There are two types of motel transactions:
1. Leasehold Motel
2. Freehold Motel
When purchasing a leasehold motel business, the purchaser will be buying the business only.
This purchase will typically include the lease, the goodwill and the chattels of the business.
Chattels include all furniture ie beds, tables and chairs, soft furnishings eg carpet, curtains, bed linen, light fittings, office and kitchen equipment and decor items, and all appliances.
Ducted air conditioners form part of the building so are owned by the landlord. Box or split system air conditioners which can be removed without major structural alteration form part of the chattels.
The right to occupy the motel will be governed by the terms of the lease. In this transaction the lease is an important asset which, if correctly structured protects the value of the tenants business.
The business is yours to market, manage and build for maximum profit and growth. The landlord receives an agreed annual rental which represents the commercial return on their property.
The standard motel lease would nominate the lessee to be responsible for the day to day repairs, painting, general maintenance of the building and the grounds including the hotwater system and signage.
The lessee would also be required to pay the rates and insurance under the conditions of the lease.
Your lease would also state the landlord is to keep the land and buildings in good order throughout. The landlord is responsible for structural repairs and replacement of fixed items such as toilet and shower systems, vanity units, built in cupboards and cabinets. The landlord is also responsible for the replacement of items such as the hot water cylinders, and swimming pool filters (not the pump) and other structural items.
Buying a motel as a freehold property is still remains the preferred option for many owner operators who enjoy the benefits associated with a freehold motel.
There are considerable advantages with owning and controlling the accommodation business and the freehold land and buildings.
For the owner operator their motel is both an income generating enterprise and a substantial commercial property asset. It is a home and a business offering security of employment and investment.
Owning a freehold motel requires a substantial commitment, but being secure in the knowledge that you are in control of the business and property gives you the leverage to capitalise on the value of the business and property.