Viewing 14 posts - 1 through 14 (of 14 total)
  • Profile photo of JJMBJJMB
    Member
    @jjmb
    Join Date: 2011
    Post Count: 1

    I have read a lot of forums on this site re: Buying a leasehold for a Motel but some of the 'chats' are a little old so I thought I'd ask for advice and information.
    I am thinking of purchasing a motel leasehold, and will probably start looking in country Vic, I am not really fussed about which area at this stage. I am still researching.

    Now the questions
    I have approx 380K equity in my PPOR, still have a mortgage of 86K. Ideally I would like to rent out the PPOR and use the equity as a down payment for the lease. Is this possible?

    What is the best way to get knowledge and experience in running a motel?
    There is a 4 day course is offered, or approaching a friendly motel manager and asking for time. Is there some other way?

    Is there a financial advisor that I can go to for advice?

    Profile photo of thecrestthecrest
    Participant
    @thecrest
    Join Date: 2004
    Post Count: 992

    Hi JJMB.
    You’ve mentioned some good ways to get started already.
    Talking to moteliers is prime networking and essential.
    Searching this forum for postings about motels will help.
    There is definately a lack of information and no advisors
    except those selling you something.
    I’ve spent a long time posting as much motel material as I could on this forum
    because I found it hard to find information for myself when i was searching.
    Helping out at a motel is worthwhile. There is no other way unless you
    attend one of the hospitality colleges for 3-4 years.
    Talk to brokers, get some figures from some motels to look at, burn midnight oil.
    It’s a slog but there’s no other way.

    Yes your equity can be used to buy a leasehold.
    Cheers
    thecrest

    thecrest | Tony Neale - Statewide Motel Brokers
    http://www.statewidemotelbrokers.com.au
    Email Me | Phone Me

    selling motels in NSW

    Profile photo of MickMick
    Participant
    @motelmingle
    Join Date: 2010
    Post Count: 7

    Hi JJMB,
    I am a Motel Leasehold owner and happy to answer any questions you may have. I was very raw when I purchased my leasehold, and learn t very quickly by asking other motel owners. You will find other owners are happy to talk to you as they also gain new insights to the way others run their motels.
    If you need any experience and willing to travel to Far East Gippsland, we may be able to work something out for you.

    You can get alot of info from "thecrest" just click on his posts and read the comments. I am sure you will benefit. He has been a great help to me in the past.

    cheers and good luck.
    Earlstongardens.

    Mick | Motel Mingle
    http://motelmingle.com.au/
    Email Me

    Finding Answers! Sharing Ideas! Solving Problems!

    Profile photo of thecrestthecrest
    Participant
    @thecrest
    Join Date: 2004
    Post Count: 992

    Good on you Earlstongardens, that’s a very good offer for JJMB, you’re a good example of a helpful motelier, great way to get experience.
    Cheers
    thecrest

    thecrest | Tony Neale - Statewide Motel Brokers
    http://www.statewidemotelbrokers.com.au
    Email Me | Phone Me

    selling motels in NSW

    Profile photo of thecrestthecrest
    Participant
    @thecrest
    Join Date: 2004
    Post Count: 992

    Something else occurred to me, a few motel broker ads mention motel on the market due to poor health.
    Now that sounds like there’s someone who could use some help and provide some hands on experience.
    Win win.
    Cheers
    thecresto

    thecrest | Tony Neale - Statewide Motel Brokers
    http://www.statewidemotelbrokers.com.au
    Email Me | Phone Me

    selling motels in NSW

    Profile photo of xavier01xavier01
    Member
    @xavier01
    Join Date: 2012
    Post Count: 2

    I’m interested in entering the motel business and would prefer to purchase a leasehold motel initially. I really like the Lake Macquarie area and am interested in peoples opinion on whether this area is a good investment location for motels and what should I look for in a motel around this area. Warner’s Bay appears to attract a lot of people with a cafe and restaurant district sitting next to the lake. Other questions I have is what hours are involved in running a motel without staff for a 20+ unit motel? What questions are important to ask about the property being sold? Any advice you can provide would be greatly appreciated.

    Cheers

    Profile photo of thecrestthecrest
    Participant
    @thecrest
    Join Date: 2004
    Post Count: 992

    Hi xavier1.
    Welcome to the forum from me as just one of the many members here.
    It might help others to help you if you could list some of your priorities or wish list such as :
    Restaurant or not?
    Price bracket
    residence size required
    star rating
    holiday or business type motel
    are you a couple in this venture
    relevant skills

    just some outline might help.
    cheers
    thecrest

    thecrest | Tony Neale - Statewide Motel Brokers
    http://www.statewidemotelbrokers.com.au
    Email Me | Phone Me

    selling motels in NSW

    Profile photo of xavier01xavier01
    Member
    @xavier01
    Join Date: 2012
    Post Count: 2

    Thank you.

    I’d prefer not to manage a restaurant, possibly could be leased separately. I’m looking in the vicinity of $500k, minimum 3.5 star rated, can have 20+ units, would like to cater it more towards holiday than business. No real relevant skills as i have, over the last 20 years worked in the retail, IT and health industry. My work now entails alot of networking and stakeholder engagement. I very much enjoy socializing with people and to a certain extent am a perfectionist. I have a diploma in accountancy and microcomputer technology. I have been interested in managing my own business for awhile and have always had a motel in mind. This is a venture that I would take lead on but my partner would help part-time.

    Any advice you can provide would be appreciated even if to recommend courses I should do.

    Thanks

    Profile photo of thecrestthecrest
    Participant
    @thecrest
    Join Date: 2004
    Post Count: 992

    Hi Xavier01.
    Your skills would add much to a “low tech” motel – one that has been operating without a good website or strong internet presence.
    Perfectionism is a hard slave driver but pays big dividends in hospitality, especially in areas of bookings details, repairs and maintenance, and room condition and presentation.
    Attention to detail impresses all guests and generates return bookings.

    You’re correct about food if you’re not a foodie, let someone else do it, nearby.

    Business guests are good bread n butter in between holidays, and they are homing pigeons, they like to keep returning to the same place to stay because it works for them, unlike many holiday guests who will go somewhere else next time for a change. Tourists like new, reps like dependable.
    Needs 2 people so you’d have to plan to replace your partner’s partial absence with a casual.
    With your skills and background, and provided you engage with people, look after them, and they like you, you have what it takes.

    Ensure when you profile a motel that your strengths address it’s weaknesses and vice versa.

    Cheers
    thecrest

    thecrest | Tony Neale - Statewide Motel Brokers
    http://www.statewidemotelbrokers.com.au
    Email Me | Phone Me

    selling motels in NSW

    Profile photo of LeanneBLeanneB
    Member
    @leanneb
    Join Date: 2013
    Post Count: 2

    Hi, My husband and I are have started the process of looking to purchase a leasehold motel.  We are looking for a motel in NSW or QLD that has a good occupancy.  We are not too fussy on the area but would like something that has good passing trade or something to attract people to the area.  We would appreciate any advice, information or things we should look for when leasing.  I would also like to hear from anyone who is running motels with children.  Any information would be appreciated.

    Thanks

    LeanneB

    Profile photo of thecrestthecrest
    Participant
    @thecrest
    Join Date: 2004
    Post Count: 992

    Hi LeanneB.

    Busy hwys go east/west, and go north/south. Where they intersect is a good start. The map will tell the story.

    Some towns are destination towns if they have enough to offer, some are only through towns because they lack natural or man-made attractions. You can search for those figures from Visitor Information Centres in those locations. Councils and RTA (now RMS) have traffic counts, but getting cooperation from RTA would be doubtful. Also the ABS provides detailed information like Occupancy for towns and regions. Strong businesses need good reasons why they have been strong, and those reasons need to be proven to be enduring. 

    Leases are a lengthy subject, they must be well read and fully understood by someone on your team. If it's under 20 years, expect to want to buy more years down the track, and the landlord might say no. Best time to negotiate more years is when buying – the vendor can probably negotiate more years at that time better than you. Very important items in a lease are – who pays for repairs or replacement of what items; how is the rent increased; is the landlord required to rebuild partial or total damage like fire, flood etc; but you MUST get legal advice re leases and buying a lease, be guided by your solicitor.

     We raised 2 kids in hospitality like motels, very challenging, very educational for them. They like being useful, plenty to do. Casual work pays too. SOHO is never easy. It helps if the school bus stop is closeby.

    Good luck

    Cheers

    thecrest 

    thecrest | Tony Neale - Statewide Motel Brokers
    http://www.statewidemotelbrokers.com.au
    Email Me | Phone Me

    selling motels in NSW

    Profile photo of LeanneBLeanneB
    Member
    @leanneb
    Join Date: 2013
    Post Count: 2

    Hi the crest,

    Thank you for your reply.  I have been reading all your post and you are a wealth of knowledge.  Thank you for sharing it.  We have found a couple of properties that are suiting our needs.  We have been told be a broker that the lease is given when an offer has been made on the property.  Is this the norm?

    Regarding accountants and solicitors – is it best to use ones that are experts in the area?  Where would I find suitable ones?

    We are lucky with our kids, they are farm kids so are already used to working.  Hopefully this change will be good for them.

    Thank you again for your help.

    LeanneB

    Profile photo of thecrestthecrest
    Participant
    @thecrest
    Join Date: 2004
    Post Count: 992
    LeanneB wrote:
    Hi the crest,

    .  We have been told be a broker that the lease is given when an offer has been made on the property.  Is this the norm?

    LeanneB

    Hi LeanneB.

    Not the norm, and not true. Suggest you deal with someone else.  The terms and conditions of the lease can affect the value of the leasehold so a copy of the lease should be available same time as the P & L's and careful reading and full understanding of the lease forms an important part of your due diligence, so how could any reasonable broker with nothing to hide expect you to make an offer without being given a copy of the lease.?

    Some leases are so oppressive and onerous, valuers react negatively to them. Those leases reduce the market price. 

    If you are ok with reading legal verbiage for about 35 pages with the lease, then as you read through,  make a list of the following :

    what items does the landlord have to pay for to replace or repair; same for the tenant;

    how is the rent increase calculated, and graph rent increases out for 5-7 years and see what it amounts to;

    in the case of partial or total damage by fire or flood, is the landlord required to rebuild;

    how long before the lease expires;

    are you held over as a guarantor for the new lessee if you sell the lease in the future (unbelievable but true);

    if it's an older motel, who pays if you have to excavate to fix old plumbing or stormwater or wiring (you can't inspect it);

    List all the things you have to pay for in the lease, inspect them all to assess their condition and the likelihood of that expense, inspect all the motel for likely expense, and make allowances accordingly in any price discussions, and don't forget the signage which is expensive and makes money or repels guests. Naturally you must get well informed legal advice for yourself and make your own decisions based on your own due diligence. 

    Always best to use a specialist in any field if you can find one. Otherwise, use one who is capable and at least has your interests at heart.

    Some brokers recommend their own experts, but that seems very close to vested interests to me. Can't see their expert suggesting you don't buy something the broker wants to sell you.

    You're blessed with your kids and their background. 

    Cheers

    thecrest

    thecrest | Tony Neale - Statewide Motel Brokers
    http://www.statewidemotelbrokers.com.au
    Email Me | Phone Me

    selling motels in NSW

    Profile photo of thecrestthecrest
    Participant
    @thecrest
    Join Date: 2004
    Post Count: 992

    Hi Xavier and LeanneB – any progress with your motel searches? Now is a good time to search as I feel the soft market may help lean things toward a buyer's market.

    Cheers

    thecrest

    thecrest | Tony Neale - Statewide Motel Brokers
    http://www.statewidemotelbrokers.com.au
    Email Me | Phone Me

    selling motels in NSW

Viewing 14 posts - 1 through 14 (of 14 total)

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