Commercial Real Estate Financing Hotel Books Expansion Opportunity
Author: Valerie Mellema
Date posted: 06.27.21

One of the most interesting case studies about commercial real estate financing focuses on a hotel on the west coast of the USA. After several years of owning a luxurious hotel that brought in people from around the country, thoughts started to swirl around about how exciting it would be to have a second hotel – maybe one that was built from the ground up.

Not All Problems Are Negative

Most people would be happy to have a successful hotel, and the owner is no different. However, he’s also on a constant path forward. He couldn’t stop himself from wondering whether he could do better and make an even bigger name with a second hotel, one that was built to his specifications, knowing everything he does now.

 

Speaking with associates and others in the hotel world only made him more sure of his decision. The only real question was how to finance such a massive undertaking without cutting into the money in his bank account. So he started to research every option to make the best decision for his brand.

The Need for Serious Capital

The owner knew he’d need a large amount of money to build his hotel from the ground up. That’s why he started looking into various forms of financing that would facilitate that without burning through his money in the time it would take to make his new location a success. If he was going to create the hotel he wanted, he needed around $5,000,000 to do it.  Other loans could be used for different aspects of the business. The most important thing was having the land and building the property that people came to stay in from near and far.

 

 

Selecting the Perfect Financing Option

It turned out that commercial real estate financing was the right loan product. The owner looked into several other loans and financing options, but none quite fit his needs. Plus, he had no desire to pay back too much or be rushed into huge payments if it took some time to get to the level of success he was hoping for.

Perks of Commercial Real Estate Financing

Of course, this isn’t the only loan that can be used for real estate, and the owner was intelligent and aware of his options. What ended up making him decide on a commercial real estate loan was that his current hotel could be used as collateral. The interest rate was low and with a 25 year term, the payments were reasonable. He signed and went ahead with it.

 

Moving Forward

The hotel owner now has three hotels. Would it all have been possible without a commercial real estate loan? Maybe. Maybe not. But the financing worked and helped the owner to achieve even greater success than he had thought possible.

About The Author | Valerie Mellema

Valerie has over 16 years of experience as a professional writer of blogs, eBooks, articles and press releases, with a focus on finance and alternative lending. Valerie resides with her family in Texas and is passionate about her horses.

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