|
10-06-2007, 06:05 PM
|
#1
|
Recycles dryer sheets
Join Date: Dec 2005
Location: San Diego
Posts: 468
|
hotel/motel investing?
Anyone out there try their hand at investing in hotels/motels? I have been considering different options for exchanging equity from apartment investments into other investments that may (?) offer higher cash-on-cash returns.
Hotel/motel properties tend to have higher cap rates but, of course, are management intensive (I would pay to hire professional mgt.) and, like all investment categories it seems, have been on a roll for a few years now.
Even if you haven't taken the plunge, anyone ever look into it or do some prelimiary research?
Thanks.
|
|
|
|
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!
Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!
You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!
|
10-06-2007, 06:07 PM
|
#2
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2003
Posts: 18,085
|
In addition to being more management intensive, they tend to be a lot more cyclical/volatile than other types of real estate. I think the time to buy is at the bottom of the business cycle, not now when valuations reflect recent rosy history.
__________________
"All animals are equal, but some animals are more equal than others."
- George Orwell
Ezekiel 23:20
|
|
|
10-06-2007, 06:14 PM
|
#3
|
Recycles dryer sheets
Join Date: Feb 2006
Posts: 403
|
Stick to what you know.
|
|
|
10-06-2007, 06:32 PM
|
#4
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Apr 2003
Location: Hooverville
Posts: 22,983
|
I think you would take a quantum jump in risk. Unless you have a very large amount of money to invest, you will also be competing mostly with savvy owner operators, many named Patel. Since you would already know all there is to know about motels if you too were named Patel, I think it would be a very unwise move.
Ha
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
|
|
|
10-06-2007, 06:53 PM
|
#5
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2006
Posts: 11,401
|
I've examined a Westin property. The cost per square foot of these investments is astronomical. To break even, you would need almost 100% hotel occupancy. Definitely in the category of "alternative" investments for the megarich only......maybe if you need that occasional condo in Paris or New York?
|
|
|
10-06-2007, 07:03 PM
|
#6
|
Thinks s/he gets paid by the post
Join Date: Nov 2005
Location: North of Montana
Posts: 2,769
|
Just like renting apartments except new tenants every night. Ohoh, forgot maid service.
Not this cowboy.
__________________
There are two kinds of people in the world: those who can extrapolate conclusions from insufficient data and ..
|
|
|
10-06-2007, 09:10 PM
|
#7
|
Thinks s/he gets paid by the post
Join Date: Oct 2005
Posts: 2,203
|
Quote:
Originally Posted by haha
I think you would take a quantum jump in risk. Unless you have a very large amount of money to invest, you will also be competing mostly with savvy owner operators, many named Patel. Since you would already know all there is to know about motels if you too were named Patel, I think it would be a very unwise move.
Ha
|
nailed the 'patel' issue right on the head. if anyone remembers my recent vacation from hell post...there was a patel at each hotel i stayed at!
|
|
|
10-06-2007, 09:54 PM
|
#8
|
Thinks s/he gets paid by the post
Join Date: Aug 2004
Location: St. Louis
Posts: 2,179
|
Quote:
Originally Posted by Meadbh
I've examined a Westin property. The cost per square foot of these investments is astronomical. To break even, you would need almost 100% hotel occupancy. Definitely in the category of "alternative" investments for the megarich only......maybe if you need that occasional condo in Paris or New York?
|
While I have never looked at a motel/hotel's financials, I would bet that a fair percentage of people spend more by ordering room service/in-room movies/other add-ons that push their bill up (not to mention many hotels with bars/restaurants), enabling the hotel to have a lower break-even occupancy.
__________________
Dryer sheets Schmyer sheets
|
|
|
10-07-2007, 02:39 AM
|
#9
|
Dryer sheet aficionado
Join Date: Oct 2007
Posts: 34
|
"Patel Motels"
Quote:
Originally Posted by thefed
nailed the 'patel' issue right on the head. if anyone remembers my recent vacation from hell post...there was a patel at each hotel i stayed at!
|
On a recent motorcycle trip across the country, my wife, after a few days of finding only 3rd tier motels with availability, dubbed them "Patel Motels". You can tell when you are entering one by the odor of curry emanating from the door as you open it. Not that's there's anything wrong with curry, since I happen to like Indian cooking.
Jim.
|
|
|
10-07-2007, 06:26 PM
|
#10
|
Thinks s/he gets paid by the post
Join Date: Mar 2005
Posts: 2,594
|
Had luck renting furnished apartments as "Motel Alternatives". Could hit for nearly 2 fold the non-furnished rental rate and still be a bargin to any business person, divorcee, moving couple .... who was stuck in a motel.
__________________
FIRE'd since 2005
|
|
|
10-07-2007, 06:41 PM
|
#11
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2004
Location: SW Ohio
Posts: 14,404
|
As far as i can tell, owning apartments (or other income properties) has almost nothing in common with owning a hotel/motel. If you are looking to "exchange equity," then I'd suggest widening the scope to consider other businesses (laundromats, self-serve car washes, self-storage facilities, restaurants) and alternative investments that are not businesses.
|
|
|
10-07-2007, 06:41 PM
|
#12
|
Full time employment: Posting here.
Join Date: Oct 2005
Posts: 501
|
me, wife, 2 children, sister, her hushand and their kid was lost in the lancaster,PA after a hershey park trip. anyhow, we landed in a "patel" motel, it was a real bad experience that today 5 years later we still talking about it.
my point, unless u got good money saved and willing to upkeep the motel or just invest a little larger franchise hotel, u will get your hand full for a while.
enuff
|
|
|
10-08-2007, 08:52 PM
|
#13
|
Dryer sheet aficionado
Join Date: Jun 2007
Posts: 26
|
Mohnish Pabrai had a good 1/2 of his book The Dhando Investor concentrated on those patels and their techniques. I don't think you can compete with them in bad times unless you want to get really nitty gritty with your property.
|
|
|
10-09-2007, 12:36 AM
|
#14
|
Recycles dryer sheets
Join Date: Dec 2005
Location: San Diego
Posts: 468
|
Thanks for feedback to all. Very good points raised. No doubt this would be a departure from the apartment business. I have a lot more studying to do.
Just to meander a bit from the original topic, have any of you RE investors switched specialties? Let's say, for example, from apartments to medical offices or single family homes to trailer parks? Or whatever?
Another question for you RE investors. How are you planning (or did you plan) the end game? How will you (or did you) extract the maximum stable cash flow from your built up equity? Paying off or reducing mortgage debt? Exchanging into RE of another type or of the same type but in a different region to get higher cash returns?
Thanks again for your thoughts and experiences.
|
|
|
10-09-2007, 06:30 AM
|
#15
|
Thinks s/he gets paid by the post
Join Date: Apr 2007
Posts: 2,360
|
Quote:
Originally Posted by thefed
there was a patel at each hotel i stayed at!
|
I believe it. "As many as 60% of mid-sized motels and hotel properties, all over the US, are owned by people of Indian origin. Of this nearly one-third have the surname Patel - a popular one among Indian Guajaratis": BBC NEWS | South Asia | America's Patel Motels. And not just tiny, cheap motels, either. Apparently Indian immigrants now own many largish hotels, too: see Little India. Well, good for them ... they are obviously shrewd, hand-working people.
P.S. According to the New York Times [ A Patel Motel Cartel? - New York Times], in addition to Indian Guajaratis dominating the motel business, "Sri Lankans ... run most porn-video stores.... the Arabs ... have a stranglehold on gas stations ... the Vietnamese ... monopolize nail salons".
__________________
"To know what you prefer, instead of humbly saying Amen to what the world tells you you ought to prefer, is to have kept your soul alive". Robert Louis Stevenson, An Inland Voyage (1878)
|
|
|
|
Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
|
|
Thread Tools |
|
Display Modes |
Linear Mode
|
Posting Rules
|
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts
HTML code is Off
|
|
|
|
» Recent Threads
|
|
|
|
|
|
|
|
|
|
|
|
|
» Quick Links
|
|
|