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Hard Money & Private Money Hotel Financing

Hard Money & Private Money Hotel Financing

Hard money loans can provide the funds you need to purchase and/or update a hospitality space when a bank loan is out of reach. Over the past few years, First Capital Trust Deeds (FCTD) has secured hard money and private money hotel financing for owner operators and investors who purchase and renovate hospitality properties. Most of our hotel financing has been focused near our offices on the West Coast, where most of our trust deed investors either own or lend against hospitality properties. 

Below are a few noteworthy hard money or private money hotel loans that closed in the past few years. 

First & Second Combo Hard Money Loans — $5 Million

An experienced operator used a first and second combination loan to purchase an empty Los Angeles motel at a significant discount during the first few months of the COVID-19 pandemic, when the economy and motels were shut down. FCTD worked with a mortgage fund on the first mortgage (up to 60% of purchase price) and a family office on the second mortgage (up to a combined Loan-To-Value [CLTV] of 70%.) Both loans were written for 24 months, giving the buyer time to start booking rooms when the economy opened up again. 

Palm Springs $2.5 Million Private Money Bridge Loan

FCTD originated a 65% LTV private money bridge loan for an experienced hotel investor who needed to close within 15 days after their institutional financing fell through. The 12-month bridge loan was written with a 2-month interest guarantee (two interest-only payments) as the borrower would continue to work with the institutional lender in the months after the acquisition to refinance the bridge loan. The investor's exit was refinancing into a long-term SBA loan, which took about five months to complete.

Lake Tahoe Motel $1.5 Million Bridge Loan

An investor purchased an outdated motel in the Lake Tahoe area, with plans to fully renovate after closing. Smaller renovation projects with lower loan amounts aren’t a good fit for bridge loan programs offered by banks and life insurance companies. But hard money and private money loans can help an investor acquire a smaller property that will remain vacant with no cash flow for 6-8 months. Once the renovations were nearly complete, the owner began marketing the rooms to generate cash flow again. 

Hard Money Second Mortgage on a Holiday Inn

The owner of a Holiday Inn hotel in the San Francisco Bay Area took out a $3 million private money second mortgage at a combined loan-to-value (CLTV) of 50%. The proceeds from the loan helped purchase land to build another hotel in Half Moon Bay.

Hard Money Bridge Loan To Purchase Entitled Land 

FCTD originated a $4.5 million hard money bridge loan for an investor to purchase an entitled commercial parcel in the East Bay Area. The 12-month bridge-to-construction loan gave the buyer one year to plan the details of the new hotel and obtain bank construction financing. 

Get Financing For a Hotel

If you own or plan to purchase a hotel that may not qualify for a bank loan, FCTD can connect you with hard money and private money hotel financing options for your investment. A first or second position bridge loan can allow you to renovate or improve the property cash flow to qualify for long-term institutional financing. Hard money and private money are great resources when your property is less than ideal — and buys you critical time to qualify for longer-term financing. 

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