This week we're showing you exactly what you need for the most crucial part of bringing your unique stay idea to life – getting financing.

It’s not the most fun part of building a unique stay, but without it your project most likely won’t see the light of day.

The world wants to see your vision come to life, let’s get the first step sorted.

A Little Backstory on Financing Onera

We have been through the ringer securing financing on both Onera Fredericksburg as well as on Onera Wimberley…

Our first project, Onera Fredericksburg, we can’t even count on two hands the amount of banks we heard “no” from. 

It took over 20 different banks before we finally found a local banker that believed in the vision and wanted to see it come to life. 

We had no idea what we were doing, didn’t know what banks were looking for and were shooting from the hip going into those early meetings.

We came in 10x more prepared to get financing for our Onera Wimberley project, which had its own hurdles going through a debt crisis, losing financing and having to secure new financing.

But, that’s a story for another day…

We have learned more than a handful of things going through the ups and downs of financing a unique stay project. So, we thought you could benefit from our hard fought lessons.

6 Docs to Secure Financing & Launch Your Unique Stay

1. Pro Forma With Sensitivity Analysis

The most standard of documents that you need to provide a bank when trying to secure financing for any type of real estate project.

The bank needs to know that you are going to be able to cover the debt that they are providing you and that the project is financially feasible. So, this one should come as no surprise.

There are a few slightly more important aspects to this document though when it comes to unique stay projects. 

Why? Because 99% of the time banks are seeing single family, multifamily, standard hotels and more traditional projects come through the door. Not a treehouse resort.

Because of this, presenting comps becomes even more important for the project, something that can be tricky for a unique stay project if there aren’t already similar projects in the market.

What we like to look for is a handful of unique Airbnbs in the area to point to, or maybe a glamping resort or landscape hotel that could be used as a comp, even if it is slightly further away.

These comps, in addition to a sensitivity analysis that stress tests a few different aspects of your project, helps banks understand the potential of a non-traditional project.

2. Detailed Budget

When bringing your budget to the bank, they want to know that you understand construction. 

Here are some aspects to consider when creating your budget:

• Itemized Costs for Every Aspect

• Realistic Costs Based on Contractor Quotes

• Soft Costs: Permits, Legal Fees, etc

• Timelines

3. Renderings

This is where you can really show off the uniqueness of your project and get the bank bought into your vision.

A rendering that they can see and experience brings your property to life and takes it from an interesting idea to something they can get behind.

While not always necessary to provide for financing, we really encourage you to have them given the non-traditional aspects of unique stays.

4. Rough Site Plans

There are a few things that site plans do to help banks evaluate the potential of your project:

• Feasibility: Does the layout demonstrate a potential for success?

• Risk Assessment: Are there risks in the layout, design or location?

• Compliance: Does the plan match the local zoning and requirements?

• Scope: This helps a bank understand the size, scale and aspects of a project.

Plus, a site plan improves your professionalism in the eyes of the banker, improving your odds of securing financing. 

5. One Pager on The Market

While they do not need to see your full market analysis, it is nice to provide context to why there is a need for your project in the market.

A simple one pager on the market dynamics, competitive set, demand factors and why there is a gap in the market that you can fill will suffice. 

Simple, but important for context.

6. Your Track Record

This is one of the most important aspects of presenting a proposal for financing. 

If you have anything on your track record that you can talk to, do it. Show your success in bringing other projects to fruition and the results of those projects.

For your first unique stay or resort project, you won't have a specific track record for this asset. Instead, highlight other completed projects that showcase your relevant experience.

In addition to yourself, you are going to want to showcase your team’s track record for the project to speak to its credibility.

This could include:

• Partners

• Advisors

• Architect

• Interior Designer

• General Contractor 

• Management Company (if you aren’t planning on self-managing)

Speaking to all of their experiences can help you paint a picture of a highly competent and experienced team.

Bonus: A Guarantor for Your Loan

If you have another cash flowing business, using that entity to guarantor your loan can boost your chances of securing bank financing while also helping your DTI ratio.

The goal of all of these documents is to show them that you are not just coming to them with a moonshot idea that you dreamed up one night.

You want them to trust you, understand your vision and provide them with a whole underwriting package that helps them make a decision on financing your project.