I recently had an email from an innkeeping friend of mine who had sold his inn — at the last minute the sale fell apart. All the plans of the retirement and the new life have been put on hold again. This innkeeper is experienced in buying and selling inns, this being at least his second sale.
He had done all his due diligence, but nothing (or almost nothing) protects you from people who mis-represent themselves. At least the innkeeper was able to take the earnest money and use it for improvements so they can reopen in style.
There are no simple answers to situations like this. Using a B&B Broker may be part of the answer, especially if they have a practice of evaluating the buyer at the same time the lender is.
One comment the innkeeper made that I found interesting was that this time as they advertise the inn they are going to stress the business-side of the purchase, not the gorgeous home and location. Food for thought for you as you buy or sell an inn — what are you *really* selling?
Good advice from this innkeeper. In my experience both innkeepers and inn purchasers have unrealistic ideas about what they are selling/buying. Many innkeepers take real pride in their property and undertandably want to make the most money possible on a sale; that may be an unrealistic approach since the market value of the business is less than the market value of the property as a residence.
Secondly, we’ve been surveying our subscriber at YBR in preparation for a change to an eletter and have discovered that most aspiring innkeepers have no idea how much they have to spend to get a suitable property. They are also confused, I’m sure, thinking that they can buy a lovely old home and let it support them and help make the payments. It can only work this way if they purchase an established business (and thus have little or no upfront costs for renovating and marketing)…in which case the business value will add to the value of the property. Purchasing an established business launches a whole new and different set of criteria on which to base value/sales/purchase price. For more long on to http://www.YellowBrickRoadnl.com and sign up for our new eletter.
Thanks Bobbi, those are some interesting points you raise. Evaluating a property whether an existing business or new really entails a lot of thought (or ought to in order to avoid financial ruin). Evaluating the property and the building and the past reputation of the existing B&B is hard enough, on top of that you have to evaluate the furnishings and the existing marketing materials too (primarily the existing website).
It may sound overwhelming at first, but its important to remember that even the longest train gets going one car at a time. Rushing is not usually necessary.
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Steve Wirt
Wine Country Cabins Bed and Breakfast in the Finger Lakes
and Inngenious Bed and Breakfast Website Promotion