[thecrestParticipant@thecrestJoin Date: 2004Post Count: 992]

August 19, 2009 - 2:23 am

Hi Jaffasoft
Echuca is a strong motel town, strategically placed for through traffic plus it has a strong tourism economy, so it's a through town and a destination town in motel terms.
To guesstimate the income I need to make some provisos.
So, IF 
the $1m motel is a freehold
in reasonable condition
say 3 1/2 stars
running strong around 60-65% occupancy,
with no restaurant,
then  it should return approx 15% ROI to an owner operator , meaning around $150K after all expenses.
That's the industry expectation for a NSW or Vic country motel.
City returns are lower due to increased competition and higher land costs, so same motel in city area returns around 10%.

25 – 30 year Leaseholds show higher returns than freehold.

Nice town and area Echuca / Moama, time was when the "Hysterical Society" was locally joked about for " their silly dreams of converting the river area into some kind of touristy thing to do with the boring old history of the place as a river port etc. Like who'd want to go and see something like that "   . . . .. It ended up booming and saving the town financially. They should be naming streets after the hysterical society. 

Hope your rellies do well, well setup motels are usually very stable and provide a free home as well.
Ballarat is strong.
We like big towns above 20,000 population on major country hwy intersections in min 4 directions.
The location really matters of course and the accommodation "product" needs to be tailored to the local market and then maintained and presented well by very welcoming hosts and marketed strongly by net, RACV/NRMA Accomm Guide and signage. They're complicated in the fine tuning tweaking dept but those are the basics.

They can be a good investment and can be run under management, which is our plan.

Very happy to help anyone considering this area, as many people have helped us on this forum and what goes around . . . .

Cheers
thecrest

thecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
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selling motels in NSW

[thecrestParticipant@thecrestJoin Date: 2004Post Count: 992]

August 18, 2009 - 2:36 pm

Basics tell me that all other things being equal, if you  :
Add stimulus – something is stimulated.
Remove stimulus – something slows down.

Assuming nothing is happening fast in our slow moving economy and this continues throughout the rest of 2009, then the most significant and predictable event will be the halving of the FHOG. So if all the other market forces like unemployment rate, interest rate, consumer confidence, business investment etc are sluggish, then the outcome is a fast slowdown in the area which was stimulated by the FHOG.
 
Outside of that, I think the times are very peculiar and difficult to predict, even with the extensive research facilities of companies like BIS Shrapnel.

That tells me to avoid niche markets and buy old faithfuls.

Cheers
thecrest 

Cheers
thecrest

 

thecrest | Tony Neale - Statewide Motel Brokers
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selling motels in NSW

[thecrestParticipant@thecrestJoin Date: 2004Post Count: 992]

August 14, 2009 - 2:21 pm

It might help to request copies of the inbound condition report for this tenant, and any subsequent periodic inspections.
If the missing part of the railing is not mentioned in the inbound condition report by either party as existing damage at that time,  then you can ask the PM to demand repair from the current tenant –  provided that the inbound inspection report supports the claim that the damage was not there when the current tenants moved in.
cheers
thecrest

thecrest | Tony Neale - Statewide Motel Brokers
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selling motels in NSW

[thecrestParticipant@thecrestJoin Date: 2004Post Count: 992]

August 14, 2009 - 2:09 pm

We're currently living in a unit for a few months under other units which have hard flooring.
How we wish they had carpet ! ! !  Stilettos are the worst. It's amazing just how far some people walk in their units, the odd hours they keep,  and you'd never know until you live under them.  Every step resounds through your own living and sleeping areas.
Talk about one up all up ! !  
But apart from all that, I personally prefer to live with the soft quiet and luxurious feel of carpet. 

A 66m2 unit should not cost too much to carpet, and you can use hall runners to minimise wear n tear in high traffic areas.
Cheers
thecrest

thecrest | Tony Neale - Statewide Motel Brokers
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selling motels in NSW

[thecrestParticipant@thecrestJoin Date: 2004Post Count: 992]

August 14, 2009 - 1:54 pm

Tony Zoro.
Hi – thanks for asking.
Yes I do have a motel on the market but I'm also looking for a leasehold one to buy.
I understand that directly marketing your own property on this website is frowned upon so I hesitate to do that.
As a motel owner and operator and seller and buyer, I am interested in the area of motel investment and hence this post to  encourage contact and interaction with those sharing that interest.

For owner operators, motels are a lot of hours but a real estate based investment with a strong and reliable return, and provide a free onsite residence as well.
Lines between personal living expenses and motel expenses become pleasantly blurred. 
But lenders want higher LVRs than residential so getting started is harder.
If a freehold owner wants to retire and lease out the motel, it can be a reliable long term passive commercial investment  because the tenants are usually very stable, on 25 year leases,  and pay all outgoings, and defaults are rare but profitable for the owner.

Quite a flexible form of investment, with rural area returns higher than coastal. 
It's what I do, but now I want to leverage my time more effectively and operate 3-5 leaseholds under contract management.
Cheers
thecrest

thecrest | Tony Neale - Statewide Motel Brokers
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selling motels in NSW

[thecrestParticipant@thecrestJoin Date: 2004Post Count: 992]

August 14, 2009 - 1:29 pm

Keep visiting  brokers and tabling  your situation and requirements with them until you come home with a good plan that you and your accountant approve of.
Cheers
thecrest 

thecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
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selling motels in NSW

[thecrestParticipant@thecrestJoin Date: 2004Post Count: 992]

August 14, 2009 - 1:23 pm

The agent wants to do a deal,  and usually doesn't care if it's at $210K or $230K as the difference in commission is small.
You could ask the agent to reduce their commission by $1K and you'll match it, thereby offering the vendor $2K.  At least it's something for the agent to take to the vendor to keep the dialogue open, which is essential for agents to do their magic.
Could be good to put a 24 hour time limit on the offer too.
Costs nothing to play the card.
Good luck
Cheers
thecrest

thecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
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selling motels in NSW

[thecrestParticipant@thecrestJoin Date: 2004Post Count: 992]

August 8, 2009 - 12:59 pm

According to your post, you discovered the damage yourself. Not very reassuring is it.
If the damage was done during the period of the previous PM and previous tenants, your opportunity to recoup the repair cost is gone unless you like long court cases with long odds.
If the damage was done during the period of the current  PM, they must act to recoup the cost or bear it themselves.
They also are required to act in your best interests at all times, which also translates into managing matters with tenants in such a way as to prolong their tenancy under circumstances beneficial to you and the property, rather than dislodging ( groan, sorry – worst accidental pun of the week)  or  losing tenants unnecessarily.
If you have concerns, get written confirmation from your insurance company on the standard required, and the same from your builder, then you'll sleep better.        
Cheers
thecrest

thecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
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selling motels in NSW

[thecrestParticipant@thecrestJoin Date: 2004Post Count: 992]

August 8, 2009 - 2:52 am

Good luck with your ventures, 
Cheers
thecrest

thecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
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selling motels in NSW

[thecrestParticipant@thecrestJoin Date: 2004Post Count: 992]

August 8, 2009 - 12:05 am

Aaaahhh, the salt of the earth eh,  Book Salesmen / publicists and REA's.
Nah, very few cynics out here, but you can tell where they live    

coz their front doorknockers are removed and they have unlisted numbers.   

Cheers
thecrest

thecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
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selling motels in NSW

[thecrestParticipant@thecrestJoin Date: 2004Post Count: 992]

August 7, 2009 - 11:49 pm

Wouldn't  expect any takers at 7% unless it was an undertaker tenant on a 99 year lease.
That low rate applies to a national brand tenant on a long lease with strong
reasons to stay, rather than a factory builder with nearby spare vacant factories and a pressing LVR bank issue.
Perhaps you could look for a local who needs to expand.
Good luck
Cheers
thecrest

thecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
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selling motels in NSW

[thecrestParticipant@thecrestJoin Date: 2004Post Count: 992]

August 7, 2009 - 11:31 pm

Over the last 5 years some commercial property has been marketed in our local area.
It's become a frequent pattern that a tenanted property goes on the market with around 12 months or less
remaining on the lease.
It's marketed with " a good tenant in place" who pays all outgoings etc.
Funny how so many of them are vacated by the tenant when the lease expires, without the tenant renewing the lease
by taking up the option to renew.
It must be that over time, the tenant has established a relationship with the landlord who got the whisper, so the property goes on the market while it's tenanted to avoid the forthcoming vacancy period.
There's one scenario to avoid.
Also, we've found that if using residential property as security for a loan for commercial property, some lenders will finance at residential rates. That's a saving. And you can split the loan and use a line of credit like an offset account.

We're into motels. If anyone's into the same, PM me pls.
Good luck.
Cheers
thecrest

thecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
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selling motels in NSW

[thecrestParticipant@thecrestJoin Date: 2004Post Count: 992]

August 7, 2009 - 10:56 pm

Hi Trevor
Where is the motel ?
Cheers
thecrest

thecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
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selling motels in NSW

[thecrestParticipant@thecrestJoin Date: 2004Post Count: 992]

August 7, 2009 - 11:52 am

Hi Trevor
PM me pls I want to discuss your motel lease and commercial finance.
I own a motel too.
Cheers
thecrest

thecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
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selling motels in NSW

[thecrestParticipant@thecrestJoin Date: 2004Post Count: 992]

August 6, 2009 - 9:04 am

Property manager is already paid to do 3-4 internal property inspections per year, so while in the premises, why not test and replace those items while there. $99 ? Struth, that's $100 and get real –  it's a rip off. Don't be afraid to call it what it is.
Cheers
thecrest

thecrest | Tony Neale - Statewide Motel Brokers
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selling motels in NSW

[thecrestParticipant@thecrestJoin Date: 2004Post Count: 992]

August 6, 2009 - 8:53 am

Usually if it quacks like a duck and looks like a duck . . . .
Cheers
thecrest

thecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
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selling motels in NSW

[thecrestParticipant@thecrestJoin Date: 2004Post Count: 992]

July 21, 2009 - 2:11 am

Hi Bluegrass
Is that 40%  a typo ? If not, it sounds pretty good to me.

Also I'm confused – would you explain what you mean by " a negative geared cash positive property " , which appears to me to be a contradiction in terms.

Also have to agree with you that motels are hard to finance as the banks want high LVR even from those with the right track record in hospitality. Buyers of these motels need these deposits and this is best case scenario –
Freehold 40% deposit — ROI 14% – 15% owner operated
Leasehold 50%  deposit — ROI  25% – 30% owner operated
Ouch on the deposit. Yes they can be hard to sell if not priced correctly and few ever are until the vendor has spent considerable time on the market and been conditioned down to meet the market and current conditions. However, each one will sell within 12 months if priced at market price, that being the appropriate price for what is is, where it is, what condition it is in,  motel market outlook conditions, and what it netts. (Conditions apply).

Those contemplating buying individual managed motel units should bear in mind those selling and managing it will want money for admin, cleaning and maintenance –  all at premium prices, some with overriding excess fees.
It really is a good lurk for the seller to refinance the motel this way and pay the buyer 4% for their money instead of the seller using borrowed funds from the bank at 7% ish commercial rates. Plus the seller's strategy shifts future operating costs onto the buyer comprising admin, cleaning and maintenance , plus refurbishment every 5-7 years, depending on the star rating and policy of the establishment.  The buyer provides cheap finance and pays some motel operating costs, that's what it's usually all about.
 The key is the homework. Which you're doing.
Cheers
thecrest

thecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
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selling motels in NSW

[thecrestParticipant@thecrestJoin Date: 2004Post Count: 992]

July 20, 2009 - 3:30 am

Hi
Looks like a match to me.     
You own the land.
You want to build some development on it and maybe sell it..
You live far away and can't watch a project every day.
You're not a builder.
So you need a builder.
You need a real estate agent to sell it.
A builder is interested.
So is a real estate agent.
Looks like all the ingredients of a joint venture have fallen into your lap.   

You need to research how to do a joint venture if all parties are interested.

good luck
cheers
thecrest

thecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
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selling motels in NSW

[thecrestParticipant@thecrestJoin Date: 2004Post Count: 992]

July 20, 2009 - 3:21 am

What was the lie ?
How many would it take to catch up ?
 Are these ones OK ?   :

I have complete faith in the integrity of your agency because you are a well known REA.

I know you'll  take good care of my property .

You'll always give me your best rate.

You'll always look after my best interests because you have that legal obligation as a PM.

That's enough tripe.

Cheers
thecrest

thecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
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selling motels in NSW

[thecrestParticipant@thecrestJoin Date: 2004Post Count: 992]

July 20, 2009 - 3:05 am

Hi D – Wealth4Life
It seems this post and my personal messages and emails to you are either being ignored or ALL of them are not getting through for some inexplicable reason.  Hopefully I have not put you on a spot somehow, and hopefully your brother really does own 19 motels as you say in your post.  So in the spirit of mutual assistance on which this forum is based, I'm asking for a reply from you for assistance in reaching your brother so as an owner of 1 motel, I can ask him how he builds to owning 19 motels and admins that many.
Any assistance would be most appreciated.
Regards
thecrest

thecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
Email Me | Phone Me

selling motels in NSW