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Property – Top Things to Look at When Buying Land

Perhaps it is the pioneer spirit in us that wants to buy an acre or more of wild land. Maybe we want to build our dream home, exactly as we’ve envisioned it in our mind’s eye. This means finding a vacant lot in your dream location, perhaps in a new subdivision. Regardless of your motivation, buying land is a complex process. It is much different than purchasing a house. Purchasing land means that you need to think about access, utilities, easements, land-use restrictions. All of these things have been covered when you buy a house.

The initial process is generally the same as when you purchase a house. Decide exactly what you want. You need to have a concrete plan and then find a zone. Once that is settled, narrow the search area. The next step is to spend some time at your city’s planning and zoning department. They will have all the necessary forms that need to be completed, plus they should be able to answer even the most basic of questions. Once you are there, look closely at the county’s long range land-use plan. This will illustrate areas designated for business, residential, agriculture and public use. Public use incorporates parks and schools. The plan will have details about your future neighboring garbage dump or prison.

The employees at planning and zoning should be able to bring up future road improvements. Perhaps you have wondered why homes are built next to major highways. It is likely that the owner did not know the highway would be there when the bought the land 15+ years ago. Now there is no way they can sell.

Now that you have narrowed down a parcel that interests you, determine the property zoning. Your dream house may not be permitted if the zoning does not allow it. Zoning tells us whether we can build on the site.

The next step would be to determine if the land is unrecorded acreage or if it is in a recorded subdivision. You should be able to see the plat plus the restrictions of the subdivisions, if it is in a subdivision. This is universal whether it is in a city or a rural countryside. The modern the plat, the more details it will have. These details may or may not be listed on the restrictions on the subdivisions. This information will tell you if the greenbelt behind your property is your neighbor’s yard or if it is a greenbelt that cannot be disturbed. Also very important is the utility easements that show up on a plat. This means the area won’t be available for construction.

If it is a subdivision, the restrictions show how much control the property owner has over the property use. These restrictions can cover items such as pets and whether you can park a mobile home or boat in the driveway. Some subdivisions have homeowner’s association fees. The restrictions will state how much the fees are, how often they are paid and what they cover. For instance, most roads in gated communities are owned by the property owners and the maintenance is paid via the homeowner’s association fees. Some homeowner’s associations have voluntary and involuntary memberships. If the particular one in your subdivision is mandatory and you do not pay your fees, you can have a lien put on your property and it can go to foreclosure.

The plat and restrictions will show utilities and road access. It will show if there is municipal water and sewage. If not, you may have to drill a well and install a septic system. This would mean additional thousands of dollars in building costs. Looking at road access helps to determine if you can even access the land. You may need a special vehicle to get to it. It is best to have paved roads or a dedicated easement on your property.

Although the details listed above may seem complex, it is important to take the time to look at all aspects of the property closely. If not, you may be in for a few nasty surprises once you’ve purchased the land. All future land owners should do their due diligence. Once complete, you will have confidence that your piece of land is exactly what you were looking for.

Commercial Loan For Your Hotel Property

Getting a commercial mortgage for a hotel property is very similar to getting a commercial mortgage for an owner occupied commercial property with a few subtle differences. The driving force for the majority of most hotel income is the RevPar or revenue per available room. RevPar is most commonly calculated by multiplying a hotels average daily room rate (ADR) by it occupancy rate and is a key indicator of performance. Rising RevPar is an indication that either occupancy is improving; the ADR is increasing, or a combination of the two.

Although RevPar only evaluates the strength of room revenue, it is typically the most relevant indicator of performance. While many full service hotels generate revenue through other means such as restaurants, casinos, conferences, spas, or other amenities the majority of hotel properties are either limited service flagged properties or limited service unflagged properties. A limited service hotel is simply a hotel with out a restaurant. Because the operating costs of the restaurant component generally run higher than that of the hotel operations, it is common for the net operating income (NOI) as a percentage of total sales to be lower for a full service than a limited service hotel. For this reason the majority of commercial lenders prefer to finance limited service hotels.

Flagged vs. Unflagged Properties:

A flagged hotel property is simply a hotel that belongs to a national franchise. An example of a flagged property would be a Holiday Inn or a Best Western. For the guest, a flagged property provides the benefits of a uniform standard that is upheld by the franchisor. A guest could stay in a flagged property on the east coast and could expect the same flag on the west coast to have the same standard of cleanliness and amenities. The owner of the property gets the benefit of a nationwide reservation system and marketing. For this benefit the operator is expected to pay a franchise fee which can typically range anywhere from 5% to 10% of room revenue. Because of the advantages that a flagged property has, most commercial lenders prefer to finance them over an unflagged property. Sometimes it can be extremely difficult to get a commercial loan for an unflagged property, especially if the property isn’t in what is considered a destination resort area. A destination resort area would be an area like Miami, Myrtle Beach, or Orlando FL. An unflagged property in a destination resort is easier to obtain a commercial loan on than an unflagged property in other areas of the country.

Exterior Corridor vs. Interior Corridor:

An exterior corridor property is a hotel property where you can actually see the door to the rooms from the exterior of the property. These are sometimes referred to as a motel instead of a hotel. The term motel is actually derived from the term motor hotel where most travelers would park their vehicle directly in front of their room. While there are disagreements between what defines a motel and what defines a hotel, there is typically very little difference between the two outside of a lenders perception.

Most exterior corridor properties are older and subsequently will not have the quality of furnishings and will have more deferred maintenance than an interior corridor property. An interior corridor property is going to be more energy efficient and would have a lower utility expense as a percentage of gross revenue.

Financing Your Hotel Property:

When trying to get a commercial loan for your hotel property there are a few distinct differences you can expect as opposed to financing other commercial properties. A hotel property is considered special purpose in nature which simply means that it is generally cost prohibitive to convert it to alternate use. An office building or retail space can accommodate numerous types of businesses whereas a hotel property can only accommodate a hotel. Because of this a commercial mortgage for a hotel is going to be considered riskier to the lender than a commercial mortgage for other general purpose property types. A lender will mediate this risk by taking a more conservative approach to underwriting a hotel property.

The loan to value (LTV) for a hotel property will be lower than other general purpose property types. For a limited service, flagged property 65% LTV is typical and that number can go down depending upon the age of the property and whether its interior or exterior corridor. The LTV is simply a ratio calculated by dividing the loan amount by the value of the property. The debt service coverage ratio (DSCR) for a hotel will also need to be higher than that of a general purpose property type. The DSCR is a ratio that determines the strength of the property or business income in relation to the proposed mortgage payment. A typical required DSCR for a hotel property by a commercial lender is 1.30 which simply means that for every $1.00 in proposed mortgage expense there should be $1.30 available to pay it. For other general purpose property types the DSCR is lower. A DSCR of 1.20 is common for general purpose property types and can go oven lower for a less risky property such as an apartment building.

Because the acquisition of a hotel property under a conventional program requires a large capital injection, many borrowers prefer to purchase a hotel property by utilizing the SBA 504 program. This program enables the borrower to put in as little as 15% and still obtain a better interest rate than a traditional commercial mortgage for a hotel.

Bamboo – Sustainable Pulp, Fiber, Paper and Construction Materials Source

Bamboo – A grass you can use like wood but grows up to 50x faster

In North America and Europe, soft woods and hard woods have traditionally been used for house framing, flooring, and doors as well as for making furniture. The problem with using trees for construction is that they take 20-100 years to mature which means that vast tracts of land must be committed for many years between harvests of the wood.

An excellent alternative to using hard woods and soft wood lumber is to use bamboo.
Unlike hardwood and softwood trees, bamboo grows very quickly and can be harvested in only a few years as they grow up to 3-4 feet/day (1.5-2.0 inches/hr)), with growth rates of 3-6 inches per day being common due to a unique rhizome system and is dependent on local soil and climate conditions.

Bamboo is already important to East and South East Asia where it is used in gardens, as a building material, and as a food source. Bamboo can survive in diverse climates from cold mountains to hot tropical regions Bamboo already occurs in the south eastern United States and there are a number of species that can be grown in the northern USA and Canada . There are already 35 species of bamboo that can be used for pulp and paper instead of trees. Bamboo grows in many sizes from small one inch diameter poles to large 12″ diameter bamboo which grows 100 feet (30 meters) tall in only 3 to 4 years.

Treated, bamboo is a very hard wood that is both lightweight and very durable, and can be used in making or building houses, fences, bridges, toilets, walking sticks, canoes, tableware, furniture, chopsticks, food steamers, toys, bicycles, construction scaffolding, as a substitute for steel reinforcing rods in concrete construction, hats, and for martial arts weaponry, including fire arrows, flame throwers and rockets. Omachron has developed a series of environmentally safe treatments to preserve bamboo for use in construction.

Harvesting bamboo for wood requires care to select mature stems that are several years old, as first-year stems, although full sized, are not fully developed and are not as strong as more mature stems.

Bamboo can also be carved for decorative artwork, and can be made into flooring. Bamboo flooring is made by steaming pieces flattening them, gluing them together, and then sanding and finishing them. The only caution about bamboo is that it is easily infested by wood-boring insects unless treated with wood preservatives or kept very dry.

Bamboo can be used to make paper and the fibers can be used as yarn and fabrics. Bamboo fabric is soft and has claims of natural antibacterial properties. Clothing, bed sheets, and towels made from bamboo are a great natural item and available at Omachron OnLine []. Bamboo has gained increasing popularity in the culinary world as a material for cutting boards, as they are hard enough to withstand years of knife abuse, yet more forgiving to the knife blade, causing less damage to the edged utensils over time

You can plant bamboo in your own back yard throughout much of North America and the wood and fibers can be used for everything from small building and carving projects to simple fencing, decoration, and making paper and crafts with your kids. For more information subscribe to Omachron OnLine.

Some skateboard and snowboard deck manufacturers as well as surfboard builders are beginning to use bamboo construction. It is both lighter and stronger than traditional materials and its cultivation is environmentally friendly. At least one snow ski manufacturing company, Liberty Skis, now uses bamboo construction for these reasons.

Bamboo is also used to make enclosures in fish farming, where cages can be made from a wooden frame and bamboo lattices.

Bamboo is a great potential as a fiber resource for pulp and paper and clothing and can be an excellent low impact farming opportunity in the near future.

Bamboo and switchgrass are also excellent fuel crops when used with the Omachron plasma combustion system to power generators, space heating, and vehicles.