Due Diligence: What did you miss?

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Morticia

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I agree with knowing everyone on the town council and town planning commission. Where I live those in the know beg forgiveness and the outsiders ask permission. Guess who gets what they want? We met everyone when we first got here, but then we were busy working and now we don’t know anyone and we can’t get anything done without months of meetings and tons of lost opportunity while those who have kept up with all the new people at the town offices go their merry way without permits.
 

KenW

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Expect negotiation depends on the needs of the buyer and seller. As a buyer sometimes favorable terms have been more important to me than actual price. As a seller I expect it depends on the seller's position and next activity. When I listed property for sale to purchase this business I got all sorts of offers but an offer had to reach a certain point to allow me to move forward with my dream or it was useless to me. I wouldn't normally be a good one at negotiation, my emotional side has to want the item and my practical side has to know it is possible without too much risk.
As I prepare to sell one of my businesses with plans on semi retirement with our lodge I hired a knowledgeable company that specializing in my industry to evaluate everything. I'm sure these same type companies also can help with a purchase. I think you could spend a little time a money doing a background on the sellers, property history ( all public knowledge) but first they need to have good financial statements to share and your CPA should look over it for red flags.So many questions to be asked. Why are they selling, How quick do they want out. Good Luck.
 

myschae

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Another thought - I went to EVERY City Council meeting. It kept me up to date with what was REALLY happening in the City - of course, it also got me appointed to City Council to fill a vacancy, lost an election but stayed involved on the sidelines and then got muzzled again by a City Manager who made me City Clerk - 4 City Managers later, I still am (she retired). By going to council meetings you will know when someone is trying to pull a fast one (wanted a green space for a parking lot - lost and now came back with make it a parking lot or we will block parking at the Library & Museum (they bought it from the bank before the City knew it was for sale). But the Mayor does not like blackmail). It will also keep you informed if they want to raise sales tax or try for an Excess Levy, change a street from 2-way to one way or vice-versa, etc.
Good thoughts and I've added it to my notes. I'm not opposed to public service - ran in an election once and lost - but it is important to keep abreast. I was thinking, though, that in the hospitality industry, I'd fall back to my typical professionalism rule: no politics or religion (at least with regard to the guests - smile and nod). But, knowing who knows what and who does the work is generally how I tackle fitting into a corporate environment. Getting the lay of the political land seems wise even if I avoid active involvement; I still have to learn how to run the place.
 

myschae

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I would agree with paying attention to town/city government and making sure everyone in town meets you and knows you. My experience steers me to suggest not getting appointed/elected to your town council or selectboard.

After my three years on our local board, I tell people "I was elected because everyone in town liked me -- and I fixed that."
I really like you.
 

myschae

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I guess THAT depends on the mindset of the area and the person. I was welcomed and treated nicely DURING my 3 years on Council (1 year finishing a term and 2 years in my own elected position - BTW the election in my own right says a lot since I was a woman AND an ALIEN, you ain't from here are ya).

Now, over 20 years later, some people think I am still on Council and many people call me for info and help. They also refer friends and family here as guests. One cannot make a blanket statement about participation in local government. (Prior to opening my business so I was still eligible to vote on the issue, I voted to raise B & O taxes on businesses which would raise mine when I opened. When notified of the condition of the restrooms at the Little League Field (a situation that was rectified after) I took bleach, mop, bucket and cleaned them myself. People knew that I was not afraid to do "dirty jobs".)
Maybe and someday but my first priority will be to make sure the ground is firm beneath our business feet. Today we're starting our home inventory because a lot of what we have is going into deep storage or will be gotten rid of - the place is already furnished; we're not doing a conversion. I hate moving and these logistics are a nightmare.
 

myschae

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I agree with knowing everyone on the town council and town planning commission. Where I live those in the know beg forgiveness and the outsiders ask permission. Guess who gets what they want? We met everyone when we first got here, but then we were busy working and now we don’t know anyone and we can’t get anything done without months of meetings and tons of lost opportunity while those who have kept up with all the new people at the town offices go their merry way without permits.
Man, I'm going to have to work on my memory skills. Great advice.
 

myschae

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As I prepare to sell one of my businesses with plans on semi retirement with our lodge I hired a knowledgeable company that specializing in my industry to evaluate everything. I'm sure these same type companies also can help with a purchase. I think you could spend a little time a money doing a background on the sellers, property history ( all public knowledge) but first they need to have good financial statements to share and your CPA should look over it for red flags.So many questions to be asked. Why are they selling, How quick do they want out. Good Luck.
We have engaged consultants in the industry to evaluate the business. The non-disclosures have been signed and they are preparing their report. I'm fairly experienced with general accounting but you always want someone with industry experience to look at the numbers. Plus, it helps the business plan and to keep things in the realm of sanity. So far, so good. I've already used a LOT of what I've learned reading here so I know what questions to ask and, hopefully, what to look for as we try and figure this all out.

The anticipation is killing me. Now that we've seen the place and know we'd like to live there, we still have to figure out what to offer, figure out how to convince the bank to finance us (business plan), move there (just kill me now), set up and hope not to take too big of a bath the first year while everything shakes out. I hate making mistakes but I'm sure I will, it's inevitable. If we can just manage to avoid a few of the obvious ones, I think I'll feel better about it. It's a weird mixture of excitement and anxiety/fear so I'm trying to manage our expectations while still feeling good about setting goals.

So, uh, yeah. That's how I'm doing. :p
 

gillumhouse

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Take a deep breath and relax. It will all fall into place and you will wonder what the heck was I so worried about. You are going in with eyes wide open, covering your butt every way possible as you go along. I cannot speak for anyone else, but I just jumped off the deep end and turned my house into a B & B. Had one very shaky period when installing the second bathroom and remodeling the existing - that closed me for 11 weeks. They saw me coming....

From your questions and comments, you will do fine. Yes, politics and religion are things to avoid with guests because it will only rile if not compatible and no one will be swayed. ONLY because so many B & Bs are Adults only, do I mention on my web site that children are welcome. I do not mention anything or anyone else because ALL are welcome at my B & B (except pets) and I do not want someone not coming because I welcome one group or another. Got a valid credit card or cash? HELLO and WELCOME!!
 

myschae

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Take a deep breath and relax. It will all fall into place and you will wonder what the heck was I so worried about. You are going in with eyes wide open, covering your butt every way possible as you go along. I cannot speak for anyone else, but I just jumped off the deep end and turned my house into a B & B. Had one very shaky period when installing the second bathroom and remodeling the existing - that closed me for 11 weeks. They saw me coming....

From your questions and comments, you will do fine. Yes, politics and religion are things to avoid with guests because it will only rile if not compatible and no one will be swayed. ONLY because so many B & Bs are Adults only, do I mention on my web site that children are welcome. I do not mention anything or anyone else because ALL are welcome at my B & B (except pets) and I do not want someone not coming because I welcome one group or another. Got a valid credit card or cash? HELLO and WELCOME!!
Wait. What? I knew about the pet thing but I had no idea most B&B's were adults only. Huh. I'd honestly never even thought of it... I assume it's allowed because of ... reasons?

There was a family there during our stay - gotta love that awkward, oh, do you mind if we just take a look at the room space, we promise not to see anything else moment. Poor things, we were in and out, applied a little humor and it was all good. I'm expecting surprises since dealing with people does that but, yeah, I'd expect people to travel with kids. Maybe it's the target audience is mostly the dual income no kids crowd or older?
 

gillumhouse

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Many are not suitable for small kids - stairs or layout or things like ponds/pools. Many have visions of jelly handprints on things. Some are justified, some are what ifs. Some is because parents do NOT watch the crumbsnatchers nor discipline them. I had 6 of the 2-legged anumals so they do not scare me. I do not hesitate to let them know if something is not appropriate - although the ONLY one I wanted to slap silly in 25 years was a 21 year-old whose Mother was footing the bill (hoses & competitions) and she was so disrespeful that I really wanted to slap both, her for her mouth and the Mother for allowing it.

Some areas are geared for kid-free-get-aways and really have nothing for kids to do. Some States have a law against no-kid policies so B & Bs are stuck with them want it or not. It is something you have to consider for your own sanity - IF your State allows the choice. I have had more breakage from adults and for me (remember I am NOT a tourist Mecca), have had few problems. the only time I had fussy babies, they were the ONLY guests thank goodness. BUT I do say on my site Children WELCOME.
 

myschae

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Many are not suitable for small kids - stairs or layout or things like ponds/pools. Many have visions of jelly handprints on things. Some are justified, some are what ifs. Some is because parents do NOT watch the crumbsnatchers nor discipline them. I had 6 of the 2-legged anumals so they do not scare me. I do not hesitate to let them know if something is not appropriate - although the ONLY one I wanted to slap silly in 25 years was a 21 year-old whose Mother was footing the bill (hoses & competitions) and she was so disrespeful that I really wanted to slap both, her for her mouth and the Mother for allowing it.

Some areas are geared for kid-free-get-aways and really have nothing for kids to do. Some States have a law against no-kid policies so B & Bs are stuck with them want it or not. It is something you have to consider for your own sanity - IF your State allows the choice. I have had more breakage from adults and for me (remember I am NOT a tourist Mecca), have had few problems. the only time I had fussy babies, they were the ONLY guests thank goodness. BUT I do say on my site Children WELCOME.
Good to know. If we get this particular place, I imagine we're the least interesting part of the stay as this is a touristy area. But, there is a hot tub and a small pond so your point about children/age limits is well advised. And, there are stairs so I suppose toddlers on the 2nd floor is something to think about.

This, this right here, is why I need this board. I have this tendency to overestimate others ability to be responsible which works great with colleagues but probably not so well with the general public. I could tell you about the time we went on a swimming with the live sharks in the ocean with parents who thought towing their 5/6ish year old out to the far end of the buoy line was a good idea. Poor little guy, he probably screams each time he sees a puddle now... some people just lack any sense.
 

Morticia

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In re kids—check the statutes in your location. In some places you cannot deny accommodations to guests with kids. We have two rooms that are appropriate for families. The rest only have one bed.
 

Morticia

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Not sure if this was covered, but it goes along with meeting all the town officials—find out if any new regulations come into being on the sale of the property. Talk to the fire chief, town planner, code enforcement, safety officials.

This was a big problem in the town next to mine. Properties turned over and there were all kinds of safety upgrades that had to be made.
 

gillumhouse

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Also -Zoning. Was there a waiver for it to be a B & B AND if so, is it still good. Was it Grandfathered into the Zoning, does it stay zoned commercial for B & B or does it revert to previous zoning with the sale.
 

myschae

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In re kids—check the statutes in your location. In some places you cannot deny accommodations to guests with kids. We have two rooms that are appropriate for families. The rest only have one bed.
Yes, there are two cabins (outbuildings) that would work for children. I wouldn't allow anyone under age 6 in the 3 upstairs bedrooms; one of which has a queen bed plus twin. We'll have a warning/liability statement/waiver regarding the hot tub and letting people no that no lifeguard is on duty even though my husband was a former lifeguard and we're both SCUBA certified.

Our CPR licenses have lapsed but we're likely to get re-certified in that and basic first aid. On our way back home there was an accident (roll over) on the highway and my husband was out the door with the first aid kit; I was driving and stayed with the car. Everyone was conscious and moving all their parts so, hopefully they'll be ok - but, we've both been responders and know how to manage a scene until appropriate medical services arrive. The area we're moving to has a lot of eco-tourism (water/hiking/equestrian) and we like outdoor eco-tourist activities, too.

It's just great to have a reminder about watching how other people watch their kids while they're on property. Partially for insurance reasons and partially just to live with ourselves - the upstairs is not a friendly place for infants or toddlers. Like some have said, I have no problem interacting with children; I think I have a voice they tend to listen to as it's not loud but quite firm about my expectations. We've done enough dangerous outdoor activities that we're not shy about stepping in to keep someone else's child from doing something regrettable.
 

myschae

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Not sure if this was covered, but it goes along with meeting all the town officials—find out if any new regulations come into being on the sale of the property. Talk to the fire chief, town planner, code enforcement, safety officials.

This was a big problem in the town next to mine. Properties turned over and there were all kinds of safety upgrades that had to be made.
Interestingly enough, we met the people who originally transformed house (1910 house) into a B&B over 20 years ago. They manage some condo's next door, the lady is a master gardener and was the one who planted the grounds. They're very friendly and we've already asked if they'd mind if Mom uses their parking lot to get to the Senior center which is across the street. They've told us a bit about the ownership history, it seems the property has changed hands a few times since they bought it. We will double check, but the zoning seems stable and fairly firm as well as the updates to code/compliance.
 

myschae

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Also -Zoning. Was there a waiver for it to be a B & B AND if so, is it still good. Was it Grandfathered into the Zoning, does it stay zoned commercial for B & B or does it revert to previous zoning with the sale.
We will check, but I'm pretty sure the zoning is solid as we're going to be the 4th or 5th since the original couple turned it into the B&B. We got to meet them; they live next door.
 

Morticia

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Yes, there are two cabins (outbuildings) that would work for children. I wouldn't allow anyone under age 6 in the 3 upstairs bedrooms; one of which has a queen bed plus twin. We'll have a warning/liability statement/waiver regarding the hot tub and letting people no that no lifeguard is on duty even though my husband was a former lifeguard and we're both SCUBA certified.

Our CPR licenses have lapsed but we're likely to get re-certified in that and basic first aid. On our way back home there was an accident (roll over) on the highway and my husband was out the door with the first aid kit; I was driving and stayed with the car. Everyone was conscious and moving all their parts so, hopefully they'll be ok - but, we've both been responders and know how to manage a scene until appropriate medical services arrive. The area we're moving to has a lot of eco-tourism (water/hiking/equestrian) and we like outdoor eco-tourist activities, too.

It's just great to have a reminder about watching how other people watch their kids while they're on property. Partially for insurance reasons and partially just to live with ourselves - the upstairs is not a friendly place for infants or toddlers. Like some have said, I have no problem interacting with children; I think I have a voice they tend to listen to as it's not loud but quite firm about my expectations. We've done enough dangerous outdoor activities that we're not shy about stepping in to keep someone else's child from doing something regrettable.
I’m just going to let you know that guests will push every limit. You will have parents show up with a baby that ‘no one has ever had a problem with!’ and be quite incensed when you say they can’t stay. We finally put a king bed in an upstairs room because SO many families co-sleep. That room formerly had a queen and a twin but NO! we want a king bed for three!!! So, king bed plus twin and now I put the families up there. They get their king and I put them in a room laid out for 3. Win-win.

Our state has a max limit on the number of guests in a b&b. You might want to check that, too. That was something we didn’t know until about six years ago when another place was fined for consistently going over the limit. We used to have a total of 11 beds, which allowed 19 guests. I removed 2 beds because I got tired of so many guests in the house!
 
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