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EBOOK: Buy a motel business with absolute confidence

Why buy a motel business?

Motels are part of the Australian ethos

For many Aussies, dropping in for a few nights stay in a motel, whether on the way to somewhere or their final holiday destination, is a time-honoured tradition. Motels are located in practically every city and owning a motel business can be a highly lucrative business when done right.

A lifestyle change for the better

Many motel business owners find the lifestyle of running a motel extremely appealing. They can live where they work, find the cost of living is greatly reduced and they get to work with a wide cross-section of the Australian public.

The business of owning a motel

Change is as good as a holiday

Are you considering ditching the 9 to 5 rat race to buy a motel by the coast, in the city or in the country? Maybe you've already decided to buy a motel but you are unsure where to start. You may even already own a motel but you need the help of an experienced motel Accountant who understands the motel business industry, inside and out.

Let's get serious

If you're looking for for a career change then buying a motel really can be a great new direction. Yet buying a motel is more than just a lifestyle change. You are buying a business. Before you commit, you'll need to be well-equipped to ensure your dream remains financially viable.

Leasehold Business

Perfect for first time buyers

Most first timer motel buyers acquire a Leasehold Business. It's a less risker proposition plus the cost and finance requirements are obviously less. The main aspects to consider for a lease is the location, length of lease and the percentage of rent that is charged (22% to 25% of accommodation turnover is reasonable). Their may also be stamp duty on a leasehold only when buying, so be careful to check with either the broker or solicitor when considering a business.

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Freehold Going Concern

For experienced operators

A Freehold Going Concern refers to buying the land and business together. This includes buildings, plant and equipment, goodwill; the lot. A Freehold Going Concern is usually much more expensive than a leasehold business and such a purchase is typically made by more experienced operators on their second or third motel Business. Mostly it comes back to your experience, your willingness to jump into the deep and your ability to finance.

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Assemble a Support Team you can trust

The Accountant

When buying a motel an Accountant is critical to the successful purchase of your motel for a fair price. The Accountant is effectively an employee of the purchaser, working in your best interests. It's important to speak to an Accountant from the very beginning of your search. Talk to your Accountant about your options- Freehold Going Concern or Leasehold Business- to gain an indication of how much you could borrow and where you should start. Making contact early means you will be able to deal with the brokers confidently, knowing what you are looking for and your price range.

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The Broker

The broker is the link between motel buyers and sellers- much like a real estate agent. You can find specialist brokers that deal in the motel industry and general business brokers that will sell anything from a milk bar to an engineering business. The specialist broker is the best place to start as they will often have the best motels (as they know them) and will have a detailed information booklet on the motel.

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The Banker

In most cases, you are going to require the services of the bank, to help you either obtain finance for the purchase, arrange working capital, organise hire purchase leases or bank roll some form of improvement or expansion to your motel business. It is important that your banker has knowledge of the industry. This will assist your finance being approved. A local bank manager will most will have no idea of industry norms or past deals financed and will be taking a cautious approach. It is best to use an experienced Accountant who can then introduce you to a banker in the industry.

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The Solicitor

The solicitor will come in to play when it is time for you to make an offer. It is best to use an experienced solicitor who is familiar with motel business transactions. Typically an offer is made subject to conditions, such as finance, due diligence and legal approval, for example. The solicitor will check the contracts, the lease, check permits, titles, understand or be aware of local governments acts, rules and regulations and the like. The solicitor will deal with the broker, Accountant, vendo'rs solicitor and most likely the bank's solicitor.

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Take your pick:
an example of five structures to buy a motel business

• Take your pick:
  an example of Five Structures to buy a motel business

• 1. Sole Trader

  A sole trader is a single person operating a business in their own name, e.g. John Jones. They can register a business name, such as Foreshore Motel.

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• 2. Partnership

  A partnership is formed when two or more people (up to 20) go into business together with a view to making profit.

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• 3. Unit Trust

  Not such a common structure, but great for unrelated parties who want to be in business together.

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• 4. Company

  A company is an independent legal entity able to do business in its own right, sue and be sued. It also is its own tax payer. The shareholders own the company, and directors run the company. This is quite a common structure with many advantages and disadvantages.

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• 5. Family Trust

  Otherwise known as a Discretionary Trust, this structure is possibly the most common structure to buy a motel business. It provides great flexibility for income distribution and small business Capital Gains Tax options. Plus, it offers great asset protection.

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