Santa Ana Hotel & Motel Property For Sale

Santa Ana is Orange County, CA’s county seat. It is also the second most populous city in the county. According to the 2010 U.S. Census, it had a population of 329,427 at that time, which means it is the 57th most populous city in the country. Located in the south of the state, next to the Santa Ana River and just 10 miles from the coast, the city, which was founded in 1869, is part of the Greater Los Angeles Area. With 18 million residents, this is the second largest metro area in the country. Additionally, Santa Ana has been ranked as the 4th safest city with more than a quarter of a million residents in this country.

Santa Ana Hotel & Motel Property for Sale & Lease – Should You Buy or Lease?

There are pros and cons to both leasing and buying hotels and motels. As an investment, whether you purchase or lease the property, and whether you look into an entire hotel or motel or a single room only, the advantages include:

  • A low requirement for capital investment (if you purchase a single room), while ensuring a high return, particularly if you invest in a hotel room in Orange County, where demand is very high.
  • The option of having a fixed rate of return, which is available for both buyers and lessees, without having to take on any of the risks of hotel management. This means that if there are customer complaints or breakages, the responsibility lies with the hotel manager.
  • Having a steady return available to you, particularly in Orange County, with high average daily rates.
  • Being able to use the hotel or room for your own personal use as well.

Essentially, hotel & motel properties offer investors a profitable, low risk method of having a diverse investment portfolio.

However, downsides exist with investing in hotel & motel property as well, including the fact that:

  • Filing returns can be incredibly complex in terms of jurisdiction and taxes.
  • You don’t have a say on the marketing policy of the hotel, or of its management strategy, unless you purchase the entire operation.
  • You are required to have a good knowledge about the hospitality industry in order to ensure that you are doing things right.
  • There is some seasonality involved in hotels, which means you won’t always have a good or predictable month per month income.
  • Competition to make a single room purchase in particular is incredibly fierce, including with foreign investors vying for any room that becomes available.

To help choose between the two options, being aware of the trends and statistics in terms of prices, supply, and demand, can be very beneficial.

Santa Ana Hotel & Motel Property for Sale – Trends and Statistics

There are currently no hotels or motels for sale in Santa Ana. However, for those who are interested in these types of properties as an investment, the question is more about whether there would be a strong incentive to build new hotel and motel properties. The statistics below demonstrate that there is a strong demand for hotel and motel properties, and that there is a very limited supply. However, much of that is met by private individuals renting out holiday villas instead.

  • The occupancy rate rose to 74.4%, which is a 16.4% year on year increase.
  • The average daily rate was $129.64, an increase of 15.6% year on year.
  • The RevPAR was $96.87, a 34.5% increase year on year.
  • The average price of occupancy for a hotel room in Santa Ana is $126 per night.
  • The supply growth in Santa Ana is very limited. In fact, across all of Orange County, there are around 500 hotels, equating to 50,000 rooms, but this has been unchanged for a long time. In Santa Ana specifically, there has only been a 0.3% increase each year since 2012.

Santa Ana Hotel & Motel Property for Lease – Trends and Statistics

There are currently no hotel & motel properties for lease in Santa Ana. These buildings tend to have to be owned through mortgage or outright purchase. However, as the statistics above have demonstrated, deciding to invest in hotel & motel properties is a great financial decision with high yields and low risks. The hospitality industry as a whole in Santa Ana is incredibly strong and certainly one to build on.

That being said, capitalization rates, while strong, are decreasing. The last figures were gathered in 2013, which showed capitalization rates in luxury hotels of 5.5% to 6.5% in the first six months, which was 7% to 7.75% the year before. For economy hotels, the rate was 7% down from 8% over that same time period.