Buy the business, lease the property?

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innshopper

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Hi Folks,
I recieved a new listing over the weekend, and I was curious about your opinions.
The B&B business is for sale for $30,000 and does not include real estate. The real estate can be leased on a monthly basis. I haven't seen this before.
It's certainly a way to run a B&B with low startup costs, but unlike other businesses you can't just move it later. I suppose with the right long-term lease agreement / right of first refusal on purchase it could work. Just very different.
Anyway, thought I'd throw it out to the group.
Thanks,
Zach
 

Morticia

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There's another innkeeper who does this with her business. She leases the property and someone else is responsible for major renovations and repairs. She's been doing this for a long time, so it seems to work.
 

domsmom

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I was looking at properties in the UK for awhile and lots of them are for lease, not sale.
 

Joey Camb

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I was looking at properties in the UK for awhile and lots of them are for lease, not sale..
Be aware that in the UK there is a difference between a Leased property which is basically renting and a leasehold property which is you own the building but you rent the land it stands on usually with a lease for 999 years at a very low rent for example $16 a year. it is a weird British thing but you do have to watch as I have had people "Oh gosh what a cheap rent!" but it doesn't include the property!
 

domsmom

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I was looking at properties in the UK for awhile and lots of them are for lease, not sale..
Be aware that in the UK there is a difference between a Leased property which is basically renting and a leasehold property which is you own the building but you rent the land it stands on usually with a lease for 999 years at a very low rent for example $16 a year. it is a weird British thing but you do have to watch as I have had people "Oh gosh what a cheap rent!" but it doesn't include the property!
.
Thanks for clarifying! I knew the leasehold meant I did not own something. Good to know it would be the land.
 

EmptyNest

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There's another innkeeper who does this with her business. She leases the property and someone else is responsible for major renovations and repairs. She's been doing this for a long time, so it seems to work..
That sounds like a great deal to me. Run the inn but no worries about taking care repairs ;-) Unless of course that is included in the deal. Read the fine print I guess I would say. Local place up for sale.../ or lease..they have been through 2 lessess in less than 6 months ;-(
 

Joey Camb

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I was looking at properties in the UK for awhile and lots of them are for lease, not sale..
Be aware that in the UK there is a difference between a Leased property which is basically renting and a leasehold property which is you own the building but you rent the land it stands on usually with a lease for 999 years at a very low rent for example $16 a year. it is a weird British thing but you do have to watch as I have had people "Oh gosh what a cheap rent!" but it doesn't include the property!
.
Thanks for clarifying! I knew the leasehold meant I did not own something. Good to know it would be the land.
.
If you have a lot of time left on the lease it is fine but when you run into problems is if there is less then 60 as in theory when it is done they landlord can claim the land back. This has never happened that I have ever heard about. When it gets close to time the tennants usually negotiate to buy the land however they have you by the short and curleys so can charge what they like. Usually they arn't too bad. Usually they are for about 1000 years.
 

Innkeeper To Go

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I was looking at properties in the UK for awhile and lots of them are for lease, not sale..
Be aware that in the UK there is a difference between a Leased property which is basically renting and a leasehold property which is you own the building but you rent the land it stands on usually with a lease for 999 years at a very low rent for example $16 a year. it is a weird British thing but you do have to watch as I have had people "Oh gosh what a cheap rent!" but it doesn't include the property!
.
Thanks for clarifying! I knew the leasehold meant I did not own something. Good to know it would be the land.
.
If you have a lot of time left on the lease it is fine but when you run into problems is if there is less then 60 as in theory when it is done they landlord can claim the land back. This has never happened that I have ever heard about. When it gets close to time the tennants usually negotiate to buy the land however they have you by the short and curleys so can charge what they like. Usually they arn't too bad. Usually they are for about 1000 years.
.
camberleyhotelharrogate@yahoo.co.uk said:
If you have a lot of time left on the lease it is fine but when you run into problems is if there is less then 60 as in theory when it is done they landlord can claim the land back. This has never happened that I have ever heard about. When it gets close to time the tennants usually negotiate to buy the land however they have you by the short and curleys so can charge what they like. Usually they arn't too bad. Usually they are for about 1000 years.
So you're fine for the first 999 years, in other words.
 

wendydk

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I've often wondered how that would work out for both parties...seems like a very high lease payment for so few rooms...$2k per month PLUS taxes and insurance and a couple of their reviews specify tattered surroundings.
 

Innkeeper To Go

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I've often wondered how that would work out for both parties...seems like a very high lease payment for so few rooms...$2k per month PLUS taxes and insurance and a couple of their reviews specify tattered surroundings..
It seemed a bit high to me, too. But I'm guessing it's just their starting point.
$30K can seem like a bargain price but what are you actually getting here? If it's an inn with a sterling reputation, well maintained, and stocked with good linens and amenities, it might well be a bargain.
But if you're buying the right to invest in deferred maintenance and pay hefty tax/insurance payments without a whole lot of revenue coming in, well, it had better be a really good longterm lease in a brilliant location. The agreement would also need to provide for regular proof that all mortgages/debts that were the owner's responsibility were, in fact, being paid.
Seems a straight up operator agreement might make more sense in this particular case, just from what it looks like from here. IMHO.
With the right conditions, though, this kind of purchase could make sense. But who is going to do this? An aspiring with no experience yet? Maybe that's why the owners want the $30k, so their risk of business decline would be offset.
I think that's why some folks have seen the same property fail more than once with lease agreements. If the inn is being leased to a novice innkeeper, the risk of failure is enormous.
It's the kind of situation that requires due diligence on both sides.
 

Joey Camb

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I was looking at properties in the UK for awhile and lots of them are for lease, not sale..
Be aware that in the UK there is a difference between a Leased property which is basically renting and a leasehold property which is you own the building but you rent the land it stands on usually with a lease for 999 years at a very low rent for example $16 a year. it is a weird British thing but you do have to watch as I have had people "Oh gosh what a cheap rent!" but it doesn't include the property!
.
Thanks for clarifying! I knew the leasehold meant I did not own something. Good to know it would be the land.
.
If you have a lot of time left on the lease it is fine but when you run into problems is if there is less then 60 as in theory when it is done they landlord can claim the land back. This has never happened that I have ever heard about. When it gets close to time the tennants usually negotiate to buy the land however they have you by the short and curleys so can charge what they like. Usually they arn't too bad. Usually they are for about 1000 years.
.
camberleyhotelharrogate@yahoo.co.uk said:
If you have a lot of time left on the lease it is fine but when you run into problems is if there is less then 60 as in theory when it is done they landlord can claim the land back. This has never happened that I have ever heard about. When it gets close to time the tennants usually negotiate to buy the land however they have you by the short and curleys so can charge what they like. Usually they arn't too bad. Usually they are for about 1000 years.
So you're fine for the first 999 years, in other words.
.
Yup let your great great grandchildren worry about it!!
 

Joey Camb

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I was looking at properties in the UK for awhile and lots of them are for lease, not sale..
Be aware that in the UK there is a difference between a Leased property which is basically renting and a leasehold property which is you own the building but you rent the land it stands on usually with a lease for 999 years at a very low rent for example $16 a year. it is a weird British thing but you do have to watch as I have had people "Oh gosh what a cheap rent!" but it doesn't include the property!
.
Thanks for clarifying! I knew the leasehold meant I did not own something. Good to know it would be the land.
.
If you have a lot of time left on the lease it is fine but when you run into problems is if there is less then 60 as in theory when it is done they landlord can claim the land back. This has never happened that I have ever heard about. When it gets close to time the tennants usually negotiate to buy the land however they have you by the short and curleys so can charge what they like. Usually they arn't too bad. Usually they are for about 1000 years.
.
camberleyhotelharrogate@yahoo.co.uk said:
If you have a lot of time left on the lease it is fine but when you run into problems is if there is less then 60 as in theory when it is done they landlord can claim the land back. This has never happened that I have ever heard about. When it gets close to time the tennants usually negotiate to buy the land however they have you by the short and curleys so can charge what they like. Usually they arn't too bad. Usually they are for about 1000 years.
So you're fine for the first 999 years, in other words.
.
Yup let your great great grandchildren worry about it!!
 

JBloggs

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Zach
Oddly enough that innkeeper used to be on the OLD forum on About.com and has had their place for sale for quite a while, I think they took it off the market and now back on. In a town where many B&B's closed up shop. We had someone on THIS forum 6 mo's ago approx who was looking to open a B&B in that same town.
 
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