Forum Replies Created
- thecrest wrote:Hi Jacko10. Without knowing other details of the leasehold, on face value it is overpriced at ROI 24% ( Nett $170K is only 24% return on cost price of $720K ). 30% is more like the market rate, so price should be more like $570K, provided it is in good condition, minimal maintenance, reliable income etc. (remember school groups are low tariff but high wear n tear, sorry kids). Hope the rent is low. Economic downturn on spending and reduced consumer confidence will impact immediately on school groups and on parents' excursion spending decisions except compulsory curriculum trips. Periods of tight lending reduces buyer numbers so that should reduce sale prices if it continues long enough. But these comments are only based on very limited info you have provided and the whole picture of the leasehold may provide compensations. What a difference a week makes in banking attitudes. Lending for motels has tightened since last week when the USA 's credit rating slipped. Banks spook like gazelles, or make a good show of it at any excuse. More reasons to use finance brokers, like the ones who regularly post their help on this forum and have thousands of posts to their credit showing how long they have been on the forum helping us. They're the ones who deserve our business enquiries. Had exactly this problem with NAB this week and I'm fuming at NAB. Customer service from banks is really about the smile on the face of the tiger. And they serenade us about building relationships….? . So when finance is tight, you need to structure a quality deal through your accountant showing cash flow projections, with a quality property and supporting valuation, and submit it through an experienced broker thereby surrounding yourself with a strong team. Post more details if you want more info. Good luck Cheers thecrest
Much appreciated thecrest.
As i said my concern is that the price is too high. The current market is also a good point that you make, in that school expenditure will likely decrease and there will be less disposable income to spend on extra curricular activities.
The business has been for sale for quite a while, although i feel the owners are reluctant to lower the price to much. Obviously they are going to be biast in how much they beleive their business is worth.
The lease is 7500 per calender month and has 17 years remaining of a 25 year lease. There is also a 3 bedroom residence on site.
What other methods should i be valueing this business by? apart from ROI?
Thanks
Also is reponse to a previous post "KPI" refers to Key Performance Indicators
Hi The Crest,
I have been reading up on this forum for a few weeks now and have really appreciated your feedback for other motel investors.
Today i signed up as I am interested in a leasehold Motel in Victoria. It also operates as a group accommodation facility for school groups.
The motel is located in coastal victoria in a destination town.
It has 18 units and a dormitory/hostel room.
It is listed at $720,000 with an average net profit of $170,000 for the last 3 years.
Gross sales are about $410,000.
I am hesitant with the asking price as the current market is quite vulnerable and banks don't seem to be lending a whole lot for leaseholds.
Can you offer me any suggestions?
Thanks
