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.
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