All Forum Posts by: Chad Shultz

Investment Info:

Other buy & hold investment.

Purchase price: $640,000
Cash invested: $1,200,000

Turned a shuttered and rundown 13-unit waterfront motel into a brand new vacation destination with added lakefront "tiny homes". Property has no "on-site" employees with exception of cleaning staff. Customers book and manage everything online and we use a property manager for Q&A and handsfree management. No on-site office, nearly autonomous functionality. Several large Georgia State tax breaks were also part of the deal. Yearly Gross $500k+ with cash flow of approximately $30k-$35k/mo.

What made you interested in investing in this type of deal?

This was one of only three hotel/motels in the city and the only one with lakefront access, including a dock. Popular year around 4-season activity area on the 2nd largest lake in Georgia. Property was just a good combination of the "right place and right time."

How did you find this deal and how did you negotiate it?

I found this deal by "stumbling" on it during a weekend get-away trip with friends for a celebration on another property. I like to make a celebration part of the end of every successful project and this celebration brought us through this area. The "For Sale" sign and phone number were posted on the front of the building, nowhere else. It was not listed. My business partner spent over six months negotiating with the seller and we ultimately purchased at a 20% reduction from asking price.

How did you finance this deal?

This deal was financed through three funding rounds over the approximate 18-month time frame for the renovation and construction of new tiny homes. Investors, (two of us) ultimately funded about 32% of the project with cash and additional money was raised from members of the local REIA, simply by word of mouth.

How did you add value to the deal?

The deal was valued based on a recent sale of the local Holiday Inn, (only real competition for us) which also needed to undergo renovation. We also did many calculations of income and expense models over time, based on usage.

What was the outcome?

The 13-unit original motel, built in 1958, has been completely renovated to 2023/2024 standards and upgraded with all new electrical, plumbing, and internet structure throughout. The six tiny homes were build from the ground up to our specs. The project was very well received by this small town and it is a fully operational 20-unit, lakefront, property in a wonderfully busy four-season destination.

Lessons learned? Challenges?

No matter how much vetting you do, you will always run into contractor issues. Being remote for us, this was a big hurdle, which we eventually overcame. Traveling back and fourth from Florida was a bit taxing, but ultimately it was worth the investment and work.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

No. This deal was completely done off-market.

Investment Info:

Other buy & hold investment.

Purchase price: $640,000
Cash invested: $1,200,000

Turned a shuttered and rundown 13-unit waterfront motel into a brand new vacation destination with added lakefront "tiny homes", for a new total of 20-units with yearly gross over 500,000 and cashflow averaging $40k monthly. Project took approximately 18-20 months due to contractor delays. Exterior areas are still being finished, but property is up and running at 100% with many long weekends at full occupancy. Property has no "on-site" employees with exception of cleaning staff. Customers book and manage everything online and we use a property manager for Q&A and handsfree management. No on-site office, nearly autonomous functionality. Several large Georgia State tax breaks were also part of the deal. Two investors in the deal at approximately 32% of total investment. Remainder was raised through local REIA members and debt will be refinanced out at end of this year.

What made you interested in investing in this type of deal?

This was one of only three hotel/motels in the city and the only one with lakefront access, including a dock. Popular year around 4-season activity area on the 2nd largest lake in Georgia. Property was just a good combination of the "right place and right time."

How did you find this deal and how did you negotiate it?

I found this deal by "stumbling" on it during a weekend get-away trip with friends for a celebration on another property. I like to make a celebration part of the end of every successful project and this celebration brought us through this area. The "For Sale" sign and phone number were posted on the front of the building, nowhere else. It was not listed. My business partner spent over six months negotiating with the seller and we ultimately purchased at a 20% reduction from asking price.

How did you finance this deal?

This deal was financed through three funding rounds over the approximate 18-month time frame for the renovation and construction of new tiny homes. Investors, (two of us) ultimately funded about 32% of the project with cash and additional money was raised from members of the local REIA, simply by word of mouth.

How did you add value to the deal?

The deal was valued based on a recent sale of the local Holiday Inn, (only real competition for us) which also needed to undergo renovation. We also did many calculations of income and expense models over time, based on usage.

What was the outcome?

The 13-unit original motel, built in 1958, has been completely renovated to 2023/2024 standards and upgraded with all new electrical, plumbing, and internet structure throughout. The six tiny homes were build from the ground up to our specs. The project was very well received by this small town and it is a fully operational 20-unit, lakefront, property in a wonderfully busy four-season destination.

Lessons learned? Challenges?

No matter how much vetting you do, you will always run into contractor issues. Being remote for us, this was a big hurdle, which we eventually overcame. Traveling back and fourth from Florida was a bit taxing, but ultimately it was worth the investment and work.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

No. This deal was completely done off-market.

Renzo,

Glad to see you here on BP.  I am a very active investor/realtor in the Greater Daytona area.  I ONLY work in real estate with investors, so if you need/want help, let me know.  There are many, many agents out there and 98% of them really have no idea about how investing actually works.  I put my investor customers' needs first, because I don't need to make a real estate paycheck to pay my bills.  With that said, to answer your question:  Cape Coral has been well over done.  For the past two years, or more, it has been about the hottest place in FL to invest.  Now that it is saturated, it is starting to fall off.  Lots of big investors went in, driving prices and now pricing is very high.  Many sellers are having to make huge price cuts to sell flips and/or new construction, so be careful there.

With your buying criteria, Daytona area is still a great market with strong numbers.  You should be able to find a decent property, if you can put in a little sweat equity.  However, finding a turn-key for $200k is not likely possible.  The places you will find for $200k won't make the rent rule, which should be a non-starter for you.  You will need patience and need to keep your eyes open.  I just recently sold a duplex property to an investor for $225k, which was bringing in $2800/mo, so you can find them occasionally.  Sorry, I don't know anything about Tampa or Panama City areas.

Hey Kwame,

Get out there and network in person at a group or meet up. Facebook and all these online or social media based groups can only get you so far. Central Florida Real Estate Investor's Association is the largest non-profit REIA group in the country. Come visit us second Tuesday of the month in Orlando. CFRI.net I guarantee you will find people doing what you want and you can start a journey.

Not to burst any bubbles, but there is no such thing as a “Licensed Wholesale Agent” in the State of Florida.  A person can be a licensed agent, or someone who wholesales, but to say “Licensed Wholesale Agent” is a bit deceptive, especially for new investors.  Everyone should do their homework.

I am a licensed agent in the Ormond/Daytona area, fluent in investor properties and needs.  I also do occasional wholesales too. I have done many fix and flips and I am very fluent in transactions in this area.  I am happy to help if anyone has questions.

Out-of-the-area Investors, be cautious. Short term rentals are not allowed in Volusia County and only in very limited areas of Ormond Beach. If you can find a legal property, an STR can be lucrative, but be sure to do your homework. I have seen many people burned AFTER they buy a property, because they assume.

Sarah B.,

The allowed use for STR in Daytona is crazy. They strictly enforce against those who attempt to run a STR in any area where it is not allowed. To that end, there are several places where you will find STR allowed on one side of a street, but not on the other. It is best to get to the source. I have the Daytona STR maps, given to me directly from the City Zoning Dept. If you want to connect with me, so we can exchange contact info, I can email them to you. I don't know of a way to put them in a thread here.

Rob,

I am just in the Daytona area, so not too far.

Hey Rob - Welcome to BP and the investor space! I am a bit south of you, but if you want to take a "day trip" down and meet up, I would be happy to chat. I am an active agent, but also active flipper, investor, wholesaler, etc., etc. I can walk you through several projects currently in progress at different stages and answer questions, etc. I am happy to have you come and "get your hands dirty", but it may be too much of a drive for frequency and you can likely find someone closer to you. I am the VP of the largest non-profit REIA in the USA currently. I can likely help you in one way or another. Feel free to reach out.

Has anyone mentioned that the Federal Government does not recognize single member LLCs and they actually give you much less protection that you think? Many courts will not recognize a single member LLC as any kind of asset protection either, because it is only protecting you. Depending on your state, you might consider a Land Trust. They are much easier to work with and they are not required to file tax returns. Everything goes on your personal return. You get much more protection.