ANSWER: We have all heard this before. As it related to financing, hospitality properties may represent a challenge depending on the historical cash flow. In certain states, 2020 and 2021 may have seen closures due to Covid-19, so gross revenues during this period may have been compromised to some extent. Most banks understand this and will be flexible in underwriting.
It is also worth noting the real estate values in certain markets may overshadow the value of a property as a “going concern” AKA “business value.” Its “highest and best use” may be apparent, but it will ultimately be determined by an appraiser if financing is necessary.
In high-cost real estate markets, it may be challenging to finance an acquisition with a high loan to value (LTV) i.e., 80%, as the NOI may be insufficient to carry the desired loan; this can be analyzed in underwriting before an offer is made.