Hotel to Multifamily Conversion?

[Sri L.]

This seems unintuitive to convert a hotel to a multifamily, but from my underwriting it seems for the property I just got into contract (in the mid west) a multifamily conversion seems more lucrative than operation as a hotel. I am a multifamily investor, not in the hotel space, so I would like some feedback:

• -Typically hotel is considered "higher and best use" than multifamily, and maybe if I operated it as such it could be, but this property is poorly managed, and has no flag on it, and because I am a multifamily investor I look at it as a multifamily play and it is looking like a slam dunk IF the city approves the re-zoning. I have no interest in operating it as a hotel.
• -Will require re-zoning, talked to the city and a land use consultant seems like it is do-able in a 45-90 day period (kept contingencies on during this process with optional 30 day extension)
• -100+ rooms, Each room is 470sq ft approximately(so this will be studio or 1bed apartments), with some suites bigger 
• -Not sure what to do with conference hall and restaurant
• -Will be hiring a consultant to do the re-zoning (since I'm an out of state investor + this is my first time doing rezoning). Consultant has worked with Marriott before but has not done a hotel to multifamily re-zoning. 

Questions

Has anyone financed such a deal, even with low leverage? I assume I have to go hard money, but even such it seems like it would be a niche of hard money lenders who would lend on a deal like this.

I would like some input on how to shut down a hotel - do you refund those who have booked? What if there's a restaurant that has a lease/contract? Who do I need to hire to make sure this goes per plan?

Anything else I should be aware of?