Motel Financing Alternatives
Any help on this would be much appreciated. I am in contract to purchase a flagged motel in Ohio. Purchase price around $1.5 million. I am putting around $500 K into the deal. The motel needs work and the numbers are not that great at the moment but it has huge upside potential. Since I am a full time real estate investor for the past 6 years I have tried not to show any income on my tax returns. My credit score is excellent (high 700s). I am trying to get a stated income loan and do not want to go through the BS of getting an SBA backed loan. My problem is that all of the potential lenders and banks I have spoke with are leary to finance this project because I do not have any motel management experience. They all want me to hire a management company to do the management. There is just not enough "juice" in the deal to have to hire an outside management company. I plan on managing the motel myself and over time putting money into the property to fix things such as the roof, blacktop, A/Cs, etc. and I know I have the management skills to turn this around and bring the numbers up enough to where in 2 years sell the property for around $2.3 million. My question is where are the lenders for these projects? I know they are out there. 
[ Edited by Mize on Date 07/28/2005 ]
I forgot to mention that the property is in a great area of NC.........excellent location, location, location. I anticipate this market to do really well in the next few years b/c home prices, etc. are still very affordable in comparison to the truly hot appreciating markets in the US.
is that a great enough reward for risk?
What are the planning/zoning/etc. barriors to converstion.
Well a couple of things:
Its an interesting project. The existing financing is not particularly important since you will need to refinance to do a condo conversion anyway. So a net before debt figure is more important than a net after debt figure.
A 20% margin on a condo conversion is actually pretty slim. There are lots of carrying, marketing and conversion costs that need to be considered.
How did you arrive at the post-conversion values?
You can register an e-mail address even if you are not a paying member and then people can e-mail you. Although a guy thinking about doing 3 million dollar deals too cheap to lay out 100 bucks is something you gotta wonder about.
commercialking,
Would you mind telling me where to post my email address so that others can see it without breaking the rules of the forum?
Thank you.
Well as far as posting your e-mail address goes go to "my TCI" then "my info" should be a place there to add it.
legal is going to be huge. In CA to comply w/ the land act, subdivision map act and to draft a CCR / form HOA for a 52 unit complex, I was given a budget of 100K.
Good luck.
you also have to check yes under "do you want other TCI users to be able to contact you via e-mail" in e-mail preferences on that same screen
Chet:
Wow, here in Chicago you could get that done for less than 10K.
there are some loop holes.
<5 unit or same owners since 77. The lagal can kill you here.
Hi, I am considering buying an apartment, which is currently being renovated. This is in Virginia. I need some help in hiring some consultants to do the condo conversion. Any suggestions?
Can anyone tell me how to come up with proforma expenses for condo conversion? Is there a book or publication?
I understand that there will be legal fees and upgrade costs. Each property will have different upgrade requirements. What other costs should we consider? How do we put a number to them?