Buying a Hotel in Florida

How a Hotel Purchase Works

A hotel is bought in the same order every time, and the buyers who close are the ones who are ready for each step before it arrives.

• The brief: cities, price, room count, flagged or independent, stabilised or value-add
• The search: the MLS feed, the listing portals, and the owners who would sell but have not listed
• The numbers: trailing twelve months, STR, rate history and NOI requested under NDA and checked
• The offer: price per key and cap rate against comparables, with financing, deposit and due-diligence terms that a seller will accept
• Due diligence: inspections, title, licences, franchisor approval, the PIP, the STR audit and the appraisal
• Closing: the lender's conditions cleared, the management transition planned, the keys handed over

What to Underwrite Before You Offer

Operating metrics are never inferred from a listing. They are requested, audited and compared.

• Occupancy: The share of available room nights sold, by month and by year, against the market and the competitive set.
• Average daily rate (ADR): Room revenue divided by rooms sold. Rate is where a boutique or oceanfront hotel earns its multiple.
• RevPAR: Revenue per available room: occupancy times ADR, the single figure most buyers compare first.
• Net operating income: Revenue less operating expenses, a market management fee and a reserve for furniture, fixtures and equipment, usually four percent of revenue.
• Price per key: The asking or sale price divided by the number of rooms, the shorthand every hotel buyer and lender uses to compare properties.
• Brand and franchise terms: The flag, the remaining term, the fees, the property improvement plan a transfer triggers, and whether the franchisor will approve the buyer.
• Property condition and capital needs: Roof, mechanicals, elevators, pool, seawall where there is one, and the last renovation; coastal insurance and flood cost now move hotel values as much as rate does.
• Land and alternative use: A motel on a corner lot or an oceanfront parcel can be worth more as land or as a redevelopment than as a going concern, and the valuation says so when it is.

Financing a Hotel

Hospitality loans are underwritten on the operation as much as the building. SBA 7(a) and 504 loans finance owner-operated hotels and motels up to their programme limits with 10 to 20 percent down; conventional hospitality lenders want 25 to 35 percent down, a seasoned operator and a debt-service coverage ratio above 1.25; private capital and seller financing fill the gaps. Consult a licensed lender for terms. BreakThru Realty introduces buyers to lenders who close hotels and keeps the financing on the contract timeline.

Before You Make an Offer

Hotel sellers share their books only with buyers who are ready, and a ready buyer's offer is taken seriously from the first conversation.

• Proof of funds for the equity, usually 25 to 35 percent of the price on a hospitality loan
• A lender conversation started: SBA 7(a) or 504, a hospitality lender, a bank, or private capital
• A personal financial statement and two to three years of tax returns
• Hotel operating experience, or a management company lined up to run the property
• An entity for the purchase and counsel who has closed a hotel before
• A clear brief: cities, price range, room count, flagged or independent, value-add or stabilised

Off-Market and Confidential Acquisitions

Many Florida hotels change hands without a public listing. A registered buyer with a clear brief and proof of funds is shown confidential opportunities as they arise, under NDA, and the brokerage approaches owners of specific properties on a buyer's behalf where the brief calls for it.

Register as a Hotel Buyer

Give us the brief: preferred markets, budget (under $2 million to over $50 million), room count, property type (independent hotel or motel, branded or franchised hotel, boutique hotel or inn), financing (cash or equity in hand, lender pre-approved or term sheet, starting the financing conversation, 1031 exchange) and timeline (ready to offer now, within 6 months, 6 to 12 months, building a pipeline). A registered buyer is sent the listings that fit, the financials under NDA, and the off-market opportunities as they arise. A listing's financials are released only as the listing brokerage authorises.

Broker of record direct: (786) 914-1017 · sales@breakthrurealty.com

Questions Hotel Buyers Ask

How much money do I need to buy a hotel in Florida?

Typically 10 to 20 percent of the price on an SBA loan for an owner-operated hotel or motel, and 25 to 35 percent with a conventional hospitality lender, plus working capital, closing costs and any PIP the franchisor requires. Consult a licensed lender for terms.

Can I see a hotel's financials before making an offer?

Yes, under a non-disclosure agreement and usually with proof of funds. The listing brokerage controls what is released; BreakThru Realty requests the package on your behalf and checks it before you offer.

What does a buyer's broker cost?

How a buyer's broker is paid is agreed in writing before the search starts. In many hotel sales the compensation is offered through the listing, and where it is not, the agreement says what the buyer pays.

Do you represent buyers outside South Florida?

Yes. The live listings on this site are the six South Florida counties in the MLS feed; the brokerage represents buyers anywhere in Florida and searches the statewide feed and off-market channels for them.

Related on BreakThru Realty

• Florida commercial real estate
• Investment property services
• Businesses for sale in Florida
• BreakThru Realty Research: market reports
• Tyson E. Sam, Founder and Broker of Record