Realtor · ID · Member since 2022 · 11 posts · 9 votes
Would a 12 room small motel be a good 1st flip investment to turn it into short term, studio or 1 bedroom housing? TOTAL rehab is needed as its currently abandoned and boarded up. But its at a cheap price and near main roads. Its got good bones, but Im just unsure if the amount if work it would need will be worth it in the end... Im thinking min 200-300k worth of DIY work at cost and I wonder if it would be too big for a first time flip. My husband owns a junk removal and small handyman/rehab company, so we have that on our side and would plan to do most of the work ourselves, but we do not mess with plumbing or electrical, so would have to hire that out. What are your thoughts?
Would a 12 room small motel be a good 1st flip investment to turn it into short term, studio or 1 bedroom housing? TOTAL rehab is needed as its currently abandoned and boarded up. But its at a cheap price and near main roads. Its got good bones, but Im just unsure if the amount if work it would need will be worth it in the end... Im thinking min 200-300k worth of DIY work at cost and I wonder if it would be too big for a first time flip. My husband owns a junk removal and small handyman/rehab company, so we have that on our side and would plan to do most of the work ourselves, but we do not mess with plumbing or electrical, so would have to hire that out. What are your thoughts?
what is the ARV , then add the rehab cost and see what the rents are in the area , if all the numbers add up , then go for it ! you have to start somewhere and you already have the remodel and junk removal covered , just keep track of all your cost and set the budget once you get the numbers , good luck !
Would a 12 room small motel be a good 1st flip investment to turn it into short term, studio or 1 bedroom housing? TOTAL rehab is needed as its currently abandoned and boarded up. But its at a cheap price and near main roads. Its got good bones, but Im just unsure if the amount if work it would need will be worth it in the end... Im thinking min 200-300k worth of DIY work at cost and I wonder if it would be too big for a first time flip. My husband owns a junk removal and small handyman/rehab company, so we have that on our side and would plan to do most of the work ourselves, but we do not mess with plumbing or electrical, so would have to hire that out. What are your thoughts?
what is the ARV , then add the rehab cost and see what the rents are in the area , if all the numbers add up , then go for it ! you have to start somewhere and you already have the remodel and junk removal covered , just keep track of all your cost and set the budget once you get the numbers , good luck !
Its currently for sale for 350k and I estimate ARV would be around 600k. I used a cash flow phone app, which says its a good investment, but Im just unexperienced in personal investing. I have sold tons of rehabs to other investors, but just now starting to think about getting in to it ourselves. We thought we would start small, but this is absolutely not small, LOL
@Arisa McRoberts I see that you are in Boise. I'm a builder in Fruitland.
On to your question, I feel that a motel rehab into STR, studio or 1 bedroom housing would be a terrible idea. A major rehab that involves non-standard plumbing and electrical work is going to be almost impossible to budget accurately. There is an extreme shortage of plumbers and electricians in the Treasure Valley. Most of them don't like bidding/doing standard remodels/rehab work and your project is different than most.
I always tell people when budgeting rehabs/remodels "Take your most accurate money and time budget, multiply the money by two and the time by four". It's very difficult to budget new construction right now. I shudder to think what it would be like to budget for a heavy rehab like a motel.
The problem with time overruns on these projects is you typically have borrowed money at interest and little/no income while the rehab is going on. If it takes 6 months longer than projected, you have a major cash flow issue on your hands.
You state that "we would plan to do most of the work ourselves".
I would urge you to think about the DIY hours that could be involved here, because 12 hotel rooms is a lot of labor for you and your husband to take on.
If the construction cost will be $250,000, I would estimate that there will be approximately 4,000 workhours that will be expended during the renovation. Subtract the hours you expect to sub for mechanical/electrical work. Lets say it ends up being 2000 hours......that's a good pile of hours that you and hubs will be doing yourselves.
Divide 2000 by the amount of hours that you will work each week (you/hubs for 8 hours on Saturday = 16), and see how many weeks it will take for the two of you to get the work done.
That will make you realize that you will probably be subcontracting the majority of the work, or take forever getting it done, and risking your marriage in the process.
If you will be subcontracting most of the work, I would focus on getting as many subcontractor quotes as possible to verify your projected construction costs are accurate.
Thank you John for that info... I did get caught up in the excitement of the idea and I didn't think of all the hours... and the toll it would take on my marriage, lol. You are 100% correct! Plus both of us are working other jobs, though flexible, it would need to be added to that equation for sure!
Not enough meat on the bone for the work involved. Unless you can buy it for 200k. But run your numbers, get some quotes from local people aka electricians, plumbers, gcs and see how it looks. It is all about numbers.
Not enough meat on the bone for the work involved. Unless you can buy it for 200k. But run your numbers, get some quotes from local people aka electricians, plumbers, gcs and see how it looks. It is all about numbers.
You said that price is 350k and you are expecting to put in 200k. And it can sell for 600k. That means if you are thinking of flipping it you are aiming to make 50k. Did you calculate closing costs as well as broker fees for selling it ? You would be left with $100 at the end of the day if you manage to stay out of the red
additionally is the property in an area that is an emerging market where you can expect its value to appreciate over time ? Or will it basically just bring in a couple hundered dollars a month after expenses.
also you will have a hard time finding financing for such a project
bottom line, when calculating the value of an investment you must compare it to other investments. Would this be more profitable the buying a turn-key 4 plex in good areas?
You said that price is 350k and you are expecting to put in 200k. And it can sell for 600k. That means if you are thinking of flipping it you are aiming to make 50k. Did you calculate closing costs as well as broker fees for selling it ? You would be left with $100 at the end of the day if you manage to stay out of the red
additionally is the property in an area that is an emerging market where you can expect its value to appreciate over time ? Or will it basically just bring in a couple hundered dollars a month after expenses.
also you will have a hard time finding financing for such a project
bottom line, when calculating the value of an investment you must compare it to other investments. Would this be more profitable the buying a turn-key 4 plex in good areas?
@Arisa McRoberts 12 room motel, you could turn it back into a motel and run it full time, the isn't a lot of rooms for labor.
Depends on the layout, might be able to turn it into 6 2bed apartments and get long term renters..
I wouldn't do a single bedroom apt as you probably will not have good tenants.
With the uncertainties with construction, supply chain issues, and labor issues, I would say this would be a very risky investment to the unexperienced, and probably not worth the return.
I would look at alternative uses if you're still thinking about it. Would it be possible to turn them into small business offices? For small retail stores?
@Arisa McRoberts 12 room motel, you could turn it back into a motel and run it full time, the isn't a lot of rooms for labor.
Depends on the layout, might be able to turn it into 6 2bed apartments and get long term renters..
I wouldn't do a single bedroom apt as you probably will not have good tenants.
With the uncertainties with construction, supply chain issues, and labor issues, I would say this would be a very risky investment to the unexperienced, and probably not worth the return.
I would look at alternative uses if you're still thinking about it. Would it be possible to turn them into small business offices? For small retail stores?
I appreciate the feedback! Offices are a great idea too. Its near a main road.