Forget Multifamily. He’s Converting Hotels into Housing, And It’s Working.

Multifamily is expensive. Interest rates are up. Deals are hard to pencil.

But Mitchell Rice sees something most sponsors don’t:

Underused hotels that can be turned into affordable housing — and deliver 20%+ returns.

After helping save his first deal by raising $7M in 3 months, Mitchell has closed over $500M in transactions. His latest focus? Taking extended stay hotels and converting them into cash-flowing multifamily.

In this Raise Report, we break down the exact strategy Mitchell uses to find, fund, and flip hotel assets into long-term rental properties — and why more sponsors should be paying attention to this overlooked space.

The Play: Hotel to Housing

Most people don’t know this, but hotels can be prime targets for multifamily conversion. Especially extended stay hotels in zoning-friendly markets.

Mitchell’s team looks for:

• Hotels near ports, trucking routes, or industrial areas

• Properties with existing kitchenettes or easy conversion potential

• Cities open to rezoning, or with no zoning at all (like Houston)

His last deal?

A 100-unit hotel in Channelview, TX, bought with seller financing at 50% LTV, now being converted into affordable rentals for blue-collar workers — targeting an IRR in the 20s.

What Makes This Work

Here’s what Mathew did differently:

1. Cap rate compression
Buy hotels at higher cap rates, convert to residential, and sell at lower cap rates typical for multifamily. The spread is where the returns are.

2. Zoning arbitrage
Some markets (like Harris County, TX) have no zoning, making conversions faster and cheaper.

3. Affordability tailwinds
Converted units are often the cheapest in their market, filling a need for workforce housing while keeping occupancy high.

The Risks (And How He Avoids Them)

• 1. Impact fees: Some cities charge thousands per door when changing property use. Mitchell avoids markets that aren’t pro-housing or transparent about fees.

• Fire suppression costs: Hotels often lack residential-grade fire sprinklers. He budgets for full installations.

• Red tape: If zoning takes 6+ months, he moves on unless the seller has already completed it.

What You Can Learn (and Steal)

1. Call the city before you underwrite
Zoning is deal-killer number one. Don’t waste time modeling a hotel conversion without knowing if it’s even allowed.

2. Seller financing is back
Mitchell secured rates 200–400 basis points lower than market by negotiating directly with sellers. One deal came with a 4.5% interest-only loan at 81% LTV.

3. This strategy won’t stay secret
As multifamily deals get tighter, more sponsors will look for niche angles like this. Now’s the time to learn it before it gets crowded.

Listen to the full episode

🎙 Groundbreakers with Mitchell Rice

In it, we cover:

• How he closed $500M+ in transactions (and why hotels are next)How h

• His step-by-step process for converting extended stay hotels into housing

• Why seller financing is his secret weapon in today’s market

• How he’s creating affordable housing while targeting 20%+ returns

• The one zoning strategy he uses to avoid costly red tape