Mogul Calculator

Hotel acquisition calculator

A practical deal screen for owners, operators, brokers, and buyers deciding whether to buy, renegotiate, or pass.

Recommendation

Pass

Deal score

At $2,250,000, this deal produces a 6.9% cap rate and 0.99x DSCR. The $300,000 PIP pushes all-in basis to $2,720,000, or $56,667 per key. The deal works better if occupancy improves from 55% to 62% or if the seller drops price by roughly $696,390. Recommendation: Pass.

Property

Property nameCity / stateProperty typeRooms / keysOccupancyThe percentage of available room nights that are sold.%ADRAverage daily rate collected for occupied rooms.$Other annual income$

Purchase and capital

Asking price$Estimated purchase price$PIP / renovation costProperty improvement plan or renovation capital needed after acquisition.$Closing costs$Working capital$Franchise / conversion costs$Initial capex reserve$Target cap rateNOI divided by price. It is the unlevered yield on the real estate.%

Operating expenses

Payroll

Calculated: $162,954

22%

Rooms / housekeeping / laundry

Calculated: $66,663

Repairs and maintenance

Calculated: $29,628

Utilities

Calculated: $44,442

Insurance

Calculated: $29,628

Property taxes

Calculated: $37,035

Franchise / royalty fees

Calculated: $37,035

Brand marketing / reservation fees

Calculated: $22,221

OTA commissions

Calculated: $22,221

Credit card fees

Calculated: $14,814

Management fees

Calculated: $22,221

Admin and general

Calculated: $37,035

Sales and marketing

Calculated: $14,814

Other operating expenses

Calculated: $15,000

FF&E reserveFurniture, fixtures, and equipment reserve set aside from revenue.

Calculated: $29,628

Debt and financing

Loan amount$Down payment%Interest rate%AmortizationyrsLoan termyrsTarget DSCRDebt service coverage ratio: NOI divided by annual debt service.x

Scenario analysis

Current performance

NOI $170,361

Current performance occupancy%Current performance ADR$Current performance expense ratio%Current performance cap rate%

Cap value

$1,703,610

DSCRDebt service coverage ratio: NOI divided by annual debt service.

1.09x

Cash-on-cashLevered annual cash flow divided by cash required to close.

1.4%

Improved operator case

NOI $237,678

Improved operator case occupancy%Improved operator case ADR$Improved operator case expense ratio%Improved operator case cap rate%

Cap value

$2,376,785

DSCRDebt service coverage ratio: NOI divided by annual debt service.

1.52x

Cash-on-cashLevered annual cash flow divided by cash required to close.

7.9%

Downside case

NOI $114,893

Downside case occupancy%Downside case ADR$Downside case expense ratio%Downside case cap rate%

Cap value

$1,148,932

DSCRDebt service coverage ratio: NOI divided by annual debt service.

0.74x

Cash-on-cashLevered annual cash flow divided by cash required to close.

-4%

Save and share

Hotel: Roadside Inn (Tulsa, OK)
Rooms: 48
Purchase price: $2,250,000
All-in basis: $2,720,000
Occupancy: 55%
ADR: $75.00
RevPAR: $41.25
NOI: $155,361
Cap rate: 6.9%
DSCR: 0.99x
Cash required: $1,032,500
Cash-on-cash: -0.1%
Recommendation: Pass
Main red flags: DSCR is below target at 0.99x.; Purchase cap rate is below the 10% target.; Expense ratio is high at 79%.
Price reduction needed: $696,390

Operating summary

Room revenue

$722,700

Total revenue

$740,700

Expenses

$585,339

GOP

$184,989

NOINet operating income after operating expenses and reserves, before debt service and income tax.

$155,361

NOI margin

21%

Expense ratio

79%

RevPARRevenue per available room: occupancy multiplied by ADR.

$41.25

Revenue/key

$15,431

NOI/key

$3,237

Valuation

Price per keyPurchase price divided by number of rooms.

$46,875

Asking capNOI divided by price. It is the unlevered yield on the real estate.

6.5%

Purchase capNOI divided by price. It is the unlevered yield on the real estate.

6.9%

Target value

$1,553,610

All-in basis

$2,720,000

All-in/key

$56,667

Stabilized value

$2,376,785

Price reduction

$696,390

Financing

Loan amount

$1,687,500

LTV

75%

Monthly debt

$13,024

Annual debt

$156,293

DSCRDebt service coverage ratio: NOI divided by annual debt service.

0.99x

Cash required

$1,032,500

Cash-on-cashLevered annual cash flow divided by cash required to close.

-0.1%

Max loan by NOI

$1,341,952

Financeability

Not financeable

Sensitivity

Cap	Value	NOI needed	Occ.	ADR
8%	$1,942,013	$180,000	63.9%	$87.19
9%	$1,726,233	$202,500	72.1%	$98.32
10%	$1,553,610	$225,000	80.3%	$109.46
11%	$1,412,373	$247,500	88.4%	$120.59
12%	$1,294,675	$270,000	96.6%	$131.72

Red flags

DSCR is below target at 0.99x.
Purchase cap rate is below the 10% target.
Expense ratio is high at 79%.
Cash-on-cash return is low at -0.1%.
Price per key is high compared to NOI per key.
Downside case goes cash-flow negative.