Any experience in underwriting an inn/motel? Tips to share?

[Brian Kantor]

Hi, y'all. We're in the process of finding our next STR property in Vermont, and we stumbled on a motel/Inn for sale that's walking distance from our existing duplex STR in the area.

We feel this property has a ton of potential, and my underwriting has so far come back really strong. With that said, I'm curious as to whether or not I am missing something that I don't know to be looking for.

A few notes:

1. The property has 10 rooms (w/ 5 exterior entry like a motel and 5x interior entry like an inn). Plus a 2BR/1.5BA owners suite and a 25-seat bar/restaurant space. Our plan would be to keep 4 units as single rooms, but split them up into 2x with 1 Queen and a small kitchen (aka studios) and 2x with 2 full beds and no kitchen (aka rooms). We'd pair each "studio" with an interior door connecting it to a "room" to have the ability to rent them together as suites. We'd turn the owner's suite from a 2BR/1.5BA into a 3BR/1.5BA and then pair up the remaining 6x rooms into 3 suites.

2. We plan (at least to start) to run this as a bunch of Airbnb units with remote key-code access and self-check in and 3rd party cleaning and maintenance as we use with our existing Airbnb.

3. There is a 15% VT lodging/sales tax, but I am calculating that this fee will be added to my room-rate after the fact, so it's neither income or an expense; it's a wash

4. My underwriting shows this doing better than breakeven without any revenue from the bar area, which apparently used to generate more revenue for the past owners than the rooms.

So, with that out of the way, any tips, advice or pitfalls to lookout for when underwriting a property like this?

Thanks in advance!

-Brian