Hotel owner cited for lack of license, code violations at two Iowa properties
An out-of-state real estate investor who purchased two Iowa hotels last year failed to secure a license and has operated the establishments as apartment buildings in violation of state regulations, according to state inspectors.
County records indicate Harvest Estates, a corporation based in Tupelo, Mississippi, purchased a New Hampton hotel in September of last year for $400,000, and a Fort Dodge hotel a few weeks later for $365,000.
The New Hampton property was once a Rodeway Inn. The Fort Dodge property was once called the Country Side Inn.
During a May 6 visit to the Harvest Estates Amerivu Inn, at 2199 S. Linn St., in New Hampton, an inspector discovered the hotel had been operating without a license. A license was then granted.
Ten of the 56 hotel rooms were inspected during the visit, and the manager agreed to close down three of them — rooms 109, 117 and 107 — until they could be brought up to minimum standards.
The inspector noted that the carpet in room 117 was not clean or in good repair; the mattresses and box springs in rooms 107, 109, and 117 were not clean; and room rates were not posted in public view as required. Also, the hotel had more than 10% of its rooms designated as “smoking allowed,” in violation of Iowa law.
The inspector also noted that the hotel was renting rooms to several people who had been there longer than 31 days, which would normally trigger level of regulatory oversight geared toward apartments. The inspector reported that she suggested the manager “reach out to the city of New Hampton to figure out any city codes regarding apartments within the city limits.”
During a May 3 visit to the Harvest Estates motel at 324 Kenyon Road in Fort Dodge, officials inspected eight of the rooms. The inspector reported the walls and the ceiling in room 242 appeared to have a “build-up of debris” on them; the window screen in room 221 had holes or gaps; the bottom of the door in six rooms had visible air gaps; the bathroom in room 221 had “a larger hole” in the wall and the sink and the shower faucet were leaking water; the shower floor in room 268 was missing several tiles; the ice machine was not working; and the shower faucets in rooms 236 and 234 were leaking.
In addition, the motel had several guests who had stayed longer than 31 days, which would normally trigger local regulatory oversight geared toward apartments.
In addition, the establishment was operating without the required hotel license. According to the inspector, a license was then issued.
State records indicate Harvest Estates is run by John Crutchfield, a self-described property flipper and investor who teaches people how to make money through real estate.
Crutchfield told the Iowa Capital Dispatch he and his partners are in the business of buying “distressed properties” and the two hotels were not in the best condition when they were purchased last fall. “We have not changed the operation of these places since we bought them,” he said. “Our first, kind of, line of business is the physical rehabbing of the places and restoring them and letting people live in habitable places.”
As for whether he intends to have the buildings inspected as apartment buildings, Crutchfield said, “Right now, I am much more interested in restoring the properties and getting operations to a level where they’re habitable. And the politics and all of that stuff, the bureaucracy, we’ll deal with that later.”
In a video he posted last fall to his Wealth in Real Estate page on Facebook, Crutchfield stood outside the newly purchased Fort Dodge hotel with a business partner and said, “We’ve got 17 rooms rented weekly and three rooms rented monthly … It’s a blessing to be able to help people have safe, clean and affordable housing. And we like cash flow, too. Cash flow is king.”
After closing on the New Hampton property, Crutchfield posted a note to the site that said after spending close to $400,000 on the hotel, he planned to spend “about $10,000 per door” and that the property would “then be worth north of $2 million.”
In recent months, state and county inspectors have cited other Iowa hotel operators for failing to meet minimum standards. Among them:
Travelodge by Wyndham, 502 Boyer Valley Road, Denison – During a March 16 pre-opening inspection, conducted due to a change in ownership, an inspector reviewed four of the hotel’s 39 rooms. The hotel was cited for failing to post information on room rates; for a stained mattress in room 112; for stained sheets in room 235; and for an inoperable ventilation system within room 114. In addition, there was no sanitizer on the premises that could be used to sanitize the coffee pots in each room, and the inside of a shield within the ice machine had a “mold-like substance” on its surface. The inspector also noted that the hotel had been operating without an approved license during time of inspection. That violation was corrected by the issuance of a license.
Quality Inn, 4747 1st Ave. SE, Cedar Rapids – During an April 20 visit, a Linn County inspector cited the hotel for failing to post room rates in each room and in the lobby and for failing to post a copy of the hotel’s license. The visit was in response to a complaint – the nature of which wasn’t described in the inspector’s report. The inspector wrote in his report that the last time the exterminator Terminex was used was the previous June. “Discussed the complaint and corrective action with the manager,” the inspector reported, adding, “The complaint was unverifiable.”