Tips for Buying a Motel for Sale by Owner

Jun 16, 2015

You may already be aware of the financial benefits of owning a hotel, particularly if the hotel is located in a busy tourist or business district.  There is no doubt that buying a motel for sale by owner can be a great investment.  However, while investing in this industry can be a smart idea, not every hotel or motel is worth the money.  If you’ve been contemplating the purchase of a motel business, here are some tips to consider.

The Devil’s in the Details

Buying a motel for sale by owner means you may get a better deal than you would otherwise get using a business broker.  Just be sure you fine tune your negotiating skills and learn as much as you can about the property and the owner’s reason for selling.  The more detail you have going in, the more certain you will be that you are paying the right price.

Who owned it?

Be sure you have access to all the most recent reports from the Department of Health, as well as guest comments and recent reviews of the motel.  Before buying a motel for sale by owner, you will want to get a thorough inspection of the property.  Ask to see the utility bills from the past few years and find out what kind of income you can realistically expect from the property. Don’t buy into a franchise that doesn’t have a good local reputation because oftentimes, the “under new management” signs just aren’t enough.

Who runs it?

Running a good motel is a 24 hour business and requires a reliable and experienced staff.  This includes retaining the best front desk clerks, maintenance staff and chambermaids.  Spend some time discussing the hotel operations with the current owner and managers, and learn about their most pressing day-to-day staffing challenges.

Who’s your competition?

Determine how an update to the property and furnishings would impact the motel’s reputation, and how this might translate into better profits over time.  Take a look at other motels in the area and find out what the competition may be doing to win customers away. 

What’s going on in the area?

Before buying a motel for sale by owner, check with the state or county planning office to see if there are any major construction projects set to begin in the area, and whether any changes will be made to traffic patterns around the property.  If so, the property may not be worth as much to you over time. Similarly, if new attractions or shopping are popping up, then it is good to buy low, before the value of the property increases.

What’s it like to stay there?

Consider staying at the motel as a guest, or asking a friend to do this for you, but do it before anyone is aware of your interest in the property.  The best way to find out what’s really going on behind the scenes is to see the hotel through the eyes of a guest. 

Buying a motel for sale by owner can be a great investment, but only when you know exactly what you’re getting into. The above factors are just a few to consider before getting involved in a new business but they are the primary ones to influence your decision. Consider your options carefully before committing.