Full Version: loan to purchase motel
I would like to purchase 56 room super 8 motel It is for sale asking price 1.5 million.I will offer 1.1 and I think it would be accepted.I would operate as independent and get rid of super 8.Motel is in the country and recieves only 3 percent of reservations from super 8.Problems are I am not a buisness and I don't have 1.1 million.I do have 150,000 cash and good credit.I could be approved for a residential loan for this amount.I don't know about a commercial loan???
Richard, for hotel loans over $1 Million, your credit is less important than the fiscal health of the business. Don’t get me wrong, if you have declared BK and have a history of non-payments aka don’t have your own house in order, you will not get a loan...so not having bad credit is more important than having great credit. This is esp true where non-recourse loans are involved (which will apply in your case).
First you should understand that hotel properties are one of the riskier investments. Although figures show that the hotel sector has been picking up steam over the past year/year and a half, lenders are generally unforgiving when it comes to poorly performing properties, inexperienced operators and or in some cases non-flagged hotels.
So my suggestion to you is to either delay your plans to remove the Motel-8 affiliation and or keep your thoughts, yours only.
Since the income from the property will be used to service the debt, the financials of the hotels will be very important in the lending process. You have two loan options to start. Both will be full doc, and will range in LTV from 65-80% of the lower of the purchase price/value.
The first will be a local bank i.e. the commercial division of Wachovia, Bank of America, CoAmerica etc. The problem with these folk is that some will either flat out say no or will put you thru a ringer for paperwork and then take a few months to close or even say NO. Local banks are the most risk averse and will only want the strongest borrowers with lots of liquidity.
The second option will be a conduit loan. Conduit loans are essentially loans where the money comes from Wall Street type investment outfits that are willing to take a little more risk than local banks. These loans are quicker but the closing costs are a bit high as, structural and engineering reports etc are req.
Either way, based on a ~70% loan amount you will have to make up the missing 30% with either a seller second, or your own funds. Based on my experience, you will need more than $150 to put down and def show some working capital/liquidity and experience. If this does not work for you, think about taking on a partner.
do not let anyone tell you that they can get you a 85%LTV+ loan. Such a thing does not exist. There are a few private HM lenders that will do 90% or more (at 12%+) BUT they will want liens on you other assets in the amount that will make their original a swallowable LTV.
Hope that helped!
Naj
First you should understand that hotel properties are one of the riskier investments. Although figures show that the hotel sector has been picking up steam over the past year/year and a half, lenders are generally unforgiving when it comes to poorly performing properties, inexperienced operators and or in some cases non-flagged hotels.
So my suggestion to you is to either delay your plans to remove the Motel-8 affiliation and or keep your thoughts, yours only.
Since the income from the property will be used to service the debt, the financials of the hotels will be very important in the lending process. You have two loan options to start. Both will be full doc, and will range in LTV from 65-80% of the lower of the purchase price/value.
The first will be a local bank i.e. the commercial division of Wachovia, Bank of America, CoAmerica etc. The problem with these folk is that some will either flat out say no or will put you thru a ringer for paperwork and then take a few months to close or even say NO. Local banks are the most risk averse and will only want the strongest borrowers with lots of liquidity.
The second option will be a conduit loan. Conduit loans are essentially loans where the money comes from Wall Street type investment outfits that are willing to take a little more risk than local banks. These loans are quicker but the closing costs are a bit high as, structural and engineering reports etc are req.
Either way, based on a ~70% loan amount you will have to make up the missing 30% with either a seller second, or your own funds. Based on my experience, you will need more than $150 to put down and def show some working capital/liquidity and experience. If this does not work for you, think about taking on a partner.
do not let anyone tell you that they can get you a 85%LTV+ loan. Such a thing does not exist. There are a few private HM lenders that will do 90% or more (at 12%+) BUT they will want liens on you other assets in the amount that will make their original a swallowable LTV.
Hope that helped!
Naj
SBA 504 will do a owner operated hotel loan to 90%.
QUOTE(Commercial LO @ Feb 11 2006, 05:33 PM)
SBA 504 will do a owner operated hotel loan to 90%.
Actually the SBA through the 504 program will do up to 85% on hotels or other "special use properties". Otherwise the max LTV is 90%.
As for hotel loans at 85% we do them regularly and the interest rates run around 8.5% fixed for 5, 10 or even 25 years.
In my experience the difficulty in hotel financing is getting the conventional lender comfortable with the cash flow of the underlying hotel operations but also the management experience of the owner/operator. Also, KEEP THE NATIONAL FLAG otherwise the loan approval gets much harder.
QUOTE(Commercial Lender @ Feb 11 2006, 03:22 PM)
Richard, for hotel loans over $1 Million, your credit is less important than the fiscal health of the business. Don’t get me wrong, if you have declared BK and have a history of non-payments aka don’t have your own house in order, you will not get a loan...so not having bad credit is more important than having great credit. This is esp true where non-recourse loans are involved (which will apply in your case).
First you should understand that hotel properties are one of the riskier investments. Although figures show that the hotel sector has been picking up steam over the past year/year and a half, lenders are generally unforgiving when it comes to poorly performing properties, inexperienced operators and or in some cases non-flagged hotels.
So my suggestion to you is to either delay your plans to remove the Motel-8 affiliation and or keep your thoughts, yours only.
Since the income from the property will be used to service the debt, the financials of the hotels will be very important in the lending process. You have two loan options to start. Both will be full doc, and will range in LTV from 65-80% of the lower of the purchase price/value.
The first will be a local bank i.e. the commercial division of Wachovia, Bank of America, CoAmerica etc. The problem with these folk is that some will either flat out say no or will put you thru a ringer for paperwork and then take a few months to close or even say NO. Local banks are the most risk averse and will only want the strongest borrowers with lots of liquidity.
The second option will be a conduit loan. Conduit loans are essentially loans where the money comes from Wall Street type investment outfits that are willing to take a little more risk than local banks. These loans are quicker but the closing costs are a bit high as, structural and engineering reports etc are req.
Either way, based on a ~70% loan amount you will have to make up the missing 30% with either a seller second, or your own funds. Based on my experience, you will need more than $150 to put down and def show some working capital/liquidity and experience. If this does not work for you, think about taking on a partner.
do not let anyone tell you that they can get you a 85%LTV+ loan. Such a thing does not exist. There are a few private HM lenders that will do 90% or more (at 12%+) BUT they will want liens on you other assets in the amount that will make their original a swallowable LTV.
Hope that helped!
Naj
First you should understand that hotel properties are one of the riskier investments. Although figures show that the hotel sector has been picking up steam over the past year/year and a half, lenders are generally unforgiving when it comes to poorly performing properties, inexperienced operators and or in some cases non-flagged hotels.
So my suggestion to you is to either delay your plans to remove the Motel-8 affiliation and or keep your thoughts, yours only.
Since the income from the property will be used to service the debt, the financials of the hotels will be very important in the lending process. You have two loan options to start. Both will be full doc, and will range in LTV from 65-80% of the lower of the purchase price/value.
The first will be a local bank i.e. the commercial division of Wachovia, Bank of America, CoAmerica etc. The problem with these folk is that some will either flat out say no or will put you thru a ringer for paperwork and then take a few months to close or even say NO. Local banks are the most risk averse and will only want the strongest borrowers with lots of liquidity.
The second option will be a conduit loan. Conduit loans are essentially loans where the money comes from Wall Street type investment outfits that are willing to take a little more risk than local banks. These loans are quicker but the closing costs are a bit high as, structural and engineering reports etc are req.
Either way, based on a ~70% loan amount you will have to make up the missing 30% with either a seller second, or your own funds. Based on my experience, you will need more than $150 to put down and def show some working capital/liquidity and experience. If this does not work for you, think about taking on a partner.
do not let anyone tell you that they can get you a 85%LTV+ loan. Such a thing does not exist. There are a few private HM lenders that will do 90% or more (at 12%+) BUT they will want liens on you other assets in the amount that will make their original a swallowable LTV.
Hope that helped!
Naj
Richard,
Each investment opportunity is different and variables matter. I'd like to offer you a free finance consultation so that we can take a look at your specific situation and give you a better idea of the options available for you.
You are under no obligation and may find the information to be more helpful than other posts here. While the information given is good information, it is not information provided with questions asked and answered. Even if this project isn't a good one for you, I have no doubt that your dream is worth pursuing and I'm sure that you will be successful.
Each investment opportunity is different and variables matter. I'd like to offer you a free finance consultation so that we can take a look at your specific situation and give you a better idea of the options available for you.
You are under no obligation and may find the information to be more helpful than other posts here. While the information given is good information, it is not information provided with questions asked and answered. Even if this project isn't a good one for you, I have no doubt that your dream is worth pursuing and I'm sure that you will be successful.
QUOTE(SRTHOMAS @ Feb 17 2006, 02:59 PM)
Richard,
Each investment opportunity is different and variables matter. I'd like to offer you a free finance consultation so that we can take a look at your specific situation and give you a better idea of the options available for you.
You are under no obligation and may find the information to be more helpful than other posts here. While the information given is good information, it is not information provided with questions asked and answered. Even if this project isn't a good one for you, I have no doubt that your dream is worth pursuing and I'm sure that you will be successful.
Each investment opportunity is different and variables matter. I'd like to offer you a free finance consultation so that we can take a look at your specific situation and give you a better idea of the options available for you.
You are under no obligation and may find the information to be more helpful than other posts here. While the information given is good information, it is not information provided with questions asked and answered. Even if this project isn't a good one for you, I have no doubt that your dream is worth pursuing and I'm sure that you will be successful.
how do I get in touch??
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