Questions for Innkeeper when purchasing an inn

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01/19/2015

Personally, as we are not open yet and looking for the right place, the niche will depend on the final place.

Garden_Pix_Inn's picture
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05/28/2015

Where you end up really should reflect a number of things about YOU:

Location (love the "green" SE and personally hate the dry brown out west. Others are the opposite.)

City or country, rural or small town?

Do you have any hobbies already?  Honestly, I don't see a staunch environmentalist embracing the ATV world as a theme/focus for their inn. 

I've had to "work" to know about hiking, biking and such since I naturally do very little of it (then as an innkeeper had little time anyway).

I've tried to make my inn serve several markets. WE were lucky--when one dried up, another was doing OK. However, the marketing gurus go nuts because I have to set up different web pages for different aspects and google probably wonders what in the world is going on!  They penalize lack of consistency....

Still, business, leisure, weddings all work for us with a few "travel through" and school related for good measure.

gaelstorm's picture
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01/28/2015

Lots of food for thought.

 

__________________

galestorm

 

Breakfast Diva's picture
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Focus on the financials. But before you go there, are you absolutely sure that YOU can afford to buy it? Do you have at least 30-40% down? Are you pre-approved for a loan?

I have 2 people I know who 's sale just fell through because the buyers thought they could get a loan. Financing is still the most difficult thing about buying a b&b and it's just devastating for both the buyer and the seller when at the final stage, it falls through.

If you think you really can afford it, then while you're there, go to the county and ask your questions. Have them pull the records for the property and make sure that the b&b is licensed for the number of rooms that it's listed. That's also where you would find the information on whether it's permitted for more rooms if you wanted to add on.

Are they hiring staff? How many hours. Are there things the staff is doing that you as a new owner would do instead, thereby saving some money?

But PLEASE, before you go, be sure that you actually have enough funds to buy it if you like it. The roller coaster that innkeepers are put through each and every time there is a lookie-loo is gut wrenching.

 

 

Garden_Pix_Inn's picture
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Breakfast Diva wrote:
But PLEASE, before you go, be sure that you actually have enough funds to buy it if you like it. The roller coaster that innkeepers are put through each and every time there is a lookie-loo is gut wrenching.

This is why we chose to use a business broker--they prequalify them for the most part. We'd also partly owner-finance IF they could get a loan for the value of the property elsewhere.

"Affordability"is a function of being priced correctly and able to withstand the rigors of the financing paperwork. We haven't gotten that far (yet).

Some days, however, selling an inn is like finding Mr. Right. You go on a lot of dates. Not all of them work out. Some of them fail to work out for mysterious (funky reasons--like the chicken down the road crowed THEN the "buyer" said she wanted a more rural location. Honey, she didn't know WHAT she wanted!!!)  Think of it as dating.

Of course, we all want the one coming in the door to be "the one." And we focus on believing it.  One hopes that IF someone comes all that way to see a place they, too, think and hope it might be "the one."  If they don't think so, they are wasting all our time!  (A curse on tire kickers, of which we've had few, if any, due to the broker screening them).

 

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10/07/2008

That is a good question Lisa.

A question that they would answer honestly...hm. I would certainly want specific marketing answers, not just a wave of the hand as they say 'on the internet' which should not happen these days, but does.

I think a lot of people ask way too personal questions, and they never share any of their own, like what sort of $ down payment, are you preapproved for purchase, that sort of thing. 

Beware of the old "you could turn this into this...or do that with this" answer. The realtor bill of goods trick. Yes, any house CAN be a B&B, yes, any room CAN be turned into this or that. 

All the best, let us know if we can help. I am in beautiful Virginia.

Lisa1958's picture
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04/28/2015

The inn is an existing inn that serves breakfast and an afternoon snack. I was wondering what their clientele is, in which months? What type of breakfast they are currently serving? what repeat guests expect from the Inn? Could dinner be served - what does their zoning cover ...

happykeeper's picture
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Honestly, those questions seem as if you are adrift. How big is this place? Is it a business or a wish of a business? What about their EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION. 

Isn't it too soon for operational questions? Wouldn't you be asking the feasibility and financing questions? 

.. and as I said, get your zoning answers before you see the property so you can actually ask relevant questions about making it what you want it to be. 

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01/19/2015

Septic, septic, septic

That keeps coming up. It limits # guests, rooms, baths, etc. here

Trust nothing you are told. Don't assume what they do automatically pass to you.

Talk to zoning and sewage officers.

Garden_Pix_Inn's picture
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undersea wrote:
Septic, septic, septic That keeps coming up. It limits # guests, rooms, baths, etc. here Trust nothing you are told. Don't assume what they do automatically pass to you. Talk to zoning and sewage officers.

 

Ha ha. We were told our building (back in 1998) needed to get off septic and onto sewer line out front. OK, we get it. So hubby went to look for the utilities down at the street and under the manhole marked SEWER he found........

.....the water meter!

In the end we paid half of $15,000 to tunnel under the highway and put in our own manhole and sewer connection (sharing  with new church next door).  NO problems once that was in, our water line was moved over onto our land... and over time the power line, phone line, cable line were all replaced. Last year a tornado got the service boxes so that triggered a new transformer (power coop paid for it).  So, now we are "all new" and good to go.

We probably have receipts to prove every purchase.  Buyers should just ask.

In "the South" most things do pass on if already solid zoning law. Only "conditional uses" and some "grandfathered" items do not. Have to check the difference. I find the $20,000 to change uses very strange. A determined developer would quickly find the money and that price would not "keep the neighborhood safe from development." Only rule of thumb is that everywhere is different. ASK and get a copy of the laws. Then READ it. Hire an attorney as needed.

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Mountain City host wrote:

undersea wrote:
Septic, septic, septic That keeps coming up. It limits # guests, rooms, baths, etc. here Trust nothing you are told. Don't assume what they do automatically pass to you. Talk to zoning and sewage officers.

 

Ha ha. We were told our building (back in 1998) needed to get off septic and onto sewer line out front. OK, we get it. So hubby went to look for the utilities down at the street and under the manhole marked SEWER he found........

.....the water meter!

In the end we paid half of $15,000 to tunnel under the highway and put in our own manhole and sewer connection (sharing  with new church next door).  NO problems once that was in, our water line was moved over onto our land... and over time the power line, phone line, cable line were all replaced. Last year a tornado got the service boxes so that triggered a new transformer (power coop paid for it).  So, now we are "all new" and good to go.

We probably have receipts to prove every purchase.  Buyers should just ask.

In "the South" most things do pass on if already solid zoning law. Only "conditional uses" and some "grandfathered" items do not. Have to check the difference. I find the $20,000 to change uses very strange. A determined developer would quickly find the money and that price would not "keep the neighborhood safe from development." Only rule of thumb is that everywhere is different. ASK and get a copy of the laws. Then READ it. Hire an attorney as needed.

When we first moved here we installed my aunt upstairs. Every time I would go to take a shower, I would shake a fist at upstairs because the water pressure would drop to NOTHING. THEN I discovered it was NOT her turning water on. I discovered we were sharing a 2 inch line with the house behind us that had originally been the wash house/garage for this property. AND their water meter was on my property. A request to City Council before I opened my B & B to get my own water line and their meter on their property was granted as I pointed out, guests will expect good water pressure. I still pray nothing ever goes wrong with their sewer line, it runs across our yard into our line before getting to the main line. Old City sysstems are interesting.

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Lisa1958 wrote:

The inn is an existing inn that serves breakfast and an afternoon snack. I was wondering what their clientele is, in which months? What type of breakfast they are currently serving? what repeat guests expect from the Inn? Could dinner be served - what does their zoning cover ...

I don't think that has a lot to do with what you need to know (breakfast) unless you are asking about are they allowed to do full breakfast vs continental?

Most likely if they have never done dinner they won't have the answer to the zoning for dinners question, you would have to find out if other inns are doing it there, or contact the town.

THERE! I knew there was a good question - contact the town and see how they feel about the B&B. You can learn a lot by what they say, town manager etc. that is if you are serious about that inn...  

happykeeper's picture
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12/11/2008

Welcome Lisa

I was struggling with a way to answer since the questions that are most important are going to be property specific. It would also depend on where you want to go with it. What you vision for the future is. That sort of thing. 

If your tag is an indicator and you are headed in the direction we went, (full service inn with breakfast and dinner) making sure you can clear any zoning, permit, and regulation hurdles is a good thing to know going in. That helps you ask questions related to kitchen conversion, which is a very large cost. Again, I am just grasping at straws since I saw the chef tag.

Garden_Pix_Inn's picture
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happykeeper wrote:
(full service inn with breakfast and dinner) making sure you can clear any zoning, permit, and regulation hurdles is a good thing to know going in. That helps you ask questions related to kitchen conversion, which is a very large cost.

I will tell you right now, put in a restaurant ONLY if it is necessary to make the inn a success in the market it is in.

Where I am we could get a restaurant license, permitting us to serve guests (grey area for serving the public due to zoning). HOWEVER, even IF I could cook dinners, I would not do it.  After years of developing slowly, we finally have three really good restaurants in our town and the golf course opening theirs 3 days/week. I absolutely would not do dinner Thursday-Sat. here. It would take all my guests away from the restaurants. We only have 5 guest rooms but those meals help make or break the independent restaurants as a group. We NEED them (as a town) to have a forward moving, developing, tourism trade which attracts more guests to the inn elsewhere around the town. 

So, you could do it, but would it be the right thing?

On the other hand, there is NO fine dining Sunday-Tuesday in this town. And IF I were a chef I'd see what I could do to cook those nights, thereby enhancing with the existing market.

Note: unless you REQUIRE your guests to eat dinner with you, those local restaurants are going to FEEL like competition (if your business plan counts on those meals in some quantity).  On the flip side, Sunday-Tues. meals here would be "found money" (especially if you could find a way to feed locals, too, as a public restaurant or "private party" locale to get around any zoning issues).

Of course, the reason the pros don't stay open is (1) need to rest/have days off (2) thin market on those days of the week (locals don't eat out and/or tourists aren't as present).  Nonetheless,  money to be made.

I would think this is a nuance you have not thought of.

I have a friend with a 12 room inn in a rural area of "Amish Country" who does numerous dinners. She will be wanting to sell/list to sell "within the year."  Dinners almost every night are essential to her success and she has done very well at getting people to dine with her (great cook!)  Her inn has little to no zoning and state law allows her something like 2 or 3 (equivalent of) tour bus loads of diners/month, all without any regulation of her kitchen."Paradise" if you hate regulation! Undersea should write me at judy@prospect-hill.com if you'd like further details about this property.

Hers is a case where NO alternative dining is available nearby so having dinners/restaurant is essential. Not every inn should do it--I feel this one must. This inn/innkeeper, by the way, is considered by MY friends to be a marketing genius. Food/dinner is part of the niche she has carved out for herself. The next owner will probably need to follow her lead. Chefs:  please get in line.

happykeeper's picture
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 I would generally agree with all of that. We are building the locally sourced food brand and have found that dinner done in a way that works for us has been a huge revenue boost. We are in a rural area with few choices, so it makes perfect sense for us to spend the money to commercialize the kitchen. It will be a major part of being viable when we go to sell. If we were in proximity to great dining, it might be a waste of money. Right now, the best dining in our area is at our place, so we are the big fish in the small pond and it is working out well. 

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