Is it a Motel or an Apartment Building?
So this news story has been on the headlines over the past week or so. It has me scratching my head a little bit.
What's the difference between a "Motel" and an "Apartment Building"?
I think as investors, we all understand what the new investor is trying to do with the building. I mean, as an investor, I can certainly see the room for improvement for running it as a "Motel" and I also see the opportunity to monetize it as an "Apartment Building. I also understand the concern about raising "rent" on 200 tenants which the low income folks and homeless advocates are concerned with, but I want to understand this more from a business perspective.
As an investor, if I were to buy a "Motel", I would have to insure the building on the basis that these are short-term rentals. I would also have to charge motel visitors the applicable lodging tax for their stay. My overhead would consist of providing daily maid service, furniture, laundry, etc., etc. Additionally, I would need a business license from the city to operate as a "motel".
As an investor, if I were to buy an "Apartment Building", I would have to insure it on the basis that these are long-term rentals. There would be no applicable lodging tax and my overhead would only consist of maintenance on the property. I could choose to provide coin-op laundry service to the residence.
From a business perspective, how does a "Motel" get away with renting rooms for 5 years? I'm presuming that for $29/night ($200/week per the article) they are not providing the amenities that a "motel" would normally provide like maid service, furniture, laundry, etc.