Motel deal analysis

[Neilrock Y.]

Hello,

This will be my biggest purchase if everything goes right. It will be my first hospitality venture.  The seller wants 3.8M for a 60 unit Motel in florida. Location is in close proximity to Disney parks and tourist spots. It is  surrounded by lots of competitive high end flagship Motels and hotels. 

property was built 1985 but was Fully renovated 2 years ago.  The 60 rooms are completely operational in  2019 so  ADR is around 34 dollars  and RevPar is around 47 dollars per room.  it is priced for 3.8M based on the 2020 proforma on an ave ADR 40 dollars and RevPar 56 dollars per room. based on an ave occupancy rate of 70% which in the greater area the ave rate is 80% to 85% based on the stated report. this property will cash flow if the proforma is right.  Reaching out for any investors, Brokers and Hospitality agents please tell me your thoughts if this property doable. Thank you. 

[Greg Dickerson]

@Neilrock Y. we would need to know the NOI and prevailing CAP rates in the area to be able to advise you. So look at going CAP rates in the area to determine if the price is on par with the market and also you need to look at NOI, GOP and GOPPAR to determine the true efficiency and profitability of the property.