What you need to know about buying a motel in NZ

In the past year, New Zealand had at least 300,000 more international visitors than last, with over 3.6 million coming to our shores, according to Statistics NZ.

It's clear that we're in the middle of a tourism boom and there's a lot of money to be made in the sector if you know where to look for opportunities.

One such opportunity is buying a motel in New Zealand. On the back of record tourist numbers, there's no better time to get into the industry. 

 

Why buy a motel in New Zealand?

Buying a motel as an owner operator means securing a home for you and your family as well as a reliable income (provided you make the right choices). It's a commitment to a certain lifestyle, perfect for partners looking to do something together, or for those looking to move out of the cities.

As an investor, buying a motel usually means stable tenants and minimal outgoing costs (usually the landlord's only responsibility is covering all structural maintenance). Provided you chose well, a motel could also offer an impressive rental yield, allowing you to quickly grow your equity. Since these investments are reliable and feature long term leases banks are usually willing to finance purchasers.

Auckland receives the overwhelming majority of international visitors with over 2.6 million flying in during the year to July.

 

 

Where to buy a motel in New Zealand? 

When deciding where to buy a motel in New Zealand, first consider tourist traffic through the area. Statistics NZ data shows Auckland receives the overwhelming majority of international visitors with over 2.6 million flying in during the 12 months prior to July this year.  

Thanks to its population and its visitor numbers motels in the area are desirable investments - particularly if they're located on an arterial route, near the airport or the main centre. According to realestate.co.nz data the average sale price of $3.2 million reflects this, along with the average price per sqm of $3,384 - both of which are higher than most other towns. Past results show that despite current high figures there is variety on the market, and low level investors and owner occupiers may still be able to find a niche.

Queenstown receives the second most international visitors with 33,248 flying in over the last year. Motels are similarly expensive in the southern district - averaging between $1.5 million and $3.4 million since late 2016. However, the average price per sqm of $1012 suggests buyers may be able to find better value here than in Auckland. 

For an even more affordable option look to the heavily touristed areas of Coromandel, Northland and Southland. Motel and leisure buildings in these areas often sell for under $1.2 million, offering superior value. 

 

What must I do before buying a motel?

While they're often stable and reliable investments motels can go under - just like any other business. So when you're figuring out how to buy a motel in New Zealand decrease the likelihood of its failure by paying close attention to:
●    The physical environment of the property: is it somewhere you'd like to stay? Is the property in need of extensive maintenance or renovation?
●    Its financial state: including income, expenses, profit and value. Get your accountant to thoroughly look over the business before you buy in.
●    Its lease: investigate the number of remaining years and check that it's registered against the property title.

While it may seem an unconventional purchase, the fact is everyday kiwis have always invested in motels. With the right in depth research, and a little hard work you could be next to take advantage of our country's incredible tourism boom. 
For more information on New Zealand's motel and hotel real estate, get in touch with our team at realestate.co.nz.