Wedding/Rental venue help.

[Garret Willink]

Good afternoon, My name is Garret and I’ve listen to BP podcast for the last couple weeks. My wife and I have been very interested in investing in real-estate for the last couple years but have not pulled the plug. More motivated than ever now with your encouragement and a little more knowledge we feel it’s time. But we’ve had a very interesting proposition come up, a wedding venue near us has come up for sale do to the owner tragically dying, along with the venue comes 3 estates that all sit on the same property over 100 acres. Every estate is rentable and beautifully maintained and finished. The previous owner did not have a WILL in place so the property has gone back to the bank. The asking price is 3.5 million, and to come up with the down payment is mind blowing. It’s a rare opportunity but even more rare is the gifts we would bring to the table along with a sister and brother in law who do photography and videography, a wife who is a florist, and a retired father in-law who was the head maintenance man at a school for the last thirty years that would love to got in on it. What I’m getting at is that we need help lol and I don’t know how to go about it. Any advice of any kind to get us on the right track would be amazingly helpful. Thank you so much. Garret

[Jacob St. Martin]

Hello Garret, this sounds like an interesting deal! When it comes to a wedding venue you will need to evaluate it more like a business than a rental, or if you are familiar with commercial real estate it is more or less the same process. You will need to look at the profit and loss statements, items that confer with the sale, employees that are staying, the business structure, etc. There is a lot that goes into it! I am in the process of trying to buy a winery that I would operate as a wedding venue right now. When it comes to financing, there are a couple of things to consider:

1. If you can seller finance the down payment that would be the most ideal. Unfortunately if the property is owned by the bank now I imagine this is not an option. 

2. When it comes to loans of this size they typically want the net worth of the people on the loan to exceed the loan value. If you and your family dont meet this requirement you may need to find someone with a higher net worth and ask them to be on the deal in exchange for a cut. 

3. If you can't raise the down payment amongst your family members than you can try to raise it from other sources. Options here include partnerships, private money, or hard money. In a partnership you will be giving up equity which is often giving up a lot more in the long run than having a debt partner but doesn't cost you anything up front. If the cashflow is high enough that it could easily support payments at 100% financing, you could try to find a private money lender who will lend in second position or an unsecured loan. I will say it is going to be extremely hard to get someone to do this unless you know them personally. 

I hope this was helpful! If you have ay other questions feel free to reach out and I will do my best to answer.