Purchasing a motel for sale in Victoria or elsewhere in Australia can be a great investment and a gainful business venture. With the right location and smart management, profit is almost a certainty. However, owning a motel is just the first step and does not guarantee a profit. Some motels have either low occupancy rates or even legal conflicts on the property. This can turn your big investment into an unprofitable venture.
If you are planning to invest in the motel business, here are some important things you will need to know.
Scepticism is a healthy attitude to when hunting for real estate. The first thing you have to think about is why the owner is selling the motel. Most of the time, owners will tell you that they are pursuing other businesses or just want to move out of town. Make an effort to find the truth. This is to ensure that you avoid lawsuits or conflicts tied up with the current owner. Find out how long they have been in business. It is important to verify whatever information they give you. This is to make sure you avoid any unwanted surprises or loss of profit. It is also advisable to investigate two or three other motels to weigh out the pros and cons. Then you can make a calculated decision.
Another important thing to look out for in a motel is the occupancy rate. The monthly room occupancy of a motel can make the difference between profit and loss. Always remember to look into the register to see the occupancy rate. This will give you an estimate of how many visitors there are on a monthly basis. This also tells you which months are the peak season.
High occupancy rates do not matter if room rates are low. You will still lose money. After reading up on the occupancy rates, ask for the financial records and look at all the monthly expenditures. With this information, you will know if the motel is making money or incurring losses. Compare what rates the motel has to its competitors so you know if the pricing is suitable.
Buying a motel real estate in Victoria is a huge investment that can make or break you. However, if you do your homework, you should have no problem.