Motel Buy & Hold or Fix & Flip

[Austin Phippen]

Investment Info:

Other commercial investment investment in Chama.

Purchase price: $550,000
Cash invested: $550,000

We bought a motel in a small tourist town in the mountain of northern NM. We partnered with my wifes in-laws on the deal. My wife and I also manage and live in the motel as well while we learn the business and remodel the building.

What made you interested in investing in this type of deal?

We wanted to move to this area and there are not many job opportunities so we decided to buy a business.

How did you find this deal and how did you negotiate it?

The previous owners of the motel approached us about buying it and gave us an offer we could not refuse.

How did you finance this deal?

We have owner financing on the property, my in-laws own 63% that they paid for in cash while my wife and I are paying off the rest of the loan over 5 years with a balloon payment at the end.

How did you add value to the deal?

We are managing and remodeling the building while we decide what the long term plan for the investment is.

What was the outcome?

Still in the works

Lessons learned? Challenges?

Hiring low-wage employees is very difficult and using incentivized pay is very helpful. We have also learned that diving in head first to something we know nothing about is difficult at first but is doable and only gets easier over time. We are also gaining property management skills that could be useful down the road for us and many handyman skills as well.