Can you explain Rev/Rar?What is a good formula to use in looking at Hotel/Motels to purchase?

Purchasing Hotel/Motel property.
In Buying Property - Asked by Sandy L. - Mar 9, 2010
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Answer(s)

greg a.
Owner/Investor
Burr Ridge, IL

RevPar = Revenue per available Room
See link below

Mar 9, 2010
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Peter A.
Owner/Investor
San Francisco, CA

I interested in getting a (30 rooms to 40 rooms ) S R O Hotel for long lease or purchase

Mar 9, 2010
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Brandi L.
Oak Brook, IL

Most use either a capitalization (CAP) rate, a price per key (room) or a multiple of gross revenue. I prefer the gross revenue approach to valuation as CAP rates are not necessarily meant for properties where a business component is involved in ownership and are better-suited for net leased assets. As multiples can vary by market, you will need to obtain recent comps from your area to determine what multiple of gross revenue hospitality properties are trading at.

Mar 10, 2010
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Commercial A.
Appraiser
Los Angeles, CA

gree with Action L. also use caution and seperate business income (restaurant, etc.)from rental income. Multiplyers for business and rental property can vary greatly.

Mar 10, 2010
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