All Forum Posts by: Winston Parks

Awesome info!

@Account Closed the property is in TN.

@Dan Wallace thank you for the feedback. I do not intend to operate it as a hotel/motel after the purchase. Plan A is to rehab the property into efficiency/studio condos and sale. Plan B is to rehab the property into efficiency/studio apartments and rent in 3/6/12 month leases. My intention is to make sure I do not over pay for the property. I reason that if I can get a good grasp on the way a motel/hotel is analyzed for purchase then I may have found a gem.... Emphasis on "may".

@Shital Thakkar thanks for the input. This sort of pricing is vastly different than what I am used to. 

Hey BP,

I am looking for some input on how I may handle a current opportunity. There is a motel in a fairly nice area of town that is a total eyesore. It attracts unsavory guests and has obviously not received any investment for upkeep. Today I spoke with the owner via phone and he said he would sale and asked that I make an offer. I found that odd as I do not have any information to make an appropriate offer. Here are my questions:

1. Would I price this just like any other commercial property? (cash flow/CAP)

2. Does the land come with the business? It does in any other multifamily deal so I assume it would in this case.

3. Once I have the cash flow and cap rate for the area, how would I go about discounting the enormous amount of renovations that will need to be done?

4. Will I simply take the cash flow/cap and there is little negotiation? 

5. Is it customary for a buyer to ask for a higher cap rate due to the amount of future investment needed or should I plan on getting an inspector to give estimated costs of repair which will be taken from the price?

Any feedback or help is greatly appreciated!!

Thanks!

Hi @Wendy Day, any luck finding your deal?

@Trevor Haasch any updates on this project? I am also in a similar situation and would appreciate any feedback.

Best,

@Leo K.

This is info is great! Thank you. I notice you are in Nashville. Have you done any multifamily projects in the area?

Thanks again!

Thanks @Jonathan Towell for the quick feedback. I believe you are correct on a traditional FHA loan; however, an FHA 223(f) allows for commercial and residential with commercial not representing more that 20% of the square footage. Again, I am not 100% sure and would love to get some guidance from anyone who has built a 8-12 unit dwelling.

@John H Huston that sounds awesome. Best of luck on building your destination resort.

@Jim Bown, how is your investigation going? I am also researching the best way to convert a 35 unit motel into efficiency/studio housing. The original idea is to sale half the units to businesses in the area and keep half to rent out on Air BnB. I am very curious to how your experience is going. Good luck!

@Jessica K. Are there any updates?