Converting multi-family STR/LTR to commercial motel/hotel - Pros and Cons

[Jake Faris]

Hi all - I have a 3-unit multi-family property (3 bed 3 bath, 3 bed 3 bath, and studio) with an unfinished basement and an attached 2-car garage that I plan to remodel soon. The unfinished basement is 900 sf and the garage is 721 sf, so this could all add a lot of value. So far, I've rented one of the units (3 bed and 3 bath) as an STR and the two remaining units as LTR.

The property is zoned as mixed-use tourist commercial, which allows me to convert the property into a motel/hotel. This would also mean that I could convert all the units into STRs. Does anyone have any experience with converting a multi-family property into a motel/hotel? What are the pros and cons to making this transition (e.g., tax implications, insurance, etc.)? If I'm missing any existing threads that covered, please share! 

[Andrew Postell]

@Jake Faris keep in mind that if you change the structure of this property, then the lending options change too.  This would significantly affect the resale value of the property if you ever went to sell or ever wanted to refinance.