How to underwrite a motel loan

This guarantee lets lenders offer longer terms for repayment than they otherwise could, which means your monthly payments will be lower. Usually used for acquisitions and refinancing but can be used for other purposes. Of course, this is right in line with how an appraiser will value your hotel.

Do you know how due diligence for hotel lending differs from due diligence for other commercial real estate lending. As of Decemberthe maximum interest rate was 7. No short cuts to due diligence and no replacement for hotel expertise While this series of articles on "What every hotel lender needs to know" does not cover every issue lenders have to consider when making hotel loans, it covers some of the most basic areas of concern.

Appraisal Rebuttals are difficult. Does the hotel owner own other hotels, bars or restaurants. Permanent Financing--For existing hotels and restaurants with in place cash flow. If the hotel workers are not unionized, has the hotel implemented the right planning and training to ensure that unionization does not become an unnecessary reality.

Many think that this is the time to jump in, before it is too late. The borrower is required to send payment direction letters to credit card processors and other major hotel revenue sourcessuch as travel agencies, group travel organizers, airlines, and retail tenants, requiring them to make payments into the clearing account.

Will the lender have sufficient reserves as part of its collateral.

Hotel Motel Financing

Banks No Longer Fund Condo Hotel Financing Unfortunately, these banks are not willing to refinance the condotel mortgage loans they are currently servicing.

Many think that this is the time to jump in, before it is too late.

Buying a hotel? Financing a hotel? 10 things every borrower should know. (part 1)

Is the hotel subject or vulnerable to an ADA investigation or lawsuit. The conditions upon disbursement may include lender approval of the contractors, plans for major projects, bonding requirements, invoices and lien releases in applications for payment, and title insurance endorsements.

In terms of sizing your deal, borrowers are often surprised that loan dollars are lower than expected. Even if the borrower can terminate the hotel manager, the logistics of doing so while remaining in compliance with the loan document covenants may be difficult, unless the covenant terms are carefully negotiated in the loan documents.

The borrower may want to negotiate for rights to terminate for a manager default or performance test failure, or to make modifications that are minor or not detrimental to the lender's interests without having to obtain the lender's consent, such as management fee reductions, or a term extension if the manager is not in default.

Many contracts valuable to the real property collateral for a hotel loan, such as leases and management agreements, can be collaterally assigned to the lender and preserved after a mortgage foreclosure.

If you would like a refresher as to why hotel lending is different from other kinds of real estate lending, you may want to refer to see, Why hotel lending is different and 8 pitfalls of hotel lending and how to avoid them.

A successor hotel owner, including a lender acquiring by foreclosure, is not typically bound by the hotel management agreement and may terminate the existing hotel manager without liability to it.

The borrower should determine at the loan commitment stage what rights the lender will require to force the hotel manager termination.

Hotel Motel Loans

Although the maximum loan is 5 million, it is possible to structure commercial loans along side of the 7a loan to increase the loan amount. Loan to Value: Up to 85% For an expansion of business (if one has hotels and is buying another hotel in the same market), the maximum Loan to value is 85%. Hotel Loan Hub is a financing tool built specifically for the hospitality industry, which comes from 30+ years of experience arranging hotel loans for acquisitions, refinancing, and development.

Hotel Loan Hub gives the borrower the power to apply and compare multiple loan terms - for FREE! This article on How To Write A Good Letter Of Explanation For Underwriters was Written By Gustan Cho NMLS Letter Of Explanations will be common during the mortgage process.

Most borrowers freak out after they get a conditional loan approval and part of conditions are a bunch of letter of explanations that need to be provided. Underwriting Guidelines 2 Effective: November 15, • Section B Mortgage Insurance Commitment Determination of the percentage of mortgage insurance coverage issued.

• Section B Delegated Underwriting Authority, and Section G Mortgage. Underwriters will be unable to approve a loan if the loan file has substantial deficiencies and does not meet the minimum standards of the lender or the lender’s secondary market investors require a second underwriter review of the loan package before a final denial is communicated to the borrower.

Capital Sources and Financing» INTRODUCTION mortgage loan process and what the hotel developer should consider when obtaining a mortgage.

Hotel Motel Financing

Exhibit indicates the breakdown between various financial institutions that lend to the hotel industry. CHAPTER

How to underwrite a motel loan
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Hotel Loan Underwriting Checklist