Considering opening a B&B, first time poster

[Morticia]

To answer your (email) questions:
1. No, there is no PM feature, it's email. (To maintain my pseudo anonymity I am responding here rather than via email.)
2. We were required to have a 25% deposit on the property we bought. We also deemed it necessary (for our peace of mind) to have 50% of what we would need for first year operating expenses in case no one showed up at the door. (That was not a problem.) Given the numbers you stated in your original post, you can look at properties in the under $500k range, that is not chicken feed, you CAN find viable properties for that. (Some inn brokers will tell you differently.)
3. When we reviewed the P&L statements from the properties we looked at we entered all the info into a spreadsheet and tried to break the numbers. ie- how bad could it get and we would still make enough money to pay the bills. (If you look under the Resources section above you can find spreadsheets you can adapt to your needs.)
4. We used a bank in the town we where we were buying the B&B. Where I live (New England) there are a LOT of B&B's so the local banks know what they're dealing with. They do not want to own a B&B a few years down the road so they help you go over the numbers very carefully. We ended up with a bank outside our town because the rates were better.
5. Generally speaking a commercial loan has a fixed rate for 5 years, then your rate changes with the Wall Street Prime. (Our rate dropped 2% in year 6! It's going up this year. Dang.) Look at the max rate you can be charged and the max rate the interest can go up every year.
5.5 You may be able to get a loan that is for 6-7 months rather than 12 if you are in an area that does not have a thriving year round biz. This allows you to pay only in the months you're making big bucks.
6. You will need a business inspection done on the property for a commercial loan. This encompasses a regular building inspection but also includes viability of the business. This will run you about $2500-$3500. It was helpful to us to have this done as we were able to have the PO's fix some safety issues we would not have caught as we were used to owning non-commercial property. The inspector stated our room with a detached bath was 'functionally obsolete'. That was 13 years ago. It's even more obsolete now but we cannot fix it. All that to say - DON'T buy a place that does not have the majority of the bathrooms IN the room. My 'obsolete' room is busy busy in the summer as it's the cheapest room in town. But you don't want a lot of rooms like that, they don't sell easily without making compromises. Ask if the owner has had this inspection done. They may offer to let you use the numbers if you pay them (less than the original cost).
7. As part of your biz plan, include taking deposits. This keeps a (hopefully) positive cash flow in off months. (We started doing this about 6 years ago and it has made all the difference to my sanity in April when the checkbook is gasping for breath.)
8. The bank will want to know how and where you plan to market, who is your target market, what new ideas are you bringing to the property to increase revenue (which can also be increased not just by higher occupancy but by lower expenses - we lowered our water bill so much the town came out to replace our water meter!), etc.
If you keep searching this site you'll find this info and more again and again. Unlike most people who have a dream of owning a biz, you actually have some bucks to back up your plans.
Good luck!.

Wow, thank you for taking the time for that reply. That is incredibly helpful.
I have a question about number 5., how long is your loan and what are loan rates typically going for? I thought commercial loans were typically 5-7 years.
ive found a few for sale in the $400-480K range I like in the areas I like. Some B&Bs are just in awful locations and some after googling their names I find bad reviews where people have complained about various things about the building or owners.
one of my concerns about buying a B&B is losing loyal customers. The B&B at the top of my list has been owned by the same couple for 3 decades, some of the customers have been staying their for a long time. I do worry many of those customers are more loyal to the current owners and won't continue to come after ownership change.
I do see some places where the business can be improved. Their online presence could be improved and their website is horrid. The main page is 2 pages of words with 2 small pictures. The booking system doesn't seem good and their wording on some things is very odd. They have the phone number plastered all over the website in huge red letters, so I bet most of their customers just call in a reservation.
it is right next to a ski resort and not far from a main highway. It has 7 rooms all with private baths and a seperate living quarters. Commercial kitchen and decent sized dining area. It's 4 acres with a beautiful background of the ski resort and a river. Plenty of room for a nice outdoor wedding. They don't have a lot of reviews online, but they are all good reviews, maybe 30-40 reviews, mostly 5 stars with a handful of 4 star reviews.
.

You can attempt to mitigate the guest turnover by sending out a joint email when you buy. The PO's are on the hook to say you're wonderful people and they are leaving the inn in good hands to pursue their retirement and you say you look forward to everyone coming back for another 30 years. And please let us know what your favorite breakfast is and your best memory of your stay.

 

[Jcam]

To answer your (email) questions:
1. No, there is no PM feature, it's email. (To maintain my pseudo anonymity I am responding here rather than via email.)
2. We were required to have a 25% deposit on the property we bought. We also deemed it necessary (for our peace of mind) to have 50% of what we would need for first year operating expenses in case no one showed up at the door. (That was not a problem.) Given the numbers you stated in your original post, you can look at properties in the under $500k range, that is not chicken feed, you CAN find viable properties for that. (Some inn brokers will tell you differently.)
3. When we reviewed the P&L statements from the properties we looked at we entered all the info into a spreadsheet and tried to break the numbers. ie- how bad could it get and we would still make enough money to pay the bills. (If you look under the Resources section above you can find spreadsheets you can adapt to your needs.)
4. We used a bank in the town we where we were buying the B&B. Where I live (New England) there are a LOT of B&B's so the local banks know what they're dealing with. They do not want to own a B&B a few years down the road so they help you go over the numbers very carefully. We ended up with a bank outside our town because the rates were better.
5. Generally speaking a commercial loan has a fixed rate for 5 years, then your rate changes with the Wall Street Prime. (Our rate dropped 2% in year 6! It's going up this year. Dang.) Look at the max rate you can be charged and the max rate the interest can go up every year.
5.5 You may be able to get a loan that is for 6-7 months rather than 12 if you are in an area that does not have a thriving year round biz. This allows you to pay only in the months you're making big bucks.
6. You will need a business inspection done on the property for a commercial loan. This encompasses a regular building inspection but also includes viability of the business. This will run you about $2500-$3500. It was helpful to us to have this done as we were able to have the PO's fix some safety issues we would not have caught as we were used to owning non-commercial property. The inspector stated our room with a detached bath was 'functionally obsolete'. That was 13 years ago. It's even more obsolete now but we cannot fix it. All that to say - DON'T buy a place that does not have the majority of the bathrooms IN the room. My 'obsolete' room is busy busy in the summer as it's the cheapest room in town. But you don't want a lot of rooms like that, they don't sell easily without making compromises. Ask if the owner has had this inspection done. They may offer to let you use the numbers if you pay them (less than the original cost).
7. As part of your biz plan, include taking deposits. This keeps a (hopefully) positive cash flow in off months. (We started doing this about 6 years ago and it has made all the difference to my sanity in April when the checkbook is gasping for breath.)
8. The bank will want to know how and where you plan to market, who is your target market, what new ideas are you bringing to the property to increase revenue (which can also be increased not just by higher occupancy but by lower expenses - we lowered our water bill so much the town came out to replace our water meter!), etc.
If you keep searching this site you'll find this info and more again and again. Unlike most people who have a dream of owning a biz, you actually have some bucks to back up your plans.
Good luck!.

Wow, thank you for taking the time for that reply. That is incredibly helpful.
I have a question about number 5., how long is your loan and what are loan rates typically going for? I thought commercial loans were typically 5-7 years.
ive found a few for sale in the $400-480K range I like in the areas I like. Some B&Bs are just in awful locations and some after googling their names I find bad reviews where people have complained about various things about the building or owners.
one of my concerns about buying a B&B is losing loyal customers. The B&B at the top of my list has been owned by the same couple for 3 decades, some of the customers have been staying their for a long time. I do worry many of those customers are more loyal to the current owners and won't continue to come after ownership change.
I do see some places where the business can be improved. Their online presence could be improved and their website is horrid. The main page is 2 pages of words with 2 small pictures. The booking system doesn't seem good and their wording on some things is very odd. They have the phone number plastered all over the website in huge red letters, so I bet most of their customers just call in a reservation.
it is right next to a ski resort and not far from a main highway. It has 7 rooms all with private baths and a seperate living quarters. Commercial kitchen and decent sized dining area. It's 4 acres with a beautiful background of the ski resort and a river. Plenty of room for a nice outdoor wedding. They don't have a lot of reviews online, but they are all good reviews, maybe 30-40 reviews, mostly 5 stars with a handful of 4 star reviews.
.

I have a business mortgage its 25 years - USA may be different mind.
Customers are weird - for myself change of ownership would be fine I would give them a chance as long as I knew it was to continue as a B&B others will not
(1) nighbour 1 bought place PO rang a lot of repeat customers and they all cancelled - felt that was not handled well - I would have sold it as lovely couple (which they are) same set up, we have done good training with them would you give them a chance.
(2) other neighbour experienced B&B owner bought different property - PO's told no one, didn't even let on they were selling - regular guests who felt they were their "friends" felt betrayed and shocked

 

[Morticia]

To answer your (email) questions:
1. No, there is no PM feature, it's email. (To maintain my pseudo anonymity I am responding here rather than via email.)
2. We were required to have a 25% deposit on the property we bought. We also deemed it necessary (for our peace of mind) to have 50% of what we would need for first year operating expenses in case no one showed up at the door. (That was not a problem.) Given the numbers you stated in your original post, you can look at properties in the under $500k range, that is not chicken feed, you CAN find viable properties for that. (Some inn brokers will tell you differently.)
3. When we reviewed the P&L statements from the properties we looked at we entered all the info into a spreadsheet and tried to break the numbers. ie- how bad could it get and we would still make enough money to pay the bills. (If you look under the Resources section above you can find spreadsheets you can adapt to your needs.)
4. We used a bank in the town we where we were buying the B&B. Where I live (New England) there are a LOT of B&B's so the local banks know what they're dealing with. They do not want to own a B&B a few years down the road so they help you go over the numbers very carefully. We ended up with a bank outside our town because the rates were better.
5. Generally speaking a commercial loan has a fixed rate for 5 years, then your rate changes with the Wall Street Prime. (Our rate dropped 2% in year 6! It's going up this year. Dang.) Look at the max rate you can be charged and the max rate the interest can go up every year.
5.5 You may be able to get a loan that is for 6-7 months rather than 12 if you are in an area that does not have a thriving year round biz. This allows you to pay only in the months you're making big bucks.
6. You will need a business inspection done on the property for a commercial loan. This encompasses a regular building inspection but also includes viability of the business. This will run you about $2500-$3500. It was helpful to us to have this done as we were able to have the PO's fix some safety issues we would not have caught as we were used to owning non-commercial property. The inspector stated our room with a detached bath was 'functionally obsolete'. That was 13 years ago. It's even more obsolete now but we cannot fix it. All that to say - DON'T buy a place that does not have the majority of the bathrooms IN the room. My 'obsolete' room is busy busy in the summer as it's the cheapest room in town. But you don't want a lot of rooms like that, they don't sell easily without making compromises. Ask if the owner has had this inspection done. They may offer to let you use the numbers if you pay them (less than the original cost).
7. As part of your biz plan, include taking deposits. This keeps a (hopefully) positive cash flow in off months. (We started doing this about 6 years ago and it has made all the difference to my sanity in April when the checkbook is gasping for breath.)
8. The bank will want to know how and where you plan to market, who is your target market, what new ideas are you bringing to the property to increase revenue (which can also be increased not just by higher occupancy but by lower expenses - we lowered our water bill so much the town came out to replace our water meter!), etc.
If you keep searching this site you'll find this info and more again and again. Unlike most people who have a dream of owning a biz, you actually have some bucks to back up your plans.
Good luck!.

Wow, thank you for taking the time for that reply. That is incredibly helpful.
I have a question about number 5., how long is your loan and what are loan rates typically going for? I thought commercial loans were typically 5-7 years.
ive found a few for sale in the $400-480K range I like in the areas I like. Some B&Bs are just in awful locations and some after googling their names I find bad reviews where people have complained about various things about the building or owners.
one of my concerns about buying a B&B is losing loyal customers. The B&B at the top of my list has been owned by the same couple for 3 decades, some of the customers have been staying their for a long time. I do worry many of those customers are more loyal to the current owners and won't continue to come after ownership change.
I do see some places where the business can be improved. Their online presence could be improved and their website is horrid. The main page is 2 pages of words with 2 small pictures. The booking system doesn't seem good and their wording on some things is very odd. They have the phone number plastered all over the website in huge red letters, so I bet most of their customers just call in a reservation.
it is right next to a ski resort and not far from a main highway. It has 7 rooms all with private baths and a seperate living quarters. Commercial kitchen and decent sized dining area. It's 4 acres with a beautiful background of the ski resort and a river. Plenty of room for a nice outdoor wedding. They don't have a lot of reviews online, but they are all good reviews, maybe 30-40 reviews, mostly 5 stars with a handful of 4 star reviews.
.

I have a business mortgage its 25 years - USA may be different mind.
Customers are weird - for myself change of ownership would be fine I would give them a chance as long as I knew it was to continue as a B&B others will not
(1) nighbour 1 bought place PO rang a lot of repeat customers and they all cancelled - felt that was not handled well - I would have sold it as lovely couple (which they are) same set up, we have done good training with them would you give them a chance.
(2) other neighbour experienced B&B owner bought different property - PO's told no one, didn't even let on they were selling - regular guests who felt they were their "friends" felt betrayed and shocked
.

(2) other neighbour experienced B&B owner bought different property - PO's told no one, didn't even let on they were selling - regular guests who felt they were their "friends" felt betrayed and shocked

We experienced this first hand - who the hell are you??? Why weren't we told? Where do the PO's live now? What's their phone number?
OTOH, there were several guests who were told. The PO's used to come to pick them up when they were here. Very awkward as the PO's never acknowledged us when coming by.

 

[Jcam]

To answer your (email) questions:
1. No, there is no PM feature, it's email. (To maintain my pseudo anonymity I am responding here rather than via email.)
2. We were required to have a 25% deposit on the property we bought. We also deemed it necessary (for our peace of mind) to have 50% of what we would need for first year operating expenses in case no one showed up at the door. (That was not a problem.) Given the numbers you stated in your original post, you can look at properties in the under $500k range, that is not chicken feed, you CAN find viable properties for that. (Some inn brokers will tell you differently.)
3. When we reviewed the P&L statements from the properties we looked at we entered all the info into a spreadsheet and tried to break the numbers. ie- how bad could it get and we would still make enough money to pay the bills. (If you look under the Resources section above you can find spreadsheets you can adapt to your needs.)
4. We used a bank in the town we where we were buying the B&B. Where I live (New England) there are a LOT of B&B's so the local banks know what they're dealing with. They do not want to own a B&B a few years down the road so they help you go over the numbers very carefully. We ended up with a bank outside our town because the rates were better.
5. Generally speaking a commercial loan has a fixed rate for 5 years, then your rate changes with the Wall Street Prime. (Our rate dropped 2% in year 6! It's going up this year. Dang.) Look at the max rate you can be charged and the max rate the interest can go up every year.
5.5 You may be able to get a loan that is for 6-7 months rather than 12 if you are in an area that does not have a thriving year round biz. This allows you to pay only in the months you're making big bucks.
6. You will need a business inspection done on the property for a commercial loan. This encompasses a regular building inspection but also includes viability of the business. This will run you about $2500-$3500. It was helpful to us to have this done as we were able to have the PO's fix some safety issues we would not have caught as we were used to owning non-commercial property. The inspector stated our room with a detached bath was 'functionally obsolete'. That was 13 years ago. It's even more obsolete now but we cannot fix it. All that to say - DON'T buy a place that does not have the majority of the bathrooms IN the room. My 'obsolete' room is busy busy in the summer as it's the cheapest room in town. But you don't want a lot of rooms like that, they don't sell easily without making compromises. Ask if the owner has had this inspection done. They may offer to let you use the numbers if you pay them (less than the original cost).
7. As part of your biz plan, include taking deposits. This keeps a (hopefully) positive cash flow in off months. (We started doing this about 6 years ago and it has made all the difference to my sanity in April when the checkbook is gasping for breath.)
8. The bank will want to know how and where you plan to market, who is your target market, what new ideas are you bringing to the property to increase revenue (which can also be increased not just by higher occupancy but by lower expenses - we lowered our water bill so much the town came out to replace our water meter!), etc.
If you keep searching this site you'll find this info and more again and again. Unlike most people who have a dream of owning a biz, you actually have some bucks to back up your plans.
Good luck!.

Wow, thank you for taking the time for that reply. That is incredibly helpful.
I have a question about number 5., how long is your loan and what are loan rates typically going for? I thought commercial loans were typically 5-7 years.
ive found a few for sale in the $400-480K range I like in the areas I like. Some B&Bs are just in awful locations and some after googling their names I find bad reviews where people have complained about various things about the building or owners.
one of my concerns about buying a B&B is losing loyal customers. The B&B at the top of my list has been owned by the same couple for 3 decades, some of the customers have been staying their for a long time. I do worry many of those customers are more loyal to the current owners and won't continue to come after ownership change.
I do see some places where the business can be improved. Their online presence could be improved and their website is horrid. The main page is 2 pages of words with 2 small pictures. The booking system doesn't seem good and their wording on some things is very odd. They have the phone number plastered all over the website in huge red letters, so I bet most of their customers just call in a reservation.
it is right next to a ski resort and not far from a main highway. It has 7 rooms all with private baths and a seperate living quarters. Commercial kitchen and decent sized dining area. It's 4 acres with a beautiful background of the ski resort and a river. Plenty of room for a nice outdoor wedding. They don't have a lot of reviews online, but they are all good reviews, maybe 30-40 reviews, mostly 5 stars with a handful of 4 star reviews.
.

#5 - our loan is for 20 years. First 5 years were at the locked in rate, that may be what you're thinking. Next 15 years are at prevailing rates unless we try to get another loan.
When we looked at properties owned by gay couples we asked the same questions of them - do you think your clientele will leave if you're not here? They were very honest with us saying if we made everyone feel welcome they would still come back.
What our experience shows - guests will leave because they liked the PO's and they don't like you. Some leave in a huff. Some just don't come back. We're the third owners of this inn and we still have guests from when it opened 30 years ago. However, many of the guests from way back when have died. This will happen to you, too, so you need a plan to bring in new biz.
My biggest suggestion in buying a place with a long standing repeat business is don't change everything at once!
We hear from new guests all the time how they used to stay at xyz inn, but they don't like the new people. I'm sure the xyz inn has a bunch of my guests, too!
Yes, fix the website, get a good booking system, keep the old phone number, make building changes to improve safety and efficiency. Don't change the décor the first year. Let the guests fall in love with you first! Once they like you, then you make big changes.
Don't double the rates first time out. Find out what deals the owners make with repeats and figure out if you can live with them. We lost a lot of repeats when we wouldn't give them the big discounts they were used to. (We're weaning our guests off discounts as they stop coming every year. If you miss a few years, you lose your frequent sleeper discount.)
.

hang onto that phone number! one of our neighbours messed about and lost the po's no one could get through to her and she didn't even get it changed on the web site for about 2 weeks! we had people desperate for rooms I was trying to send her and coudn't get through - gave up. You don't know how many people have the number in their phone, address book, keyring or fridge magnet!

 

[Movingon]

To answer your (email) questions:
1. No, there is no PM feature, it's email. (To maintain my pseudo anonymity I am responding here rather than via email.)
2. We were required to have a 25% deposit on the property we bought. We also deemed it necessary (for our peace of mind) to have 50% of what we would need for first year operating expenses in case no one showed up at the door. (That was not a problem.) Given the numbers you stated in your original post, you can look at properties in the under $500k range, that is not chicken feed, you CAN find viable properties for that. (Some inn brokers will tell you differently.)
3. When we reviewed the P&L statements from the properties we looked at we entered all the info into a spreadsheet and tried to break the numbers. ie- how bad could it get and we would still make enough money to pay the bills. (If you look under the Resources section above you can find spreadsheets you can adapt to your needs.)
4. We used a bank in the town we where we were buying the B&B. Where I live (New England) there are a LOT of B&B's so the local banks know what they're dealing with. They do not want to own a B&B a few years down the road so they help you go over the numbers very carefully. We ended up with a bank outside our town because the rates were better.
5. Generally speaking a commercial loan has a fixed rate for 5 years, then your rate changes with the Wall Street Prime. (Our rate dropped 2% in year 6! It's going up this year. Dang.) Look at the max rate you can be charged and the max rate the interest can go up every year.
5.5 You may be able to get a loan that is for 6-7 months rather than 12 if you are in an area that does not have a thriving year round biz. This allows you to pay only in the months you're making big bucks.
6. You will need a business inspection done on the property for a commercial loan. This encompasses a regular building inspection but also includes viability of the business. This will run you about $2500-$3500. It was helpful to us to have this done as we were able to have the PO's fix some safety issues we would not have caught as we were used to owning non-commercial property. The inspector stated our room with a detached bath was 'functionally obsolete'. That was 13 years ago. It's even more obsolete now but we cannot fix it. All that to say - DON'T buy a place that does not have the majority of the bathrooms IN the room. My 'obsolete' room is busy busy in the summer as it's the cheapest room in town. But you don't want a lot of rooms like that, they don't sell easily without making compromises. Ask if the owner has had this inspection done. They may offer to let you use the numbers if you pay them (less than the original cost).
7. As part of your biz plan, include taking deposits. This keeps a (hopefully) positive cash flow in off months. (We started doing this about 6 years ago and it has made all the difference to my sanity in April when the checkbook is gasping for breath.)
8. The bank will want to know how and where you plan to market, who is your target market, what new ideas are you bringing to the property to increase revenue (which can also be increased not just by higher occupancy but by lower expenses - we lowered our water bill so much the town came out to replace our water meter!), etc.
If you keep searching this site you'll find this info and more again and again. Unlike most people who have a dream of owning a biz, you actually have some bucks to back up your plans.
Good luck!.

Wow, thank you for taking the time for that reply. That is incredibly helpful.
I have a question about number 5., how long is your loan and what are loan rates typically going for? I thought commercial loans were typically 5-7 years.
ive found a few for sale in the $400-480K range I like in the areas I like. Some B&Bs are just in awful locations and some after googling their names I find bad reviews where people have complained about various things about the building or owners.
one of my concerns about buying a B&B is losing loyal customers. The B&B at the top of my list has been owned by the same couple for 3 decades, some of the customers have been staying their for a long time. I do worry many of those customers are more loyal to the current owners and won't continue to come after ownership change.
I do see some places where the business can be improved. Their online presence could be improved and their website is horrid. The main page is 2 pages of words with 2 small pictures. The booking system doesn't seem good and their wording on some things is very odd. They have the phone number plastered all over the website in huge red letters, so I bet most of their customers just call in a reservation.
it is right next to a ski resort and not far from a main highway. It has 7 rooms all with private baths and a seperate living quarters. Commercial kitchen and decent sized dining area. It's 4 acres with a beautiful background of the ski resort and a river. Plenty of room for a nice outdoor wedding. They don't have a lot of reviews online, but they are all good reviews, maybe 30-40 reviews, mostly 5 stars with a handful of 4 star reviews.
.

#5 - our loan is for 20 years. First 5 years were at the locked in rate, that may be what you're thinking. Next 15 years are at prevailing rates unless we try to get another loan.
When we looked at properties owned by gay couples we asked the same questions of them - do you think your clientele will leave if you're not here? They were very honest with us saying if we made everyone feel welcome they would still come back.
What our experience shows - guests will leave because they liked the PO's and they don't like you. Some leave in a huff. Some just don't come back. We're the third owners of this inn and we still have guests from when it opened 30 years ago. However, many of the guests from way back when have died. This will happen to you, too, so you need a plan to bring in new biz.
My biggest suggestion in buying a place with a long standing repeat business is don't change everything at once!
We hear from new guests all the time how they used to stay at xyz inn, but they don't like the new people. I'm sure the xyz inn has a bunch of my guests, too!
Yes, fix the website, get a good booking system, keep the old phone number, make building changes to improve safety and efficiency. Don't change the décor the first year. Let the guests fall in love with you first! Once they like you, then you make big changes.
Don't double the rates first time out. Find out what deals the owners make with repeats and figure out if you can live with them. We lost a lot of repeats when we wouldn't give them the big discounts they were used to. (We're weaning our guests off discounts as they stop coming every year. If you miss a few years, you lose your frequent sleeper discount.)
.

Sounds like good advice. The only thing I would change to start is the website, booking system, add a blog and keep Facebook updated. I've also thought adding a public jacuzzi is a good idea, one that fits like 6 people or so. There are no covered outdoor sitting sreas, so I was thinking of adding a gazebo as well.
The menu is very simple and I wouldn't change it. I might add a couple things over time, but it seems good. It was very difficult to find anything about their meals/menu online.
They stopped serving dinner about 6 years ago, I think due to they didn't want to work that much. I might start that up again, at least on Friday and Saturday nights. They had it at $37/person.
Currently they are closed for all of April and November. The owners travel a lot. I might change to being closed 1 month a year.

 

[EmptyNest]

To answer your (email) questions:
1. No, there is no PM feature, it's email. (To maintain my pseudo anonymity I am responding here rather than via email.)
2. We were required to have a 25% deposit on the property we bought. We also deemed it necessary (for our peace of mind) to have 50% of what we would need for first year operating expenses in case no one showed up at the door. (That was not a problem.) Given the numbers you stated in your original post, you can look at properties in the under $500k range, that is not chicken feed, you CAN find viable properties for that. (Some inn brokers will tell you differently.)
3. When we reviewed the P&L statements from the properties we looked at we entered all the info into a spreadsheet and tried to break the numbers. ie- how bad could it get and we would still make enough money to pay the bills. (If you look under the Resources section above you can find spreadsheets you can adapt to your needs.)
4. We used a bank in the town we where we were buying the B&B. Where I live (New England) there are a LOT of B&B's so the local banks know what they're dealing with. They do not want to own a B&B a few years down the road so they help you go over the numbers very carefully. We ended up with a bank outside our town because the rates were better.
5. Generally speaking a commercial loan has a fixed rate for 5 years, then your rate changes with the Wall Street Prime. (Our rate dropped 2% in year 6! It's going up this year. Dang.) Look at the max rate you can be charged and the max rate the interest can go up every year.
5.5 You may be able to get a loan that is for 6-7 months rather than 12 if you are in an area that does not have a thriving year round biz. This allows you to pay only in the months you're making big bucks.
6. You will need a business inspection done on the property for a commercial loan. This encompasses a regular building inspection but also includes viability of the business. This will run you about $2500-$3500. It was helpful to us to have this done as we were able to have the PO's fix some safety issues we would not have caught as we were used to owning non-commercial property. The inspector stated our room with a detached bath was 'functionally obsolete'. That was 13 years ago. It's even more obsolete now but we cannot fix it. All that to say - DON'T buy a place that does not have the majority of the bathrooms IN the room. My 'obsolete' room is busy busy in the summer as it's the cheapest room in town. But you don't want a lot of rooms like that, they don't sell easily without making compromises. Ask if the owner has had this inspection done. They may offer to let you use the numbers if you pay them (less than the original cost).
7. As part of your biz plan, include taking deposits. This keeps a (hopefully) positive cash flow in off months. (We started doing this about 6 years ago and it has made all the difference to my sanity in April when the checkbook is gasping for breath.)
8. The bank will want to know how and where you plan to market, who is your target market, what new ideas are you bringing to the property to increase revenue (which can also be increased not just by higher occupancy but by lower expenses - we lowered our water bill so much the town came out to replace our water meter!), etc.
If you keep searching this site you'll find this info and more again and again. Unlike most people who have a dream of owning a biz, you actually have some bucks to back up your plans.
Good luck!.

Wow, thank you for taking the time for that reply. That is incredibly helpful.
I have a question about number 5., how long is your loan and what are loan rates typically going for? I thought commercial loans were typically 5-7 years.
ive found a few for sale in the $400-480K range I like in the areas I like. Some B&Bs are just in awful locations and some after googling their names I find bad reviews where people have complained about various things about the building or owners.
one of my concerns about buying a B&B is losing loyal customers. The B&B at the top of my list has been owned by the same couple for 3 decades, some of the customers have been staying their for a long time. I do worry many of those customers are more loyal to the current owners and won't continue to come after ownership change.
I do see some places where the business can be improved. Their online presence could be improved and their website is horrid. The main page is 2 pages of words with 2 small pictures. The booking system doesn't seem good and their wording on some things is very odd. They have the phone number plastered all over the website in huge red letters, so I bet most of their customers just call in a reservation.
it is right next to a ski resort and not far from a main highway. It has 7 rooms all with private baths and a seperate living quarters. Commercial kitchen and decent sized dining area. It's 4 acres with a beautiful background of the ski resort and a river. Plenty of room for a nice outdoor wedding. They don't have a lot of reviews online, but they are all good reviews, maybe 30-40 reviews, mostly 5 stars with a handful of 4 star reviews.
.

#5 - our loan is for 20 years. First 5 years were at the locked in rate, that may be what you're thinking. Next 15 years are at prevailing rates unless we try to get another loan.
When we looked at properties owned by gay couples we asked the same questions of them - do you think your clientele will leave if you're not here? They were very honest with us saying if we made everyone feel welcome they would still come back.
What our experience shows - guests will leave because they liked the PO's and they don't like you. Some leave in a huff. Some just don't come back. We're the third owners of this inn and we still have guests from when it opened 30 years ago. However, many of the guests from way back when have died. This will happen to you, too, so you need a plan to bring in new biz.
My biggest suggestion in buying a place with a long standing repeat business is don't change everything at once!
We hear from new guests all the time how they used to stay at xyz inn, but they don't like the new people. I'm sure the xyz inn has a bunch of my guests, too!
Yes, fix the website, get a good booking system, keep the old phone number, make building changes to improve safety and efficiency. Don't change the décor the first year. Let the guests fall in love with you first! Once they like you, then you make big changes.
Don't double the rates first time out. Find out what deals the owners make with repeats and figure out if you can live with them. We lost a lot of repeats when we wouldn't give them the big discounts they were used to. (We're weaning our guests off discounts as they stop coming every year. If you miss a few years, you lose your frequent sleeper discount.)
.

Sounds like good advice. The only thing I would change to start is the website, booking system, add a blog and keep Facebook updated. I've also thought adding a public jacuzzi is a good idea, one that fits like 6 people or so. There are no covered outdoor sitting sreas, so I was thinking of adding a gazebo as well.
The menu is very simple and I wouldn't change it. I might add a couple things over time, but it seems good. It was very difficult to find anything about their meals/menu online.
They stopped serving dinner about 6 years ago, I think due to they didn't want to work that much. I might start that up again, at least on Friday and Saturday nights. They had it at $37/person.
Currently they are closed for all of April and November. The owners travel a lot. I might change to being closed 1 month a year.
.

Thought you weren't ready to do this for at least a year???? Sounds like you are hyped up now and ready to go LOL!

 

[JBloggs]

If you are in the people business you know how this is, could be that complainer was actually on a good day too.
"and some after googling their names I find bad reviews where people have complained about various things about the building or owners."
We had a guy call the health dept and building dept on us because we said we are within walking distance to a place, he said we certainly aren't and that was that. Boom. But of course we fully are, the manager of that place lives next door and walks every day, and we ourselves walk (4 blocks - not City blocks either, more like half blocks). He was a piece o work. They apologized when they came out. He was a bully, and if my other half was here he wouldn't have done what he did.He left demanding his money back - we never had even charged him to begin with, good riddance.
So, people like that go allover social media and write nasty reviews. I am a blogger and every blog post I put out (for another org) the first comment is a complaint, every stinkin' time. Life was so simple back before the internet and every rotten person got online. We used to only read about them in the newspapers...
Back to your original quote I cut n pasted. I went to B&B's on this forum after hearing stories, and it blew me away how wonderful they were. I still can't understand it.

 

[Morticia]

To answer your (email) questions:
1. No, there is no PM feature, it's email. (To maintain my pseudo anonymity I am responding here rather than via email.)
2. We were required to have a 25% deposit on the property we bought. We also deemed it necessary (for our peace of mind) to have 50% of what we would need for first year operating expenses in case no one showed up at the door. (That was not a problem.) Given the numbers you stated in your original post, you can look at properties in the under $500k range, that is not chicken feed, you CAN find viable properties for that. (Some inn brokers will tell you differently.)
3. When we reviewed the P&L statements from the properties we looked at we entered all the info into a spreadsheet and tried to break the numbers. ie- how bad could it get and we would still make enough money to pay the bills. (If you look under the Resources section above you can find spreadsheets you can adapt to your needs.)
4. We used a bank in the town we where we were buying the B&B. Where I live (New England) there are a LOT of B&B's so the local banks know what they're dealing with. They do not want to own a B&B a few years down the road so they help you go over the numbers very carefully. We ended up with a bank outside our town because the rates were better.
5. Generally speaking a commercial loan has a fixed rate for 5 years, then your rate changes with the Wall Street Prime. (Our rate dropped 2% in year 6! It's going up this year. Dang.) Look at the max rate you can be charged and the max rate the interest can go up every year.
5.5 You may be able to get a loan that is for 6-7 months rather than 12 if you are in an area that does not have a thriving year round biz. This allows you to pay only in the months you're making big bucks.
6. You will need a business inspection done on the property for a commercial loan. This encompasses a regular building inspection but also includes viability of the business. This will run you about $2500-$3500. It was helpful to us to have this done as we were able to have the PO's fix some safety issues we would not have caught as we were used to owning non-commercial property. The inspector stated our room with a detached bath was 'functionally obsolete'. That was 13 years ago. It's even more obsolete now but we cannot fix it. All that to say - DON'T buy a place that does not have the majority of the bathrooms IN the room. My 'obsolete' room is busy busy in the summer as it's the cheapest room in town. But you don't want a lot of rooms like that, they don't sell easily without making compromises. Ask if the owner has had this inspection done. They may offer to let you use the numbers if you pay them (less than the original cost).
7. As part of your biz plan, include taking deposits. This keeps a (hopefully) positive cash flow in off months. (We started doing this about 6 years ago and it has made all the difference to my sanity in April when the checkbook is gasping for breath.)
8. The bank will want to know how and where you plan to market, who is your target market, what new ideas are you bringing to the property to increase revenue (which can also be increased not just by higher occupancy but by lower expenses - we lowered our water bill so much the town came out to replace our water meter!), etc.
If you keep searching this site you'll find this info and more again and again. Unlike most people who have a dream of owning a biz, you actually have some bucks to back up your plans.
Good luck!.

Wow, thank you for taking the time for that reply. That is incredibly helpful.
I have a question about number 5., how long is your loan and what are loan rates typically going for? I thought commercial loans were typically 5-7 years.
ive found a few for sale in the $400-480K range I like in the areas I like. Some B&Bs are just in awful locations and some after googling their names I find bad reviews where people have complained about various things about the building or owners.
one of my concerns about buying a B&B is losing loyal customers. The B&B at the top of my list has been owned by the same couple for 3 decades, some of the customers have been staying their for a long time. I do worry many of those customers are more loyal to the current owners and won't continue to come after ownership change.
I do see some places where the business can be improved. Their online presence could be improved and their website is horrid. The main page is 2 pages of words with 2 small pictures. The booking system doesn't seem good and their wording on some things is very odd. They have the phone number plastered all over the website in huge red letters, so I bet most of their customers just call in a reservation.
it is right next to a ski resort and not far from a main highway. It has 7 rooms all with private baths and a seperate living quarters. Commercial kitchen and decent sized dining area. It's 4 acres with a beautiful background of the ski resort and a river. Plenty of room for a nice outdoor wedding. They don't have a lot of reviews online, but they are all good reviews, maybe 30-40 reviews, mostly 5 stars with a handful of 4 star reviews.
.

#5 - our loan is for 20 years. First 5 years were at the locked in rate, that may be what you're thinking. Next 15 years are at prevailing rates unless we try to get another loan.
When we looked at properties owned by gay couples we asked the same questions of them - do you think your clientele will leave if you're not here? They were very honest with us saying if we made everyone feel welcome they would still come back.
What our experience shows - guests will leave because they liked the PO's and they don't like you. Some leave in a huff. Some just don't come back. We're the third owners of this inn and we still have guests from when it opened 30 years ago. However, many of the guests from way back when have died. This will happen to you, too, so you need a plan to bring in new biz.
My biggest suggestion in buying a place with a long standing repeat business is don't change everything at once!
We hear from new guests all the time how they used to stay at xyz inn, but they don't like the new people. I'm sure the xyz inn has a bunch of my guests, too!
Yes, fix the website, get a good booking system, keep the old phone number, make building changes to improve safety and efficiency. Don't change the décor the first year. Let the guests fall in love with you first! Once they like you, then you make big changes.
Don't double the rates first time out. Find out what deals the owners make with repeats and figure out if you can live with them. We lost a lot of repeats when we wouldn't give them the big discounts they were used to. (We're weaning our guests off discounts as they stop coming every year. If you miss a few years, you lose your frequent sleeper discount.)
.

Sounds like good advice. The only thing I would change to start is the website, booking system, add a blog and keep Facebook updated. I've also thought adding a public jacuzzi is a good idea, one that fits like 6 people or so. There are no covered outdoor sitting sreas, so I was thinking of adding a gazebo as well.
The menu is very simple and I wouldn't change it. I might add a couple things over time, but it seems good. It was very difficult to find anything about their meals/menu online.
They stopped serving dinner about 6 years ago, I think due to they didn't want to work that much. I might start that up again, at least on Friday and Saturday nights. They had it at $37/person.
Currently they are closed for all of April and November. The owners travel a lot. I might change to being closed 1 month a year.
.

Really give that hot tub thing some consideration. Unless you can lock it completely you will be dealing with it at all hours of the night. You'll be draining and cleaning it regularly given to the activities that will go on.
Also consider the insurance aspect.

 

[Movingon]

To answer your (email) questions:
1. No, there is no PM feature, it's email. (To maintain my pseudo anonymity I am responding here rather than via email.)
2. We were required to have a 25% deposit on the property we bought. We also deemed it necessary (for our peace of mind) to have 50% of what we would need for first year operating expenses in case no one showed up at the door. (That was not a problem.) Given the numbers you stated in your original post, you can look at properties in the under $500k range, that is not chicken feed, you CAN find viable properties for that. (Some inn brokers will tell you differently.)
3. When we reviewed the P&L statements from the properties we looked at we entered all the info into a spreadsheet and tried to break the numbers. ie- how bad could it get and we would still make enough money to pay the bills. (If you look under the Resources section above you can find spreadsheets you can adapt to your needs.)
4. We used a bank in the town we where we were buying the B&B. Where I live (New England) there are a LOT of B&B's so the local banks know what they're dealing with. They do not want to own a B&B a few years down the road so they help you go over the numbers very carefully. We ended up with a bank outside our town because the rates were better.
5. Generally speaking a commercial loan has a fixed rate for 5 years, then your rate changes with the Wall Street Prime. (Our rate dropped 2% in year 6! It's going up this year. Dang.) Look at the max rate you can be charged and the max rate the interest can go up every year.
5.5 You may be able to get a loan that is for 6-7 months rather than 12 if you are in an area that does not have a thriving year round biz. This allows you to pay only in the months you're making big bucks.
6. You will need a business inspection done on the property for a commercial loan. This encompasses a regular building inspection but also includes viability of the business. This will run you about $2500-$3500. It was helpful to us to have this done as we were able to have the PO's fix some safety issues we would not have caught as we were used to owning non-commercial property. The inspector stated our room with a detached bath was 'functionally obsolete'. That was 13 years ago. It's even more obsolete now but we cannot fix it. All that to say - DON'T buy a place that does not have the majority of the bathrooms IN the room. My 'obsolete' room is busy busy in the summer as it's the cheapest room in town. But you don't want a lot of rooms like that, they don't sell easily without making compromises. Ask if the owner has had this inspection done. They may offer to let you use the numbers if you pay them (less than the original cost).
7. As part of your biz plan, include taking deposits. This keeps a (hopefully) positive cash flow in off months. (We started doing this about 6 years ago and it has made all the difference to my sanity in April when the checkbook is gasping for breath.)
8. The bank will want to know how and where you plan to market, who is your target market, what new ideas are you bringing to the property to increase revenue (which can also be increased not just by higher occupancy but by lower expenses - we lowered our water bill so much the town came out to replace our water meter!), etc.
If you keep searching this site you'll find this info and more again and again. Unlike most people who have a dream of owning a biz, you actually have some bucks to back up your plans.
Good luck!.

Wow, thank you for taking the time for that reply. That is incredibly helpful.
I have a question about number 5., how long is your loan and what are loan rates typically going for? I thought commercial loans were typically 5-7 years.
ive found a few for sale in the $400-480K range I like in the areas I like. Some B&Bs are just in awful locations and some after googling their names I find bad reviews where people have complained about various things about the building or owners.
one of my concerns about buying a B&B is losing loyal customers. The B&B at the top of my list has been owned by the same couple for 3 decades, some of the customers have been staying their for a long time. I do worry many of those customers are more loyal to the current owners and won't continue to come after ownership change.
I do see some places where the business can be improved. Their online presence could be improved and their website is horrid. The main page is 2 pages of words with 2 small pictures. The booking system doesn't seem good and their wording on some things is very odd. They have the phone number plastered all over the website in huge red letters, so I bet most of their customers just call in a reservation.
it is right next to a ski resort and not far from a main highway. It has 7 rooms all with private baths and a seperate living quarters. Commercial kitchen and decent sized dining area. It's 4 acres with a beautiful background of the ski resort and a river. Plenty of room for a nice outdoor wedding. They don't have a lot of reviews online, but they are all good reviews, maybe 30-40 reviews, mostly 5 stars with a handful of 4 star reviews.
.

#5 - our loan is for 20 years. First 5 years were at the locked in rate, that may be what you're thinking. Next 15 years are at prevailing rates unless we try to get another loan.
When we looked at properties owned by gay couples we asked the same questions of them - do you think your clientele will leave if you're not here? They were very honest with us saying if we made everyone feel welcome they would still come back.
What our experience shows - guests will leave because they liked the PO's and they don't like you. Some leave in a huff. Some just don't come back. We're the third owners of this inn and we still have guests from when it opened 30 years ago. However, many of the guests from way back when have died. This will happen to you, too, so you need a plan to bring in new biz.
My biggest suggestion in buying a place with a long standing repeat business is don't change everything at once!
We hear from new guests all the time how they used to stay at xyz inn, but they don't like the new people. I'm sure the xyz inn has a bunch of my guests, too!
Yes, fix the website, get a good booking system, keep the old phone number, make building changes to improve safety and efficiency. Don't change the décor the first year. Let the guests fall in love with you first! Once they like you, then you make big changes.
Don't double the rates first time out. Find out what deals the owners make with repeats and figure out if you can live with them. We lost a lot of repeats when we wouldn't give them the big discounts they were used to. (We're weaning our guests off discounts as they stop coming every year. If you miss a few years, you lose your frequent sleeper discount.)
.

Sounds like good advice. The only thing I would change to start is the website, booking system, add a blog and keep Facebook updated. I've also thought adding a public jacuzzi is a good idea, one that fits like 6 people or so. There are no covered outdoor sitting sreas, so I was thinking of adding a gazebo as well.
The menu is very simple and I wouldn't change it. I might add a couple things over time, but it seems good. It was very difficult to find anything about their meals/menu online.
They stopped serving dinner about 6 years ago, I think due to they didn't want to work that much. I might start that up again, at least on Friday and Saturday nights. They had it at $37/person.
Currently they are closed for all of April and November. The owners travel a lot. I might change to being closed 1 month a year.
.

Really give that hot tub thing some consideration. Unless you can lock it completely you will be dealing with it at all hours of the night. You'll be draining and cleaning it regularly given to the activities that will go on.
Also consider the insurance aspect.
.

A friend of mine has an outdoor jacuzzi inside a gazebo type of building, he put windows all around and big sliding glass doors. It's really neat and I was thinking that would be a good idea. He keeps it on all the time, 24/7, and it keeps the whole room fairly warm. No additional heat or a/c in the room. He also has a ceiling fan to use during the summer and he opens all the doors. But typically they don't turn the heat on when it's warm outside. The places we are looking at get about as cold as it does here, but not as hot in the summer.
Its not a set in stone idea, but I like the idea. As long as the cost would be reasonable to build it out. Honestly though, used good quality jacuzzis can be found really cheap. Just the installation, and then maintence and utilities would be the costly part.
My family used to go skiing a lot in Colorado and if a place had a jacuzzi was a big consideration to where we would stay. It was so nice and relaxing to lay in after skiing all day.

 

[Movingon]

To answer your (email) questions:
1. No, there is no PM feature, it's email. (To maintain my pseudo anonymity I am responding here rather than via email.)
2. We were required to have a 25% deposit on the property we bought. We also deemed it necessary (for our peace of mind) to have 50% of what we would need for first year operating expenses in case no one showed up at the door. (That was not a problem.) Given the numbers you stated in your original post, you can look at properties in the under $500k range, that is not chicken feed, you CAN find viable properties for that. (Some inn brokers will tell you differently.)
3. When we reviewed the P&L statements from the properties we looked at we entered all the info into a spreadsheet and tried to break the numbers. ie- how bad could it get and we would still make enough money to pay the bills. (If you look under the Resources section above you can find spreadsheets you can adapt to your needs.)
4. We used a bank in the town we where we were buying the B&B. Where I live (New England) there are a LOT of B&B's so the local banks know what they're dealing with. They do not want to own a B&B a few years down the road so they help you go over the numbers very carefully. We ended up with a bank outside our town because the rates were better.
5. Generally speaking a commercial loan has a fixed rate for 5 years, then your rate changes with the Wall Street Prime. (Our rate dropped 2% in year 6! It's going up this year. Dang.) Look at the max rate you can be charged and the max rate the interest can go up every year.
5.5 You may be able to get a loan that is for 6-7 months rather than 12 if you are in an area that does not have a thriving year round biz. This allows you to pay only in the months you're making big bucks.
6. You will need a business inspection done on the property for a commercial loan. This encompasses a regular building inspection but also includes viability of the business. This will run you about $2500-$3500. It was helpful to us to have this done as we were able to have the PO's fix some safety issues we would not have caught as we were used to owning non-commercial property. The inspector stated our room with a detached bath was 'functionally obsolete'. That was 13 years ago. It's even more obsolete now but we cannot fix it. All that to say - DON'T buy a place that does not have the majority of the bathrooms IN the room. My 'obsolete' room is busy busy in the summer as it's the cheapest room in town. But you don't want a lot of rooms like that, they don't sell easily without making compromises. Ask if the owner has had this inspection done. They may offer to let you use the numbers if you pay them (less than the original cost).
7. As part of your biz plan, include taking deposits. This keeps a (hopefully) positive cash flow in off months. (We started doing this about 6 years ago and it has made all the difference to my sanity in April when the checkbook is gasping for breath.)
8. The bank will want to know how and where you plan to market, who is your target market, what new ideas are you bringing to the property to increase revenue (which can also be increased not just by higher occupancy but by lower expenses - we lowered our water bill so much the town came out to replace our water meter!), etc.
If you keep searching this site you'll find this info and more again and again. Unlike most people who have a dream of owning a biz, you actually have some bucks to back up your plans.
Good luck!.

Wow, thank you for taking the time for that reply. That is incredibly helpful.
I have a question about number 5., how long is your loan and what are loan rates typically going for? I thought commercial loans were typically 5-7 years.
ive found a few for sale in the $400-480K range I like in the areas I like. Some B&Bs are just in awful locations and some after googling their names I find bad reviews where people have complained about various things about the building or owners.
one of my concerns about buying a B&B is losing loyal customers. The B&B at the top of my list has been owned by the same couple for 3 decades, some of the customers have been staying their for a long time. I do worry many of those customers are more loyal to the current owners and won't continue to come after ownership change.
I do see some places where the business can be improved. Their online presence could be improved and their website is horrid. The main page is 2 pages of words with 2 small pictures. The booking system doesn't seem good and their wording on some things is very odd. They have the phone number plastered all over the website in huge red letters, so I bet most of their customers just call in a reservation.
it is right next to a ski resort and not far from a main highway. It has 7 rooms all with private baths and a seperate living quarters. Commercial kitchen and decent sized dining area. It's 4 acres with a beautiful background of the ski resort and a river. Plenty of room for a nice outdoor wedding. They don't have a lot of reviews online, but they are all good reviews, maybe 30-40 reviews, mostly 5 stars with a handful of 4 star reviews.
.

#5 - our loan is for 20 years. First 5 years were at the locked in rate, that may be what you're thinking. Next 15 years are at prevailing rates unless we try to get another loan.
When we looked at properties owned by gay couples we asked the same questions of them - do you think your clientele will leave if you're not here? They were very honest with us saying if we made everyone feel welcome they would still come back.
What our experience shows - guests will leave because they liked the PO's and they don't like you. Some leave in a huff. Some just don't come back. We're the third owners of this inn and we still have guests from when it opened 30 years ago. However, many of the guests from way back when have died. This will happen to you, too, so you need a plan to bring in new biz.
My biggest suggestion in buying a place with a long standing repeat business is don't change everything at once!
We hear from new guests all the time how they used to stay at xyz inn, but they don't like the new people. I'm sure the xyz inn has a bunch of my guests, too!
Yes, fix the website, get a good booking system, keep the old phone number, make building changes to improve safety and efficiency. Don't change the décor the first year. Let the guests fall in love with you first! Once they like you, then you make big changes.
Don't double the rates first time out. Find out what deals the owners make with repeats and figure out if you can live with them. We lost a lot of repeats when we wouldn't give them the big discounts they were used to. (We're weaning our guests off discounts as they stop coming every year. If you miss a few years, you lose your frequent sleeper discount.)
.

Sounds like good advice. The only thing I would change to start is the website, booking system, add a blog and keep Facebook updated. I've also thought adding a public jacuzzi is a good idea, one that fits like 6 people or so. There are no covered outdoor sitting sreas, so I was thinking of adding a gazebo as well.
The menu is very simple and I wouldn't change it. I might add a couple things over time, but it seems good. It was very difficult to find anything about their meals/menu online.
They stopped serving dinner about 6 years ago, I think due to they didn't want to work that much. I might start that up again, at least on Friday and Saturday nights. They had it at $37/person.
Currently they are closed for all of April and November. The owners travel a lot. I might change to being closed 1 month a year.
.

Thought you weren't ready to do this for at least a year???? Sounds like you are hyped up now and ready to go LOL!
.

Haha, true. But I do really like the place I found for sale. If it's still available after our lease is up on our restaurant we will probably make an offer. Technically we have 9 months on our lease left, but we do want to do some traveling after we close and we will have a lot of business and personal stuff to sell. This last year is going to be pretty stressful. We make a profit, but it's not worth how many hours we put in, and they are not enjoyable hours.
What I hate about the restaurant business is the inconsistency, it can just be super slow and then out of nowhere we can get 30 customers. I figure with a B&B at least we should have a day minimum to prepare and know guests are coming. I'm sure someone will just show up at some point and there will be issues, but with a restaurant it can be like that multiple times every week. It just gets exhausting with a small mom and pop restaurant.

 

[gillumhouse]

To answer your (email) questions:
1. No, there is no PM feature, it's email. (To maintain my pseudo anonymity I am responding here rather than via email.)
2. We were required to have a 25% deposit on the property we bought. We also deemed it necessary (for our peace of mind) to have 50% of what we would need for first year operating expenses in case no one showed up at the door. (That was not a problem.) Given the numbers you stated in your original post, you can look at properties in the under $500k range, that is not chicken feed, you CAN find viable properties for that. (Some inn brokers will tell you differently.)
3. When we reviewed the P&L statements from the properties we looked at we entered all the info into a spreadsheet and tried to break the numbers. ie- how bad could it get and we would still make enough money to pay the bills. (If you look under the Resources section above you can find spreadsheets you can adapt to your needs.)
4. We used a bank in the town we where we were buying the B&B. Where I live (New England) there are a LOT of B&B's so the local banks know what they're dealing with. They do not want to own a B&B a few years down the road so they help you go over the numbers very carefully. We ended up with a bank outside our town because the rates were better.
5. Generally speaking a commercial loan has a fixed rate for 5 years, then your rate changes with the Wall Street Prime. (Our rate dropped 2% in year 6! It's going up this year. Dang.) Look at the max rate you can be charged and the max rate the interest can go up every year.
5.5 You may be able to get a loan that is for 6-7 months rather than 12 if you are in an area that does not have a thriving year round biz. This allows you to pay only in the months you're making big bucks.
6. You will need a business inspection done on the property for a commercial loan. This encompasses a regular building inspection but also includes viability of the business. This will run you about $2500-$3500. It was helpful to us to have this done as we were able to have the PO's fix some safety issues we would not have caught as we were used to owning non-commercial property. The inspector stated our room with a detached bath was 'functionally obsolete'. That was 13 years ago. It's even more obsolete now but we cannot fix it. All that to say - DON'T buy a place that does not have the majority of the bathrooms IN the room. My 'obsolete' room is busy busy in the summer as it's the cheapest room in town. But you don't want a lot of rooms like that, they don't sell easily without making compromises. Ask if the owner has had this inspection done. They may offer to let you use the numbers if you pay them (less than the original cost).
7. As part of your biz plan, include taking deposits. This keeps a (hopefully) positive cash flow in off months. (We started doing this about 6 years ago and it has made all the difference to my sanity in April when the checkbook is gasping for breath.)
8. The bank will want to know how and where you plan to market, who is your target market, what new ideas are you bringing to the property to increase revenue (which can also be increased not just by higher occupancy but by lower expenses - we lowered our water bill so much the town came out to replace our water meter!), etc.
If you keep searching this site you'll find this info and more again and again. Unlike most people who have a dream of owning a biz, you actually have some bucks to back up your plans.
Good luck!.

Wow, thank you for taking the time for that reply. That is incredibly helpful.
I have a question about number 5., how long is your loan and what are loan rates typically going for? I thought commercial loans were typically 5-7 years.
ive found a few for sale in the $400-480K range I like in the areas I like. Some B&Bs are just in awful locations and some after googling their names I find bad reviews where people have complained about various things about the building or owners.
one of my concerns about buying a B&B is losing loyal customers. The B&B at the top of my list has been owned by the same couple for 3 decades, some of the customers have been staying their for a long time. I do worry many of those customers are more loyal to the current owners and won't continue to come after ownership change.
I do see some places where the business can be improved. Their online presence could be improved and their website is horrid. The main page is 2 pages of words with 2 small pictures. The booking system doesn't seem good and their wording on some things is very odd. They have the phone number plastered all over the website in huge red letters, so I bet most of their customers just call in a reservation.
it is right next to a ski resort and not far from a main highway. It has 7 rooms all with private baths and a seperate living quarters. Commercial kitchen and decent sized dining area. It's 4 acres with a beautiful background of the ski resort and a river. Plenty of room for a nice outdoor wedding. They don't have a lot of reviews online, but they are all good reviews, maybe 30-40 reviews, mostly 5 stars with a handful of 4 star reviews.
.

#5 - our loan is for 20 years. First 5 years were at the locked in rate, that may be what you're thinking. Next 15 years are at prevailing rates unless we try to get another loan.
When we looked at properties owned by gay couples we asked the same questions of them - do you think your clientele will leave if you're not here? They were very honest with us saying if we made everyone feel welcome they would still come back.
What our experience shows - guests will leave because they liked the PO's and they don't like you. Some leave in a huff. Some just don't come back. We're the third owners of this inn and we still have guests from when it opened 30 years ago. However, many of the guests from way back when have died. This will happen to you, too, so you need a plan to bring in new biz.
My biggest suggestion in buying a place with a long standing repeat business is don't change everything at once!
We hear from new guests all the time how they used to stay at xyz inn, but they don't like the new people. I'm sure the xyz inn has a bunch of my guests, too!
Yes, fix the website, get a good booking system, keep the old phone number, make building changes to improve safety and efficiency. Don't change the décor the first year. Let the guests fall in love with you first! Once they like you, then you make big changes.
Don't double the rates first time out. Find out what deals the owners make with repeats and figure out if you can live with them. We lost a lot of repeats when we wouldn't give them the big discounts they were used to. (We're weaning our guests off discounts as they stop coming every year. If you miss a few years, you lose your frequent sleeper discount.)
.

Sounds like good advice. The only thing I would change to start is the website, booking system, add a blog and keep Facebook updated. I've also thought adding a public jacuzzi is a good idea, one that fits like 6 people or so. There are no covered outdoor sitting sreas, so I was thinking of adding a gazebo as well.
The menu is very simple and I wouldn't change it. I might add a couple things over time, but it seems good. It was very difficult to find anything about their meals/menu online.
They stopped serving dinner about 6 years ago, I think due to they didn't want to work that much. I might start that up again, at least on Friday and Saturday nights. They had it at $37/person.
Currently they are closed for all of April and November. The owners travel a lot. I might change to being closed 1 month a year.
.

Thought you weren't ready to do this for at least a year???? Sounds like you are hyped up now and ready to go LOL!
.

Haha, true. But I do really like the place I found for sale. If it's still available after our lease is up on our restaurant we will probably make an offer. Technically we have 9 months on our lease left, but we do want to do some traveling after we close and we will have a lot of business and personal stuff to sell. This last year is going to be pretty stressful. We make a profit, but it's not worth how many hours we put in, and they are not enjoyable hours.
What I hate about the restaurant business is the inconsistency, it can just be super slow and then out of nowhere we can get 30 customers. I figure with a B&B at least we should have a day minimum to prepare and know guests are coming. I'm sure someone will just show up at some point and there will be issues, but with a restaurant it can be like that multiple times every week. It just gets exhausting with a small mom and pop restaurant.
.

Had you thought of making it a set menu (2 choices) each day with just 2 seatings - reservation only. An exclusive type restaurant - pay when reserving. Would something like that work? It is something I thought of a few years ago but had no thought of doing it myself as I do not want to work as hard as a restaurant would have to.

 

[Movingon]

To answer your (email) questions:
1. No, there is no PM feature, it's email. (To maintain my pseudo anonymity I am responding here rather than via email.)
2. We were required to have a 25% deposit on the property we bought. We also deemed it necessary (for our peace of mind) to have 50% of what we would need for first year operating expenses in case no one showed up at the door. (That was not a problem.) Given the numbers you stated in your original post, you can look at properties in the under $500k range, that is not chicken feed, you CAN find viable properties for that. (Some inn brokers will tell you differently.)
3. When we reviewed the P&L statements from the properties we looked at we entered all the info into a spreadsheet and tried to break the numbers. ie- how bad could it get and we would still make enough money to pay the bills. (If you look under the Resources section above you can find spreadsheets you can adapt to your needs.)
4. We used a bank in the town we where we were buying the B&B. Where I live (New England) there are a LOT of B&B's so the local banks know what they're dealing with. They do not want to own a B&B a few years down the road so they help you go over the numbers very carefully. We ended up with a bank outside our town because the rates were better.
5. Generally speaking a commercial loan has a fixed rate for 5 years, then your rate changes with the Wall Street Prime. (Our rate dropped 2% in year 6! It's going up this year. Dang.) Look at the max rate you can be charged and the max rate the interest can go up every year.
5.5 You may be able to get a loan that is for 6-7 months rather than 12 if you are in an area that does not have a thriving year round biz. This allows you to pay only in the months you're making big bucks.
6. You will need a business inspection done on the property for a commercial loan. This encompasses a regular building inspection but also includes viability of the business. This will run you about $2500-$3500. It was helpful to us to have this done as we were able to have the PO's fix some safety issues we would not have caught as we were used to owning non-commercial property. The inspector stated our room with a detached bath was 'functionally obsolete'. That was 13 years ago. It's even more obsolete now but we cannot fix it. All that to say - DON'T buy a place that does not have the majority of the bathrooms IN the room. My 'obsolete' room is busy busy in the summer as it's the cheapest room in town. But you don't want a lot of rooms like that, they don't sell easily without making compromises. Ask if the owner has had this inspection done. They may offer to let you use the numbers if you pay them (less than the original cost).
7. As part of your biz plan, include taking deposits. This keeps a (hopefully) positive cash flow in off months. (We started doing this about 6 years ago and it has made all the difference to my sanity in April when the checkbook is gasping for breath.)
8. The bank will want to know how and where you plan to market, who is your target market, what new ideas are you bringing to the property to increase revenue (which can also be increased not just by higher occupancy but by lower expenses - we lowered our water bill so much the town came out to replace our water meter!), etc.
If you keep searching this site you'll find this info and more again and again. Unlike most people who have a dream of owning a biz, you actually have some bucks to back up your plans.
Good luck!.

Wow, thank you for taking the time for that reply. That is incredibly helpful.
I have a question about number 5., how long is your loan and what are loan rates typically going for? I thought commercial loans were typically 5-7 years.
ive found a few for sale in the $400-480K range I like in the areas I like. Some B&Bs are just in awful locations and some after googling their names I find bad reviews where people have complained about various things about the building or owners.
one of my concerns about buying a B&B is losing loyal customers. The B&B at the top of my list has been owned by the same couple for 3 decades, some of the customers have been staying their for a long time. I do worry many of those customers are more loyal to the current owners and won't continue to come after ownership change.
I do see some places where the business can be improved. Their online presence could be improved and their website is horrid. The main page is 2 pages of words with 2 small pictures. The booking system doesn't seem good and their wording on some things is very odd. They have the phone number plastered all over the website in huge red letters, so I bet most of their customers just call in a reservation.
it is right next to a ski resort and not far from a main highway. It has 7 rooms all with private baths and a seperate living quarters. Commercial kitchen and decent sized dining area. It's 4 acres with a beautiful background of the ski resort and a river. Plenty of room for a nice outdoor wedding. They don't have a lot of reviews online, but they are all good reviews, maybe 30-40 reviews, mostly 5 stars with a handful of 4 star reviews.
.

#5 - our loan is for 20 years. First 5 years were at the locked in rate, that may be what you're thinking. Next 15 years are at prevailing rates unless we try to get another loan.
When we looked at properties owned by gay couples we asked the same questions of them - do you think your clientele will leave if you're not here? They were very honest with us saying if we made everyone feel welcome they would still come back.
What our experience shows - guests will leave because they liked the PO's and they don't like you. Some leave in a huff. Some just don't come back. We're the third owners of this inn and we still have guests from when it opened 30 years ago. However, many of the guests from way back when have died. This will happen to you, too, so you need a plan to bring in new biz.
My biggest suggestion in buying a place with a long standing repeat business is don't change everything at once!
We hear from new guests all the time how they used to stay at xyz inn, but they don't like the new people. I'm sure the xyz inn has a bunch of my guests, too!
Yes, fix the website, get a good booking system, keep the old phone number, make building changes to improve safety and efficiency. Don't change the décor the first year. Let the guests fall in love with you first! Once they like you, then you make big changes.
Don't double the rates first time out. Find out what deals the owners make with repeats and figure out if you can live with them. We lost a lot of repeats when we wouldn't give them the big discounts they were used to. (We're weaning our guests off discounts as they stop coming every year. If you miss a few years, you lose your frequent sleeper discount.)
.

Sounds like good advice. The only thing I would change to start is the website, booking system, add a blog and keep Facebook updated. I've also thought adding a public jacuzzi is a good idea, one that fits like 6 people or so. There are no covered outdoor sitting sreas, so I was thinking of adding a gazebo as well.
The menu is very simple and I wouldn't change it. I might add a couple things over time, but it seems good. It was very difficult to find anything about their meals/menu online.
They stopped serving dinner about 6 years ago, I think due to they didn't want to work that much. I might start that up again, at least on Friday and Saturday nights. They had it at $37/person.
Currently they are closed for all of April and November. The owners travel a lot. I might change to being closed 1 month a year.
.

Thought you weren't ready to do this for at least a year???? Sounds like you are hyped up now and ready to go LOL!
.

Haha, true. But I do really like the place I found for sale. If it's still available after our lease is up on our restaurant we will probably make an offer. Technically we have 9 months on our lease left, but we do want to do some traveling after we close and we will have a lot of business and personal stuff to sell. This last year is going to be pretty stressful. We make a profit, but it's not worth how many hours we put in, and they are not enjoyable hours.
What I hate about the restaurant business is the inconsistency, it can just be super slow and then out of nowhere we can get 30 customers. I figure with a B&B at least we should have a day minimum to prepare and know guests are coming. I'm sure someone will just show up at some point and there will be issues, but with a restaurant it can be like that multiple times every week. It just gets exhausting with a small mom and pop restaurant.
.

Had you thought of making it a set menu (2 choices) each day with just 2 seatings - reservation only. An exclusive type restaurant - pay when reserving. Would something like that work? It is something I thought of a few years ago but had no thought of doing it myself as I do not want to work as hard as a restaurant would have to.
.

That is roughly what I am thinking. By reservation only and a very limited menu.
I have no desire to keep doing a restaurant day to day. Serving a simple breakfast daily and dinner twice a week by reservation is about the most I would want to do.
My restaurant right now has about 80 menu items, including soups and appetizers.

 

[EmptyNest]

To answer your (email) questions:
1. No, there is no PM feature, it's email. (To maintain my pseudo anonymity I am responding here rather than via email.)
2. We were required to have a 25% deposit on the property we bought. We also deemed it necessary (for our peace of mind) to have 50% of what we would need for first year operating expenses in case no one showed up at the door. (That was not a problem.) Given the numbers you stated in your original post, you can look at properties in the under $500k range, that is not chicken feed, you CAN find viable properties for that. (Some inn brokers will tell you differently.)
3. When we reviewed the P&L statements from the properties we looked at we entered all the info into a spreadsheet and tried to break the numbers. ie- how bad could it get and we would still make enough money to pay the bills. (If you look under the Resources section above you can find spreadsheets you can adapt to your needs.)
4. We used a bank in the town we where we were buying the B&B. Where I live (New England) there are a LOT of B&B's so the local banks know what they're dealing with. They do not want to own a B&B a few years down the road so they help you go over the numbers very carefully. We ended up with a bank outside our town because the rates were better.
5. Generally speaking a commercial loan has a fixed rate for 5 years, then your rate changes with the Wall Street Prime. (Our rate dropped 2% in year 6! It's going up this year. Dang.) Look at the max rate you can be charged and the max rate the interest can go up every year.
5.5 You may be able to get a loan that is for 6-7 months rather than 12 if you are in an area that does not have a thriving year round biz. This allows you to pay only in the months you're making big bucks.
6. You will need a business inspection done on the property for a commercial loan. This encompasses a regular building inspection but also includes viability of the business. This will run you about $2500-$3500. It was helpful to us to have this done as we were able to have the PO's fix some safety issues we would not have caught as we were used to owning non-commercial property. The inspector stated our room with a detached bath was 'functionally obsolete'. That was 13 years ago. It's even more obsolete now but we cannot fix it. All that to say - DON'T buy a place that does not have the majority of the bathrooms IN the room. My 'obsolete' room is busy busy in the summer as it's the cheapest room in town. But you don't want a lot of rooms like that, they don't sell easily without making compromises. Ask if the owner has had this inspection done. They may offer to let you use the numbers if you pay them (less than the original cost).
7. As part of your biz plan, include taking deposits. This keeps a (hopefully) positive cash flow in off months. (We started doing this about 6 years ago and it has made all the difference to my sanity in April when the checkbook is gasping for breath.)
8. The bank will want to know how and where you plan to market, who is your target market, what new ideas are you bringing to the property to increase revenue (which can also be increased not just by higher occupancy but by lower expenses - we lowered our water bill so much the town came out to replace our water meter!), etc.
If you keep searching this site you'll find this info and more again and again. Unlike most people who have a dream of owning a biz, you actually have some bucks to back up your plans.
Good luck!.

Wow, thank you for taking the time for that reply. That is incredibly helpful.
I have a question about number 5., how long is your loan and what are loan rates typically going for? I thought commercial loans were typically 5-7 years.
ive found a few for sale in the $400-480K range I like in the areas I like. Some B&Bs are just in awful locations and some after googling their names I find bad reviews where people have complained about various things about the building or owners.
one of my concerns about buying a B&B is losing loyal customers. The B&B at the top of my list has been owned by the same couple for 3 decades, some of the customers have been staying their for a long time. I do worry many of those customers are more loyal to the current owners and won't continue to come after ownership change.
I do see some places where the business can be improved. Their online presence could be improved and their website is horrid. The main page is 2 pages of words with 2 small pictures. The booking system doesn't seem good and their wording on some things is very odd. They have the phone number plastered all over the website in huge red letters, so I bet most of their customers just call in a reservation.
it is right next to a ski resort and not far from a main highway. It has 7 rooms all with private baths and a seperate living quarters. Commercial kitchen and decent sized dining area. It's 4 acres with a beautiful background of the ski resort and a river. Plenty of room for a nice outdoor wedding. They don't have a lot of reviews online, but they are all good reviews, maybe 30-40 reviews, mostly 5 stars with a handful of 4 star reviews.
.

#5 - our loan is for 20 years. First 5 years were at the locked in rate, that may be what you're thinking. Next 15 years are at prevailing rates unless we try to get another loan.
When we looked at properties owned by gay couples we asked the same questions of them - do you think your clientele will leave if you're not here? They were very honest with us saying if we made everyone feel welcome they would still come back.
What our experience shows - guests will leave because they liked the PO's and they don't like you. Some leave in a huff. Some just don't come back. We're the third owners of this inn and we still have guests from when it opened 30 years ago. However, many of the guests from way back when have died. This will happen to you, too, so you need a plan to bring in new biz.
My biggest suggestion in buying a place with a long standing repeat business is don't change everything at once!
We hear from new guests all the time how they used to stay at xyz inn, but they don't like the new people. I'm sure the xyz inn has a bunch of my guests, too!
Yes, fix the website, get a good booking system, keep the old phone number, make building changes to improve safety and efficiency. Don't change the décor the first year. Let the guests fall in love with you first! Once they like you, then you make big changes.
Don't double the rates first time out. Find out what deals the owners make with repeats and figure out if you can live with them. We lost a lot of repeats when we wouldn't give them the big discounts they were used to. (We're weaning our guests off discounts as they stop coming every year. If you miss a few years, you lose your frequent sleeper discount.)
.

Sounds like good advice. The only thing I would change to start is the website, booking system, add a blog and keep Facebook updated. I've also thought adding a public jacuzzi is a good idea, one that fits like 6 people or so. There are no covered outdoor sitting sreas, so I was thinking of adding a gazebo as well.
The menu is very simple and I wouldn't change it. I might add a couple things over time, but it seems good. It was very difficult to find anything about their meals/menu online.
They stopped serving dinner about 6 years ago, I think due to they didn't want to work that much. I might start that up again, at least on Friday and Saturday nights. They had it at $37/person.
Currently they are closed for all of April and November. The owners travel a lot. I might change to being closed 1 month a year.
.

Really give that hot tub thing some consideration. Unless you can lock it completely you will be dealing with it at all hours of the night. You'll be draining and cleaning it regularly given to the activities that will go on.
Also consider the insurance aspect.
.

A friend of mine has an outdoor jacuzzi inside a gazebo type of building, he put windows all around and big sliding glass doors. It's really neat and I was thinking that would be a good idea. He keeps it on all the time, 24/7, and it keeps the whole room fairly warm. No additional heat or a/c in the room. He also has a ceiling fan to use during the summer and he opens all the doors. But typically they don't turn the heat on when it's warm outside. The places we are looking at get about as cold as it does here, but not as hot in the summer.
Its not a set in stone idea, but I like the idea. As long as the cost would be reasonable to build it out. Honestly though, used good quality jacuzzis can be found really cheap. Just the installation, and then maintence and utilities would be the costly part.
My family used to go skiing a lot in Colorado and if a place had a jacuzzi was a big consideration to where we would stay. It was so nice and relaxing to lay in after skiing all day.
.

Ugh nothing but problems. My friends got rid of theirs and they are so glad. Personally I love mine but I am not sharing it with anyone not even my husband...he doesn't like it anyway.
hygiene wise, I don't care how much you clean and disinfect I am not using a jacuzzi anywhere
just call me germaphobic.

 

[JimBoone]

To answer your (email) questions:
1. No, there is no PM feature, it's email. (To maintain my pseudo anonymity I am responding here rather than via email.)
2. We were required to have a 25% deposit on the property we bought. We also deemed it necessary (for our peace of mind) to have 50% of what we would need for first year operating expenses in case no one showed up at the door. (That was not a problem.) Given the numbers you stated in your original post, you can look at properties in the under $500k range, that is not chicken feed, you CAN find viable properties for that. (Some inn brokers will tell you differently.)
3. When we reviewed the P&L statements from the properties we looked at we entered all the info into a spreadsheet and tried to break the numbers. ie- how bad could it get and we would still make enough money to pay the bills. (If you look under the Resources section above you can find spreadsheets you can adapt to your needs.)
4. We used a bank in the town we where we were buying the B&B. Where I live (New England) there are a LOT of B&B's so the local banks know what they're dealing with. They do not want to own a B&B a few years down the road so they help you go over the numbers very carefully. We ended up with a bank outside our town because the rates were better.
5. Generally speaking a commercial loan has a fixed rate for 5 years, then your rate changes with the Wall Street Prime. (Our rate dropped 2% in year 6! It's going up this year. Dang.) Look at the max rate you can be charged and the max rate the interest can go up every year.
5.5 You may be able to get a loan that is for 6-7 months rather than 12 if you are in an area that does not have a thriving year round biz. This allows you to pay only in the months you're making big bucks.
6. You will need a business inspection done on the property for a commercial loan. This encompasses a regular building inspection but also includes viability of the business. This will run you about $2500-$3500. It was helpful to us to have this done as we were able to have the PO's fix some safety issues we would not have caught as we were used to owning non-commercial property. The inspector stated our room with a detached bath was 'functionally obsolete'. That was 13 years ago. It's even more obsolete now but we cannot fix it. All that to say - DON'T buy a place that does not have the majority of the bathrooms IN the room. My 'obsolete' room is busy busy in the summer as it's the cheapest room in town. But you don't want a lot of rooms like that, they don't sell easily without making compromises. Ask if the owner has had this inspection done. They may offer to let you use the numbers if you pay them (less than the original cost).
7. As part of your biz plan, include taking deposits. This keeps a (hopefully) positive cash flow in off months. (We started doing this about 6 years ago and it has made all the difference to my sanity in April when the checkbook is gasping for breath.)
8. The bank will want to know how and where you plan to market, who is your target market, what new ideas are you bringing to the property to increase revenue (which can also be increased not just by higher occupancy but by lower expenses - we lowered our water bill so much the town came out to replace our water meter!), etc.
If you keep searching this site you'll find this info and more again and again. Unlike most people who have a dream of owning a biz, you actually have some bucks to back up your plans.
Good luck!.

Wow, thank you for taking the time for that reply. That is incredibly helpful.
I have a question about number 5., how long is your loan and what are loan rates typically going for? I thought commercial loans were typically 5-7 years.
ive found a few for sale in the $400-480K range I like in the areas I like. Some B&Bs are just in awful locations and some after googling their names I find bad reviews where people have complained about various things about the building or owners.
one of my concerns about buying a B&B is losing loyal customers. The B&B at the top of my list has been owned by the same couple for 3 decades, some of the customers have been staying their for a long time. I do worry many of those customers are more loyal to the current owners and won't continue to come after ownership change.
I do see some places where the business can be improved. Their online presence could be improved and their website is horrid. The main page is 2 pages of words with 2 small pictures. The booking system doesn't seem good and their wording on some things is very odd. They have the phone number plastered all over the website in huge red letters, so I bet most of their customers just call in a reservation.
it is right next to a ski resort and not far from a main highway. It has 7 rooms all with private baths and a seperate living quarters. Commercial kitchen and decent sized dining area. It's 4 acres with a beautiful background of the ski resort and a river. Plenty of room for a nice outdoor wedding. They don't have a lot of reviews online, but they are all good reviews, maybe 30-40 reviews, mostly 5 stars with a handful of 4 star reviews.
.

We are a mom and pop motel, similar, but no food service like our friends on the forum. I expect I did everything wrong when we purchased our place, but years have passed and we are happy, to me that's what counts the most.
1) Chose a vacation area that we liked to visit, saw the place advertised in a newspaper I picked up following a visit in September, returned with a friend from work on a quick overnight trip for a first look
2) Looked at property again on an overnight in October with wife, were to return to close on property in December. Original plan was 1/3 (more or less) down and owner carry the balance. We arrived after dark on a wet night in December expecting reservations with a closing the next day to find the business not operating and the office door unlocked, called realtor and was told to make myself at home and he would see me in the morning, we found the one room that looked clean enough to sleep in, didn't find heat or hot water.
Eventual financing plan, I had borrowed against rental property for the down payment, rent on that property would cover those payments. The prior owner's loan holder (original family owner) would carry most of the balance for 12 years with one annual payment at the end of each year. I would have 2 years to sell a piece of property or otherwise pay off a balance owed to the then current operator. Took a couple of months to actually have a closing on the business.
3) Everyone can laugh at my business planning. I had photocopies of a notebook that had been used as the prior year's reservation book and utility costs for that prior year, my lodging experience was limited to having been a guest, but this was something I wanted to do and I followed my heart. My plan was that I would need a job, Maxine would run the business and I would help after work. Guardian Angel, luck, hard work, maybe work keeps us young as we still enjoy the life.

 

[Tom]

To answer your (email) questions:
1. No, there is no PM feature, it's email. (To maintain my pseudo anonymity I am responding here rather than via email.)
2. We were required to have a 25% deposit on the property we bought. We also deemed it necessary (for our peace of mind) to have 50% of what we would need for first year operating expenses in case no one showed up at the door. (That was not a problem.) Given the numbers you stated in your original post, you can look at properties in the under $500k range, that is not chicken feed, you CAN find viable properties for that. (Some inn brokers will tell you differently.)
3. When we reviewed the P&L statements from the properties we looked at we entered all the info into a spreadsheet and tried to break the numbers. ie- how bad could it get and we would still make enough money to pay the bills. (If you look under the Resources section above you can find spreadsheets you can adapt to your needs.)
4. We used a bank in the town we where we were buying the B&B. Where I live (New England) there are a LOT of B&B's so the local banks know what they're dealing with. They do not want to own a B&B a few years down the road so they help you go over the numbers very carefully. We ended up with a bank outside our town because the rates were better.
5. Generally speaking a commercial loan has a fixed rate for 5 years, then your rate changes with the Wall Street Prime. (Our rate dropped 2% in year 6! It's going up this year. Dang.) Look at the max rate you can be charged and the max rate the interest can go up every year.
5.5 You may be able to get a loan that is for 6-7 months rather than 12 if you are in an area that does not have a thriving year round biz. This allows you to pay only in the months you're making big bucks.
6. You will need a business inspection done on the property for a commercial loan. This encompasses a regular building inspection but also includes viability of the business. This will run you about $2500-$3500. It was helpful to us to have this done as we were able to have the PO's fix some safety issues we would not have caught as we were used to owning non-commercial property. The inspector stated our room with a detached bath was 'functionally obsolete'. That was 13 years ago. It's even more obsolete now but we cannot fix it. All that to say - DON'T buy a place that does not have the majority of the bathrooms IN the room. My 'obsolete' room is busy busy in the summer as it's the cheapest room in town. But you don't want a lot of rooms like that, they don't sell easily without making compromises. Ask if the owner has had this inspection done. They may offer to let you use the numbers if you pay them (less than the original cost).
7. As part of your biz plan, include taking deposits. This keeps a (hopefully) positive cash flow in off months. (We started doing this about 6 years ago and it has made all the difference to my sanity in April when the checkbook is gasping for breath.)
8. The bank will want to know how and where you plan to market, who is your target market, what new ideas are you bringing to the property to increase revenue (which can also be increased not just by higher occupancy but by lower expenses - we lowered our water bill so much the town came out to replace our water meter!), etc.
If you keep searching this site you'll find this info and more again and again. Unlike most people who have a dream of owning a biz, you actually have some bucks to back up your plans.
Good luck!.

Wow, thank you for taking the time for that reply. That is incredibly helpful.
I have a question about number 5., how long is your loan and what are loan rates typically going for? I thought commercial loans were typically 5-7 years.
ive found a few for sale in the $400-480K range I like in the areas I like. Some B&Bs are just in awful locations and some after googling their names I find bad reviews where people have complained about various things about the building or owners.
one of my concerns about buying a B&B is losing loyal customers. The B&B at the top of my list has been owned by the same couple for 3 decades, some of the customers have been staying their for a long time. I do worry many of those customers are more loyal to the current owners and won't continue to come after ownership change.
I do see some places where the business can be improved. Their online presence could be improved and their website is horrid. The main page is 2 pages of words with 2 small pictures. The booking system doesn't seem good and their wording on some things is very odd. They have the phone number plastered all over the website in huge red letters, so I bet most of their customers just call in a reservation.
it is right next to a ski resort and not far from a main highway. It has 7 rooms all with private baths and a seperate living quarters. Commercial kitchen and decent sized dining area. It's 4 acres with a beautiful background of the ski resort and a river. Plenty of room for a nice outdoor wedding. They don't have a lot of reviews online, but they are all good reviews, maybe 30-40 reviews, mostly 5 stars with a handful of 4 star reviews.
.

#5 - our loan is for 20 years. First 5 years were at the locked in rate, that may be what you're thinking. Next 15 years are at prevailing rates unless we try to get another loan.
When we looked at properties owned by gay couples we asked the same questions of them - do you think your clientele will leave if you're not here? They were very honest with us saying if we made everyone feel welcome they would still come back.
What our experience shows - guests will leave because they liked the PO's and they don't like you. Some leave in a huff. Some just don't come back. We're the third owners of this inn and we still have guests from when it opened 30 years ago. However, many of the guests from way back when have died. This will happen to you, too, so you need a plan to bring in new biz.
My biggest suggestion in buying a place with a long standing repeat business is don't change everything at once!
We hear from new guests all the time how they used to stay at xyz inn, but they don't like the new people. I'm sure the xyz inn has a bunch of my guests, too!
Yes, fix the website, get a good booking system, keep the old phone number, make building changes to improve safety and efficiency. Don't change the décor the first year. Let the guests fall in love with you first! Once they like you, then you make big changes.
Don't double the rates first time out. Find out what deals the owners make with repeats and figure out if you can live with them. We lost a lot of repeats when we wouldn't give them the big discounts they were used to. (We're weaning our guests off discounts as they stop coming every year. If you miss a few years, you lose your frequent sleeper discount.)
.

Sounds like good advice. The only thing I would change to start is the website, booking system, add a blog and keep Facebook updated. I've also thought adding a public jacuzzi is a good idea, one that fits like 6 people or so. There are no covered outdoor sitting sreas, so I was thinking of adding a gazebo as well.
The menu is very simple and I wouldn't change it. I might add a couple things over time, but it seems good. It was very difficult to find anything about their meals/menu online.
They stopped serving dinner about 6 years ago, I think due to they didn't want to work that much. I might start that up again, at least on Friday and Saturday nights. They had it at $37/person.
Currently they are closed for all of April and November. The owners travel a lot. I might change to being closed 1 month a year.
.

Really give that hot tub thing some consideration. Unless you can lock it completely you will be dealing with it at all hours of the night. You'll be draining and cleaning it regularly given to the activities that will go on.
Also consider the insurance aspect.
.

A friend of mine has an outdoor jacuzzi inside a gazebo type of building, he put windows all around and big sliding glass doors. It's really neat and I was thinking that would be a good idea. He keeps it on all the time, 24/7, and it keeps the whole room fairly warm. No additional heat or a/c in the room. He also has a ceiling fan to use during the summer and he opens all the doors. But typically they don't turn the heat on when it's warm outside. The places we are looking at get about as cold as it does here, but not as hot in the summer.
Its not a set in stone idea, but I like the idea. As long as the cost would be reasonable to build it out. Honestly though, used good quality jacuzzis can be found really cheap. Just the installation, and then maintence and utilities would be the costly part.
My family used to go skiing a lot in Colorado and if a place had a jacuzzi was a big consideration to where we would stay. It was so nice and relaxing to lay in after skiing all day.
.

Ski/board crowd expects a hot tub: warm up, relax muscles, start drinking. If that is a seasonal market put one in. They are a messy crowd, anyway. An alternative is a sauna.
But figure out how to drain and lock it off all other seasons. Huge maintenance and really not much needed outside of winter. Needs to be locked off for insurance reasons anyway.

 

[Morticia]

To answer your (email) questions:
1. No, there is no PM feature, it's email. (To maintain my pseudo anonymity I am responding here rather than via email.)
2. We were required to have a 25% deposit on the property we bought. We also deemed it necessary (for our peace of mind) to have 50% of what we would need for first year operating expenses in case no one showed up at the door. (That was not a problem.) Given the numbers you stated in your original post, you can look at properties in the under $500k range, that is not chicken feed, you CAN find viable properties for that. (Some inn brokers will tell you differently.)
3. When we reviewed the P&L statements from the properties we looked at we entered all the info into a spreadsheet and tried to break the numbers. ie- how bad could it get and we would still make enough money to pay the bills. (If you look under the Resources section above you can find spreadsheets you can adapt to your needs.)
4. We used a bank in the town we where we were buying the B&B. Where I live (New England) there are a LOT of B&B's so the local banks know what they're dealing with. They do not want to own a B&B a few years down the road so they help you go over the numbers very carefully. We ended up with a bank outside our town because the rates were better.
5. Generally speaking a commercial loan has a fixed rate for 5 years, then your rate changes with the Wall Street Prime. (Our rate dropped 2% in year 6! It's going up this year. Dang.) Look at the max rate you can be charged and the max rate the interest can go up every year.
5.5 You may be able to get a loan that is for 6-7 months rather than 12 if you are in an area that does not have a thriving year round biz. This allows you to pay only in the months you're making big bucks.
6. You will need a business inspection done on the property for a commercial loan. This encompasses a regular building inspection but also includes viability of the business. This will run you about $2500-$3500. It was helpful to us to have this done as we were able to have the PO's fix some safety issues we would not have caught as we were used to owning non-commercial property. The inspector stated our room with a detached bath was 'functionally obsolete'. That was 13 years ago. It's even more obsolete now but we cannot fix it. All that to say - DON'T buy a place that does not have the majority of the bathrooms IN the room. My 'obsolete' room is busy busy in the summer as it's the cheapest room in town. But you don't want a lot of rooms like that, they don't sell easily without making compromises. Ask if the owner has had this inspection done. They may offer to let you use the numbers if you pay them (less than the original cost).
7. As part of your biz plan, include taking deposits. This keeps a (hopefully) positive cash flow in off months. (We started doing this about 6 years ago and it has made all the difference to my sanity in April when the checkbook is gasping for breath.)
8. The bank will want to know how and where you plan to market, who is your target market, what new ideas are you bringing to the property to increase revenue (which can also be increased not just by higher occupancy but by lower expenses - we lowered our water bill so much the town came out to replace our water meter!), etc.
If you keep searching this site you'll find this info and more again and again. Unlike most people who have a dream of owning a biz, you actually have some bucks to back up your plans.
Good luck!.

Wow, thank you for taking the time for that reply. That is incredibly helpful.
I have a question about number 5., how long is your loan and what are loan rates typically going for? I thought commercial loans were typically 5-7 years.
ive found a few for sale in the $400-480K range I like in the areas I like. Some B&Bs are just in awful locations and some after googling their names I find bad reviews where people have complained about various things about the building or owners.
one of my concerns about buying a B&B is losing loyal customers. The B&B at the top of my list has been owned by the same couple for 3 decades, some of the customers have been staying their for a long time. I do worry many of those customers are more loyal to the current owners and won't continue to come after ownership change.
I do see some places where the business can be improved. Their online presence could be improved and their website is horrid. The main page is 2 pages of words with 2 small pictures. The booking system doesn't seem good and their wording on some things is very odd. They have the phone number plastered all over the website in huge red letters, so I bet most of their customers just call in a reservation.
it is right next to a ski resort and not far from a main highway. It has 7 rooms all with private baths and a seperate living quarters. Commercial kitchen and decent sized dining area. It's 4 acres with a beautiful background of the ski resort and a river. Plenty of room for a nice outdoor wedding. They don't have a lot of reviews online, but they are all good reviews, maybe 30-40 reviews, mostly 5 stars with a handful of 4 star reviews.
.

#5 - our loan is for 20 years. First 5 years were at the locked in rate, that may be what you're thinking. Next 15 years are at prevailing rates unless we try to get another loan.
When we looked at properties owned by gay couples we asked the same questions of them - do you think your clientele will leave if you're not here? They were very honest with us saying if we made everyone feel welcome they would still come back.
What our experience shows - guests will leave because they liked the PO's and they don't like you. Some leave in a huff. Some just don't come back. We're the third owners of this inn and we still have guests from when it opened 30 years ago. However, many of the guests from way back when have died. This will happen to you, too, so you need a plan to bring in new biz.
My biggest suggestion in buying a place with a long standing repeat business is don't change everything at once!
We hear from new guests all the time how they used to stay at xyz inn, but they don't like the new people. I'm sure the xyz inn has a bunch of my guests, too!
Yes, fix the website, get a good booking system, keep the old phone number, make building changes to improve safety and efficiency. Don't change the décor the first year. Let the guests fall in love with you first! Once they like you, then you make big changes.
Don't double the rates first time out. Find out what deals the owners make with repeats and figure out if you can live with them. We lost a lot of repeats when we wouldn't give them the big discounts they were used to. (We're weaning our guests off discounts as they stop coming every year. If you miss a few years, you lose your frequent sleeper discount.)
.

Sounds like good advice. The only thing I would change to start is the website, booking system, add a blog and keep Facebook updated. I've also thought adding a public jacuzzi is a good idea, one that fits like 6 people or so. There are no covered outdoor sitting sreas, so I was thinking of adding a gazebo as well.
The menu is very simple and I wouldn't change it. I might add a couple things over time, but it seems good. It was very difficult to find anything about their meals/menu online.
They stopped serving dinner about 6 years ago, I think due to they didn't want to work that much. I might start that up again, at least on Friday and Saturday nights. They had it at $37/person.
Currently they are closed for all of April and November. The owners travel a lot. I might change to being closed 1 month a year.
.

Really give that hot tub thing some consideration. Unless you can lock it completely you will be dealing with it at all hours of the night. You'll be draining and cleaning it regularly given to the activities that will go on.
Also consider the insurance aspect.
.

A friend of mine has an outdoor jacuzzi inside a gazebo type of building, he put windows all around and big sliding glass doors. It's really neat and I was thinking that would be a good idea. He keeps it on all the time, 24/7, and it keeps the whole room fairly warm. No additional heat or a/c in the room. He also has a ceiling fan to use during the summer and he opens all the doors. But typically they don't turn the heat on when it's warm outside. The places we are looking at get about as cold as it does here, but not as hot in the summer.
Its not a set in stone idea, but I like the idea. As long as the cost would be reasonable to build it out. Honestly though, used good quality jacuzzis can be found really cheap. Just the installation, and then maintence and utilities would be the costly part.
My family used to go skiing a lot in Colorado and if a place had a jacuzzi was a big consideration to where we would stay. It was so nice and relaxing to lay in after skiing all day.
.

Ski/board crowd expects a hot tub: warm up, relax muscles, start drinking. If that is a seasonal market put one in. They are a messy crowd, anyway. An alternative is a sauna.
But figure out how to drain and lock it off all other seasons. Huge maintenance and really not much needed outside of winter. Needs to be locked off for insurance reasons anyway.
.

Our neighbors had one they installed in a screened gazebo. Looked lovely. Right next to the pool. Because they did not want to stay up all night keeping track they locked the door to the pool area at 9 PM. They had more complaints from guests not being able to access the pool and hot tub for 'moonlight swims'. And we all know what that meant.

 

[Lee2014]

I would buy a B&B over starting one up myself. Think bathrooms for each bedroom, codes, red tape, furniture, learning on your own, etc. When you buy a place already a B&B all that stuff is already there in place, all you have to do is get a mortgage and move in. Okay, its not that simple! But you get the picture.

 

[vtourville]

To answer your (email) questions:
1. No, there is no PM feature, it's email. (To maintain my pseudo anonymity I am responding here rather than via email.)
2. We were required to have a 25% deposit on the property we bought. We also deemed it necessary (for our peace of mind) to have 50% of what we would need for first year operating expenses in case no one showed up at the door. (That was not a problem.) Given the numbers you stated in your original post, you can look at properties in the under $500k range, that is not chicken feed, you CAN find viable properties for that. (Some inn brokers will tell you differently.)
3. When we reviewed the P&L statements from the properties we looked at we entered all the info into a spreadsheet and tried to break the numbers. ie- how bad could it get and we would still make enough money to pay the bills. (If you look under the Resources section above you can find spreadsheets you can adapt to your needs.)
4. We used a bank in the town we where we were buying the B&B. Where I live (New England) there are a LOT of B&B's so the local banks know what they're dealing with. They do not want to own a B&B a few years down the road so they help you go over the numbers very carefully. We ended up with a bank outside our town because the rates were better.
5. Generally speaking a commercial loan has a fixed rate for 5 years, then your rate changes with the Wall Street Prime. (Our rate dropped 2% in year 6! It's going up this year. Dang.) Look at the max rate you can be charged and the max rate the interest can go up every year.
5.5 You may be able to get a loan that is for 6-7 months rather than 12 if you are in an area that does not have a thriving year round biz. This allows you to pay only in the months you're making big bucks.
6. You will need a business inspection done on the property for a commercial loan. This encompasses a regular building inspection but also includes viability of the business. This will run you about $2500-$3500. It was helpful to us to have this done as we were able to have the PO's fix some safety issues we would not have caught as we were used to owning non-commercial property. The inspector stated our room with a detached bath was 'functionally obsolete'. That was 13 years ago. It's even more obsolete now but we cannot fix it. All that to say - DON'T buy a place that does not have the majority of the bathrooms IN the room. My 'obsolete' room is busy busy in the summer as it's the cheapest room in town. But you don't want a lot of rooms like that, they don't sell easily without making compromises. Ask if the owner has had this inspection done. They may offer to let you use the numbers if you pay them (less than the original cost).
7. As part of your biz plan, include taking deposits. This keeps a (hopefully) positive cash flow in off months. (We started doing this about 6 years ago and it has made all the difference to my sanity in April when the checkbook is gasping for breath.)
8. The bank will want to know how and where you plan to market, who is your target market, what new ideas are you bringing to the property to increase revenue (which can also be increased not just by higher occupancy but by lower expenses - we lowered our water bill so much the town came out to replace our water meter!), etc.
If you keep searching this site you'll find this info and more again and again. Unlike most people who have a dream of owning a biz, you actually have some bucks to back up your plans.
Good luck!.

Wow, thank you for taking the time for that reply. That is incredibly helpful.
I have a question about number 5., how long is your loan and what are loan rates typically going for? I thought commercial loans were typically 5-7 years.
ive found a few for sale in the $400-480K range I like in the areas I like. Some B&Bs are just in awful locations and some after googling their names I find bad reviews where people have complained about various things about the building or owners.
one of my concerns about buying a B&B is losing loyal customers. The B&B at the top of my list has been owned by the same couple for 3 decades, some of the customers have been staying their for a long time. I do worry many of those customers are more loyal to the current owners and won't continue to come after ownership change.
I do see some places where the business can be improved. Their online presence could be improved and their website is horrid. The main page is 2 pages of words with 2 small pictures. The booking system doesn't seem good and their wording on some things is very odd. They have the phone number plastered all over the website in huge red letters, so I bet most of their customers just call in a reservation.
it is right next to a ski resort and not far from a main highway. It has 7 rooms all with private baths and a seperate living quarters. Commercial kitchen and decent sized dining area. It's 4 acres with a beautiful background of the ski resort and a river. Plenty of room for a nice outdoor wedding. They don't have a lot of reviews online, but they are all good reviews, maybe 30-40 reviews, mostly 5 stars with a handful of 4 star reviews.
.

#5 - our loan is for 20 years. First 5 years were at the locked in rate, that may be what you're thinking. Next 15 years are at prevailing rates unless we try to get another loan.
When we looked at properties owned by gay couples we asked the same questions of them - do you think your clientele will leave if you're not here? They were very honest with us saying if we made everyone feel welcome they would still come back.
What our experience shows - guests will leave because they liked the PO's and they don't like you. Some leave in a huff. Some just don't come back. We're the third owners of this inn and we still have guests from when it opened 30 years ago. However, many of the guests from way back when have died. This will happen to you, too, so you need a plan to bring in new biz.
My biggest suggestion in buying a place with a long standing repeat business is don't change everything at once!
We hear from new guests all the time how they used to stay at xyz inn, but they don't like the new people. I'm sure the xyz inn has a bunch of my guests, too!
Yes, fix the website, get a good booking system, keep the old phone number, make building changes to improve safety and efficiency. Don't change the décor the first year. Let the guests fall in love with you first! Once they like you, then you make big changes.
Don't double the rates first time out. Find out what deals the owners make with repeats and figure out if you can live with them. We lost a lot of repeats when we wouldn't give them the big discounts they were used to. (We're weaning our guests off discounts as they stop coming every year. If you miss a few years, you lose your frequent sleeper discount.)
.

Sounds like good advice. The only thing I would change to start is the website, booking system, add a blog and keep Facebook updated. I've also thought adding a public jacuzzi is a good idea, one that fits like 6 people or so. There are no covered outdoor sitting sreas, so I was thinking of adding a gazebo as well.
The menu is very simple and I wouldn't change it. I might add a couple things over time, but it seems good. It was very difficult to find anything about their meals/menu online.
They stopped serving dinner about 6 years ago, I think due to they didn't want to work that much. I might start that up again, at least on Friday and Saturday nights. They had it at $37/person.
Currently they are closed for all of April and November. The owners travel a lot. I might change to being closed 1 month a year.
.

Really give that hot tub thing some consideration. Unless you can lock it completely you will be dealing with it at all hours of the night. You'll be draining and cleaning it regularly given to the activities that will go on.
Also consider the insurance aspect.
.

I agree about the hot tub. we closed ours because it is so hard to keep it clean. Guests get in without showering and then yuk!

 

[Jcam]

To answer your (email) questions:
1. No, there is no PM feature, it's email. (To maintain my pseudo anonymity I am responding here rather than via email.)
2. We were required to have a 25% deposit on the property we bought. We also deemed it necessary (for our peace of mind) to have 50% of what we would need for first year operating expenses in case no one showed up at the door. (That was not a problem.) Given the numbers you stated in your original post, you can look at properties in the under $500k range, that is not chicken feed, you CAN find viable properties for that. (Some inn brokers will tell you differently.)
3. When we reviewed the P&L statements from the properties we looked at we entered all the info into a spreadsheet and tried to break the numbers. ie- how bad could it get and we would still make enough money to pay the bills. (If you look under the Resources section above you can find spreadsheets you can adapt to your needs.)
4. We used a bank in the town we where we were buying the B&B. Where I live (New England) there are a LOT of B&B's so the local banks know what they're dealing with. They do not want to own a B&B a few years down the road so they help you go over the numbers very carefully. We ended up with a bank outside our town because the rates were better.
5. Generally speaking a commercial loan has a fixed rate for 5 years, then your rate changes with the Wall Street Prime. (Our rate dropped 2% in year 6! It's going up this year. Dang.) Look at the max rate you can be charged and the max rate the interest can go up every year.
5.5 You may be able to get a loan that is for 6-7 months rather than 12 if you are in an area that does not have a thriving year round biz. This allows you to pay only in the months you're making big bucks.
6. You will need a business inspection done on the property for a commercial loan. This encompasses a regular building inspection but also includes viability of the business. This will run you about $2500-$3500. It was helpful to us to have this done as we were able to have the PO's fix some safety issues we would not have caught as we were used to owning non-commercial property. The inspector stated our room with a detached bath was 'functionally obsolete'. That was 13 years ago. It's even more obsolete now but we cannot fix it. All that to say - DON'T buy a place that does not have the majority of the bathrooms IN the room. My 'obsolete' room is busy busy in the summer as it's the cheapest room in town. But you don't want a lot of rooms like that, they don't sell easily without making compromises. Ask if the owner has had this inspection done. They may offer to let you use the numbers if you pay them (less than the original cost).
7. As part of your biz plan, include taking deposits. This keeps a (hopefully) positive cash flow in off months. (We started doing this about 6 years ago and it has made all the difference to my sanity in April when the checkbook is gasping for breath.)
8. The bank will want to know how and where you plan to market, who is your target market, what new ideas are you bringing to the property to increase revenue (which can also be increased not just by higher occupancy but by lower expenses - we lowered our water bill so much the town came out to replace our water meter!), etc.
If you keep searching this site you'll find this info and more again and again. Unlike most people who have a dream of owning a biz, you actually have some bucks to back up your plans.
Good luck!.

Wow, thank you for taking the time for that reply. That is incredibly helpful.
I have a question about number 5., how long is your loan and what are loan rates typically going for? I thought commercial loans were typically 5-7 years.
ive found a few for sale in the $400-480K range I like in the areas I like. Some B&Bs are just in awful locations and some after googling their names I find bad reviews where people have complained about various things about the building or owners.
one of my concerns about buying a B&B is losing loyal customers. The B&B at the top of my list has been owned by the same couple for 3 decades, some of the customers have been staying their for a long time. I do worry many of those customers are more loyal to the current owners and won't continue to come after ownership change.
I do see some places where the business can be improved. Their online presence could be improved and their website is horrid. The main page is 2 pages of words with 2 small pictures. The booking system doesn't seem good and their wording on some things is very odd. They have the phone number plastered all over the website in huge red letters, so I bet most of their customers just call in a reservation.
it is right next to a ski resort and not far from a main highway. It has 7 rooms all with private baths and a seperate living quarters. Commercial kitchen and decent sized dining area. It's 4 acres with a beautiful background of the ski resort and a river. Plenty of room for a nice outdoor wedding. They don't have a lot of reviews online, but they are all good reviews, maybe 30-40 reviews, mostly 5 stars with a handful of 4 star reviews.
.

visitor location.
views.
good kitchen.
private baths.
already a business.
Sounds pretty good to me!
.

private baths or ensuite? - private bath is not ensuite id be checking that!

 

[Jcam]

I got a post card today for a B&B and house called Killahevlin Estates - - 75 miles w of DC and 3 miles from Shenandoah National Park. This really is a magnificent property!
I cant find any for sale or auction listing online, but I do see they went groupon - which may or may not have led to their demise as a B&B. Another article here, they have an excellent online reputation. I have always heard good things,and they had a pub for guests which was a huge hit. Not sure what happened, they could be down the rabbit hole with a loss of life or marriage, not sure. It happens.
MLS#WR9767965
7400 sq ft living space 2.92 tree-lined acres, 8br, 7 full bath, 3 half bath, 7 wood burning fireplaces (2 brick residences)
"Auction price is a steal for a world renowned estate that is currently assessed at over $1mm and conveyed with furniture in 2005 for $1.5mm."
Current zoning permits bed & breakfast, residential, medical, office, or educational use // Needs work. Federal and State Tax Rehabilitation Credits may be available. Current tax assessed value: $1,038,200 //
I found a link here
Opening bid $442,500
Buy now for $635,000.

They filed bankruptcy and the bank took it from them. I was friends with them and did their site. The place will need a lot of updating as it looked really dated and had not been kept up. There was some illness issues. They were not good business people. Those photos show it much better than in person and I had to laugh, I never saw the kitchen that clean ever!! You could never see. The countertops it was so cluttered.
this will take some big bucks.
I had heard it had already been auctioned off. Guess not.
.

We had this with next door -photo's looked really good (need that chap if ever selling!) everyone was all you won't need to do much - we have been 6 months into full on construction!