The value of a lease has many factors to consider the main ones being:
- Term in years
- Net profit of motel business before rent
- Condition of property being the Landscaping, Buildings & Equipment
- Terms within the lease
The benchmark average yield for a leasehold is 30% when the annual rental is no higher than 45% of the Freehold annual net profit and for a term in excess of 22 years.
If the motel is in pristine condition without a cent to be spent on it in the short-term the yield could be reduced by 2 percentage points.
If considerable expenditure is evident you can add up to 5 to 8 percentage points.
click here to view or download Market Rental Determination Article of Interest
