Posted by Ed Garcia on March 10, 2001 at 20:01:50:
Ray,
That was WELL said. I’m looking forward to you next part.
Ed Garcia
commercial realestate problem - Posted by ALSTAR COMMERCIAL
Posted by ALSTAR COMMERCIAL on March 09, 2001 at 19:52:29:
Im a new investor who is interested in commercial realestate investmants and has recently found a large hotel that I think has investment potential. The property has been vacant for ten years,has an out of state owner, and has problems with asbestos, bad elevators, blown transformers and needs extensive rehabbing. The owner owns the property out right with no leins,or mortgages on the property. His asking price is 7,790,000 and he is being represented by an agent. The hotel is located on 5.9 acres, has close to 340 rooms 8 floors, and is roughly 18,000 square feet per floor. Question #1: My problem is that Im lacking the funds for this venture, and was wondering if there was a way to get the property appraised using none of my own money or borrowing from the bank. Question #2: My intent is to put this property under contract then flip the property to an investor for rehab, but im unsure as to where to look for an investor that would be interested in undertaking such a huge expensive project. Question #3: How to find earnest money with out using my own money or the banks money. If any one has any creative ideas for me or advice please e-mail me. Thanks
Re: commercial realestate problem - Posted by ray@lcorn
Posted by ray@lcorn on March 10, 2001 at 12:30:00:
This deal is a non-starter. Here’s why:
- You have no hotel experience.
- You have no money to compensate for your lack of experience.
- You have no contacts, prior track record, or expertise to bring to the table.
- A vacant, environmentally challenged, capital intensive rehab project, and a hotel to boot, is just about the most difficult challenge imaginable.
It would be hard for a well capitalized, experienced hotel developer with triple A credit to get financing on this project. That the property has been sitting for ten years should tell you something.
Again, my favorite truism:
“Opportunity, without the capacity to capture it, is an illusion.”
This is not an opportunity for you, as you lack the capacity to capture it. Sorry to be so blunt, but to not tell it like I see it would be a disservice to you and others who read these boards.
ray
Re: commercial realestate problem - Posted by Ed Garcia
Posted by Ed Garcia on March 10, 2001 at 11:36:47:
ALSTAR,
Don’t take this wrong, but I see you as a fish out of water. Rather than me going into a long post with not enough information to support my opinion. I’d rather refer you to the Commercial Real-estate Group at http://www.creonline.com/commercial-real-estate/wwwboard5/index.html. Ray Alcorn, owns a few Comfort Inns, and is very versed on Hotels. He knows which lenders are financing this type of acquisition. I think you’ll find that he will direct and guide you as to what to do.
Ed Garcia
Re: commercial realestate problem - Posted by JohnBoy
Posted by JohnBoy on March 10, 2001 at 13:53:35:
Hi Ray,
What would the average cost per sq ft run to build a new hotel of this size? Constuction cost excluding land cost.
What would you guess roughly the cost would be to tear down something like this?
Without knowing anything about this or how prime of a location where this 5.9 acres sits, my first assumption is the real value here is sitting in the land and not in the building.
Ray, you stated your favorite truisum is:
“Opportunity, without the capacity to capture it, is an illusion.”
I prefer to look at things more as:
“Opportunity, with the imagination to capture it, is when the illusion, turns into the reality!” 
hotel stuff… - Posted by ray@lcorn
Posted by ray@lcorn on March 10, 2001 at 16:17:19:
JohnBoy,
Your questions are the right ones, however the answers depend so heavily on market, location and condition of the structure (demo cost), as to make them almost impossible to answer accurately. However I will give you some general numbers for discussion only.
It sounds as though this was a former full service hotel. As such, today’s building costs can range anywhere from a low of about $60T to a high of $200T per room, not including land cost.
Demo costs are impossible to guess without many more details than we have. Type of construction; the amount and nature of the asbestos; applicable local, state and federal regulations; etc. will all come into play in determining cost.
Whether the land is worth the price is also not known. However even CA prices of over $1.3MM per acre, plus demo costs, substantially limits the feasible uses of the property.
ray
Deep thoughts (very long) - Posted by ray@lcorn
Posted by ray@lcorn on March 10, 2001 at 16:09:00:
JohnBoy,
(This is part one of a two-part post. I started with your comments on the truism, and it got away from me! I’ll have to answer the nuts and bolts questions above.)
As someone blessed with more than any two person’s share of imagination, I know better than to tell you anything can’t be done! Far be it from me to be the one to stand in your way. I will offer some comments as to my own thinking on the subject.
The truism works on a couple of different levels, the first of which states the obvious. Many people stand on the sideline and fret about lost opportunities in life. We’ve all heard the tale of the person that just knew a piece of property, or business idea, or new product, etc. would be a gold mine. Often the person will point to the individual that did capitalize on the opportunity and lament “that could have been me.” Could it have been? Doubtful. That wishful person is only fooling him or her self. Had they truly had the capacity to use the opportunity, they would now not be lamenting a loss. They are living an illusion.
The second level of meaning is more complex. We all have varying levels of capacity. Overreaching that capacity to do some great big thing, while a romantic notion, has in my own life experience yielded sometimes-disastrous consequences. Let me explain.
One of the major life lessons I have learned is that I must first demonstrate mastery over the level of life I currently inhabit. That means, among other things, being a good steward of the blessings and resources (tools) that have been entrusted to my care. By demonstrating true stewardship, I mean that I must use those tools in my possession to the best of my ability in order to graduate to the next level. What I see as opportunities on those upper levels is not necessarily unattainable, but I must realize the reality of the task, and prepare myself, develop my capacity, by doing the footwork required for the task. Without that preparation, then what seems an opportunity is not for me, until I do in fact have the capacity. This is not to say that one can’t imagine, only that imagination alone won’t enable you to clear the bar.
A good example of this is what Ed Garcia does with the students he mentors. He takes what the student has (their current capacity), and brings mastery (competence and insight) to bear on the structure and direction of the tools already in the student’s possession. In so doing, the result is that the student gains new capacity. Hence more opportunities are in fact achievable now for that student than before gaining the new capacity. Jim Rayner’s story, and your own story, are perfect reflections of this.
The third level of meaning is in effect a challenge. The secret of life is in using and developing your present capacity to take you to that place where what you do is effortless. When you are in tune with your own capacities and are actively engaged in putting them to the highest and best use, there is no longer “work” in your life. Obstacles will present themselves, but they are removed by the application of knowledge and resources that can be brought to bear when one lives in reality and not illusion. Knowing yourself with total honesty is the key to breaking out of illusions.
That’s enough deep thoughts for a Saturday afternoon! Glad you started the discussion. Have a great weekend. I’m hitting the road again for the next ten days, so I may be slow to respond to further discussion, (cause I know you’ll have to comment!) but rest assured I’ll be back!
ray
(Note: I believe in this concept so strongly that I included a small essay on Stewardship in the last chapter of my first book, “The Dealmaker’s Guide to Mobile Home Parks.” Doesn’t have a thing to do with MHP’s, but it has everything to do with dealmaking and life and success and happiness. I include the excerpt here as food for more thought.)
Stewardship
Many thinkers much smarter than I am have expounded eloquently on the concept of stewardship, defined as the practice of caring for what has been given to us. True to the teachings of so many sages, I found that the better care I took of the abundance already present in my life, the more abundance I received.
It reminded me of when I was a boy and I wanted a new bicycle. I had a purple ten-speed all picked out, and was hounding my Dad to buy it for me, promising to take care of it, and promising pay him back from my paper route money. He listened to my story, and then asked to see my old bicycle. Now, as a kid, I was a pretty rough on equipment. That bike looked like it had been through a war. The tires were slick, spokes bent and missing, the fenders bent and scratched. My Dad said that if that were the way I treated this bike, what was to make him think a new bike would be taken care of any better? What do you think I did? That’s right, I cleaned that bike up, straightened the dings, shined up the fenders and tried again. Instinctively I had attempted to demonstrate that I could take care of what I had been given in order to receive greater blessings. I got the bike, but the lesson it taught wasn’t truly learned until many years later.
Now that may be a sophomoric story to use as an analogy, but today I look at life in just this way. If I take care of those gifts (talents, money, friends, etc.) that have been entrusted to me, then I am creating the conditions necessary to receive even greater gifts (abundance). If I ignore or waste those blessings by issuing constant complaint and reasons why I can’t use them for good, then the gifts will be taken from me and redistributed to some other soul that is grateful, and ready for more. I will have denied myself the opportunity to use the gifts I already possess to create even more abundance.
This principle of stewardship has guided me ever since. In business it means I am a humble steward of the capital and resources entrusted to my decisions. In my personal life it means I must focus on remaining teachable, knowing I will never know all the answers, or even all the questions. In the day-to-day march of events, I am not being a good steward if I am not always looking for ways to improve, protect and to share the many blessings I have been given.
I hope you can see this principle at work in your life. No matter what your station in life or your situation at the present, if you don’t like it, it is within your power to change it. Your life is but a reflection of your habitual thought. If you are not enjoying the blessings and abundance of the universe, you must first make your mind ready to receive it. Find and express your gratitude for those gifts you already possess. Show the universe you deserve them. Make the most of what you have to do with. Another old proverb says, “Rather than curse the darkness, light a lamp.” In short, be a good steward.
Re: Deep thoughts (very long) - Posted by JohnBoy
Posted by JohnBoy on March 13, 2001 at 22:29:22:
Ray, this was an excellent piece! True words of wisdom! I truely can relate to everything you have said here. Unfortunately though, I honestly think this is something every person will have to learn for themselves as they go through life.
I sure wish I could have read something like this about 5 years ago! Although, I may not have been able to relate to it as well then either. It’s unfortunate, but some things in life appear that they just have to be learned the hard way! The important thing is that you LEARN and gain wisdom through it all! Then, even though the battle scars are there, they WILL heal and only make the person better and grow as they continue their journey through life.
Thanks for the great words of wisdom!