FMV on motel?
I am looking at buying a motel in a vacation rental area. The owner is ready to retire (in his 80s) and seems eager to sell. Here are some basic numbers:
Asking price $675k which includes a 10 room motel, owners quarters, guest game room, 1 duplex and a SFH. The properties gross $100k a year. The motel needs a facelift, to the tune of $40k. I think 5-6 other small cabins can be placed on the property and I think I can raise rates by $20 a door/night--so about to $130k gross.
I know that most of the time a cap rate is used to figure out FMV for a commercial property, but this is a small town (under 1000 people), and there really are no comparable sales.
How would you figure out what this motel business is worth?
Thank you for your time. :)