How to Build a Capital Stack for a $15M Hotel Acquisition in 2026

This article is general information, not legal, tax, securities or investment advice. Laws, rates and programs change, and the details here may no longer be current. Confirm anything you plan to act on with your own counsel and accountant.

The Capital Problem Every Hotel Buyer Faces

You found a 60-key select-service property listed at $15M with a 5.2% going-in cap rate. The lender is lined up for $7.5M. So where does the remaining $7.5M come from before your exclusivity expires in 45 days?

Most buyers fail at this step. They have a great asset and a weak capital stack. The result is a stalled raise, a broken exclusivity, or a deal that closes only because they threw in more personal equity than they planned.

This post builds the stack for a $15M hotel, layer by layer, with real numbers you can model. It also covers the sequence of raising so your investor commitments land before the closing date, not after it.

The Four Layers of a Hotel Acquisition Stack

A working hotel capital stack has four layers. The order matters because each layer affects what the others can cover.

• Senior debt (SBA 7(a) or bank): $7.5M, roughly 50% of value, 6.0 to 7.5% all-in for a 7(a) on a select-service hotel.
• Seller note (mezzanine equity gap): $1.5M, 5 to 7 years, 6 to 9%, often subordinated to senior debt.
• Investor equity (your fund or SPV): $4.5M, 30% of the deal, your raise to close the gap.
• Personal equity from you (the acquirer): $1.5M, 10%, typically your 20% skin in the game on the equity side.

The key discipline: your investor equity does the heavy lifting, not your own cash. If you raise $4.5M from investors and commit $1.5M of your own, your personal exposure is 10% of the whole deal, not 30%. That is the difference between one deal and a fund you can repeat.

Closing the Equity Gap Without Over-Promising

Once senior debt and seller financing are locked, your equity gap is what you actually raise. For this $15M deal it is $4.5M from investors plus $1.5M from you, a $6M equity raise.

Investors will model the pro forma. They want to see a stabilized NOI of $700K to $780K on a 5.2% to 5.8% going-in rate, a cash-on-cash return of 6 to 9% in year one, and a hold period of 3 to 5 years with a sale exit at a 5.5 to 6.0% cap. If your numbers do not clear those lines, your raise slows down.

Structure the SPV so investors know their distribution waterfall before they wire. A 100% preferred return of 8% back to investors first, then a 70/30 split of profits between investors and you as sponsor, is the standard hotel and hospitality shape. Put it in the operating agreement, not just the pitch.

The Raising Sequence That Keeps the Deal on Schedule

Do not raise all at once and hope. Run the raise in a sequence that matches your timeline.

• Weeks 1 to 2: Lock senior debt and seller note terms. No investor commitments are real without this layer written down.
• Weeks 2 to 3: Build the PPM, subscription documents, and CFA pro forma. Open the data room.
• Weeks 3 to 5: Open to your core investor base. Anchor 60% of the equity first so you have a funded majority before you market wider.
• Weeks 5 to 8: Close the remainder. If you are short, do not extend exclusivity twice. Reprice the seller note or tighten your personal equity commitment instead.

The mistake buyers make is opening the raise before the debt and seller note are firm. Investors walk when the stack shifts under them. Sequence first, raise second.

Structuring the SPV for One Hotel or a Repeatable Fund

If this is your first hotel, form a single-asset SPV. It is faster and cheaper, and your investor base is small enough to manage directly.

If you intend to buy three to five hotels over three years, form a fund instead. A fund lets you close investor commitments once and deploy them across multiple acquisitions. That is what a roll-up or a multi-deal hospitality fund is, and it changes your economics entirely.

For a fund, the structure differs. You typically charge a management fee of 1 to 2% of committed capital, take a 10 to 20% promote above a 8% hurdle, and hold for a 5 to 7 year term. For a single-asset SPV you do not usually charge a management fee. Match the structure to how many deals you will actually close, not how many you hope to close.

The Documents That Make the Raise Legally and Financially Sound

Investors in a hotel deal will ask for the same core set of documents. If any of these are missing or sloppy, the raise stalls.

• Private Placement Memorandum (PPM): the risk factors, use of proceeds, and exit strategy in written form.
• Subscription agreements: each investor's signature page, KYC, and accredited investor certification.
• Operating agreement: the waterfall, management rights, and decision thresholds.
• SPV formation documents: the LLC certificate, EIN, and banking setup.
• CFA pro forma: the three to five year financial model your investors are underwriting.

A hotel deal has extra layers a simple business buy does not: a going-concern property, an existing brand or management contract, and a going-in rent roll of room rates and RevPAR. Your pro forma should show stabilized occupancy, ADR, and RevPAR assumptions, not just a blended cap rate.

Frequently Asked Questions

How much of a $15M hotel can I fund with SBA 7(a) debt?
Typically 50 to 60% of value for a select-service or limited-service property, so $7.5M to $9M on a $15M deal. Extended-stay and service-heavy assets may go higher. Confirm the ceiling with the lender before you build the stack, because it sets your equity gap.

What return do hotel investors usually require?
A cash-on-cash of 6 to 9% in year one and a total return that clears an 8% preferred return plus a promote. If your pro forma is below that, investors will ask for a lower purchase price or a longer seller note, which shifts your stack.

Should I use a single-asset SPV or a fund for my first hotel?
Use a single-asset SPV for the first hotel. It is faster to form and cheaper to raise. Move to a fund once you have committed capital for a second and third deal, because the fund lets you amortize your raise effort across multiple acquisitions.

How long should the raise take?
Plan for four to eight weeks from opening to close. Anchor 60% of equity in the first two to three weeks. If the first two weeks are slow, reprice the stack or tighten your personal equity before you spend more time marketing.

Get the Stack Right Before You Sign

A hotel deal is only as strong as the capital behind it. We structure the fund or SPV end to end, the PPM, subscription and operating agreements, CFA pro forma, and a data room that is investor-ready, so your raise is legally and financially sound before you market it. Start here: raises.com/buy-a-business to walk through your deal, or raises.com/call to talk it through on a call.

General information, not legal, tax, securities or investment advice. Laws, rates and programs change, and the details here may no longer be current. Confirm anything you plan to act on with your own counsel and accountant.