Motel Purchase
Have several rent houses and duplexes, currently an over abundance in area and landlords offering money back to potential tenants. Time to change strategy!
We are looking at a 32 unit motel built 16 years ago with 6 acres ( room for expansion) in a up and coming area. Currently under utilized with owner running out of steam.
Price over 500,000 thousand (negotiable) for package, Sales 125,000 per year, no Advertising or upgrades recently.
Were thinking with 2000 per unit upgrades and proper advertising, website, aggressive manager and owners we can increase sales by 20% for the first year and more their after.
Are we wise to leave the single rental market for a motel?
Is this a tight deal? we are thinking about seperating 5 acres for possible RV park and or luxury cabins or hold and sell later?
Is their some pitfalls we need to watch for in a motel? :-?
Do you want to own property or run a motel? My guess is that you need to find a motel operater.
Well I've never actually operated a hotel (though I did manage the renovation of a couple and the conversion of one to apartment building.)
They are a lot of work. Somebody's got to man the phone 24/7. Somebody;s go to change those sheets and clean the bathrooms, etc.
Unless, as the frogger suggests, you want to hire an operator you need to be prepared to make all that happen.
That said. $500,000 is way too much to pay for a motel grossing $125,000 per year Motels usually trade for 3 to 5 times the Net .
Thanks for the replys, we are waiting for the rest of the tax returns. Another motel operator is looking at the motel, we decided to wait to see if they make an offer. We know in order to break even, the motel has to sell for around 275,000. In the late 90's the gross was closer to 180,000. Newer Motels have been built in recent years taking away business.