I recently purchased a closed run-down hotel in eastern europe for 1.2 million with the intention to tear it down and build a 13-15 million 300 bed hotel on the site. The property's value is 3.2mill and has a awesome location, but here are my problems:
I have no development or hospitality management experience. I can fix the management experience by hiring a management company. The hotel will be an independent.


I have had short conversations with banks in the region and they have expressed their interest in financing the project in some capacity, but I haven't disclosed to them my shortcomings.

I currently have significant real estate equity in the states that I do not want to use. I figure I can borrow at least 2 million against the hotel and inject another 1 million in equity therefore giving me at least 20%.

My questions are: Will I need to put up more equity and if so how much? Will it be difficult for me to secure sufficent financing? Should I hire an experienced developer to act as a mentor and assist me with this project thereby making the banks fell more comfortable.

I currently am interviewing architects, would it be smarter for me to make sure I can finance this project before doing this?

Your help is appreciated,

I would think that you should secure the financing prior to making any other arrangements. It doesn't hurt to look around so you have all your ducks in place, but without financing you have nothing.

If you have any questions feel free to call me as I may be able to point you in the right direction for your needs...

I hope that you do not take offense, but how does one purchase something for $1.2MM, when it is worth $3MM?

And the answer to your question is yes, you should get financing lined up.

Terrence,
Thanks for taking interest in helping. I'll call you tomorrow.

As for the other poster, I purchased the property thru a govt privitizaton sale. There are some strings attached such as renovating the site and retaining employees, but our feasibilty study and appraisal valued the property accordingly.