Hello pezz, report:
Am still in van, tapping on iPad, answering e-mails, reading PDF files, doing SI, and reckoning our fate.
A small band of boyz including myself have decided to purchase a 24-years leasehold mid-market quaint hotel featuring 47 rooms and swimming pool in the middle of old Manila walled city.
Assuming no last minute hiccups, we shall pay the equivalent price for two ordinary homes in america, inherit a going concern without its corporate vehicle / complications.
If all go correct, inclusive of renovation equal to cost of leasehold purchase, we reap 4 years cash on cash payback, and earn a 37% irr (equivalent to annual yield) to end of lease.
If all go better than correct, we finance after stabilization, get our equity out w/I 24 months, and enjoy the annual cash-flow as before less debt payment.
Should we get good tax accountant as most do, irr gets boosted to 50%.
In case all go super, we engage with three such hotels in town n on beach and get the fourth one free.
Some strategic leaders in the group have the relevant experience, and we intend to contract out the management to a firm formed by proven capable but capital-constrained friend.
We can roll up friend's management operations should we aggregate enough hotels to exit as a group.
This venture is an experiment as well as a nostalgic revisit of an earlier time.
Cheers, j
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