A 25-year-old built a 'tiny hotel' in Texas that's generated $500,000 in bookings this year. Check out the $3.1 million property.

• Isaac French grew up working in his dad's construction business and always loved design.
• He moved to Waco, Texas, in 2020 and wanted to take advantage of the hot real-estate market there.

Isaac French, a 25-year-old bookkeeper and contractor, co-owns and operates a "tiny hotel" in Waco, Texas, with seven tiny homes that he opened early this year.

Before getting into short-term rentals, French ran a cloud-based accounting business in Waco. But around late 2020, he told Insider, he was itching to take advantage of the hot real-estate market in the area — Waco is within two hours' driving distance of Austin, Fort Worth, and Dallas.

"I'd had these ideas sort of brewing to create this modern Scandinavian housing concept in Texas," French said.

French said that while he'd always had an entrepreneurial spirit, working in his father's construction business as he grew up gave him the experience he needed to execute his idea. In March 2021, he bought a 5-acre plot that would become Live Oak Lake. The seven cabins are between 550 and 650 square feet and were built in the Scandinavian architectural style.

Live Oak Lake has generated more than $500,000 in bookings since its opening, as indicated by screenshots of Airbnb and Stripe dashboards reviewed by Insider. Here's how French got his business off the ground.

French turned a 5-acre empty plot in Waco into a luxury tiny hotel in 9 months

French used $138,000 of his savings to purchase the land. At the time, he projected that the construction costs of building his tiny hotel would come to about $1.6 million. French's father, two brothers, and father-in-law joined as minority partners so he could secure a construction loan worth 80% of the appraised cost of the build.

This partnership meant French could also use a line of credit from his father's construction business to cover further construction costs. He said that when he was starting out he was confident that the property would be appraised at a higher value than the cost, especially once he could prove it was a commercial success, and he planned to do a cash-out refinance — taking out a bigger mortgage against the value a property has gained since the owner acquired it — to pay off the cost of labor and materials.

Live Oak Lake took about nine months to finish. French acted as the general contractor for the project, which included building the roads, utilities, and a man-made lake. The tiny hotel, which opened for business this January, ended up costing $2.5 million to construct — he said the price increased because of labor shortages and soaring lumber prices, as well as additions like hot tubs and a pool.

"I was surrounded by lots of incredible people as well, as far as contractors and landscapers," French said.

Four months after opening, the property was appraised at $3.1 million, and French and his family did an 80% cash-out refinance. French received a loan of 80% of the property value, or $2.48 million, appraisal reports and HUD-1 settlement statements reviewed by Insider indicated.

French said that crucial in securing the construction loan was showing Live Oak Lake's selling point as an "experience," including lots of drawings and renderings in the planning forms.

With a new batch of funding, French was able to pay off his original construction loan and the line of credit he used to complete the project.

French said that to get familiar with the short-term-rental industry, he relied on online resources and YouTube. He described Robuilt, a channel run by another short-term-rental entrepreneur, as particularly useful. French also asked friends who owned a short-term-rental management company in Waco for advice. They introduced him to automated property-management systems, which he said had been integral to his success.

French wanted his guests to feel like they were in an oasis

In addition to the seven identical cabins, Live Oak Lake has a common area with a small dock, picnic tables, paddleboards, and kayaks.

Each cabin has floor-to-ceiling windows and two floors with two bedrooms, one bathroom, an open-plan kitchen, and a living area, along with a washer and dryer, a private entrance, parking space, an outdoor hot tub, a hammock, and a fire pit.

"It was very high cost per square foot because these are very high-end — we chose very nice finishes," French said, adding that he took inspiration from Olson Kundig, a Seattle architecture firm that designs sculptural buildings that draw from nature.

"I've always loved design," French said. "I wanted to be an architect when I was younger."

He said he wanted the hotel to strike a balance between being "completely lost in nature" and having a "village" feel. The tiny houses are a couple hundred yards apart and surrounded by trees, but the string lights between buildings can be seen reflected in the water.

The cabins are priced nearly identically to reflect their identical aesthetics. A night in one during the week costs about $300, but that can jump to $450 to $500 on the weekends. During busy visitor periods in Waco, like graduation weekend at Baylor or local high-school football games, the nightly fee can rise to $1,200 per cabin, French said.

To set prices, he uses an app called Wheelhouse, which can automatically implement price increases and discounts and standardize them across his accounts on Airbnb, Vrbo, and Booking.com depending on demand in the area.

The pricing software also allows French to add markups when customers book through a specific platform to reflect what that platform charges hosts — for example, Airbnb charges 15% of the booking price as a fee. This incentivizes people to book directly from the Live Oak website, where French has more control and can access more information about his guest, such as their email.

French said the occupancy rate is 90% to 95%, with almost 70% of bookings coming directly from Live Oak's website and the remaining 30% from Airbnb, Vrbo, and Booking.com.

French markets the hotel through social media. At first he partnered with travel influencers and did giveaways — he said this helped Live Oak's Instagram account, which now has over 50,000 followers, gain traction.

"Instagram is our main funnel for bookings," he said.

French said he thought Live Oak was well positioned to weather the economic downturn. He said he'd seen an influx of wealthy or middle-class tourists from cities like Austin or Dallas who normally would take longer international holidays but were choosing to vacation closer to home for short periods.

"We're already tapping into that," French said, "but I just think there's so much more opportunity even just here in Texas."

If you're an Airbnb host or tiny home owner and want to share your experience, email Kiera Fields at kfields@insider.com.