Posts Tagged ‘property’

Commercial Loan for Your Hotel Property

Getting a commercial mortgage for a hotel property is very similar to getting a commercial mortgage for an owner occupied commercial property with a few subtle differences. The driving force for the majority of most hotel income is the RevPar or revenue per available room. RevPar is most commonly calculated by multiplying a hotels average daily room rate (ADR) by it occupancy rate and is a key indicator of performance. Rising RevPar is an indication that either occupancy is improving; the ADR is increasing, or a combination of the two.

Although RevPar only evaluates the strength of room revenue, it is typically the most relevant indicator of performance. While many full service hotels generate revenue through other means such as restaurants, casinos, conferences, spas, or other amenities the majority of hotel properties are either limited service flagged properties or limited service unflagged properties. A limited service hotel is simply a hotel with out a restaurant. Because the operating costs of the restaurant component generally run higher than that of the hotel operations, it is common for the net operating income (NOI) as a percentage of total sales to be lower for a full service than a limited service hotel. For this reason the majority of commercial lenders prefer to finance limited service hotels.

Flagged vs. Unflagged Properties:

A flagged hotel property is simply a hotel that belongs to a national franchise. An example of a flagged property would be a Holiday Inn or a Best Western. For the guest, a flagged property provides the benefits of a uniform standard that is upheld by the franchisor. A guest could stay in a flagged property on the east coast and could expect the same flag on the west coast to have the same standard of cleanliness and amenities. The owner of the property gets the benefit of a nationwide reservation system and marketing. For this benefit the operator is expected to pay a franchise fee which can typically range anywhere from 5% to 10% of room revenue. Because of the advantages that a flagged property has, most commercial lenders prefer to finance them over an unflagged property. Sometimes it can be extremely difficult to get a commercial loan for an unflagged property, especially if the property isnt in what is considered a destination resort area. A destination resort area would be an area like Miami, Myrtle Beach, or Orlando FL. An unflagged property in a destination resort is easier to obtain a commercial loan on than an unflagged property in other areas of the country.

Exterior Corridor vs. Interior Corridor:

An exterior corridor property is a hotel property where you can actually see the door to the rooms from the exterior of the property. These are sometimes referred to as a motel instead of a hotel. The term motel is actually derived from the term motor hotel where most travelers would park their vehicle directly in front of their room. While there are disagreements between what defines a motel and what defines a hotel, there is typically very little difference between the two outside of a lenders perception.

Most exterior corridor properties are older and subsequently will not have the quality of furnishings and will have more deferred maintenance than an interior corridor property. An interior corridor property is going to be more energy efficient and would have a lower utility expense as a percentage of gross revenue.

Financing Your Hotel Property:

When trying to get a commercial loan for your hotel property there are a few distinct differences you can expect as opposed to financing other commercial properties. A hotel property is considered special purpose in nature which simply means that it is generally cost prohibitive to convert it to alternate use. An office building or retail space can accommodate numerous types of businesses whereas a hotel property can only accommodate a hotel. Because of this a commercial mortgage for a hotel is going to be considered riskier to the lender than a commercial mortgage for other general purpose property types. A lender will mediate this risk by taking a more conservative approach to underwriting a hotel property.

The loan to value (LTV) for a hotel property will be lower than other general purpose property types. For a limited service, flagged property 65% LTV is typical and that number can go down depending upon the age of the property and whether its interior or exterior corridor. The LTV is simply a ratio calculated by dividing the loan amount by the value of the property. The debt service coverage ratio (DSCR) for a hotel will also need to be higher than that of a general purpose property type. The DSCR is a ratio that determines the strength of the property or business income in relation to the proposed mortgage payment. A typical required DSCR for a hotel property by a commercial lender is 1.30 which simply means that for every $1.00 in proposed mortgage expense there should be $1.30 available to pay it. For other general purpose property types the DSCR is lower. A DSCR of 1.20 is common for general purpose property types and can go oven lower for a less risky property such as an apartment building.

Because the acquisition of a hotel property under a conventional program requires a large capital injection, many borrowers prefer to purchase a hotel property by utilizing the SBA 504 program. This program enables the borrower to put in as little as 15% and still obtain a better interest rate than a traditional commercial mortgage for a hotel.

Orlando Investment Property – How Can You Make Money In Property Investment There?

Florida is the crowning glory of holiday destinations in the US and Orlando is the shining jewel in the crown. It is located almost centrally in the state and attracts millions of tourists both from within the country and overseas. Orlando investment property is the best option to make your hard-earned money earn higher returns. Capital appreciation of the real estate investment acts as a cushion against inflation.

Orlando is the top choice of families looking for a vacation spot. It has the world famous Walt Disney World and Sea World amusement parks. It is the cradle of the theme entertainment industry. The tourist traffic continues to grow and this means Orlando investment property assures one of regular rental income. In fact, Orlando is the preferred second home location for vacationers and retirees.

If you wanted compelling reasons for making your Orlando investment property, here is the list:

• The properties in Orlando are still priced cheaper as compared to their intrinsic value. So, if you are an early bird you could make a bargain and watch your investment grow exponentially.

• The tourist traffic and retirees movement is bound to grow upwards and there are different property options like homes, condos and apartments. As people reach for the city throughout the year, chances of vacant homes is almost nil.

• The most attractive feature is of course the low interest rates on mortgages and zero state income tax. So, you pay less for your home loan and get to keep all the income you earn from rentals.

Another advantage of an Orlando investment property is that it could be a vacation home for you and your family. For a few days every year, you could enjoy the attractions of the place and come home with goodies from endless hours of shopping. This saves you expensive hotel bills. For rest of the year, you could rent out the property.

The time is ideal to acquire an Orlando investment property while the market is still in the growth phase.

Copyright © 2006 Joel Teo. All rights reserved.

How do I price my property?

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USA – The Perfect Destination For All Your Holiday Rental Property Needs

The United States of America is a fantastic place for your family holiday, whether you choose to go skiing in the Northern States or enjoy the sunshine that you can find in the Southerly States! Being such a vast country (the USA covers a land area of 9,161,923 sq km!), it’s a country that you will have to return to again and again.

The USA boasts a total of 50 states and the District of Columbia, and offers a huge variety of terrain, such as mountains, deserts, busy cities with skyscrapers, national parks, massive plains, beautiful coastlines and a whole lot more.

The 50 states include Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin and Wyoming. The USA is the ideal destination to find a property rental, as it has a massive selection of self-catering accommodation available across the country.

Whether you’re after a luxury apartment, a ski chalet, a waterfront condo or a large villa for all the family, the USA will be able to cater for you. It’s a good idea to rent in during your holiday in the USA, as it will give you the opportunity to see the places and attractions you want, without the worry and hassle of getting back to your hotel for a certain time. With so much to offer, it’s not surprising that the USA is such a popular holiday destination with so many people.

This is just a taster of just some of the many places worth a visit in the USA. Las Vegas, in the state of Nevada, has so much to offer and has something for everyone. It’s famous for its casinos, but there’s a wealth of other entertainment and attractions here, too. There’s no shortage of shows, food and drink, shopping, golf, nightlife and more. Why not take the opportunity to get married while you are in Las Vegas?

Los Angeles, which is the largest city in California and the second largest in the USA, is a great city to explore. There’s so much here to see – Hollywood, Hollywood Hills, Venice Beach, Beverly Hills etc. One big child-friendly attraction too far from LA is Disneyland, which is located in Anaheim. Also in California is San Francisco and is another must see destination in the USA. It is brimming with tourist attractions, such as the Golden Gate Bridge, Alcatraz and San Francisco Zoo. If you’ve got kids in tow, then a visit to Orlando in Florida should definitely be on your list, as Disney World is located here! This area is perfect for a property rental during your holiday, as it boasts a good selection of self-catering accommodation. Miami, also in Florida, has beautiful warm weather all year round and offers a variety of attractions for tourists.

Washington DC is an interesting city worth exploring. It’s home to the White House and a lot more besides. New York (or the Big Apple as it’s also known) is another fantastic USA destination. It’s great for a city break and an opportunity to catch up on some shopping or a sightseeing holiday.

Here you can visit Manhattan Island, Central Park, Times Square, Broadway, the Empire State Building and more. There is just so much to see here that you will no doubt want to return for another holiday.

If you want a break from the hustle and bustle of city life, then make sure that you head to Arizona, where you can see the amazing Grand Canyon.

It’s a great area to explore on foot, too, and there are a number of sporting activities here to try such as climbing, hiking and white-water rafting.

Utah is another popular destination with tourists who want to get away from it all. It has five national parks and also some good ski resorts with some fantastic terrain and snow conditions.

Whether you’re a beginner or an advanced skier, then you will be catered for here. The USA has so much more to discover.

Why not make your next holiday a self-catering holiday in the USA?

Western Pacific Acquires Rock Springs Property

Western Pacific Acquires Rock Springs Property
Western Pacific Resources Corp. is please to announce the acquisition, through staking, of the Rock Springs property located in Elko County, Nevada. The property lies along the northwest edge of the Bald Mountain/Pequop Trend, which hosts the Company’s Mineral Gulch property covering the Black Pine Mine, and is 45 miles north of the Fronteer/AuEx Long Canyon property.

Read more on CNW Group via Yahoo! Finance

Buying Property? Florida is a Great Location to Consider

If you’re thinking about buying property in Florida, then this article is for you as it will give you an overview on Florida, USA and the property market.

Florida, the Sunshine State, enjoys warm and pleasant summers, while the winters are mild, with only occasional cold spells. The state has over 1100 miles of beaches and extremely good resorts, spas, restaurants and facilities for snorkeling, surfing and golfing.

There is always plenty to do in Florida as it is home to a number of tourist attractions, such as the Kennedy Space Centre, Disney Animal Kingdom, Busch Gardens, Sea World, and Gatorland. There are a number of festivals and events periodically taking place in Florida, and all in all it makes Florida a fun place to live in.

A major portion of Florida’s population consists of Americans, African-Americans and Hispanics, with English being the most commonly spoken language. Florida is extremely well connected to other parts of the world by air, road and rail, and has a number of reputed universities and colleges.

There are number of different areas within Florida to consider when buying property:

Orlando: Life in Orlando is fun, with several beaches, golf courses and nightspots, and the famous tourist attractions of Sea World and Disney World. Most of the available properties are condominiums and villas, and the prices are rising; according to the Orlando Business Journal, family homes were priced at above $1 million in 2006.

Kissimmee: The city of Kissimmee has rapidly developed in recent years due to tourism, as it is centrally located to Sea World, Walt Disney World Resorts and Universal Studios. Kissimmee is experiencing double digit growth in property sales.

Miami: There is hardly anyone who is not aware of the beauty of the Miami beaches. The population of Miami is cosmopolitan, and is a friendly, warm place for a relaxed peaceful vacation. Its scenic beauty makes it an ideal place for buying property and then using it as a rental home for the never-ending supply of tourists.

Jacksonville: Jacksonville is a beautiful city in the north-east part of Florida, where the majority of the population is young. It is one of the largest cities in Florida and is well equipped with medical and educational facilities. Jacksonville has a comparatively low cost of living, and offers good facilities for sports, eating out, and shopping. The region has a nice combination of urban and rural life, with certain areas being extremely well developed, and other areas retaining their old-world charm. Statistics indicate that the average cost of buying property in Jacksonville was about $211,000 in 2005, which was lower than most Florida cities.

Tampa: The city of Tampa has excellent financial, medical, educational, sports, cultural, and entertainment facilities. In spite of all this, the cost of living is comparatively low, making it an ideal place for property investment. Property prices in Tampa are relatively low compared to other cities in Florida.

As you can see there are a number of excellent destinations to think about when buying property in Florida, and they are just the tip of the iceberg. To help you with your property purchase, agents in Florida would be glad to assist you; however you do need to exercise caution and discretion when appointing a professional agent. As per law in Florida, the transfer of ownership of property is carried out by Title Companies, and not by lawyers, which makes the process less risky and easier when buying property. Florida has a lot to offer everyone, whether they are a holiday maker or a resident of the states, and is an excellent place to buy a property for a second home or an investment property.