I have a closed 18 unit hotel in my community and am interested in analyzing the feasibility of converting it into one bed room apts. Has anyone been involved in a conversion or know someone that has? General cost per room?
Investor · Castle Rock, CO · Member since 2018 · 297 posts · 159 votes
4y
@Donald Hlava that's kind of a loaded question. Are there already kitchenettes? Are you planning to knock down walls and completely modify the floor plan? Is a lot of electrical and plumbing work needed to accommodate the conversion? All these will make a huge difference in scope of work.
Actually, I gotta come back to this one. You have the resources to close on an 18 unit hotel, which I'm assuming means you lined up the financing and had the property under contract- but you did all that before asking about the feasibility of conversion?
Investor · Castle Rock, CO · Member since 2018 · 297 posts · 159 votes
4y
@Donald Hlava that's kind of a loaded question. Are there already kitchenettes? Are you planning to knock down walls and completely modify the floor plan? Is a lot of electrical and plumbing work needed to accommodate the conversion? All these will make a huge difference in scope of work.
I mistyped in my original post - I have not closed nor am I in contract. This hotel is closed.
Originally posted by @Account Closed:
Actually, I gotta come back to this one. You have the resources to close on an 18 unit hotel, which I'm assuming means you lined up the financing and had the property under contract- but you did all that before asking about the feasibility of conversion?
Thank you Adam - I mistyped in my original post, I have not closed and am not under contract. I am hoping I can view the property before the end of the year. Once I can get feet on the ground I will be better informed. Stay tuned.
@Donald Hlava that's kind of a loaded question. Are there already kitchenettes? Are you planning to knock down walls and completely modify the floor plan? Is a lot of electrical and plumbing work needed to accommodate the conversion? All these will make a huge difference in scope of work.
Way more is needed before anyone can give an accurate answer. @Adam Lacey brought up some great points: Are their already gas or electric connections in the units that support kitchen appliances [ Range, oven, sink] Those don't run off regualr wall outlets. Neither will each unit have its own breaker and meters for H2O and electric, so you have to spend money to convert or include them in rent. What about washer and dryer hook ups? This isn't a BRRR, this is a re development, so what experience do you have in this area? Do you know a good GC with experience in this kind of thing?
What about market demand? 1 bedrooms fit within a niche of the market, usually in cities that have a large draw of single, college educated people moving to the area for a specific job. Does that fit the market?
Guess the legal red tape heavily varies from region to region, because no one is mentioning it as an issue. Los Angeles has over 4000 units underway right now, supposedly more than any other city, and my understanding is the red tape involved will make you puke.
Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
4y
How big are the existing rooms? Most hotel rooms are pretty small (300 SF?)....where is the bedroom going? Other than that, I'd say the kitchens will be your biggest expense, modern kitchens require approx 8 separate circuits per code....that will require a major electrical upgrade (I'm guessing even if each unit has it's own subpanel they will only be 60A).
I don't see it working, but good luck if you decide to move forward.....
@David Abbate are you referring to re-zoning the property, if necessary? That will definitely vary city to city and sometimes even block to block.
That and/or getting approval from what ever board lords over it in your locality. I know people do crap like unpermitted construction all the time, but adaptive reuse is a whole different ballgame.
There's a link to the people involved in the fun process in Los Angeles.
Before even discussing the architects and engineers with the skills sets needed, I don't understand why making sure you have a clear path through all that legal red tape isn't consideration 1.
Investor · Branson, MO · Member since 2016 · 101 posts · 146 votes
4y
@Donald Hlava We have done these projects and are in the middle of doing several right now. Here are some things to consider:
1. Zoning- is it zoned to be multi-family? Do you have to apply for a variance to change the use?
2. Electrical- How many breakers are assigned to each room. Most likely each room has a 20 amp breaker. If you don't plan on upgrading the panel and re-running the wire, you will have to use a modified kitchenette set up with low voltage cooktops and apartment fridges. You will most likely have to educate tenants on limited electrical use at one time to avoid tripping breakers.
3. Fire alarm system- Low frequency sounders will required for a R-1 to R-2 use change. This may require a re-running of the electrical wires to a lower gauge.
4. Extended stay- These projects work well if you have incoming revenue through the hotel side of the business and gradually transition to multi-family. Most of the time, a well occupied extended stay will produce more cash flow than a stabilized multi family.
5. RUBS- Once the project is transitioned, inserting a utility sharing/ RUBS system will alleviate utility costs.
6. Additional income streams- We usually like to use the common areas and vending as additional income streams on the property. Our onsite laundry and vending can produce an additional $3k/mo in cash flow on a 100 unit building.