Posted by wes on July 20, 2005 at 19:44:17:
There is lending and then there is investing. It’s good to have a clear understanding of the difference in regard to where you go to seek financing for any deal
If you want a lender to provide a loan, it will be based on the actual financials of the Hotel over the past few years. There also can be other factors. For example, I recently worked on financing a Hotel in a “military town” that has seen revenues and occupancy increase dramatically since the Iraq war build-up. But due to experience with military build-up towns, there was extra scrutiny required. A determination based on the towns hotel average occupany prior to the build-up just did not justify the asking price and loan request.
If the deal looks to you to have good “investment potential” then that might be exactly how you should be approaching the issue. Find one or more investors that also agree with the potential and get them to put up funds to either purchase the property or at least put up enough to cover the shortfall you might personally have if going to a lender.
I recently read a quote to which I not only agree but find useful regarding approaching many lending sources. Something like “one should never give a seller credit for future property appreciation”.
While that certainly covers alot of ground, I certainly see the wisdom in the statement from the buyers and lenders point of view…
Sure there are others that can add much more, but thought I would throw these thought out for consideration.