| If you are an owner and wish to sale your hotel or | | | | of the property in correct and legal ways. |
| motel – you have indeed a great opportunity to | | | | Unfortunately, for every right way to do so there |
| gain some good profit on your investment. However, | | | | are ten fraudulent ways – and you should be |
| the enhancement of the price should be always done | | | | aware of most of these if you are planning to look |
| ethically. There are a good number of underhand | | | | for a hotel motel sale by owner. |
| tricks that people play to raise the evaluation of the | | | | • Get a building inspector look the property over |
| property – and you should definitely not be one | | | | and see if there are any major flaws that could be |
| of those. | | | | costly later on – plumbing, electrical wiring, heating |
| In case you are the one who is buying the property | | | | system, etc that might be camouflaged superficially |
| from the owner, be sure you know about all such | | | | • Discount the income of the vending machines |
| cut-the-corner methods of increasing evaluation so | | | | from the cap rate – this is usually a grey area |
| you could avoid overpayment. For example, cutting | | | | and would not give you an accurate estimate |
| down on repairs and heating of the place can | | | | • Check whether the regular repairs and |
| increase the per-day income by as much as $100-150 | | | | maintenance have been accounted for. Often by |
| and this computed to a yearly amount can be | | | | keeping these expenses off the books or totally |
| astronomical. If the evaluation is based on this, you | | | | doing without them – would cut costs to a large |
| will end up paying a highly inflated amount just for | | | | extent and show a much higher profit – and |
| nothing. | | | | hence the evaluation would be wrongly inflated. If |
| Understand the minimum basics of property | | | | you find that repairs figures are not there in the |
| evaluation before you go into the nitty-gritty of the | | | | books for the last 6-12 months – then ask about |
| deal. Let us see how they calculate the valuation. This | | | | it |
| is usually started with the capitalization rate, which is | | | | • Look at the expenses in the previous years and |
| commonly known as cap rate. Supposing the overall | | | | compare it carefully to the present year and it will be |
| return on the assets built comes at about eight | | | | easy to see if any of the figures have been |
| percent, and then the cap rate is 0.08. After the | | | | doctored |
| debt is deducted, the net income would be divided | | | | With a little care and investigation, you will be able to |
| by this cap rate to arrive at the value of the | | | | judge accurately the cost of the hotel or motel that |
| property. | | | | is up for sale – and close a great deal. |
| There are many ways that would enhance the value | | | | |