All Forum Posts by: Summer McDade

I am of the belief that sellers are motivated by a couple of things. Money, or time. However, when making an offer on property that must be sold to satisfy a federal judgment, what do you think is their motivation? In a multi-offer situation what would they choose? Obviously they need to get the payoff amount at the very least. But is time a motivating factor as well for the federal government or just having a good, clean, simple, transaction?

@Todd Goedeke

@Todd Goedeke There is high demand for lake property here. And currently, LOW inventory.

The parking is definitely an issue. But can be solved by negotiating the adjacent 1.5 acre lot into the deal.

I have someone willing to partner on the deal (YAY!) but I’m now reconsidering. As I would be the main manager and solely responsible for getting it up and running and profitable. With my current business, I simply don’t have the time and we wouldn’t have the funds up front to make that work. Plus, resale, even at a profitable business level, would be narrow and it would likely leave me still being the management. Which is what I don’t want.

It’s a beautiful dream. It’s just meant for someone else. I’m pitching the owner on listing it with me as an agent though and I have a few interested parties already. Since I know the property and the financials well, as we as the contagious enthusiasm for its potential, I’m sure it will find a new owner soon and I will get to stay there on occasion.

Some dreams just aren’t meant for you. 🤷🏻‍♀️ And that’s okay.

@Stephen DeThample It’s the silence after the “No.” that really sets it. 😉

@Ashley Salisbury you are exactly right. And honestly, I wouldn’t want to work with someone who would even ask for that. Maybe that’s just me. But I wouldn’t even entertain it. If it feels wrong, it probably is. And there’s a difference in trying to get a good deal, and straight up expecting someone to devalue their services and time.

@Joshua D. I’m here for the vacation rental idea. ♥️🤭

@Jerry W.

@Jerry W.

Thank you for the feedback!

The property isn’t very big at only 2 acres. And it is mostly hilly. The max amount of guests plus be 125 for any event.

The trash is pretty low. I agree.

The staff and maintenance is calculated properly though. It’s a 10 suite place. I currently own the cleaning service for all of my vacation rentals so I know the pricing on that end for flipping between guests in the rooms. The cleaning up the grounds after events would be a few charged to the wedding party on the front end. As part of the reservation fee.

The property is on a septic system and needs to be pumped out for maintenance once every 5 years. This costs around $300 to do. Should we have any issues and it need to be pumped sooner it would be the same cost. Should worst case senator happen and we have to completely replace the system it can cost up to $28k.

Landscaping has already been quoted at $300 per month and includes flower beds and mowing.

The “staff” will just be me at first until we get it up and running enough to add other services that would require more help. It won’t be a typical hotel. So it won’t need to be staffed 24/7. Each suite will have its own keypad lock with a different code each check in.

I hope this gives a better view of my plans.

@Todd Goedeke

@Todd Goedeke

The net income for the last three years doesn’t accurately reflect the market. The people who own the place have owned it for 19 years. They never updated the furnishings, they never listed on vrbo or Airbnb, marketing was basically non-existent, they did a few weddings over the years but prohibited alcohol on the property (which, in my opinion, severely limited their target audience in a rural setting) and the owners are older now and wanting to retire. She hasn’t wanted anyone staying there because she has to take care of them and then clean after and she just can’t do that anymore. So once it was paid off a few years ago and she didn’t need the income really (she stated it was a “hobby”) she just didn’t really do anything with it.

I have a massive local network built over the last several years of having my own vacation rental management and consulting company. Local realtors depend on my information and data on the local str market to help their clients understand the market as well. The local vacation rental market here is and has been my full time career since 2013. I hold a real estate license here as well as flip occasionally. But this would be a monster flip for us. And we couldn’t do it alone.

The lake is about 41,150 acres of water and 880 miles of shoreline. There are docks in place and having boaters dock there is a major draw. It opens door for others just visiting this side of the lake for the day and they cost less to us while spending more in the restaurant/bar. But I would likely want to put a few more socks in for the actual suite rentals to have for their boats.

I say 0% occupancy during the off peak being ultra conservative. Since the lake water goes down during this time and it’s cold there isn’t a huge draw for outdoor activities or vacations. However, during this time we would likely be focused on local events. Holiday markets, construction workers needing somewhere to stay, (we have a lot of this since there are always new developments popping up here, workers working on the dams nearby, etc.) and we would likely have small families or retired couples waiting for their homes to finish construction who would stay longer term 3-4 months. This is normal here. And I say we can expect all of this because there aren’t really any hotels in the area. There’s only 1 I know of on the lake. And it’s on the other side from this. So roughly 40 minutes away driving. The other hotels in the area are further away.

I just want to be conservative on numbers for preparation for worst case scenarios.

This is a similar business model but in a larger market. We are rural and would depend more on the current regional tourism, local businesses, and local population than the model here.

https://inncahoots.com/

Thanks SO MUCH for your feedback. I LOVE thinking through deal or no deals. Haha and definitely let me know what you think and other other questions.

@Ben McMahon

Wow! That sounds exciting! Hospitality has a TON of potential. In my opinion.

This place doesn’t have a lot of acreage. So parking would be limited at first, but there is room to expand the parking. Also, covid has everybody where they are no longer doing 400+ guest weddings. So 100-125 would be perfect.

This place has already been running for a few years as a wedding/vacation rental place and the county is already taxing it as such. Plus the lake where it is, is a vacation destination so the homes are somewhat spaced out and the ones around it are also vacation rentals.

It’s a lot of hats for sure. I wouldn’t immediately start all of them. It would be a step process prioritizing the immediate income generating activities to create momentum and profit to startup the others.

I’m not too worried about restrictions. Even during the first part of covid our state didn’t shut down. My current vacation rentals company took extra precautions and changed cleaning procedures. But 2020 has been our best year ever.

@Joseph Firmin

Thanks so very much for your reply! I’m worried this is too far out of reach for me. I like this idea though. So I will consider it and see what they think about it. It’s a good strategy.

I am looking at a potential property. Large (7,000 sf +\- as well as 2 acre property, watercraft docks and almost 300 fr of waterfront on a lake) boutique hotel and event space. I am local to the property and would manage it myself as I have the experience and systems and staff already to handle the entire day to day.

The sellers are somewhat family friends and are open to some seller financing. I would need to update the interior furnishings and flooring immediately and do some structural (exterior desk system) repairs/replacement within 2 years.

The property is available to me at a small discount. It has been run in the past as a vacation rental and event space. Marketing was severely lacking. Weddings were done beautifully and run well, despite the prohibition of alcohol on the property.

The owners haven’t allowed events there in a couple of years now and the income isn’t showing the true potential of the property in my option. I run several successful vacation rentals in the area and am very familiar with the value and nightly pricing averages here. I am having trouble figuring out the best way to go about it financially. I absolutely can’t do traditional financing. And i would LOVE to be able to get an investor to pay the down payment. Sellers will do partial seller financing and I have floated the idea of them doing seller financing for a majority of the purchase price and then do a profit sharing option for them to stay on. How do I realistically make this work? My husband thinks I’m insane for even trying this but I’m not giving up yet. At the very least it’s a learning experience on putting together deals.

Here’s what I have worked out so far.

purchase price: $900k (was listed last year for $1.3m and the market has only gone up.)

Immediate upgrades and repairs: $20k min. (I could use cash for this if I don’t have to pay a down payment.)

Comps support: $6000 each wedding for up to 300 people. (Other wedding venues nearby did 32+ weddings last year) we could also do more entry level weddings starting at $3000 for less days.

Occupancy rates: Vacation rentals in this area occupancy rates are currently 56%. November typically still sees football bookings and weddings (we are super close to an SEC college campus) and Thanksgiving. Typically we see a decrease to nearly 0% occupancy from December-March 1. However, I believe this boutique hotel setup will be able to have good business year-round with the proper marketing and amenities.

Projected annual gross income: $150,000 - $250,000

Current setup sleeps 30 people. However, I plan to increase this number to 50 max.

Add a bar (that would also be open to the public and a hot tub (which has proven to increase income for vacation rentals here.)

There is also a commercial kitchen and laundry in place.

(Having the bar open to the public would be another Income stream for the property. I would need someone with bar experience to inform me on what I could expect on that end.)

Operating expenses average currently:

(Monthly)

Power $565

Water $55.55

Internet $167.89

Gas $162.37

Trash $17.30

Staff $1000

Maintenance $200

Total current operating expenses: $2168.11 (monthly average, and I would estimate for this to increase by 10%. Bringing the monthly expenses on average to $2385.

Property taxes: $6297 (annually)

Insurance: $2763 (annual)

What’s a good interest rate for seller financing?

Fair down payment if I HAVE to?

How long should I make the terms?

They are open to staying on and profit sharing as part of the deal, but is that even worth it for either of us? Should I put a time frame on that end as well? So profit sharing for X years OR until X percentage of the loan is paid off?

Please help me focus on the right option for everyone for this to be able to move forward