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Hotel to MultiFamily Conversions
By the Numbers
| Operations | Hotel/Extended Stay | Multi-Family Housing |
|---|---|---|
| Occupancy | 70% | 90% |
| Revenue | $1,400,000 | $1,000,000 |
| Average NOI Margin | 40% | 60% |
| NOI | $560,000 | $600,000 |
| Sales/Refi Values | Hotel/Extended Stay | Multi-Family Housing |
|---|---|---|
| Average Market Cap Rates | 10% | 6.5% |
| Appraised Value using Market Cap | $5,600,000 | $9,230,769 |
| Revenue Multiple | 3.5x | |
| Value on Revenue Multiple | $4,900,000 |
| Financing Options | Hotel/Extended Stay | Multi-Family Housing |
|---|---|---|
| LTV – acquisiton/Reno | 60% -70% Max | 75% -80% |
| Rates Charged by Lender | Higher | Lower |
| Portfolio of Lenders | Limited | Unlimited |
| Ability for Cash Out Refi | Limited | Unlimited |
| Lenders willingness to finance | Low to Medium | High |
| Refi Cash Out Example Year 2 | Hotel/Extended Stay | Multi-Family Housing |
|---|---|---|
| Purchase Price | $3,500,000 | |
| Conversion/Improvement | $1,500,000 | |
| Total Investment | $5,000,000 | |
| Refi Value in Year 2 | $9,230,769 | |
| Refi Cash Out @ 85% of Appraised Value | $7,846,154 | |
| Cash out to Investor | $2,846,154 |