Feedback? Absentee Owner Turn Key Motel Lodging vs Multi-Unit

[Brent Fullerton]

I need your support! I recently came across an Absentee Owner/Turn Key Motel Lodge opportunity in Eastern Colorado. I know this offer is not standard Multi-family investment, yet I ran the Rental Calculator.

As a Multi-family investor, my goal is $100 per unit with 12%+ Cash on Cash.

I am not experienced in Motel ownership, yet I own a camp as an Absentee Owner in Wadi Rum, Jordan.

Is this a BP Deal????

My numbers from Rental Calculator indicated:

Cash Flow = $1098 Per Month

Cash on Cash ROI = 26%

About:

The Motel is located on major highway (Eastern Colorado) approximately 100 miles east of Colorado Springs and two hours from Denver. The Motel is twenty minutes from the Rush Creek 600 MW Wind Farm and two miles from Niobrara Shale Basin, one of the highest producing oil fields in the United States.

The small town the Motel is located in has no traffic jams and quality school system K-12. The Motel is the only apartment/lodging within 20-50 miles in each direction and 11 hours from Dallas Fort Worth, Texas.

• 11 units total with 10 flexible apartments and lodging and 1 unit for Management
• 5 one bedroom or suite units with separate living room, kitchen and dining area
• 2 studio apartment units with two double bed overnight units and one single bed overnight units
• 4.3 Star Trip Advisor Rating -- 23% repeat business
• Turn Key

Terms:

• Owner Finance - No Qualifying Loan for Seller
• Price $350,000 w/ Down Payment of $50,000
• Interest 5.5% for 40 Years
• Principal Pay Down - $10K or less = +2%, $10K plus = +4%, $20K plus = +4% (For example, I put $10,000 towards Principal and receive bonus of $10,200 applied toward Principal.)

Income:

1. Gross Income for 29 months (6/2015 - 10/2017) = $168,888.00
2. Total Expenses for 29 months (6/2015 - 10/2017) = $81,200.00
3. Net Income NOI for 29 months = $87,688.00
4. Monthly Net Income = $3023.00
5. Annual Net Income = $36,284.68 (Average for 29 months)
6. *Gross Income for October 2017 = $6987.00 (Sturgis Rally)
7. Gross Income from monthly apartment rentals @ $599/month per unit
8. Gross Income from overnight rentals @ $68/night per unit *(For 2018, raised to $73/night)
9. Monthly units @ $599/month have been as high as 6 units per month, yet varies!
10. Overnight units @ $68/night have been as high as 95 unit per month, yet varies!

Monthly Expenses = $2800 Per Month:

• Current Management Team = $1000.00
• Insurance = $224.00
• Real Estate Taxes = $92.00
• Fiber Optic High Speed Internet = $89.00
• Cable TV = $52.00
• Trash Dumpster = $55.00
• Sewer / Water = $186.00
• Natural Gas (average) = $142.00
• Electric = $327.00
• Housekeeping = $270.00
• Ongoing supplies = $230.00
• Maintenance = $133.00

Total Renovation

The renovation started in 2011 and was completed 2016 with entire complex being gutted to the studs, then completely rebuilt fully furnished inside and out to new standards, as follows:

• 26 gauge top of the line triple epoxy coated metal roof
• 26 gauge top of the line triple epoxy coated awning and patio cover
• Single hung gas filled energy efficient EZ clean vinyl tip-out windows
• 4 new natural gas water heaters
• All new plumbing throughout entire complex/building
• Only #1 Grade Premium lumber was used throughout entire renovation
• Quality Price Pfister plumbing fixtures and lifetime parts
• 180 feet of new 4 inch sewer line from the building to the street tap
• New premium exterior fiberglass dimensional Colonial style entry door with new door jams, aluminum thresholds, all new lock sets and peep holes
• Custom picture framed windows with decorative edging and exterior door trim to match
• Commercial toilets: all new PEX plumbing, shut off valves, bullets, supply lines, hose bibs, angle stops
• New attic and wall insulation with vapor barrier
• Upgraded electrical, HE lighting, new fixtures, switches, outlets, breakers, energy efficient lighting, vapor lights, rope lighting and HE flood lights
• Custom artistic signage (3) built by Management Team
• New drywall, texture and highest quality Valspar paint throughout
• All exterior wood was hand primed and hand painted
• New vinyl fencing for corner lot
• Premium Quality pillow top mattresses
• New hand textured walls (office), ceiling and covered entry
• New concrete sidewalks, kitchens, baths, showers stalls, toilets, vanities, cabinents, counter tops, sinks, refrigerators, microwaves, deep freezers, dryers, A/C units, flat screen TVs
• All work has been documents and permitted