Boutique Motel Owners

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I'm in the process of buying a small, boutique motel (7 rooms in the motel and 12 stand-alone, seasonal cabins) that's on 3-acres. There is also a house onsite that the current owners live in and manage the business from. I will be looking to hire someone to run this business for me and they will be able to live in the house as part of their compensation.

My goal is to renovate the rooms and cabins and expand by adding more year-round cabins designed for longer stays. Are there any other moteliers in the BP community? If so, what lessons have you learned along the way and what tech are you using to automate. I'm looking at ResNexus with keyless entry locks. What's your experience with running a motel?

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Quote from @Timothy Hogan:

@Account Closed - how did it go with the purchase? I'm interested in getting into this space. Any insight you have would be welcome! 

So, I did buy the motel. I owned it for one year and one day before selling it to Rob Abasolo. I liked the idea of owning the motel but the area I was in (The Adirondacks of upstate New York) is a very difficult place to find quality workers. I know everyone says that about everywhere but it is even harder in that part of the world. You can listen to the BiggerPockets podcast that Rob did where he talks about this issue. 

The motel needed a lot of renovations and I was not able to find a decent contractor willing to do the work in that area. I called at least five contractors and it was as if they were all reading from a script, “I’m booked up 18 to 24 months out.” They would say. Rob found someone over an hour away to come do the work. 

The previous owners were an old married couple that did no renovations to the rooms. They did do some large cap ex repairs like all metal roofs and burying the power lines but they didn’t do anything to bring people in like building a nice website. 

That is about all I did before I sold it. I built a much nicer website than what they had and used a booking engine called ResNexus (which is awesome, BTW) that allows you to set dynamic pricing. I was able to increase bookings and nightly rates compared to what the previous owners did. They had a very poor website that you could not use to book a room.

They had set pricing for the weekdays and weekends, and based on the tax returns they sent me it appeared they were not reporting all their income. They most likely pocketed a large portion of the cash and only reported the credit card transactions. I did not accept cash because I wanted every penny accounted for. With commercial properties you are valued based on NOI, so if you can increase that you can increase the valuation. 

I had someone running the place for me who was recommendation from a friend in the area. She had no experience and she was the only person I could find in the area willing to take the job. I should’ve spent more time looking for some by using online job boards, because the person I hire was not a good worker and I had to get rid of her. 

I tried finding someone using Indeed and she was going to start a couple of months before I made the decision to sell but she told me her mother was going to die of COVID and was not going to be able to start working for me. That is when I decided to sell. 

I reached out to Rob on Instagram and spent the next couple of months going through negotiations. I bought the place for $389k and sold it for $825k after making no repairs or updates other than a website with a profit of about $500k. Not bad for a “little rinky dink” website.