Funding for Motel - Posted by Shambhu Nath

Posted by Nate(DC) on July 15, 2002 at 23:26:45:

Presumably, though, the seller is more knowledgable than you are at this point, so if he were going to cook the numbers, he could cook them to something realistic (meeting a “rule of thumb”) so you would be sucked in further…

Just something to consider.

Get the REAL numbers!


Funding for Motel - Posted by Shambhu Nath

Posted by Shambhu Nath on July 11, 2002 at 16:18:42:

I am trying to buy a motel in Minnesota for $ 525K and need a $ 100K down payment. What are my options? I have about 50K home equity in the house and wonder if someone will give me 125% homeequity loan for the down payment. ARe there any notes available for 100K at about 10% secured by motel or motel and home equity.
Motel has revenue of $ 250K per year and 60K net profit per the seller? Do these number make sense for a 20 unit motel with $ 30 average rent? Anyone has expereience about what percentage of motel revenue is the cost(all expenses?).

Shambhu Nath
IF you would like to finance it, please call me at 952 445 0764.

Re: Funding for Motel - Posted by Tim Fierro (Tacoma, WA)

Posted by Tim Fierro (Tacoma, WA) on July 11, 2002 at 16:43:39:

One thing stands clearly out to me, you are asking if net profit is ok with average rent,the numbers were per the seller, and you wanted to know percentage of revenue and expenses. If you are going into the motel business, I would assume you would either have a background in this kind of business, or that you have evaluated all the numbers carefully that you know you can make it work; not asking those who visit a newsgroup if this particular motel is profitable as you should be gathering all the information before you start plunking down an offer to purchase a ‘business’.

Shambhu, I am not saying it is a good deal or bad deal, but wanted to comment on that you should be fully informed with verification of the numbers before you proeed into new territory that you have to ask questions like those you posed.

Re: Funding for Motel - Posted by Shambhu Nath

Posted by Shambhu Nath on July 11, 2002 at 16:52:10:

Thanks for your reply. I am doing my home work but wanted to make sure that I can trust the numbers from seller as the seller has not given tax returns and statement can be overinflated(creative accounting is common). Rule of thumb can give an idea whether to spend more time in investigation or just rule it out.