Traditional and Boutique Hotel Investments

New to Real Estate · Miami · Member since 2025 · 46 posts · 23 votes

I see the latest Real Estate Rookie episode is about investing in hotels, but I don't see a recent hotel thread on here...

So what's the scoop on this? This seems like potential massive cash flow. But how would one go about this? Anybody in this field?

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Nathan Bisson

Property Manager · ME · Member since 2024 · 12 posts · 12 votes

Hey @Mat Garcia, we manage a small STR portfolio (around 20 units) and also own a boutique hotel (around 21 units).

The number of units in your hotel can be a great multiplier for success, or failure. I would say there is a spectrum of systems usage in managing STR's.

You can get by with minimal systems and lot of attention paid when managing 1-2 STR's.

However, operating a small hotel successfully is all about systems, policies and procedures. Especially as you are starting to manage more personnel, guests, etc…

I would advocate for purchasing a hotel as long as you have a knowledgable operating team to partner with you.

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Andrew SteffensBusiness Member
Tampa, FL · Member since 2022 · 3k+ posts · 3k+ votes
1y
Ive maybe never seen hotel talk on here - its a different strategy then STR traditional SFR/MF holdings. There are similarities but many more differences then STR house versus operating a hotel.
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Jake YuskaitisBusiness Member
Lender · New Jersey, USA · Member since 2022 · 254 posts · 67 votes
1y
people can make a ton of money. we lend on hotels and i've seen some great deals. but hospitality is a ton of work.
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Nathan Bisson
Property Manager · ME · Member since 2024 · 12 posts · 12 votes
1y
Hey @Mat Garcia, we manage a small STR portfolio (around 20 units) and also own a boutique hotel (around 21 units).

The number of units in your hotel can be a great multiplier for success, or failure. I would say there is a spectrum of systems usage in managing STR's.

You can get by with minimal systems and lot of attention paid when managing 1-2 STR's.

However, operating a small hotel successfully is all about systems, policies and procedures. Especially as you are starting to manage more personnel, guests, etc…

I would advocate for purchasing a hotel as long as you have a knowledgable operating team to partner with you.
3 Reply
Cliff BennerBusiness Member
Accountant · Denver, CO · Member since 2020 · 392 posts · 183 votes
1y
I have seen hotels, dude ranches, more outdoor hospitality for sale, and from my research it is more like buying a business but rather than SDE or EBITDA the multiplier goes against Gross Revenue. Usually 2-3X.
So rather than buying a car wash that grosses $100k with SDE of $50k with a 3X multiplier for the sale price to be $150k, the 6 cabin resort that grosses $100k with SDE of $50k with a 3X multiplier would have a sale price of $300k.
Just an example for a different perspective.
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Michael BaumPro Member
Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
1y
Hey @Mat Garcia, there is a reason for that.
It is a very different business. People go get 4 year degrees in hotel/hospitality management.
There are several folks on here that have invested in very small places like 8 units or so and I could see that working more like a STR vs a traditional hotel.
In those instances they were out of the country and ocean front.
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- Mat Garcia
  OP
  New to Real Estate · Miami · Member since 2025 · 46 posts · 23 votes
  1y
  Quote from @Michael Baum:
  
  Hey @Mat Garcia, there is a reason for that.
  It is a very different business. People go get 4 year degrees in hotel/hospitality management.
  There are several folks on here that have invested in very small places like 8 units or so and I could see that working more like a STR vs a traditional hotel.
  In those instances they were out of the country and ocean front.
  That makes sense. I just always try to look at all my options before going in and I see some mention of hotels on the Rookie podcast.
  BTW, weren't you in a episode? The investor who worked at Intel? Or did I make that up?! :-P
  2 Reply
- Michael BaumPro Member
  Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
  1y
  Quote from @Mat Garcia:
  That makes sense. I just always try to look at all my options before going in and I see some mention of hotels on the Rookie podcast.
  BTW, weren't you in a episode? The investor who worked at Intel? Or did I make that up?! :-P
  Yup! Episode 1024. Which is quite applicable!
  2 Reply
- Mat Garcia
  OP
  New to Real Estate · Miami · Member since 2025 · 46 posts · 23 votes
  1y
  Quote from @Michael Baum:
  
  Quote from @Mat Garcia:
  That makes sense. I just always try to look at all my options before going in and I see some mention of hotels on the Rookie podcast.
  BTW, weren't you in a episode? The investor who worked at Intel? Or did I make that up?! :-P
  Yup! Episode 1024. Which is quite applicable!
  A proper MB comes to mind. ;-)
  Thanks for sharing your story. It was inspiring in a couple of ways. I can relate in that I am not aiming for "doors", but for financial freedom, in as few properties and as simple processes as possible. I like the idea of owning and operating real estate, but I actually most want the free time and financial freedom so that I can help other people (doing what I love, which includes teaching) without being tied down to a W-2 (or worrying that AI is gonna take it over), one day.
  1 Reply
- Jon Martin
  Member since 2022 · 1k+ posts · 1k+ votes
  1y
  Quote from @Mat Garcia:
  
  I feel the same way as well. Every property in your STR portfolio is a property tax bill, a lawn to mow, a roof, an HVAC, and a thousand things that can break and go missing, often occurring in short succession after one another. Would rather have 3-5 properties that are top notch than dozens of mediocre units. I could even advocate for a single great property if it weren't for the risk of being shut down by a disaster or weather event, which is why I like the idea of a small handful spread between at least 2 markets.
  
  I've also come to the conclusion that you are either 1 bedroom or 5+ bedroom. 2-4 bedrooms are the squishy saturated middle. 1 bedrooms make good income relative to purchase price, but a 1 bedroom SFR (assuming you can find one) will get killed on the recurring expenses that don't scale down like WIFI/Cable, STR insurance, lawn care etc. I see this with my 2 bedroom that may as well be a 1 bedroom because 85% of my stays are 1-2 people, and many of the recurring expenses are about the same as my 5 bedroom across town with an ADR 2-3X+ higher.
  
  Whereas if you have a 8-20ish unit hotel, now you can capture that market segment at scale on one property and spread out the fixed costs. Plus you are also at a size where you can rent the whole place out for special events.
  1 Reply
Stuart UdisPro Member
Attorney · Philadelphia · Member since 2018 · 2k+ posts · 3k+ votes
1y
@Mat Garcia Hotel cash flow can be misleading. Opex is SIGNIFICANTLY higher than other asset classes. Having previously worked for one of the larger hotel development/managment companies I can tell you first hand there’s a lot of content online promoting hotels. I’m even seeing multi-family investors/syndicators moving into this space and it’s an entirely different ball game. Admittedly boutique hotels are very different than the assets I was involved with but I suspect there will be some challenging inefficiencies when it comes to running them. Very different than operating STR’s as well.
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Andrew Street
Member since 2019 · 1k+ posts · 292 votes
1y
Hi Mat! Hotel investing can definitely bring in strong cash flow, but it’s a whole different game compared to residential real estate - more moving parts, higher risk, and a lot more hands-on. It’s doable, just takes the right team, solid planning, and good due diligence. Happy to connect!
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James McGovern
Flipper/Rehabber · Bloomfield CT · Member since 2020 · 1k+ posts · 408 votes
1y
Hopefully someone will share a link to a sample business plan for a hotel that you can learn from
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Wade Wisner
Member since 2024 · 86 posts · 69 votes
1y
Hey Mat, I like your reply and fully concur. I have gone in both directions of doors vs financial freedom and owning my time and I have to say that I much prefer the latter than the former. I currently have a commercial property, a fix-n-flip that became a STR, another fix-n-flip that I hold the Notes/DOT, and house hacking at every opportunity. All have been very successful. My point is that some of us don't need a massive portfolio of marginally productive properties but prefer instead a few very profitable ones.
I like you highly value my time and freedom to use it as I choose. Having been in real estate for the long term I followed what I thought was the goal to own as much as possible and did that until the Great Recession where it was all turned upside down. I had commercial and residential rentals and relied on leverage and 1031 exchanges to scale my portfolio. It all came apart in 2009 when my biggest commercial lender called my loan and almost put me into bankruptcy. A very grueling and stressful time.
Today I deal only in cash and look for only properties that do not own me or my time and that support those goals. I enjoyed reading your post as you were speaking my language. Good luck to you.
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Michael K GallagherBusiness Member
Real Estate Agent · Columbus OH · Member since 2018 · 1k+ posts · 1k+ votes
5mo
Feel like hotel investing can be great, but capital intensive, and very operational based. Got a close connection doing some amazing things in south lake tahoe, their most recent acquisition is called "The iceburg" you can find them on IG, its pretty amazing, but again lots of work, not veyr passive which I feel is the main thing on these forumns or at least what used to be the main draw to BP it seems.
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Floyd JohnsonPro Member
Real Estate Agent · Orlando, FL · Member since 2025 · 60 posts · 17 votes
5mo
I was actually looking for the same forum category as I have seen boutique hotels have more talk recently. That also includes myself. For those who have previous or current information on this maybe could assist me on best way to approach financing on this deal I currently have.
I have a lease option contract on a 28 key beachfront underperforming international hotel. Currently it has no PMS or OTA systems in place and only taking cash with some deferred Maintanence utilizing only 12 rooms and netting $7k a month owner managed on excel sheets. Without the digital assurance and verifications I didn't figure to obtain institutional financing so I convinced the current owner to do a lease option at $15k down and $5k a month for 24 months with ballon payment end of term that would include owner carrying half the ballon in second position if needed. The purchase price I was able to negotiate on the current 12 keys in operation instead of the 28 keys which brought it to $1.3 with all payments including down payment reducing the ballon at 24 months for total ballon of $1.165 million. Within 3-6 months I plan to stabilize all 28 keys, insert Cloudbeds PMS and OTA systems and at conservative stabilization of 50% occupancy, (rural average is 60%) and $70 ADR (average is $95 ADR) this would put me at over $300k NOI at 7.5% Cap. Should I if its possible search for hard money to fully purchase now then refi after stabilized? Should I ride out the lease option as payment is lower then go institutional financing at 24 months? Current owner is elderly so I do worry about lease option time frame. I also want to focus on running the business and not always looking at rates and what if and when I should or shouldn't get financing. Would welcome insight on which scenario would be more beneficial.
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