I bought Schitts Creek.....I bought a motel, now what?!?!

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I bought Schitts Creek.....I bought a motel, now what?!?!

Jonathan Mueller
Real Estate Agent 路 Park City, UT 路 Member since 2016 路 113 posts 路 112 votes

Ok so I just bought an extended stay motel in Michigan......and I live in Utah.

How it happened: I was under contract on a single level 9 plex in a small industrial town in Michigan, I flew out for the inspection and we found mold all throughout the roof and the crawlspace. There were some other issues with the building as well so we decided to cancel the contract and fly home. While we were out driving around, we saw a small motel with a little for sale sign. We toured the property and went under contract the next day. The motel is 8 units plus a managers apartment, 5 of the units have kitchenettes and all units are rented on a weekly basis with most of them staying for 1+ month, and even have 2 tenants that have been there several years. Right now, the renters do not fill out any sort of application, they move in as soon as they look at the unit and move out on a moments notice. The units are fully furnished, including bedding and all utilities included. Does anyone have ideas on setting up a process for on boarding guests, part of why people are staying at a motel is not having an application process and getting to move in/out anytime they want. Most of the guests pay by the week, and right now 7 of 8 units are filled. I do have an onsite manager that collects rents and shows the units for discounted rent. He only pays $325/month.

For people interested in the numbers:

Purchase Price: $250,000

Rents when fully occupied are $5,500/month (most units rent for $175/week) 

My monthly expenses are roughly $2000/month (working on lowering this buy buying the Water softener isnt of rent, switching the internet/cable company, and adding insulation in roof to lower my utility bills)

The best way to get started is to just get started, I dont have all the answers but it seemed like a good deal and a great learning experience! Any advise is appreciated 

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Derek LarsonPro Member
Investor 路 Traverse City, MI 路 Member since 2019 路 58 posts 路 12 votes
5y

I got the joke sounded good to me.  I am curious on the city/town its in now.  I see these little motels all over here.  One up north by my rental- sign always says "no vacancy".  I wonder who is always renting in that area.

sounds like a great house hack-  

sorry can't help with your questions though- good luck

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  • Brandon SturgillBusiness Member
    Real Estate Broker 路 Columbus, OH 路 Member since 2013 路 3k+ posts 路 1k+ votes
    5y

    @Jonathan Mueller is it zoned for residential occupancy? 

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    0Reply
  • Jonathan Mueller
    OP
    Real Estate Agent 路 Park City, UT 路 Member since 2016 路 113 posts 路 112 votes
    5y

    @Brandon Sturgill great question, its a commercial designation right now.

    1Reply
  • Jonathan Mueller
    OP
    Real Estate Agent 路 Park City, UT 路 Member since 2016 路 113 posts 路 112 votes
    5y

    @Anthony Wick hey Anthony, not the first property we have owned, I sold a duplex to help pay for most of this purchase, and have a home in Park City Utah that has a mother in law apartment. We live in the mother in law and rent out the main house 4 bed/3 bath. We have airbnb'd it but now have it rented om a monthly basis and fully furnished. We have considered doing airbnb and switching to nightly rentals, the cashflow would be better but its also a lot more work and expense as we would have to schedule cleaners and do more laundry service. Most motels in the area are $45-70/night.

    We are filling a huge need by having weekly rental available, the unit we just rented was to a contractor who will work in the boat yard for the next 5 months.

    0Reply
  • Jonathan Mueller
    OP
    Real Estate Agent 路 Park City, UT 路 Member since 2016 路 113 posts 路 112 votes
    5y

    @Jacri Stubbs thanks for the info! I will look into both of these! Automation is something that we will need, I am hoping to get some good systems in place while we still have an awesome on-site manager, we rely on him way to much right now. Automating check in, weekly rent payments and checkouts will be a huge step for us. I'll need to update all my door handles to wifi connected locks with keypads as well.

    0Reply
  • Jonathan Mueller
    OP
    Real Estate Agent 路 Park City, UT 路 Member since 2016 路 113 posts 路 112 votes
    5y
    Originally posted by @Jonathan Mueller:

    @Brandon Sturgill great question, its a commercial designation right now.

    It does allow for residential occupancy

    0Reply
  • Daniel Consalvo
    Rental Property Investor 路 Lunenburg, MA 路 Member since 2016 路 33 posts 路 16 votes
    5y

    Are you going to rename it the Rosebud? How much a night? Or is it priced by the week?  We have one in my city. Population 45K.  I'ts been there forever so my guess is there is one for every town.  They must perform or they wouldn't exist! I like your ready, shoot, aim mentality.  It's just a matter of if your the guy to run it. If not you can pass it to the next investor.

    Good Luck

    0Reply
  • Avery CarlBusiness Member
    Real Estate Agent 路 USA 路 Member since 2016 路 909 posts 路 1k+ votes
    5y

    Ew, David!

    Podcast Guest on Show How to Get More Airbnb Bookings This Spring and Summer Break
    0Reply
  • Jonathan Mueller
    OP
    Real Estate Agent 路 Park City, UT 路 Member since 2016 路 113 posts 路 112 votes
    5y

    @Daniel Consalvo I only price it by the week right now, most units are 150-190/week.

    There are old motels everywhere you look, if I can systemise it and keep it profitable, I have alot of good deals to buy!

    But time will tell :) I might be selling a motel soon 馃ぃ馃ぃ馃ぃ

    0Reply
  • Jonathan Mueller
    OP
    Real Estate Agent 路 Park City, UT 路 Member since 2016 路 113 posts 路 112 votes
    5y

    @Avery Carl best response yet!! Funny show, hopefully my experience goes better

    0Reply
  • Clay Massey
    Rental Property Investor 路 Vail, CO 路 Member since 2021 路 19 posts 路 12 votes
    5y

    @Jonathan Mueller

    Great joke. It is what got me to click on your post! Haha. I plan to buy a small hotel one day. I come from a back ground in hospitality and most recently the vacation rental industry. Best of luck!

    0Reply
  • Greg TodrankPro Member
    Rental Property Investor 路 Bloomfield Hills, MI 路 Member since 2020 路 88 posts 路 35 votes
    5y

    @Jonathan Mueller At least you have a contact when you are ready to sell... 馃槀馃槀

    0Reply
  • Jacri Stubbs
    Real Estate Agent 路 Miami, FL 路 Member since 2021 路 3 posts 路 1 vote
    5y

    Absolutely. This is an interesting one. Yes, wifi connected errrrthing!

    I'm keen to stay updated on your progress. I'm sure you'll do well.

    1Reply
  • Eric WaltersPro Member
    Banker 路 Marquette, MI 路 Member since 2017 路 8 posts 路 2 votes
    5y

    Sounds like a great acquisition. My wife and I own four properties in that area and the rental market has been very strong. The shipyard is definitely helping. 

    1Reply
  • Greg TodrankPro Member
    Rental Property Investor 路 Bloomfield Hills, MI 路 Member since 2020 路 88 posts 路 35 votes
    5y

    @Jonathan Mueller

    Hey Jonathan! I just drove thru the Bay Breeze Motel today. Lots of cars.

    How is it going overall?

    I close on a triplex tomorrow in Marinette.

    Greg

    0Reply
  • Jonathan Mueller
    OP
    Real Estate Agent 路 Park City, UT 路 Member since 2016 路 113 posts 路 112 votes
    5y

    Thanks for the update Greg! I am so glad we found that motel in this small community. Yes we currently have 7 out of 8 units rented, one of our tenants just moved out. Its been a great investment so far! I need to redo 3 showers this spring/summer. Do you have any recommendations for a good tile person? @Eric Walters @Greg Todrank 

    0Reply
  • Eric WaltersPro Member
    Banker 路 Marquette, MI 路 Member since 2017 路 8 posts 路 2 votes
    5y

    Hi Jonathan,

    We haven't installed any tile yet on our properties, so we don't have any recommendations unfortunately. If I hear of someone, I'll keep you posted.

    1Reply
  • Mark Zajaczkowski
    Member since 2021 路 17 posts 路 2 votes
    5y

    @Jonathan Mueller

    How do you coordinate cleaning the rooms and who cleans the rooms?

    Also, for your on site manager, do they perform any basic maintenance and do you give them a stipend or just discounted rent? Thanks!

    0Reply
  • Jonathan Mueller
    OP
    Real Estate Agent 路 Park City, UT 路 Member since 2016 路 113 posts 路 112 votes
    5y
    Originally posted by @Mark Zajaczkowski:

    @Jonathan Mueller

    How do you coordinate cleaning the rooms and who cleans the rooms?

    Also, for your on site manager, do they perform any basic maintenance and do you give them a stipend or just discounted rent? Thanks!

    Well with it being a weekly/monthly rental situation, we dont need to clean that often, so when it does need to be cleaned, we usually have the manager do it, we include that as one of the tasks that they do in exchange for discounted rent. For maintenance we do exchange time for the remainder of the rent that they pay. Their unit would rent for $1000/month and right now they pay $350/month. The manager offered to repaint one of the rooms during a turnover and we told him he didn't owe any rent that month. For larger jobs we will trade 2 months of rent. Its great for us and its great for the manager, he would rather work off his rent than get a paycheck or stipend.

    1Reply
  • Jonathan Mueller
    OP
    Real Estate Agent 路 Park City, UT 路 Member since 2016 路 113 posts 路 112 votes
    5y

    In case people were wondering how Schitts Creek is going......ITS GOING AWESOME! we are sticking to weekly/monthly rentals and I wish I had room to build another motel just like it. We are continually updating the rooms and upping our rent. Anytime we have a vacancy, the manager finds another tenant within a week. I am putting minimal time in managing the manager and he is doing a great job and treating the place well. 

    0Reply
  • Greg TodrankPro Member
    Rental Property Investor 路 Bloomfield Hills, MI 路 Member since 2020 路 88 posts 路 35 votes
    5y

    @Jonathan Mueller

    Are most tenants coming from Marinette Marine?

    0Reply
  • Mark Zajaczkowski
    Member since 2021 路 17 posts 路 2 votes
    5y

    @Jonathan Mueller

    I really like that system! With your onsite property manager only receiving discounted rent do they need to file a W-2? Also, how were you able to find a person to fill that role and does that person have an additional part time job? It's very niche, but I know there are people out there looking for that type of work situation

    0Reply
  • Jonathan Mueller
    OP
    Real Estate Agent 路 Park City, UT 路 Member since 2016 路 113 posts 路 112 votes
    5y
    Originally posted by @Mark Zajaczkowski:

    @Jonathan Mueller

    I really like that system! With your onsite property manager only receiving discounted rent do they need to file a W-2? Also, how were you able to find a person to fill that role and does that person have an additional part time job? It's very niche, but I know there are people out there looking for that type of work situation

     They Do not need a W-2 and luckily we inherited that manager. Its a great situation for anyone with a part time job or that has their own business and wants to keep expenses low! There are a lot of people out there that would look at it as a side hustle!  

    0Reply
  • Jonathan Mueller
    OP
    Real Estate Agent 路 Park City, UT 路 Member since 2016 路 113 posts 路 112 votes
    5y
    Originally posted by @Greg Todrank:

    @Jonathan Mueller

    Are most tenants coming from Marinette Marine?

    Actually only half of them are from Marinette Marine, the rest of normal people with long term jobs in and around Marinette/Menominee. Some are looking for longer term housing and need a place to stay in the meantime. Some people stay with me just because they dont want to deal with a long term lease. So far this summer I have been fully rented with only a few turnovers. 

    0Reply
  • Ryan Sarka
    Rental Property Investor 路 Buffalo, NY 路 Member since 2016 路 32 posts 路 10 votes
    4y

    @Jonathan Mueller I just read through this thread, very interesting, is it still going well for you!? I was wondering if your willing to share some more details specifically regarding expenses, maybe hop on a call one day with me? 

    I am currently looking into a small motel in a vacation town. Although a different business model then you have been successful with I am really trying to dial in some of the expenses. If your up for it let me know. 

    Thanks and have a good one!

    0Reply
  • Scott Mac
    Austin, TX 路 Member since 2019 路 5k+ posts 路 5k+ votes
    3y
    Quote from @Jonathan Mueller:

    Ok so I just bought an extended stay motel in Michigan......and I live in Utah.

    How it happened: I was under contract on a single level 9 plex in a small industrial town in Michigan, I flew out for the inspection and we found mold all throughout the roof and the crawlspace. There were some other issues with the building as well so we decided to cancel the contract and fly home. While we were out driving around, we saw a small motel with a little for sale sign. We toured the property and went under contract the next day. The motel is 8 units plus a managers apartment, 5 of the units have kitchenettes and all units are rented on a weekly basis with most of them staying for 1+ month, and even have 2 tenants that have been there several years. Right now, the renters do not fill out any sort of application, they move in as soon as they look at the unit and move out on a moments notice. The units are fully furnished, including bedding and all utilities included. Does anyone have ideas on setting up a process for on boarding guests, part of why people are staying at a motel is not having an application process and getting to move in/out anytime they want. Most of the guests pay by the week, and right now 7 of 8 units are filled. I do have an onsite manager that collects rents and shows the units for discounted rent. He only pays $325/month.

    For people interested in the numbers:

    Purchase Price: $250,000

    Rents when fully occupied are $5,500/month (most units rent for $175/week) 

    My monthly expenses are roughly $2000/month (working on lowering this buy buying the Water softener isnt of rent, switching the internet/cable company, and adding insulation in roof to lower my utility bills)

    The best way to get started is to just get started, I dont have all the answers but it seemed like a good deal and a great learning experience! Any advise is appreciated 


    This post is a couple of years old...how have you been doing with this cash cow.

    What a desirable lakefront (almost) location, it looks like a Deer Hunters paradise.

    0Reply
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