26 years Old and Bought a Hotel

[Micah Haworth]

Investment Info:

Other commercial investment investment.

Purchase price: $3,500,000

I syndicated a 61-unit Hotel. We raise 1.2M to take it down. I put in none of my own money, and after paying the investors and partners it makes me $3000 a month.

What made you interested in investing in this type of deal?

High Cashflow and great partners

How did you find this deal and how did you negotiate it?

I had a partner bring the deal to me asking me to help them syndicate it. He had gotten it from a Marcus and Millichap Broker. It was on the market for a while listed for around 3.75M and we got it for 3.5M. After an inspection, we ended up getting them to cover the cost of replacing the roof.

How did you finance this deal?

Normal Real Estate loan and an SBA loan. The AmericInn Franchise also gave us a small renovation loan to help cover the required repairs.

How did you add value to the deal?

The owner lived in the property and ran it with her parents. They did not maintain professional standards and did a lot of DIY maintenance. This led the property to get run down and now has an average of 2.9-star reviews. They didn't do any marketing and ended up with a 13% occupancy efficiency compared to the market (this is equivalent to over 350k of lost revenue). We are updating all the units and have already hired professional staff and an experienced GM to increase performance to market.

What was the outcome?

We just closed on it so I will keep you posted. But in the first 10 days we Grossed about 50k!

Lessons learned? Challenges?

We need to have a better contract with specific requirements for documents that we require for DD to begin. As well as a penalty if the seller is the cause of extending the close date. We had those issues with our seller on this one and each week she pushed back closing she collected 20k+ in revenue.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

We did, but I would not recommend them at this point.

[Noah Laker]

Tremendous story, great work Micah. This is super impressive especially considering your age. I'm a 24 year old broker out of California, I've spent a lot of time learning syndication but have yet to execute my first deal. 

Hope you all have a very prosperous future with this property! Keep us updated!