Wednesday, April 5, 2017

SOLD 4/4/17! Glenmoor By the Sea Resort in Lincolnville, Maine





This 33 unit waterfront resort sits just a few miles north of Camden on the Penobscot Bay. And in terms of lodging properties, wasn't on the market long (about a year). It offers a mix of motel units and individual cottages with fantastic views AND sounds of the ocean! My colleague Rick Wolf represented the buyers and I represented the sellers.

We wish them all the best of luck!

Wednesday, March 29, 2017

NEW! A Newsletter sign up form!

Now you can subscribe to my newsletter to stay up to date on what's happening in our lodging and tourism industry. You can sign up on my website or on this blog in the right hand column at the top.

And you are always welcome to shoot me an email just to ask questions about the industry. I do my share of educating curious and future buyers!


Tuesday, March 28, 2017

Maine restaurants and hotels had a record-breaking year in 2016!


The Portland Press Herald reports "Maine restaurants and hotels had a record-breaking year in 2016, bringing in more than $3.6 billion in combined revenue, a 7 percent increase! The record sales were driven by an improving economy, warm and dry weather, and Maine’s reputation as a place for food, drink and travel."

“My thinking on this is that there are more people who realize Maine can be a year-round destination,” said Steve Hewins, president and CEO of the Maine Innkeepers Association and the Maine Restaurant Association.  Every county in the state had an increase in lodging revenue in 2016, according to data from Maine Revenue Services. Franklin County, which recorded more than $16 million in sales, saw the biggest percentage increase, jumping nearly 30 percent from the year before. Restaurant revenue rose everywhere except in Franklin, Oxford and Washington counties, the data show. Cumberland County led the way with almost $848 million, nearly a third of all restaurant revenue statewide. Portland, which has developed an international reputation for its food scene, accounted for $357.6 million of the total. “We jokingly called it a gastronomical high tide and we’re planning for an even greater 2017,” said Jim Britt, principal at gBritt, a South Portland public relations firm specializing in the hospitality industry. Britt also organizes the annual Maine restaurant week in early March. There seems “no end in sight to national and international media interest in Maine as a place to eat, drink and vacation,” he said. Restaurant revenue totaled $2.6 billion, an increase of 6 percent, and lodging revenue was $950 million, an increase of almost 10 percent, according to association estimates based on data from Maine Revenue Services. Taxes on restaurant and lodging sales brought in almost $300 million in revenue for the state last year, the associations said. Low gas prices, consumer confidence and a long, hot summer definitely played a role in boosting visitors and sales last year, as did the millions of visitors to Acadia National Park for its 100th anniversary, Hewins said.

But he also thinks a five-year marketing campaign that the Maine Office of Tourism launched in 2015 is starting to pay off. The marketing effort was aimed at getting first-time visitors to Maine and branding the state as a place to have authentic experiences. The number of visitors to Maine has grown for four straight years, with 35.8 million visitors arriving in 2016, according to the Office of Tourism’s annual report.

Although tourists make up a big segment of lodging and restaurant sales, Mainers are contributing to the trend. About two-thirds of restaurant sales are from in-state residents, said Hewins, president of the restaurant and innkeeper associations. There is a wealth of dining options across the state and it is attracting locals just as much as tourists, he said.

“We know the restaurant business is driven by in-state travel,” Hewin said. “It’s not just Portland, there are a lot of restaurants that are bringing people to small urban places.

“It is just a big part of our economy, probably more so than in other states.”

Read the full article here.








Maybe now is the time to get into a lodging property, while interest rates are still historically low and Maine's tourism industry continues to grow. Check out my listings and contact me with any questions at all, I'm happy to help!

Saturday, March 11, 2017

Down East Magazine Names Rockland the "Best Place to Live in Maine" March 2017

 

Down East Magazine held an online tournament for this year’s reader pick for the Best Place to Live in Maine...and the winner is?  


"YOU ONLY HAVE TO GO BACK A DECADE or so to reach a time when it may have seemed preposterous for Rockland to take top billing in a list like this. Long considered a saltier, grittier cousin to manicured Camden, Rockland slogged through a rocky transition from its economic reliance on fishing (and stinky fish processing) to a more diversified service and tourism economy. Of late, the city has hit its stride. True, the school system’s reputation is still middling, but Rockland has seen median income jump and percentage of families in poverty dwindle since the first decade of the 2000s. Moreover, downtown is hopping, thanks to what’s arguably the state’s most vibrant arts scene — there’s a pinch of wild, creative energy to Main Street’s gallery circuit, its foodie bustle, and the steady stream of new faces around town...." Click here to read the full article.

Check out the Limerock Inn I have listed for sale. A wonderful opportunity to live, work and play, in a year round coastal Maine town! And situated midway between Portland and Bar Harbor, Rockland makes a great home base for residents and tourists alike.

Friday, March 3, 2017

SOLD! Atlantic Birches Inn in Old Orchard Beach, Maine

This wonderful historic inn designed by John Calvin Stevens just sold today. Congratulations to my sellers and to the new innkeepers. We wish them all the best!






Sunday, February 19, 2017

Understanding The Numbers

I was looking at some numbers this morning (despite it being a Sunday, my mind just won't rest) and thought I'd share the general basis of determining value for hospitality properties. And this information is helpful to buyers and sellers.

Here you first see a cash flow scenario based on three fictitious properties to see if each has a cash flow that would work if trying to obtain financing. Then I look at the three properties if using the same cap rate (cap rate is essentially a way of looking at a return on investment) and we've been seeing around a 9% as of late (not considering reserves and management fee, but that's an appraisal topic for another blog post). The last scenario shows two properties with the same revenue but different expenses. And the bottom line is, if you control your expenses, you can increase your value. Of course if you can increase revenue and control expenses, that's the best scenario!

As a buyer, you can see how putting a bit more down can potentially buy you a lot more cash flow.

It is natural to try and minimize your taxable gain (as any business owner) by expensing more on your tax return (rather than putting certain expenses on a depreciation schedule), but in the end, the value of your inn when you go to sell is based primarily on your last three years of tax returns! Visit my website ("Understanding Value") for a link to a full spreadsheet in a pdf format.

For buyers, there really isn't enough information here about Property A, B or C to make a decision on what you'd want to buy. Factors such as location, lifestyle you choose (and at what pace/occupancy), staff or no staff, etc. could affect your decision. Some buyers want to own a B&B that can provide a comfortable pace, and not opt for a high performing one. 

A lot goes into choosing the right property for you. 

Friday, February 17, 2017

Residential vs Commercial Real Estate: Two Entirely Different Animals

I'm connected to a lot of real estate agents all over the country through social media. And I am always watching the 'market' around the country through the eyes of my fellow real estate agents, just to have an understanding on what's going on. Though much of what goes on in the residential 'market' doesn't affect the commercial market and what I sell, the ability for my buyers to sell their homes in order to use the equity to purchase what I sell does affect what I sell. So I pay attention.

The other day I was watching a video on Facebook by a Realtor in North Carolina about what we provide to our clients as Realtors®. It reminded me that not all consumers understand the difference between a REALTOR® and a licensed real estate agent. And although that's really not really the focus of this post, it's important and there a few things you should understand. And then I'll get into the differences between residential and commercial real estate!

As a licensed real estate agent who chooses to subscribe to the Code of Ethics of the Realtor® organization, we agree to certain fiduciary duties to our client and uphold the highest standards when it comes to ethics and the law. Integrity. We care about how we represent our clients and nothing is more important.

Fiduciary duties are described as: a real estate broker who becomes an agent of a seller or buyer, either intentionally through the execution of a written agreement, or unintentionally by a course of conduct, will be deemed to be a fiduciary. Fiduciary duties are the highest duties known to the law. Classic examples of fiduciaries are trustees, executors, and guardians. As a fiduciary, a real estate broker will be held under the law to owe certain specific duties to his principal, in addition to any duties or obligations set forth in a listing agreement or other contract of employment. These specific fiduciary duties include:

  • loyalty
  • obedience
  • disclosure
  • confidentiality
  • reasonable care and diligence
  • accounting

Any licensed real estate agent who is not a Realtor® does not have to follow this standard. By whom would you want to be represented?

So what is so different between residential and commercial real estate? 

Residential:

  • the buyer's ability to qualify is based on their job, their debt coverage ratio (of personal income to personal debt), their paycheck and ability to repay the loan
  • there are all sorts of different loans for residential buyers that are not available to commercial buyers, such as Government-Insured (FHA, VA, USDA), Conventional, Conforming (Fannie Mae, Freddie Mac), Jumbo 
  • Private Mortgage Insurance (PMI) is required if the loan exceeds 80% 
  • typically amortized over 30 years (with options for a 15 year), with fixed and adjustable rates (ARMS)
  • a residential mortgage is secured by the property
  • a residential mortgage is made to an individual borrower(s)
  • buying a house isn't as discretionary as buying a business. Of course, whether to buy or rent is discretionary, but the residential housing market is more of a necessity than a discretionary decision. What and where to buy (if not renting) is discretionary.
  • the value of a residential property is market value, what a buyer is willing to pay. 
Commercial:
  • the buyer's ability to qualify is based on the business's cash flow, the amount of a downpayment the buyer has, the amount they would have for reserves, the condition of the property might dictate more held for reserves 
  • there are fewer loan options, such as an In-House bank loan (Non-Government Insured), Government Insured such as SBA 504 or 7a, (Small Business Administration), USDA, there are Short Term and Equipment loans, and ROBS or Self Directed IRA which use 401k funds to purchase a hospitality property by a formed C Corporation.
  • commercial loans are typically amortized over 20 or 25 years and are only fixed for 5-10 years (unless secured by SBA and that portion is fixed for 20), rates are often 1-1.5 points higher than residential.
  • a commercial mortgage is secured by a lien 
  • a commercial mortgage is made to a business entity formed for the purchase where the individuals are guarantors of the loan (often a corporation and an LLC are formed, one owns the real estate, the other owns the business) 
  • buying a business is completely discretionary. Nobody has to buy a business. 
  • the value of a commercial business is based on cash flow, not 'the market'. In some cases, a buyer is willing to pay more than the value, because they see what potential the property has and are willing to risk getting a return on the future value.
It's all about the numbers...

Whether I'm representing a commercial or residential buyer, my fiduciary responsibility to my client remains. Every buyer matters, every house or lodging property matters, and the success of our industry matters. Realtors® do our best to ensure the consumer comes first.