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All Forum Posts by: Andrew Warner

Andrew Warner has started 2 posts and replied 6 times.

Post: Vacant Land Purchase

Andrew WarnerPosted
  • Investor
  • Lake Leelanau, MI
  • Posts 8
  • Votes 2

Investment Info:

Other buy & hold investment.

Purchase price: $490,000
Cash invested: $122,500

40 acre vacant parcel (previously was a cherry orchard). Has fields, woods, meadows/valley, a pond, wildflower fields.
Planning to start with an Airstream on property to bring in some revenue (unique STR) while we decide what to do with it. Just picked up the Airstream. Planning to put a driveway in this spring (nearly 1,000 ft long) which will be an expense, but add equity. Perc test on file for conventional septic system, and we may drill a well and bring back electric this year.

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

I think large tracts of vacant land is becoming harder to come by. For now we are playing on it but are brainstorming different ideas as to what to do for revenue.

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

Off market with a farmer.

How did you finance this deal?

7/1 ARM vacant land loan with 25% down.

How did you add value to the deal?

So far made trails and two tracks, had 1500 cherry trees taken out. Plan to have it fenced in and add driveway this spring. May drill a well and bring underground electric back.

What was the outcome?

We are still learning the land and figuring out what we want to do with it!

Post: Airbnb - how much do you pay yourself?

Andrew WarnerPosted
  • Investor
  • Lake Leelanau, MI
  • Posts 8
  • Votes 2

I have 18 units but they are all on the same property. We have a team of about 7-8 during our season (April - Nov) and then are closed for 5 months. I spend about 15 to 20 hours a week during peak months and about 3-5 hours a week during the off season on phone calls remotely. The net is between 250k-300k depending on the year. I'd guess it comes out to about $375 per hour if I tried to pin it down. That's not counting principal pay down, appreciation or depreciation. I am currently looking for a new project to work on, whether that means eventually selling the hotel and going bigger, or adding something to simply keep busier. 

Post: 18 unit waterfront hotel, creative financing

Andrew WarnerPosted
  • Investor
  • Lake Leelanau, MI
  • Posts 8
  • Votes 2

Yes Whaleback Inn (www.whalebackinn.com)...

Post: 18 unit waterfront hotel, creative financing

Andrew WarnerPosted
  • Investor
  • Lake Leelanau, MI
  • Posts 8
  • Votes 2

We've had a record July and August. Used to be phones only, so we went online with a new booking engine called Think Reservations. Then we integrated with Expedia and their family of companies as a gap filler. On weekends in peak season we require a 2 night minimum, however we relax those restrictions if we don't fill up. Otherwise by night or whatever a guest prefers, we do have several 4, 5 night stays, week long and even two-week stays in our cottage suites which have kitchenettes. We have in house laundry and housekeeping. The staffing is 2 full time innkeepers then 7 part time seasonal employees in peak. We'll go down to about 4 part time in fall and then innkeepers only for winter. We are right on M-22, one mile south of Leland on your left as you head toward town. Our docks are across the road and we have 216 ft on North Lake Leelanau. 

Post: 18 unit waterfront hotel, creative financing

Andrew WarnerPosted
  • Investor
  • Lake Leelanau, MI
  • Posts 8
  • Votes 2

@Dan O'Neill - fantastic! We love Leland and have lived in Leelanau for the past 12 years. Love the community and the school. 

Post: 18 unit waterfront hotel, creative financing

Andrew WarnerPosted
  • Investor
  • Lake Leelanau, MI
  • Posts 8
  • Votes 2

Investment Info:

Other commercial investment investment in Leland.

Purchase price: $3,000,000
Cash invested: $475,000

18 unit waterfront hotel in Leland, a small vacation town in Leelanau County (Northwest Lower) Michigan. This was a cold call (off market) deal and we have taken a mom and pop hotel and added value in many ways, increased occupancy and ADR (average daily rate), integrated with OTAs (online travel agencies) and increased marketing efforts to emphasize the strengths of the property as a destination for tourists visiting our region. We were able to secure an SBA 504 loan with very good terms. We lived on property with our family and ran the Inn for the first 4 months after purchase, and now have innkeepers in place that live on site. I have learned a huge amount about the power of commercial real estate between the debt pay down, building equity, appreciation and depreciation. Since I am highly involved in the business it is also able to pay many of my expenses (vehicle, phone etc). Now seeking next commercial opportunity in my region.

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

I have a friend who started in the hotel industry by purchasing small mom and pop hotels. He has done well and now has 4 properties (currently listed for sale as he is entering another arena).

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

I cold called the owners after seeing my friend's success rate. The hotel was not for sale but sat down for coffee. There was an interesting coincidence in that our kids were the same age as their kids when they purchased the property 18 years ago. We hit it off and structured the deal from there, which took 4 months to negotiate and close.

How did you finance this deal?

I borrowed $475,000 from a relative who receives a monthly flat rate return from the business, but I have 100% equity. The other 25% of down payment was an "owner carry" so I have a small note payment to the past owners which has a balloon in 4 years. I utilized an SBA 504 loan for the other 80% which was split between the lending bank and the SBA so the bank carries around $1,500,000 and the SBA around $900,000. Our debt pay down alone is nearly $70,000 per month.

How did you add value to the deal?

So far: new septic, 5 new hot water heaters, all new towels and linens, new soaps/shampoos, lotion etc. New waterfront docks and kayaks/SUPs for rent. Revamped gift shop, updated website and redid logo, drone video of property and all new outdoor and room photos. Added online bookings and OTA integration. We also created systems for front desk procedures, cleaning and laundry and added on site innkeepers so that the business can be turn key should we decide to sell.

What was the outcome?

We were able to increase rates and occupancy and should be 10-12% revenue increase over past owner's best year. Average 4.7 rating on major review engines.

Lessons learned? Challenges?

In real estate based businesses you have to be ready for anything and be quick to adapt, make repairs, self-correct, and always be thinking about how to improve. Always look for ways to be more organized, and build a great team. If you do these things then I'm convinced any size deal is feasible which is why I am seeking my next opportunity.

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

Several if you are in my area.