For real estate developers seeking private capital for their hotel or other lodging development project, We offer a large database of commercial real estate lenders and will place projects in front of the companies that are best suited for it if the sponsor is qualifies and fills out the form below.
Both the database of firms and placing your project in front of various lenders is free of charge.
If your team has proven success with commercial real estate construction, tell us about the specifications of your specific project and we will put it in front of the loan companies who are most capable of funding the development.
The interest rates on your hotel construction loan are typically in-line with what they would by for many other real estate development projects (apartment, office, etc.) However, hotels are a tough industry to crack into as a developer. The majority of private money loans that are made for lodging projects and placed with qualified development teams that have a track record of success.
Private money lenders are often-times able to make many loans that banks cannot. However, private money loans are almost always made at a higher interest rates and for shorter terms than loans from traditional financial institutions. This is so that the investors that are behind the loan can still make a suitable return on the project that is in-line with the risk.
Loans made to develop hotel and lodging facilities will only be made after significant due diligence. The lender will require information about the location, plot of land, general contractor and development team. Hotels are the historically the most volatile of all real estate asset classes, so it is paramount to have a tenured development team and to be operating in a market that both the developer and lender fully understand.
While there are fewer lenders that are comfortable with the risk that comes from being a lender on hotel projects, the loans are typically much larger. Larger loans are more desirable for many lending institutions because they can allocate larger sums of capital on projects that they believe in.
Many loans made on hotel and lodging units from private money lenders are made on non-recourse terms. This means that the sponsor does not have to risk their home or other personal assets to secure financing. Many real estate developers are willing to pay ther higher interest as long as their
loans are non-recourse.
In addition to being comfortable with the asset type (hotel and lodging), many lenders will only make loans for projects in certain geographic regions or in markets with certain characteristics. We have done most of the heavy lifting to compile lenders and can place your project in front of the most capable firms.
For novice developers, finding money for their project is possible, however they will likely need to get smaller loans and use a higher amount of their own capital in order to get the lenders interested. This helps the lenders mitigate their risk as they are lending a smaller amount of money relative to the completed projects value. They can also be assured that the project sponsor will be motivated as they have a large amount of cash in the deal.
Development teams who have worked with hotel and lodging construction previously and can show a track record of success will have a much easier time getting capital and will be able to acquire it on more favorable terms.
New developers and veteran sponsors alike will be able to benefit from reading our article on commercial real estate construction loans.