Monday, November 30, 2009

Buyers and Aspiring Innkeepers - Start your search with your AVAILABLE CASH

The very first thing you should discuss with your agent is your available cash, not how much you want to spend on a property. There are a couple very important reasons why:
  • Some of you aren't aware that you will have to put down 25% for a business loan. You're not just buying a home, you're buying a business. So you can't assume you'll be able to put down as little as a residential loan would allow, unless...
  • If you are able to get an SBA loan (Small Business Administration), then you might be able to put as little as 10% (or less) down, but only if the business' performance meets the criteria set forth by SBA.

--Property A is listed at $500,000, gross income is $50,000

--Property B is listed at $1,000,000, gross income is $200,000

--The buyer has $125,000 available cash.

--The downpayment for Property A will be $125,000 (25%, sometimes 30%)

--The downpayment for Property B with an SBA loan could potentially be $100,000 if SBA determines they could loan you 90% or $900,000.

In all likelihood, Property B offers a much better cash flow than Property A, whose deficit would have to be subsidized by the buyer's cash on hand until they could increase the business income. But the buyer has already put down their available cash for the downpayment thus leaving zero cash to carry the business . That said, not all properties are strong performing businesses. But it's certainly worth discussing with your agent to find the best scenario for you.

Wednesday, November 25, 2009

Price reduction for Mountain Village Inn, as a private residence

Spacious Cape Cod with 4-7 bedrooms, 7 1/2 baths, on 7 acres with a small farm, 2 large barns, a perfect spot for horseback riding, and just 15 minutes to Ski Sugarloaf.


Great Room/Kitchen

Living Room

Front Exterior

Rear Exterior

The view

Mountain Village Inn is also being offered as a private residence for $499,000 ($515,000 for the inn). Situated on 7 acres with a small farm, two large antique barns, great lot for horseback riding, close to Ski Sugarloaf. There are 4-7 spacious bedrooms, 6 baths, living room with wood burning fireplace, large kitchen/open great room, this home is in excellent condition and was renovated (baths included) about 5 years ago. This is a great opportunity at a great price.

Additional Photos on Flickr

Residential vs. Bed and Breakfast - what's the best use for Kismet Inn & Spa?

There isn't always a clear answer - everyone's needs are different. The seller has just reduced the price on this Victorian mansion as a residential listing to $995,000. If purchased as a bed and breakfast, completely furnished (including trade name, website, etc.) it's being offered at $1,175,000. The home is just a gorgeous example of a modernized and fully renovated Painted Lady Victorian.

Step inside and you feel the energy of both the vibrant and soothing colors. The foyer is done in a Marigold yellow which feels sunny inside even on a gray day. One parlor is a beautiful shade of red, the other a pale lavender. The dining room is a soft lichen green, hardwood floors throughout. Step into the kitchen and there's a tumbled marble tile floor (laid in two patterns) with white walls, black granite counters and warm red Kennebec cabinetry. The art studio is white with hardwood floors, allowing the artwork to act as the focal point.

The bedrooms are decorated in varying shades of vibrant off-prime colors: muted chartreuse, kiwi, soft moss green, soft grey, with fabrics in complementary shades of pumpkin, reds, oranges and whites. Baths are all either steam showers with heated stone floors or deep tiled soaking tubs, also with heated floors.

Offered as a turnkey bed and breakfast spa or beautifully renovated and maintained private residence, in the heart of downtown Bath but on a quiet side street across from the park.

Private residence $975,000
Bed and Breakfast $1,175,000

View additional photos on Flickr

Friday, November 13, 2009

Mountain Village Farm Bed and Breakfast at the gateway to SKI Sugarloaf...

This is Mountain Village Farm Bed and Breakfast in Kingfield, Maine. Located on Route 27 just 15 miles from SKI Sugarloaf USA. This property offers the B&B goer a unique experience, with farm fresh eggs at breakfast and beautiful mountain views.

The house is an 1850's Cape Cod with a shingle roof and classic dormer windows. There are 6 guest rooms with private baths, a living room with fireplace, a large cafe/great room with picture windows that's open to the spacious kitchen. New 8 zone heating system, energy star replacement windows, newly enclosed front porch, various garden beds and other wonderful details.

Just 15 miles to SKI Sugarloaf USA - Kingfield is the gateway to the mountain...

There are two very large barns built with antique hemlock (which are worth some money if the buyer prefers not to utilize the barns). Currently the inn raises chickens offering guests fresh eggs used for breakfast (which I realized after staying at the inn the other night that fresh eggs are a vivid shade of yellow as compared with the pale commercially produced eggs).

There's a small building currently being used as an art gallery which gives the buyer a great opportunity at an additional revenue stream for whatever a creative mind can conjure up.

The property is across the street from a snowmobile trailhead and the barns would make a great place for guests to keep their riding equipment. If there were bike tour groups in the summer, the barns would be a great place for guests to keep their cycling equipment, motorcycles, etc. There are so many uses for the barns - possibly horse stabling for the equine enthusiast.

View additional photos on Flickr

The property is offered at $515,000 and includes 7 acres. There is an option to purchase an additional 10 acres. Contact me for more details.

Tuesday, November 10, 2009

When sellers ask "would my house make a good bed and breafkast?"

This question comes up more often than we think. And I get my brain picked enough to find it important to write this post geared toward residential real estate agents as well as buyers who want to do a startup bed and breakfast by converting a home.

Let me start by saying that I don't claim to know absolutely everything about the bed and breakfast business. But I do have experience and it is my specialty. And so many historic homes have the feel of a classic bed and breakfast, but are they all worthy of that marketing angle? The answer is, not always.

Sometimes this marketing angle could be good for your sellers, but if there really isn't the potential for a good business, down the road, the buyer isn't going to be happy and might feel they were misled. You don't want that reputation.

So what do you look for when determining B&B potential?
--The area... Is it a destination spot? Is it on the way to or from a destination spot? IF the visitor stays at the house turned B&B, when they drive just a few miles beyond the limits of the immediate town, will they find themselves thinking that next time they'll stay in the town they just found? Look at the competing towns in terms of tourism. Tourism potential is key.
--How many other lodging establishments are there already? and could the town handle another and are there enough visitors to fill the rooms in the busy season?
--What brings tourists to the town?
--Is there enough to do in town?
--Are there enough restaurants in town?
--Are there shops, galleries or museums in town for tourists?
--How far is the property from a daytrip to a national park? And keep in mind, the closer the town is to a park or tourism attraction, but not IN the town, it's going to have to compete with that town.
--Is there interesting history associated with the town, therefore giving a buyer a way to visualize the house as a B&B?
--Does the house have enough common living room space for the number of guest rooms it would have?
--Does the room flow make sense for B&B use?
--Today, it's very important to have all guest rooms with en-suite baths, and double showers or jacuzzi's even better.
--Does the house in its location and on its site give a potential buyer/B&B buyer enough to market to attract business?
--Is there ample parking?
--Does the house offer good exposure for walk-in business?
--Is the house large enough for a B&B?

So, how are B&B's are priced? This method will vary by region but for example in Maine, if a business is performing, we use a GIM (gross income multiplier) or GRM (gross rent multiplier). So if a business is grossing $200k, and if the region is using a GIM of 6 for the list price, the inn would be priced at $1.2m. They may sell for less, depending on the market, but the GIM has been used for some time. If the business isn't performing to its potential, the property may be priced on its residential value and/or a combination of its residential value and its revenue potential. Often there are properties out there that have real growth potential and those in a position with the cash to subsidize the business until it reaches its potential.

Another note for any of you representing buyers of an existing B&B, educate your buyers on what the banks will require for a down payment. And again, this may vary, but a standard rule of thumb will be a 25-30% down payment with a commercial loan structure. A big difference from the down payment required for a home - often this is a surprise to buyers!

As a rule of thumb, the fewer number of rooms, the lower the room revenue potential, the lower the price on the home. Great, right? Not really. If a buyer is looking for the property to support him/her financially, a small property will only bring in limited revenue (unless the rooms were extremely high end and pricey). Not all buyers can afford to subsidize the B&B lifestyle.The buyer looking to be financially comfortable from the cash flow of a B&B will likely have to spend more because the larger properties with more rooms offering more potential have a higher price tag. Higher price tag might mean smaller buyer pool. You have to determine the best way to reach the largest buyer pool. Always keep this in mind. What's important when buying a home is much different than what's important when buying a B&B. The former is what's best for you, the latter is what's best for your guests. Sometimes the best use for a house is just as a home...

Monday, November 9, 2009

BROKER OPEN HOUSE - Guilford Bed and Breakfast, Guilford, Maine

Please join us for a Broker Open House to view the Seller's fantastic restoration efforts of this Queen Anne home. They have brought this painted lady back to the charm of the era by using local craftsmen, the finest materials and never missing a detail. From the polished copper flashings to the rebuilt chimneys atop the original Monson slate roof, the new tri-color paint job, hand carved balustrades, custom screened porch, custom wooden porch skirt (lattice) to the interior Mahogany-walled library, several wood burning fireplaces, coffered ceilings and spacious bedrooms, this home has been lovingly restored and must be seen to be appreciated.

When: Thursday November 19, 2009 12pm-3pm

Where: Guilford Bed and Breakfast, 24 Elm Street, Guilford, Maine

Light lunch will be served


Property Information (in addition to the listing package attached)
Flickr Photos of the house
Virtual Tour

Offered at $650,000

RSVP would be appreciated.

Please contact me with any questions. We do hope you can make it (and you're welcome to bring clients). Potential Buyers: if you are interested in attending, please contact me.

2009 income was up 15% for Abbington's Seaview Motel and Cottages in Lincolnville!

Abbington's Seaview Motel and Cottages just informed me that their income was up 15% over last year! At $425,000 this is a fantastic opportunity for someone to get into the lodging business. Offering: a GREAT mid-coast location on Route 1; four miles from Camden; a beautiful ocean view; room to grow the business at a very affordable price.

The cottages are simple and rustic and the motel units are spacious and more like motel/hotel rooms, giving people a choice depending on their needs. There is a two room suite that offers more of a bed and breakfast feel. This variety may be why the revenue was up this year, especially during a time when many are being conservative with their money.

Flickr Photos
Virtual Tour
Property's Website

Contact me for more details.