motel valuations
Navigate the Pitfalls Motel Valuations – Part 2
Rod Clough, MAI | June 25, 2019
By Rodney Clough In Part 1, I discussed the importance of determining the true revenue and expense levels of a property, which may not be overtly evident by statements or tax returns provided by a motel owner. When reconstructing a true (or as close to true as possible) statement, this may diminish the reliability of the direct capitalization method and discounted cash flow in the reconciliation if these opinions are based on estimated statements. Conversely, this heightens the importance of the RRM if the rooms revenue is the most documented line item, as well as the importance of the sales comparison approach; moreover, these two may be ...
Navigate the Pitfalls Motel Valuations – Part 1
Rodney G. Clough | May 29, 2019
By Rodney Clough Independent, budget motels are often operated by resident owners that are talented at running efficient, safe motel operations but lack sophisticated and complete financial models that generate proper reports upon which to base purchase and valuation decisions. It is important for a buyer to understand that available financial information may not tell the full story, and relying solely on what is available may sell short the profit potential of the hotel and, ultimately, its true value. In Part 1 of this series, I discuss the importance of deriving a proper revenue estimate and testing its reasonableness against the nor...
