Ready to scale our hospitality portfolio
Rental Property Investor · Cleveland Ohio · Member since 2019 · 25 posts · 9 votes
Hello - My husband and I are experience real estate investors, with several LTR/MTR/STR located in Ohio and Geogial, in 2022, we purchased a seasonal boutique motel in Western New York. We complete renovated and turned into a successful operation with a current 11% rate cap. We are on the lookout for our next hospitality asset. Our buy box specifically focuses on vacation destination accommodations - including boutique motel/hotel, campgrounds, treehouses, cabins, etc.
As with most people starting out - having the 20%-30% equity to put in the deal is the challenge. I have cash, but not enough for the purchase price i am targeting (500k-$1MM). I want to approach sellers with either a seller carry arrangement - or become the equity partner in a Joint Venture. I also would like to find equity partners. Any advice that can be shared to try and get over this hurdle to be able to expand our portfolio? I feel like i am in this awkward in the middle stage where I still need to work my corporate job, but right on the cusp to make real estate my fulltime job. My husband and I are not afraid to work - just cannot find where to start.
Congrats on turning that boutique motel into a success! For your next step, you might want to look into seller carry arrangements and joint ventures. Networking will be key here. Consider connecting with local REI meetups, hospitality groups, or even online forums like this one to find like-minded investors.
You could also pitch your successful track record to potential equity partners. Your ability to turn around a property with an 11% cap rate is a pretty strong selling point. Crowdfunding platforms tailored to hospitality investments might be another avenue to explore. Although these platforms tend to accept bigger deals from sponsors with a lot of experience. It's still worth looking into.
And don’t underestimate the power of direct outreach; some sellers may be more flexible if you present a clear, structured plan for partnership or financing.
Well first off, congrats on the success you’ve had with your hospitality investments—an 11% cap rate on a boutique motel is no small feat! I’ve been in a similar position where I wanted to scale but equity was a limiting factor. What worked for me was focusing on building strategic relationships with top tier people (quality partners) who could complement what I brought to the table—sales, management, and execution.
When you are approaching sellers for creative financing, leading with a clear value proposition (and CONFIDENTLY) is key. Sellers are more likely to consider a carry arrangement if they see you as a solution, not just another buyer. You have to find their problem.
There are a lot of high-net-worth people looking for opportunities to enter the hospitality space but lack the operational know-how you’ve clearly demonstrated. Pitching them on your track record and offering them a passive role with attractive returns can be a solid way to bridge the funding gap.
Shoot me a message if you want to talk more, I’m always looking to align with people making bold moves in this space!
Natalie, you're in a great position with a proven track record in hospitality and a strong cash-flowing asset! Here are some strategic ways to bridge the equity gap and scale your portfolio:
✅ Seller Carryback: Many hospitality properties struggle to sell, making sellers more open to carrying part of the purchase price. Propose 20-30% seller financing with structured interest payments.
✅ Master Lease Option (MLO): Take control of the asset with an option to buy after stabilizing revenue—especially useful if the property is underperforming.
✅ Equity Earn-In: Offer the seller a minority stake (e.g., 10-20% ownership) instead of cash up front.
You have a strong 11% cap rate success story—use it to attract equity partners!
✔ Joint Venture (JV): Find private investors willing to fund equity for ownership (e.g., 30% of the deal for 100% of the down payment).
✔ Syndication (Reg D 506(b) or 506(c)): If you're looking at $1MM+ deals, syndicating investors could work—though it requires legal structuring.
✔ Networking: Target high-net-worth individuals (HNWI), real estate groups, and doctors/lawyers/tech professionals looking for passive cash flow.
Short-term financing can cover the down payment:
✅ Private lenders: High-interest, but great for acquisitions
✅ Mezzanine loans: Secondary financing sitting behind a primary loan
✅ Cross-collateralization: Leverage equity in your existing motel or rentals
Consider bringing on an investor who has scaled hospitality properties—they can provide funding while you handle operations.
Would you like introductions to equity partners or lenders who specialize in boutique hospitality acquisitions?
Thank you for this! This is exactly what I was looking for and gives me confidence that I can go after that deal. I would love to be introduced to equity partners and lenders as I have a potential deal that I want to present an offer - but struggling with the 25% equity required by most institutional banks.
Thanks again!
Natalie
@Natalie Gelbke-Mattis congrats on the success so far! I'm a commercial mortgage broker and I'd love to connect to discuss debt financing strategies as you come across potential deals.