January 2020 was going to be the year I would shift my focus from smaller real estate investments into larger 100 unit plus multifamily homes. And in April of that year we muscled our way into a deal. 128 Units in the Westwood area of Cincinnati Ohio. Not bad, four months in and we got our name on the wall. Now we just need to rinse and repeat right?
Not so fast... The world was hit with COVID and she came to a screeching halt. Everything was shut down, even my beloved NYSE had to suspend floor trading. Well I figured people still need to live and apartments now more than ever will fill that void. So here I am with years of experience as a landlord continuing to seek deals for my senators. Yes, I call my investors Senators, building a brand here buddy.
Few weeks ago we're tossing ideas with my team and what markets are getting absolutely decimated... shopping malls, offices, retail store fronts, hotels, high floor apart..... WAIT, hotels! Let's discuss hotels...
Currently these poor bastards are losing $400 MILLION each and every single day in revenue according to the American & Hotel Lodging Association. After reading this report it's not an exaggeration that their walls are literally crumbling down. We also feel that we are in a unique situation to help some of them out!
Looking at the chart below demonstrates what hotels would generate per room. (RevPAR is a formula used to measure a hotels performance) This is just to give you a historical idea on where revenues were pre-COVID.
So here is our call to action and how we plan on helping some of these hoteliers: (mind you I will be extremely vague here, I do not wish to share this strategy with the public)
- A capital injection for ownership or majority ownership
- Alternative conversions. Due to our vertical integration we're able to think outside the box and create modifications that the current owner simply doesn't have that option.
- Experienced Operator with a proven track record. Our team has partnered with a national operator that offers us economies of scale and experience. They haven't lost a single hotel in 30 years!
- PPP and EIDL. Congress is currently negotiating the next package. The entire industry will be utilizing this along with us.
- Debt. We have figured out a way to grab these hotels at a fraction of what it would have cost just 1 year ago. This allows us to allocate more cash for the burn rate (staying power baby).
We believe that there will be a vaccine, not IF but WHEN. If you do not agree that in X weeks, months, or years the scientists of the world will have a vaccine and will be in a position of subsiding this virus, please stop reading. I am sorry I have wasted your time and I wish you well in your zombie apocalypse bunker. But if you do agree than realize this, the hotel industry acts very quickly. Almost as quick as the stock market. Look at the 3 dips, and more importantly check out how quickly the RevPAR bounced. We believe that today's dip will reflect a similar bounce. Staying true to our conservative values, we also are accounting for 3-5 years before hotel occupancy and revenues are back to their Q1 2020 levels (chart above for reference).
There is a LOT of information here, too much for a simple post. But the MAIN point here is that there is short window of opportunity right now for those that have the connections and vision. Just so we are clear, my description of a GOLDEN opportunity is to buy a majority stake of a $10M hotel for a cash injection of $500k. Before COVID you would have needed $3M in cash to sit at this table, they're in that much trouble and need help. Sounds interesting or better yet sounds too good... email me directly: