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Need about $1,000,000. SteveO, Diane, ?

Russ H

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Just got done doing our estimates for this coming year.

Need about $1M to finish our projects.

Already have $473K, but will use some of that in Dec to pay bills (about 30K worth).

So we'll need to get about $600K, more is better.

Have not refi'd in a while (10 months), given the market and current loan climate.

RE in Napa is staying steady-- not decreasing, but not appreciating much, either.

Funds needed ($1M) are to finish off a B&B-style 3BR cottage w/innkeepers quarters (need about $150K for that), and finish off a 12-room B&B w/permits for 18 rooms (need about $850K for that).

We do have small amounts of equity in our other RE.

We also have a B&B worth $3-3.5M, with only 1.05M in loans on it.

So we're planning to tap into the equity of the B&B.

Part of that $1.05M loan is an SBA 20yr fixed rate loan for about $400K. Like to keep that if possible (it was a *great* deal, super low interest rate, got it in '04).

But we need to refi the other $650K of the B&B loan anyways (loan ends Nov 08), so we might as well do this at the same time.

So what are our options?

Ideas?

As you all know, I'm also open to creative (out of the box) ideas.

More traditional ones are also appreciated. :)

-Russ H.
 

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reipro

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Russ,

I have always been fans of smaller local banks. You tend to get better service less upfront costs. Most of them would be more than happy to take a 2nd on something that is worth 3+ million and the first is only at 1MM. Even if you get the whole 1MM from them you are only at a 66% LTV. Here are a couple of banks that might fit. Make sure you ask for the commerical loan officer or they will always send you to the mortgage guy and that is not who you want to talk too.

  1. Napa Community Bank - (1)(707) 227-9300 - 700 Trancas St, Napa, CA
  2. Get Directions
  1. Westamerica Bank(707) 258-3128 - 1400 Clay St, Napa, CA
 
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Russ H

Russ H

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David-

We agree with you.

We have half a dozen of our corporate entities at Napa Community Bank, and have a personal banker.

We also have personal (and past business) relationships with Vintage Bank of Napa.

And we have our B&B/SBA loan through another local bank, known for working w/B&Bs. They were the ones that got us an SBA loan in 21 days (a new record for their finance dept).

Sorry I didn't mention this stuff earlier. :smx4:

-Russ H.
 

CRBFL

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I'll throw you $100 for being such a swell guy if you'd like. :)
 

Peter2

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Have you checked between the sofa cushions? Kitchen drawers can also be very good when it comes to finding capital.
 
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Russ H

Russ H

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Peter2 said:
Have you checked between the sofa cushions?
:)

Yep.

Where did you think we found the $473K? :smxB:

I dunno about the kitchen drawers, though.

All I'm finding there are steak knives and some rubber bands. :cool:

-Russ H.
 

SteveO

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It sounds to me like your avenue is already laid out. The refinance of the main B&B looks to be the logical choice based on the information given.

Other alternatives may not be so inexpensive.

Angel investors are always an opportunity to explore. The cost to you may end up over 20% when all is said and done. They would usually want 8% paid out monthly with the rest coming at the end of the deal. You could borrow from investors to finish the buildings and refinance to pay them off once complete.
 

Diane Kennedy

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Okay, total brainstorming:

Time shares
Hard money
Niche market and raise your prices
Create new cash flow from the property
Mini storage, vending machines, illegal gaming,
Lower vacancy (not sure if this is an issue or not)
Auction off something on eBay (something weird that gets attention)
Turn it into a brothel

Okay, I'm done....
 

AroundTheWorld

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I second SteveO, but for the fun of brainstorming.....

:coffee: JV with someone on 2 deals.

Deal one: they bring cash to your deal
Deal two: in exchange, you provide knowledge, time, credit? to their deal

:coffee: Barter with some of your contractors (something like: http://www.tradia.net/ ) Contractors like a night away at a bnb.

:coffee: Envision it and believe that it will happen!

:coffee: Sell one of them

:coffee: Make a DVD about how to develop/rehab bnb's and sell it on ebay.

:coffee: Print a Bank Statement and write in 1M for the balance. Look at it daily. (idea from the Secret)

:coffee: Any chance of getting your super duper interest rate on a larger amount? OR another SBA loan on the expansion project?

:coffee: Go to one gazillion banks and refine your presentation with every "no" until you get a "yes"

:coffee: Close your eyes and "feel" the money in your hands.

:coffee: Secure the loan on your expansion with the 2M equity in existing BnB

ok. I'm done too.
 

AroundTheWorld

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opps... forgot to add...

You'll notice that I made several references to the mental exercise of believing that it will happen. This has been such a key for us in the last couple of years. I don't know hwo many times we have seen a deal and wondered "where will the money come from"... having absolutely NO IDEA where the money would come from.... only to have the money come.
 

Diane Kennedy

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opps... forgot to add...

You'll notice that I made several references to the mental exercise of believing that it will happen. This has been such a key for us in the last couple of years. I don't know hwo many times we have seen a deal and wondered "where will the money come from"... having absolutely NO IDEA where the money would come from.... only to have the money come.
Love the brainstorming.

I was going to suggest that Russ develop a special pancake mold that has a religious icon on it and then auction them off on eBay...to gain nationwide attention as a shrine. But maybe that was a little too far out there....
 

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AroundTheWorld

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Love the brainstorming.

Yes... love Brainstorming. Hubby had the brothel idea too.... but I told him, "Diane Kennedy beat you to it!!" He got a kick out of that!

Power in the numbers.... Russ - maybe Diane is onto something with this Brothel idea!!!
 

RE Taipan

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w/ $473K already, I have one word....."Lotto"

(prob thought I was going to say "plastics")

:)
 

kurtyordy

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Thinking outside the box is a specialty of mine.

1. Create an opportunity based social experiement. (not a raffle) sell 1,000,000 people the right to participate in the experiement for one dollar. The experiement being that they have one month to pick from amongst themselves in an online forum who gets to stay at your place for a year. If not chosen in a month, experiement closes. Also, the winner must have a majority vote to win.

2. Allow people to 'own' a room for a year, during which time they would get the profit from that room, plus at the end they would get thier money back.

3. Sell lifetime subscription. 35 people for 30k each and they are entitled to 12 nights a year for life, non transferable, no carry over. Make it exclusive, application only type thing, then once you have a list of about 100, pick the oldest looking ones so the odds are more in your favor.

4. host the fastlane beer and breakfast thingy in Dec. at your b and b. Sell 10,000 tickets for $100 each. Make certain you specify non refundable. Once the first 200 or so cram into your place, turn the rest away and tell them they should have read the smal print more closely. It may cause some negative emotion in the forums, but you will have 1 mill free and clear in your pocket, so who cares :)

That is all for now. If you need any other wacky solutions, let me know and I will try harder.
 

Diane Kennedy

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3. Sell lifetime subscription. 35 people for 30k each and they are entitled to 12 nights a year for life, non transferable, no carry over. Make it exclusive, application only type thing, then once you have a list of about 100, pick the oldest looking ones so the odds are more in your favor.

That is all for now. If you need any other wacky solutions, let me know and I will try harder.
I want to build on kurtyordy's idea - Use breakage in your model. Sell 50,000 people the right to use the entire B & B for 1 week (sometime within the next 10 years, black out days, all that stuff) for $1,000.... at $20 down, $5/month - I'm just making up numbers, but make the buy-in really low, figure most people will never use it. Excess cash goes into your advertising/PR costs as you look for a hook... For example, target Japan - "American dollar sinks even further! Own a part of the California dream for just $20!!"

Another one - create a reality show! Dog the Bounty Hunter is gone...How about McLovin (maybe shouldn't take MJ's original handle away from him) the B & B Owner - post it on YouTube and do a strong viral marketing campaign behind it

Keep 'em coming. This is fun! I don't know how useful, yet, though Russ. But, we'll get there.
 

AroundTheWorld

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Here is something I've always wanted to do...

Run an essay w/ an entrance fee of, say $20 - winner gets a SFR, free and clear. I've seen this done w/ sailboats.

I always thought this would be fun to do with businesses too... take a failing biz that someone wants to get rid of... run a contest - how would you turn it around? winner wins the biz - you get the entrance fees.
 

lkn2bfd

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Here is something I've always wanted to do...

Run an essay w/ an entrance fee of, say $20 - winner gets a SFR, free and clear. I've seen this done w/ sailboats.

I always thought this would be fun to do with businesses too... take a failing biz that someone wants to get rid of... run a contest - how would you turn it around? winner wins the biz - you get the entrance fees.
This was done in a movie an old lady had a restaurant and wanted to give it away so she had people to send in one dollar with a poem best poem wins the restaurant. worked in the movies why not real life great idea !!!


(lkn2bfd, your follow up post/question was moved to a separate thread, so you can get the answers you want! -RH) :)
 

andviv

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somehow I missed this thread....
I suggest to go back to a familiar source... SBA. Remember, they are giving you a loan for a business. This fits PERFECTLY in SBA's mission, to help small business to grow. You have the successful track record, and what you are doing is precisely that. I think you will qualify easily. Maybe the original BnB could be added as collateral somehow, but I think this would beat the refi path. Are the new properties part of the same legal entity? If so this should make things easier with them.
 

aptohosting

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$473,000 bet it on red.
 

Hoop

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Not really "out of the box".....

As a successful business person and specifically, a successful B&B operator, can you form a new entity, capitalized with OPM, to purchase the 12rm B&B(from yourself), do the value add renovations, and operate the facility?

Sell units/shares to investors for a 50% equity stake(Class A)...you get the other 50% as a different unit/share class owner(Class B). The outside capital is used to fund the acquisition and renovations (OPM)

Only you know the numbers, but you could offer prefferred return to the Class A's to make it attractive. Something like, all cash flow is distributed to Class A until they are made whole + 8% cummulative preferred return. Then the distributions are split 50/50 between A's and B's. Upon a sale...again 50/50 split.

Obvioulsy, this new entity will contract RussH, Inc. to manage the faciltiy and/or consult.

Again, only you know the numbers...
 

MJ DeMarco

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Cant you structure the deal like one of SteveO's apartment deals? Then, after the new B&B is done, refinance it to give the investors their exit?
 

SteveO

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I don't know that too many people on these forums have seen the setup.
 

Hoop

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Cant you structure the deal like one of SteveO's apartment deals? Then, after the new B&B is done, refinance it to give the investors their exit?
I think the refi is the fastest way to make the investors whole and allow the B Class or those with a "Back End Incentive" to begin to participate in the cash flow. But if I were an investor, I wouldn't exit. I would maintain my equity position that will cash flow and appreciate. And, thanks to the refi, I have my capital back...plus a preferred return...to go do other investments.
 
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hakrjak

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A suggestion that has been missed between Brothel and Casino is Salon! Your target market is high income wine snobs, and they like to be treated like royalty. Add a small high end Salon to your property, offering manis/pedis, massage, facials, etc (All with a glass of wine of course) and you'll up your income potential 50% beyond the standard B&B.

Cheers,

- Hakrjak
 
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Russ H

Russ H

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Sorry, Hakrjak.

That's not our market.

Our market is folks who want to feel like they're staying at a friend's home in the wine country.

That's our niche.

-Russ H.

PS We've been busy working on financing, and will post an update to this thread when we're done.
 
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Russ H

Russ H

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Update 05.09.08:

Per the first post, we already had $473K, and needed about $600K, preferably more.

We re-financed the B&B (bought for $1.275M, it just appraised for $3.4M)

Took out just shy of a million (cash) in equity.

Just confirmed new funds in our accounts (today) for $980,457.76.

Adding that to the $473K we already had, and we get . . .

$1,453,457.76.

Close enough. :cool:

:party:

-Russ H.
 
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Russ H

Russ H

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I suppose I should also mention that this cash-out re-fi is a NON taxable event.

Right, Diane? :)

-Russ H.
 

SteveO

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Way to go Russ.
 

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