- Motel owners only have to deal with one party regarding decisions about the property not multiple unit owners.
- Every dollar you take in is yours and you have no end of month accounting to numerous individual unit owners.
- No trust account auditing.
- As money is not through a trust account you can take the risk of not declaring all income.
- With a leasehold going concern, no $ tied up in real estate so every investment dollar is working in the business.
- Your income stream can not be affected by owners taking units out of the letting pool.
- No licensing requirement ( and so no training course to do) unless a liquor license is required in the restaurant.
- Settlement is generally much shorter (aprox 30 - 45 days).
- Contracts to buy are less complex and are not subject to the buyer being approved by the Body Corporate.
- Shows a much higher return of aprox 28% (equivalent to a 3.6 multiplier) on the whole investment.
- Often a more constant income than that experienced by resort management right complexes.
- Generally longer leases than an Accommodation module.
- Bigger motels lend themselves to being run under management.
- If run under management there is no need to live on site and there is certainly no legal requirement to do so as is the case with Management Rights.
- With no requirement to live on site you can rent/buy an external residence that suits your families requirements.
- Motels can be easier to resell as the concept of running a motel is easier for many to understand.
- Lending ratio lower at 50% to 60% for leasehold going concerns as there is no freehold equity to borrow against.
- Requirement to provide at least breakfast, means the hours are longer.
- On site restaurants require an additional skill set and lead to still longer hours and staff management issues.
- You don't have to account to individual owners but you do have a substantial rent payment to make to the freehold owner each month.
- No guaranteed salary component in income.
- You have no dollars invested in the capital gains tax free environment of principal place of residence.
- As accounts aren't through a trust they aren't audited, so its easier to get "burned" when buying.
- Due diligence requirement to avoid the above are more stringent and expensive.
- Good earning motels are in regional areas not in capital cities or resort areas (Coast for show bush for dough).
- If lease runs down to around 15 years the operator has to pay for new lease extensions whereas with management rights the term can be extended at no cost.
- Operator is responsible for all the maintenance costs and for all fit out upgrades.
- The operator is more tied to the complex time wise than is the case in resort or permanent complexes.
- Operator must be careful that the plant and equipment is correctly apportioned in the contract.
- You can't make an additional income stream by selling units to your clients.
- Less suitable for inexperienced operators.