Cashing in on Roadside Motels

These are classic, overgrown grass, and broken window situations. I am now on my third deal in three years buying a “mom and pop” roadside motel (less than 15 units each) in a rural area for less than 50% of market value. In every case, I bought these deals for no money down with cash in pocket at closing.

Deal one was three buildings: a two-bedroom ranch house for the manager, a nine-unit motel, and a 2000 sq.ft. restaurant building. Total Purchase Price: $45,000. Appraised at $90,000.

Deal two was two buildings: a 2400 sq.ft. colonial with fireplace and walk-in closets in every bedroom for managers quarters and an 11-unit motel. Total Purchase Price: $56,000. Appraised Value: $120,000.

Deal three was a duplex rental and managers quarters and a 6-unit motel. Total Purchase Price: $23,000. Appraised Value: $68,000.

I have rented out all the rooms by the week for $85 or by the month for $275. I have made over $40,000 net cash flow from these properties since I started, all with no money invested.

Fellow investors, do not overlook these fabulous real estate investments. The value is created because none of the non-creative crowd knows what to do with them. Because these little motels do not make a full-time living by themselves, they are overlooked by all the simple thinkers who think they can only do one thing at a time the old-fashioned way.

The simple thinking crowd (non-creative) does not realize that they don’t need to run the motel in a traditional fashion and are not required to make a full-time living at the motel.

What I have done is to advertise for a management couple that is currently renting an apartment. I rent them my manager’s quarters for 1/2 the market rate for a similar apartment, and I give them 20% of the net profit for running the motel.

This arrangement gives them an incentive to take the job because they live cheaper and to work hard to make a profit, so they can have a big piece. I make good money and have no management headaches because I am never there. I am out investing in real estate!

On a seasonal basis we clear out some of the rooms for nightly travelers and charge up to $55 per night. In the off season we go back to monthly and weekly renters. We always have many elderly people who make the best tenants. They love it because everything is included in their low rent right down to furnishings and cable.

We also have set up a community (shared) kitchen for the people who stay there on a long-term basis. This a great way to beat the competition for tenants.

  • We are better than a rooming house because of the private bathroom and entrance.
  • We are better than other motels because of the full working kitchen for renters.
  • We are better than an apartment because it is so much cheaper to rent.

We beat ’em all. Don’t overlook these great opportunities! Good Luck.

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