Leasehold, Freehold and Investment Motel.
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Leasehold, Freehold and Investment Motel.

The big question is what type of motel businesses are there?

Below is a brief description to help you understand the difference in the motel businesses available to you in Australia.


Leasehold Motel – A huge increase in popularity over the last few years and is perfect for people who don’t want to purchase the bricks and mortar. The smaller leasehold motels provide a lower cost entry into the industry. Obviously buying a Leasehold allows you to buy a much bigger business for less outlay than a freehold.  A leasehold is basically described as the business and you buy the plant, equipment and goodwill to operate it, paying rent to the investment owner according to the terms of the lease. Leaseholds are currently offering 30% ROI (return on investment).

 

Freehold Motel – This is where someone owns the motel in its entirety ( land, building, plant & equipment and goodwill).  Returns are lower, however you own the property and save by paying no rent. Freeholds are currently offering around  if it is owner operated 15% ROI (return on investment). A general rule is that the further you go inland , the higher the ROI with up to 20%.

 

Investment Motel – This is for the person wanting to purchase into the industry as an investor rather than working the business. A great passive investment where you buy the land and buildings receiving the right to receive rent according to the terms of the lease. Investment motels are currently offering around  9% ROI (return on investment).

History tells us that most  motel businesses have stood the test of time and provided purchasers with very good returns and also allows purchasers to enter the industry at a comfortable level and over time progress into larger and more profitable businesses or motel buildings.