I have had some experience in working in the hotel industry, and was planning on using this to my advantage in investing in the real estate market. The general advise I usually receive from experienced real estate investors is to identify a lucrative property at a good price, get financing and ensure the monthly cashflow from renting the property (Whether residential or commercial) can satisfy the monthly loan obligation. Basically have other people buy the property for you.
However, what I am currently working on is acquiring a building suitable for a hotel , and instead of renting it out for business like many owners do in Dubai, I hope to operate the hotel myself and thus multiply my income; because I will be paying the rent to myself and keeping the rest of the profit as well. Assuming it all works out of course, which is never a guarantee in business.
The thing is, commercial buildings that can operate as a hotel in Dubai dont come cheap, a simple 1 star hotel with 48 rooms and a restaurant can reach up to 4 to 5 million dollars to purchase; however when operating profitably, it can pull in around $800k to $1 million annually in income (40% of the income usually goes to just rent, so if the building is yours you get to keep that, which is pretty sweet).
Furthermore, the financial crises hit this place pretty hard and we are still economically recovering. The hotel and tourism industry is also very competitive in nature. However, there is still plenty of demand in the market if you can tap into what the customers are looking for (which is another topic for later). Below is my financing plan in brief, I can expand if needed.
----------------
1. What I intend to do is get hold of some real estate investors, who can put up some hard money, 50% of the price of the building.
2. Negotiate with the current building owner to enter into a 50/50 partnership with us, where he sells 50% equity of his building at a significant discount. If the building is $5,000,000, I would need to purchase 50% ownership for $2,000,000.
Why would he do such a thing?
a. If the property owner only planned to rent the building, his cash flow would have been rent. However as a partner with us, he can still receive around the same amount of annual cash flow but instead from the hotel profit.
b. Cash is still king: he will be receiving $2,000,000 hard cash today, for the purchase.
c. Owner still has remaining equity in the commercial property. This is important because some people don’t ever want to let go of their property.
Now going back to the investors who put up the money, their incentives would be
a. estimated 12 % percent annual profit from hotel cash flow
b. around 7 % annual property appreciation
c. and the big incentive of having a 20% discount on property (only on purchase-1st year).
----------------
To wrap it all up
If you are wondering where I profit from all this, it is by acquiring a 12 percent stake in the property and business, without putting up any capital.
From the 50% capital raised by investors, 38% goes to the investor and 12% to me.
It would be transparent, the investor would know of course.
Since I negotiated the deal, found the property, convinced the buyer and would later manage and operate the business, my cut would be 12%.
---------
This is the financing deal I put together. I understand it is quite confusing, and perhaps unrealistic to some. But would love to hear honest and helpful feedback.
And thank you for reading!
However, what I am currently working on is acquiring a building suitable for a hotel , and instead of renting it out for business like many owners do in Dubai, I hope to operate the hotel myself and thus multiply my income; because I will be paying the rent to myself and keeping the rest of the profit as well. Assuming it all works out of course, which is never a guarantee in business.
The thing is, commercial buildings that can operate as a hotel in Dubai dont come cheap, a simple 1 star hotel with 48 rooms and a restaurant can reach up to 4 to 5 million dollars to purchase; however when operating profitably, it can pull in around $800k to $1 million annually in income (40% of the income usually goes to just rent, so if the building is yours you get to keep that, which is pretty sweet).
Furthermore, the financial crises hit this place pretty hard and we are still economically recovering. The hotel and tourism industry is also very competitive in nature. However, there is still plenty of demand in the market if you can tap into what the customers are looking for (which is another topic for later). Below is my financing plan in brief, I can expand if needed.
----------------
1. What I intend to do is get hold of some real estate investors, who can put up some hard money, 50% of the price of the building.
2. Negotiate with the current building owner to enter into a 50/50 partnership with us, where he sells 50% equity of his building at a significant discount. If the building is $5,000,000, I would need to purchase 50% ownership for $2,000,000.
Why would he do such a thing?
a. If the property owner only planned to rent the building, his cash flow would have been rent. However as a partner with us, he can still receive around the same amount of annual cash flow but instead from the hotel profit.
b. Cash is still king: he will be receiving $2,000,000 hard cash today, for the purchase.
c. Owner still has remaining equity in the commercial property. This is important because some people don’t ever want to let go of their property.
Now going back to the investors who put up the money, their incentives would be
a. estimated 12 % percent annual profit from hotel cash flow
b. around 7 % annual property appreciation
c. and the big incentive of having a 20% discount on property (only on purchase-1st year).
----------------
To wrap it all up
If you are wondering where I profit from all this, it is by acquiring a 12 percent stake in the property and business, without putting up any capital.
From the 50% capital raised by investors, 38% goes to the investor and 12% to me.
It would be transparent, the investor would know of course.
Since I negotiated the deal, found the property, convinced the buyer and would later manage and operate the business, my cut would be 12%.
---------
This is the financing deal I put together. I understand it is quite confusing, and perhaps unrealistic to some. But would love to hear honest and helpful feedback.
And thank you for reading!
Dislike ads? Become a Fastlane member:
Subscribe today and surround yourself with winners and millionaire mentors, not those broke friends who only want to drink beer and play video games. :-)
Membership Required: Upgrade to Expose Nearly 1,000,000 Posts
Ready to Unleash the Millionaire Entrepreneur in You?
Become a member of the Fastlane Forum, the private community founded by best-selling author and multi-millionaire entrepreneur MJ DeMarco. Since 2007, MJ DeMarco has poured his heart and soul into the Fastlane Forum, helping entrepreneurs reclaim their time, win their financial freedom, and live their best life.
With more than 39,000 posts packed with insights, strategies, and advice, you’re not just a member—you’re stepping into MJ’s inner-circle, a place where you’ll never be left alone.
Become a member and gain immediate access to...
- Active Community: Ever join a community only to find it DEAD? Not at Fastlane! As you can see from our home page, life-changing content is posted dozens of times daily.
- Exclusive Insights: Direct access to MJ DeMarco’s daily contributions and wisdom.
- Powerful Networking Opportunities: Connect with a diverse group of successful entrepreneurs who can offer mentorship, collaboration, and opportunities.
- Proven Strategies: Learn from the best in the business, with actionable advice and strategies that can accelerate your success.
"You are the average of the five people you surround yourself with the most..."
Who are you surrounding yourself with? Surround yourself with millionaire success. Join Fastlane today!
Join Today
