How Do You Wholesale Hotels?

Question

How do I wholesale a hotel? NEED ANSWERSSSS

Stanley Bronstein · Answer

@John Morehead  Normally I would say someone shouldn't be entering into a contract to purchase something as large as a hotel unless they have intentions of going through with the purchase of the hotel.

I know that whenever I represent the Seller of anything such as a hotel, I put specific language in the contract that would prevent a buyer from then flipping the hotel to another buyer.

So essentially, in cases such as my clients, you would NOT be able to wholesale the hotel.

I think that if you're dealing with any semi-sophisticated Sellers, you're going to find similar results.

Mary M. · Answer

The owner of the hotel should be talking to a commercial broker

Jon Allen · Answer

Have you walked through how the conversation with the seller would go? How will you convince them to put it under contract with you unless you present yourself as a legitimate buyer/operator? And finding a buyer for a distressed hotel to complete the deal is a lot more difficult than finding someone willing to take on a $30k rehab on a sfh. I’m assuming it’s distressed or they’d be able to find a legitimate buyer/operator at the right price and wouldn’t consider you. I’d think your likelihood of success is low.

DeMarco Robinson · Answer

John, don’t let negative folks in this forum discourage you. You can wholesale a hotel just like any other property, you just have to use a different exit strategy

. Follow William Crean’s advice, all the front end work he mentioned to the tee.You won’t be able to assign the contract but you can do a double close and use Transactional Funding to “Buy” the property first. It’s also called fast money because they lend you the funds for 24 hours.They will fund the A to B transaction plus closing cost, so you will actually own the property. Then when your buyer brings his funds for the purchase(B to C) they will take out their fee(usually 1%) and what they funded you.

As for the objections posted by others, you are presenting yourself as a legitimate buyer/operator being the fact you are buying the property, so getting it under contract won’t be hard. Someone putting contingencies that you can’t “flip” it to another investor in the contract is null and void if you actually “buy” the property. That contract is executed and closed, and the title has switched owners. Secondly, it’s easy to find a buyer for a hotel as well as 100, 200, and 300 unit apartments, I see it happen everyday on connected investors website. Get a membership. And lastly, Of course it will be a distressed property your flipping, what other kind of property would a wholesaler be looking for?

William Crean · Answer

Hi John, Nothing about this would be easy but I would apply basic wholesaling steps. You need to know if it is really a deal before investing significant time. Pull comps and run it by some agents who operate in that area and ask their view on the values. Then pull a list of buyers of similar properties in the area (or as broad a region as you need) in the last 12-24 months and start calling - you will need to pay for the list and also separately pay to skip trace the buyers. When you call these buyers your conversation should be asking what kind of hotels/investments they look for ...and then in broad terms outline your deal. You should know if it is a deal by the reaction of those you talk to.  This front end work should be done before you think of getting anything under contract. If all still looks good maybe consider partnering with an investor and avoiding the wholesale issues altogether (ie take a lower finders fee or whatever you can negotiate).

How Do You Wholesale Hotels?

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