Owning a Motel or Hotel can be very profitable but hard work, a good way to increase your profit and cash flow is to employ a Quantity Surveyor to prepare a Tax Depreciation Schedule for your business. Motels and Hotels are usually sold as a business with a lease attached, ie a leasehold business or as a freehold going concern, you buy the buildings and the business.
Leasehold for a Motel or Hotel is where you take over the running of the business and pay the owner of the building a lease or rent per year. When purchasing the business it will come with an asset register or inventory list of what is owned by the business, ie furniture, air conditioners, fridges, cutlery etc. If you purchase a larger Motel or Hotel then it might come with a commercial kitchen, bar or restaurant, in this scenario you will most likely as part of the business sale be owning all of the commercial kitchen appliances, ie ovens, grills, dishwashers, rangehoods etc.
Generally you are buying the fitout of the business and all the structural walls, roofing or the shell of the building is owned the landlord. Who repairs or redecorates the Motel / Hotel? it is generally the new business owner and not the landlord, remember you are buying the business and that includes all of your fixtures and fittings but also keeping the buildings in a well repaired and tidy state, some leases will have a clause that states that you must redecorate the buildings every 5 years which includes painting, even maintaining and landscaping the land. The hot water system breaks down or needs repair? Don’t be surprised that the landlord won’t fix this and is considered part of running your business and you will need to fix this yourself.
