B&B's with Lease/Purchase option?

Bed & Breakfast / Short Term Rental Host Forum

Help Support Bed & Breakfast / Short Term Rental Host Forum:

This site may earn a commission from merchant affiliate links, including eBay, Amazon, and others.

mona

Member
Joined
Mar 19, 2013
Messages
8
Reaction score
0
I'm curious if lease purchase options are common in this industry?
I've always dreamt of having a B&B and am now beginning to plan on making this a reality. However, the fear I have is that I'll buy a property, the business will be unsustainable, and then I'll be unable to sell the house. I know that owning your own business requires risk- which I'm more than willing to take, but the commitment to a huge mortgage seems like its just too much. So I've been thinking of alternatives such as lease/purchase options, which would allow me a year or two to actually operate the business and determine whether a particular B&B is a viable, sustainable business option for me. By no means am I trying to get rich. I'm really not even interested in profit at all- I just would need to know that it could pay for itself. I'm 27 years old and single, so there's no pension or spouse's income that I could rely on.
Has anyone had success in buying a B&B by first leasing? Is this something seller's are open to and willing to consider? More importantly, are YOU open to this? I'd pretty much relocate anywhere to follow this dream :)
Thanks for any info!
-M
 
All I can say is YIKES. If you think it is risky to own it, it is even riskier leasing it out to someone who might run it into the ground and walk away. (Not you, this has happened to quite a few people). No skin in the game, is what I would call it.
The lease option may be out there for someone who had a death of a spouse or something major and needs to be out of the business immediately. I could see that being a viable option.
Hope you get many great answers here, mine being the first. :) All the best!
 
All I can say is YIKES. If you think it is risky to own it, it is even riskier leasing it out to someone who might run it into the ground and walk away. (Not you, this has happened to quite a few people). No skin in the game, is what I would call it.
The lease option may be out there for someone who had a death of a spouse or something major and needs to be out of the business immediately. I could see that being a viable option.
Hope you get many great answers here, mine being the first. :) All the best!.
Yeah, I definitely get what you are saying.... But if I'm paying an option fee- that's my skin in the game. If I walk away, it's the sellers to keep.
 
All I can say is YIKES. If you think it is risky to own it, it is even riskier leasing it out to someone who might run it into the ground and walk away. (Not you, this has happened to quite a few people). No skin in the game, is what I would call it.
The lease option may be out there for someone who had a death of a spouse or something major and needs to be out of the business immediately. I could see that being a viable option.
Hope you get many great answers here, mine being the first. :) All the best!.
Yeah, I definitely get what you are saying.... But if I'm paying an option fee- that's my skin in the game. If I walk away, it's the sellers to keep.
.
mona said:
Yeah, I definitely get what you are saying.... But if I'm paying an option fee- that's my skin in the game. If I walk away, it's the sellers to keep.
There are a few stories I know of, from people I know who lost everything from this option. As I said, not you, but there are bad people out there who don't care.
 
I really have not heard of this being a common practice. I'm sure there are some out there that are willing to do this. My guess its the properties that are not selling. Then you need to ask yourself, "why has it not sold?" This is where you need to be really careful.
People only lease their properties for 2 reasons.
1)They can't sell it.
2)They want to make money off of it.
I'm sure there are some out there that will work with you and you could succeed.
Best of luck to you. I hope your dreams come true!
 
The only innkeepers I know who did this went bankrupt. They had several try the leasing...I assume they got a hefty down payment from them..but both of them had on "rose colored" glasses and neither lasted 2 months. One went bankrupt, the other--just left. I suspect she lost a good down payment as well. Then, the "Owners" themselves on some sort of visas, were unable to make their bills, time running out..so they just threw it to the wind and hightailed it out of the country leaving all their creditors behind. Bank has the property for sale now if you ever find some money.
Don't think you will find much around with this option. If you want to get into innkeeping take an aspiring class first and save some money. Sorry to say at 27 chances are slim to none if you don't have any income or support / health care etc from somewhere.
Take some time here and read through past threads. you will learn alot. Everyone here speaks the truth whether people like it or not but that is they way we are...take it from the voices of experience.
 
The only innkeepers I know who did this went bankrupt. They had several try the leasing...I assume they got a hefty down payment from them..but both of them had on "rose colored" glasses and neither lasted 2 months. One went bankrupt, the other--just left. I suspect she lost a good down payment as well. Then, the "Owners" themselves on some sort of visas, were unable to make their bills, time running out..so they just threw it to the wind and hightailed it out of the country leaving all their creditors behind. Bank has the property for sale now if you ever find some money.
Don't think you will find much around with this option. If you want to get into innkeeping take an aspiring class first and save some money. Sorry to say at 27 chances are slim to none if you don't have any income or support / health care etc from somewhere.
Take some time here and read through past threads. you will learn alot. Everyone here speaks the truth whether people like it or not but that is they way we are...take it from the voices of experience..
Your example is interesting- in that you've known of only one, who themselves up and left the property. I'd say that's not a typical situation and, generally, a terrible example.
If you want to get into innkeeping take an aspiring class first and save some money. Sorry to say at 27 chances are slim to none if you don't have any income or support / health care etc from somewhere.
While I appreciate your "advice", I find you patronizing. Just because I'm 27, doesn't mean I don't have savings.
 
I really have not heard of this being a common practice. I'm sure there are some out there that are willing to do this. My guess its the properties that are not selling. Then you need to ask yourself, "why has it not sold?" This is where you need to be really careful.
People only lease their properties for 2 reasons.
1)They can't sell it.
2)They want to make money off of it.
I'm sure there are some out there that will work with you and you could succeed.
Best of luck to you. I hope your dreams come true!.
Thanks, Bob.... :)
 
The only innkeepers I know who did this went bankrupt. They had several try the leasing...I assume they got a hefty down payment from them..but both of them had on "rose colored" glasses and neither lasted 2 months. One went bankrupt, the other--just left. I suspect she lost a good down payment as well. Then, the "Owners" themselves on some sort of visas, were unable to make their bills, time running out..so they just threw it to the wind and hightailed it out of the country leaving all their creditors behind. Bank has the property for sale now if you ever find some money.
Don't think you will find much around with this option. If you want to get into innkeeping take an aspiring class first and save some money. Sorry to say at 27 chances are slim to none if you don't have any income or support / health care etc from somewhere.
Take some time here and read through past threads. you will learn alot. Everyone here speaks the truth whether people like it or not but that is they way we are...take it from the voices of experience..
Your example is interesting- in that you've known of only one, who themselves up and left the property. I'd say that's not a typical situation and, generally, a terrible example.
If you want to get into innkeeping take an aspiring class first and save some money. Sorry to say at 27 chances are slim to none if you don't have any income or support / health care etc from somewhere.
While I appreciate your "advice", I find you patronizing. Just because I'm 27, doesn't mean I don't have savings.
.
I may only know of one personally, but I have heard many many more stories. In fact we have a forum member here who recently lost her place.
Well you stated " a place to pay for itself" that makes me assume. Savings is a relative term. Our savings Paid cash for our B & B. If I sound patronizing it is because so many have come here asking questions and not liking the answers they get. We get tired of playing the game.
 
The only innkeepers I know who did this went bankrupt. They had several try the leasing...I assume they got a hefty down payment from them..but both of them had on "rose colored" glasses and neither lasted 2 months. One went bankrupt, the other--just left. I suspect she lost a good down payment as well. Then, the "Owners" themselves on some sort of visas, were unable to make their bills, time running out..so they just threw it to the wind and hightailed it out of the country leaving all their creditors behind. Bank has the property for sale now if you ever find some money.
Don't think you will find much around with this option. If you want to get into innkeeping take an aspiring class first and save some money. Sorry to say at 27 chances are slim to none if you don't have any income or support / health care etc from somewhere.
Take some time here and read through past threads. you will learn alot. Everyone here speaks the truth whether people like it or not but that is they way we are...take it from the voices of experience..
Your example is interesting- in that you've known of only one, who themselves up and left the property. I'd say that's not a typical situation and, generally, a terrible example.
If you want to get into innkeeping take an aspiring class first and save some money. Sorry to say at 27 chances are slim to none if you don't have any income or support / health care etc from somewhere.
While I appreciate your "advice", I find you patronizing. Just because I'm 27, doesn't mean I don't have savings.
.
I may only know of one personally, but I have heard many many more stories. In fact we have a forum member here who recently lost her place.
Well you stated " a place to pay for itself" that makes me assume. Savings is a relative term. Our savings Paid cash for our B & B. If I sound patronizing it is because so many have come here asking questions and not liking the answers they get. We get tired of playing the game.
.
Wanting to buy a business that breaks even is not abnormal and indicates nothing about my financial situation... Who would want to purchase something that is losing money?
If you are tired of newbies like myself, you certainly didn't have to reply to my post.
 
Every time I hear about this, I only hear horror stories. It's a lot about the skin in the game. What has worked has been mortgages with balance of sale, since the balance is paid off with the first revenues and there is a lot of skin in the game, so the person has a lot to lose. Buy unless it is a LOT of money that they can lose, there usually isn't enough skin in the game, unless it's a tried and true innkeeper who is looking to do this.
Innkeeping isn't for wimps, it's not for "trial", it's not "I hope it works". It's more like either it works or there is nothing else. And too many people today just aren't able to just struggle though and do what has to be done. Excuse my being crude, here, but I think it has to be said in terms that aren't so rose coloured.... being an innkeeper means that you will...
  • Stoop to clean pee off the seat, under the seat, on the rim, on the floor and even on the bedsheets.
  • You will be washing makeup, blood, semen and wine out of linens.
  • You will have people disrespect you, your house and your belongings.
  • You will smile when a man from Minnesota makes snide and underhanded remarks to you and thank him for staying with you.
  • You will cook a beautiful breakfast to have someone make a comment about not liking something in breakfast a day later. Or decide in the morning that they are a gluten-free vegan who won't eat refined sugar because you can't prove that it's vegan friendly sugar.
And that's the TIP of the iceberg. It's just too easy for people who aren't ready for all this to walk away.
 
I really have not heard of this being a common practice. I'm sure there are some out there that are willing to do this. My guess its the properties that are not selling. Then you need to ask yourself, "why has it not sold?" This is where you need to be really careful.
People only lease their properties for 2 reasons.
1)They can't sell it.
2)They want to make money off of it.
I'm sure there are some out there that will work with you and you could succeed.
Best of luck to you. I hope your dreams come true!.
Thanks, Bob.... :)
.
Its nice to have you on here! This is a great time to buy. Im sure you can find something that will work. It will just take time.
 
I think it would be far easier and better for you to take your time looking at properties in your price range and making sure that it is a good investment, rather than thinking of a lease/purchase agreement. What everyone has said is true, most owners don't want the risk of leasing with an option because of the long term pitfalls. If the owners ever had to take back the property, it would cost far more than the upfront option to repair the business reputation, negative reviews and possible damage to the property.
If you are looking for a b&b that pays it's bills but not much more, there are a lot out there! Find one for a great price that has the potential if run right to actually make more of a profit. Lots of older innkeepers are wanting to get out and haven't kept up with the times of marketing properly on the internet.That's the kind of place to find!
What else you'll find out there are owners who are willing to carry some or a lot of the financing (big risk for them also). There are a flood of b&bs out there right now looking to sell. Just make sure that it's a good match for you. Remember, after you buy, you'll be in the business for years and you want to make sure that the area you choose to live in and the house suits you.
 
I think it would be far easier and better for you to take your time looking at properties in your price range and making sure that it is a good investment, rather than thinking of a lease/purchase agreement. What everyone has said is true, most owners don't want the risk of leasing with an option because of the long term pitfalls. If the owners ever had to take back the property, it would cost far more than the upfront option to repair the business reputation, negative reviews and possible damage to the property.
If you are looking for a b&b that pays it's bills but not much more, there are a lot out there! Find one for a great price that has the potential if run right to actually make more of a profit. Lots of older innkeepers are wanting to get out and haven't kept up with the times of marketing properly on the internet.That's the kind of place to find!
What else you'll find out there are owners who are willing to carry some or a lot of the financing (big risk for them also). There are a flood of b&bs out there right now looking to sell. Just make sure that it's a good match for you. Remember, after you buy, you'll be in the business for years and you want to make sure that the area you choose to live in and the house suits you..
thank you! those are all really great points!! I definitely have to do a lot more research...
 
All I can say is YIKES. If you think it is risky to own it, it is even riskier leasing it out to someone who might run it into the ground and walk away. (Not you, this has happened to quite a few people). No skin in the game, is what I would call it.
The lease option may be out there for someone who had a death of a spouse or something major and needs to be out of the business immediately. I could see that being a viable option.
Hope you get many great answers here, mine being the first. :) All the best!.
Yeah, I definitely get what you are saying.... But if I'm paying an option fee- that's my skin in the game. If I walk away, it's the sellers to keep.
.
mona said:
Yeah, I definitely get what you are saying.... But if I'm paying an option fee- that's my skin in the game. If I walk away, it's the sellers to keep.
While you are correct that you do have something to loose, for the owners (sellers) it becomes a matter of 'WHAT' they get back if it doesn't work out. - This is NO reflection on you, not at all, this is a statement driven from those that have experienced the problem and have shared that experience. Of course there have also been win/win situations as well.
If a person leases a currently thriving (or even holding its own) business but does not take the care to keep the business in the current state, then walks away. What the owner gets back is not the same business. The name is tarnished and therefore harder to turn over again. And if the owner returns to the business, it is again a work in progress to return it to its once thriving self.
 
An alternative to consider might be working as innkeeper -- somebody else owns the property, you're just the hired hand to run it, with a place to live and living expenses. You wouldn't make a lot of money, but this would give you the opportunity to try out the business and perhaps learn what to look for when it comes time to shop for your own place. This kind of opportunity seems to come up more often than lease to purchase options straight from the get-go (some of innkeeping gigs sometimes turn into lease/purchase arrangements, from the stories I've read).
As for the lease/purchase option, you might think about a month's trial rather than a year-long trial. I could see somebody giving you a month to evaluate the viability of the business. That seems more realistic (in terms of the risk an owner would take in leasing the inn to you) than a whole year... Maybe I'm off my rocker, though.
 
There are not that many lease/purchase options out there, and the best way to find one would be to work with a B&B broker who might know which, if any, of the sellers out there would go for that.
I have heard of at least 5 or 6 deals that have gone bad, ranging from the new buyer walking away after a week to scam artists who took all the money they could out of the business and the property before walking away. I have heard of one that worked out well for both seller and buyer.
Personally, as a seller, I would only go with a lease/purchase option if a) the buyer had enough money for a down payment equivalent to obtaining a mortgage at the purchase price and b) the buyer would qualify for a mortgage/commercial loan if they pursued one with a bank.
I have been around a lot of aspiring workshops and seminars (as has EmptyNest, BTW) and it seems like many people want the lease/purchase option because they can't meet one or both of those criteria. They have no money to put down, or they have a bad credit history or financial problems that would keep them from qualifying. If you are willing to treat the seller as a bank alternative, and go through the same qualification process - you may find some sellers with viable businesses out there who are willing to work with you.
 
I think it would be far easier and better for you to take your time looking at properties in your price range and making sure that it is a good investment, rather than thinking of a lease/purchase agreement. What everyone has said is true, most owners don't want the risk of leasing with an option because of the long term pitfalls. If the owners ever had to take back the property, it would cost far more than the upfront option to repair the business reputation, negative reviews and possible damage to the property.
If you are looking for a b&b that pays it's bills but not much more, there are a lot out there! Find one for a great price that has the potential if run right to actually make more of a profit. Lots of older innkeepers are wanting to get out and haven't kept up with the times of marketing properly on the internet.That's the kind of place to find!
What else you'll find out there are owners who are willing to carry some or a lot of the financing (big risk for them also). There are a flood of b&bs out there right now looking to sell. Just make sure that it's a good match for you. Remember, after you buy, you'll be in the business for years and you want to make sure that the area you choose to live in and the house suits you..
thank you! those are all really great points!! I definitely have to do a lot more research...
.
mona said:
thank you! those are all really great points!! I definitely have to do a lot more research...
GREAT! While Eric ripped off the Rose Glasses, hopefully you will dig in to this forum and still find it is a very rewarding business. I love what I do (well most of it
wink_smile.gif
) and I sure hope that there are other individuals ready to jump in and love this business as well. I alos love the fact that young people find this business interesting. We all just would like those to have given it much thought, lots of research and know that it is not all glamorous or rosy.
As Empty mentioned, a seminar is a great way to get to know just what you would be diving into if you continue on this dream path. You may also look into doing some innsitting after the class to get a feel for the business first hand.
When someone comes here asking questions we have no idea how deep their pockets are, where (in the world, country, etc.) they hope to pursue their dream, what they think is enough $ and on and on..... So we can only provide basic information here.
Stay around, snoop into the different threads and check into a seminar near you. If you need assistance finding a seminar, post here and we can provide some choices. Best of luck to you & see you around the forum.
 
Welcome Mona, this is a great place to learn... I agree with the others that you should try classes and innsitting or hire on as an innkeeper to see if it is something that really fits you.
Seriously, I don't care what you love doing...when you HAVE to do it everyday, you can come to look at it differently.
Also, a prospective business should have books available to examine if it is a going concern. Bear in mind, even if it is profitable, or even if it is not, it will be how YOU manage it that will make the difference. That is why you need experience going in, if you don't have a second source of income, you need to know what you are doing from day one.
If you are considering a purchase in any area you are not familiar with, be very careful to find out what the real estate prices there are like in general. Don't compare just B&B prices, because if worst came to worst and you had to sell it not as a business, the value needs to be there.
I don't know what your dream B&B is, or what your abilities are, but I do think you are wise to ask and learn about it before you sign on the dotted line. Good Luck.
 
The only innkeepers I know who did this went bankrupt. They had several try the leasing...I assume they got a hefty down payment from them..but both of them had on "rose colored" glasses and neither lasted 2 months. One went bankrupt, the other--just left. I suspect she lost a good down payment as well. Then, the "Owners" themselves on some sort of visas, were unable to make their bills, time running out..so they just threw it to the wind and hightailed it out of the country leaving all their creditors behind. Bank has the property for sale now if you ever find some money.
Don't think you will find much around with this option. If you want to get into innkeeping take an aspiring class first and save some money. Sorry to say at 27 chances are slim to none if you don't have any income or support / health care etc from somewhere.
Take some time here and read through past threads. you will learn alot. Everyone here speaks the truth whether people like it or not but that is they way we are...take it from the voices of experience..
Your example is interesting- in that you've known of only one, who themselves up and left the property. I'd say that's not a typical situation and, generally, a terrible example.
If you want to get into innkeeping take an aspiring class first and save some money. Sorry to say at 27 chances are slim to none if you don't have any income or support / health care etc from somewhere.
While I appreciate your "advice", I find you patronizing. Just because I'm 27, doesn't mean I don't have savings.
.
I may only know of one personally, but I have heard many many more stories. In fact we have a forum member here who recently lost her place.
Well you stated " a place to pay for itself" that makes me assume. Savings is a relative term. Our savings Paid cash for our B & B. If I sound patronizing it is because so many have come here asking questions and not liking the answers they get. We get tired of playing the game.
.
Wanting to buy a business that breaks even is not abnormal and indicates nothing about my financial situation... Who would want to purchase something that is losing money?
If you are tired of newbies like myself, you certainly didn't have to reply to my post.
.
mona said:
Wanting to buy a business that breaks even is not abnormal and indicates nothing about my financial situation... Who would want to purchase something that is losing money?
If you are tired of newbies like myself, you certainly didn't have to reply to my post.
answers given to questions are not to be taken as a personal reflection - we have no idea who or what you are. I know some 27 year olds who are set financially and mentally and some who at 40 still are not. Your questions are not being answered at the personal YOU, they are answered at the question you asked.
I have a 3-guestroom B & B and there is no way I would consider leasing it. I built this baby from scratch and put a lot of work and sweat into building a great reputation - something that could get ruined in one month if handled wrong.
Call me snarky if you wish, but just what profession allows you to just come in and "try it on for size"? For most professions (and trust me, innkeeping is a profession) you have to go through schooling or an internship or some sort of training. The only job I know of that you just learn by doing is being a Mother - no handbook there damn it!!
So just cool your jets and start over nicely. These folks are trying to help you and you will only get backs up by being disrespectful to anyone here - because everyone here is actually (or has been) in the trenches with the toilet brush and knows what the heck they are talking about.
We do give second chances - so ask your questions and be prepared for honest answers/
 
Back
Top