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I've purchased quite a number of multi-family and SFR homes in the past few years and have been wanting to buy a hotel for some time now. The upsides seems higher, but of course that brings with it higher risk and more headaches. Luckily for me I'm ok with that, but I prefer to bring a partner onboard to help with the downpayment and/or operations.
I found a good deal in Palms Springs, CA for a 9-room boutique hotel that has a lot of potential for upside through updates and expansions, increasing cashflow substantially, and also providing the opportunity to then refinance and pull cash out. Its current NOI is about $70k and they claim NOI is low because of lower occupancy rates during the pandemic. Market research confirms that occupancy rates have been lower than pre-pandemic levels, but are still moving up toward pre-2020 levels, so increasing NOI should be fairly easy. The bigger play here is expanding, updating rooms, increasing daily rates, and expanding marketing to increase occupancy rates. This would add tremendous value to the property in addition to increasing NOI and cash flow.
My question is, what type of creative structures could I offer to someone who puts up the 20% down payment? I was thinking a Kevin O'Leary type of deal where they receive their money back first and also receive either a fixed interest rate for a set number of years, an equity position, royalty from each booking, or a percentage of NOI each quarter.
Does anyone have any suggestions as to what a fair, but yet enticing offer would be to someone who puts up the 20% down payment on this? Also, feel free to reach out to me directly if you're interested in joining me on this deal.
I found a good deal in Palms Springs, CA for a 9-room boutique hotel that has a lot of potential for upside through updates and expansions, increasing cashflow substantially, and also providing the opportunity to then refinance and pull cash out. Its current NOI is about $70k and they claim NOI is low because of lower occupancy rates during the pandemic. Market research confirms that occupancy rates have been lower than pre-pandemic levels, but are still moving up toward pre-2020 levels, so increasing NOI should be fairly easy. The bigger play here is expanding, updating rooms, increasing daily rates, and expanding marketing to increase occupancy rates. This would add tremendous value to the property in addition to increasing NOI and cash flow.
My question is, what type of creative structures could I offer to someone who puts up the 20% down payment? I was thinking a Kevin O'Leary type of deal where they receive their money back first and also receive either a fixed interest rate for a set number of years, an equity position, royalty from each booking, or a percentage of NOI each quarter.
Does anyone have any suggestions as to what a fair, but yet enticing offer would be to someone who puts up the 20% down payment on this? Also, feel free to reach out to me directly if you're interested in joining me on this deal.
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