Hotel to Apartment Conversion

6 Replies

Hi BP Community, 

Would love to discuss the hotel to multi conversion play with fellow investors who have considered or have completed a similar type of project.  Strongly believe this trend will only grow in the coming years as hotels are currently oversupplied and MF undersupplied.  We are currently negotiating our first PSA for such project now. 

Look forward to connecting! 

@Sean Banilivy We have looked at this strategy recently with the amount of distressed hotels for sale. We were pursuing a project where we believed the basis was low enough that a substantial renovation could occur and still have our all in cost be significantly below replacement, and even below the average $/unit for apartments in the market. This provides the potential opportunity to achieve strong returns while keeping rents somewhat affordable. 

We ended up not aggressively pursuing the deal as it was an auction and we weren't able to complete adequate due diligence in order to essentially close with cash within 30 days.

Following this thread for further input as we're seeing more and more of these projects becoming available on the open market.  I'd imagine with the huge hit to the travel/leisure industry from Covid, there will be lots of these opportunities. 

Anyone out there successfully pulled off a seemingly profitable conversion? 

Hey @Sean Banilivy . David Peters at First Floor Equity does some rehabs on hotels, and I believe he converts them into multifamily housing (I'm not 100% clear on the specifics, but you can find him on LinkedIn). I'm sure he'd love to talk.