Forum Replies Created
Hi Allan
Did you manage to put a finance deal together, might be very interesting to know how it went so we can all see what the current market is providing .
Any feedback appreciated.
Cheers
thecrestthecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
Email Me | Phone Meselling motels in NSW
Hi Tim
This is a genuine enquiry, we are seeking a motel leasehold in Wagga.
Please contact me if you are selling.
Cheers
thecrestthecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
Email Me | Phone Meselling motels in NSW
Hi All
Great post D , and great replies.
Could someone please tell me what the 20% correction is ?Thanks
Cheers
thecrestthecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
Email Me | Phone Meselling motels in NSW
If you now have a lower bond, it needs to be topped up again to regain that level of bond protection, especially with the sound of these tenants.
Cheers
thecrestthecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
Email Me | Phone Meselling motels in NSW
Hi jcar
Scott n Wolfe n Dan are right, I'm sure you can see that.
All the alarmed landlords are correct. Your friends are most likely dodging problems with tax or FHOG, but for whatever reason, trying to avoid documents showing their property is tenanted.These loose or poorly documented tenancies are a time bomb – see the post below which is current which shows just some of the possible bad outcomes.
https://www.propertyinvesting.com/forums/property-investing/help-needed/4334902#comment-226351With normal business deals, you need full documentation to protect yourself.
With business deal with friends, you and your friendship especially need full documentation.
Friends are too hard to find and are treasures – not to be risked with low doc deals.No document you sign with TBA is worth the paper anyway, it's meaningless, can't be lodged with bond board or tribunal or tabled in any legal scenario except to show complicity, irresponsibility or naiivete. It doesn't relate to any particular property so you can never substantiate that it relates to the property you are paying rent on, so why bother.
TBA format rent receipts would be worthless too.If you don't know what docs are required, contact the dept of fair trading in your state or buy a set of docs from a local REA.
Good luck
Cheers
thecrestthecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
Email Me | Phone Meselling motels in NSW
Hi Tim
I’d avoid a lease that wants the tenant to pay a % of their turnover each year, sounds like Westfields. If that’s what you mean.The % is just to have a formula for the initial setting of the $ rent level at the commencement of a new lease.
At the commencement of a new lease, normally the rent is set at a $ figure which ideally equals not more than 20 – 22% of turnover.
Now after the lessee commences operating the property under the lease, and if the tenant increases the turnover by his own endeavours, good luck to him, that is no reason why the landlord should get more rent. The benefit to the landlord is that his tenant is making more money and so becomes a more reliable and stable tenant, business and investment. In this case – Capital gain and extra profit go to the one who works for it – the tenant.If you mean the basis for the starting rent on a 25 year lease, then 22% would be good. Once the rent is fixed at that $ amount, then the lease increases it each year as per the agreed formula in the lease, which usually says to increase by the amount of CPI but hopefully says” by CPI but not more than 5% in any one year and not less than zero. “
If rent starts too high, then the rent compounds too quickly and the rent level and business becomes unsustainable, creating either litigation or very awkward negotiation and mediation to avoid litigation, and unless you fluke it for a very reasonable far sighted fair-minded landlord then the tenant will usually come out disadvantaged to some degree. It’s difficult to get a landlord to accept a pay cut (reduction in rent). No one likes a pay cut.
Cheers
thecrestthecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
Email Me | Phone Meselling motels in NSW
Hi Joe
Suggestions.
If there are any ads for any kind of staff at a REA, ring them and pitch to them, might be a chance for them to reshuffle especially at volunteer rates. Call it work experience.The other option which gets results is cold canvass, always obviously in your business suit looking like a real estate person with personal business cards at the ready. REA’s will respect your drive & initiative, and it will demonstrate that you can cold call, still to this day it gets results for listers who can doorknock a suburb.
It also shows what you look like and how you present yourself. Anywhere you can’t see the principal or licencee personally straight away, leave a brief one page pitch at each place with your photo on it, just as a REA would in trying to list a property, so they don’t have to wonder if you can do at least the personal presentation part of the job.
Mention on the one page pitch that you will be following up with a courtesy call in 2 days time to see if there is an opportunity for you, and do all the calls and call backs yourself as well as leaving messages when they’re not there. Keep the initiative though, keep the ball in your court and call back yourself, not just wait for them to call you back on left messages.If you can do that, you will flush out any opportunity that is hiding in the market place.
It’s in all the old tried n true sales manuals, and it worked for me.Good luck
Cheers
thecrestthecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
Email Me | Phone Meselling motels in NSW
Hi Quarram
Suggestions.
Sounds like you didn’t prepare the premises for the tenant. Time to show them by example your true expectations of looking after the premises.For your own benefit, you should immediately do the big cleanup, after agreeing in writing to a change in the condition report which will show that the tenants agree to leave the premises in the same condition when vacating (meaning the new cleaned condition). Take photos.
Obviously the repairs to dishwasher and pool equipment are urgent and necessary.
Every landlord should respond fast to tenants reasonable requests and urgent necessary repairs, about as fast and timely as you would like the rent paid. You can’t differentiate between whingers and good tenants until you’ve completed your own duties and finalised all reasonable requests or outstanding work.
Cheers
thecrestthecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
Email Me | Phone Meselling motels in NSW
Hi Nabeel
Difficult family situation. DWolfe is on the money by the sound of it as usual.Hopefully you can substantiate the bond was $600 by the receipt you issued them. If not, it’s up to them to help substantiate their claim for any amount over $600.
Wear n tear is allowed relevant to the type of occupants incl extra allowance for more wear n tear for kids and disabled persons.
Chips, scuff marks etc are usually fair wear n tear.Without a detailed inbound tenant-signed condition report and outbound condition report you will most likely not be able to press the matter in any court because the before n after condition might not be legally established and mutually agreed.
Sounds like you lose due to lack of professional paperwork.
Suggest you improve your paperwork and keep family relations, you might consider it a small loss compared to some loosely structured and inadequately documented family business deals.Good luck
Cheers.
thecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
Email Me | Phone Meselling motels in NSW
Hi Din
Assuming you get nett income left over after you pay all Quest’s fees like booking fees, commissions, advertising fees, cleaning fees, repairs & maintenance, Body Corporate levies & fees, then you need to know how much those fees will be, and how much return you get in $s and ROI %. Not sure if you’re paid on nett income of your one apartment or if nett income from 50 units is pooled and you get 1/50 th.
Body Corporate / Owners Corporation may have lots of owners or be dominated by Quest due to numbers, so if buying from Quest on certain assumptions, better to make them contractual if possible, (see your solicitor) so you can live in it or rent out or whatever after the lease expires. Find out how you can keep Body Corporate post-lease options open during the 10 years lease.
Off or On Lease shouldn’t change it’s buy or sell price. Depends on the local market and what the potential buyer wants to use it for, and its nett rental return for investors.
Cheers
thecrestThese are my opinions, suggestions and assumptions only. You should do your own due diligence, get expert advice where appropriate and make your own decisions.
thecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
Email Me | Phone Meselling motels in NSW
Hi Tim
We’re looking for a leasehold in Wagga.
Please send me your details.
email to – [email protected]
Cheers
thecrestthecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
Email Me | Phone Meselling motels in NSW
Hi
Had the miserable task of clearing out my mother's place just after her passing. I rang her special friends so they could take anything they wanted, then bundled up the clothes and dumped at Vinnies in masses of garbage bags. The 3 cubic metre skip bin I ordered was deposited at the closest point to the back door, filled in one day, had to get it all in before the neighbourhood overnighters filled it for me.
About half the stuff I put in the skip bin then magically distributed itself all over the neighbourhood overnight. You can sell the rest to anyone on the lists mentioned in these posts.
Not very cheery, but cheers
thecrestthecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
Email Me | Phone Meselling motels in NSW
Those spongey faux wood floors or bamboo product ones, whatever they are, look good. However, I'm kinda wired that if wood feels spongey underfoot, then it's soggy or rotten. So I don't enjoy walking on those wood looking soft floors. That's just me maybe. Tiles would be my choice for warm areas, and carpet in locations where it's colder.
Cheers
thecrestthecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
Email Me | Phone Meselling motels in NSW
Hi Lplate101
What attracted you to motel investment ?
What area of motel investment were you attracted to ?
Did that change ?
Why did you invest in residential instead ?Cheers
thecrestthecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
Email Me | Phone Meselling motels in NSW
Vetting prospective tenants is the first and most important task, which even many experienced Property Managers do poorly, for one reason or another. So those less experienced need to be extremely thorough in this area.
One of the PM tools is the TICA database which is powerful when used correctly, usually not available to private landlords.
Search this Forum on "vetting tenants" and be so thorough that you feel the applicant is close to withdrawing.
You must be convinced by confirmed and proven information that the applicant can afford the rent now and later.
I don't house the able-bodied unemployed, coz I already support them enough. Employment = work ethic = income.
Applicant must prove their own identity with 100 pts ID system with current recent bills, photo ID, refs to landlines listed in the current phone book, refs from REAs not private, etc. Anything isn't quite right, decline the application and no reason is required.Or ask a PM to setup a tenancy for you for a fee, and then run it yourself.
Cheers
thecrestthecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
Email Me | Phone Meselling motels in NSW
Hi Joe
Hold that thought, extend the time line. Courses provide the knowledge, but not the operational survival strategies necessary to run a traditional Real Estate office & Agency, and get through the first 3 years. Would strongly suggest you work with an agent for at least 12 months before deciding to open your own agency, assuming you mean the traditional type REA office.
Cheers
thecrestthecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
Email Me | Phone Meselling motels in NSW
My opinion only.
If you can think of it as a partnership with the lessee, and you ensure you have a lessee who has a reputation for being reasonable, it should run smooth.
Usually rent is not more than 25% of turnover. Rent can compound out of hand if it starts too high, ends up in court eventually.
Reviews are grey areas. Placing a 5 yearly rent review in a lease defeats the purpose of a lease, which is to eliminate any grey areas. I prefer to use CPI.
Brokers say "coast for show, inland for dough", it's true, so compare yourself, higher return=stronger biz & tenant.
Can't advise on Qld law relating to leases.Ideal would be motel under 20 yrs old because usually the lessor is responsible for pipes and wires in walls & underground, drainage, structure, so that if a problem requires digging or removing bricks or structural repairs, lessor pays. Lessee is responsible for superficial stuff like furnishings, fixtures & fittings, re-paint, carpets, tiles, repairs, bathroom reno, HWS, A/conds, and internal / external superficial maintenance. So lessor is better off if the structure and things inside walls and ground are not 50 years old and hence likely to require replacement or repair. F/H owners have few costs with a newer motel.
Downfalls of motel vs commercial buildings ? More complicated leases; more components than an empty factory;Leases vary considerably. The older ones are weighted in favour of the lessor. In legal terms, there is no superior position in the lessor/lessee relationship, however, some leases read like the lessee is an inferior being, and certainly is disadvantaged by some leases. No way to run a partnership.
When I sold the investment freehold, I rearranged a plain English lease on more even terms than the norm. I offered the F/H at a 10% ROI didn't have to listen to any requests to change the lease clauses.
The commonly occurring onerous lease clauses I dislike are :
Lessee gives the Lessor Power of Attorney over the lessee in the event of lessee default. ( POA is too much power).
Lessee pays the lessor's building insurance, (and yet no compulsion for the lessor to rebuild if destroyed by fire.) Unfair.
Lessee selling lease becomes held over as guarantor for new lessee until end of current 5 year lease period. Unbelievable.
Complying with any recommendations of AAA. (we found AAA very unreasonable sometimes, even demanding we render).
Lessee pays all lessor legal costs. (Lessors act faster when paying their own legals).
Rent review every 5th year according to value of business, (which is improved by lessee's hard work & expertise). Unfair.
If motel is destroyed by fire, Lessor is not obliged to rebuild motel or compensate lessee (how much did lessee pay ?)
Refurbishing and repainting every 5 years or whenever the lessor deems appropriate (might not need it yet).PM me your email address and I'll email you a lease. Include your landline phone number if you want a chat.
Cheers
thecrestthecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
Email Me | Phone Meselling motels in NSW
Hi Motelinvestor
I'm not anyone official on this forum, but welcome from me.
It would help to keep this short if you provide some info :
Level of investment approx $ ?
Geographical preferences ?
Proposed term of investment ?
What % of the investment cost are you borrowing ?
Happy to help. This info matters.Cheers
thecrestthecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
Email Me | Phone Meselling motels in NSW
Strata management is complicated, especially when there is disagreement. Went thru this recently. Messy tribunal.
Was very happy to pass the management onto a professional licenced strata mgr.
If you want advice on strata, Dept Fair Trading is excellent, very helpful.Good luck
cheers
thecrestthecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
Email Me | Phone Meselling motels in NSW
Hi Athman
You're quite right.Opinions vary on the benefits of a restaurant in a motel.
Some say it's great, puts bums in beds, attracts groups and corporates.
Others say they only break even and who'd want a business add-on that demands an extra 40 hours a week and only breaks even, or it's a constant source of problems – staff, costs, extra 40 hours per week, low profit, scarce erratic chefs.We are not experienced with Food & Bev ourselves so we avoid investing in motels with restaurants. We prefer a motel surrounded by eateries so we can concentrate on accommodation and leave F & B to those who love it and are good at it.
However, Motels with restaurants attract more corporate guests – who want to book in, relax in a 3 1/2 – 4 star room, update the day's business or reports on the laptop, freshen up, few drinks, eat in-house, not have to wander a strange town at night to and from a restaurant or club, or worse still drive after a drink. They like it all on one bill, breakfast same place or delivered to the room. These motels also attract bus groups provided there are 26 rooms min.
Some motel restaurants also attract local business, which is a bonus.
There are many ads for motels for sale which mention that the restaurant part is closed, so there may be opportunities right there, if the local area's market conditions are suitable.
Motels are mostly valued on nett profit, all other things being more or less equal, unless there are significant other factors like for example it's sitting on 5 acres instead of 3000m2. So a motel with a closed restaurant is usually underperforming its potential. Opening the restaurant should increase the accommodation figures and add F & B profit as well. In a freehold motel, assuming typical cap rate is 15%, then an increase in nett proifit increases the valuation x7 – therefore every $1 extra nett profit adds approx $7 to the valuation. The restaurant of a 25 unit motel could add $50K to the nett hence $350K to the val. Nice CG so be ready to cope with CGT.
So, blessing for the experienced F & B operators, mixed blessing for the others.
Cheers
thecrestthecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
Email Me | Phone Meselling motels in NSW
