Thank you everyone for the feed back. Ummmmm I would be looking for some funding. And I was actually thinking of not keeping it a hotel b/c it is located downtown I was thinking of a condo conversion for this bldg??? Any input on that??
For Perryct and broadcreek...I just posted this on a post commercialking had on financing:
"commercialking,
I have done only a couple of these deal in the states, none internationally. Even though I know of sources. As Aaron mentioned there are actually quite a few international brokers. You would be surprised at how many hoteliers here in the states own properties abroad. Here are the general underwriting guidelines associated with hotels:
Cap Rate: 7.35% to 12.1%
Best Rates are associated with: Properties with >1.50 DSCR, <65% LTV, >60% occupancy, market ADR, appropriate reserves for FF&E, Franchise Fees, Advertising & Marketing, Repair & Maintenance
Issues:
"Mom & pop" operators are being scrutinized
Non-flagged hotels have an adverse view. Interior corridors are viewed better than exterior corridors.
Spreads are impacted by variance from market ARD and Occupancy
Many lenders are underwriting to a Max. Occupancy of 75%
Net Cash Flow calculations include FF&E, Franchise Fees, Advertising & Marketing, Repair & Maintenance
Lenders may reconcile property value using the Direct Capitalization Approach on NOI and NCF
General Required Calculations:
Historical ADR & Occupancy
Departmental Revenue, Departmental Income, Total General Expenses, Operating Expense Ratio
Net Operating Income - Departmental Income minus Total Expenses
Net Cash Flow - NOI minus FF&E and extraordinary cap ex
Debt Service Coverage Ratio - NOI divided by Annual Debt Service
Cap Rate - should be applied to the stabilized income stream to estimate direct capitalized value to support loan request.
Hope this helps you out and if you have any questions feel free to contact me and I will try to answer them the best I can.
Thanks,
Mark"
Perryct - as far as doing a condo conversion you are talking a whole different beast there. Not sure he has done any, but Commercialking might be able to give you some advice in this area. I can tell you this make sure you know what you are doing and make sure you have the backgound in doing conversions. If you have not any conversions getting the money will be very tough. I tried getting some for a group in AZ that has experience and could not find anyone to invest.
I just got my Administrator license and want to start the process of getting my house licensed as a home for elderly. If my 4 beds, 3 bah home is worth $450,000 how much should I ask for sale, when transformed into assisted living home? Is there a formula?
I recommend a mandatory 40 hours of education for Administrators, even if you do not want to sit for the exam( which is good to do and is easy), because you learn so much and it costs around $200-$300
My instructor recommended only private pay customers, versus Medicaid. Medicare does not pay for assisted living.
Rules and regulations are very strict, licensing can fine you for ex. for the hot water being too hot. I suggest you learn how to apply for a license on the regular home, instead of buying already licensed one, which is I am sure cheaper.
And if you are not going to run the place, find a knowledgeable Administrator with experience.
Let us know how many assisted living homes in your area and what are the prices ( CA, FL)?
I would contact the ombudsman for your state to get the correct info on running an Assisted Living Home and rules that pertain to your state.
There is a difference between a Assisted living home and an Assisted living facility. It has to do with the number of people. In the state I live in you can have up to 6 persons with the sq ft of bedrooms of at least 120 sf. and egress windows in the bedrooms. ALH with 6 or less residents are still considered residential properties and will qualify for a regular residential loan with a few lenders. Qualifications would be 300 hrs of on the job experience to get licensed.
ALF on the other hand fall into the commercial lending and have all the requirements of a commercial loan. Your experience will come into play in getting one of these loans. The best scenario would be to build a new facility with 90 % LTV 40 yr fixed low interest loan. The properties I have financed for a developer used Medicaid residents to fill the property fast then replaced them with insurance/private pay thru attrition.
Insurance and private pay will be almost double the money but its important to reach stabilization as fast as possible to satisfy lending requirements and converting the construction loan to the permanent loan.
I would recommend filling your home with residents in the same way to maximize your income.
[addsig]
Thanks for your reply, cjmazur!
Would you sell through the broker or is there a good market, already interested in buying licensed homes ( I would only do up to 6 beds, so residential home for elderly)?
Price per bed really depends on several factors. You can pick these properties up for 30k per bed in Oakland. Get licensed and then get a contract for specialized services, such as drug and alcohol rehab, and the sky is the limit as far as what the state will pay you per resident. I have a beautiful facility listed in Oakland. The lender listed it at 2.55 prior to getting the facility licensed and has since then received the license. Really a steal for the right person.
from what I was told, the operator of the facility must me licensed as well as the property.
Once the administrator leaves (the previous owner) a new facility license must be obtained.
Personally, I would hold the property and lease it to an operator, unless the offer was too good to pass up.
People might want to double check their expectations of what the State and Federal programs will pay for the various uses (sober living, assisted living, drug treatment, etc.)
are you looking for money? are you gonna own and operate?
Thank you everyone for the feed back. Ummmmm I would be looking for some funding. And I was actually thinking of not keeping it a hotel b/c it is located downtown I was thinking of a condo conversion for this bldg??? Any input on that??
For Perryct and broadcreek...I just posted this on a post commercialking had on financing:
"commercialking,
I have done only a couple of these deal in the states, none internationally. Even though I know of sources. As Aaron mentioned there are actually quite a few international brokers. You would be surprised at how many hoteliers here in the states own properties abroad. Here are the general underwriting guidelines associated with hotels:
Cap Rate: 7.35% to 12.1%
Best Rates are associated with: Properties with >1.50 DSCR, <65% LTV, >60% occupancy, market ADR, appropriate reserves for FF&E, Franchise Fees, Advertising & Marketing, Repair & Maintenance
Issues:
"Mom & pop" operators are being scrutinized
Non-flagged hotels have an adverse view. Interior corridors are viewed better than exterior corridors.
Spreads are impacted by variance from market ARD and Occupancy
Many lenders are underwriting to a Max. Occupancy of 75%
Net Cash Flow calculations include FF&E, Franchise Fees, Advertising & Marketing, Repair & Maintenance
Lenders may reconcile property value using the Direct Capitalization Approach on NOI and NCF
General Required Calculations:
Historical ADR & Occupancy
Departmental Revenue, Departmental Income, Total General Expenses, Operating Expense Ratio
Net Operating Income - Departmental Income minus Total Expenses
Net Cash Flow - NOI minus FF&E and extraordinary cap ex
Debt Service Coverage Ratio - NOI divided by Annual Debt Service
Cap Rate - should be applied to the stabilized income stream to estimate direct capitalized value to support loan request.
Hope this helps you out and if you have any questions feel free to contact me and I will try to answer them the best I can.
Thanks,
Mark"
Perryct - as far as doing a condo conversion you are talking a whole different beast there. Not sure he has done any, but Commercialking might be able to give you some advice in this area. I can tell you this make sure you know what you are doing and make sure you have the backgound in doing conversions. If you have not any conversions getting the money will be very tough. I tried getting some for a group in AZ that has experience and could not find anyone to invest.
getting just lower paying medi-cal/medicaid pateints
high turnover
low vaacncy
keeping it a nice, pleasent place.
Licensing issues
positives
2000+K for a studio apartment
state, county state, federal perk, tax breaks, financiang breaks. (look into)
I just got my Administrator license and want to start the process of getting my house licensed as a home for elderly. If my 4 beds, 3 bah home is worth $450,000 how much should I ask for sale, when transformed into assisted living home? Is there a formula?
I recommend a mandatory 40 hours of education for Administrators, even if you do not want to sit for the exam( which is good to do and is easy), because you learn so much and it costs around $200-$300
My instructor recommended only private pay customers, versus Medicaid. Medicare does not pay for assisted living.
Rules and regulations are very strict, licensing can fine you for ex. for the hot water being too hot. I suggest you learn how to apply for a license on the regular home, instead of buying already licensed one, which is I am sure cheaper.
And if you are not going to run the place, find a knowledgeable Administrator with experience.
Let us know how many assisted living homes in your area and what are the prices ( CA, FL)?
I was told by a broker that 70K-100K per bed depending on occupancy is the market.
I would contact the ombudsman for your state to get the correct info on running an Assisted Living Home and rules that pertain to your state.
There is a difference between a Assisted living home and an Assisted living facility. It has to do with the number of people. In the state I live in you can have up to 6 persons with the sq ft of bedrooms of at least 120 sf. and egress windows in the bedrooms. ALH with 6 or less residents are still considered residential properties and will qualify for a regular residential loan with a few lenders. Qualifications would be 300 hrs of on the job experience to get licensed.
ALF on the other hand fall into the commercial lending and have all the requirements of a commercial loan. Your experience will come into play in getting one of these loans. The best scenario would be to build a new facility with 90 % LTV 40 yr fixed low interest loan. The properties I have financed for a developer used Medicaid residents to fill the property fast then replaced them with insurance/private pay thru attrition.
Insurance and private pay will be almost double the money but its important to reach stabilization as fast as possible to satisfy lending requirements and converting the construction loan to the permanent loan.
I would recommend filling your home with residents in the same way to maximize your income.
[addsig]
Thanks for your reply, cjmazur!
Would you sell through the broker or is there a good market, already interested in buying licensed homes ( I would only do up to 6 beds, so residential home for elderly)?
Price per bed really depends on several factors. You can pick these properties up for 30k per bed in Oakland. Get licensed and then get a contract for specialized services, such as drug and alcohol rehab, and the sky is the limit as far as what the state will pay you per resident. I have a beautiful facility listed in Oakland. The lender listed it at 2.55 prior to getting the facility licensed and has since then received the license. Really a steal for the right person.
_________________
http://www.gregorygarver.com[ Edited by SF_Broker on Date 11/09/2007 ]
from what I was told, the operator of the facility must me licensed as well as the property.
Once the administrator leaves (the previous owner) a new facility license must be obtained.
Personally, I would hold the property and lease it to an operator, unless the offer was too good to pass up.
People might want to double check their expectations of what the State and Federal programs will pay for the various uses (sober living, assisted living, drug treatment, etc.)