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

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

Real Estate Agent · Park City, UT · Member since 2016 · 113 posts · 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 

10Reply
218 views

Most Popular Reply

Derek LarsonPro Member
Investor · Traverse City, MI · Member since 2019 · 58 posts · 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

See this reply in the discussion

61 Replies

Jump to latestLatest
  • Investor · Curtis, NE · Member since 2019 · 231 posts · 140 votes
    3y

    Hey - yeah I am curious about an update too. Has there been any large CapEx - how old is the place?

  • Austin, TX · Member since 2019 · 5k+ posts · 5k+ votes
    3y

    Your neighbor across the street has a 6 car garage and mansion on the waterfront, and you are taking bottom end renters.

    Too bad you could not figure out a way to get more rent for it.

  • Real Estate Agent · Park City, UT · Member since 2016 · 113 posts · 112 votes
    2y
    Quote from @Scott Mac:
    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.


     Hey Scott,

    I should get on this platform more often. Here is the update for everyone. I still have this little Schitts Creek. I almost forget about this motel sometimes as its our furthest away investment and the manager does an ok job so we don't have to micro manage, although if we paid attention to this place more, it would probably boost our bottom line. Cash flow and occupancy are still good. We haven't raised prices in awhile and don't think we will be able to do that without putting more capital into the building and amenities. We bring in about 60k a year on this and have about a 50% expense ratio. Expenses seem abnormally high on this as it's not a nightly property. Utilities are the biggest expense, we have also had a few people not pay for a month and then leave, I have been working with the manager to evict people sooner for non payment but he gets taken advantage of and doesn't lay down the law well. 

    All in all, the property is performing well and we have all but forgotten about it, it doesn't take up any of my time or bandwidth. We are in the season where we are getting some deer hunters coming up which is good because the big employers in this town have been cutting back so there aren't as many temp workers up here, which affects our occupancy levels. I think we could transition this from a medium term rental property to a nightly property and do well, but that would require more time, money and effort from me which I don't have at the moment as I have just acquired a large campground. So I will let this little medium term motel keep chugging along as the forgotten child and circle back next year. 

  • Greg TodrankPro Member
    Rental Property Investor · Bloomfield Hills, MI · Member since 2020 · 88 posts · 35 votes
    2y

    @Jonathan Mueller We haven't spoken in a while. Just checking in on how the Bay Breeze is performing. I've added to my portfolio: 2 LTR, 1 STR - Menominee, 8 LTR - Marinette.

  • Real Estate Agent · Park City, UT · Member since 2016 · 113 posts · 112 votes
    2y

    Hey @Greg Todrank Things have been moving along with it, it has been out of sight and out of mind for me and I am here now to make some changes. My manager hasn't been doing a good job but we have still brought it over $40,000 this year. Want to add something else to your portfolio? I think we will bring in over $60,000 this year. I am working on getting the exterior painted and one of the units will need a full remodel. I am trying to figure out what to sell it for, I am thinking $400,000. Do you think that is in the ballpark? 

    Also, how are your units doing that you have added to your portfolio? It seems like businesses are still hiring in Marinette and Menominee, I heard Menominee was awarded $20 billion to build a better port area for shipping, do you know anything about this? 

  • Greg TodrankPro Member
    Rental Property Investor · Bloomfield Hills, MI · Member since 2020 · 88 posts · 35 votes
    2y

    @Jonathan Mueller — we’ve been very happy with the properties. At this point, businesses are doing well with many new contracts and the port improvements (if that actually happens and isn’t just an election year promise)

    Our long terms have also been mostly on auto pilot, but our STR has performed well since launching mid-July.

    Lots of remodel during turnover in the LTRs. Good investment, but cutting into cash flow quite a bit initially.  The problem with older homes.

    Let’s talk when you are ready to move it.  Prices have continues to rise.  We’ve only recently had a bit of pullback.  Not sure on the $400k, but I can put you in touch with my realtor and others in her office. 

  • Real Estate Agent · Park City, UT · Member since 2016 · 113 posts · 112 votes
    1y

    Property update! This motel has been great for the last 4 years, constantly filled, my manager lives on site and gets free rent for taking care of the property, filling units and collecting rents. 

    Its time for me to sell, $375,000 OBO

    2023 Gross Revenue $65,000

    2024 Gross Revenue $61,000

    You could really juice the returns by switching to nightly stays instead of weekly/monthly

    DM for more info! Thanks 

  • Real Estate Agent · Park City, UT · Member since 2016 · 113 posts · 112 votes
    1y

    Closing the loop on this adventure. We sold the Bay Breeze motel. I would 100% do it again. If you have a small motel in your town or city, it could be a great investment for you. 

Join the conversationCreate a free account to reply, vote on answers and follow this thread.