Hi Dave
Good questions.
Coastal freehold motels usually return lower than inland.
The catchphrase in our industry is “coast for show, inland for dough”.
The inland motels usually sell for around 15%Return.
As you know the return is calculated on the nett profit divided by cost price x100.
So it matters what price you can negotiate.
But for a set nett return, you must pay more for it on the coast than inland.
Decide if you want top income or “coastal” lifestyle.
Cheers
thecrest

Hi Paco
Just happy to help, doesn't matter if it's old post or new.
The banks lending criteria vary depending on a number of factors like – whether you're buying freehold or leasehold, your business experience, your banking history, credit history, assets, ability to repay, ability of the motel business to repay, bank valuation of motel, etc.  
The banks think of the default scenario where if the $500K property must be sold to pay your debt, how much will you have in your hand after the sale when your debt is fully paid out. 
So, using a simple sale scenario, it sells for $500K, then you pay out bank debt of $271K = $229K left in your hand. When it's $229K cash in your hand, it's $229K cash, but before the sale it's $229K tied up in the property, so it's $229K equity.

Now while you own the property and the property is not sold, the Bank will decide what percentage of $229K equity they are willing to lend you for your purpose. I haven't checked all the banks this month, but I do know one which will finance me to buy a motel leasehold on 30% cash deposit. If I used equity instead of cash, they will regard say 80% of that equity amount, $183,200 as a deposit, not the whole $229K, just in case the property did not fetch market price at a forced sale.
 But you're not out of the woods yet.
Often bank valuers will value your $500K property "conservatively" and value it slightly lower than what you think is "market value", so they may value it at say $480K.  Then the bank maths says $480K-$271K=$209K x 80%=$167,200 deposit.
The banks will cover themselves those 3 times given the opportunity. 
Once by only lending 70% of the cost of the motel lease, once by only lending to 80% of your equity, and once by conservatively valuing your property.
 
Banks may have a different criteria for freehold, and may require more deposit, or not.

Hope that helps. Happy to assist with any more onfo you may require, if I can.

Are you aiming for a freehold or leasehold ?
Size & star rating?
What area ?
Restaurant?
Price bracket ?
Any info would be appreciated.

Cheers
thecrest

Hi Carolinaconch
That sounds like a very exciting project at that level.
Can you describe the style of motel ?
So we have some idea of the market in that area, can you describe the type of finance deal with costs and interest
that is available for this type of investment ?
What are the financiers' attitudes to motels ?
What is the expected ROI % ?
How much is your contribution ?
What is the LVR required by those financing it ?
Any information would be of great interest in comparing with Australian conditions.
Cheers
thecrest