All Forum Posts by: Chris Winterhalter

@Alton Williams

I am very interested in investing in hotels. We have a hotel construction company so we are constantly in the hotel arena. We actually did a Sheraton and a Hilton project not far from you a few years ago. Last year we almost bought a hotel project. The deal ended up not coming together (price) but it was a great learning experience from a hotel investment perspective. We are still on the lookout for hotel projects and will hopefully add hotel investing to the business over the next few years. The market is extremely hot right now though...as I am sure you know REVPAR is up across the board and deal activity is high as well.

@Steve R.

Most companies that insure habitational won't allow you to deal with them directly. I would reach out to several brokers that truly understand and deal with this type of insurance. Get recommendations from other owners in your area, the REIA club, apartment association, property managers, etc. Narrow it down to three choices and get quotes from all three. They should each offer you several quotes from different companies. It sounds like you are really worried about the financial backing and rating of the insurance company. If that is the case I would also try Farmers Commercial. Their policies can be more expensive however they do an amazing job when problems arise. I currently use Lloyds for hazard/fire and Penn Star for liability. Good luck!

@Walter Ichikawa-Doyle @Swat Khan

Thanks...I appreciate the encouragement!

@Anthony Gayden

No it is not a syndication deal....well as of right now if we can make it work for the 10% down (roughly). If we need to bring 20%+ to the table then I will bring in one other investor. We will need to syndicate at that point which I would rather avoid because the deal is smaller and syndication fees are high. If we need to syndicate I will drop the seller second and pick up the deal for 1.495MM. I negotiated two offers...one based on seller financing and one based on no seller financing.

@Jarrett Harris

No....the seller is going to take back a 2nd mortgage for the buyer (us). So we will take out a 2nd mortgage on the property of 10% of the purchase price at 5% interest rate. So the seller will receive 90% of the sales price at closing in cash (+/- fees, concessions, etc) and a promissory note with a deed of trust in 2nd lien position to the property.

@Annunciata R.

So to clarify you obtained an EB-5 visa though investing in a business on your own and not through a Regional Centre. The Regional Centre's essentially take qualifying investments for the foreigner to obtain a visa through the EB-5 visa program right? That is essentially my understanding of the process. From what I understood creating a Regional Centre was difficult and expensive.

Also awesome work on your investment!

@Lisa Boudiette

Are you looking at this for an investment, vacation property, or both? Can you get a list of other owners to contact to discuss their experience?

I posted on the multi-family forum a month or so ago regarding the multi-family 50+ unit market heating up. We've lost out on many offers from buildings ranging from 20-150 units. I've been mainly focused on Cincinnati where I was born and raised after investing in St. Louis for 4 years. However I had a deal come across my plate near several of my other buildings in St. Louis that just made sense. It's a stabilized building with several years of occupancy around 90%. It has some deferred maintenance that we will handle in phases as my construction crews have time. The good part of the deal lies in this...

We negotiated a deal with a 10% seller carry at 5% interest rate. I have two really good relationships with local banks that are willing to go to 80% LTV along with bundling in rehab costs. They will also allow the seller 2nd bearing that we still make debt service. Our primary lenders are quoting rates around 4.25-4.5%. If everything goes well we could be in the deal with only 10% down plus all other associated costs and capital needs. The banks don't even require a phase 1 or property condition report (which we will still get). Unless we need to come up with more capital we will take down the property on our own not bringing in other equity investors. This is a very unique situation (in my opinion) and is probably only possible because of our previous relationship (and their current appetite). I remember when they wouldn't even finance a 12 unit building for us (2009). However I kept fighting and eventually broke into the relationship.

The lead came from a broker that I met when buying a complex a year and a half ago. He knew this complex was near my other properties and knew I was interested in buying more buildings (probably from my Linkedin updates). I've been trying to break into the Cincinnati market, meeting the key players however this shows you nothing is better than a proven track record and established relationships. I will keep pounding the pavement in my homeland of Cincy but I'm definitely not going to pass on a good deal in a market where I own properties. I'm not going to get into the deal specifics since I just got the project under contract however here are a few details:

Purchase price - 1.55MM w/ 10% seller second at 5%

Rehab - 100-150k - mainly windows, plumbing stacks and misc cosmetic

Gross rents are around 30k/month

Tenants pay for everything but water/sewer

Instantly appealing the taxes right at closing. I've had great success with this in the past. I use a lawyer that specializes in this and works off of a contingency fee (we pay her 50% of the reduction).

Hopefully everything goes well with due diligence!

Amy Arata More than likely you will not be able to obtain financing at 80%LTV even if you made debt service. Financing for that product type and size will look more like 65-70 LTV unless you have a really good relationship with a local bank. You can also structure in a small seller carry back if the primary lender will allow it however they will still add this into the DSCR. Areas with low caps/high values will generally require more down to make debt service. Have you networked with all the brokers in this space? A lot of deals in that space are not listed however it would still be worth the money to pay for loopnet. Network network network!

@Lisa Boudiette

After the crash they banned anyone and everyone from using that word ever again. Hotel developers were making a lot of money on these projects right up until the music stopped. Theoretically it makes sense...you have a vacation property that comes with all of the amenities of a hotel (because it is a hotel) and when you are not staying in the hotel they can put it in the system to sell for a fee creating more income for you. The issue was they were so expensive and came with high association fees. Also your unit doesn't get priority to sell. The hotel will always sell their rooms first. Depending on the location and state of the hotel market your unit could sit empty a majority of the time. They also created challenges for the hotel owner for several reasons. Are you looking to offset your vacation rental with investment income?

@Karma Senge

Here's a copy and past from one of my previous posts...Like Joel stated focus on the brokers that specialize in exactly what you are looking for. Definitely network with property managers...they can point you in the direction of many good brokers. Good luck!

Search Loopnet to see what brokers currently have listings on these size properties. Reach out to each of these brokers, have lunch, and regularly connect. Search all the top commercial brokerage firms to see who is listing these type of properties. Hendricks Berkadia is a multi-family only brokerage company and they have an office in Orlando. Check CBRE, Cassidy Turley, Marcus & Millichap, Sperry Van Ness etc etc. I would also search Craigslist to see if anything pops up (it may not). Get a routine set up so you are continually checking on deals on a daily/weekly basis.

@Annunciata R.

I've seen you mention the EB-5 visa program a few times on previous posts. Have you obtained funding through the program? I came to learn about the program through a New York City hotel developer who had set up their own program many years ago. They own north of $3 billion of real estate and have the ability and connections to get the funds. The EB-5 program is used a lot for hotel development because it instantly meets the minimum number of permanent jobs created by the investment and a lot of hoteliers are immigrants. The program comes with a lot of red tape and the funding is extremely difficult to obtain (from talking with people in the space). I don't think it's a viable option for funding needs under 20MM but I could be wrong.