Building a Motel?

Question

I'm thinking of getting a motel built on a lot that I own. Does any one know in terms of financing on how I would go about trying to accomplish this. What percent would I have to put down to obtain financing?

Answer 1

usually 20%

Answer 2

As mentioned to one of the other answers, there are many other issues to think about before construction financing is a real issue.

Zoning, community plans, environmental issues, creeks and or water courses, soil testing, engineering, hight restrictions, parking, services available.

These are the ones you have limited control over, then there are the ones you may have some control over like,
Community acceptance, commercial viability, franchising or not, partnering with financial backers, time lines etc. etc

Once you have figured out all the above, you will know the likely hood of the motel being able to be built and its likely success.

Financing the project will at that stage relatively easy;

If you own the land outright (no financing against it) you should be able to get upwards to 75 % of the construction hard costs financed in draws against the various stages of completion of the construction.

This is where it may be a good idea to discuss your options with a motel specialist, there are many many financial ways to make this happen. For example there are a good number of timeshared motels and hotels around, in which days, weeks and months are being sold to as many buyers as needed to finance the entire project.

An other method might be to partner with a construction firm, they built it, you own the land and run the business once the project is done, and share the profits in some fashion, and the proceeds from the sale of the project when that time comes.

As a wise man told me many many years ago, if the deal is right, money will show up in amounts surpassing your needs and from sources you least expect it. So far this has proven to be so every time I have ever needed it.

Good Luck

Answer 3

Get the zoning taken care of first. But the points required would depend on who is providing the loan. It can be 15% or lower.