Here is the situation:

State: TX
95 room Motel is in business since last 15 years.
Annual revenue till 2003: 800,000 (fully documented)
Annual revenue 2003-2005: 1,200,000 (fully documented)
Sellers Asking price: 3,500,000
Downpayment needed: 500,000
Non-flag property
Occupancy is close to 70% for the year 2005 and 2006.

My problem: Raising the capital for the downpayment.

Owner is willing to go for wrap-around his mortgage.

I need some advice on how to approach this. while i myself have little experience in running motels, my partner has been running motels for the last 16 years. Unfortunately, he got into trouble with the SBA 5 years ago and therefore cannot approach SBA again, even though the SBA has settled his case and the settled amount was lesser than what he owe

Would a commercial lender be willing to loan us the 3mn?
If so, could I / would I be able to owner finance the remaining 500,000? Between me and my partner, we can come up with $150,000.

The property is in imacculate shape (no renovation costs for the next 5 years) and business is up and growing in that area, as the occupancy rates indicate. It would be owner operated by my partner.

Need all your help and advice I can get.

$3,000M is too much for most lenders for this type of property.

How much cash flow does the business generate? Revenue and net income do not pay a loan.

Wrap arounds are risky. Most loan agreements have clauses against them.

like the lenders, I too am going in because of the cash flow it generates! It is good. very good.

Like I said, there is no renovation needed. Motel is in immaculate condition. No part of the capital is to be used for renovating the premises.

Outgoing cash flow consists of nothing more than Loan installments, Utilities, Salary for owner/operator, housekeeping services, Insurance.

Market value of property is $3.6million. I am currently negotaiting and it appears that the seller will most likely agree with $3.45 million, with $500,000 downpayment.

Wrap around is tricky. I do realize that. But that was an option.

I would rather like the option of taking a commercial loan, and doing owner financing for the remainder. But that will bump up the price a bit as the owner-finance will be 2nd lein and therefore riskier for the seller!

but why would commercial lenders not willing to do the $3 million. Cash flow is good. I can sit down and go over the numbers with one if one is ready to listen.

no takers?