- propertymanagerstsvParticipant@propertymanagerstsvJoin Date: 2018Post Count: 3
Hope the cut in cash rate last week is good for all forum members ?
Any downsides ?
Great for buying or selling motels as banks have been tight lately and this should help.
Our motel leasehold is still for sale although price is very low. Too much irresponsible and unnecessary discounting in local motel tariffs has hurt the market.
Good buying time.
thecrestTTRTRParticipant@ttrtrJoin Date: 2019Post Count: 1
First post, new to the forum.
I was searching out motel brokers in NSW (I’m also interested in Queensland) and found the forum.
Long story but I’m looking to buy a freehold passive investment motel ASAP. I’ve been in property for a long time but it’ll be my first motel.
I’m ready to buy now and have only really been ready for a few weeks now, but I’ve been looking for a little while and had seen a lot but perhaps didn’t understand how quickly for sale turns to under offer! Everything that I’ve looked into and wanted has evaporated before I could act.
I’m left now with just a couple of options. I have a feeling it’s because of interest rates dropping recently. Would you agree or is it normal for these things to sell quickly?
I’m a bit restricted on what I can consider because I survive on overseas income and the lenders won’t consider that for their sums so I’m trying to buy outright which restricts my budget. Once I get more established in Australia I should cure that with local income for their sums, but in the meantime I’ve only a couple of choices.
So I have two questions –
Does anyone know of a good broker that can definitely find finance that considers overseas equity and income as well?
Would anyone like to suggest an ownership structure? I currently have nothing better than buying as myself and relying on the lessee indemnity. Im not too impressed with complicated structures but at the same time perhaps I need advice on that. We were planning to keep our house in my wife’s name and the investments in my name and keep them separate from each other.
Something that bothers me about Pty Ltd is that your benefits from depreciations seem to evaporate when you then pay yourself the money as a salary as you’re declaring it twice so the depreciation results in no tax savings. If it’s in my name (or something else?) then the final taxable result is lower after depreciation and left alone after that.
Any tips would be appreciated.
You need to sort out your finances first, before you go shopping so you know what price bracket to search.
For loans – Offering assets which would be difficult to seize & sell under default conditions won’t help loan applications. Suggest you find an expert Finance Broker – there are some in this forum.
There are plenty of buyers for secure 8-9% passive income returns, so quality investment motels in good condition and location with a good tenant in place are in demand. That’s why a motel broker would help with early market information. In a fast market, you need to be prepared to move fast as well, or be prepared to miss out.
Email me for a broker’s details.
Hi ttrtr, it is correct to say there is a lot to learn. I have been studying this industry for about 2 years trying to establish a new system of owning & developing several motels. It is difficult to break into a system that I admit has been successful.
But the world has changed, in particular, banks & finance. It has also been changed by AIRBNB, UBER, TRIVARGO,etc. The first name is in fact a challenge to the motel industry, people have learnt quickly that their house can become a money earner. The above booking agent is in fact dipping into some industry profits.
The major thing to understand is that FREEHOLD MOTELS returning 6% to 12% & gain in value at perhaps 2 to 3%pa, fall far short of leasehold properties that return anything up to 30%+ over 30 years. Yes the lease declines in value but over 30 years the return is substantial.
My proposal is a group to purchase several motels, NO MORTGAGE. Please call 0419798990, David, anytime.
To give you some food for thought, we are close to finishing a new website & company to form a group to purchase 20+ motels or management rights with leasehold at 25 to 30 years.
This will be very profitable, with you to chose to manage or not, with a salary.
For more info please call David Boyd 0419898990, regards David
Sorry mobile number is 0419798990, David
Time to update.
Unfortunately since mid March 2020 with Covid, the motel sector has suffered considerable losses. Various Govt assistance packages helped like Jobkeeper and CCoC re rent etc, but in simple terms – stop travel and you kill motels. Travel confidence was damaged by relentless heavy media doom n gloom, and border closures stopped travel altogether. Things have improved this month, almost back to normal turnover. Business confidence is low in the accommodation sector where heavy losses were experienced, but everyone is soldiering on anyway.
Covid period P & L figures can be very revealing for potential buyers, showing how a motel coped with the worst conditions the world could throw at it, and to what extent. Under normal circumstances , those what if disaster contingency figures are normally not available and only estimates at best.
Banks are slowly lending again, but better to make finance enquiries direct to the expert finance brokers on this forum.
Potential purchasers of leaseholds should be fully informed of any liabilities or deals made between the lessee & lessor that may be binding on a new owner, like amendments to the lease, deferred rent, etc.
Hope you all are recovering or prospering. Looking forward to the good times again.
While we had a good month or 2, the travel and accommodation market was locked up again by Covid.This week has seen the turnaround we’ve all been waiting for in the motel industry. How quickly 20% occupancy can become 70%, and full rates.
Motel P & L’s over this extended Covid period are very revealing and provide real life worst case scenarios rather than projections. The period also revealed the calibre of landlords and banks. Positive changes are coming for lessees as a result so watch this space.
Hope those investing complete very thorough due diligence and take advantage of the finance and legal experts on this forum who are very generous with their hard earned experience and expertise.