Researching Value

From “Ask Kit!”:

Q: We are looking at a guesthouse for sale by owner. I have researched the area land value, home sales, etc… and it seems that the price is not supported by my research.

A: Sometimes comparing the land values and home sales in an area gives you an idea of what a B&B inn “should” sell for, but generally not. If the guesthouse you are looking at is an operating business then there is value in the cash flow, FF&E (furniture, fixtures, and equipment), and goodwill. If it’s a strong business then the cash flow should be the model to use in valuing the property. If it’s a part-time business for the owner then the cash flow has less importance in setting the price. A B&B Broker or consultant can help you with that valuation.