40 unit mfh vs 40 door hotel

Investor · Atlanta · Member since 2019 · 597 posts · 99 votes

hi,
Compared to 40 unit hotel and 40 unit hotel which is better. What are pros and cons of each.approach. My experience so far only on residential rental area. Please advise

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Ashish AcharyaBusiness Member
CPA, CFP®, PFS · Sarasota, FL · Member since 2017 · 5k+ posts · 3k+ votes
2w
Gp, I’d look at this as more than a 40-unit versus 40-door comparison. A 40-unit multifamily is primarily a real estate investment, while a 40-room hotel has a much larger operating-business component.
Coming from residential rentals, I’d probably lean toward multifamily unless you already have an experienced hospitality operator involved. Hotels can produce strong revenue, but staffing, occupancy, turnover, marketing, and day-to-day operations can make the business much more involved.
There’s also a meaningful difference on the tax side. Multifamily and hotel properties have different depreciation treatment, and hotels can have a significant amount of furniture, fixtures, equipment, and other shorter-life components that may make cost segregation worth evaluating.
I'd compare both based on NOI, financing, operating complexity, capital requirements, depreciation, and after-tax return, rather than just the potential revenue per door.
If this is your first move outside residential, I’d probably favor the 40-unit multifamily unless the hotel has a very strong operating team behind it.
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Gp G.
OP
Investor · Atlanta · Member since 2019 · 597 posts · 99 votes
2w
Are there any good property management companies who can manage hotel if I buy one like my sfh property management companies to run operations hands free
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