Hotel Investment – What Type Of Properties Get The Highest Leverage Financing?
If you are an experienced hotel operator, you will know that acquiring hotel assets can be quite challenging these days. REITS and private equity firms have a lot of cash burning a hole in their pockets and stay zeroed in on the hotel market. This is pushing the demand up for hotels and keeping prices high. The problem that is occurring is that the returns investors would like to get are being squeezed. The credit crunch is causing new loans to be valued at higher interest rates and lower loan to value. This translates to higher down payments and less cash to take home at the end of the year. This should push the price of hotels down eventually because Wall Street backed loans were readily available at 6% interest and even below to make even expensive hotel purchases cash flow out for the investor. Right now Wall Street is trying to figure out just what they want so it may take a few months for the market for those loans to settle and it will definitely not be as liberal as before. You
