All Forum Posts by: Chris Winterhalter

@Reginald S.

If you can quickly figure out land costs (somewhat) and it makes sense at the 100k number then you might want to get an option on the property.  If you are indeed able to wholesale the deal it probably won't happen quickly and will take a great deal of your time networking in different circles.  More than likely a residential investor isn't going to purchase the property so you would be talking with small hotel owners, management groups, developers, brokers etc.  

Has the property owner listed the property for sale ever?  Put together some more information and share it with the group.  I doubt you'll have someone steal this "deal" away from you on BP.  

@Reginald S.

Interesting situation...

Can you give us more information about the deal?  

-Type of structure and age, 2 story exterior corridor, 70's motel...etc etc....Do you have a photo?

-Location, where does it sit in relation to other hotels, business, highway, etc. 

-How big is the lot and how much is the land worth?  It might be a land play if it's in a solid location.  

-Do you know anything about the history of the hotel, when it was built what flag did it carry, what flags has it carried over the years etc.  I'm sure it was an independent when it was last opened.  

-What's the highest and best use?  This gets back to the land value and location.  I have very little information about the building but I can tell you if the location warrants any type of decent flag then it would need a large rehab.  Think 35k+/key.  

-Having a restaurant, swimming pool, and ballroom are generally not pluses in midscale down to economy properties.  Actually limited service is preferred today, selling room nights is much more a real estate play than running the business of meeting space/restaurants etc.  Historically hotel restaurants lose money in this space.  

-Comparing other hotel tax assessments in your area doesn't tell you anything. You can easily have a brand new 4 story Hampton Inn worth 125k/key right next to a two story motel that trades at 20k/key. Getting a STAR report from STR where you compare average daily rate (ADR) and occupancy (RevPar) to similar properties in your comp set would be a starting point. Talking to a hotel evaluation or hotel broker about similar sales in the area would be the next step.

I would talk with a local hotel consultant, feasibility person in the area.  If you don't want to spend the cash going that route then search for hotel management company or hotel development company in your area on google.  A few names will pop up, give them a call.  They will want to know that you are credible, if you're not looking to buy the property yourself be up front with them.  The hotel world is not like residential, it's a very small circle of players.  

@Account Closed

As others have mentioned consistency is key. That doesn't mean you won't tweak your campaign as you continue to learn your market and successful techniques however that does mean mailing over an extended period of time. In my opinion you really need to mail for 12 months consistently (not necessarily to the same list). Over this period of time you will be following up with old leads that were not motivated at the time. You will be refining your approach to converting leads. And you will be constantly tracking your results. 6 months should give you a good gauge however if you get really good at following up with old leads you will continually increase your ROI on your mailing campaigns as time goes on. Several years ago when we use to mail to foreclosure lists some of my best deals came from leads that were 12 months or older. Good luck!

@Eric Tait

Awesome job on the 2nd syndication in Belize!  Can you provide any more project details? I would love to hear more about the developments including some basic pro-forma information.  Are they in Ambergris Caye?  I've been wanting to visit for a dive weekend but haven't yet been able to get down there.    

@Kevin Cuthbertson

Will the owner's seller finance the deal?  Does the condotel meet your financial & investment goals?  If you can underwrite the deal within your parameters I wouldn't say it's a bad investment.  However leverage not only plays into the acquisition but also the disposition.  Even if you can obtain financing make sure you understand that your resale could be affected by the credit markets.  

Historically condo hotels haven't been the best investment.  A lot of product nationally was built during the boom years and was either over leveraged or wasn't able to meet projections (& was also over leveraged).  It left a bad taste in a lot of peoples mouths in the hotel and vacation ownership businesses.  Certain developers & operators have had success in certain locations.  But in my opinion it's been far and few between.  

@Nicholas Moffett

I would search the forum as the question has been brought up several times in the past. 

http://www.biggerpockets.com/forums/432/topics/931...

Frank Gallinelli has several books on the finance side which are great for getting started & brushing up.  

@Jay H. 

Awesome progress so far!  Looking forward to hearing more details about the project.  

@Adam Morgan 

Since you're looking at a 15k/unit rehab, financing will be more difficult.  To get the deal done you will need a partner like @Jeff Greenberg mentioned.  If you are newer you will likely be giving up 70% of the equity in the deal (which is fine). That number can largely change however it will depend on the partner, deal, etc.  Your partner will need a solid relationship with a local/regional bank to get through construction, cash, & experience.  Even with a construction loan you are probably looking at bringing 25% down for the acquisition and construction loan.  

Is this deal listed?  If it is, it will be harder to find a partner.  Why hasn't it sold?  Multi-family 100+ is extremely hot right now.  Cap rates have compressed across the country.  There is a ton of money chasing the asset class with deals far and few between.  True 10 cap deals even on turn arounds don't exist at this point in the market.  Is this a bad area, class D? 

If the complex is actually a deal then finding a partner will be somewhat easier.  However you will need to get it in front of the right people.  Do you have the ability to bring any capital to the deal?  If you can structure the deal, bring some cash to the table, and find the right partner you might be able to make it work.  There's a lot to learn when going through a deal like this though.  I would be connecting with the local property managers that manage larger complexes.  Good luck! 

As a hotel contractor we deal liquidators and hotel liquidations on a regular basis.  I will make sure to post our next project on BP since there is obvious interest!  

@Adam Morgan 

It depends on who's dime you're going to train yourself...because there will be a learning curve, and the curve may or may not require large capital calls.  If it's on your dime, you have strong income and solid liquidity for both down payment and large reserves then I would say buying a 100 unit building is in theory better than buying smaller complexes.  However that's barring that you have a strong team, correctly buy, reposition, and stabilize the asset.  I even think that you can account for paying a little more than market if you are able to learn the business and weather the storm.  However buy the wrong building, at the wrong price, and you could lose a lot of money.  Can you lose a lot of money and still survive?  Larger complexes have a lot of advantages including operating efficiencies, availability of debt, and resale markets.  

Now if you don't have the available cash or high income it might not be the right investment to jump into.  You would be risking other peoples capital without having solid experience.  Add in a very HOT multi-family market and you might find yourself with an asset that nobody else wanted (for the right reasons).  

I have a small portfolio of about 120 units all located more or less within a 1 mile radius.  The larger complexes perform better than the smaller properties (& I've seen that over several years).  I'm been searching for another 50-100+ unit complex to add to the portfolio for the last 6-9 months without any success.  And every time I get to the offer stage I'm shocked at what people are paying for these assets.  

I'm definitely a proponent of having large goals and going after your dreams.  So I don't want to discourage growth or success.  It can definitely be done, ask @Joe Fairless .  He purchased a large complex out of the gate and is probably much happier he did as opposed to compiling a bunch of 5-20 unit properties.  However I'm sure it has come with its challenges.  Good luck!