Hi Thr1lled.
If you’d like the blank lease, PM me your emai addressl & I’ll send it to you.
Don’t think I can send a big attachment through the Forum private message system.
Cheers
thecrest

Hi Thr1llied.
Very glad to hear someone is benefiting from the posts.
Any cashflow that cannot be substantiated, cannot be sold.
Valuers will disregard it.
Any large difference in income between one year and the next, especially an increase approaching sale time, is cause for suspicion, and must be proven if accepted into the sale price equation.
As you already know, if a seller says they have already enjoyed tax free cash, then they have already been “paid” that amount, and
can’t reasonably expect to benefit from it again by selling it as part of the business income.

Items to look for with a sudden increase in income :
Proportionate increases in variable costs – those items which increase with occupancy such as laundry, electricity, gas, water, cleaner wages, room consumables like soap n shampoo.
Also if the claimed increase in occupancy was also enjoyed by the town or region, it would show up in Australian Bureau of Statistics information on that particular town or region.

It’s wise to engage your accountant and solicitor early in the process, to ensure free flow of information from the vendor’s accountant and solicitor to yours. Your accountant should carefully analyse the P & Ls. After you have looked at a number of motel P & Ls, there emerges a pattern, and anything which is outside that pattern raises questions. Ensure offers and contracts contain escape clauses like subject to valuation, or subject to finance on terms acceptable to the purchaser, or subject to your solicitor finding all documents acceptable, subject to inspections like building & pest.
Ensure there are no outstanding or onerous pending local council demands.
Ensure there are no outstanding or onerous impending demands from the landlord, no ongoing conflicts between landlord and tenant.
Coz you don’t want to buy into a well-shaken hornets’ nest.

Re assessing a motel. We paid a valuer $4500 to do an official valuation on the motel which the bank demanded, 75 pages worth arrived, best due diligence I’ve ever seen and spent last when we were sure we were going ahead subject to valuation. If you need the contact we’re happy to supply it, but don’t know if they operate in Victoria or have affiliates. They were actually a recommendation from a valuer we knew who was slightly out of area. Worth every cent. Valuers base their final figure on a number of factors, and it includes the condition of the property, age, P & Ls, competition, local economy, state of the national economy, SWOT analysis, comparable sales of other properties, capitalisation rate relative to the aforementioned factors among others, and other factors. A good valuation is quite comprehensive.

PM me contact details if you would like a chat.

Cheers
thecrest