Forum Replies Created
Hi Dave
Access your PM private messages through the “inbox” located top right hand corner of any page after you log into the Forum.
Cheers
thecrestthecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
Email Me | Phone Meselling motels in NSW
Hi Shadowcat
Just to clarify the scenario here –
It sounds like the offer is for you to pay $600K to be the lessor/landlord of those areas you mentioned, and you get paid a 10% return on your investment, someone pays you rent of $60K.
If that’s correct, there are a few questions that arise.
Who pays the $60K ?
What is your tenure or control or ownership – lease? Sublease?
When the lease expires in 13 years, how do you get your $600K back ?
Who gets your $600K now – the developer ?
How secure is the business in the hands of current operators ?
How strong is the trading position of the business itself in the marketplace, irrespective of operator ?
A 10% return for a lessor in the hotel or motel area is not unusual, often it’s more like 9%, but with only 13 years remaining to spread purchase costs like legals, due diligence and stamp duty (ouch) , it needs to be more like 10%. Ask Office of State Revenue how much stamp duty is payable on purchasing a $600K lease, it’s around $25K.It’s constructive criticism showing areas of interest by questioning.
Cheers
thecrestthecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
Email Me | Phone Meselling motels in NSW
Hi Dave.
Q. Difference of 50% ?.
Well the ROI depends eventually on what you pay for it, but yes the difference can be that much in the extreme. It would be difficult to sell a motel on ROI of less than 10% to a buyer operator because an investor can buy one and be a laid back passive non-working landlord and get paid rent amounting to 9% ROI with no work at all.Q. 35% Occupancy?
Assuming this is coastal, it’s still very low and there should be upside there BUT with the following provisos :
the motel is in good condition and does not require high expenditure, or
there are no unavoidable irreparable factors limiting occupancy like it’s next door to a nuclear reactor, or next door to a 5 nights a week battle of the bands venue,
or some other similarly poor location, or other “limiting factor”,Occupancy can usually be lifted, but it’s nett profit that you bank, not occupancy, so think of both.
Send me details of the motel by PM and I can give you better info than my stabs in the dark on limited info.
Cheers
thecrestthecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
Email Me | Phone Meselling motels in NSW
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
thecrestthecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
Email Me | Phone Meselling motels in NSW
Sometimes these signs fall off in windy weather, and land in between shrubs.
Cheers
thecrestthecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
Email Me | Phone Meselling motels in NSW
We used to run an island resort, and the bar had a sign titled "Things To Do Today" which we left permanently blank.
Get a massage every day, swim, massage, tour, shop, swim massage . . . . next day …… oh you're just making us all jealous, go have a good time n stop working, let the mind relax.
Cheers
thecrestthecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
Email Me | Phone Meselling motels in NSW
Perhaps this is where the misunderstanding stems from : quote ….(( While Richard says "Hate to say Justin you wont find anyone who pays the card off for you and you then pay you a fee"- this is what these 2 do.))….
Whatever.
Will a bank do a personal loan at around 11-12% or whatever the current personal loan rate is, to payout a credit card debt ?
Anyone know ?
cheers
thecrestthecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
Email Me | Phone Meselling motels in NSW
Property management by professional or amateur works just fine until grey areas arise, or a tenant pushes a boundary (bad pun, sorry), which inevitably happens.
Then the professional knows what to do to avoid a train wreck.
So I believe it's better left to professionals.
Doing it for a friends risks a friendship and the property.
Cheers
thecrest (former PM)thecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
Email Me | Phone Meselling motels in NSW
Hi Debbiemc
Would you be better off moving into the house yourself ?
Glad your house didn't get flooded, but then are you saying that the flood markers are placed where they adversely affect your property's sale prospects?
If you decide to continue to sell your property, you may consider using "staging" to sell the property ?
My 2c worth.
Cheers
thecrestthecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
Email Me | Phone Meselling motels in NSW
Hi Bob
Not sure what you call nothing, but you have experience, and in some areas,
grey hair beats youthful exuberance, and if you are time rich,
then you may be a joint venture candidate for those who have the rest of the pieces.
Naturally you need to stop whatever you were doing to burn through assets as well.
Good luck
Cheers
thecrestthecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
Email Me | Phone Meselling motels in NSW
Hi Paco
Click on "thecrest 547 posts" located just above my struggling bonsai logo, then public profile, then contact, and email me your email address, and I'll send you some links to good motel properties I've come across. Not appropriate to post them here.
Cheers
thecrestthecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
Email Me | Phone Meselling motels in NSW
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
thecrestthecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
Email Me | Phone Meselling motels in NSW
Hi Carolina,
Sounds like a good return. Hope you can build up the hostel as well, assuming that means a backpacker style place.
They're quite different as you know and flourish under young management and marketing thru youth channels. Word of mouth is uber strong in that area and can quickly strengthen your business, provided you know what they want and give it to them.
With over 80% occupancy, the motel could handle a tariff increase and also sounds like you could benefit from converting some hostel into about another 10 motel units. 6.5% is great too. Something that size would run well under management when you decide to go easier on yourself.
That's great, pls let us know how it's going as you progress.
Cheers
thecrestthecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
Email Me | Phone Meselling motels in NSW
"….putting skin in the game " …. love it, thanks. And a good read Andrew.
Cheers
thecrestthecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
Email Me | Phone Meselling motels in NSW
Hi Michael
Just be sure you're not the one who in effect is providing cheap finance by way of low return.
It's always good to wonder why an organisation or individual would part with a unit in a high occupancy location,
depending on who's servicing it , maintaining it, booking it, cleaning it etc.
Cheers
thecrestthecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
Email Me | Phone Meselling motels in NSW
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
thecrestthecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
Email Me | Phone Meselling motels in NSW
Update. We withdrew from buying 2 motels in the last 3 months, came close but decided they were just a bit off target because they have a restaurant, where we have little expertise. But, there is so much motel stock for sale everywhere and some of them are prime. The prices are low right now, hope someone else is enjoying this buyers market too. We now have 2 motels of special interest and hope they pan out after due diligence. Will post the result here.
Cheers
thecrestthecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
Email Me | Phone Meselling motels in NSW
Hi Bonnie
Avoid the one stop shop where you buy a property, finance, and whatever else all in the same place.Talk to Richard who has the runs on the board in this Forum and has helped so many.
Lay out all the jig saw pieces until it makes sense, then run your decisions and ideas past more people before making a decision.
Good luck
cheers
thecrestthecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
Email Me | Phone Meselling motels in NSW
Dear Angel. Your tribute to Tim is also a special gift to us all, thank you for sharing it and for the wake up call reminding us of our true wealth. The strength you have shown through your investment journey you have shared with us, will help you through this sad time. May the time pass quickly.
With deepest sympathy.
thecrestthecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
Email Me | Phone Meselling motels in NSW
Terry's sooo right, better to stick to democracies where you understand the language and actually have rights and justice.
We lost our shirt in the idyllic South Pacific and discovered why so many places are aptly described as a graveyard of entrepreneurs. Australia is a fantastic land of opportunity – the grass is very green on this side of the fence.
Good luck
Cheers
thecrestthecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
Email Me | Phone Meselling motels in NSW
