Anyone Buying Hotels?

Question

Aloha,

My Name is Isaac Yoshimori.  I'm from the Island of Kauai in Hawaii, and I'm new to real estate investing.

My background is in Engineering, Electrical and Communications.

Was in Management for many years and retired recently.

I love doing the analysis of properties (BRRRR) especially.  I'm in contract on a multifamily property in Tennessee currently but ultimately would like to own a hotel one day.

LOL, Is this too ambitious?

Anyone form a REIT in biggerpockets?

Just yesterday I did an Analysis against Coco Palms resort here on Kauai.  Maybe you've heard of it..  it's where Elvis in Blue Hawaii was filmed.  It has been abandoned since Hurricane Iniki struck Kauai in 1992.   Many investors have come and gone throughout the years.  in my profession we were asked to give a quote on communications upgrades (well new construction pretty much.. there's literally very little to "upgrade" as it sits)

Using an avg room rate, vacancy and opex,  in the area, I was able to value the property at 141M if it was operational.

With that I thew out the number to the broker to see if  they would send me more info..

Turns out I was pretty close to a professional appraisal and was able to sign an NDA to get more info.

I was way off on the calculations for the redevelopment work so my offers would have been way too high.

Anyone here have any experience with development work on Hotels that could throw some number my way?

thanks,

isaac

Mark Baldwin · Answer

I can't offer any help on hotel development costs, and probably not much help in general, I can at least warn you (though I'm sure you're aware), of the political hot potato that is Coco Palms.  I'm sure you are aware of the Native Hawaiian Squatters that occupied the property for a long while, and somehow even got their day in court...They may not have won the case, but they successfully drug the nonsense out long enough that the current owners were unable to secure financing.  Now the local Kauai government has a bad taste in its mouth.  They were fairly generous in helping these last guys along, only to have been burnt.  I'm not sure the next buyer is going to have much support politically.  At the very least I think it would be helpful to have a "local" player on your team.  The community seems to be pretty mixed about the Coco Palms redevelopment.  On one hand, it looks like crap and held an important place on the island for many years.  On the other, the East side is already sitting in traffic all the time, and public support for anything that would cause more traffic is tough.  Kauai is a tough place to develop...not for the faint of heart or faint of pocketbook!  Personally, I'd like to just see something happen.  Its been an eyesore for almost 30 years.  Embarrassing frankly.

Don Konipol · Answer

@Mark Sullivan

Isn’t taking real estate advise from a cabbie who couldn’t make it as a real estate broker a lot like buying gas station sushi?  LOL

Mark Baldwin · Answer

@Greg Gaudet they definitely weren't there that long.  Maybe months?  A year at most.  They did claim ownership to the land due to ancestral ties.  I dont remember enough to know their legal case, but the fact that they stood in front of a judge, rather than being thrown in jail for trespassing, tells you about the climate here.

Isaac Yoshimori · Answer

no problem Rohin!

Rohin Dhar · Answer

Thanks for the resources @Isaac Yoshimori!

Isaac Yoshimori · Answer

We have many people like that here.  Eccentrics who made their million and just come to Kauai to relax and get away.

Everyone is pretty laid back and unassuming here, but your neighbor or person hanging out on the beach could be in the next Movie, Free Music festival, or own a billion dollar company that we frequently use the services or products of.

Isaac Yoshimori · Answer

@Rohin Dhar

That specifically can be found in the following:

Kauai Tourism Plan Final and

Executive Summary of Tourism Strategic Plan 2019-2021

Page XIII

#7

I don't think the you have to worry about your recent purchase.  You're lucky to find it.  The next guy may need to worry.

Rohin Dhar · Answer

@Isaac Yoshimori Any citation on this point I can check out? "They are seeking to block the ability of the TVNC permit to pass along to the buyer if the property is sold."

Currently closing on a TVR outside of a VDA and want to make sure this isn't a significant risk of happening while we're move the permit to our name!

best,

rohin

Mark Sullivan · Answer

I probably wasn't clear - he was retired.  He drove the cab for fun and to stay active, not because he needed the money.  I suppose he could have been lying, but frankly, I drove Uber and Lyft all last year for the same reasons.  Meet people, show off the city (DC), get out of the house... I loved it.  Made no money but it was better than evening television.  I'm not retired, though.

Isaac Yoshimori · Answer

yes sir..  I've been looking.   In Princeville as well.  Thanks for the suggestion

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