Like any property, when you’re buying or selling an accommodation business – caravan park, hotel or motel – there are a bunch of tips and tricks to ensure you get the best outcome. But not everyone is always aware of them. That’s why I was fortunate to have leading accommodation broker and industry veteran, Kevin Connolly of CRE Brokers, on a recent episode of the That Bad Review podcast, where he shared with us the insights of more than 30 years in the business. Here are some of his top tips:
Sellers – Get Your Books Looking Good
For Kevin, there’s nothing more critical than having your financials in order. His advice to sellers is to prepare the financial side of your accommodation business as well as you’d prepare the physical side. Everyone knows the better a property looks the easier it is to sell. And it’s the same with your financials. Businesses are bought and sold on multiples of your adjusted net profit, so the higher the net profit the higher the purchase price.
For best results, Kevin says, “You’ve got to really think about what you’re spending your money on, what your expenses are. You can’t be stingy, you’ve got to keep the maintenance up obviously, but you’ve got to think about what you’re spending your money on.”
Sellers – Get Your Document Ducks Are In A Row
Other than the physical aspect of your property and getting your books in order, you need to make sure your annual agreements, permits and certificates are up to date. They can be easily overlooked and costly if, for example, you’re in the final stages of a sale and the buyer notices you don’t have something as simple as a current CFA certificate or food handlers’ license.
As Kevin says, don’t let doubt into the buyer’s mind. Make a simple mistake like this and they begin to think, well if they haven’t provided that, what else haven’t they provided. Doubt begins to fester.
Buyers And Sellers – Look At Leasehold: It Can Be Great Option From Both Sides
With freehold prices prohibitive, particularly if you’re trying to get a foothold in the industry, Kevin’s advice is to look at a long-term lease. Typically this would be about a third the price of buying the freehold. With the right agreement, you can also get first look rights for when the freehold becomes available.
From a seller’s perspective, leasehold can also be a good option. With the right agreement in place, you’ll have the security of a good tenant overseeing the property and an on-going income, all while still controlling the freehold rights. With the right leasee, you can ensure the legacy of your history and hard work continues.
It’s a big subject and this is just the start of Kevin’s great tips. Have a listen to our full conversation on the That Bad Review podcast for more.
Listen to my entire conversation with Kevin here.