Hi thecrest,

Glad to hear you're happy with your motel purchase in Wagga was it?  I posted last year about a few leaseholds we'd been sniffing around, still haven't made a purchase but we're in a better position to buy now if the right business comes up, as we've sold a residential investment property for a tidy profit, getting us out of debt with cash in the bank.  We did miss out on what seemed like a promising opportunity a month or 2 ago, it wasn't on the market long at all.  Located in Armidale, close to the city centre, over the road from a gastro-pub and next door to a bowls club (I think).   It was also a couple of doors away from a Coles supermarket and servo.  It didn't help that when I first requested more info about the motel from the broker that they stuffed up and sent me the blurb about a different motel!  At the moment I'm just keeping an eye out for good opportunities as they crop up.
Just a comment about an old post where someone mentioned that they'd prefer the "lifestyle" of operating a coastal motel.  From what I remember about growing up in a motel with parents operating motels, the operators don't really get the chance to enjoy the coastal lifestyle because they're always working in the motel!  It's a 7 day a week business from early in the morning til reasonably late at night.  As for a restaurant, forget about it…more hours for less profit, and you've got to manage staff.  Lose a good chef and what happens to your restaurant meal quality and therefore YOUR business?

Congratulations again on your purchase

Hi thecrest,

Judging from your previous posts, you're the "go-to" guy about motel investment questions.  My wife and I are considering going into business and we've been comparing motel leaseholds to other businesses.  My parents have been successful motel lessees and also motel developers so we've also been gleaning info from them about the industry.
There seems to be lots of motel leaseholds on the market at the moment and the returns that can be achieved from operating a lease seem to be fairly high.  Would you agree with this assessment?
For example, there is a 22 unit leasehold for sale in a large regional city in Victoria, asking price is $900K for 22 years.  The motel is bed and breakfast only (which would suit us, we're not interested in doing evening restaurant meals), net profit after rent and other outgoings is approx $240K (after add-backs, profit is approx $290K), on turnover of $525K.  The rooms have been recently refurbished, there is a restaurant over the road and another restaurant being built not far away.
Do these figures look reasonably believeable to you?  How rubbery are the add-backs?  Is 22 years long enough for a lease or should it be longer to make it easier to sell down the track?  My parents are of the opinion that 25 or 30 year leases are more desirable nowadays.
Also, I'm wondering what kind of business strutcure is most appropriate for motel leaseholds?  I've been looking into partnerships, companies and trusts, but it seems quite complicated.  I realise this is more of an accountant/legal question and that the structure will depend on our personal circumstances, but any advice would be helpful!  Thanks
How are you progressing with your purchase?   You're right about Xmas slowing everything down.  Nothing much happens for most of January too, from what I can tell.  Not just with property, pretty much everything shuts down, everyone's on holidays.