Hi,
My parnter and I are looking to purchase our first leasehold motel. We have approximately $100k in cash to invest but we do not own any property. We are looking at starting small so are viewing leases aroung the $200k mark. Therefore we would need to borrow about $100k.
We would like to know if it's likely that we would be able to get the rest of the money we need to purchase a motel through finance.
Does it depend on the figures of the motel we would be purchasing? Would they even consider us for finance because we have no property to be used as security? Would we be better off looking at a free hold purchase ( which is our eventual plan) as far as finance is concerned as that then becomes security for the bank?
Thanks
CasmitHi Casmit
Yes i think purchasing a freehold motel would be a lot easier when it comes to financing.
Richard Taylor | Australia's leading private lender
Hi Richard,
Thanks for the fast response.
Are there specialists in finance for motels? Are they worth going to? Should we just stick with the banks? I am guessing that the lending criteria will be generally the same, good credit rating etc, and also dependent on the figures of the motel?
ThanksYes there are motel specialist and you are right the lending criteria would be much the same although might find the interest rate set up and ongoing costs might be more competitive.
Richard Taylor | Australia's leading private lender
Would you please name some of these specialists ?
St George dried up in very poor style this week, so we need to make a move.
Any ideas would be appreciated.
Cheers
thecrestthecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
Email Me | Phone Meselling motels in NSW
Hi Casmit
If the $200K leasehold provides typical leasehold returns of 30-35%, you'll have to be careful you buy one that doesn't need much spent on it for a few years while you save, income of 30-35% doesn't leave you too much to play with.However, disposable income is high compared to most people's situation because there are perks like a free home onsite, no commute to work costs, personal living expenses indistinguishable from deductible business expenses, free use of guest extras like broadband, austar, free utilities, deductible vehicle is biz on call 24/7, cash, replace casual labour with your own ( avoid personal burnout ), do all laundry and repairs/maintenance yourself.
Unfortunately freeholds typically only return around 15% , half of what leaseholds do, and there probably won't be any on the market for around $200K.
I know a really good leasehold for sale for $365K, (mine), 30%, if your financial situation reaches that point, PM me.
Cheers
thecrestthecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
Email Me | Phone Meselling motels in NSW
thecrest wrote:Would you please name some of these specialists ?
St George dried up in very poor style this week, so we need to make a move.
Any ideas would be appreciated.
Cheers
thecrestAll of the majors lend on leasehold motels – for the right deals. So does BankWest. So does St George.
The first problem you will have is the amount: – 100k will barely get you in the door to see a business banker let alone a specialist. You would need to have accountant prepared cash flow forecasts and a well prepared business plan. Preferably some experience in the industry. Generally lending will be limited to the term of your lease.
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