If this is your first motel purchase or if you have not purchased a
motel in a long time, this may be of interest to you. Variations do
exist for leases, but the majority of the information is the same.
Broadwalk Business Brokers are happy to explain any part of the process
or assist with information on who to use, where to go and what
information you may require. Through “Progressive Technology base”. We
offer a comprehensive service to all involved in the Tourism /
Hospitality and Business Broking Industry
1. Determining your price limit:
It is important to be realistic with the prices of property and
businesses you can afford. The general rule of thumb for Tourism
Property as a going concern on a freehold basis is 35% equity and 65%
debt with the additional purchase cost of Stamp Duty, Solicitor etc
covered with additional funds. For a lease the normal borrowing is 50%
of the banks valuation.
2.What to look for at a property showing:
a. Always consider the condition of the property because your final
acquisition cost will be the price of the property plus any repairs or
alterations you may wish to make.
b. Consider the franchise fees and benefits if one is in place or you
are contemplating joining one. For the first time operator they can add
c. Put yourself in the motel customer's shoes and judge the property
from that perspective.
d. Check out the competition by looking at other motels in area.
e. Ask owner to identify room-night demand opportunities or existing
generators so these can have some additional focus placed upon them.
3. Courtesy and ethics when looking at
Please consider the owners and staff when looking at properties as not
all the staff may know a property is on the market. Some sellers are
concerned some staff will leave or suppliers may alter supply an
arrangement if they find out a property is on the market.
Please schedule appointments to inspect with a reasonable notice. Where
ever possible, Broadwalk Business Brokers will meet you at the property,
often with the owner to show you rooms and answer technical questions.
Caution: It is almost never appropriate or in your interest to
discuss price with the owner during any showing. Always work through the
broker when it comes to negotiations and be very certain and clear.
4. Determining the value of the property to
Often factors such as the residence, the presentation and state of
repair of the property are important as well as the potential to
increase / grow the business
5. Determining what price to offer:
As a rule, first determine what you can afford, what the property is
worth to you, and be prepared to pay that amount if necessary. The
seller's profit is completely irrelevant to your purchase decision and
success with the property.
It will be important to advise any conditions for a potential purchase
so all factors can be considered with any offer. Often a written offer
has more power than a verbal offer.
6. Verifying the financial data and other
property details "this is the Due Diligence Period"
The financial information should include a couple of years revenue
history and expense history for one year. With the availability of BAS
Statements a reasonably accurate assessment of turnover can be made in a
short period after reviewing these documents.
Most lenders will require access to all income and expense information
for the past three years to gain an indication of how well the property
will perform well in the future.
verification of the past financial performance of the property
Contracts, if any, with key customer groups should be reviewed with the
Study of the current employee situation including current pay scales and
length of employment can help you with early decisions about your future
Obtaining a copy of the current franchise agreement from the seller can
provide a important tool for you when negotiating the re-license terms.
Compliance with basic governmental requirements should also be
7. Forms of offers:
Offers are typically made in one of two formats.
a. Verbally, but this does not have a great deal of power with it
b. An “Offer and acceptance” that assists with the documentation
subsequently prepared by the solicitors for the transaction. The power
of this document to formalise an agreement can not be understated.
8. The Deposit:
The 10% deposit accompanying a Letter of offer of Sale is a show of good
faith on the part of the buyer that the buyer is serious about the
purchase. The deposit is held by Broadwalk Business Brokers in the
Statutory Trust Account, Then the Memorandum of Sale is sent to both
9. Preparing for settlement:
Broadwalk Business Brokers are happy to provide a checklist to assist in
this area. Between the agreement to purchase and final settlement, there
are a number of steps to meet depending upon the financial institution
you are using if any and your requirements. Some of the more common are:
a. Valuation of the property.
b. Finalising the franchise agreement if applicable.
c. Obtaining insurance.
d. Surveying the property if not already done so.
e. Licenses and permits application transfers.
f. Setting up a bank accounts.
g. Credit card accounts.
h. Corporation documents.
i. Taking inventory.
It is common for some training to explain the systems, operational
requirements and property / business needs as part of the process
after settlement for a period of between 7– 14 days, depending upon the
experience of the purchaser and their needs that are negotiated at the
time of offer to purchase.
11. Settlement day:
At settlement the bank makes the loan to you, the purchaser. You then
use the loan plus your contribution to buy the property. The seller via
your solicitor gives you a deed for the property. The seller via your
solicitor then gives you a bill of sale for the furniture, fixtures and
equipment and you take over operation of the property.
12. Adjustments for Stock
Where possible, Broadwalk Business Brokers will have a representative at
the property to assist with settlement and make the transaction as
smooth as possible. If the property is considerable, a professional may
be employed for Stock take, but if the property is modest, Broadwalk
Business Brokers will often assist with the final stock
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site are presented in good faith and believed to be correct, McMahon
& Daughter Enterprises Pty Limited trading as Broadwalk Business
Brokers makes no representations or warranties as to the
completeness or accuracy of Information and no person in the employ
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Business Brokers has any authority to make or give any
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inquiries in relation to all and any documents supplied by McMahon &
Daughter Enterprises Pty Limited trading as Broadwalk Business
Brokers , all descriptions, dimensions, references to conditions and
necessary permission for use and occupation and other details are
given in good faith but any intending purchasers should not rely on
them as statements or representations of fact, but must satisfy
themselves by inspection or otherwise as to the correctness of each
Potential purchasers should rely on their own enquires in relation
to all and any documents supplies and , McMahon & Daughter
Enterprises Pty Limited trading as Broadwalk Business Brokers
disclaims all responsibility for any harm, loss, cost of damage
resulting from a purchases use of or reliance upon, the information,
if any part thereof is inaccurate or incomplete. Nothing contained
herein is to be construed as a recommendation , McMahon & Daughter
Enterprises Pty Limited trading as Broadwalk Business Brokers makes
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