Motel Finance for Self-Employed Buyers
Motel finance that starts with your real deposit.
We fund motels on the going-concern valuation, freehold or leasehold, and we know how these deals read from the lender's side of the desk, because we have worked there. The headline deposit is almost always more than the cash you actually need.
Tell us which buyer you are.
Three people buy motels, and the finance works differently for each.
Buying your first, a business and a home in one move. You have the deposit question and the no-experience worry. Both are smaller hurdles than they look, and most of the detail below is for you.
The number that scares you is rarely the number you pay.
The headline gap looks like a third of the price. Supporting security usually shrinks it to costs and a little more.
On a $1.2m freehold, with your home as supporting security. Illustrative, not a quote.
How the money actually stacks up.
The loan against the motel, lending secured on your other property, and the cash you bring.
One choice reshapes the whole deal.
The same motel can be sold either way. Here is the difference, plainly.
You own the lot
Yours outright, home on titleYou own the business
Cheaper in, you rent the landYou are buying a business, not just a building.
Land, building and trade are valued as one. That figure, not the bricks, is what the LVR is applied to.
Trading history, occupancy and room rates, the tariff mix, the building and the location, and the earnings a new operator could expect. It is why two motels at the same asking price can value very differently. More in going-concern valuation explained.
A motel's track record matters more than yours.
Lenders weigh four things, and a hospitality CV is the smallest of them.
We read a motel file the way a lender does, because we used to. We make the strengths lead.
There is more than one way to fund it.
The right one depends on your deposit, your timing, and whether you are buying or expanding.
From offer to keys.
A motel moves at the speed of the valuation, not a clock. When there is a clock, that is a different tool.
Pure timing pressure is private lending or a caveat loan, then a refinance.
Deals like the one you are weighing.
Three buyers, three structures.
First freehold, regional. Feared a $380k deposit, put in costs and a little, with the home as security. Business and home funded as one.
Motel finance, or something else?
A motel purchase
Motel finance
Buying or refinancing a freehold or leasehold motel, on the valuation with supporting security. This page, alongside a senior commercial property loan.
A different job
Timing, a pub, a refit
Pure timing is private lending or a caveat loan. A pub or hotel with gaming has its own page. A refurbishment-only spend is equipment finance.
Motel finance, answered.
Freehold motels are typically funded to 60 to 70 percent of the going-concern valuation, so the gap looks like 30 to 40 percent plus costs. Supporting security usually shrinks the cash you put in to costs and a modest contribution. The real figure depends on your equity, not the LVR.
Yes. Lenders weigh the motel's trading history, the valuation and your security well ahead of a hospitality CV. A solid motel and a clear plan carry a first-time owner.
Usually yes. In most freehold motels the residence sits on the same title, so business, building, land and home are funded as one going-concern deal.
Yes, against the lease. The lender takes a mortgage over the lease, needs the landlord's deed of consent, and caps the term inside the remaining lease, often up to about 15 years. The LVR is lower than freehold.
It values the motel as a trading business, land, building and established trade as one figure rather than the bricks alone. That figure is what the LVR is applied to.
As a guide, freehold up to around 70 percent of the going-concern valuation, and leasehold up to around 50 percent. Supporting security can move total borrowing toward 100 percent of price. Final terms depend on the asset and your position.
Sometimes. Vendor finance is where the seller leaves part of the price in the deal behind the senior lender, usually interest-only for a few years. The senior lender's written consent is the critical step.
Found a motel, or close to it? Let us run the numbers.
Freehold or leasehold, your first or your fourth, we will tell you what is fundable and what your deposit really needs to be. No credit check to start.
By Nick Lim, founder of Switchboard Finance. Credit Representative 576702 under ACL 384704 (Finsure). General information, not credit, legal or tax advice.