7 minute read
CASE STUDY: Tivoli Guesthouse - 10 Bed lockdown hotel
Finding your niche in commercial property can be like finding your own personal goldmine if you are patient, know what you are looking for and are willing to pounce. Jamie Greaves certainly demonstrated those traits with this hotel investment
Serviced accommodation investor Jamie Greaves
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OTH: Tell us a bit your property investing journey so far...
I’m Jamie, I’m a full-time property investor based “up North” in Sheffield who specialises in buy-to-service accommodation/holiday lets. My portfolio is currently across beautiful areas throughout North Wales, Lake District, and the Peak District. My first 18 months as an investor/business owner were an absolute disaster with mistakes made, capital lost, and lessons certainly learned. In the past two and a half years though, things have gone fantastically and I’m incredibly grateful for growing my portfolio, which has come through Focusing, huge Action and Teamwork… in short… being F.A.T! ;-) With close family members who live with special needs, I left my career and jumped into property investment so I could provide them with a life full of freedom, fun, choice and happiness. My mission has since grown, which is to provide a life-changing difference to people from vulnerable and deprived backgrounds.
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OTH: Please tell us how the project was sourced? The first step to sourcing a great property is taking time to fully understand what you are looking for and why. Once you have a clear idea of this and you learn how to stack deals, sourcing becomes much easier. We specifically wanted to purchase a hotel, within one of our investment areas, whilst ensuring we were buying at fantastic value. Most hotels are sold for their commercial value (bricks and mortar value plus a yield based / EBITA) which is why for example in an area where 8-bed residential houses are sold for £500,000, you’ll see 8-bedroom hotels on the market for say £800,000.
What we specifically wanted was a hotel being sold for the bricks and mortar value which whilst rare, every now and then happens! Our clear criteria meant we had to firstly be patient, then when the right deal became clear we moved at speed with full confidence –which allowed such a fantastic purchase.
BEFORE: The tired dining room
BEFORE: The kitchen
BEFORE: Dated bedrooms
OTH: Why did you feel this property was a good prospect?
So many reasons! Firstly, it was based in an area my business partner knew like the back of his hand, having lived closeby for many years - area knowledge is SO important when investing in SA/holiday lets! Secondly, this was a 10-bedroom all en-suite guesthouse on the market at offers over £275,000! This was way back during the first COVID lockdown, when no one else was out trying to buy hotels! As we know the area, we understand that hotels, when sold commercially start at £450,000. Lastly, as we chatted with the vendors and shared a cup of tea and biscuits during our viewing, we realised the major opportunity we were sat on. For example, the hotel had never been marketed on Airbnb nor Booking.com and the vendors had refused to sell through a commercial agent. Of course, buying a hotel during a national/global lockdown doesn’t come without its risks, but as you’ll see in the numbers below the rewards significantly outweighed these.
OTH: How did you finance the deal?
We decided to purchase the hotel on a C1 70% LTV Commercial mortgage. As our own funds had been tied up in other projects, we also brought in a JV partner for the remaining funds. This JV partner has gone on to become a business partner and good friend, showing the superb opportunities that can arise when you collaborate with great people in property.
OTH: Were there any specific challenges that you can detail during the conveyancing process?
Yes! As there always is with buying properties! Looking back… the purchase price was too low! Yes, you heard that correctly. Most mortgages for hotels start at £250,000, we found this out after the fact we had agreed a £240,000 purchase price. Also, this was one of our first purchases a couple of years ago now and our solicitor wasn’t overly experienced in commercial purchases which brought major delays. We have since built a relationship with a fantastic solicitor who has significant experience in such commercial purchases - An important tip which your readers should follow.
OTH: Talk us through the renovation - the plans, the process and the end result?
We were not looking for a major renovation project, which meant this deal worked so well for us. The vendors had already fitted modern en-suites and a good quality kitchen – meaning our refurbishment was largely cosmeticdecoration, flooring, interior design, furniture etc. Our challenge came through managing a tight budget and we learned quickly how much capital 10 bedrooms and such a large property could eat up. However, being a natural (tight, haha) Yorkshireman came in handy and after instructing some brilliant trades, we were absolutely delighted with the result!
OTH: Tell us about that result...
We are delighted with our hotel! The numbers are fantastic; once we refinance next year, we’ll have no funds left in the deal. Moreover, we wanted to test our management systems and staff in a busy hotel, as we knew this would stretch our capabilities. Hotels require a lot of management given their short-term stay, additional service nature. Owning a busy guesthouse has meant we’ve had to become world-class at managing our own portfolio – an important strategic benefit that supports our wider SA portfolio.
OTH: What lessons, key learnings and philosophy will you take with you from this project to future property investments?
People – Look after people, including vendors, investors, trades. The more you support other people with ethical and warm values, the more you’ll be looked after in business. Secondly, knowledge – Know your market and who your tenants/guests will be BEFORE you buy an investment or start your refurbishment. This makes everything else so much easier and successful - Our purchase and refurbishment was done with our guests in mind. Third, go your own way – Don’t follow the herd, be contrarian. Whilst lots of investors were looking for hotels they could turn into aparthotels or apartments, we looked for a hotel we could turn into a… hotel. This contrarian and clear thinking allowed us to source a nomoney-left-in, high cash-flowing, (we think) brilliant deal!
Where you can follow’s Jamie’s investment journey: Jamie Greaves - facebook.com/j.s.greaves
