Can a 44% LTV Deal be funded 100% by a Lender

3 Replies

I have this commercial deal currently and I'm looking for 100% financing or other creative ways to structure the deal. (I keep getting mixed feedback, some people say no some say yes 100% financing is possible)

Hotel/Motel

Current Appraisal $2mil

Accepted offer $900k

120 rooms

ADR $60

Occupancy 30%

Rev $700k

PIP needs to be completed with a Rehab Loan (additional loan needed)

I was able to get a 100% hard money loan on a similar deal.  They even loaned me money for some fixup.  It did cost more money as the lender wanted to participate in some of the upside. 

But they did this with the understanding that I had done a number of turnaround deals.  I also had my own crew for the repairs.

So, yes it is possible but may hinge on the lender's confidence in you and the project.

Originally posted by @Steve Olafson :

I was able to get a 100% hard money loan on a similar deal.  They even loaned me money for some fixup.  It did cost more money as the lender wanted to participate in some of the upside. 

But they did this with the understanding that I had done a number of turnaround deals.  I also had my own crew for the repairs.

So, yes it is possible but may hinge on the lender's confidence in you and the project.

 good advice

Basically the bank calculates risk of the deal (obv). The more they know you, your ability to deliver, and your history, the less risk YOU are and they may be willing to take more risk on the deal. The more risk you are, the more capital they are going to want from you. 

@Account Closed

You might be able to get a 100% loan to cost loan, but you likely can't do it without at least HAVING some cash.

You'll have to paint the picture of how you or your partners can come to the table for any future capital needs.  It's absolutely possible, but difficult to say the least.  The lender will also want to know that you have experience in hotels (or experienced management in place).  They'll also want to look into you're ability to get the funding for the PIP.

If you lose the franchise agreement because you can't fund the PIP, then suddenly your value goes way down.

This sounds like a decent value add opportunity assuming the market STR report looks good. If you can't get financed maybe bring in a partner. You'll get some equity, cash flow and most importantly, a resume booster (assuming you haven't done this already previously)