All Forum Posts by: Ben Ertl

@Luke Carl This place only does $80,000 in revenue in a given year. Closed during winter months due to heating cost. Near 100% booked June through August. 30-50% booked May & October.

Hi BP community,

This has weighed on me for quite some time.  I grew up on this 6 cabin property in northern WI that my parents own.  This includes a larger house they live in 50 yards behind the cabins, behind a road.  They've tried selling it in the past for around $400k-600k as well as selling individual cabins; however, there were never qualified buyers.

My parents are nearing retirement and the burden of this property is eating into the years they'd like to go elsewhere and enjoy.  They hire high school cleaners with a couple adults at $14-$22 per hour - so they're not doing everything.  In fact, in many ways they act as property managers themselves.

For the longest time, the property broke-even or lost a little money (in part to help with student aid for myself and siblings go through college).  However, since I've helped them integrate online bookings the property is turning a modest profit.

My career and home is now 3 hours away where managing the 6 cabin property would seem impossible.  My job requires visiting people in-person in my local area.

Instead of selling the property off, or having my parents forced to live out their days chained to this property, I'd like to see if anyone has any suggestions on ways to keep the property in the family without having to shell out huge sums of money to buy the existing mortgage ($300k).

The big roadblock is managing the property effectively from a distance and quality control of cabin maintenance and guest experience.

If the mortgage was paid off, the profit would be fairly significant (it's all relative I suppose).

I know this post is sort of a tangent but figured I'd put this out there in case someone has experienced this / seen this before with retiring parents / owners.

Hi all,

My wife and I are looking to get a commercial loan for a motel purchase.  The thought crossed my mind that our personal residence (upper and lower duplex) that we bought for $87k and put over $20k into could be leveraged to help secure an SBA loan for the motel purchase (about $300k).

If I were to open a HELOC on our personal home, that would allow me to get a free appraisal through the bank that's doing the HELOC. If that appraisal comes back at $120,000 (just an estimate) would that allow the commercial lender to view our home as having more equity? Or would the HELOC in place negate any equity in the home we could potential use as collateral for an SBA loan?

The idea is that we wouldn't use the HELOC. It's really just a means to get a free appraisal.

@David H. Thank you very much for spending time helping me.  5% down with perhaps 5% seller financed would not be a big deal (at least not for me).

I'll reach out to LiveOak and see what they say - they might not cover my area in WI but either way I'm sure the conversation will yield some value.

The owners are looking to retire (although apparently aren't in a rush) so you'd think they'd be perfectly willing to do a measly 5% seller financed to find a buyer in an area that is not a "hot market".

@David H. The hotel is definitely not in an urban town but it's not completely out there in the wilderness either.  An SBA loan to cover 90% (give or take) would be ideal combined with the seller financing if that is even needed.

I wonder if you could do an SBA for whatever the owners still owe on the mortgage and then have them finance the rest so that you'd be paying very little to actually buy the place.

I'll have to look at SBA as an option. I've been told it's hard to qualify and receive but if it's a viable possibility then worth investigating. Thanks!

@Eric Mayer Makes sense, thanks again.  I'm balancing two sides.  

1) Creative financing and maneuvering to get a larger property with a lot of potential (i.e. many units, owners don't do online bookings at all, positive Google reviews already (43 at 4.5 avg), etc).

2) Being more conservative and continue the residential, multi-family investing that I'm more familiar with and is obviously less expensive upfront.

The lifestyle change with a hotel is something that we would welcome as an adventure - my wife and I are both 26 and have very little overall debt vs income.

Being conservative isn't a bad strategy.  You just always hear the people who made a name for themselves get started with some awesome deal that took a lot of creativity / forced appreciation / etc.

@Eric Mayer Brilliant.  Thanks for clarifying.  For the 2 properties used as collateral, did you use the full equity of both?  Or a certain % of equity for both?

@Eric Mayer Did you use the hard money for the down payment only after it was in your name?  If so, how did you go about putting that hard money in your name?

Did you personally know the seller to get a good deal on 3 years of no payments?

@Tim Swierczek @Miguel Planas WOW, these ideas are very creative and I would've never thought to do either of these ideas.  Even simply asking the seller to talk to the bank and see if the due on sale clause can be avoided with more down payment or another scenario.

The partnership idea seems like I'd have to do a lot more research before presenting that idea. I don't want to scare these folks off. I think the property is under personal ownership of the couple, not an LLC or corporation.