Well, I have to ask the obvious question now.... if no one is making a living at this, are you doing it b/c you live in the house and it's a great write-off? There are far too many B&Bs to say this isn't a profitable business.
I, occasionally, buy a rent house knowing I'll only break-even, because I think the property is a good investment. I want to do more than break-even with a B&B, especially if I'm going to put my blood, sweat and tears into it.
I can't use the current owners bookings (for 2010) as a good guide b/c she just lived there and took bookings when they called. (She also let her sister live there, too) She didn't actively promote the business (due to personal stuff).
Fortunately, she is good at what she does and the B&Bs rep has not suffered, it just lost it's momentum..
Gingerbread Latte said:
Well, I have to ask the obvious question now.... if no one is making a living at this, are you doing it b/c you live in the house and it's a great write-off? There are far too many B&Bs to say this isn't a profitable business.
We make a living. We'd never get rich doing it, but we live comfortably. Not trying to send kids to college, and we already have a retirement fund from our corporate lives - we are making enough to bridge the gap. Our first two years, we didn't show a profit because a) we had been lied to about the income of the inn and b) we decided to upgrade the house and amenities to build the business faster, so we had some capital expenditures. But we came into it expecting some of that and had a year's worth of operating expenses in the bank as a cushion. And I was finishing up some of my consulting contracts the first 18 months we were here, so we had some extra income.
It's not impossible to have a decent business. Our revenue is up 50% from our first year. And in this recession, we still have this job and we've had our two best years in the business. The portion of the mortgage that goes to our space is way lower than any rent I would pay to live in this town, for nice owner's quarters in a nice house. We drive nice cars but nothing fancy and both are more than 8 years old. We don't take fancy vacations but we get away. Family emergencies are always a problem - but honestly, they were when I was in the corporate world. I don't think I could ever go back to the corporate world happily.
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Thank you! Thank you!
Hubs has a good job, I have a very flexible part-time job. Our 2 kids are in college (they keep changing their majors....eeekkk)
I'm not concerned with having to live completely on the B&B income, but if I'm going to do it, I want to be successful. (I also know the difference in making money and showing a profit for tax reasons, so I'm not worried about that.)
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I know people that have made comfortable incomes from buying turnkey B&Bs that are 6 rooms or more. I know people that have made
very comfortable incomes on 10 rooms up. I also know people that have made quite a bit of money with start up properties when they sold them - most before the current economic turndown.
I know folks with small B&Bs that can pay their home's expenses from what they make on the B&B and that's pretty much it. There has to be supplemental income of some sort to get by.
If you have an impressive mortgage and no guests, you'll have problems. If the property requires more money for maintenance or improvements than anticipated, you'll have problems. Whatever you do, don't underestimate the amount of money that you need to have in reserve for emergencies or unexpected repairs.
You have to know your location and market. You have to know what's happening in the hospitality and lodging industry for your region. You have to know your competition. You have to know how to handle your own business. It's a long day's work........
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