All Forum Posts by: John K.

Xero users, I need some help. I've moved from Excel to Xero and am need of some help setting up accounts for an LLC started last year. I've been trying to piece together how to do this from lots of Xero help topics and forum posts, but can't get a straight answer on how to do this.

This is for a property purchased in 15 years ago that we moved into the LLC last year. Not sure how the opening balances for the fixed asset need to be setup for correct depreciation.

Also not quite sure how to set up the loan correctly so that principal and interest are accounted for correctly. 

Any advice? I'm willing to pay, too.

And maybe I should clarify, they weren't saying it might not get bad, just not horrible and maybe not as bad as other types which are more dependent on the economy. I much more concerned about losing a property and my capital, than having to hold longer. I don't need the return now.

Larry, maybe. I have seen properties do fine in a recession. I just don't know about this particular type. I've asked for data from years around 2008. The current owner has been running it for 20 years, so the answer is there.

Realized I never came full circle on this. We did the first 4 things. Of the optional, we painted all the cabinets white and did new tile in the master bathroom. Didn't do new flooring anywhere else. Didn't install washer and dryer, but did stage with a refrigerator. 

But the big thing was, after trying to sell for another 2 months with the same agent, fired the agent. Took it off the market for a few weeks, hired a new agent familiar with the area, re-staged, and sold in a week at over $40k higher.

Lesson learned. Even "rock star" real estate agents can't get the job done if they don't understand the subtleties of the local market. Find someone that truly knows what's going on in your neighborhood.  

Here are some of them that make a difference to me.

• Target COC is 7% and 14-16% IRR over a 3-5 year hold. A little less than what I normally see for apartments. But there is a 12% preferred rate for investors. Couple points with this. If at any time the NOI won't support the 7%, the sponsor will make up the difference. At the time of sale, the investor gets paid first until we hit the 12% preferred rate. After, the split is 90/10 sponsor/investor. So I would be trading back end upside for a higher probability of hitting the 12%. Notice I'm not saying guarantee.
• The sponsor does not get any fees for any milestones until the deal closes on the back end. Additionally, they put in 10% of all incoming investment. They get a $100,000 investment, they put in $10,000 of their own capital. What I like is this aligns the sponsor with the investor. Too many deals I see pay the majority of the sponsors fees on early milestones, leaving the alignment skewed. At that point, they are playing with house money. The risk/reward is skewed and they may take on much higher risk, even when they still have "capital in the deal."
• The sponsor is much larger and have a significantly larger balance sheet than most syndicated deals I've seen. They could easily do this deal without any investment many times over. This means the above is more believable. 
• The sponsor, being quite large, is heavily connected and this is run more like institutional type deals. There reason they are looking for individual investors for a large portion of the deal is we happen to also be their clientele. Luxury boutique hotel, right? So it's partially marketing. But being so, I was extremely impressed with the class of auditors, insurance, etc... It also means they are well connected to the eventual exit partners. 

I'll try to think if there were any more differences, but these were the main ones.

I'm a bit concerned about the impact of economy changes, but of course, there is a sales pitch around this. Luxury boutique hotel patrons aren't affected by the economy nearly has much as general public. Not dependent on business travel. People may cancel a trip to France for wine tasting and go to California wine country for the "cheap" vacation. Etc...

There is a very large value add portion, with all sorts of revenue channels I'm not familiar with. Spas, food & drink, etc... 

No one can ever answer my questions on potential fraud. So there's a strike against them (and every one I've looked at).

I've invested in a couple large syndicated deals, but recently had one referred to me by a friend. It's a luxury boutique hotel in the wine country. The deal structure has some subtle, or maybe not-so-subtle, differences compared to just about every apartment deal I've seen. And these differences are quite attractive. However, my hospitality knowledge is lacking and I'm looking for some advice. Anyone on BP do these types of deals and willing to network a little?

@Dave Van Horn Will you be at 12% on your next fund (of which I'm patiently waiting for)? It appears that on your website the listed preferred rate is 10% now. If that's the case, interested to know why.

@Patrick Desjardins Thanks, but I know how to search. I want to discuss it privately, which is why I requested a PM.

I'm very interested in notes lately and might start with the PPR fund. I'm looking for other PPR investors willing to share with their experience with me. Hit me up with a PM, please.