Funding for Trophy Property

[Colin Eilts]

Hi BP community,

I’m pursuing an off-market short-term rental opportunity in northern Virginia.  I’ve submitted a letter of interest and would like to prepare a formal offer, but I’m navigating a few funding challenges and would greatly appreciate thoughtful input from anyone with experience in lower-yielding opportunities.

The property is very historic, well-known in the area, and operates as a turnkey STR with no renovation required and a consistent operating history. My goal is to raise approximately $1.5M through private lending or a partnership.

The core challenges are a valuation gap and constrained investor yield.  The property likely appraises near $1.2M while the seller’s expectation is around $1.5M, and projected investor return is modest at around 3% annually.  The objective here is to own and preserve a unique and historic property with provenance dating to before the American Revolution that is also able to pay for itself.

I’m looking for practical advice on raising capital for off-market deals with valuation gaps, structuring private lending among trusted contacts, and finding values-aligned partners who are interested in projects with significance and low risk over high yield. If anyone has experience, advice, or ideas, I would truly appreciate hearing from you.  If anyone might be interested in the project themselves, please DM me.

Thank you in advance!

[Mike Grudzien]

Quote from @Jeff S.:

When I hear "trophy property," I think of star-struck investors overpaying for underperforming properties in return for some sort of pride of ownership. With all due respect, @Colin Eilts, you did not disappoint. Pride of ownership does not pay the bills. Here's the practical advice you asked for: don't do this deal and don't ask anyone to invest with you.

"The objective here is to own and preserve a unique and historic property with provenance dating to before the American Revolution that is also able to pay for itself. I'm looking for practical advice on raising capital for off-market deals with valuation gaps …"

First, "off-market" doesn't mean "good deal." Doesn't spending $1.5M on a $1.2M property for a 3% return demonstrate that? The only valuation gap here will be closed in the seller's favor. Preserving historic real estate is much more challenging than newer property. Do you have a background here?

I'm sorry to be harsh, Colin, but for the risk you are taking, your objective should be to earn an above-average return with a substantial payback. Nothing you wrote illustrates that.

Please be careful, Colin. I recommend you rethink this one.

 Jeff NAILED IT!