A team evaluates a 118-unit apartment complex listed at $19 million with an offer at $15 million for potential hotel conversion. They need to verify the deal's legitimacy, review floor plans, and run cash-flow analyses to determine if converting to a hotel would beat keeping it as apartments.
Are you locking up deals in the deal room?
No, this is, this is, this is a deal that was sent to me.
I think Tommy sent it to us last night. This is the one you sent us yesterday.
It's Tommy's. I'm just trying to figure out whose deal it is so I can track it. Tommy, right? This is a, it's a Land Shark deal. Okay. So, it's set up as, as apartments, but it could go to a hotel conversion. So, you can kind of see. Hold up, back up, back up. Let's, let's, so we know in relation to where we're at. There's this piece. There's Katya's piece right there. Or actually right here.
There's your property, Katya. Growing up so fast.
Just kidding. But what it shows is like, this is a $12 million, 118-unit apartment complex/hotel, right? They want $19 million for it. Actually, the offer to us is $15 million. So, and then if we can work out some other deal, we can get it somewhere else in between there. And honestly, with this, being set up like this, it's not a bad deal if it's cash flowing properly. So there's some documents involved in the rest of this package. Let's jump over and look at those. Here's a floor plan.
So you want to convert this into a hotel? Can I ask? I can discuss with ChatGPT if there's no time right now, but can I ask financially, what's the incentive of creating a hotel instead of keeping it as apartment?
Money. Clientele and money. Cash flow. Well, what we're going to do is run the numbers, let the numbers tell you what to do, right?
If that's even like— are there even like other options for this property?
So here's what it looks like as a hotel. It's right, you got year to date, they made $2 million on the rooms. And so grand totals are between $2.3 and $2.9. Then when you come all the way down, going, going, going, that's just for January. Go back up a little bit, keep going up. Keep going up right there. Go up a little bit more. Keep going. So this was at the end of the year, right? They show end of year right there. So year to date, and then that's their— looks like they're operating at about a break even, I think. Go back, go back out of here. Go into the NOI. So here's where we got our numbers. Go down. These are all of the operating expenses, etc. So our NOI right here, net operating expenses, is $713,000. Total expense, net operating expense. 9. Okay, and that's the end of the document, right? But up here with total revenues at $2, $2.5, so if its net operating expenses are— go back down, says total expenses are about $1.3 to $1.6, so it's got a 60 to 62% margin on the, on the expenses, right?
