Rental Property Investor · Member since 2020 · 92 posts · 21 votes
Hey guys I recently came across a 18 room motel for sale, but I don’t know anything about motels and I probably won’t end up purchasing this one in specific but what are the general things to know about a motel? Are you able to convert a motel into apartments? For instance transform a motel into 18 1 bed one bath apartments?
If you were to keep it as a motel, and ramp it up updating things inside and out, how do you estimate the numbers per month? In theory they seem decent, but that’s based off amount of vacancy.
Anyone that’s purchased a motel can you spread some light on the whole process you went through and what are the pros and cons?
You won't be able to make an 18 room hotel into 18 one bedroom apartments. To have an apartment that is classified as one bedroom, you need the separate bedroom, a bath PLUS the kitchen and living room. It would take 2 hotel rooms to make a one bedroom apartment. One room for the bedroom and bath and the other for the living room and kitchen.
You could make it 18 studio rooms if the rooms are big enough to make a small kitchen.
Hey guys I recently came across a 18 room motel for sale, but I don’t know anything about motels and I probably won’t end up purchasing this one in specific but what are the general things to know about a motel? Are you able to convert a motel into apartments? For instance transform a motel into 18 1 bed one bath apartments?
If you were to keep it as a motel, and ramp it up updating things inside and out, how do you estimate the numbers per month? In theory they seem decent, but that’s based off amount of vacancy.
Anyone that’s purchased a motel can you spread some light on the whole process you went through and what are the pros and cons?
Motels are a retail business and can be Beverly profitable depend on location and demand. You can definitely convert to apartments by simply renting longer term stays or you can do a full on conversion. You should be able to find comparable properties to run rental comps for weekly and monthly motel stays.
You won't be able to make an 18 room hotel into 18 one bedroom apartments. To have an apartment that is classified as one bedroom, you need the separate bedroom, a bath PLUS the kitchen and living room. It would take 2 hotel rooms to make a one bedroom apartment. One room for the bedroom and bath and the other for the living room and kitchen.
You could make it 18 studio rooms if the rooms are big enough to make a small kitchen.
@Lynnette E. Ooo that makes sense! Well thank you for spreading ur wisdom. I appreciate it! I’m in the process of one deal right now so I’m not sure how I could do both at the moment haha! Maybe swing for the fences, am I right.
@Jack McWatters From what I've seen, the easiest to convert to apartments are extended stay hotels/motels that already have a small kitchen + a bedroom that's actually walled off and separated.
Think Hyatt House, Residence Inn, TownePlace Suites etc.
If you keep it as a hotel/motel, just realize it is valued differently than apartments. Know your metrics like ADR and RevPar. Also, "ARV" is more of a multiple of revenue, not a CAP Rate.