Ok, so last the time I was attempting to draft up a proforma for a deal was right before COVID hit in 2020. Since then, my Architecture firm has almost exclusively been working in the healthcare industry.
We finally have a breather. 🥲 I want to take a look at another deal.
I am doing the design work for a developer converting a hotel he owns into apartments. I see an opportunity where I may be able to do the same. Convert 130 hotel units into 65 2bd room apartments. I have my draft below. I have some of my own capital I could put into the deal, but my scenario is based on 100% financing here. Which as it stands is killing my annual Income!
Take a quick look. Let me know how I am doing so far.
Thanks 🍌
First blush - your annual Net Cash FLow is -50k. Seems like not a great deal no? Also, i'm not what loan program you are doing, but i don't get your financing. Who is lending on this deal(like what kind of lender)?
It looks like a yield on cost of 4.8% which is not great, and a cash on cash of 4%(asusming you put in 35% equity). Clearly without equity your returns are negative. Which brings the question, what lender is going to lend on negative cash flow after debt service. This property would be in cash management day 1.
Have you found a lender that will finance 100%? Would be interesting.
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