Gold-Diggers: Exactly What the SBA 504 Loan Was Made For

 

Gold-Diggers was a “rundown strip bar that had seen better days” before Dave Neupert stepped in. East Hollywood, where Gold-Diggers was located, had seen better days, too, but Neupert, a Los Angeles resident since the 90s, looked at the neighborhood as the “last little pocket of LA’s east side that hadn’t seen much development.” He reckoned that change was on the way.

Initially, Neupert took an interest in the opportunity to breathe new life into the one-story bar and a two-story, ten-room hotel above the bar. The real estate developer, bar owner, and social media pioneer had good luck with a “bed and beverage” hotel-bar project in New Orleans and saw similar potential in the vacant Gold-Diggers property.  However, a storied, 6,000-square-foot, bow-trussed building behind Gold-Diggers suggested a more ambitious concept.

“That’s what kind of brought the whole concept of Gold-Diggers together,” said Neupert. “It used to be a rehearsal space for bands, mostly punk-rock, metal bands back in the ’70s, ’80s, ’90s, into the 2000s. Guns N Roses rehearsed there in the ’80s, and there were a lot of thrash metal bands, like Slayer, and Slash Records punk bands who performed there in the 70s.”

Zoning favored Neupert’s plan. The two top floors were zoned as a hotel back in the 20s, so there was no change of use necessary. He could simply renovate the hotel. The bar, which was a bikini bar for 38 years, was a 48-license bar—an old, grandfathered liquor license—with no conditional use permit requirement,” according to Neupert.

The concept is that artists can stay at the hotel, record in the studio, and play in the club. The tagline, “Drink, Sleep, Record,” was born.

The existing Gold-Diggers brand was ideal, as was the 60s-era neon sign in front of the bar. The previous bar owner coined the name. A fan Dean Martin and a frequent customer of Whiskey-a-Go-Go, he chose the bar’s name in honor of the King of Cool’s singing and dancing troupe, the Golddiggers. Neupert kept the sign and maintained the seedy-looking, retro appearance of the front of the building. He wanted his patrons to walk through a “grungy’ entrance into something beautiful and special.

What 504s are Made For

Neupert paid a decent price to purchase the facility, but he would need to put an equal amount into the renovations. A 1031 exchange from the sale of a commercial real estate project Neupert owned in Silver Lake and a two-year construction loan gave him enough capital to finish the project and get close to opening the doors.

Check out a virtual tour of the renovated space!

Neupert had taken out SBA 7(a) loans in the past, but the SBA 504 loan was the instrument he had his eye on to pay off the construction loan and provide low down payment, low-interest, long-term financing for the project.

Neupert’s mortgage broker introduced him to John Rockwell, Vice President of Business Development, TMC Financing. According to Neupert, Rockwell thought the SBA 504 would be an ideal fit. Rockwell liked the way Neupert was setting up the business with three separate entities (the bar, the hotel, and the studio) all paying rent.

“Having long-term, inexpensive money was important for us, coming out of a pretty expensive bridge loan to start the process,” said Neupert. “John came down, did a tour of the property, liked what he saw, liked the concept, and he said, ‘this is exactly what 504s are made for’.”

John Rockwell, TMC Financing
John Rockwell, TMC Financing

“There was a lot of heavy lifting, but the staff at TMC was excellent. John is amazing, and his whole crew made it easy to get through that heavy-lifting part. They held my hand the whole way.”

“It was thrilling to help Dave and his team access an affordable SBA 504 loan to finance the Gold-Diggers renovation,” said Rockwell. “Reinvigorating a historically significant property and bringing new life to an underserved Los Angeles community is exactly what the 504 program was made for. We are honored to play a role in Gold-Diggers’ success.”

Gold-Diggers Sound

American soul singer, songwriter, and record producer Leon Bridges was one of the first major artists to come use the facility as Neupert envisioned. Bridges’ producer thought it would be good to have a fully immersive environment.

“They came to us and said, ‘we’d like to have him stay at the hotel with his whole band and crew and record out of Studio 1, so he would be on campus all the time’,” said Neupert. “The idea was that he’s not going home and getting out of his creative mix, and that was really the incentive there and what we wanted to do from the beginning.”

Neupert felt that Gold-Diggers became a character in Bridges’ narrative, so much so that Bridges asked permission to name the album after Gold-Diggers Sound.

Leon Bridges and Gold Diggers
photo courtesy of Dallas News

“It really was a deeply personal thing to him, and it feels great to have created this business from scratch that was used the way we intended it to be used. For the first artist to experience what we created, and then to name the album after that, is really humbling, especially from an artist like Lean Bridges,” said Neupert.

Neupert said that despite bar being closed during the pandemic, the Leon Bridges success is putting “wind beneath our sails.” His long-term vision is to become a renowned institution in town to attract other leading artists to take advantage of the complete Gold-Diggers package. He also has plans to leverage the infrastructure upgrades he completed during the pandemic to launch a streaming network with intellectual property “that goes well beyond the income of a typical brick-and-mortar business.”

Thanks to Neupert’s vision—and with a little help from the SBA—Hollywood history is in the making once again.