Can someone help me determine whether this is a good buy or not?

[Alien]

I'd be making sure if I bought it that the vendor cannot start up a similar business nor use a similar business name to the one they are selling you.

The last thing you want is for them to be a competitor down the road.

I'd be also looking at tourism data to make sure you have the potential to tap into the market to bring you business.

Also look at any current business arrangements/contracts the business has and whether they will continue to work with you.

And I nearly forgot to mention other similar developments planned in the area which is of similar business in your area. Might be a reason they are selling?????

 

[Mamaof3]

we've decided its not a very good buy......still learning so thanks for all the feedback so far, its helped us make a very good decision not to go any further with it!

 

[crest133]

Assuming you are buying the lease, goodwill & chattels like beds, drapes, kitchen equipment, airconds, carpets, all the internals but not the structure etc.
Whatever the lease costs to buy in, remember to amortise it by dividing the 8.5 years remaining on the lease into the cost of the lease, so you know how much the cost is per year, before you have to walk away at the end of the lease.

Vendor is already paid for "cash" component. Buy on proven figures.

Compare stated occupancy rates with the locality by checking ABS figures of "Tourist Accommodation Small Area Data NSW (latest Quarter avail) and see room occupancy rate in your sector.

Graph a history dump of utility consumption figures with occupancy figures, should agree. Also graph with locality occupancy looking for anomalies.

Best to have more than 3 years figures.

Maintenance condition of building and fixtures n fittings very important.

Reputation is everything.
Marketing to this niche market is a speciality and vital.
This type of business is Owner Labour intensive due to large cash intake.
Good luck.

Cheers
crest133
(motel owner operator)