Realty411 Magazine The Future of Real Estate is Here | Page 84

Let’s Analyze a Deal!
I
’ve done many deals over the years
and one of my favorite deals hap-
pened to be a 107 unit hotel that I
partnered on with a student and
closed January 1st, 2013. Talk about a
heck of a start to the new year.
The deal was brought to my attention
by a broker that we’ve closed other deals
with in mid 2012. After going to the ho-
tel and spending a couple of days there,
we quickly observed that it didn’t have as
many flaws as previously thought. As a
matter of fact it was already on it’s way to
grossing around $900K in revenue for the
year. We did notice that there was a good
number of rooms that were down, roof
that had leaks, pool that needed repairs
and poor sign-age. Most people when
going into a property think that the more
problems that a property has the less up-
side. It’s actually the complete opposite,
I love problems! The more problems, the
more opportunity... for both upside and
revenues. I look past the minor flaws with
a property and I go straight to the bones,
and then location. If those things check
out, I move to the next phase. This prop-
erty had all the components that we look
for in our model, good bones, good loca-
tion, and a motivated seller!
When it was all said and done, we were
able to pick up this property originally
priced at $2.6M for only $1.9M. This
was a Quality Inn that only had about 4
months left on it’s contract. So we were
able to structure the deal on the front end
with a lease option and then exercise the
option with owner financing for 5 years.
We were able to get into the deal with
none of our money and not only that, but
the cash flow from the property was able to
pay for all of the repairs that were needed.
In just one year, we were able to increase
the revenue from $900K to over $1.3M.
That’s $400K in additional cash flow in
just one year! We even enjoyed cash flow
of over $50K in a single month a couple of
times throughout the year.
The repairs that were needed were not
too intensive. We had to replace and patch
a number of places of the roof over the
lobby along with fixing the pool and get-
ting about a dozen rooms up and running.
It was nice to have the cash flow from the
property be able to cover the repairs of the
hotel.
I’ve done many hotels with much more
repairs needed so this deal was a bit of a
cosmetic turn around for us. One of the
great things I love about hotels is that if
you pick the right one and you buy it right,
you can make many repairs and do most
of the turn around from the profits of the
hotel without having to go borrow more
money. It’s one of the main reasons that
we don’t do too many closed down hotels,
you actually have to have a capital reserve
while you’re making your repairs with no
Larry Goins Discusses His Deals, pg. 82
investor looking for a great deal or someone he’s mentored,
Investors Rehab has no shortage of buyers.
To create such good deals, Goins and his devoted team are
always on the hunt for property to buy. He estimates they
make a jaw-dropping 2,000 to 3,000 offers a week; they pur-
chase 10-15 properties a month through their office. Once an
offer has been accepted, his dedicated team gets three repair
estimates and conducts a comparative market analysis. The
properties Goins buys and sells aren’t “turn-key,” he says,
they are what he has dubbed, “learn-key.”
Learn key? “That’s right,” Goins tells me, “Learn-key
means you learn as you earn.” Investors buy properties
for great prices that need a bit of work, and thanks to the
research the Goins team does beforehand, they know about
how much work will be needed before a property is rent-
al-ready or can be flipped. The legwork his team does takes
away some of the risk for new investors and is a great help
to seasoned investors. “Learn-key properties come with
instant equity while turn-key properties come with instant
Realty411Guide.com

revenue coming in to help. I like the simple
fact that I’m making money day one that I
take over, and all I’m doing is making im-
provements and putting heads in beds.
We’ve had this property for exactly one
year now and we’ve loved every minute of
it. Not only did the cash flow pay for the re-
pairs, but it also paid for the down payment
that we needed as well. Another reason I
love hotels so much is that I have managers
at each of our hotels taking care of the day
to day activities while I’m out looking for
my next deal. Making sure that you have a
good strong manager with experience is a
big plus. It will only make your life easier.
We have a great team in place right now
and we’re looking to get the revenues up to
$1.4 - $1.5M for 2014 at this particular ho-
tel. With the amount of additional revenues
that we created over 2013, we also created
almost 2 million in equity. I’m ok with eq-
uity, but I really love what actually pays the
bills...CASH FLOW.
Jason Schubert
President, Rich In Five
cash flow,” Goins explains. He wants investors to get the most
equity they can out of a deal. Simply stated, learn-key teaches
investors to fish whereas turn-key gives investors the fish.
Larry Goins, and his career in real estate, stand apart from
the rest. His continuous drive to perfect his craft, learn better
ways of doing things and new challenges to win is both inspi-
rational and rare. Though his son and wife have an obvious in-
terest in real estate, perhaps his daughter’s interest in horseback
riding indicates that she too hasn’t fallen far from the Goins
tree either; in both real estate and riding, there are always dif-
ferent horses to tame, new challenges to tackle, and techniques
that can be improved upon.
“Keep learning. Take action,” Goins says. Just as in horse-
back riding, in real estate you can’t go far unless you saddle up
and start riding. Since this is an article about a man driven to
help others, it should come as no surprise that he’s decided to
offer our readers his book about buying HUD Homes Half Off
free of charge for everyone reading this. Think of it as a nudge
to take action from Larry himself.
To receive your copy, simply visit Amazon or get your free copy
via this website: http://freehudbook.com/
PAGE 84 • 2014

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