July 3, 2026 Hospitality & Accommodation

What Motel Owners Should Know About Commercial Property Finance

Buying the motel you run, or your next accommodation asset, is a defining step for any operator. At Ardent Capital Group we speak with motel owners about this kind of freehold going concern purchase, so this guide covers how a lender reads a motel, the deposit to plan for, and how the finance is put together.

Ardent Capital Group works with motel operators across Australia on commercial mortgages. Our team can help you move from tenant to owner, or add to an accommodation portfolio, with clear lending advice on structure and strategy.

Finance sized from $100,000 to $10,000,000+, arranged across bank and non-bank lenders.
Over $500,000,000 facilitated across more than a decade for 1,000+ borrowers.
Coverage across Sydney, Melbourne, Brisbane, Gold Coast, Perth, Adelaide, Canberra, Hobart and regional towns.
Structures for owner-occupiers, investors and partnerships, with terms and conditions explained clearly.

The case for owning your motel premises

Owning the freehold aligns the property with the business model. A motel's revenue relies on location, drive-by visibility, parking layout, number of keys and room mix, plus compliance items such as fire systems and accessible rooms. Fit-out and plant are real costs, from commercial laundry and hot water systems to keyless entry, solar and pool equipment. When you pay rent, these sunk costs sit in a building you do not control. When you pay a loan, repayments build an asset you do control.

Common demand anchors include highway frontage and signage, proximity to hospitals, airports and industrial precincts, seasonal tourism in coastal or alpine towns, and long-stay corporate crews. These drivers persist through cycles. Ownership lets you time refurbishments, add keys where planning permits, and keep rent risk off the table.

Key ownership drivers:

Control over site and signage, car park configuration and room mix, with upgrades planned to your schedule.
Repayments build equity that sits on your balance sheet, instead of annual rent escalations.
Ability to leverage your equity later for refurbishments, solar, EV chargers or an additional property.
Better alignment with lenders who favour owner-occupiers with stable trading history.

Buying may not suit where the lease horizon is short and you plan to relocate, where a highway bypass could shift passing trade away from your site, or where capital is better deployed into a full refurbishment and digital acquisition. The decision sits with you.

We structure a motel property loan around how you plan to hold and occupy the site, and getting your file to the right lender is where we add value.

Financing a motel: how it works

Deposit and LVR. A motel is a specialised, operator-dependent asset, so a freehold going concern is typically funded to between 50 and 65 per cent of value, which means a 35 to 50 per cent deposit. A stronger trading record and an owner-operator profile sit at the upper end of that band. Where a borrower has additional residential or commercial security to offer, some lenders can gear the purchase itself to 100 per cent against that combined security, and our broker team can explain when that is on the table.
Loan term and structure. Banks commonly cap terms at 10 to 15 years, while non-bank lenders can extend to 25 or 30 years. Repayments can be principal and interest for steady amortisation, or interest only for a set period where cash flow is earmarked for a staged refurbishment.
Security and serviceability. The property is the primary security. Lenders assess your financials, including occupancy trends, average daily rate, revenue per available room and operating margins. They test serviceability with interest rate buffers and may require a working capital allowance.
Owner-occupier treatment. Lenders generally view an owner-operator with proven trading more favourably than a passive investment, because the business and property are aligned and living or working on site reduces tenancy risk. On most motels the owner's residence is part of the security.

How the deal is put together

Many motel operators hold the freehold in a separate entity, often a company or a trust, and lease the premises to the trading business at a commercial rent. A lender then reads the inter-entity rent as a serviceability line and assesses the property and the business as related but distinct risks. Where the property and business sell together, the finance is arranged against the freehold going concern as a single asset. Where an investor buys the freehold and an operator holds the lease, the lender underwrites the lease covenant and the tenant's trading strength. Ardent works through the entity and lease structure with you across each option, then your accountant confirms the tax and ownership position before contracts are exchanged.

Financing a motel through an SMSF

A commercial motel freehold generally qualifies as business real property, so a self-managed super fund can hold it and lease it back to your trading entity at market rent. The purchase runs through a limited recourse borrowing arrangement, with a bare trust holding the property, personal guarantees still required, a liquidity buffer expected by lenders, and the fund putting up its own deposit since an LRBA cannot be cross-collateralised against other security. Gearing sits lower than a standard purchase, with tighter rules on improvements and redraw. We arrange the loan and LRBA structure end to end, while your accountant and SMSF specialist confirm the fund's tax, contribution and ownership position before the bare trust and contract are signed.

What credit teams weigh up

Business financials and track record, including two to three years of P&L, BAS, occupancy, ADR and RevPAR trends, plus online review stability.
Serviceability metrics, such as debt service cover ratios, sensitivity to rate rises and allowance for seasonality or shoulder-season dips.
Property and valuation, including number of keys, configuration, parking, age, recent capex, compliance items and flood or bushfire overlays. A specialist motel valuer assesses the asset on its trade, not on dollars per square metre.
Location and demand drivers, for example highway exposure, proximity to hospitals or industrial hubs, and local tourism depth.
Deposit and equity position, whether cash, equity in residential or other commercial property, or partner capital.
Freehold versus leasehold, the central question on any motel. A freehold going concern buys the land, building and business together; a leasehold motel buys the business and lease only, lends materially lower, and the loan term is capped by the remaining lease.
Experience and management capacity, including time in the motel sector, systems and staffing. Relevant operating experience is the lending gate for accommodation.

A specialist broker who understands motel trading metrics and lender appetite can keep the structure clean and the terms competitive.

A situation we could help with

This is an illustrative scenario that shows the kind of situation we can assist with, and how the thinking might run.

Profile and goal: a regional NSW owner-operator with a 28-key highway motel, strong corporate weekday trade and weekend leisure, looking at a freehold going concern purchase near $3,200,000 with a planned room refurbishment.
Structures we would map:
- Company or trust purchase as owner-operator, with a commercial lease back to the trading entity at market rent.
- SMSF purchase of the freehold, leased to the trading company at arm's length.
- A partnered structure with an investor on the freehold while the operator retains the business.
Deposit sources to consider: cash reserves, and the option to leverage your equity in a home or an industrial unit to reduce the cash required at settlement.
Indicative lending: for a freehold going concern of this type, lenders often consider 50 to 65 per cent of value for an owner-operator, on a bank term of 10 to 15 years or a non-bank term stretching to 25 or 30 years, principal and interest or an initial interest-only period tied to a costed refurbishment.
Working capital and capex: a refurbishment allowance may sit as a separate facility, subject to quotes and a staged draw.
How we would approach it: we would map the ranges, structures and repayments so you can weigh risk against cash flow. The figures above are illustrative, not confirmed outcomes.

Other finance we arrange for motel operators

Asset and equipment finance. Fund washers, dryers and ironers, housekeeping carts, keyless entry, solar arrays, hot water and pool plant, sized to occupancy patterns. We arrange motel equipment finance alongside the property loan or as a separate facility.
Fit-out and refurbishment finance. Rooms, bathrooms, soft furnishings, split-system air conditioners, compliant fire doors and highway-visible signage.
Working capital. Smooth cash flow through seasonality and manage OTA prepayments and group booking timing; working capital for a motel covers the gaps between payroll, utilities, linen and corporate receivables.
Refinancing and debt consolidation. Reset pricing and terms, and consolidate equipment rentals and residuals into a cleaner structure.
Construction and renovation. Add keys where planning permits, reconfigure reception, create accessible rooms, or upgrade car parks and EV charging.
Business or premises acquisition finance. Buy a leasehold motel, acquire the freehold, or buy out a partner, with terms aligned to forecast cash flow.

Owning the premises can free equity for future refurbishments, while a refinance can consolidate several facilities into a clearer repayment profile.

Why motel owners work with Ardent

Ardent Capital Group positions your motel finance around how you plan to hold and occupy the property, with structures that fit the trading model and the asset. We arrange commercial mortgages for motel owner-operators and investors, with a clear pathway from term sheet to settlement.

We service Sydney, Melbourne, Brisbane, Gold Coast, Perth, Adelaide, Canberra and surrounding metro and regional areas. We have helped facilitate over $500,000,000 in funding over a decade for more than 1,000 borrowers.

This is the kind of purchase where the structure and the strategy matter as much as the rate. We give motel owners clear advice on both, so the finance supports the wealth you are building and the years ahead, not just this settlement. If you are weighing up a motel purchase, we would be glad to talk it through.

Motel finance FAQs

How much deposit do I need to buy a motel freehold?

Most lenders look for 35 to 50 per cent, with 50 to 65 per cent LVR common on a freehold going concern for owner-operators. A stronger trading record sits at the upper end of that band.

Can I use my SMSF to buy the motel freehold and lease it to my business?

Yes. A commercial motel freehold generally qualifies as business real property, so the SMSF can hold it and lease it back at market rent through a limited recourse borrowing arrangement. Expect lower gearing and stricter rules around improvements and redraw.

Will lenders fund refurbishments as part of the purchase?

Many will include a refurbishment allowance or a separate facility if you provide a costed scope, quotes and a staged timeline, which can support an initial interest-only period.

What trading metrics do lenders look at for motels?

Occupancy, average daily rate, RevPAR, length of stay, channel mix, corporate account depth and seasonality, alongside margins and normalised EBITDA.

What is the difference between a freehold and a leasehold motel loan?

A freehold going concern funds the land, building and business together at 50 to 65 per cent. A leasehold motel funds the business and lease only, gears materially lower, and the loan term is capped by the remaining lease.

Can I buy the freehold as an investment and keep a tenant operator in place?

Yes. Lenders assess the lease term and options, rent coverage ratios and the operator's strength. Yield, location and condition of the asset influence terms.

What loan terms are typical and can I get interest only?

Banks commonly cap terms at 10 to 15 years, while non-bank lenders can extend to 25 or 30 years. Interest-only periods can be available where cash flow supports a refurbishment or seasonal requirements, then convert to principal and interest.

Written by

Nick Chong

Managing Director, M.AppFin, Dip. Mortgage Mgmt

Nick holds a Bachelor of Agricultural Economics, a Master of Applied Finance and an Advanced Diploma in Financial Planning. He founded Ardent Capital in 2016 after more than a decade in financial planning and mortgage broking. For the past ten years he has led a team of finance specialists, mortgage advisers, brokers and credit analysts, all working to secure optimal outcomes for clients and always acting in their best interests. The team brings both a qualitative and a quantitative approach to every deal.