About Lease Calculations

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

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