52 Unit Motel - Advice?

[Mitch Freed]

I mainly deal with SFR but I've got an opportunity to go after a 52 unit motel located 8 miles from a fair sized city right off a very busy freeway.

I'm curious if anybody might have some advice to offer regarding rules of thumb when it comes to operating expenses vs operating income, per unit cost etc...

The advertised vacancy is 60%...which might not exactly be accurate...we are currently researching.

The weekly rate is $150. Monthly rate is $500

The owner claims that 70% of the occupants are on weekly rates.

Owners are selling because they need some cash, don't want to be in this type of business anymore, and cannot control the current manager who is most likely skimming and thus reporting the high vacancy (we are assuming this for now)

Sales price could be somewhere between 400-500k...seller will carry a note at a rate somewhere between 4-5%. They are looking for a down payment somewhere between 50-100k.

I currently do not have data on their operating expenses but am working on obtaining...was hoping that somebody who owns something similar might be able to offer some advice on how they analyzed their deal, and how their experience has been owning and operating so far.

Thanks!