Posted by mike on February 20, 2006 at 13:00:52:
I always make an offer directly to the owner, usually by mailing them a letter that I am interested. I bought a newly remodelled 10 unit with $2000+ cash flow per month. Area a little on the rough side. It was listed with a realtor and fell through 3 times. The owner is now doing 95% owner financing. I did have to put 5% down though.
How to Structure Hotel Deal - Posted by Eric Evans
Posted by Eric Evans on February 13, 2006 at 23:01:24:
I have always wanted a hotel. Very well qualified management wise. I will try to stick with the specifics. No money bad credit can not traditionally finance. Looking for something 1M-3M, franchised, steady revenues, likely economy class, 100 rooms or less. I have one I really like that is 1.2M right now. Super 8. I ave several ideas, but need help presenting.
Could I lease option a hotel like a residential deal? If so how do I present this? How do I deal with broker? I already tried to get one to present an offer for a management deal with myself earning sweat equity in the property over time, but broker clammed up on me and I dont believe he even talked to the owner and now will not even send me packages on hotels unless I give him a financial statement. Told him he was nuts and I would not give that info unless I saw all the properties details and made the decision to submit an LOI. Would it violatre a CA with a broker to go directly to the owner?
Can you get hard money for a hotel that is selling for market value and refi after a period of time? If I can get HArd Money at 60-70% would I have to get the owner to carry a note for the 30-40%? Then where would I slip in the pre-close and contract money? What about the money you need right away for franchise application and operating costs after take over. Would hopefully find a property with a small punch list for franchise, but would be required to do something I know for that also. Could drag that out very likely over a period of time though. Mainly franchise app fees would be needed ASAP.
If I were to try and just offer to manage the property for some equity with a hit in salary, how do I get this to the owner and how do I make it attractive to them? Hwo do I get it past broker? Alright just looking for some options here to make this happen. Thanks all.
Eric Evans
Re: How to Structure Hotel Deal - Posted by ray@lcorn
Posted by ray@lcorn on February 16, 2006 at 10:11:21:
Eric,
Hotels are hard deals to get done when all the right pieces are in place, like cash equity, strong franchise and a willing lender. You’ve got none of those right now, and that’s why the broker decided you were wasting his time.
Your best bet is to work your way into ownership. Lease option, hard money and 100% financing all sound good on paper, but in reality may happen one-half of one percent of the time… in other words, all the planets have to be in alignment with just the right combination of circumstances for it to occur.
That said, if you approach it from the employment side and offer an owner solutions for his problems, then the very strategies you mention could be exactly what will happen. Look for an owner who wants to retire or an absentee owner of a property who needs more than usual management involvement. That’s the type of situation that lends itself to structuring a compensation package to include ownership interests. But by the time an owner has put the property on the market it’s probably too late. You’ll need to get to it before that, which means you may have better luck submitting resumes for properties that need turnaround help.
ray