Term of Lease
|
|
Term of Leases
Motel leases generally run for an intial 10 year term with two or three year options of 5 years each. These options are capable of being exercised by the Lessee fo the property (ie you the motel lease purchasor).
There is potential for capital growth with respect to leasehold properties, particularly where a new owner is able to increase turnover and increase net profit. Rents generally are not related to turnover and therefore an increase in net profit is enjoyed by the proprietor of the motel rather than the landlord.
An increase in net profit means that on disposal of the property the vendor will enjoy an increase in the value of the goodwill for which he is able to sell the property. This is particularly so where there are still a good number of years left on the lease agreement.
|
Quick Tip
Understand the Lease Document It is important that you understand the lease, and how it works, of the motel you are going to buy. Your occupation of the motel is controlled by the landlord through the Lease document and is an important part of the asset which is on-sold when you decide to move on.
|
