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!

[Mark Zajaczkowski]

Quote from @Cliff Benner:

@Mark Zajaczkowski Congrats on building it up! Hoping that you are selling to move on to bigger and better! That was an awesome strategy!

Thank you! It has not been an easy decision and I know motels don't typically sell fast (We might be in for a haul, but I think our price will be very competitive especially for Colorado). We've definitely improved the property and business-My wife started her own business 2 years ago and I want to help her when I can and hopefully invest in more Real Estate where we live and maybe a 2nd home/rental somewhere warm

[Tim Debronsky]

@Mark Zajaczkowski We just came across a 39 room motel in my market. How long it took you to turn around the motel? Was it a difficult process? I’m a single family investor/Landlord not a motel investor. We’re considering flipping it after turn around. 

[Norm Kopesky]

Quote from @Tim Debronsky:

@Mark Zajaczkowski We just came across a 39 room motel in my market. How long it took you to turn around the motel? Was it a difficult process? I’m a single family investor/Landlord not a motel investor. We’re considering flipping it after turn around. 

 standard disclaimers, market, occupancy, staffing, property condition blah blah blah..

It takes us about 3 months to scrape out the bad tenants, get a quick tune up and be cash flow positive. once winter hits here in Wisconsin we go through another round of evictions. (10%) a month till we have it truly stabilized... as those units come vacant we upgrade those to the next level of quality. this will always be a class c property though...

[Tim Debronsky]

Thanks! @Norm Kopesky After you stabilize do they cash flow very well? Is a 50% occupancy a conservative number to use for our pro-forma?

[Norm Kopesky]

Quote from @Tim Debronsky:

Thanks! @Norm Kopesky After you stabilize do they cash flow very well? Is a 50% occupancy a conservative number to use for our pro-forma?

The national average for occupancy is about 47% if memory serves, again tons of variables. 

[Tim Debronsky]

Thanks again @Norm Kopesky!

[Calvin Ozanick]

Quote from @Brandon Thurman:

Quote from @Norm Kopesky:

looking to restart the thread and get an update from the different members. 
I currently own 4 motels in Wisconsin 

1 under contract 

2 in negotiations

Hoping to connect with you, Norm. Looking to acquire our first motel soon.

I would love to connect with the both of you. We operate out of Janesville, WI, but have connections in most of south central Wisconsin! 

[Jonathan Mueller]

midwest moteliers unite!! I have a motel in Menominee Michigan, base of the UP. And I have one in Western Colorado that's a bit bigger. Finding labor and talent is the hardest part of this biz. But it's great cashflow and worth the headache most of the time. @Norm Kopesky where in Wisco are you? 

[Norm Kopesky]

HQ is Appleton, where we have our largest at 31units

Omro 24 units

Necedah 22 units

Racine 22 units

Oshkosh 12 units

Talent is an issue for us as well, I’d like to sell the Racine location just because it’s the furthest from home for us. 

[Jonathan Mueller]

That's awesome, I have a 8 unit in Menominee MI and a 23 unit in Fruita Colorado, and just bought a 108 site RV park in southwest Michigan. I was actually looking for another motel when I found this mis labeled RV park for a good deal! Do you have onsite managers at each of your properties ?

[Elizabeth Connelly]

This is all great info @Norm Kopesky and @Jonathan Mueller and @Mark Zajaczkowski. I'm just getting the motel bug recently. How to do estimate utilities for pro forma? I'm a data nerd so I try to be tight and very conservative with my numbers. Do you estimate per unit or just overall size of the property?

It's my first commercial attempt so I'm hitting hurdles I don't have on the residential side finding tax info and such.

[Norm Kopesky]

Quote from @Jonathan Mueller:

That's awesome, I have a 8 unit in Menominee MI and a 23 unit in Fruita Colorado, and just bought a 108 site RV park in southwest Michigan. I was actually looking for another motel when I found this mis labeled RV park for a good deal! Do you have onsite managers at each of your properties ?

I do have onsite managers, that is the key position to the whole project. 

[Norm Kopesky]

Quote from @Elizabeth Connelly:

This is all great info @Norm Kopesky and @Jonathan Mueller and @Mark Zajaczkowski. I'm just getting the motel bug recently. How to do estimate utilities for pro forma? I'm a data nerd so I try to be tight and very conservative with my numbers. Do you estimate per unit or just overall size of the property?

It's my first commercial attempt so I'm hitting hurdles I don't have on the residential side finding tax info and such.

I would be requesting actual copies of all docs from the seller, (seller pro formas are dog crap) we have averaged 46-47% expenses at full occupancy, across 5 properties. 
Depending on region, heat and AC are our biggest expenses by far. Old buildings…
we are functionally running these places as efficiency apartments to dollar tree tenants. High risk, you have to stay on top of it, we also have not found any third party management that’s interested in hiring on…

[Jonathan Mueller]

I agree with @Norm Kopesky, get docs and past utilities from the seller or get permission from the seller to contact utility company. This is one of our biggest expenses, without info from the past, it's really hard to come up with a number for utilities.