Would a hotel make a good apartment building?

[Dalton Emershaw]

So, full disclosure, I am not at all experienced enough to try this, I am just asking out of curiosity and education.

There is a Holiday Inn in the downtown of my city that closed. It is 5 stories and has a small indoor pool.

Could there be an efficient way to convert this hotel into a multi-family apartment building?

[Greg Dickerson]

Originally posted by @Dalton Emershaw:

So, full disclosure, I am not at all experienced enough to try this, I am just asking out of curiosity and education.

There is a Holiday Inn in the downtown of my city that closed. It is 5 stories and has a small indoor pool.

Could there be an efficient way to convert this hotel into a multi-family apartment building?

 Yes hotels can make fantastic apartment conversion projects. It all depends on the market, demand, condition, location, type of building etc. there are a lot of factors that go into it some you can convert pretty much as is others you have to completely gutted and renovated.

[Shiv Patel]

Yes it can, but it depends on the cost structure for the conversion. You'd have to get the asset for well below replacement cost. The market would also need to justify the rents you project. I have seen successful deals happen and have also seen several fail in this space as well. Part of the reason is that, you need to reconfigure the whole building from plumbing, walls, electrical, etc. Especially if the rooms don't have kitchens. This can be extremely pricey. I know of deals where a conversion happened and the investors effectively got a multifamily property at a 4% cap rate. This means they went through all that trouble and achieved poor results. They would have just been better of buying an existing multifamily deal. So my recommendation is to account for all the costs.

[Scott Mac]

Class A, B C or D (or F). What I mean is you might end up making a Class C attracting building in the heart of a class B area, and suffer attracting residents due to lack of available Class C services and amenities (pawn shops, liquor store, buy here pay here joints, etc...).

Look at your competitors and compare it to what the local (in close) competition is offering (for example within 3 miles in the same area class, structure class, and same neighborhood).

Can you turn it into a multifamily? It can be done. The question is should it be done.

Also watch your existing build quality regarding noise between units, and between floors,

and laundry chutes (may) be convertible to trash chutes.

Good Luck!

[Tamba Neil]

@Dalton Emershaw is there a college nearby? On the surface it would seem like a lighter lift to convert it into dorm style housing.

[Danny Randazzo]

@Dalton Emershaw you need to see what size apartments are currently available in your market. Sometimes hotel room square footage is not comparable (too small) to apartment sizes. That could be an occupancy challenge. There’s a lot more due diligence you’d need to do but go get started. Good luck.

[Ethan Perry]

@Dalton Emershaw. Not sure about that particular situation but I have a large RE operator client on the east coast that has converted their hotel portfolio over to multi family per covid so it’s definitely possible.

[Todd Dexheimer]

This works well depending on the type of construction, how large the hotel is, the location of the plumbing and utilities and the overall layout. Typically you will need to combine 2-4 hotel rooms to make 1 unit.  

[Jennifer Ruelens]

I have seen it done and even lived in a conversion! I second all the responses you already have and add one thing...depending on your market that may be a lot of inventory to absorb.  Keep in mind diversity of unit types, you don't want 100 new studio units or 50 new 1 BR coming online at the same time.  Absorption is hard to predict but you have to consider it. If there are other new construction or renovations of MF going on in your market, watch their absorption closely.