they expect the returns to be very high when they decide it is time to sell that land or real estate. It is a covered land play when the real estate itself is capable of generating the revenue that covers its expenses, which mitigates your downside risk by mitigating your carry costs.
Slocum (13:03):
Is that right?
James (13:04):
That is exactly correct.
Slocum (13:06):
That is an interesting term. It makes a lot of sense, and I know there are listeners who will be interested in it. They will want to look more deeply into long term land plays where your downside and carry costs are mitigated by buying something that is revenue producing, even though it is not currently the highest and best use of that real estate. That makes sense.
James (13:31):
Exactly. To your other point, when you are talking about people buying farmland, I think of that more as land banking. I am not sure all farmland will be able to cover carry costs, but with those strategies you can get into some advanced tax planning.
James (13:57):
For example, if developers are going to sell single family homes or other properties that are considered dealer property, you can use tax strategies to own some of the land banking in an S corporation, sell it to your developer company, capture capital gains that way, and lock in a lot of profit. It is similar to what people do with transfer pricing.
James (14:25):
Then the dealer, the entity actually building and selling the homes, operates at a more marginal profit. With land banking, you can get into a strategy of turning a lot of the profit of home development into capital gains.
15:09 - Why James Moved From California To Coeur d'Alene
Slocum (15:09):
That makes sense.
Slocum (15:09):
James, tell us more about what attracted you and your family office to Coeur d'Alene, Idaho.
James (15:16):
It is a story that is pretty common these days. We were a pandemic move. We looked around the mountain states of Utah, Wyoming, Montana, and Idaho, and for a mix of reasons, Coeur d'Alene checked all the boxes for my family.
James (15:31):
There is a lake. Coming from Southern California, we were really into boating and boating culture, and there is a lot of that here. There are golf courses. The people are some of the friendliest people I have ever met.
James (15:54):
When I first moved up here, the first time I went into my home I walked across the street to a wedding venue that hosted beer nights. The sun was setting over the valley and there was a Celtic band playing. I am Irish, so I felt very at home at that moment. I love it here in Idaho and it is really hard to get me to leave.
16:30 - Spokane Coeur d'Alene Market Drivers For Hotels
Slocum (16:09):
That is very interesting and not where I thought you were headed with that answer. When you look at Coeur d'Alene as a market for investing, what are the economic drivers that make it a good place for hotel investing right now?
James (16:30):
Good question. When we look at Coeur d'Alene, we are part of the Spokane MSA. Coeur d'Alene is located in Kootenai County. There are about one hundred thousand people just in Kootenai, and in the greater Spokane Coeur d'Alene MSA there are over a million people.
James (16:52):
As I said earlier, this is one of the highest growth cities in one of the fastest growing states in the nation. There is a lot of turnover, people looking to move here and needing a place to stay. People coming for summer vacations also need a place to stay.
James (17:16):
I think being carried and lifted by this strong market movement will lift all asset classes, especially when it is such a desirable tourist location. People come to enjoy the lake, ride their ATVs, and enjoy the outdoor beauty of Idaho. All of that supports strong hotel demand.
18:00 - Pandemic Bump Versus Long Term Growth
Slocum (17:30):
If I could summarize, the demand for hospitality amenities far outweighs the supply. What you are recognizing is that not only are there people from places like Southern California looking for a place like Coeur d'Alene, but the proximity to Spokane makes it compelling because it is a much shorter trip for a large nearby population.
James (18:00):
Exactly. I tell people it is like Los Angeles being forty five minutes from Newport Beach in Orange County. It is a very similar commute here. There are a lot of people who live in Coeur d'Alene and work in Spokane, making that thirty to forty five minute commute every day.
James (18:18):
That creates a strong and resilient ecosystem with everything you need from a good city.
Slocum (18:29):
Tell me if I am wrong here. You said Coeur d'Alene, Idaho and your family moving there from California, and my immediate thought, in part because you referenced it, is that Coeur d'Alene is a pandemic bump market that became very compelling when people wanted to get out of major metros. Some of those people are now in the process of moving back.
Slocum (18:54):
Are you seeing those more volatile market factors? Has Coeur d'Alene seen consistent growth since the end of the pandemic, or are you seeing that people in positions similar to yours are moving back toward Southern California instead of staying in Coeur d'Alene?
James (19:17):
I do not have precise numbers on that, but any time you have 25 percent growth in a year, that is unsustainable.
James (19:24):
However, growth is still positive here. As you said, pandemic markets like this were really put on the map during that time. I am staying here and digging in. Some people who had remote jobs that are no longer remote are the ones I see moving out.
James (19:41):
Otherwise, I still see many families trying to move here. The branding, values, and lifestyle of places like Coeur d'Alene remain very attractive to many people. Some may not have been able to move during the pandemic because they were locked into jobs. They needed two to five years to transition. Now they can finally move.
James (19:59):
Another reason I like Coeur d'Alene is that the whole city is wired for fiber internet. I am on a ten acre farm outside the city and I have fiber internet here. I also have Spectrum, and because I need to be online for my job, I also have Starlink. This hybrid remote work setup has worked very well for me and I have invested to make sure I can stay connected to my clients.
20:26 - Lightning Round Books, Giving Back, Swagger Investing
Slocum (20:26):
That makes a lot of sense. James, are you ready for the Best Ever lightning round?
James (20:29):
Yes, sir.
Slocum (20:30):
What is the best ever book you recently read?
James (20:33):
The Bible. I think the Bible is the story of us as humans and of civilization. It has a lot of God’s wisdom in it. I think many books written over the past 3,500 to 5,500 years still reference concepts you can find in the Bible.
Slocum (20:50):
Does the Bible qualify as a book that you read recently?
James (20:54):
If you read it every day, does that count as recently?
Slocum (20:56):
Yes. We will take that. It is about a 72 hour read, and there is a book called “The Story” that breaks it down to between fifteen and twenty hours, following the chronology of the Bible. But yes, if you read it every day, I will take that.
James (21:15):
The other one I just finished was “Ego Is the Enemy” by Ryan Holiday, which was amazing. Other than the Bible, this is one of the only books I feel I will need to pick up again every couple of years.
Slocum (21:24):
Great. As long as the Bible is something you have taken to recently, that works. I am also a fan of Ryan Holiday. What is your best ever way to give back?
James (21:34):
My best way to give back is through community events here in Idaho. For example, at our lodge we started a farmer’s market, which has been a great way for people to come out and support small businesses.
James (21:38):
With my career as a tax professional, keeping money out of the government’s hands is also a great way to give back. It is a career passion for me when I can keep money in people’s hands instead of giving it to a government that will spend it on whatever it chooses.
Slocum (22:03):
James, on the deals you have done as an investor, what is the biggest mistake you have made and the best ever lesson that resulted from it?
James (22:16):
My grandpa gave me some money to invest in the stock market about ten to fifteen years ago. Through that process I realized I am not a good stock market investor. I became too addicted to the highs and lows of options trading.
James (22:40):
I grew a portfolio from around 20,000 dollars to 65,000 dollars trading a lot of options. Then I cashed out the principal to start some businesses but lost the rest. From that lesson, I realized I am going to stick to hard assets and I developed an investment philosophy I call SWAGGER.
James (23:00):
SWAGGER stands for Silver, Weapons, Agriculture, Gold, Entertainment, and Real Estate. The SWAGGER investment philosophy.
Slocum (23:00):
On that note, what is your best ever advice?
James (23:03):
It is hard to pick the single best piece of advice from a business perspective. I will use a quote that my grandpa had in every one of his emails. “Be kind, because everyone is facing a hard battle.”
James (23:08):
In business, when you are dealing with people, always try to think about where they are coming from. There is a book called “Getting to Yes.” If you really think about what the other person is going through and what their needs and wants are, and you can meet their needs and your needs, that is a win. That is what I am all about. I feel that is what capitalism in America is all about as well.
23:37 - How To Connect With James
Slocum (23:37):
Last question. Where can people get in touch with you?
James (23:40):
You can get in touch with me at thehotelcpa.com. We are going to be raising a hospitality fund to target assets in the mountain states of Idaho, Utah, Wyoming, and Idaho that need operational and physical value add.
Slocum (23:58):
That link is in the show notes.
Slocum (24:02):
James, thank you. Best Ever listeners, thank you as well for tuning in. If you gained value from this episode, please subscribe to our show, leave us a five star review, and share this episode with a friend you know we can add value to through our conversation today. Thank you and have a Best Ever day.
James (24:19):
Thanks for having me on, Slocum. I hope you all have the Best Ever week as well.
