Motel rent By thew week like a air B&B.
Hello all I'm looking at buying a 25 room motel. Its in a small but growing town I want to rent it by the week and run it off site kinda like the Air b&B. The over head with the loan payment and all should run around 12k a month. I think i can rent the rooms fast for $200 a week. What are ya'll thoughts ?
Can i run it off site?
Lock Types?
I know Im going to get a lot of the lower income people and it will have to checked on daily.
Sounds like a great idea. $200 a week is ridiculously affordable. I do not see any reason why you would not be able to list the rooms on Airbnb and VRBO. South Carolina is Airbnb-friendly in general and small towns don't bother anyone. It might be good to convert the motel to apartments and have both long-term rental and short-term rentals. This way you are diversified and not wholly dependent on transient travelers.
Thanks,
Joe O.
803-201-9137
@Jordan Lutz Most motels are old. You need to be careful. Obsolescence is real and can quickly make a deal that looks great on the surface a nightmare under the microscope. For example, aluminum wiring, asbestosis, lead based paint etc were all used decades ago. If you are buying a very old place then you should go into it with eyes wide open.
I agree with @Aaron Gordy, but if you do move forward, I don't think Airbnb (or any vacation rental market) is your target audience.
I love the idea! I am in the process of doing my due diligence on converting a small motel in to short term rentals. My thoughts are if you update and design each unit and possibly give each unit a small fenced backyard. Update the curb appeal so it doesn't look like a Motel, I think that up to $150 per night could be charged. I have done this in areas where I thought there would not be the type of clientele that I would prefer and boy was I wrong I am booked solid. The Digital Nomad revolution is real! People can work from anywhere that they want to, even if it is just for a scenery change. Good luck! Feel free to reach out.
Without knowing all the details $200 per week seems too cheap and may attract the wrong tenant.
I agree with Aaron, a deep due diligence on the property is in order, but the project can grow legs. I question the $200 per week. Is it a bad location? Curious who is your target market that you expect lower income people.
I suggest that you check the Rob Abasolo's YouTube channel. He is buying a hotel and converting it into an Airbnb. Good
Thank you for your input
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Quote from @Jordan Lutz:In the motel business it’s called extended stay. There are plenty of extended stay motel flags adding units every day. What you are doing is occupying the low end of the market where the flagged extended stay industry doesn’t play.
Hello all I'm looking at buying a 25 room motel. Its in a small but growing town I want to rent it by the week and run it off site kinda like the Air b&B. The over head with the loan payment and all should run around 12k a month. I think i can rent the rooms fast for $200 a week. What are ya'll thoughts ?
Can i run it off site?
Lock Types?
I know Im going to get a lot of the lower income people and it will have to checked on daily.
We had to foreclose on just such a motel operation about 8 years ago when the owner/borrower stopped paying the note. We were surprised at how much money the property was able to net. The keys were (1) good ONSITE manager (as in lives on the property) (2) handyman/contractor that can repair most problems who also lives on the property and receives salary plus free rent. We were able to do this because we had 50 units. We kept the property 6 years then sold when we received an unsolicited offer from a developer needing our property to build new construction.
I think you’ll find that to realistically keep the place full you’ll have to offer a further discount for a monthly stay. Some people will stay forever, or at least until they can no longer pay the rent. But it all really depends on market demand. There are two ways to approach any market. One is to gather information, give it your best guess, then take the plunge and be ready to adjust or change marketing strategy if your analysis wasn’t accurate. The second is to have a professional feasibility study done and (hopefully) know beforehand the marketing niche/strategy that will maximize profitability.
Good Morning Jordan,
The problem with hotels and motels is the inconsistent occupancy. One day you can be fully sold out and the next you can have little to no one on the property.
By running it as an extended stay and doing a continuous weekly rental you are removing a lot of the inconsistencies and are able to have a more narrow support staff.
You can definitely run it off site if you have a strong front desk / operations manager working the property. You would also need at least one maintenance professional and one housekeeper.
As for locks, I would consider the locks that allow you to change access codes electronically. This will allow you not to have a physical key and if the guest forgets their code, they can easily go to their app and reset it. You can also program the guest code for a certain period of time.
$200.00 a week is pretty good as that comes out to be $800.00 for 4 weeks. What is the average rental cost for a studio in the area? You also have to take into account that you are providing all utilities and furniture. You can always try this price first to fill up the property and than if you feel it is too low you can increase the price little by little.
Note, each state has their own rules, regulations and rights as far as tenancies and what is considered short term occupant versus a general tenant. I would consult with an attorney first.
hope the above helps. Please feel free to reach out to me if you have any additional questions.
Paul Turovsky
Emerald Realty International
Realtor
Quote from @Jordan Lutz:
Hello all I'm looking at buying a 25 room motel. Its in a small but growing town I want to rent it by the week and run it off site kinda like the Air b&B. The over head with the loan payment and all should run around 12k a month. I think i can rent the rooms fast for $200 a week. What are ya'll thoughts ?
Can i run it off site?
Lock Types?
I know Im going to get a lot of the lower income people and it will have to checked on daily.