I'm a wholesaler who needs some expertise on structering an offer for a local hotel deal!

[Reginald S.]

Hello all! I'm a wholesaler who lives in South Carolina. I got a call the other day from a potential seller that owns a nearby 75 suite hotel that he would like to sell asap. In addition to the 75 suites, the hotel also has a restaurant, ballroom, private party room, a large extended stay suite, and an outdoor swimming pool. It is located on a major hwy next to a I-95 exit. The property has been vacant now for about four years and the county assessor has valued it at $300,000 as it has been trashed by squatters and seems to be at the beginning stages of succumbing to neglect. The seller who seems to be very motivated is asking for $100,000 cash but will do an owner-finance for a bit more. So here in lies my issue, I don't have any experience what soever with 'commercial' property and am looking for an experience investor (particularly someone who has experience with buying hotels) that can partner with me on this deal or at least guide me through the process. If you believe that you can help me with this deal, please PM me asap. Thanks... PS. Any tips or advise posted here on BP will be greatly appreciated also!

[Chris Winterhalter]

@Reginald S.

Interesting situation...

Can you give us more information about the deal?  

-Type of structure and age, 2 story exterior corridor, 70's motel...etc etc....Do you have a photo?

-Location, where does it sit in relation to other hotels, business, highway, etc. 

-How big is the lot and how much is the land worth?  It might be a land play if it's in a solid location.  

-Do you know anything about the history of the hotel, when it was built what flag did it carry, what flags has it carried over the years etc.  I'm sure it was an independent when it was last opened.  

-What's the highest and best use?  This gets back to the land value and location.  I have very little information about the building but I can tell you if the location warrants any type of decent flag then it would need a large rehab.  Think 35k+/key.  

-Having a restaurant, swimming pool, and ballroom are generally not pluses in midscale down to economy properties.  Actually limited service is preferred today, selling room nights is much more a real estate play than running the business of meeting space/restaurants etc.  Historically hotel restaurants lose money in this space.  

-Comparing other hotel tax assessments in your area doesn't tell you anything. You can easily have a brand new 4 story Hampton Inn worth 125k/key right next to a two story motel that trades at 20k/key. Getting a STAR report from STR where you compare average daily rate (ADR) and occupancy (RevPar) to similar properties in your comp set would be a starting point. Talking to a hotel evaluation or hotel broker about similar sales in the area would be the next step.

I would talk with a local hotel consultant, feasibility person in the area.  If you don't want to spend the cash going that route then search for hotel management company or hotel development company in your area on google.  A few names will pop up, give them a call.  They will want to know that you are credible, if you're not looking to buy the property yourself be up front with them.  The hotel world is not like residential, it's a very small circle of players.