Hotel/ Motel Investment

[Lindsey Ambrose]

Hello! My business partner and I are considering investing in a 24 room inn/motel that is for sale in our area - this is our first property outside of apartment buildings, so I am hoping to find someone with expertise in the hotel business that could help give me some insight. Is anyone out there familiar? It will just take a few minutes of your time and would be so, so appreciated!

[Account Closed]

Originally posted by @Shiv Patel:

Happy to help. We've been investing in hotels for quite some time. 

Wow!!! Before I saw your post I was thinking of the name 'Patel' since we have a 16-room motel 200 feet across the street from my office and the owner's last name is Patel. There must be a lot of money in the business because I am always amazed about how much money he spend on the motel and he tore down a separate house he lived in on the property and build a mansion.

As for someone investing who has no experience, I think someone who invests in a hotel or motel should understand that it is a 24-hour business that requires 100% around-the-clock employees willing to work during every major holiday even during the worst weather conditions, storms, or through whatever crises and current events are happening.

The business requires several different shifts of workers for the front desk, several shifts of room-cleaning workers since many hotels and motels have guests coming and going 24/7 and they want to re-rent rooms asap, constant room maintenance for plumbing, heating and cooling and the guests come in all shapes and sizes with all sorts of inherent problems when it comes to the things they do both on the property, in the rooms, on the bed linens and then add the dealing with drug addicts, potential prostitution, potential sex-trafficking, potential sexual abuse in general and abuse of a minor, damage to the property, out-of-control parties, lovers having fights on the property and in the rooms, damage and theft to the linens, damage to bedspreads, and damage to the flooring.

Since I am a plumbing contractor, many motels and hotels call my company to remove drug addicts' heroin needles stuck in toilet bowls.

Before making an investment into a hotel or motel an investor needs to take a serious long amount of time to look at the books to see whether or not business in the area is declining, but since the hotel and motel business is one of the greatest   cash businesses' in this country you can bet that many sellers will make you well-aware that the 'real' income cannot be verified.

I did a lot of research for the past 20+ years, looked at more than 100 hotels and motels for sale and declined to purchase most of them due to the decline in sales in most areas they were located in. Many of the motels I looked at were eventually torn down and many were less than 1 mile from huge amusement parks like Disneyland and Knotts Berry Farm a fairly well-know and super busy amusement park only 7 miles from Disneyland.

So, don't let sellers fool you with words like 'lot of money in the business' because every business has some sort of inherent problems and you should want to find a business with the least number of inherent problems and the best ROI.