Making a motel into an apartment building

[Jeremy Hunsberger]

Looking for some insights into what all that would entail, its currently run as a motel (21 doors) but would make a potentially great multi-family property. I know zoning would play a part, looking for someone whos done it or what else i should think of when planning this project.  

[Justin K.]

I have looked at these before.  I agree with @Andrew Johnson.  I own a building that has several 2 bedroom/1 bath apartments and then 2 very small 1 bedroom/1 bath apartments.  The small units are typically hardest to rent.  The typical tenant I have found for those units is in a stage of life transition (divorcing, moving out of parents, etc).  Usually once they 'land' on their feet they move quickly into something larger.  I think that the difficulty to rent and keep rented these units it would be complicated by the fact that with the typical hotel room layout (bathroom by the door and 'bedroom' beyond) the most logical place for the kitchen or more than likely 'kitchenette' is in the bedroom area. Based on my experiences with the 1bed/1bath's that I currently own and the difficulty that I have getting them rented and keeping them rented I would pull my hair out trying to find 25 to 50 of these typically transient tenants.  So I switched how I was analyzing these properties. I began analyzing them as 2 bedroom/1bath units.  With a more expensive remodel I could merge 2 hotel rooms into 1 by removing a bath and since the plumbing is there already I could place the kitchen there.  By putting a cased opening in the wall between the units I could create a hallway and a few more non-load bearing walls and I could create 2 separate bedrooms.  Close off the motel room door nearest to the bathroom that will not be removed and you have a pretty decent 2 bedroom apartment.  This solved my layout problems but gave me two other problems.  1) Remodeling costs skyrocketed on me.  2) Now I went from 50 - 1 bedrooms renting for $600 each per month to 25 - 2 bedrooms renting for $850 each per month.  My maximum (not allowing for vacancy) income went from $30,000 to $21,250.  My gross income dropped by 30% and my initial upfront (remodeling) costs almost tripled.  Long story short, when I have analyzed properties in this manner, I cant get the numbers to work in a manner that makes me want to deploy capital to undertake such a project.  I will keep looking at them as leads.  Has anybody else been able to look at these from a different angle or perspective and find a lucrative deal?