In this short walkthrough, the speakers dissect a potential acquisition of the Club Scottsdale property. The original owner, Mike, bought the building for $9 million; he now wants to sell for $15 million, but the negotiators propose an $18 million price to make Mike whole and secure favorable financing. They outline a split‑financing structure—approximately 50 % loan‑to‑value bank loan at 6.5 % interest with a 25‑year amortization, plus seller financing at 5 % interest for 10 years. The resulting debt service is about $120,000 per month, requiring $190‑215 k of net operating income to hit a target DSCR of 1.8. Projected revenue streams include $30 k/month from three executive offices, $75 k/month from a master‑lease club (Knights Club), $15 k/month from a car wash, $20 k/month from other revenues, and $10 k/month from car‑port rentals—totaling roughly $80 k/month. Assuming operating expenses at 30 % of income, the NOI reaches about $200 k/month, yielding a DSCR of ~1.65 and a DPI of 3.36. The discussion centers on reverse‑engineering the deal to determine feasibility and required cash‑flow metrics.
Chapters
Are you in the deal room? For Club Scottsdale, back when Mike bought it, and he bought it for $9 million.
So I met Jack, who's one of the guys that's going to sell this thing.
I said, Mike, how much you selling it for? He said $15 million.
I was like, why are you selling? He's like, well, I just want to sell the building.
He said, I want to run this deal on a point of failure. I want to see what we would need to do to reverse engineer it. I just like to get a calculation. I don't want to see if you want to put any debt to exploit. So the amount of money, I'm the businessman anyway. I said, tell me how much you need to make. Are you making the money If we get $9 million on a loan, 50% LTV, and the other is going to be Mike's financing, we still got— so that's exactly what he does. And it shows up here.
Deal terms are going to be $18 million, and then Mike said $15, so I said I want $18. Why did I say that? So what I want to do is I want to make him whole, right? And then I'm going to turn around and I'm going to get him to agree to do 5% interest, 25-year amortization, 10 years of payments. And then I'm going to get the bank to give me 7.5, 25-year amortization, which would be 6.5%.
And I'm going is by getting this for all their DSER commercial loans. DSER means debt service credit ratio. Debt service that I would end up having to pay on this building is somewhere around $120,000 a month, right? So if I paid $120,000 a month, that means I'm gonna pay right about $1.4 million a year, right? What I need to do in order to meet the 1.8 to 1.8 debt service credit ratio is create $190,000 to $215,000 of income out of this building.
We've got 3 executive offices on that top floor, so I can rent those out for $10,000 a month and get $30,000 a month off of office space.
My friend Scott Stale has a master lease at the Knights Club, and he's going to— I'm going to lease him the building for his club at $75,000, which is the poker room and all that. Dapper Luxury Car Wash, we're going to put a car wash in the back there, and they'll pay us $15,000 a month. We've got invest revenues every month, 20 grand. We get carport rentals. They, they rent space here for 10 grand a month to park their cars. So that's a projected income of about $80,000 a month. That gives me a DPI of 3.36.
Now when we go look at that relative to the DSCR, we can see if our operating expenses are 30% of our income, we're going to have anywhere between—
with an NOI of 2.35, which is about $200,000 a month, we'll have a DSCR So 1.65, so I'm fairly over.
