# Hotel refinance vs sell calculator: which path leaves me more cash?

- URL: https://matthewshotelmarkets.com/tools/refinance-vs-sell
- Last updated: 2026-09-18
- Author: Miles Cortez III, VP & Director, Hospitality Capital Markets, Matthews Hotel Markets (https://matthewshotelmarkets.com/team/miles-cortez)
- Reviewed by: Nate Solomon, Hospitality Associate (https://matthewshotelmarkets.com/team/nate-solomon)
- Format: Markdown copy of the HTML page at the URL above. Same content, same data source.

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Size the new loan from NOI, then price the sale from the same NOI. Maximum refinance proceeds are NOI divided by your lender's DSCR test, divided by the loan constant. Net sale proceeds are value at your cap rate, less the PIP, sale costs and the payoff. Matthews Hotel Markets' September 2026 rate sheet shows the 10-year Treasury at 4.94% on September 17, 2026.[1][2]

## Key takeaways

- Both paths start from one number, NOI. Use the same NOI and the same PIP in both columns.
- Refinance proceeds come from NOI, the rate, the amortization and the lender's DSCR test. What you owe does not change them.
- Net sale proceeds here are before tax. A sale can realize a taxable gain; a refinance is not a sale.[3]
- The gap is the extra cash a sale puts in your hands today. The price of that cash is the hotel.
- No lender type publishes a DSCR floor, so type the test your lender gave you.[1]

## From our rate sheet

Matthews Hotel Markets' September 2026 rate sheet publishes the index a fixed-rate quote is struck against, the 10-year Treasury at 4.94% on September 17, 2026,[2] and marks the DSCR floor not yet published for every lender type, because no lender type publishes one.[1] That is why the DSCR test and the rate below are fields you fill in.

[Matthews Hotel Markets rate sheet](https://matthewshotelmarkets.com/rates)

## The formula, written out

```
monthlyRate   = rate / 100 / 12
n             = amortYears x 12
loanConstant  = (monthlyRate / (1 - (1 + monthlyRate) ^ -n)) x 12
maxLoan       = noi / testDscr / loanConstant
refiNet       = maxLoan - loanBalance - pip

value         = noi / (capRate / 100)
salePrice     = value - pip
saleCosts     = salePrice x saleCostPct / 100
netSale       = salePrice - saleCosts - loanBalance

gap           = netSale - refiNet
```

Indicative only, before tax and before refinance closing costs. Every default is hypothetical. Not a loan quote, an offer of credit, a valuation or tax advice.

## How the math works

The refinance column turns NOI into a maximum loan, and the sale column turns the same NOI into a price, then both subtract what it costs to get there.

Refinance side. Divide net operating income ([/glossary/noi](https://matthewshotelmarkets.com/glossary/noi)) by the lender's DSCR test to get the most debt service the lender will allow. Divide that by the loan constant, the annual payment on one dollar of loan at the new rate and amortization, to get the maximum loan. Subtract the balance you have to pay off and the PIP you still have to fund. A positive result is cash out. A negative result is equity you bring to close. The coverage math is covered in full on [/glossary/dscr](https://matthewshotelmarkets.com/glossary/dscr).

Sale side. Divide the same NOI by a cap rate ([/glossary/cap-rate](https://matthewshotelmarkets.com/glossary/cap-rate)) to get value. Subtract the PIP, because a buyer who inherits the work prices it into the bid ([/glossary/pip](https://matthewshotelmarkets.com/glossary/pip)). Subtract sale costs as a percent of that price, then the loan payoff. What is left is net sale proceeds before tax.

The gap is net sale proceeds minus refinance cash. It is not a verdict. If you refinance you still own a hotel producing that NOI. If you sell you hold cash and the hotel is gone.

## What this calculator leaves out

It leaves out tax, refinance closing costs, prepayment charges, and the debt yield and LTV tests, all of which can move the answer.

Tax is the large one. A sale produces a gain when the amount you realize is more than your adjusted basis, and depreciation you have taken lowers that basis.[3] The size of the tax depends on your basis and holding structure, so this tool stops at the pre-tax number and a CPA takes it from there. Exchange rules are on [/hotel-financing/1031-exchange-hotels](https://matthewshotelmarkets.com/hotel-financing/1031-exchange-hotels).

On the refinance side, a lender sizes to the lowest of three tests: DSCR, debt yield and LTV. This tool runs DSCR only. If your lender also stated a debt yield test, run it separately and use the smaller loan. Lender fees, legal costs, rate caps and any prepayment charge on the old loan also come out of refinance proceeds, and they vary too much by loan to model with one field.

The PIP field is applied in full to both columns. In practice a buyer may price a PIP at less or more than its cost, and a lender may fund part of it. If you have a real bid or a real term sheet, change the inputs to match it. The longer discussion of when each path is right is on [/hotel-financing/refinance-or-sell](https://matthewshotelmarkets.com/hotel-financing/refinance-or-sell).

## Which inputs should I be most careful with?

NOI and the cap rate, because a small change in either moves the sale column by hundreds of thousands of dollars.

Use trailing twelve-month NOI after a management fee and an FF&E reserve, because that is the figure both a lender and a buyer will underwrite. If you enter an NOI before reserves, both columns will look better than any term sheet or bid you receive.

The cap rate is not something an owner chooses. It is what buyers pay for that cash flow in that market, and the way to find it is recent comparable sales and a broker opinion of value, covered on [/hotel-valuation/hotel-cap-rates](https://matthewshotelmarkets.com/hotel-valuation/hotel-cap-rates). The table below shows how much the sale column moves across a one point spread in the cap rate with everything else held still.

The DSCR test, the rate and the amortization should come from a term sheet or a lender conversation. No lender type publishes its DSCR floor, and our rate sheet marks those cells not yet published rather than guessing.[1]

## Hypothetical 78-key hotel: both paths at three cap rates, all other inputs at the calculator's defaults

| Cap rate you enter | Value (NOI / cap rate) | Net sale proceeds, pre-tax | Refinance cash after payoff and PIP | The gap |
| --- | --- | --- | --- | --- |
| 7.75% | $13,548,387 | $3,799,419 | Owner brings $532,900 | $4,332,319 |
| 8.25% | $12,727,273 | $2,994,727 | Owner brings $532,900 | $3,527,627 |
| 8.75% | $12,000,000 | $2,282,000 | Owner brings $532,900 | $2,814,900 |

## Worked example

**Pre-computed worked example (server-rendered): hypothetical 78-key select-service hotel**

Hypothetical, using the calculator's own default inputs so the example and the live tool agree. The 1.35x test, the 7.25 percent rate, the 8.25 percent cap rate and the 2 percent sale cost are this hypothetical's assumptions, not market figures.

Inputs: NOI $1,050,000. Loan balance $8,400,000. New rate 7.25 percent, 25-year amortization, lender DSCR test 1.35x. Cap rate 8.25 percent, sale costs 2 percent, PIP $1,100,000.

Refinance. Maximum debt service = $1,050,000 / 1.35 = $777,778. The loan constant at 7.25 percent over 25 years is 0.086737. Maximum refinance proceeds = $777,778 / 0.086737 = $8,967,100. Less the $8,400,000 payoff and the $1,100,000 PIP = negative $532,900. The owner brings $532,900 and keeps the hotel.

Sale. Value = $1,050,000 / 0.0825 = $12,727,273. Less the $1,100,000 PIP = $11,627,273. Sale costs at 2 percent = $232,545. Less the $8,400,000 payoff. Net sale proceeds before tax = $2,994,727.

The gap = $2,994,727 minus negative $532,900 = $3,527,627. Selling puts about $3.53M more cash in hand today than refinancing, before tax, and the hotel's $1,050,000 of NOI goes to the buyer. The paired page, [/hotel-financing/refinance-or-sell](https://matthewshotelmarkets.com/hotel-financing/refinance-or-sell), runs the same hotel with a smaller PIP price reduction and lands on a different sale number, which is the point of changing the inputs.

## Frequently asked

### How do I calculate maximum refinance proceeds on a hotel?

Divide annual NOI by your lender's DSCR test to get maximum debt service, then divide by the loan constant at the new rate and amortization. In the hypothetical above, $1,050,000 of NOI at a 1.35x test, 7.25 percent and 25 years supports $8,967,100.

### How do I calculate net proceeds from selling a hotel?

Take value, which is NOI divided by the cap rate, subtract any PIP the buyer will price in, subtract sale costs, then subtract the loan payoff. The result is before tax. Tax depends on your adjusted basis, so run that with a CPA.[3]

### What DSCR test should I enter?

The one your lender stated in writing. No lender type publishes a DSCR floor, and our rate sheet marks that cell not yet published for every lender type.[1] The 1.35x default is a hypothetical placeholder.

### Does a bigger gap mean I should sell?

No. The gap is only the extra cash a sale produces today, before tax. Refinancing keeps the asset and its income. Compare the gap, after tax, with what the hotel would earn you if you kept it.

### Why is the PIP subtracted from both columns?

Because it is a cost on both paths. If you keep the hotel you fund or reserve for it. If you sell, a buyer prices the work into the bid. Set the field to zero if the PIP is already funded and complete.

### What does the calculator not include?

Capital gains and depreciation recapture tax, refinance closing costs, prepayment charges on the old loan, and the debt yield and LTV tests. Each one can change the answer, so treat the output as a first pass.

### What rate should I use for the new loan?

A quoted rate if you have one. Fixed-rate quotes are struck over the Treasury curve, and the 10-year Treasury was 4.94% on September 17, 2026.[2] Lenders do not publish their hotel spreads, so we do not print one.[1]

## Who wrote this

[Miles Cortez III](https://matthewshotelmarkets.com/team/miles-cortez)

VP & Director, Hospitality Capital Markets, Matthews Hotel Markets

(303) 653-2963 · miles.cortez@matthews.com · [LinkedIn](https://www.linkedin.com/in/miles-cortez-iii-3ab26212/)

Reviewed by [Nate Solomon](https://matthewshotelmarkets.com/team/nate-solomon), Hospitality Associate.

## Sources

1. [Matthews Hotel Markets September 2026 rate sheet](https://matthewshotelmarkets.com/rates) · Matthews Hotel Markets (first-party) · accessed September 18, 2026
2. [Daily Treasury Par Yield Curve Rates, September 2026](https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve&field_tdr_date_value_month=202609) · U.S. Department of the Treasury · accessed September 18, 2026
3. [Publication 544, Sales and Other Dispositions of Assets](https://www.irs.gov/publications/p544) · Internal Revenue Service · accessed September 18, 2026

## Related

### Guide

- [How does hotel financing work, and what does it cost right now?](https://matthewshotelmarkets.com/hotel-financing)

### Other questions in this guide

- [Should I refinance my hotel or sell it instead?](https://matthewshotelmarkets.com/hotel-financing/refinance-or-sell)
- [How do I refinance a hotel loan before it matures?](https://matthewshotelmarkets.com/hotel-financing/refinance)
- [How much hotel debt is maturing in 2026 and 2027?](https://matthewshotelmarkets.com/hotel-financing/loan-maturities-2026-2027)
- [What is a good cap rate for a hotel in 2026?](https://matthewshotelmarkets.com/hotel-valuation/hotel-cap-rates)

### Terms defined in the [glossary](https://matthewshotelmarkets.com/glossary)

- [Net Operating Income (NOI)](https://matthewshotelmarkets.com/glossary/noi)
- [Debt Service Coverage Ratio (DSCR)](https://matthewshotelmarkets.com/glossary/dscr)
- [Hotel Cap Rate](https://matthewshotelmarkets.com/glossary/cap-rate)
- [PIP (Property Improvement Plan)](https://matthewshotelmarkets.com/glossary/pip)

### Our own data

- [Matthews Hotel Markets rate sheet](https://matthewshotelmarkets.com/rates)

Matthews Hotel Markets places hotel debt and sells hotels, so an owner can get both columns of this comparison from one team.

[Have us run both numbers on your hotel](https://matthewshotelmarkets.com/contact)

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Cite as: Miles Cortez III, Matthews Hotel Markets. "Hotel refinance vs sell calculator: which path leaves me more cash?." https://matthewshotelmarkets.com/tools/refinance-vs-sell. Last updated 2026-09-18.