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C

cdrako

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Originally from PA/NY my husband and I are looking to buy a B&B in the northeast/mid-Atlantic.
We've done a little damage in the past to our credit and obtaining a mortgage/commercial loan is borderline, but maybe not yet impossible. So we are looking for creative options like lease purchase or owner financing etc. We could probably have a down payment of around 60K maybe a bit more.
We are currently working professionals with 2 adult sons (20 and 23) who live with us and would probably want to tag along once we leave Colorado.
I will probably remain working remotely to lessen the financial risk at first while he retires from his Retail Executive position to run the business.
As my hubby is very active on social media we virtually "meet" people from all over the world especially those who are sports fans of our local teams. We often meet up with people when we travel and/or host folks on their trips to Colorado and take them touring. It's because we enjoy this so much that we decided to look for a B&B.
Any advise would be very appreciated.
Cindy
 
After the down payment do you have any operating capital left?
How can you guarantee the owner you'll be able to make the, possibly, $7000-$10000/month mortgage? Would your job cover this?
What experience do you bring to running the size property you'll need to support 4 people?
You might actually enjoy doing tour groups more than running a B&B where, unless you have help, you really don't live the life you seem to enjoy.
 
Thank you for the great questions Morticia,
Yes after the down payment we would still have a little operating capital. I make 6 figures but a 7-10K mortgage is out of my range.
I don't expect to support 4 people, my sons currently both have full time jobs and would look for work after moving. If the property had a carriage house that we could build out an apartment over, or something along those lines then great, otherwise they would need to find residence.
I can't say that we have experience outside of our love to host people in our home. (tour groups I don't think I would enjoy). We are both very much people persons.
Hubby has spent his entire life in retail / service industry. As an executive he manages and supports a couple of hundred people, the marketing, sales and support sides of the company.
I am currently a healthcare project manager so creating plans, identifying and mitigating risks, managing budgets and making sure all of the i's are dotted and t's are crossed are all part of my nature so I wouldn't go into a transaction unless I believed we could make it viable.
I really believe this is up our alley.
Cindy
 
CindyD said:
Thank you for the great questions Morticia,
Yes after the down payment we would still have a little operating capital. I make 6 figures but a 7-10K mortgage is out of my range.
I don't expect to support 4 people, my sons currently both have full time jobs and would look for work after moving. If the property had a carriage house that we could build out an apartment over, or something along those lines then great, otherwise they would need to find residence.
I can't say that we have experience outside of our love to host people in our home. (tour groups I don't think I would enjoy). We are both very much people persons.
Hubby has spent his entire life in retail / service industry. As an executive he manages and supports a couple of hundred people, the marketing, sales and support sides of the company.
I am currently a healthcare project manager so creating plans, identifying and mitigating risks, managing budgets and making sure all of the i's are dotted and t's are crossed are all part of my nature so I wouldn't go into a transaction unless I believed we could make it viable.
I really believe this is up our alley.
Cindy.
Click to expand...
I'm basing the mortgage amount on what size property you would need to cover expenses. With your down payment you're only looking at a property listed for $300k. Not really enough to support itself.
If you move up in price, at around 7% interest (the going rate around the NE area), your mortgage, or payments to the owner-financer, are going be about what I mentioned.
The financer is going to want interest payments, not just principal.
It's unfortunate that if you don't have a property you can convert, what's out there that is worth the investment is not cheap.
A lot of properties we looked at in NH had the owners living in the cellar, sleeping on a cot. These properties, 10 years ago, were $650k and up.
You might want to start calling brokers in the areas you want to live to get ideas about what kind of financing is available.
Or, enter one of the contests to win a property.
 
Morticia said:
CindyD said:
Thank you for the great questions Morticia,
Yes after the down payment we would still have a little operating capital. I make 6 figures but a 7-10K mortgage is out of my range.
I don't expect to support 4 people, my sons currently both have full time jobs and would look for work after moving. If the property had a carriage house that we could build out an apartment over, or something along those lines then great, otherwise they would need to find residence.
I can't say that we have experience outside of our love to host people in our home. (tour groups I don't think I would enjoy). We are both very much people persons.
Hubby has spent his entire life in retail / service industry. As an executive he manages and supports a couple of hundred people, the marketing, sales and support sides of the company.
I am currently a healthcare project manager so creating plans, identifying and mitigating risks, managing budgets and making sure all of the i's are dotted and t's are crossed are all part of my nature so I wouldn't go into a transaction unless I believed we could make it viable.
I really believe this is up our alley.
Cindy.
Click to expand...
I'm basing the mortgage amount on what size property you would need to cover expenses. With your down payment you're only looking at a property listed for $300k. Not really enough to support itself.
If you move up in price, at around 7% interest (the going rate around the NE area), your mortgage, or payments to the owner-financer, are going be about what I mentioned.
The financer is going to want interest payments, not just principal.
It's unfortunate that if you don't have a property you can convert, what's out there that is worth the investment is not cheap.
A lot of properties we looked at in NH had the owners living in the cellar, sleeping on a cot. These properties, 10 years ago, were $650k and up.
You might want to start calling brokers in the areas you want to live to get ideas about what kind of financing is available.
Or, enter one of the contests to win a property.
.
Click to expand...
Thank you so much for your advice.
I do have a few calls out regarding financing, just thought I would try to cover all possible bases by posting something here.
I haven't really looked at properties that I can convert from scratch but may follow that advice.
Thanks again,
Cindy
 
btw, my husband comes from a retail background and I am still working outside the house, so I support your premise that your experience translates.
In my town there are a couple for sale but for more than $1 million each. There is an inn in town that only rents two rooms out of their house. People love them. You can start small with a house and rent the bedrooms if it's in the right area.
Best of luck.
 
TheBeachHouse said:
btw, my husband comes from a retail background and I am still working outside the house, so I support your premise that your experience translates.
In my town there are a couple for sale but for more than $1 million each. There is an inn in town that only rents two rooms out of their house. People love them. You can start small with a house and rent the bedrooms if it's in the right area.
Best of luck..
Click to expand...
I think it's the rare innkeeper who was born into it. We all have a past that can be used to make the business thrive.
The tough part is starting with no money.
A couple of innkeepers on here have lovely, reasonably priced inns for sale. If they want to owner finance they can contact to OP and open negotiations.
But even those reasonably priced, income producing properties can't be bought with so little down payment.
 
CindyD said:
Morticia said:
CindyD said:
Thank you for the great questions Morticia,
Yes after the down payment we would still have a little operating capital. I make 6 figures but a 7-10K mortgage is out of my range.
I don't expect to support 4 people, my sons currently both have full time jobs and would look for work after moving. If the property had a carriage house that we could build out an apartment over, or something along those lines then great, otherwise they would need to find residence.
I can't say that we have experience outside of our love to host people in our home. (tour groups I don't think I would enjoy). We are both very much people persons.
Hubby has spent his entire life in retail / service industry. As an executive he manages and supports a couple of hundred people, the marketing, sales and support sides of the company.
I am currently a healthcare project manager so creating plans, identifying and mitigating risks, managing budgets and making sure all of the i's are dotted and t's are crossed are all part of my nature so I wouldn't go into a transaction unless I believed we could make it viable.
I really believe this is up our alley.
Cindy.
Click to expand...
I'm basing the mortgage amount on what size property you would need to cover expenses. With your down payment you're only looking at a property listed for $300k. Not really enough to support itself.
If you move up in price, at around 7% interest (the going rate around the NE area), your mortgage, or payments to the owner-financer, are going be about what I mentioned.
The financer is going to want interest payments, not just principal.
It's unfortunate that if you don't have a property you can convert, what's out there that is worth the investment is not cheap.
A lot of properties we looked at in NH had the owners living in the cellar, sleeping on a cot. These properties, 10 years ago, were $650k and up.
You might want to start calling brokers in the areas you want to live to get ideas about what kind of financing is available.
Or, enter one of the contests to win a property.
.
Click to expand...
Thank you so much for your advice.
I do have a few calls out regarding financing, just thought I would try to cover all possible bases by posting something here.
I haven't really looked at properties that I can convert from scratch but may follow that advice.
Thanks again,
Cindy
.
Click to expand...
I believe we have covered this in several other threads if you do a search. Creative financing these days is pretty much out of the question. You either have the $$$, or you keep saving. NO bank is going to give a mortgage without a guarantee you can pay and start with a hefty down payment. Sorry...but that's just the way it is.
 
EmptyNest said:
CindyD said:
Morticia said:
CindyD said:
Thank you for the great questions Morticia,
Yes after the down payment we would still have a little operating capital. I make 6 figures but a 7-10K mortgage is out of my range.
I don't expect to support 4 people, my sons currently both have full time jobs and would look for work after moving. If the property had a carriage house that we could build out an apartment over, or something along those lines then great, otherwise they would need to find residence.
I can't say that we have experience outside of our love to host people in our home. (tour groups I don't think I would enjoy). We are both very much people persons.
Hubby has spent his entire life in retail / service industry. As an executive he manages and supports a couple of hundred people, the marketing, sales and support sides of the company.
I am currently a healthcare project manager so creating plans, identifying and mitigating risks, managing budgets and making sure all of the i's are dotted and t's are crossed are all part of my nature so I wouldn't go into a transaction unless I believed we could make it viable.
I really believe this is up our alley.
Cindy.
Click to expand...
I'm basing the mortgage amount on what size property you would need to cover expenses. With your down payment you're only looking at a property listed for $300k. Not really enough to support itself.
If you move up in price, at around 7% interest (the going rate around the NE area), your mortgage, or payments to the owner-financer, are going be about what I mentioned.
The financer is going to want interest payments, not just principal.
It's unfortunate that if you don't have a property you can convert, what's out there that is worth the investment is not cheap.
A lot of properties we looked at in NH had the owners living in the cellar, sleeping on a cot. These properties, 10 years ago, were $650k and up.
You might want to start calling brokers in the areas you want to live to get ideas about what kind of financing is available.
Or, enter one of the contests to win a property.
.
Click to expand...
Thank you so much for your advice.
I do have a few calls out regarding financing, just thought I would try to cover all possible bases by posting something here.
I haven't really looked at properties that I can convert from scratch but may follow that advice.
Thanks again,
Cindy
.
Click to expand...
I believe we have covered this in several other threads if you do a search. Creative financing these days is pretty much out of the question. You either have the $$$, or you keep saving. NO bank is going to give a mortgage without a guarantee you can pay and start with a hefty down payment. Sorry...but that's just the way it is.
.
Click to expand...
No need for an apology. I am in the very early stages of this and doing my research. I'm not unrealistic, I need to know what any and all possible options are. This is how you determine if your goals are short, mid or long term and can plan appropriately.
Thank you for your feedback!
Cindy
 
I know this thread is about financing but do want to bring up one other thing to you Cindy. If you do receive positive information from your sources, may I suggest that you look into a innkeeping class. Hosting and showing people around for fun is one thing, doing it and all the behind the scene tasks as a business is different. The classes will provide you all that it takes to run this business.
We all wish you the best of luck.
 
So much may depend on your goal, making money or living the life you want to live, our goal was the lifestyle. Maxine was a stay at home mom, never worked for pay and my best outside salary would have been less than half of yours so our goals and lives were probably not similar.
When we started (about 25 years ago):
Borrowed against our home and some rental property, this gave me an amount similar to your 60,000 for a down payment (about 1/3 down for the property we purchased), the rent on those properties paid the payments on the money borrowed.
Had a first and second mortgage on the new property (tiny motel), original owner carried the first mortgage and room rentals paid this mortgage. We had 2 years in which to sell a property and pay off the second mortgage.
Generally everything we started with was borrowed, I did have some money from a retirement/profit sharing account, not large, the tax free part gave me initial operating money with the balance in an IRA. About 8 to 10 years in we cashed the IRA, paid the tax and paid that money against the first mortgage.
For most of our almost 25 years here I continued to work a job, sometimes good, sometimes flipping burgers or delivering newspapers while Maxine did everything at the motel (me helping evenings and weekends), so yes from my view a person can get into the lodging business with little or no money or experience and from my view it is a great life, but having good jobs now ask yourselves if it would be a life you would enjoy, that's the key question. Always fun talking with guests on a sunny spring day, not as much so scrubbing toilets, plowing snow or crawling in the muck under the house on a cold winter night to repair a leaky pipe.
 
JimBoone said:
So much may depend on your goal, making money or living the life you want to live, our goal was the lifestyle. Maxine was a stay at home mom, never worked for pay and my best outside salary would have been less than half of yours so our goals and lives were probably not similar.
When we started (about 25 years ago):
Borrowed against our home and some rental property, this gave me an amount similar to your 60,000 for a down payment (about 1/3 down for the property we purchased), the rent on those properties paid the payments on the money borrowed.
Had a first and second mortgage on the new property (tiny motel), original owner carried the first mortgage and room rentals paid this mortgage. We had 2 years in which to sell a property and pay off the second mortgage.
Generally everything we started with was borrowed, I did have some money from a retirement/profit sharing account, not large, the tax free part gave me initial operating money with the balance in an IRA. About 8 to 10 years in we cashed the IRA, paid the tax and paid that money against the first mortgage.
For most of our almost 25 years here I continued to work a job, sometimes good, sometimes flipping burgers or delivering newspapers while Maxine did everything at the motel (me helping evenings and weekends), so yes from my view a person can get into the lodging business with little or no money or experience and from my view it is a great life, but having good jobs now ask yourselves if it would be a life you would enjoy, that's the key question. Always fun talking with guests on a sunny spring day, not as much so scrubbing toilets, plowing snow or crawling in the muck under the house on a cold winter night to repair a leaky pipe..
Click to expand...
JimBoone said:
...ask yourselves if it would be a life you would enjoy, that's the key question. Always fun talking with guests on a sunny spring day, not as much so scrubbing toilets, plowing snow or crawling in the muck under the house on a cold winter night to repair a leaky pipe.
Click to expand...
But latter can be fun, too, at least when you are done and can claim bragging rights for having accomplished the arduous task!
MuddyTim480x640.jpg

 
OnTheShore said:
JimBoone said:
So much may depend on your goal, making money or living the life you want to live, our goal was the lifestyle. Maxine was a stay at home mom, never worked for pay and my best outside salary would have been less than half of yours so our goals and lives were probably not similar.
When we started (about 25 years ago):
Borrowed against our home and some rental property, this gave me an amount similar to your 60,000 for a down payment (about 1/3 down for the property we purchased), the rent on those properties paid the payments on the money borrowed.
Had a first and second mortgage on the new property (tiny motel), original owner carried the first mortgage and room rentals paid this mortgage. We had 2 years in which to sell a property and pay off the second mortgage.
Generally everything we started with was borrowed, I did have some money from a retirement/profit sharing account, not large, the tax free part gave me initial operating money with the balance in an IRA. About 8 to 10 years in we cashed the IRA, paid the tax and paid that money against the first mortgage.
For most of our almost 25 years here I continued to work a job, sometimes good, sometimes flipping burgers or delivering newspapers while Maxine did everything at the motel (me helping evenings and weekends), so yes from my view a person can get into the lodging business with little or no money or experience and from my view it is a great life, but having good jobs now ask yourselves if it would be a life you would enjoy, that's the key question. Always fun talking with guests on a sunny spring day, not as much so scrubbing toilets, plowing snow or crawling in the muck under the house on a cold winter night to repair a leaky pipe..
Click to expand...
JimBoone said:
...ask yourselves if it would be a life you would enjoy, that's the key question. Always fun talking with guests on a sunny spring day, not as much so scrubbing toilets, plowing snow or crawling in the muck under the house on a cold winter night to repair a leaky pipe.
Click to expand...
But latter can be fun, too, at least when you are done and can claim bragging rights for having accomplished the arduous task!
MuddyTim480x640.jpg

.
Click to expand...
You can't seriously be going to open that door and go inside!
 
Morticia said:
OnTheShore said:
JimBoone said:
So much may depend on your goal, making money or living the life you want to live, our goal was the lifestyle. Maxine was a stay at home mom, never worked for pay and my best outside salary would have been less than half of yours so our goals and lives were probably not similar.
When we started (about 25 years ago):
Borrowed against our home and some rental property, this gave me an amount similar to your 60,000 for a down payment (about 1/3 down for the property we purchased), the rent on those properties paid the payments on the money borrowed.
Had a first and second mortgage on the new property (tiny motel), original owner carried the first mortgage and room rentals paid this mortgage. We had 2 years in which to sell a property and pay off the second mortgage.
Generally everything we started with was borrowed, I did have some money from a retirement/profit sharing account, not large, the tax free part gave me initial operating money with the balance in an IRA. About 8 to 10 years in we cashed the IRA, paid the tax and paid that money against the first mortgage.
For most of our almost 25 years here I continued to work a job, sometimes good, sometimes flipping burgers or delivering newspapers while Maxine did everything at the motel (me helping evenings and weekends), so yes from my view a person can get into the lodging business with little or no money or experience and from my view it is a great life, but having good jobs now ask yourselves if it would be a life you would enjoy, that's the key question. Always fun talking with guests on a sunny spring day, not as much so scrubbing toilets, plowing snow or crawling in the muck under the house on a cold winter night to repair a leaky pipe..
Click to expand...
JimBoone said:
...ask yourselves if it would be a life you would enjoy, that's the key question. Always fun talking with guests on a sunny spring day, not as much so scrubbing toilets, plowing snow or crawling in the muck under the house on a cold winter night to repair a leaky pipe.
Click to expand...
But latter can be fun, too, at least when you are done and can claim bragging rights for having accomplished the arduous task!
MuddyTim480x640.jpg

.
Click to expand...
You can't seriously be going to open that door and go inside!
.
Click to expand...
Morticia said:
You can't seriously be going to open that door and go inside!
Click to expand...
My thoughts exactly!
shades_smile.gif

 
OnTheShore said:
JimBoone said:
So much may depend on your goal, making money or living the life you want to live, our goal was the lifestyle. Maxine was a stay at home mom, never worked for pay and my best outside salary would have been less than half of yours so our goals and lives were probably not similar.
When we started (about 25 years ago):
Borrowed against our home and some rental property, this gave me an amount similar to your 60,000 for a down payment (about 1/3 down for the property we purchased), the rent on those properties paid the payments on the money borrowed.
Had a first and second mortgage on the new property (tiny motel), original owner carried the first mortgage and room rentals paid this mortgage. We had 2 years in which to sell a property and pay off the second mortgage.
Generally everything we started with was borrowed, I did have some money from a retirement/profit sharing account, not large, the tax free part gave me initial operating money with the balance in an IRA. About 8 to 10 years in we cashed the IRA, paid the tax and paid that money against the first mortgage.
For most of our almost 25 years here I continued to work a job, sometimes good, sometimes flipping burgers or delivering newspapers while Maxine did everything at the motel (me helping evenings and weekends), so yes from my view a person can get into the lodging business with little or no money or experience and from my view it is a great life, but having good jobs now ask yourselves if it would be a life you would enjoy, that's the key question. Always fun talking with guests on a sunny spring day, not as much so scrubbing toilets, plowing snow or crawling in the muck under the house on a cold winter night to repair a leaky pipe..
Click to expand...
JimBoone said:
...ask yourselves if it would be a life you would enjoy, that's the key question. Always fun talking with guests on a sunny spring day, not as much so scrubbing toilets, plowing snow or crawling in the muck under the house on a cold winter night to repair a leaky pipe.
Click to expand...
But latter can be fun, too, at least when you are done and can claim bragging rights for having accomplished the arduous task!
MuddyTim480x640.jpg

.
Click to expand...
For me yes, I do enjoy the feeling of accomplishing a job even if it is dirty, but I've always been a handyman, felt that folks that seemed to have executive type positions should be aware of that side of the business. I don't really mind the dirty jobs, but sure would be nice if things would fail on a sunny spring day rather than a winter night and darned if the jobs don't seem to get tougher with age.
 
Morticia said:
OnTheShore said:
JimBoone said:
So much may depend on your goal, making money or living the life you want to live, our goal was the lifestyle. Maxine was a stay at home mom, never worked for pay and my best outside salary would have been less than half of yours so our goals and lives were probably not similar.
When we started (about 25 years ago):
Borrowed against our home and some rental property, this gave me an amount similar to your 60,000 for a down payment (about 1/3 down for the property we purchased), the rent on those properties paid the payments on the money borrowed.
Had a first and second mortgage on the new property (tiny motel), original owner carried the first mortgage and room rentals paid this mortgage. We had 2 years in which to sell a property and pay off the second mortgage.
Generally everything we started with was borrowed, I did have some money from a retirement/profit sharing account, not large, the tax free part gave me initial operating money with the balance in an IRA. About 8 to 10 years in we cashed the IRA, paid the tax and paid that money against the first mortgage.
For most of our almost 25 years here I continued to work a job, sometimes good, sometimes flipping burgers or delivering newspapers while Maxine did everything at the motel (me helping evenings and weekends), so yes from my view a person can get into the lodging business with little or no money or experience and from my view it is a great life, but having good jobs now ask yourselves if it would be a life you would enjoy, that's the key question. Always fun talking with guests on a sunny spring day, not as much so scrubbing toilets, plowing snow or crawling in the muck under the house on a cold winter night to repair a leaky pipe..
Click to expand...
JimBoone said:
...ask yourselves if it would be a life you would enjoy, that's the key question. Always fun talking with guests on a sunny spring day, not as much so scrubbing toilets, plowing snow or crawling in the muck under the house on a cold winter night to repair a leaky pipe.
Click to expand...
But latter can be fun, too, at least when you are done and can claim bragging rights for having accomplished the arduous task!
MuddyTim480x640.jpg

.
Click to expand...
You can't seriously be going to open that door and go inside!
.
Click to expand...
Gee, a fellow can't change clothes on the front porch, can he?
 
JimBoone said:
Morticia said:
OnTheShore said:
JimBoone said:
So much may depend on your goal, making money or living the life you want to live, our goal was the lifestyle. Maxine was a stay at home mom, never worked for pay and my best outside salary would have been less than half of yours so our goals and lives were probably not similar.
When we started (about 25 years ago):
Borrowed against our home and some rental property, this gave me an amount similar to your 60,000 for a down payment (about 1/3 down for the property we purchased), the rent on those properties paid the payments on the money borrowed.
Had a first and second mortgage on the new property (tiny motel), original owner carried the first mortgage and room rentals paid this mortgage. We had 2 years in which to sell a property and pay off the second mortgage.
Generally everything we started with was borrowed, I did have some money from a retirement/profit sharing account, not large, the tax free part gave me initial operating money with the balance in an IRA. About 8 to 10 years in we cashed the IRA, paid the tax and paid that money against the first mortgage.
For most of our almost 25 years here I continued to work a job, sometimes good, sometimes flipping burgers or delivering newspapers while Maxine did everything at the motel (me helping evenings and weekends), so yes from my view a person can get into the lodging business with little or no money or experience and from my view it is a great life, but having good jobs now ask yourselves if it would be a life you would enjoy, that's the key question. Always fun talking with guests on a sunny spring day, not as much so scrubbing toilets, plowing snow or crawling in the muck under the house on a cold winter night to repair a leaky pipe..
Click to expand...
JimBoone said:
...ask yourselves if it would be a life you would enjoy, that's the key question. Always fun talking with guests on a sunny spring day, not as much so scrubbing toilets, plowing snow or crawling in the muck under the house on a cold winter night to repair a leaky pipe.
Click to expand...
But latter can be fun, too, at least when you are done and can claim bragging rights for having accomplished the arduous task!
MuddyTim480x640.jpg

.
Click to expand...
You can't seriously be going to open that door and go inside!
.
Click to expand...
Gee, a fellow can't change clothes on the front porch, can he?
.
Click to expand...
JimBoone said:
Gee, a fellow can't change clothes on the front porch, can he?
Click to expand...
With all that muck? Better to scare the neighbors than sink up the house!
 
One concern, with such a small down, is that your payments will be likely be interest only. That can be a slippery road.
We have an SBA loan currently, 20 yr. I believe they will go higher term however. But for info purposes, we pay roughly $725 a month, for every $100,000K borrowed. As an owner financed sale, I would expect your payments to be higher to compensate for the risk.
A well run, money making operation requires more than one person, so working outside but not be possible. Maybe sometimes of the year when it can be slower, but generally you need all hands on deck.
 

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