What it costs to buy a motel in Australia
Motels are the most convention-bound market in Australian accommodation: brokers, valuers and lenders all price them the same way, which makes them unusually learnable for a first-time buyer. Here are the conventions and the current prices.
What motels sell for
| Structure | Price (current listings) | The convention |
|---|---|---|
| Small regional freehold | $550,000 to $1.5m | 7 to 9x net profit, roughly 11 to 16% returns |
| Typical regional freehold going concern | $2.5m to $5.5m | |
| Premium leisure locations | $5m to $8.5m plus | tighter yields |
| Leasehold motel | ~a third of the freehold price | 2.5 to 3.5x net, ~30% return |
Live examples: a Sunshine Coast motel at $2.65m against $430,000 net profit (16%), a 27-room Victorian regional at $4.6m, a 30-room Queensland leasehold at $895,000. The industry's worked example has not changed in a decade: $200,000 of net profit at a 30% leasehold return prices the lease around $667,000.
The leasehold economics, honestly
Most Australian motels trade split: someone owns the bricks as a passive investment, someone else buys the lease and runs the business. The lessee convention: rent lands near 45% of gross profit, and buyers walk when rent passes half of net maintainable earnings. The years left on the lease are the asset; 25 years is a business, 5 years is a job with an expiry date. Read the rent review clauses before you fall in love with the return.
Financing a motel
Freehold motels lend at 50% to 70% of the going-concern valuation depending on the asset and lender, so plan a 30% to 45% deposit plus costs. Leaseholds run around 50%: lenders fund goodwill only as far as the earnings support it. The loan sizes off valuation, not contract price. Equity in property you already hold can carry part of the deposit, and property-backed lending prices around 6% to 9% p.a. as a working rule. Start at business acquisition finance, or see the property-backed guide for how the equity side works.
Frequently asked questions
How much does a motel cost to buy in Australia?
Small regional freeholds from $550,000, typical regional freehold going concerns $2.5m to $5.5m, premium leisure locations to $8.5m plus. Leaseholds run about a third of the equivalent freehold price.
What is the return on a motel?
Freehold going concerns price around 7 to 9 times net profit, roughly 11 to 16% returns. Leaseholds price at 2.5 to 3.5 times net, around a 30% return, against a lease that runs down.
What deposit does a motel purchase need?
Freehold: 30 to 45% plus costs, with lending at 50 to 70% of the going-concern valuation. Leasehold: around half down, since goodwill is only funded as far as earnings support it.
What should I check before buying a leasehold motel?
The years remaining including options, the rent as a share of gross profit (the convention is ~45%, caution past 50% of net), the review clauses, and whether the advertised return survives your own add-backs.
Freehold or leasehold, structured properly
Tell us the motel and the structure and we will come back with the deposit and repayment picture, usually within a day.
This article is general information only and not financial, credit, or tax advice. Ventas Asset Lending is a finance broker, not a lender. Approvals are subject to lender assessment. Consider your own circumstances and speak to a qualified professional, including your accountant for any tax questions.