Hotel VS Apartments

[Gon Eisenberg]

Is it true to say that the worth of a building will always be higher as an hotel than an apartment building?

Lets say there are two exactly the same buildings both are 20 units of 1 BD and are located in the exact same area. One is an apartment building and the other is an excutive suites hotel. Both are managed perfectly. Will the real estate of the hotel will worth more than the apartments? How much more?

[Eric Schleif]

In my experience hotels are more volatile than multi-family assets. Also there are fewer players who will finance hotels than multi-family buildings. In your example with 2 similar buildings in the same area, the hotel would most likely have a higher cap rate on an appraisal than the multi-family asset. So if you are looking at an income approach, I would think that the multi-family building would appraise higher in your scenario.Of course a thousand other things play into this and I am just trying to speak in general terms.