I'm looking for some advice on valuing and negotiating a purchase of a 9 unit motel in South Florida. My father and I are speaking with a seller on purchasing a 9 unit building. We've just found out that the seller is asking 1.8M for the building. The motel hasn't been updated since the 70's. The current business income does not support the asking price. I would estimate that we will need to spend about 450K to get the building in great shape. The property has been well maintained, it just still looks like the 70's. I would estimate we can get about 250K in income per year from the 9 units once fixed up.
The seller isn't hurting for money and is willing to self finance a good portion of the sales price. We haven't asked the seller how they came to the asking price, we literally just had a meeting this afternoon and did a walkthrough.
Does anyone have some advice on how discuss and negotiate the price? Any ideas on some creative ways to make this deal work for both the seller and us? How would you value this property?
Any ideas and suggestions would be greatly appreciated!
@Chris Myatt , sounds like an interesting opportunity. A couple questions for you:
1) How much cash are you bringing to the deal?
2) Do you have experience running a small motel?
3) Have you invested in real estate before?
4) How confident are you in the $450k figure?
Seller financing could be what makes or breaks the deal.
And whatever you do, don't over pay.
Hope this helps,
How large is the lot? land value could be the big difference in estimating sales price.
1) We can put down around $250K. That number is flexible if needed. The seller is checking with their accountant to see what may benefit them/us as well. So that number may change.
2&3)Yes, our family currently owns a 10 unit apartment and an 11 unit motel in South Florida and a 20 unit motel in North Carolina. We've had a couple of these properties in our family for nearly 50 years and could take 100K profit per year from one motel to help pay off debt on this motel. I am an active real estate as well.
4) I am fairly confident in the 450K figure. It needs exterior paint and landscaping on the exterior. The interior units all need new flooring, full kitchen and bath remodels, windows, doors, floors, paint and a few new a/c units.
Thank you and any advice is appreciated!
@Ronald Rohde The lot is tight and not very large. It's about .2 Acre. The area is completely developed and no empty lots anywhere nearby.
Hi Chris, just saw your post. Any updates on your end? I have a similar kind of question regarding a property a family friend is evaluating near Tampa/St Pete. This one is 14 units and is also reminiscent of the 70's also (lots of potential but property needs work and is mismanaged). What are the best non-SBA options for a owner occupant? Any local florida lenders that would be interested? What are the current rates out there? Any advice is appreciated.
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