Fantastic transition from STRs to boutique hotels. Where better than Richmond, VA, a promising location for such an endeavor? Your case is indeed a challenging one, especially when traditional lenders are hesitant.
Here are a few avenues folks often explore in times like this:
You are already on this path - Owner Financing: It's great that the seller is willing to finance a portion of the deal. Stretch the terms or better still negotiating favorable terms with the seller could significantly ease the burden of acquiring the property.
Private Investors: As of December, the stock/forex market are performing bullishly. Remind them , how they felt back in July and how your deal edges against the amount of cash pumped into the economy (inflation). They might be interested in partnering or providing funding for your project.
As mentioned by @Chris Mason, Bridge Loans: These short-term loans can provide immediate financing until more traditional financing becomes available or until the property stabilizes and becomes more attractive to lenders.Interest rates and stipulations may be a pain.
Out of the box here and requires a few more research, SBA Loans: Small Business Administration loans can be an option, especially the SBA 7(a) loan program, which can be used for hotel acquisitions.
I heard someone mention - Mezzanine Financing: it involves a combination of debt and equity financing, which might appeal to some investors looking for higher returns. Not sure if this appeals to you
Joint Ventures: Partnering with a larger hospitality group or another investor might not only bring in funding but also expertise and industry connections. 40% of a deal is better than no deal. Reverse engineer the list of most recently acquired hospitality business built or bought within the 30-40mile radius, You’d be puzzled at how much capital they have to play with.
Crowdfunding or Real Estate Syndication: Platforms dedicated to real estate investment might have investors interested in backing a boutique hotel project. Your project may not have enough meat in the bone for syndication but if it scales, why now explore.
Caveat: each avenue comes with its pros and cons. However, weighing your options and performing due diligence carefully based on your specific circumstances, the property's potential, and your long-term goals. There should be some financial advisors or real estate attorneys on here around your area who specializes in hospitality ventures and might provide valuable insights tailored to your situation. These guys operate like flies on the wall. Best of luck pulling down that boutique hotel.