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Does anyone have any information regarding upfront expenses, including closing costs, of purchasing a hotel? I

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The BAF Group LLC
MD

Charles, the costs are not terribly different from other businesses. You have a deposit, potential application fees for loans, franchise transfer costs (if the hotel is franchised,) deposits for utilities and telephone, potential charges for credit card systems, and ideally 3 to 6 months of cash for Operating Expenses, until you achieve a break-even point. Closing costs will depend upon the state and perhaps even the city or county in which you make your purchase. In Maryland, closing costs for commercial property will frequently be about 4% of the purchase price. Some of these expenses can be worked into your loan. But please remember that the biggest reason that American companies fail, regardless of what kind of company they might be, is a lack of capitalization.

In asking this kind of question, it would appear that you may not have any experience in the industry. It is uncertain that making that kind of an investment in the total absence of that kind of experience is the wisest of moves. Perhaps I am incorrect, and if so, I apologize.

We write a blog about buying or starting businesses, and one of them involves the hotel/Motel industry. You can take a look at that post, at the following: https://combrokerbusiness.wordpress.com/2014/09/26/buying-a-motel-a-good-or-bad-idea/

Feb 12, 2015

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