Hotels and Motels for Sale in Florida
What is the best method to use to determine the value of a hotel or motel for sale in Florida? The last thing any investor wants is to pay too much for a property. It is easy to do if they are not familiar with how to establish the proper value of hotels or motels for sale in florida . There are some factors that are more important than others.
Some would say that the Capitalization Rate is a good indicator of value. This is because it takes the income and expenses of the hotel or motel into account. It should tell you how the property has performed over time and hopefully continue into the future. But the hotel or motel Cap Rate is based on financial documents that may not be accurate, or may be projections instead of actual numbers. Starting the Cap Rate calculation with accurate and trusted income numbers is critical for a proper determination of the value of a hotel or motel. An investor should look at other factors including, environmental, building structure, zoning issues, and site location issues, etc.
Another calculation used to determine the value of Florida motels and hotels for sale in Florida is the per unit cost. This is basically the value assigned to the hotel or motel based on the number of units that it has. However, this indicator can be greatly flawed and should only be used in conjunction with other methods, and after ensuring you are comparing very nearly identical hotels and motels within the same market area.
Another method used to value and appraise hotels and motels is the sale comparison approach. An appraiser will study the market and find hotels and motels similar to the one being purchased, and use those comparable properties to determine value. Finding a knowledgeable appraiser experienced in hotels and motels is important to ensure a proper valuation is obtained.
The cost approach is another way that appraisers use to determine the value of hotel or motel. Using this method the appraiser would determine what the replacement cost would be for the entire hotel and use that in their valuation calculations.
It is important to note that using only one method of valuation can result in costly mistakes. It is best to look at the entire hotel or motel investment opportunity and engage the proper hospitality professionals to ensure a positive outcome.
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