how do you price your b&b, when putting it up for sale?

[Sunshine]

I found this link and it was VERY helpful:
http://www.bedandbreakfastforsale.com/index.cfm?fuseaction=openresource&resourcename=valuation
Thought it might help someone else out too.

 

[EmptyNest]

All I can say is good luck. It will take anywhere from 2-5 years and maybe longer if our economy doesn't improve. I am sure JB will have some advice for you. My advice is contact a B & B realtor who knows the business and can market it for you. A friend of mine signed a year contract with some BIG NAME real estate company. They did nothing! and his hands were tied because of the contract!!!
A 3 room B & B is not usually seen as a money making business. Many realtors would rather just sell it as a residence. Or a lifestyle B &B meaning...one of you work while the other runs the place and you do not depend on it for your livelihood.

 

[egoodell]

Some are selling. Friends of ours just sold a large B&B with restaurant in the Berkshires. So there are buyers still out there.
RIki

 

[toddburme]

We are going up for sale in the spring and have been talking about marketing and pricing. I was thinking of making a pro forma. You can expect this much income against these fixed expenses etc.
We have a bit of an issue as no one would run the B&B the way we do. My partner hires absolutely everything out. That was kind of the deal but it is really tough on cash flow. It also is unrealistic. How many B&B owners would hire someone to do checkins? So we would back out the excess labor.
Then the good news is that mtge rates are super low. I doubt they can get one but if they can, the place looks really good on paper. The price sort of gets determined then by what is reasonable and what is unreasonable as we are not in an area where we are selling at a huge premium based on other sales in the area.

 

[Silverspoon]

There are two B+B's in the area that have recently sold for full price (6 figures). One 6 room B+B sold as a private home and the other as a turn-key 6 room B+B, cash deal.
I don't think there is one single answer to your question. Have a market anaysis by a business broker/realtor done using both scenerios...private home vs. B+B.

 

[egoodell]

There are two B+B's in the area that have recently sold for full price (6 figures). One 6 room B+B sold as a private home and the other as a turn-key 6 room B+B, cash deal.
I don't think there is one single answer to your question. Have a market anaysis by a business broker/realtor done using both scenerios...private home vs. B+B..

There are two B+B's in the area that have recently sold for full price (6 figures). One 6 room B+B sold as a private home and the other as a turn-key 6 room B+B, cash deal.
I don't think there is one single answer to your question. Have a market anaysis by a business broker/realtor done using both scenerios...private home vs. B+B.

Good advice - I would think of using one of the B&B brokers who are more familiar with the industry. Some sell more as private homes than B&Bs.
RIki

 

[EmptyNest]

There are two B+B's in the area that have recently sold for full price (6 figures). One 6 room B+B sold as a private home and the other as a turn-key 6 room B+B, cash deal.
I don't think there is one single answer to your question. Have a market anaysis by a business broker/realtor done using both scenerios...private home vs. B+B..

Well things may be selling in someplaces, but not around here. And from the looks of the listings at numerous inns for sale sites, plenty on the market and have been for several years now. Just ask JB :-(

 

[JBloggs]

My only answer is do research online. Of course you are being preemptive, nothing is the same when it comes time to list, so really there is not much you can do now, other than get your ducks in a row for a future buyer. Be prepared to show your tax returns for 4-5 years, revenue and all costs to operate as a business. Considering we did not even had ONE SHOWING in 2011 I would consider the private residence route. Someone looking for a prestigious home in your community. Get on the MLS with a local trusted realtor who can show it to pre-approved buyers. You most likely will not be able to sell the "business" only the real estate. Get every item you plan to convey with the sale on a list with value.
Why would they buy it as a business vs a private residence? Let me answer...Business loans are not out there, for a business loan the business needs to sustain the purchase cost/mortgage. Does it do this?
I have had inquiries...people looking to lease this B&B, because they cannot get a loan, nor do they have ample down payment. They ramble on about losing their jobs and think up this whole "I can run a B&B, I like to cook and entertain" angle. Dreamers...simply dreamers who are not even close to reality.

 

[Madeleine]

Things to do now:

• Bring in a B&B broker to get an estimate on what you could expect to get if you sold today (at least you have a baseline)
• What is the building worth as a business and as a residence? (You may find many takers for a residence that they then reopen as a B&B to get around the business loan issue.)
• Paperwork- make sure you have profit and loss statements.
• Decide what's going to leave with you and what's going to stay at the inn. Maybe you're taking everything, maybe not. Get the list made up and figure out how you are going to replace the major items if you're planning to sell turn key.
• Fix stuff.
• Write up a business plan for the next owner showing where you think improvements can be made (especially in light of your taking lots of time off that the next owners might not- room for occupancy improvement).
• If you have investigated licensing for additional uses at the inn (dinners, teas, parties, meetings) that you did not pursue yourself, have that info ready to hand out.
• Know what's coming into your town that can be used to show where business may pick up in the future.
• Keep your internet marketing up to date.
• Try to get more excellent reviews in a variety of places.
• Try to win some other awards that show yours is the place to stay.
• Don't lock yourself into a contract with a broker for more than 3 months. They rarely do anything on the property after the first week and before the last week.

 

[toddburme]

Things to do now:

• Bring in a B&B broker to get an estimate on what you could expect to get if you sold today (at least you have a baseline)
• What is the building worth as a business and as a residence? (You may find many takers for a residence that they then reopen as a B&B to get around the business loan issue.)
• Paperwork- make sure you have profit and loss statements.
• Decide what's going to leave with you and what's going to stay at the inn. Maybe you're taking everything, maybe not. Get the list made up and figure out how you are going to replace the major items if you're planning to sell turn key.
• Fix stuff.
• Write up a business plan for the next owner showing where you think improvements can be made (especially in light of your taking lots of time off that the next owners might not- room for occupancy improvement).
• If you have investigated licensing for additional uses at the inn (dinners, teas, parties, meetings) that you did not pursue yourself, have that info ready to hand out.
• Know what's coming into your town that can be used to show where business may pick up in the future.
• Keep your internet marketing up to date.
• Try to get more excellent reviews in a variety of places.
• Try to win some other awards that show yours is the place to stay.
• Don't lock yourself into a contract with a broker for more than 3 months. They rarely do anything on the property after the first week and before the last week.

.

Really sound advice.
I would that now might be the time to do any imporvements that were putting off. Paint the ext or remodel such and such bathroom.
I would also add make a list of the good and bad points of your B&B. This will help you learn to deal with both if they get thrown at you in negotiations. Nice owner's living quarters versus a bit out of the way type of things.
My limited experience says that people typically move a bit of a distance when they buy a B&B. So the local realtor etc is probably not the way to go. Seeing as their are so many sites with For Sale pages does one even need to list it with a broker?
Did anyone suffer from community blow back once it was listed? My partner is worried that everyone might be a bit less receptive to us once they see it go up for sale.

 

[JBloggs]

There are two B+B's in the area that have recently sold for full price (6 figures). One 6 room B+B sold as a private home and the other as a turn-key 6 room B+B, cash deal.
I don't think there is one single answer to your question. Have a market anaysis by a business broker/realtor done using both scenerios...private home vs. B+B..

Well things may be selling in someplaces, but not around here. And from the looks of the listings at numerous inns for sale sites, plenty on the market and have been for several years now. Just ask JB :-(
.

Well things may be selling in someplaces, but not around here. And from the looks of the listings at numerous inns for sale sites, plenty on the market and have been for several years now. Just ask JB :-(

I get alerts when inns sell from one online directory, they are all the high end (like Inn at Riverbend which I know you all know), ie those with gross income well over $150K, many with restaurants. None that are under 6 rooms from what I have seen. Go to "B and B Te am" to see what is selling, I think they show the "SOLD!" on there.
Sunshine is asking about pricing her residence/B&B as a B&B for sale. Not about what to do to sell. The pricing is not an answer anyone can give. Businesses that are not high revenue are not selling the business, smaller inns are considered lifestyle and do not hold water for income. Yeah nice isn't it, what we give our heart and soul to.

 

[Madeleine]

Things to do now:

• Bring in a B&B broker to get an estimate on what you could expect to get if you sold today (at least you have a baseline)
• What is the building worth as a business and as a residence? (You may find many takers for a residence that they then reopen as a B&B to get around the business loan issue.)
• Paperwork- make sure you have profit and loss statements.
• Decide what's going to leave with you and what's going to stay at the inn. Maybe you're taking everything, maybe not. Get the list made up and figure out how you are going to replace the major items if you're planning to sell turn key.
• Fix stuff.
• Write up a business plan for the next owner showing where you think improvements can be made (especially in light of your taking lots of time off that the next owners might not- room for occupancy improvement).
• If you have investigated licensing for additional uses at the inn (dinners, teas, parties, meetings) that you did not pursue yourself, have that info ready to hand out.
• Know what's coming into your town that can be used to show where business may pick up in the future.
• Keep your internet marketing up to date.
• Try to get more excellent reviews in a variety of places.
• Try to win some other awards that show yours is the place to stay.
• Don't lock yourself into a contract with a broker for more than 3 months. They rarely do anything on the property after the first week and before the last week.

.

Really sound advice.
I would that now might be the time to do any imporvements that were putting off. Paint the ext or remodel such and such bathroom.
I would also add make a list of the good and bad points of your B&B. This will help you learn to deal with both if they get thrown at you in negotiations. Nice owner's living quarters versus a bit out of the way type of things.
My limited experience says that people typically move a bit of a distance when they buy a B&B. So the local realtor etc is probably not the way to go. Seeing as their are so many sites with For Sale pages does one even need to list it with a broker?
Did anyone suffer from community blow back once it was listed? My partner is worried that everyone might be a bit less receptive to us once they see it go up for sale.
.

My limited experience says that people typically move a bit of a distance when they buy a B&B. So the local realtor etc is probably not the way to go. Seeing as their are so many sites with For Sale pages does one even need to list it with a broker?
Did anyone suffer from community blow back once it was listed? My partner is worried that everyone might be a bit less receptive to us once they see it go up for sale.

You want the broker to be the middleman if you are running a very busy inn. You do NOT want random people walking in during breakfast saying, 'So, I'd like a tour, I'm looking to buy this place,' in front of all your guests.
You can put up an ad online with very general info and no photos and require all investors to contact the broker to find out the details. I do not want my inn for sale to be listed on FB or Twitter or blogged about. Serious inquiries get the info, not everyone who has a FB account.
Personally? I think if guests know the inn is for sale they'll stay somewhere else unless they are repeats. Repeats will want the innside scoop on what's going on. However, like getting engaged, if you don't marry (sell) soon everyone starts to wonder what's wrong. So, I'd rather guests didn't know at all.
There are no 'for sale' signs up in my town for the inns that are for sale.

 

[EmptyNest]

Things to do now:

• Bring in a B&B broker to get an estimate on what you could expect to get if you sold today (at least you have a baseline)
• What is the building worth as a business and as a residence? (You may find many takers for a residence that they then reopen as a B&B to get around the business loan issue.)
• Paperwork- make sure you have profit and loss statements.
• Decide what's going to leave with you and what's going to stay at the inn. Maybe you're taking everything, maybe not. Get the list made up and figure out how you are going to replace the major items if you're planning to sell turn key.
• Fix stuff.
• Write up a business plan for the next owner showing where you think improvements can be made (especially in light of your taking lots of time off that the next owners might not- room for occupancy improvement).
• If you have investigated licensing for additional uses at the inn (dinners, teas, parties, meetings) that you did not pursue yourself, have that info ready to hand out.
• Know what's coming into your town that can be used to show where business may pick up in the future.
• Keep your internet marketing up to date.
• Try to get more excellent reviews in a variety of places.
• Try to win some other awards that show yours is the place to stay.
• Don't lock yourself into a contract with a broker for more than 3 months. They rarely do anything on the property after the first week and before the last week.

.

Really sound advice.
I would that now might be the time to do any imporvements that were putting off. Paint the ext or remodel such and such bathroom.
I would also add make a list of the good and bad points of your B&B. This will help you learn to deal with both if they get thrown at you in negotiations. Nice owner's living quarters versus a bit out of the way type of things.
My limited experience says that people typically move a bit of a distance when they buy a B&B. So the local realtor etc is probably not the way to go. Seeing as their are so many sites with For Sale pages does one even need to list it with a broker?
Did anyone suffer from community blow back once it was listed? My partner is worried that everyone might be a bit less receptive to us once they see it go up for sale.
.

You don't put a For Sale sign up in your front yard So unless you tell your neighbors no one should know it is for sale.

 

[swirt]

We were a seasonal 3 room that actually did generate income (when not balanced against a mortgage) and none of the dedicated B&B realtors would even take us on as clients. They didn't look at anything less than 6 rooms unless they were SUPER high end and returned salary generating profits. We ended up selling ours as just a home.
We tried to sell it turnkey, but the reality was, unless we found someone with cash, no bank would finance it as a buisiness, which means it had to appraise as a just a house for what the turnkey price was....which it wouldn't do. Appraisers these days are not being generous ... which is of course a self fulfilling prophecy / restriction keeping the housing market flat.

 

[gillumhouse]

Since I cannot even go on the market until after DH dies, I have a long time to wait but will not have anyone butting in on what I plan to do - assuming I am still above ground with enough marbles left to notice.
I plan to sell turnkey for the price of the house. My city needs a B & B and I want to make it financially viable. The next innkeeper will have the energy to do things I cannot (and probably will not have opposition to deal with). Plus they most likely will not be as involved with the city and the other stuff that is important to me so will not send rooms doen the road because of something with the city. When we get out Community Center built, I also expect more demand for rooms due to functions there (I also expect a small hotel to come in) as it will have capacity for 350. This new building will be less than 1 block from me.
By then the new roof will be on which will just leave the kitchen to be renovated if I have not done that by then. At my age, I am not going to need a lot of money - my kids are on their own!

 

[Sunshine]

wow. Lots of thoughts here. Thanks everyone. I am trying to think ahead. I know it will take a while to sell and like I said, we don't plan to put it up on the market for a while, and hopefully when we do the market will have turned around.

 

[Joey Camb]

In the UK it used to work as 2/3 for the building and 1/3 for the business however now banks will not loan at all on the business value so thats that, plus to a certain extent I can see their point if it all goes bottom up then the bank isn't going to run a B&B so they are only looking at what they can sell. To be honest I would be selling as a house with only 3 rooms as even if it was their intention to do B&B I am guessing they would get a domestic mortgage anyway.

 

[Samster]

wow. Lots of thoughts here. Thanks everyone. I am trying to think ahead. I know it will take a while to sell and like I said, we don't plan to put it up on the market for a while, and hopefully when we do the market will have turned around..

Sunshine, I would take the leap now to do the things recommended by Joey and Madeleine. If you really want to be out in 2.5 years, you need to consider listing now, despite the flat market. Projections are that the real estate market will not show really large gains in the next couple of years. Consider where you really want to be and what you want to be doing a few years down the road. You may end up selling as a residence after all.
We have a large B&B here that is selling off piece meal. We are listing our second house this Spring as a residence. Another B&B tried to auction their building last year and still own it after selling off the contents. Our real estate market here is stable also, just flat.
Good luck!

 

[Aussie Innkeeper]

Please use an expert. A realtor that specializes in B&B's and other hospitality-type properties is really your best friend. A residential realtor is not going to know the B&B market, nor are they going to have any clue as to how to target the market of anyone who's even interested in buying a business. We utilized the services of Eliot Dalton in Kennett Square, PA when we were looking to buy in 2007. I think he's also licensed in NJ, MD, NY and maybe a few other places. His expertise was fabulous and he's a trusted friend.

 

[Joey Camb]

wow. Lots of thoughts here. Thanks everyone. I am trying to think ahead. I know it will take a while to sell and like I said, we don't plan to put it up on the market for a while, and hopefully when we do the market will have turned around..

Just saw a thing on twitter that matches people who want to buy a B&B with people trying to sell on I'll try and find it - http://innmatchmakers.com/ don't know if its any good mind but thought it was worth mentioning.