Over the last 2 years we have had some educational experiences with banks who financed our motel investment, and in the hope it might help someone else, we’ll share it here.
Bank A – agreed to finance our plan to sell our freehold motel, buy a leasehold motel and double the return for the same investment.
Then use the extra income to buy 1-2 brm units nearby to fill through the motel as serviced apartments.
As soon as we sold the freehold motel, the bank said “oh sorry we don’t finance leasehold motels unless you hold some freehold property” – . . . . . we asked ” um doh , do you mean like the freehold property we just sold ?”
Gotta love that one. Sgt George .

Bank B. Then we found another bank to finance the same plan, reached agreement, but as soon as we wanted to go ahead, they moved the LVR into an impossible position for us thereby killing the deal. They wanted a massive deposit. Then they asked us if we’d like to borrow $XYZ and we said sure, that’s heaps more than we’d asked for, then they refused it a week later but during that week they recorded it as a credit enquiry by us for the extra huge amount on our credit record, for all to see, and then told us that due to circumstances of over a month ago that amount could not have been lent anyway.
Gotta love that one too. NAB.

We decided to try all the finance brokers we knew, but none could find finance for us.

Bank C. Then as a last resort, we decided to ask the vendor’s bank, on the assumption that the vendor’s bank had been enjoying the direct cashflow income of the motel business for a number of years and should be confident of the figures from the vendor. After all, if the vendor’s bank had refused to finance it, we would’ve had good reason to doubt the vendor’s figures and walk away. The bank agreed to finance it provided we reduced the LVR a little over the first 12 months, and then on IO for 5 years. They agreed that their firsthand knowledge of the property and business made it possible. Very competitive interest rate, great service, friendly helpful.
Thank you CBA.

In this case, the journey was educational but lousy, but the outcome excellent.

Posted in case it helps someone get a deal across the line.

Cheers
thecrest

Hi All.
We are pleased to announce finally after many hiccups over the last 18 months of searching
for the right motel, , that we have
settled and purchased the leasehold of :

The Best Western Ambassador Motor Inn, Wagga Wagga NSW.
4 star, 22 rooms plus 6 x 2 brm apartments, pool, no restaurant,
strong business, excellent location, very strong motel town.

Still happy to help anyone else with motel investment, but
time a bit more limited while operating this motor inn.

Finance was crucial, nearly stopped us,
and then we found finance ourselves through a
creative process with CBA.

Steep learning curve, to another level I guess.

Our thanks to all those who helped and encouraged us to
persevere through a difficult process.

Family and friends are priceless.

The next 6 months operating the business ourselves will prove the figures
beyond doubt. Looking forward to that point in time.

Hope you all enjoyed a happy Xmas and
we wish you a very successful 2012.

Cheers
thecrest

.

Some good suggestions here, if you want only payroll, MYOB and QB entry level are around $700 & $500 respectively.

I’d really appreciate as many suggestions as possible, something will ideally suit this purpose,
and I’ll look at just about anything. Sometimes the simplest are best.

Cheers
thecrest

Hi Scott.
Thanks for that info. I’m very interested in locating that article and will start searching.
The Echo Point location would have to be considered very strong in the tourism sector.
It’s an awsome view, well setup for buses and a “must see” . As I remember, it’s free too.
Great motel for someone with good maintenance skills and ripe for a reno.

We’ve been avoiding anything with a restaurant, so the one at Mudgee next to the RSL is perfect, and the
other one is in Bathurst and although it has a restaurant, it’s across the road from a hotel/motel with 2 restaurants so for that location we’d make an exception. But banks LVR’s are so harsh with motel purchase that we ran out of deposit funds after we committed to the Wagga purchase. Then these plums pop up, ggrrrr.

Cheers
thecrest