Viewing 20 posts - 161 through 180 (of 201 total)
  • Profile photo of thecrestthecrest
    Participant
    @thecrest
    Join Date: 2004
    Post Count: 989

    Hi APWPG.

    Not sure what you're seeking, so you need to post specific details.

    Cheers

    thecrest

    thecrest | Tony Neale - Statewide Motel Brokers
    http://www.statewidemotelbrokers.com.au
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    selling motels in NSW

    Profile photo of thecrestthecrest
    Participant
    @thecrest
    Join Date: 2004
    Post Count: 989
    rusty05 wrote:
    Oh, one other thing… when brokers list under the categories of Freehold, Leasehold or Investment Motels does it typically mean Freehold is with no lease in place and Investment is Freehold with a lease in place (as in a passive investment)?

    Ta!

    Hi Rusty. You got it right. Investment sounds a bit generic but with a lease there are only 2 sides to it, landlord and tenant, so they call the tenant side "buying the lease" and the landlord side the "investment". You can buy or sell either.

    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: 989

    It's a popular investment area

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

    selling motels in NSW

    Profile photo of kindrenkindren
    Member
    @kindren
    Join Date: 2011
    Post Count: 6

    Hi Crest and others,

    I have not logged on to this site for some time. Last time I was here, I was looking at motels in both Goulburn and Lithgow, however I am pleased to say we finally took the plunge and purchased  a leasehold  at Warrnambool Vic last year. It is a reasonable size 80 odd rooms with function rooms, restaurant and day spa attached. It also has a geo thermal hot springs bore going down some 900 metres. The website is http://www.qsdb.com.au We run it under full management, it has sure been some work from take over to now. We have rebranded the property-it was a "Sebel", and have been busy re-establishing ourselves in the market place. What do people think of our new website? It came out around 28 December…

    I would like to thank thecrest for his positive remarks and assistance he provided helping us to stay positive during a scary time (making the decision), I had the pleasure of meeting thecrest prior to him moving to Wagga and he is indeed a knowledgeable chap, with a lovely partner. I am pleased to hear they are doing well in Wagga.

    Our plan is similar to his, we would like to purchase again, eventually ending up with 3 good leaseholds, but first we need to steady the ship down south. Mind you I have found it can take a really good (and long) 18 months or better to find the right hotel, so may as well start looking again.

    Cheers and best luck to everyone, particularly thecrest

    Regards

    Kindren

    Profile photo of kindrenkindren
    Member
    @kindren
    Join Date: 2011
    Post Count: 6

    Hi Crest and others,

    I have not logged on to this site for some time. Last time I was here, I was looking at motels in both Goulburn and Lithgow, however I am pleased to say we finally took the plunge and purchased  a leasehold  at Warrnambool Vic last year. It is a reasonable size 80 odd rooms with function rooms, restaurant and day spa attached. It also has a geo thermal hot springs bore going down some 900 metres. The website is http://www.qsdb.com.au We run it under full management, it has sure been some work from take over to now. We have rebranded the property-it was a "Sebel", and have been busy re-establishing ourselves in the market place. What do people think of our new website? It came out around 28 December…

    I would like to thank thecrest for his positive remarks and assistance he provided helping us to stay positive during a scary time (making the decision), I had the pleasure of meeting thecrest prior to him moving to Wagga and he is indeed a knowledgeable chap, with a lovely partner. I am pleased to hear they are doing well in Wagga.

    Our plan is similar to his, we would like to purchase again, eventually ending up with 3 good leaseholds, but first we need to steady the ship down south. Mind you I have found it can take a really good (and long) 18 months or better to find the right hotel, so may as well start looking again.

    Cheers and best luck to everyone, particularly thecrest

    Regards

    Kindren

    Profile photo of thecrestthecrest
    Participant
    @thecrest
    Join Date: 2004
    Post Count: 989

    Hi Kindren.

    Very kind words thank you, but what's really warming is your success, congratulations on your purchase and we hope it increases. Sorry I don't recognise you from your Forum name or the details. Please PM me or give a hint, if you like.

    Website looks fabulous, thank you for the link, makes you want to book in.

    All the best.

    Cheers

    thecrest

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

    selling motels in NSW

    Profile photo of steele bladesteele blade
    Member
    @steele-blade
    Join Date: 2013
    Post Count: 3

    I'm hoping for some experts to give me some guidance. I am currently a PAYG wage slave on $70,000. Say I bought a $300,000 leasehold motel and expect a 30% ROI of $90,000. No bank interest. I would need to pay my own super, but what other significant costs are there? I am trying to get an idea of how a wage compares to a business income. How much more do I need to earn to cover costs that the employer now pays, if I were to take the plunge? Is that offset by the savings I will make in living expenses? Thanks in advance.

    Profile photo of Anthony KAnthony K
    Participant
    @anthony-k
    Join Date: 2010
    Post Count: 56

    Hi Tony Zorro and All

    What a great name you have Tony,

    My interest is through property structuring  with heavy emphasis on SMSF involvement and been establishing/advising on them since 1978.

    As you know Tony there is a view that leasehold is an inferior product, whether its motels, hotels or Child care many prefer the freehold but that's not my view.

    My reasoning  is repaying debt is after tax which crushes your cash flow from acquisition date when debt reduction should be the major goal.

    My view is that leasehold and freehold are best tackled separately like this.

    1. When doing your due diligence do get the accounts BUT ASK for Bank Statements for 3 years.

    If they don't want to supply them there is a reason so go to the next business..

    2. Make sure you do lots of calc's on the business cash flows and your cost estimates before you take the plunge

    Remember Its the business which makes the money and you can lease the premises fro say 3+3+3 or 5+5 with an option to buy the freehold when your leasehold debt is paid out or reduced.

    We a have a special structure call a TEBL (Tax Effective Business Loan) Trust which can retain more after tax profit so you can reduce debt faster and pay less interest. The higher the profit the more you save, 15% to 25% extra cash after tax.

    Then you can tackle the freehold with a clean slate and better cash flow.

    I would welcome some discussion on this idea.

    Regards to All

    Anthony K

    Profile photo of thecrestthecrest
    Participant
    @thecrest
    Join Date: 2004
    Post Count: 989

    Hi Steele Blade.

    Welcome to the Forum, members appreciate meeting new members and like to know a bit about you or your occupation or circumstances. People are always interesting. Then while you are receiving info and assistance, others can look to you for info and assistance when they know your occupation or area of expertise.

    First, the usual disclaimer applies,  talk to your accountant who has knowledge of your personal financial situation and can advise you of the differences between whatever you have now and a motel live in situation. The following is only my uneducated inexperienced unqualified opinion and you must get your own expert's qualified professional financial opinion which takes into account your personal circumstances.

    Many of the investment self help books,  incl Rich Dad Poor Dad,  tell us that an employee gets paid last with "hurt" money meaning after tax. Self employed people enjoy a better scenario.

    Motels provide a free home onsite and the office provides all the office stuff which is tax deductible that I assume you are currently paying for at home out of after tax money. No commuting to work. Car is deductible, clothes deductible, many living expenses are indistinguishable from costs of running the motel kitchen, laundry and back office. You don't get personal bills like electricity, gas, water, internet, fuel, phone, mobile, puters, mortgage or rent, the business gets them. Without going into too much detail, you are correct that living expenses are very low in a motel. 

    30% ROI is nett after paying normal leasehold motel business expenses, provided you purchased at a price where the nett is 30% of the purchase price. Working hours dramatically increase for the self employed in a motel, and at least double the normal 40 hr week, and every weekend, it's hard work but pays well. It soon sorts out the hard workers and the highly motivated from the armchair admirals.  

    You need to pay your own sickness & accident insurance, income protection insurance, super, bank interest, accountancy fees, and enjoy the deductions from those as well. 

    What are your thoughts on this ?

    Cheers

    thecrest

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

    selling motels in NSW

    Profile photo of steele bladesteele blade
    Member
    @steele-blade
    Join Date: 2013
    Post Count: 3

    thanks, that is pretty much what I have read elsewhere. With regard to working hours, are you talking about an 80 to 100 hour week for a single person? Or are you assuming that a couple has bought the lease and both would work at least an 80 hour week? This would effectively double the required man-hours in any salary comparisons with the wage slave world. I will post some other questions separately if you don't mind to keep the thought processes for me clearer. At this point I am thinking, why on earth wouldn't I want to work for myself!! I am just afraid that the income seems too good to be true.

    Profile photo of steele bladesteele blade
    Member
    @steele-blade
    Join Date: 2013
    Post Count: 3

    Does anyone have an opinion on the pros and cons of a motel leasehold versus a caravan park leasehold? Are the ROIs similar as I was thinking that there may be more staff needed to run a caravan park. Any chance that someone reading has experience in both areas to share?

    Profile photo of thecrestthecrest
    Participant
    @thecrest
    Join Date: 2004
    Post Count: 989

    Hi Steele Blade.

    Parks. We've run 3 parks. Depends on how they're structured, like holiday only , or retirees relocatable park, or mixture of some permanents and casuals and tourists.

    Usually more gardens & grounds work with a park, more outdoor work. Amenities block gets a workout, so too camp kitchens. Sleep with one eye open after a while. Shop is time consuming. More cash transactions than motel. Prefer no permanents unless they own their relocatable home and rent the site under it. Mostly tourists. Larger parks have 2 residences and 2 management couples plus casuals. This allows couples to take alternate holidays during quiet times. Some need full time groundsman. Usually parks require more land than motels.

    Motels. No permanents. Usually less maintenance depending on the age of the motel.  Must cook breakfasts for guests. More complex resv / booking systems than parks. Expense of refurbishment every 7 years or so. Tourists, corporates, travellers. Larger motels have only one residence and one residential management couple but more office staff & casuals.

    Bottom line is worth focussing on  – ROI. 

    Cheers

    thecrest

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

    selling motels in NSW

    Profile photo of RipnrunRipnrun
    Member
    @ripnrun
    Join Date: 2013
    Post Count: 5

    I am 68 years old and want to buy a motel because i want to keep working, i am very active with no health issues, I have a property worth 350k  with 215k owing on it, the business i am looking at is for sale as a going concern and is for sale at 219k is it possible for me to get a loan for this with the equity i have in my house and with me renting this house out.

    Regards

    Darryn

    Profile photo of thecrestthecrest
    Participant
    @thecrest
    Join Date: 2004
    Post Count: 989

    Hi Darryn.

    Good finance question. " is it possible for me to get a loan for this with the equity i have in my house and with me renting this house out.  "

    You really need the opinion of one of the finance brokers

    (who I don't mind saying are kind enough to provide endless hours of help on this Forum

    to many grateful newbies and investors)  and who have thousands of posts to their credit. 

    The devil would be in the detail such as :

    Any previous experience in business or hospitality

    Trade or handyman skills

    House Valuation

    Security and Profitability of the Motel Business

    The details and tenure of the motel lease

    Condition of the motel, goods and chattels

    Valuation of motel business

    Operation of business as a couple or solo

    Bank LVR specifically for your personal situation at your age

    And so on . . . ..

    Happy to help if I can.

    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 RipnrunRipnrun
    Member
    @ripnrun
    Join Date: 2013
    Post Count: 5

    I was a bricklayer/builder all my life, my Daughter and son in law live with me and both have Hospitality Exp in cooking and front of house.He is a qualified chef and she has management training with front of house and the public side, The motel I am looking at is freehold not Leased would this make any difference, and ty for your time i have reposted this in the finance forum.

    Profile photo of thecrestthecrest
    Participant
    @thecrest
    Join Date: 2004
    Post Count: 989

    Hi Darryn.

    Thank you for the additional information.

    As a family group operating a motel, you have an excellent skill set which should impress any lender, and certainly has the makings of a successful group.

    Lenders usually favour freehold over leasehold as better security, while leaseholds usually provide higher cash flow returns.

    But if the motel would benefit from renovation, better cooking, better customer service, you have the goods.

    You personally also have the obvious huge advantage of building skills for renovation or adding rooms, which would increase the value of the property and business, thereby providing some capital gain/extra equity/increased cash flow. Meanwhile the 3 of you would enjoy a "free home" with lower cost of living as well.

    Choose a motel carefully and do your homework of course. Get all the expert help you can like your accountant, solicitor and a valuer.  

    Can you say what area you're looking at and how many rooms  etc. ? 

    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: 989

    What a great time to invest in a motel, the accommodation sector is a bit soft, even the coal areas are feeling the pinch, commercial interest rates are low, must be leaning towards a buyer's market. Hope all those with loans are pressuring their lenders for a better deal right now.

    Cheers

    thecrest

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

    selling motels in NSW

    Profile photo of investingyounginvestingyoung
    Member
    @investingyoung
    Join Date: 2013
    Post Count: 1

    Hi Crest,

    Thank you so much for all the great information and sharing of experience.

    I stumbled across this forum yesterday after someone had told me about the the general concept of motel investment.

    When I heard about the higher ROI when compared to traditional assets (shares, residential property, etc) I decided to do my research (GOOGLE) and I found your impressive thread. A thread which has lasted many years!!!

    Admittedly I have very little knowledge but I just wanted to confirm a few things I had learnt from your comments;

    1. ROI is highest on leasehold. (LH 30% annually vs FH 9% annually)

    2. If you purchase a leasehold you can either operate the business yourself or pay someone to run the motel for you (under management)

    3. You will need a 30% deposit minimum to buy a leasehold

    4. If you increase the turnover and nett profit whilst you own the leasehold you can then sell later at a higher price (Capital Gain)

    5. The nett profit = turnover – rent paid – business expenses.

    6. The nett profit is your income as business owner of which you then need to pay loan repayments, income protection, wages, super payments and tax, etc?

    Maybe I have some details wrong above and if you could correct me that would be great.

    If possible are you able to run through a sample scenario to highlight the numbers and cash flow from purchase to sale? Would be good to see how you can make money from purchase to sale and the income/expenditure throughout the years?

    If we use a $500,000 leasehold with a 30% ROI, could you show the cash flow if it was under management and also explain how you sell a leasehold if you have used 10-15 years of a 25 year term?

    Sorry for all the questions just very keen to learn and understand everything?

    Profile photo of thecrestthecrest
    Participant
    @thecrest
    Join Date: 2004
    Post Count: 989

    Hi Investingyoung.

    Welcome to the Forum from me as just one of the members, and I hope the forum is as much help to you as it has been to me.

    Like others here who have a specialty, I have tried to place as much info at the Forum's disposal as possible so read all you can.

    It's a 2 way street.  At the same time, the forum members appreciate the interaction with new members so please feel free to contribute by making an introductory post about yourself and what you're doing with investment, or plans, or career or interests or qualifications etc.

    In relation to motel investment, it might help to know at what level you are thinking of investing, your business experience and what you hope to achieve from a motel investment like short term, long term and lifestyle and where.

    To partly answer your many questions ,  

    1. 30% / 15% (inland).

    2. correct

    3. minimum

    4. correct (all other things being equal)

    5. generally speaking, yes. depending on how the figures are displayed.

    6. usually it's expressed as gross profit  then minus some expenses you've mentioned to reach a figure called nett profit, but ask your accountant.

    Quote " If possible are you able to run through a sample scenario to highlight the numbers and cash flow from purchase to sale? Would be good to see how you can make money from purchase to sale and the income/expenditure throughout the years?"

    Wow, Investingyoung, that'd be a huge exercise which my accountant charges me heaps for because it's so many hours of detailed work. But suffice to say, with a leasehold where the nett profit is 30% of the value of the leasehold, then every $1000 increase in the nett profit actually increases the value of the leasehold by $3,300.

    What are you thinking of doing ?

    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: 989

    Many moteliers are reporting surges in turnover last few weeks so expect P & Ls to show an unseasonal surge for this time of the year .

    Finance at an all time low cost, banks keen for solid investment, record profits as usual, plenty of good motels on the market at the moment, should be a good time for motel investors. Hope you're all doing well. Our motel in Wagga is going just great.

    Cheers

    thecrest

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

    selling motels in NSW

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