Tommy Dobczyk analyzes a hotel-to-apartment conversion deal and finds major red flags. The property's $200 nightly rates are too high for the market, occupancy dropped in 2025, and the $19 million asking price is $4 million above his $15 million valuation. He warns that while hotel costs like franchise fees vanish, core expenses remain.
Chapters
Are you locking up deals in the deal room? Not like— again, what's the— we already know the saturation and absorption rate down there, don't we? The NOI quality. Again, like the current expenses include hotel specifics like franchise fees, room supplies, food supplies, commissions, but those disappear on the apartment side. But payroll, utilities, insurance, taxes, repairs, management all matter and they come in. You need a true apartment expense reset, not just a hand wave. So occupancy declined. The hotel operation showed a meaningful decline in 2025 because people just aren't staying there that way. Uh, rents are too— I'll tell you right now, the rents are too high. They're charging $200 a night for that shit in that area. Yeah, so it's horrible. So if you were able to increase your— if you were able to increase your, your, uh, occupancy and adjust your price. It could make a difference. So the go, no-go, conditional no-go at $19 million today. Blah. All right. So now we know that it's worth $15 million. All right. Now we know this property is actually being offered at $15 million. Just let me know what we are looking at financially so I can see if we're gonna cut this or let it go.
