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One of my real estate investors came to me the other day to discuss the possibility of a new investment. I was open to the idea as in the past we had partnered on many deals. We had a few homes we rehabbed and resold and we had a few rentals that we shared rental income on each month. Recently we even went in with a few other partners and bought a multi-family apartment in Southern California. We fixed the place up and basically remodeled the entire building. Then we found a Long Beach property management company to help us manage the place.
This property was a bit different than the others. This idea that he came to me about was buying an older hotel that he ran across near our apartment building. At first I was skeptical, but then he told me how little work it needed and the great price we could buy it for if we acted fast. The owner was unable to pay his loan and the business had gone into foreclosure. We needed to scoop it up before anyone else could. I agreed but voiced a few concerns. Neither one of us knew how to run a hotel or manage one. What would we do about advertising and day to day operations? How would we set up a reservation and payment system? It seemed a bit complex.
That is when he tossed out his trump card. The company we had managing our apartment building was capable of managing this hotel. They had been in business in the Long Beach area for many years and plenty of commercial property experience including property management of hotels. They would handle all the day to day maintenance issues and they had connections to help us find the right business people to help us run the hotel. With the great track record the company has with me, I was now going to be a hotel owner as well.