This a very intersting topic and one that many do not understand properly. The value of a freehold motel has nothing to do with the gold taps you put in the bathrooms or how much you have spent refurbishing your property! It is about the Return on Equity (ROE). Return on what? Return on the Net Profit + addbacks.

With the reduced occupancy we have experienced over the last few years, the net profit has slowly been eroded and anyone that bought in this period is probabley sitting on negative equity and anyone that bought eight/nine years ago might just be breaking even.

There has been NO capitol growth. I can't even buy back the house I sold ten years ago to buy this motel in the first pace!

I refinanced last year, so have seen how harsh the banks can be. They are looking for about 12.5% ROE minimum, but are also not allowing some of the 'addbacks' that had traditionally been included.

I will expand on this in a seperate forum response.