BRRRR'ing commercial properties

[Matthew Radniecki]

My wife and I looking at a 16 unit motel and converting away from traditional motel operation and towards STR Airbnb each unit.

I've read enough books and have enough education to know on paper how the commercial refi process should work.... increasing NOI at a given cap rate to drive up valuation.

But none of the books and education really dive into the nitty gritty of what is basically commercial BRRRR.

For example... upon cash out refi, I am assuming most lenders will require a formal business appraisal. It is easy for us to value using NOI and cap rate for the given market. But how will that differ from externa business valuation? Any insight?

And what about time lines... will most lenders (or appraisers) require a certain number of years of financials to qualify the increase in NOI?

And is there any consideration given to property improvements and market conditions or is it all 100% financially driven in the commercial world? 

Just looking for some of that real world knowledge that may get missed in a book. 

[Andrew Postell]

@Matthew Radniecki doing this technique on an apartment complex is pretty common but doing it on a hotel/motel is a bit less common.  However, just to provide a reference point, most lenders would want a 2 year history of income on a commercial asset to asses the value of the property.  So a commercial "flip" is usually a 3-4 year turn time because of that 2 year history that is required.  I hope that makes sense how I am describing it.