| So you have always wanted to own a hotel or a | | | | work for both parties. |
| motel, in your part of the country. Maybe the area | | | | If the deal is just out of your reach then you must |
| you want to own a place in is in a resort area or a | | | | make that choice. Stretching to make a deal can be |
| downtown location of a portion of town that is being | | | | part of many purchases, but the stretch still has to |
| rehabilitated. How do you go about finding properties | | | | be within reason. If the financial stretch is to far and |
| that you could purchase and run profitably? | | | | could over time jeopardize the chances of success it |
| A first step is to consider how much capital you will | | | | may be time to pass on the purchase. You will need |
| have for a down payment and for working capital. | | | | money to run the business and you will need more |
| Then figure that this will represents from 5% to | | | | money than you realize to market your facility. In a |
| 20% of the total paid for the property. The second | | | | resort area this is absolutely the case, as most |
| part of this exercise is the property must be | | | | people will make their room reservations before they |
| assumable or the current owner will consider carry | | | | come to town. The obvious way to get your |
| the balance above the down payment. You may also | | | | message out is to use Internet advertising. All of |
| look into what a bank would demand to make a deal. | | | | these expenses need to be considered in order to |
| Assuming you have good credit and several years of | | | | make solid financial decisions. These have to be part |
| experience in the hotel or motel business you would | | | | of the financing plan when purchasing a hotel or |
| probably make an excellent prospect to purchase the | | | | motel. |
| right place. | | | | Other considerations about the hotel business |
| Finding properties that meet your qualifications | | | | There are two businesses that a person can own |
| The first step that you should take is to let brokers | | | | that take care 24 hours a day and someone always |
| that are specialists in hotel properties know that you | | | | needs to be minding the store. The dairy business is |
| are in the market and the price range you are looking | | | | one; because cows need to be milked daily and the |
| for. This could begin the search for potential hotels or | | | | hotel business as the desk needs to be covered 24 |
| motels that meet your requirements. You could also | | | | 7. An owner of a hotel or motel must come to the |
| check out properties listed on the Net by various | | | | realization early in the game how tied down to the |
| brokers There are many listings to look at and the | | | | desk they want to be on a weekly basis. If they |
| search engine can be made more selective by limiting | | | | want any freedom at all they will need to hire desk |
| the sections of the country you are interested in | | | | personnel and maids to keep the rooms in order. This |
| looking at for a hotel or motel. Both of these steps | | | | is another fixed expense that there is little leeway in |
| will generate information that can be used to consider | | | | managing. You cannot go on the cheap with either |
| what the current market looks like and what type of | | | | employee because both can have a serious affect on |
| units are for sale. You could limit searches to | | | | your business if not the right person. A poor desk |
| properties that are for sale by owner and are in a | | | | person can lose business for you by the way they |
| certain state. The limitation could be further refined | | | | handle incoming calls from people looking for a room. |
| to only certain states or cities. If you are interested | | | | This person is your business as far as the person on |
| in a specific resort area you could limit the search to | | | | the other end of the line is concerned. Poor phone |
| what is available in that particular resort area. The top | | | | technique can cost a lot of money in a year. This |
| price you are willing to pay could be put into the | | | | area of your business must be properly run or it will |
| search engine, as further limiting criteria. | | | | cost you more than you will ever realize. Room |
| You can also easily find brokers in the area that you | | | | service is a given to anyone renting a room in your |
| are looking at that limit their listings to hotels and | | | | establishment. They fully expect that it will be done |
| motels. They are experts in moving this type of | | | | right and on time. Remember once you own the |
| property. These property experts are excellent | | | | hotel you may need to do all of these jobs in order |
| sources to get information from and obtain a feel for | | | | to run the business. |
| what the market will bare in the area you are | | | | Conclusions |
| interested in pursuing. | | | | This hotel/motel business category has a very large |
| Financing the hotel or motel | | | | price range for a buyer to contemplate. Most people |
| There are sources listed on the Internet that | | | | will not build one from the ground up. The purchase |
| specialize in these kind of business loans. The current | | | | of a hotel usually requires some financing to complete |
| owner may be willing to take back a mortgage for | | | | the deal. Many times the current owner is the source |
| that portion of the purchase price that you do not | | | | of the financing. Outside sources are also available to |
| have in cash. If the property is a high dollar | | | | the buyer to raise the money to make the sale. This |
| investment, you may be able to form an LLC with | | | | type of loan is based on several factors such as |
| partners and buy the property as an investment. | | | | hotel experience, down payment, credit rating and |
| There are many ways to make the purchase work if | | | | cash flow prospects for the business. |
| you have enough of a down payment to make it a | | | | A good broker may be brought in to find a suitable |
| worthwhile venture. It will help a great deal if you | | | | property and help with the price negotiating and |
| have a successful history running a business like this. | | | | maybe even help in finding the financing. The least |
| Your personal credit rating will also be a factor. | | | | they can do is bring to your attention a hotel they |
| Getting the money needed is always the challenge | | | | have a listing on and the asking terms. They will |
| when buying any business and a solid broker may be | | | | probably have an idea of how quickly the current |
| able to come up with financing sources. These | | | | owner wants to sell the hotel. It is sometimes easier |
| brokers are invaluable in the deal making if they have | | | | to get a better deal from an impatient owner of a |
| the experience under their belt. They also can be | | | | hotel or motel. Ask lots of questions of the broker |
| used to help in the price negotiating and the terms of | | | | when you find one that buys and sells properties as |
| the deal. There is always a way for a motivated | | | | a special niche market. They can be of great help. |
| buyer and seller to come to an understanding that will | | | | |