All Forum Posts by: Jimmy Klein

@J. Martin

Exactly. My partner is looking for land to build the new Hilton midscale brand. The issue with waiting for a low cycle is that you will be waiting a very long time. The recession is still in fresh in the eyes of hoteliers. Outside of tier 1 markets, valuations are high actually. We are not likely to see a low cycle for another 7 years or so. Also you look at cap rate, but my partner and most other owners look at GRM multiples. He has actually bought properties for the same if not cheaper valuation in this cycle. Cap rate doesn't apply that well in this business because expenses can skew the numbers greatly. In certain markets I wouldn't touch hotels, but most markets have reasonable valuations still if your buying based on GRM. Are you looking at a specific franchise your looking to purchase?

Fundrise is pretty strict who it does business with. You'll need alot of experience and be a large firm in order for them to list your deal.

No lender does 100% regardless of the rate since you have to have skin in the game. If a lender does 100%, they might as well just take control of the whole asset and get access to all the cash flow instead of some of it.

I have an investment home worth about $450k. The loan amount is $280k. I am looking to pull out $100k or even more in a refinance. My rate is currently around 4%. Keep in mind, this is an investment house, not sure if I get a better rate. Anyone did a refinance of an investment home or anything like this before.

I know people that own them. They are extremely profitable, but be prepared to sweat and bleed. The maintenance costs are high as are utilities, but the repairs kill you. The owner I know has done exceptionally well, but the problem he said was that machines break down daily. The types of clientele that come there also have no regard for property and damage the machines badly too. If a machine goes offline or breaks and its busy time, you lose money on that. Even during slow times, it requires having someone on site, which is a salary that needs to be paid, so during slow times you lose money actually. 

As a current owner, I can tell you in this business you can achieve great returns, but you have to know what you are doing or you can lose your shirt. First thing to know is, do you want to be an owner operator or an investor. There is a big difference in the two. Since you are new, I recommend staying with flagged properties that way you get support from the franchise and access to loyalty members. I really recommend you invest with others before operating on your own. When I first started out, I invested with a family I knew well. They are good operators. I still invest with them, but have some hotels that I operate on my own as well. 

Yes. Are you looking at something specific? Flagged? Or you just interested in getting to know more about the industry.

@Matt Dorsten

I have worked with large development firms that assume some sort of vacancy even in NYC. I think its kind of ridiculous not to do so. As for the billboard, some agreements make the landlord cover upfront costs such as new billboard banners or more importantly you might even have to pay leasing commission to a broker to help you get a company interested. Same thing applies for you 2000 sqft steel building. If you can build steel framed buildings for $80 sqft, please call me now. I want you to build for me. Don't forget tenant improvements and leasing commissions as well. Ultimately you know this market and property better than anyone here. I haven't seen it. I know nothing about it, but you got to remember there are a lot more variables in play when you are talking about demoing and rebuilding. 

Your analysis assumes no vacancy and your best case scenario is 9 cap for all the work and effort you would do to renovate the buildings. If they are as bad as you say they are then you are dealing with more than just renovation, who knows what the underlying costs are such as roof, piping, etc. You might have not factored this in, but if something breaks your budget is going up. Then don't forget about any mold which might be around. 

First confirm from Choice if there is a PIP, which is a mandatory renovation. Yes, pricing is based on market as well as brand and various other factors. So for example, an econo lodge in a market like this I would honestly pay 1.5x-2x revenue. For a Holiday Inn Express in downtown Dallas is a different story. A hotel in NYC will go well over 6x. It all depends.