Now is your chance to buy the Sosua Bay hotel for only 65 million USD!
- Thread starter JD Jones
- Start date
You Snooze, You Lose!
144 Rooms , using rudimentary Hotel value Math , like Room revenue Multiplier , this Hotel at Full occupancy 365 days a year ,. @ $65 average/ room ..
and that is Generous , Maximum Value is around 17 MIL.. Someone may pay 20 Mil for it ,if they have Big Plans . Curious to see what happens .
and that is Generous , Maximum Value is around 17 MIL.. Someone may pay 20 Mil for it ,if they have Big Plans . Curious to see what happens .
There is a set method for valuing hotels, you take the average room rate achieved, multiply it by the occupancy, then multiply this by the profit margin and then multiply that by 10. In other words 10 times the profit. No hotel could possibly achieve 100% occupancy - some rooms always need to be blocked for one reason or another and we have hurricane season. In Sosua I would suspect 70% would be a fairer number. So 144 (rooms) x 0.7 (occ) x $65 (ARR) = $2,332,512 projected revenue per year.
Now of this revenue, 18% is paid in ITBIS. And 15% will be paid to the travel agencies like Hotels.com. And then I imagine a big chunk, maybe another 18% currently, will cover electricity bills as all those rooms use a lot of AC. And then you have your salaries, and your food for breakfast etc. etc. So I would imagine absolute top-side if the planets all align, they wouldn't achieve more than a 30% margin. So 30% of $ 2,332,512 is $699,753, that's the most profit you could expect to make in a year.
And now multiply that by 10, and you get the market price (on which you would obviously negotiate) of US$ 7M. So basically if you bought it for $7M and everything worked out as you wanted it to, you could pay back your investment in 10 years, or put another way get a 10% return on your investment. If the price gets any higher, then this return is lower and to be honest you'd be better putting your money in a bank or in other types of property like apartments with less risk and less hassle.
So that would add another $5 million if the casino pays decent rent. About the only other tenant is the gym on top and they don't pay much in rent.
So may $25 million would be a fair price for the place
And there is quite a bit of repair work needed on both properties, although the casino/gym was painted 18 months ago to that rather unappealing shade of blue.
Lack of parking makes the location somewhat less desirable.
However they don't make many hotels with such impressive views - but some of the rooms don't get the view.
Any guesses on how long the property might sit seeking a new owner ?
I think the guy who posted the ad is off by a decimal point. 6.5 would be a fair price if they really want to sell.
The guy that listed it said it pulls in 200K a month in rent, giving the impression that it's dollars. It's clearly DOP, and I doubt it receives that much rent.
I'm using a " 5 " multiplier . OF the Gross .. my #s are accurate ..(FULL occupancy not necessary , its a guide to get a baseline, Room Revenue ( gross) Multiplier is industry standard .
It is the Maximum anyone would ever dare pay .. the sale price may be well below that .
If any of you can get that Hotel for 7 mil, I have a Buyer who would be immediately interested .
7 Mil in the states gets you an Apt building with $500,000 Gross , BUT the benefit of Depreciation over 20 on the base ,which is Huge .
Plenty of Investors would line up to buy that Operational Hotel , with that view .
I really had no intention of getting into an Accounting or appraisal debate .
My " guess " based on my numbers is 17 Mil, and I stand by it ..
u take your guess , based on your math , and lets see who gets Closer .
but iit is definitely going to be Way over 6.5 or 7 Mil USD , you can be sure of that .
The guy is not off on his decimal point , but he is 300% high
Rancho Hotel on Rosen by Playa Alicia is for sale at 1.2 Mil .. that is a 21 Room Hotel.. But rates are almost comparable .. in the $60 Range
Sosua Sunrise , also near Playa Alicia on Rosen ( several name changes on that hotel) is a 24 Room, and I believe SOLD for just over 1 Mil usd a couple years back ..
So based on those as a rough Comparison , per room ,, yes then Sosua Bay should be in the 8 Mil range
Lets see what happens , this should be interesting if it really is for sale .
Sosua Sunrise , also near Playa Alicia on Rosen ( several name changes on that hotel) is a 24 Room, and I believe SOLD for just over 1 Mil usd a couple years back ..
So based on those as a rough Comparison , per room ,, yes then Sosua Bay should be in the 8 Mil range
Lets see what happens , this should be interesting if it really is for sale .
refer back to my prev comment about Hotel theft ..( this is common knowledge for that hotel, especially the Victoria House side)
All The managers who have allowed it , need to be removed, all the Employees replaced .
but to answer your specific question, I doubt its even in the 30 % average Range . but for very specific reasons .
They were also hosting " time sharing " Scammers like 12 years back? ..that did not help wither .
Public TRUST was Pinned at close to ZERO for this place ..
Hey, it is a great location. We're alse can you walk a hundred feet and get a portrait of snoop-doggie dog, Tupac Shakur and some tasty chicken fingers served in a plastic basket
I heard he is in a nursing home and that his wife is selling off all of his assets.
That's a truly stupid thing to do if she is, unless they are desperate for cash. She will pay tax on the capital gains, and then inheritance tax again when he dies. Good job she has no idea what it's worth.