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white pine

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Wasn't sure where this fits most form wise here or Aspiriing. I've been reading posts again-- and the economic news. I know that the number one reason businesses fail/close is cash flow (being more out than in). I know that something like 90% of small businesses never make it to 10 years. I see posts from many innkeepers here who have listed their inns for sale . I see tons of mom and pop motels, resorts, and inns closing and for sale in the real estate listings -- most of these are being sold as property not businesses. I know that the economy is hardest on small businesses, and the big boys love to invade specialty markets if they think there is money there to be had (I just noticed an ad for a super 8 under a google bed and breakfast search for an area I may need to travel to.). I realize that to make a go of it, and to end up with a property I can sell, the cash flow has to support the potential sale price of the inn, not just the smaller loan we will have to carry. I based my positive cash flow on a little less than 25% occupancy. Now I am wondering if I am nuts to think I can do this at all in todays economy?? Is there any glimmer of hope?? All seems very black today.
 

EmptyNest

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If you are buying a turnkey property in a good location, with a good cash flow and occupancy right now...I would say you stand a chance.Especially if you can find yourself a great deal.
BUT..if you are doing a start up and think you will see a return on your investment any time soon, I would say forget about it at least for now. Unless you have cash reserves to see you through the next couple of years. If you do, then you may be able to make it.
I am probably known as the "negative one" around here..and give my state of mind with total cabin fever right now....it is worse than normal..and I do apologize.
But I prefer to see it as being realisitc. If it were me, I would not be taking chances with my $$$ right now. Sorry. I am sure others here will tell you totally the opposite and I hope their words will be more encouraging than mine.
 

Morticia

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Where are you getting the info for the 25% occ? Thin air or actual hard numbers? You can get this info from your state by asking for lodging tax revenues for your area. How many rooms are there at present in your area? What do they charge? How many are being used? (this is where the tax rev comes in)
We looked at places that were and still are charging under $100 IN season. To me, that is a difficult game. It means there are more rooms than guests and prcing is what they are using to bring them in. When you can get a ski pkg for $99/night on a weekend that includes your lift ticket, breakfast & room, times are tough.
So, you need to do your homework in re what is going on in the area? How are the really established (and open all the time) businesses doing? You said this one you are looking at was partially closed, but if others are going great guns, there may be room for you, too.
You are right about working capital. If possible you should have enough cash on hand going into your first day on the job to pay ALL your bills for one year in case no one shows up. That includes enough for the reno work, etc.
Good luck!
 

Don Draper

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First of all you have to do the hard research as Morticia outlined above and listen to yourself...turn OFF the news and all their blabbering about "the economy", etc. The only vested interest they have is to garner ratings, and they do that by hyperbolizing and dramatizing every little thing, good or bad. Not a good mindset, you need to be focused on what you want and listening to your own intuition as to whether or not NOW is a good time.
You also really need to look at whether your area is a tourist destination or not. To start a new place (or renovate a partially open place) where you have to be the destination I would say that would be tough to do in the current climate...you would first have to get your reno's done and then start targeted marketing to get people coming in. But if it's a tourist destination in the first place, the people are already going to come and you just need to get your place out in front of them when they are deciding where to stay. Kind of like the market is already there and you just need to focus on getting a share of it. While nothing is recession proof, certain places are recession resistant and people are going to travel to them regardless of what "the economy" is doing.
 

Morticia

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First of all you have to do the hard research as Morticia outlined above and listen to yourself...turn OFF the news and all their blabbering about "the economy", etc. The only vested interest they have is to garner ratings, and they do that by hyperbolizing and dramatizing every little thing, good or bad. Not a good mindset, you need to be focused on what you want and listening to your own intuition as to whether or not NOW is a good time.
You also really need to look at whether your area is a tourist destination or not. To start a new place (or renovate a partially open place) where you have to be the destination I would say that would be tough to do in the current climate...you would first have to get your reno's done and then start targeted marketing to get people coming in. But if it's a tourist destination in the first place, the people are already going to come and you just need to get your place out in front of them when they are deciding where to stay. Kind of like the market is already there and you just need to focus on getting a share of it. While nothing is recession proof, certain places are recession resistant and people are going to travel to them regardless of what "the economy" is doing..
Rupert said:
...turn OFF the news and all their blabbering about "the economy", etc. The only vested interest they have is to garner ratings, and they do that by hyperbolizing and dramatizing every little thing, good or bad. Not a good mindset, you need to be focused on what you want and listening to your own intuition as to whether or not NOW is a good time.
Bingo. Talking heads. If news is on 24x7 they have to talk about something no matter how absurd.
You do need to listen to your own gut instincts on something. Are you in love with the place because it means so much to you emotionally (as I think the initial description of this place was stated) or is it really a viable biz opp?
We saw so many places I wanted to 'rescue' but they were not good biz opps. One place that spoke to me but it was next door to a run down apt building with beater cars all over the lawn and the inn itself needed a big influx of cash. I wanted to save that place but it wouldn't have made us any money.
 

EmptyNest

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First of all you have to do the hard research as Morticia outlined above and listen to yourself...turn OFF the news and all their blabbering about "the economy", etc. The only vested interest they have is to garner ratings, and they do that by hyperbolizing and dramatizing every little thing, good or bad. Not a good mindset, you need to be focused on what you want and listening to your own intuition as to whether or not NOW is a good time.
You also really need to look at whether your area is a tourist destination or not. To start a new place (or renovate a partially open place) where you have to be the destination I would say that would be tough to do in the current climate...you would first have to get your reno's done and then start targeted marketing to get people coming in. But if it's a tourist destination in the first place, the people are already going to come and you just need to get your place out in front of them when they are deciding where to stay. Kind of like the market is already there and you just need to focus on getting a share of it. While nothing is recession proof, certain places are recession resistant and people are going to travel to them regardless of what "the economy" is doing..
Rupert said:
...turn OFF the news and all their blabbering about "the economy", etc. The only vested interest they have is to garner ratings, and they do that by hyperbolizing and dramatizing every little thing, good or bad. Not a good mindset, you need to be focused on what you want and listening to your own intuition as to whether or not NOW is a good time.
Bingo. Talking heads. If news is on 24x7 they have to talk about something no matter how absurd.
You do need to listen to your own gut instincts on something. Are you in love with the place because it means so much to you emotionally (as I think the initial description of this place was stated) or is it really a viable biz opp?
We saw so many places I wanted to 'rescue' but they were not good biz opps. One place that spoke to me but it was next door to a run down apt building with beater cars all over the lawn and the inn itself needed a big influx of cash. I wanted to save that place but it wouldn't have made us any money.
.
You are absolutely right in that it has to be a good bus. opp. and always consider the resale value potential even as you purchase a place. We thought we had all our bases covered...and think we still do...it's just the economy that keeps us from listing the place because we know we can't get what we want for it now. That's ok, we planned for that too and we will stay here until the timing is better.
 

gillumhouse

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Especially in the current climate, set things up to separate your personal holdings from the business. From the e-mails I have been getting from the SBA (not SPAM - legit e-mails) there is loan money available at little or no interest for small business - not for the purchase of, but to improve. O do not know if you would qualify as a start-up but since it has been a business, you might.
I would definitely look at my resources - do you have enough funds, not committed to the project, to sustain you personally for a year or longer? Is there any NEW business inthe area? Same old businesses may be just hanging on because there is nowhere else to go but if there has been new investments, new businesses that have opened in the last couple years it is a good sign that the area is still viable.
You have memories of years past - savor them. Now look at the place as a stranger. Are people still coming there? Is it "THE SPOT" still?
I am more the Rah-Rah, you can do it however the whole worle has changed in the last year. I think of Hot Springs, Arkansas. In 1975 it was still a bustling place but on the downward. The Bathhouse Row was deteriorating and some of the bath houses were closed but the antiue shops and auctions were going great guns. 10 years later they were struggling to revive Bath House Row and the antiques shops and auctions were a lot less plentiful. Last time we were there - about 1998 - it looked a bit dingier and the downtown was pretty dead. At one time Hot Springs was a hopping place and was a bit of a "little Chicago" (not a nice appelation). So look at the area to see if it is holding its own and getting better or is it one of the places that is a "used to be".
Good luck. It is always a factor of luck mixed in with the hard work. And do not forget to factor in the tax deductions that will offet some of the expenses.
 

wendydk

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White Pine
Many (if not most) small businesses are started during down economic times. Innkeeping has it's benefits...like rent or mortgage payments and utilities on just one structure and tremendous writeoffs of the things all homeowners pay for. I am always the first one to tell Aspirings to go for it.
What happens if business is not good, or if you don't enjoy it (or if any number of expensive things go wrong)? Could you afford to (or would you want to) still live there, or would you lose your shirt? If you could not afford to live there without a healthy and thriving business, consider buying one of the many successful Inns for sale...at least they give you a snapshot of the business in real time....before and after the economy took a hit.
 

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I agree with everyone's statements that have posted so far. I just want to add or clarify one thing. Even if you are in a tourist area, if you are a NEW place, it will take time (a couple of years) to establish yourself and start getting a REAL piece of the pie UNLESS you are in the heart of Main Street. Our market is not one of those "build it and they will come" businesses, at least not as in knocking down the door. You need a cushion to carry you through the first 2 years, at least, or a job that at least pays the bills.
This is reality in even the good times!
 

swirt

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I see posts from many innkeepers here who have listed their inns for sale .
I think you have to keep in mind, that of the people who are active here that have their places for sale, it is not because the inn is not doing well. It is because of changes in family (ex: I have a one year old and it is not fair to him for many reasons) or they've put in their time and they are looking to do something else.
Everybody's situation is different. Financial begininings, location, income potential, investment potential of the property (could it ever be something other than a B&B)... So it is difficult to say what would work for you. (and that includes the news...they can't say what would work for you either) I think it is important to have a fallback option....what would happen if it all failed...what would you do. If you can live with that, then you don't have to sweat it too much.
 

Innkeeper To Go

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Ditto to all of the above.
The average innkeeper/owner keeps their place 7 years before selling. Today it is taking significantly more time than most would like. And many of them suffer the same fate as many home owners; they're over-leveraged so can't sell at the price the market would bear right now.
But as swirt says, many of them decide to sell for reasons completely unrelated to the viability of the business.
That said, do you have a plan for what you would do if something happened in your family and you really needed to sell? In my book, it helps to be prepared for all possibilities and keeps each of those potential problems from being so frightening.
If you needed to sell your inn in 5 years and couldn't, what would you do? Could you hire a manager and still survive? Do the math and figure out what you can and cannot do, considering every possible contingency.
And as Morticia says, make sure the 25% occupancy you're planning on is not a pipedream but based in fact. How many guests are coming to that area now. Not 3 years ago but now. The age of the data you're looking at now is really important in determining viability.
Times are tough out there. Never have they been tougher for our industry. And we have some even worse days ahead of us.
But many will buck the trend and thrive. They will have their fingers on the pulse of what guests want and they will do well, no matter what the future brings.
The trick is to make sure you're one of that latter category.
That means leaving no stone unturned in your research, in your planning, and in your marketing once your dream comes to fruition.
 

seashanty

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white pine, it's always good to go into something with your eyes wide open. i met some aspirings in 2005 who opened in 2006 and folded two years later. the stars in their eyes were blinding.
it's great to have balance. and perspective. there is invaluable advice here from real innkeepers with first hand knowledge.
after you gather all your facts and get your financing in line, sometimes you have to take a leap of faith, and give it a shot.
 

Breakfast Diva

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white pine said:
Now I am wondering if I am nuts to think I can do this at all in todays economy?? Is there any glimmer of hope?? All seems very black today.
If you have the cash and have done ALL your research, this is actually a good time to buy. There are great deals out there. There are also great risks. It's much more difficult to get a loan than it used to be, but what has happened is that they are carefully looking to see if the business can support it. Gone are the days of just sign on the line and hope it works out.
Buy low and sell high.....isn't that how one makes money?
I agree with all of the above posts that you MUST have cash reserves. This is just good business sense whether we're talking B&B or any other business. From the day we bought out B&B we had our exit strategy. You must plan ahead for all possibilities, both positive and negative.
If you have your property in mind and are unsure of things, contact a professional to help you. There are many out there. It's actually an exciting time for those aspirings who have the money to buy a property right now. You won't see these kinds of "deals" again (we hope).
It's not all bleak, and there is hope, just be very careful.
 

wendydk

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I see posts from many innkeepers here who have listed their inns for sale .
I think you have to keep in mind, that of the people who are active here that have their places for sale, it is not because the inn is not doing well. It is because of changes in family (ex: I have a one year old and it is not fair to him for many reasons) or they've put in their time and they are looking to do something else.
Everybody's situation is different. Financial begininings, location, income potential, investment potential of the property (could it ever be something other than a B&B)... So it is difficult to say what would work for you. (and that includes the news...they can't say what would work for you either) I think it is important to have a fallback option....what would happen if it all failed...what would you do. If you can live with that, then you don't have to sweat it too much..
swirt said:
I see posts from many innkeepers here who have listed their inns for sale .
I think you have to keep in mind, that of the people who are active here that have their places for sale, it is not because the inn is not doing well.
Swirt is so right. We just took our Inn off the market, as the family problems that prompted the sale have simmered down from a raging forest fire to glowing embers. In fact, I know of no one around us who are on the market because business is down. All are due to some personal preference or issue (or so they say).
 

gillumhouse

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white pine said:
Now I am wondering if I am nuts to think I can do this at all in todays economy?? Is there any glimmer of hope?? All seems very black today.
If you have the cash and have done ALL your research, this is actually a good time to buy. There are great deals out there. There are also great risks. It's much more difficult to get a loan than it used to be, but what has happened is that they are carefully looking to see if the business can support it. Gone are the days of just sign on the line and hope it works out.
Buy low and sell high.....isn't that how one makes money?
I agree with all of the above posts that you MUST have cash reserves. This is just good business sense whether we're talking B&B or any other business. From the day we bought out B&B we had our exit strategy. You must plan ahead for all possibilities, both positive and negative.
If you have your property in mind and are unsure of things, contact a professional to help you. There are many out there. It's actually an exciting time for those aspirings who have the money to buy a property right now. You won't see these kinds of "deals" again (we hope).
It's not all bleak, and there is hope, just be very careful..
And the REAL failures in life are those who are afraid to take a risk - period. Just be sure to understand the difference between a risk and a "flyer". A "Flyer" has not looked at risk, they just go for it! Risk understands the possibilities and still does it. Just my opinion.
I want to put my place on the market BECAUSE the only way I can keep it a B & B is for ME to sell it, not because I am tired of doing B & B or any other reason. However DH has kaboshed the plan - he does not want to move! Who coulda guessed that!!!
 

EmptyNest

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white pine said:
Now I am wondering if I am nuts to think I can do this at all in todays economy?? Is there any glimmer of hope?? All seems very black today.
If you have the cash and have done ALL your research, this is actually a good time to buy. There are great deals out there. There are also great risks. It's much more difficult to get a loan than it used to be, but what has happened is that they are carefully looking to see if the business can support it. Gone are the days of just sign on the line and hope it works out.
Buy low and sell high.....isn't that how one makes money?
I agree with all of the above posts that you MUST have cash reserves. This is just good business sense whether we're talking B&B or any other business. From the day we bought out B&B we had our exit strategy. You must plan ahead for all possibilities, both positive and negative.
If you have your property in mind and are unsure of things, contact a professional to help you. There are many out there. It's actually an exciting time for those aspirings who have the money to buy a property right now. You won't see these kinds of "deals" again (we hope).
It's not all bleak, and there is hope, just be very careful..
And the REAL failures in life are those who are afraid to take a risk - period. Just be sure to understand the difference between a risk and a "flyer". A "Flyer" has not looked at risk, they just go for it! Risk understands the possibilities and still does it. Just my opinion.
I want to put my place on the market BECAUSE the only way I can keep it a B & B is for ME to sell it, not because I am tired of doing B & B or any other reason. However DH has kaboshed the plan - he does not want to move! Who coulda guessed that!!!
.
You are fortunate in that you can live in your house as your home when and if you decide to close the B & B. I know you would prefer to sell it as a B & B, but for your DH, it has become his home and he is now comfortable there and probably does not want to face the upheaval selling and moving would be in his life.
 

white pine

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white pine said:
Now I am wondering if I am nuts to think I can do this at all in todays economy?? Is there any glimmer of hope?? All seems very black today.
If you have the cash and have done ALL your research, this is actually a good time to buy. There are great deals out there. There are also great risks. It's much more difficult to get a loan than it used to be, but what has happened is that they are carefully looking to see if the business can support it. Gone are the days of just sign on the line and hope it works out.
Buy low and sell high.....isn't that how one makes money?
I agree with all of the above posts that you MUST have cash reserves. This is just good business sense whether we're talking B&B or any other business. From the day we bought out B&B we had our exit strategy. You must plan ahead for all possibilities, both positive and negative.
If you have your property in mind and are unsure of things, contact a professional to help you. There are many out there. It's actually an exciting time for those aspirings who have the money to buy a property right now. You won't see these kinds of "deals" again (we hope).
It's not all bleak, and there is hope, just be very careful..
I have done my homework-- again, and again, and again. The economic news does not get better. I doubt people forced into early retirement intend to travel a great deal. ANYWAY....
We are debt free. We have no mortagages. Even with the down, we have cash reserves for two years, for all our properties taxes, utilities, and insurance as well as living expenses. The husband plans on continuing his consulting business. The sale of our primary residence could pay off the balance, and add to the funds needed for renovation. The motel could be up and running this spring, to offset outgo.
BTW I applied for a sba loan when I bought my commercial building. Although they approved the loan, I ended going with a local lender who gave us a much better rate.
The property is 1/2 hour from the largest tourist area in the state, and is on route two several other areas of interest. It is on a nice lake, and has sandy frontage and a nice sandy beach area.
The area is quite nice; there are three lakes there, this one is the largest and is largely developed. The frontage on this property is probably the largest chunk of undeveloped property on the lake. There are three listings on the lake now, and all are asking about $100. per front foot. We would be paying under half that and getting the motel, an inn and a cabin.
Statistics based on the past can not be used as a prediction of the future. I think it is best to prepare for the worst. In a better economy I a sure the heir would take the money and run. I know for fact they were offered over a million for the place and turned it down, because I was present at the time.
The PO, now deceased, and her husband bought it in 1953. It is a local landmark. I think it has a lot of potential. Tourisim is down and is projected to drop another 7.8% in the area. Occupancy rates are not too helpful I feel because the property lies between two counties wiith one dominated by a large number of franchises. Also, this property is very different than many. There is a small motel in town proper with horrible beds that does a good business. Across the lake is a very small resort that rents cabins to fishermen. Nicely kept, but not much land.
Based on my best estimates,, without putting preservation easements to restrict deveolpment on the land thereby lowering property taxes, I fiqured to meet expenses the property must rent out at about 25% of capacity for the season (20 weeks) to do a little better than break even. This is based on keeping the room rates low enough to compete with other motels and inns in the area.
Sorry for the rather generic response. I went for a hard ski, but I am still feeling down.
 

gillumhouse

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white pine said:
Now I am wondering if I am nuts to think I can do this at all in todays economy?? Is there any glimmer of hope?? All seems very black today.
If you have the cash and have done ALL your research, this is actually a good time to buy. There are great deals out there. There are also great risks. It's much more difficult to get a loan than it used to be, but what has happened is that they are carefully looking to see if the business can support it. Gone are the days of just sign on the line and hope it works out.
Buy low and sell high.....isn't that how one makes money?
I agree with all of the above posts that you MUST have cash reserves. This is just good business sense whether we're talking B&B or any other business. From the day we bought out B&B we had our exit strategy. You must plan ahead for all possibilities, both positive and negative.
If you have your property in mind and are unsure of things, contact a professional to help you. There are many out there. It's actually an exciting time for those aspirings who have the money to buy a property right now. You won't see these kinds of "deals" again (we hope).
It's not all bleak, and there is hope, just be very careful..
I have done my homework-- again, and again, and again. The economic news does not get better. I doubt people forced into early retirement intend to travel a great deal. ANYWAY....
We are debt free. We have no mortagages. Even with the down, we have cash reserves for two years, for all our properties taxes, utilities, and insurance as well as living expenses. The husband plans on continuing his consulting business. The sale of our primary residence could pay off the balance, and add to the funds needed for renovation. The motel could be up and running this spring, to offset outgo.
BTW I applied for a sba loan when I bought my commercial building. Although they approved the loan, I ended going with a local lender who gave us a much better rate.
The property is 1/2 hour from the largest tourist area in the state, and is on route two several other areas of interest. It is on a nice lake, and has sandy frontage and a nice sandy beach area.
The area is quite nice; there are three lakes there, this one is the largest and is largely developed. The frontage on this property is probably the largest chunk of undeveloped property on the lake. There are three listings on the lake now, and all are asking about $100. per front foot. We would be paying under half that and getting the motel, an inn and a cabin.
Statistics based on the past can not be used as a prediction of the future. I think it is best to prepare for the worst. In a better economy I a sure the heir would take the money and run. I know for fact they were offered over a million for the place and turned it down, because I was present at the time.
The PO, now deceased, and her husband bought it in 1953. It is a local landmark. I think it has a lot of potential. Tourisim is down and is projected to drop another 7.8% in the area. Occupancy rates are not too helpful I feel because the property lies between two counties wiith one dominated by a large number of franchises. Also, this property is very different than many. There is a small motel in town proper with horrible beds that does a good business. Across the lake is a very small resort that rents cabins to fishermen. Nicely kept, but not much land.
Based on my best estimates,, without putting preservation easements to restrict deveolpment on the land thereby lowering property taxes, I fiqured to meet expenses the property must rent out at about 25% of capacity for the season (20 weeks) to do a little better than break even. This is based on keeping the room rates low enough to compete with other motels and inns in the area.
Sorry for the rather generic response. I went for a hard ski, but I am still feeling down.
.
Based on what you just said - GO FOR IT!!!
Take a bubble bath with a glas of wine in hand and upbeat music on the CD! Turn off the radio. Pundits get paid to skew opinion but do absolutely nothing to actually change anything - not even a light bulb. What a fantastic feeling it will be to give the Italian salute up to the armpit to those who said it could not succeed when you do. Target your market when ypu are getting ready to open - I would start 6 months prior to opening. It sounds as if all you re going to have to do is let people know it is open!
Kick BUTT!!!!!!!
 

Morticia

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white pine said:
Now I am wondering if I am nuts to think I can do this at all in todays economy?? Is there any glimmer of hope?? All seems very black today.
If you have the cash and have done ALL your research, this is actually a good time to buy. There are great deals out there. There are also great risks. It's much more difficult to get a loan than it used to be, but what has happened is that they are carefully looking to see if the business can support it. Gone are the days of just sign on the line and hope it works out.
Buy low and sell high.....isn't that how one makes money?
I agree with all of the above posts that you MUST have cash reserves. This is just good business sense whether we're talking B&B or any other business. From the day we bought out B&B we had our exit strategy. You must plan ahead for all possibilities, both positive and negative.
If you have your property in mind and are unsure of things, contact a professional to help you. There are many out there. It's actually an exciting time for those aspirings who have the money to buy a property right now. You won't see these kinds of "deals" again (we hope).
It's not all bleak, and there is hope, just be very careful..
I have done my homework-- again, and again, and again. The economic news does not get better. I doubt people forced into early retirement intend to travel a great deal. ANYWAY....
We are debt free. We have no mortagages. Even with the down, we have cash reserves for two years, for all our properties taxes, utilities, and insurance as well as living expenses. The husband plans on continuing his consulting business. The sale of our primary residence could pay off the balance, and add to the funds needed for renovation. The motel could be up and running this spring, to offset outgo.
BTW I applied for a sba loan when I bought my commercial building. Although they approved the loan, I ended going with a local lender who gave us a much better rate.
The property is 1/2 hour from the largest tourist area in the state, and is on route two several other areas of interest. It is on a nice lake, and has sandy frontage and a nice sandy beach area.
The area is quite nice; there are three lakes there, this one is the largest and is largely developed. The frontage on this property is probably the largest chunk of undeveloped property on the lake. There are three listings on the lake now, and all are asking about $100. per front foot. We would be paying under half that and getting the motel, an inn and a cabin.
Statistics based on the past can not be used as a prediction of the future. I think it is best to prepare for the worst. In a better economy I a sure the heir would take the money and run. I know for fact they were offered over a million for the place and turned it down, because I was present at the time.
The PO, now deceased, and her husband bought it in 1953. It is a local landmark. I think it has a lot of potential. Tourisim is down and is projected to drop another 7.8% in the area. Occupancy rates are not too helpful I feel because the property lies between two counties wiith one dominated by a large number of franchises. Also, this property is very different than many. There is a small motel in town proper with horrible beds that does a good business. Across the lake is a very small resort that rents cabins to fishermen. Nicely kept, but not much land.
Based on my best estimates,, without putting preservation easements to restrict deveolpment on the land thereby lowering property taxes, I fiqured to meet expenses the property must rent out at about 25% of capacity for the season (20 weeks) to do a little better than break even. This is based on keeping the room rates low enough to compete with other motels and inns in the area.
Sorry for the rather generic response. I went for a hard ski, but I am still feeling down.
.
If you have the funds necessary to stay alive this may be a great time to get in on this!
Something that caught my eye was your plan to keep rates low to compete. This may also be the time to make this place you are buying something different from 'rooms for rent.' Just a thought in that the property sounds unique and might draw a different clientele than (cheap) anglers. You might want to go for the anglers with bucks!
 

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white pine said:
Now I am wondering if I am nuts to think I can do this at all in todays economy?? Is there any glimmer of hope?? All seems very black today.
If you have the cash and have done ALL your research, this is actually a good time to buy. There are great deals out there. There are also great risks. It's much more difficult to get a loan than it used to be, but what has happened is that they are carefully looking to see if the business can support it. Gone are the days of just sign on the line and hope it works out.
Buy low and sell high.....isn't that how one makes money?
I agree with all of the above posts that you MUST have cash reserves. This is just good business sense whether we're talking B&B or any other business. From the day we bought out B&B we had our exit strategy. You must plan ahead for all possibilities, both positive and negative.
If you have your property in mind and are unsure of things, contact a professional to help you. There are many out there. It's actually an exciting time for those aspirings who have the money to buy a property right now. You won't see these kinds of "deals" again (we hope).
It's not all bleak, and there is hope, just be very careful..
I have done my homework-- again, and again, and again. The economic news does not get better. I doubt people forced into early retirement intend to travel a great deal. ANYWAY....
We are debt free. We have no mortagages. Even with the down, we have cash reserves for two years, for all our properties taxes, utilities, and insurance as well as living expenses. The husband plans on continuing his consulting business. The sale of our primary residence could pay off the balance, and add to the funds needed for renovation. The motel could be up and running this spring, to offset outgo.
BTW I applied for a sba loan when I bought my commercial building. Although they approved the loan, I ended going with a local lender who gave us a much better rate.
The property is 1/2 hour from the largest tourist area in the state, and is on route two several other areas of interest. It is on a nice lake, and has sandy frontage and a nice sandy beach area.
The area is quite nice; there are three lakes there, this one is the largest and is largely developed. The frontage on this property is probably the largest chunk of undeveloped property on the lake. There are three listings on the lake now, and all are asking about $100. per front foot. We would be paying under half that and getting the motel, an inn and a cabin.
Statistics based on the past can not be used as a prediction of the future. I think it is best to prepare for the worst. In a better economy I a sure the heir would take the money and run. I know for fact they were offered over a million for the place and turned it down, because I was present at the time.
The PO, now deceased, and her husband bought it in 1953. It is a local landmark. I think it has a lot of potential. Tourisim is down and is projected to drop another 7.8% in the area. Occupancy rates are not too helpful I feel because the property lies between two counties wiith one dominated by a large number of franchises. Also, this property is very different than many. There is a small motel in town proper with horrible beds that does a good business. Across the lake is a very small resort that rents cabins to fishermen. Nicely kept, but not much land.
Based on my best estimates,, without putting preservation easements to restrict deveolpment on the land thereby lowering property taxes, I fiqured to meet expenses the property must rent out at about 25% of capacity for the season (20 weeks) to do a little better than break even. This is based on keeping the room rates low enough to compete with other motels and inns in the area.
Sorry for the rather generic response. I went for a hard ski, but I am still feeling down.
.
Ditto to Kathleen and Morticia's responses. Especially ditto to the wine and bubble bath.
Sounds like you know what you're doing. You've got the funds set aside to get you through. Your eyes are wide open.
Best of luck to you, white pine. We're all rooting for you.
 
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