Texas motel for sale: what actually makes one worth buying
Direct answer: a Texas motel is worth buying when four things are true, the income is verifiable from the P&L, the certificate of occupancy matches how it operates, the renovation is done (not “priced in”), and a lender will actually finance it. Most sub-$1M listings fail at least two of those tests. One that currently passes all four: Hotel Dilley Grand, 19 rooms plus an owner’s residence (20 units) on I-35, asking $650,000 against a trailing-twelve-month NOI of $69,333 (a 10.7% cap rate).
The four tests, in order
- Verifiable books. Ask for a trailing-twelve-month P&L and check it against PMS reports and bank deposits. Sellers without books are selling real estate, not a business, price accordingly. A property whose NOI trend is rising is rarer still.
- Certificate of occupancy that matches reality. Many small motels quietly run monthly tenants on a nightly-lodging CO. That is a compliance risk you inherit. A dual-use CO, nightly rental and monthly leasing both permitted, is rare and valuable, because it makes workforce-housing income legal optionality instead of a gray area.
- Renovation done, documented, and recent. “Needs a little TLC” in a motel listing usually means six figures of deferred capex. A documented recent renovation converts that risk into a line item you can inspect.
- Financeability. The most common way small-motel deals die is the loan. Before falling in love with a property, ask: has any lender looked at this? Independent motels can be financed, via SBA 7(a) around 20% down for owner-operators, or conventionally at 60–65% LTV, but only when the NOI carries the debt. See our guide to buying a hotel with an SBA loan.
Why the I-35 corridor
Interstate 35 between San Antonio and Laredo is one of the busiest trade corridors in the country. A motel on that corridor draws from through-traffic, contractors on regional projects, and local employers, multiple demand sources instead of one. Dilley sits an hour south of San Antonio, directly on the interstate.
The live example: Hotel Dilley Grand, purchased abandoned in 2024, renovated (about $135,000 in roughly 30 days), reopened July 2024, and now producing a $69,333 T12 NOI, up 70% year over year. 19 rooms plus an owner’s residence (20 units), dual-use CO, Cloudbeds PMS, smart locks, and a public 3D tour of every room.
All figures owner-provided from the P&L; buyers should verify independently.
Frequently asked questions
How much does a small Texas motel cost?
Small independent Texas motels commonly trade in the $300,000 to $1.5 million range depending on condition, room count, and income. The meaningful measure is price against verified net operating income: Hotel Dilley Grand, for example, asks $650,000 against a trailing-twelve-month NOI of $69,333, a 10.7% cap rate.
Can you finance an independent motel in Texas?
Yes, but the property has to carry the loan. SBA 7(a) loans can finance owner-operated motels at roughly 20% down, and regional banks with hotel desks lend conventionally at 60–65% LTV. Both depend on documented income, lenders underwrite the P&L, not the story.
What due diligence matters most on a motel purchase?
Verify income against PMS reports and bank deposits, confirm the certificate of occupancy matches how the property actually operates, inspect mechanicals and the renovation scope, and pressure-test the financing path with a lender before going under contract.
Is a motel near an interstate worth more?
Interstate visibility and access drive both nightly demand and workforce/contractor stays. A property on a corridor like I-35 between San Antonio and Laredo draws from through-traffic, local employers, and regional projects rather than a single demand source.
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