Focus on Cash on Cash Return for Hotel Investments

When investing in hotels, focus on achieving at least a 20% cash on cash return, with a possibility of going down to 15% if the potential growth is substantial. Instead of relying solely on cap rates, consider the potential upside and the current performance of the property to determine if the investment is worthwhile. Many deals may initially seem overpriced based on cap rates, but assessing the potential to improve the operation and profitability of the hotel is crucial. Understanding the market dynamics and typical cap rates for hotels in the area is essential to make informed investment decisions.