You can also take out a home equity line of credit (HELOC), take out a second mortgage, use a personal credit card, or ask for loans from friends and family to get more startup money. [2] X Research source For example, imagine that you have saved up $47,500 in various accounts. In addition, you are able to take out a second mortgage for $100,000. Finally, you secure a $20,000 loan from a friend. This would give you $167,500 total to invest in your hotel.

Imagine that you are 35 years and decide to take some money out an IRA to add to your hotel investment amount. You decide to take out $50,000. This withdrawal would be penalized for 10 percent of its value, or $5,000, and taxed at your income tax rate. Assuming an income tax rate of 25 percent, you would be left with $32,500 ($50,000*(1-(0. 10 + 0. 25)))after the penalty and taxes. This would give you a total investable amount of $200,000 ($167,500 from earlier plus the $32,500 from the IRA).

For the previous example, this means that you would set aside $50,000 (0. 25*$200,000). This leaves you with $150,000 for a down payment.

A 5 percent down payment for a hotel costing $3 million. A 10 percent down payment for a hotel costing $1. 5 million. A 20 percent down payment for a hotel costing $750,000. 20 percent down payments are the norm if you use a bank loan to purchase your hotel. However, with seller financing (borrowing from the seller of the property), you may be able to get the down payment percentage down to 5 percent. [4] X Research source

Hotel expense and cost information can be estimated from examining hotel similar to those in your price range.

You can also look at the national state of the hotel industry by searching for relevant news articles online.

It may also be advantageous to drive around the local area and look for properties, particularly if you are planning to significantly update or restore your hotel. If you find one, you can access real estate records at the county seat to find out who owns the property and go from there. [8] X Research source

Once you have an offer to sell, check that the hotel meets your requirements in price, location, repairs or renovations needed, and style. If it doesn’t, call the seller and tell them you aren’t interested. [10] X Research source If you have several offers, make a table comparing the benefits and drawbacks of each one, for example in cost, renovations needed, and amenities.

Include in your offer that you require a set amount of time to inspect the property (for damages or necessary repairs), that you need to look through the hotel’s books (to confirm their financial information), and that your offer relies on the two of you reaching a purchase agreement and signing a purchase contract. [17] X Research source

Make sure you get any promises for additional payments or aid from the seller in writing and that they are later included in the purchase contract.

In addition to reviewing the document, your lawyer can lengthen the approval process, giving you more time to secure your financing or seek out additional financing if you need it. [19] X Research source Make sure the agreement stipulates that you can get out of the purchase up until the closing date without penalty. [20] X Research source