I have contact with an owner of 2 hotels, 4 lots, second row beach property that wants to sell. She wants 4 million. Both hotels bring in 400k year gross, (only open 7 months a year). Mostly cash so you know the deal. Owner will finance 20%. Will lenders consider this the 20% down needed to purchase the property at an 80% loan?
The business is not what I’m after, it’s the land. This is in Myrtle Beach, in the re-development zone. 15 new resorts under construction right now. At least a dozen more in planning. The adjoining lots have already been cleared. The owner of those lots has made an offer to purchase that fell through. He is going to develop a new resort on the joining land. He is short 20 million at the moment, but still working on raising his funds. His resort plans included the two hotels in question, one was part of the resort, the other was the entire parking deck for the resort. According to the owner, this put the value of her property in the 6 million range. Having some local knowledge, this information is very real.
Now, I do not have the liquid to put down on this property, nor do I have the liquid to carry it for 12 to 24 months. I do have a crew that will move down, run the business to carry it for the time needed to re-sale. Owner will stay on for six months to train. Her staff of 16 years will remain.
Some problems I see are… What if the joining land owner is not able to raise his funds for the resort? What is the mb resort market crumbles (no sign of slowing down now). Now what if somebody strong enough comes in to buy this property, then purchases the joining land with the resort plans and builds this thing first? Sounds like money to me!
I think this is a strong deal, I think there is a lot of potential here. I also feel I could find strong investors if this deal is solid enough.
Anyone’s thoughts?
chris