Taking out a mortgage on a B&B

I'm looking to have a B&B built in NC. I'm trying to figure out how I'm going to finance this thing. I wanted to take out a mortgage instead of a business loan. The first few banks I called said they didn't think something like that could be done, but weren't sure. However, since then I've learned that banks can do that. I also was wanting to have a commercial kitchen at my B&B which will probably complicate things even further. Does anyone have any good tips about financing a B&B?
Does anyone know anything about this?

Check the regulations in your town, county, municipality, state before you build anything. (Here, in my town, there are odd regs about mixing a B&B with a commercial kitchen.) If you can afford to pay off a personal mortgage, ie- you are gainfully employed and can make the mortgage payments, you can usually take out a personal mortgage.
If you expect the business to pay the mortgage, you usually get a commercial loan.
However, what you end up with is what the banks will loan you.
Try talking to someone at a local SCORE office. Join the local Chamber. Meet local business owners. They can open doors to banks.

There's a guy who can help you find the people who have the $$ to loan. His name is Rick Newman and all he does is help to finance B&B's.
http://innfinancing.com/
He helped us re-finance when even the bank we had been working with for 5 years said 'no'. He also helped at least one other couple in our area get financing.
Tell him I sent you.

Before you even talk to the banks, get it in WRITING as to the local Zoning Codes, Building Codes, and Fire Codes require for the location you plan to build on. The rules could be very different depending on which side of the street you are on or which street or road. If it is rural get the regs IN WRITING for that particular location regards taxes, zoning, building, sewer/water, fire, etc. Would hate to see you build a wonderful place and then find out you cannot use it as a B &B or any other commercial enterprise.And yes, that HAS happened.

Aussie Innkeeper said:

There's a guy who can help you find the people who have the $$ to loan. His name is Rick Newman and all he does is help to finance B&B's.
http://innfinancing.com/
He helped us re-finance when even the bank we had been working with for 5 years said 'no'. He also helped at least one other couple in our area get financing.
Tell him I sent you..

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I appreciate that info, I'll be sure to get in contact with him

That is all really good info everyone, I really appreciate the time you took to answer my question. The key advise I've learned from all this is... don't go off what a real estate agent or anyone else is telling me. Makes ure I have cleard things with the state municipality first.
Thanks!

James Barrett said:

That is all really good info everyone, I really appreciate the time you took to answer my question. The key advise I've learned from all this is... don't go off what a real estate agent or anyone else is telling me. Makes ure I have cleard things with the state municipality first.
Thanks!.

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Absolutley!!!! Don't take a realtors advice on stuff like this. They usually don't have a clue unless they work strictly with B & Bs. A long time ago we were considering building just a 4 room B& B in NC. Could never find a place that would let us except way out in the woods in the middle of no where! So we ended up buying our place...cash I might add. If you don't have the $$$ to put down the sizeable down payment no one is going to finance you. My friends are just in the process of refinancing to a lower rate and no one but our local bank would touch them. And even the bank which they have their current mortgage couldn't give them what they wanted..but finally got a 4.3% 15 year fixed. Plus $4000 in closing costs. Commercial loan.
So as we all have said Due Diligence on your part for sure!

James Barrett said:

That is all really good info everyone, I really appreciate the time you took to answer my question. The key advise I've learned from all this is... don't go off what a real estate agent or anyone else is telling me. Makes ure I have cleard things with the state municipality first.
Thanks!.

Click to expand...

James Barrett said:

That is all really good info everyone, I really appreciate the time you took to answer my question. The key advise I've learned from all this is... don't go off what a real estate agent or anyone else is telling me. Makes ure I have cleard things with the state municipality first.
Thanks!

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You, and everyone else in the market to buy or build, has to follow the money. The realtor is in the market to sell property to you for a commission. They don't work for you. They work for the money.
We have good friends who bought an existing B&B with a lunch business. They weren't in the B&B for a month when they were told by the town they absolutely could NOT run a lunch business, 'we don't care what the other people did.' So, you really have to delve into these things and, for someone who is buying a place, don't take the seller's word on anything. Check it yourself.
We were told a train station was coming to our town. While walking around we saw a building going up along the tracks. Great! The station is right near where the inn is! No! It was a HOTEL being built. We didn't ask the right questions.

EmptyNest said:

James Barrett said:

That is all really good info everyone, I really appreciate the time you took to answer my question. The key advise I've learned from all this is... don't go off what a real estate agent or anyone else is telling me. Makes ure I have cleard things with the state municipality first.
Thanks!.

Click to expand...

Absolutley!!!! Don't take a realtors advice on stuff like this. They usually don't have a clue unless they work strictly with B & Bs. A long time ago we were considering building just a 4 room B& B in NC. Could never find a place that would let us except way out in the woods in the middle of no where! So we ended up buying our place...cash I might add. If you don't have the $$$ to put down the sizeable down payment no one is going to finance you. My friends are just in the process of refinancing to a lower rate and no one but our local bank would touch them. And even the bank which they have their current mortgage couldn't give them what they wanted..but finally got a 4.3% 15 year fixed. Plus $4000 in closing costs. Commercial loan.
So as we all have said Due Diligence on your part for sure!
.

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We have friends trying to refi. No one, not even the bank that holds the paper right now, will touch them. They are paying over double what I am paying for my rate. The guy they originally got the loan from has moved to a different bank and he is looking for properties to build his B&B portfolio so we told them to try him again at his new bank. Unbelievable that the bank won't refi the loan to a lower rate because they say the biz doesn't cover the mortgage. How the heck can the owners cover it at twice the % then?

I always rember that case - can't remember the chap's name but there was a ton of press about it - he'd got the ok on a Bed and Breakfast/spa/mini conference center - got the thing all built and then the zoning people said - nope we never said you could do that - he didn't have anything in writing and went broke - ill try and find the article

James Barrett said:

That is all really good info everyone, I really appreciate the time you took to answer my question. The key advise I've learned from all this is... don't go off what a real estate agent or anyone else is telling me. Makes ure I have cleard things with the state municipality first.
Thanks!.

Click to expand...

Never take anyone's word for it, especially the real estate agent who just wants the commission or is faking that they know the proper info. We nearly bought a second place a few years ago that was a 3 room b&b. The agent said we would just have to have the special variance renewed. We had put our financing together and was ready to put a bid on the property, but before we did I contacted the county and it turned out that since the property had no business income for more than 1 year (owner died), the special variance that everyone thought was grandfathered in, now was null and void and the property had been zoned differently in the past several years and the zoning forbid any business there...now and forever (National forest now had control over the surrounding acrage. We even took it to an attorney who specializes in land rights. No go. If I had not done due diligence we could have been in a real pickle!

Not taking a business loan is a good decision as once debted the person hardly is able to come out. Now coming on finances. Not all the banks have this mortgage taking procedure so You need to find one such bank that has. Secondly You can also try and go for some structured settlements if You have any.

Chase Bank reportedly mishandled a Colorado woman's home loan documents. It didn't robo-sign, but it did send her sensitive papers to the incorrect person. If you need help paying your mortgage payment this month, get a short term loan.