Over the past few years, we’ve received dozens of hard money and private money hotel financing requests from existing owners doing a major overhaul as well as buyers seeking acquisition funds to stabilize a property before taking out a long-term bank loan. This blog post outlines a recent competitively priced private money hotel acquisition loan for an experienced operator that we believe would benefit many other hotel owners.
As mentioned above, the buyer was an experienced hotel operator, owning several brands in Northern and Central California. Upon acquisition of the hotel, the new owner would convert the property into a different brand, which was expected to cost $500,000+ to complete the overhaul. After completing the transition from one brand to a higher valued brand, the owner believed that the value of the property would increase, which would then be time to take out a long-term financing.
First Capital Trust Deeds provided the buyer with a very attractively priced private money hotel loan with limited documentation requirements.
The Terms and Conditions
- $4,000,000 Loan Amount (45% Loan-To-Value [LTV])
- 8.00% Interest-Only
- 18-Month Term
- 6-Month Interest Guarantee
- Closing Costs: 2 Points
- STAR Report – required
- Borrower Personal Financial Statement – required
- Proof of Down Payment Funds – required
- Appraisal – not required
- Franchise Comfort Letter – not required
- Property Improvement Plan – not required
The terms and guidelines for hard money and private money hotel financing for experienced owners to come in at the following price range:
- 60-65% LTV – higher LTV in larger markets
- 12-24 month terms
- 6-month Interest Guarantee requirement
- 7.50% to 8.50% interest rates