How to afford a B&B

[GeorgiaGirl]

I've been wondering how people afford the Inn's that are being listed for 1-3 million dollars?? For example, there's one in Rockland Maine that recently listed for 2,700,00.00. Who can buy at this price, what kind of money would you have to put down????? Just curious at this point.

 

[DaisyMae]

even though it seems like all we hear about is tough times and the poor economy, it's easy to forget that there is a portion of society that are not experiencing tough times and the poor economy is just not an issue for. i would assume that the requisite 20% down payment would apply.

 

[Penelope]

20% or more, probably. But at that place, it might be purchased by an investment person or group of persons anyway. They'll hire someone to run it and just have another jewel in their crown...or maybe not.

 

[EmptyNest]

That's probably why they are still on the market. ONly someone with very deep pockets or some investors could afford these kinds of properties. I have always asked that same question of a few of the B & B realtors. There has to be a breaking point where people can no longer afford to buy these kinds of properties unless the income can support the mortgage payment....CAN THEY???? Who knows???

 

[DaisyMae]

i agree, who really knows? it seems like you always hear about how substantial the revenue is from the realtor. sometimes it's true, however, what matters to the realtor is making the sale and the substantial revenue isn't as substantial as it's made out to be.

 

[GeorgiaGirl]

I was shocked when I went to a mortgage calculator and just figured out the monthly payment (excluding insurance and property tax at 1.25%). I'm assuming interest rate on a 2.5 million dollar loan would be more so at 7.5% the payment are $21.126 per month

If they have all 12 rooms filled for 15 nights a month at an average of $150 they would bring in $27,000 but only 8 nights filled for 15 nights a month and they are only bringing in $18,000....even though it seems like if they are full every month they will make a lot of money how can you afford to actually get the loan?
We stayed at this Inn in Rockland and it's beautiful! I would love to have this just to live in!!

 

[Morticia]

I was shocked when I went to a mortgage calculator and just figured out the monthly payment (excluding insurance and property tax at 1.25%). I'm assuming interest rate on a 2.5 million dollar loan would be more so at 7.5% the payment are $21.126 per month

If they have all 12 rooms filled for 15 nights a month at an average of $150 they would bring in $27,000 but only 8 nights filled for 15 nights a month and they are only bringing in $18,000....even though it seems like if they are full every month they will make a lot of money how can you afford to actually get the loan?
We stayed at this Inn in Rockland and it's beautiful! I would love to have this just to live in!!.

Getting a commercial loan right now, the interest rate can be 4.5% (depends on the bank), so a much better deal! They would probably come into this with 50% down.

 

[EmptyNest]

I was shocked when I went to a mortgage calculator and just figured out the monthly payment (excluding insurance and property tax at 1.25%). I'm assuming interest rate on a 2.5 million dollar loan would be more so at 7.5% the payment are $21.126 per month

If they have all 12 rooms filled for 15 nights a month at an average of $150 they would bring in $27,000 but only 8 nights filled for 15 nights a month and they are only bringing in $18,000....even though it seems like if they are full every month they will make a lot of money how can you afford to actually get the loan?
We stayed at this Inn in Rockland and it's beautiful! I would love to have this just to live in!!.

Getting a commercial loan right now, the interest rate can be 4.5% (depends on the bank), so a much better deal! They would probably come into this with 50% down.
.

Oh yeah! Who has 1 million cash to bring to the table??? Not I for sure:-(
We couldn't afford anything on the market in Asheville NC 10 years ago which is why we changed locations....I certainly couldn't buy anything there now...or most places for that matter.

 

[Morticia]

I was shocked when I went to a mortgage calculator and just figured out the monthly payment (excluding insurance and property tax at 1.25%). I'm assuming interest rate on a 2.5 million dollar loan would be more so at 7.5% the payment are $21.126 per month

If they have all 12 rooms filled for 15 nights a month at an average of $150 they would bring in $27,000 but only 8 nights filled for 15 nights a month and they are only bringing in $18,000....even though it seems like if they are full every month they will make a lot of money how can you afford to actually get the loan?
We stayed at this Inn in Rockland and it's beautiful! I would love to have this just to live in!!.

Getting a commercial loan right now, the interest rate can be 4.5% (depends on the bank), so a much better deal! They would probably come into this with 50% down.
.

Oh yeah! Who has 1 million cash to bring to the table??? Not I for sure:-(
We couldn't afford anything on the market in Asheville NC 10 years ago which is why we changed locations....I certainly couldn't buy anything there now...or most places for that matter.
.

I couldn't buy my own place now! Which happened to the place we lived in before we moved here...couldn't have afforded to buy it for what I was selling it for!

 

[GeorgiaGirl]

I was shocked when I went to a mortgage calculator and just figured out the monthly payment (excluding insurance and property tax at 1.25%). I'm assuming interest rate on a 2.5 million dollar loan would be more so at 7.5% the payment are $21.126 per month

If they have all 12 rooms filled for 15 nights a month at an average of $150 they would bring in $27,000 but only 8 nights filled for 15 nights a month and they are only bringing in $18,000....even though it seems like if they are full every month they will make a lot of money how can you afford to actually get the loan?
We stayed at this Inn in Rockland and it's beautiful! I would love to have this just to live in!!.

Getting a commercial loan right now, the interest rate can be 4.5% (depends on the bank), so a much better deal! They would probably come into this with 50% down.
.

Getting a commercial loan right now, the interest rate can be 4.5% (depends on the bank), so a much better deal! They would probably come into this with 50% down.

Wow, if you got the same loan for 4.5% the payment drops to $16,313

 

[JBloggs]

Imagine putting that money in the bank and drawing interest vs buying and inn with just a couple rooms? The return would be tenfold greater to put it in an acct vs a BnB. Would be different if houses were increasing in value then the investment would grow - but then you have to sell it, you have to pay more taxes and all that stuffing around. If you bought a BnB you have operational costs, which would suck out the revenue from a super small inn (meaning # of rooms, not size of property or house)

 

[JBloggs]

I was shocked when I went to a mortgage calculator and just figured out the monthly payment (excluding insurance and property tax at 1.25%). I'm assuming interest rate on a 2.5 million dollar loan would be more so at 7.5% the payment are $21.126 per month

If they have all 12 rooms filled for 15 nights a month at an average of $150 they would bring in $27,000 but only 8 nights filled for 15 nights a month and they are only bringing in $18,000....even though it seems like if they are full every month they will make a lot of money how can you afford to actually get the loan?
We stayed at this Inn in Rockland and it's beautiful! I would love to have this just to live in!!.

Getting a commercial loan right now, the interest rate can be 4.5% (depends on the bank), so a much better deal! They would probably come into this with 50% down.
.

Getting a commercial loan right now, the interest rate can be 4.5% (depends on the bank), so a much better deal! They would probably come into this with 50% down.

Wow, if you got the same loan for 4.5% the payment drops to $16,313
.

Getting a commercial loan right now, the interest rate can be 4.5% (depends on the bank), so a much better deal! They would probably come into this with 50% down.

Wow, if you got the same loan for 4.5% the payment drops to $16,313

You would require a hefty down payment as equity, the bank would never go for that low of an interest rate with out cash in hand and numbers to prove it as a BnB.

 

[Don Draper]

It is all about cash flow...if the annual receipts can support the mortgage payments, they will get what they are asking for...mortgages are much harder to get now than they have been in the past, I think 30% down is the new normal for a deal this size. History helps as well, if they can provide numbers that show cash flow over several years.
Blech, I hate banks, banking, refinancing, mortgages...my mother is an accountant and I would DIE if I had to sit at a desk and do her job every day.

 

[Morticia]

I was shocked when I went to a mortgage calculator and just figured out the monthly payment (excluding insurance and property tax at 1.25%). I'm assuming interest rate on a 2.5 million dollar loan would be more so at 7.5% the payment are $21.126 per month

If they have all 12 rooms filled for 15 nights a month at an average of $150 they would bring in $27,000 but only 8 nights filled for 15 nights a month and they are only bringing in $18,000....even though it seems like if they are full every month they will make a lot of money how can you afford to actually get the loan?
We stayed at this Inn in Rockland and it's beautiful! I would love to have this just to live in!!.

Getting a commercial loan right now, the interest rate can be 4.5% (depends on the bank), so a much better deal! They would probably come into this with 50% down.
.

Getting a commercial loan right now, the interest rate can be 4.5% (depends on the bank), so a much better deal! They would probably come into this with 50% down.

Wow, if you got the same loan for 4.5% the payment drops to $16,313
.

Getting a commercial loan right now, the interest rate can be 4.5% (depends on the bank), so a much better deal! They would probably come into this with 50% down.

Wow, if you got the same loan for 4.5% the payment drops to $16,313

You would require a hefty down payment as equity, the bank would never go for that low of an interest rate with out cash in hand and numbers to prove it as a BnB.
.

That's why I mentioned the 50% down. My guess, not knowing the situation, is that inn can probably afford a million dollar mortgage. But not with hiring an innkeeper to run it and a cook to handle the meals.

 

[Iris]

anyone that can afford a place for that kind of money doesn't need to work as hard as an Innkeeper does. It almost makes no sense to me.

 

[swirt]

anyone that can afford a place for that kind of money doesn't need to work as hard as an Innkeeper does. It almost makes no sense to me..

LOL Good point. Welcome to Innspiring.com

 

[JBloggs]

Welcome Iris. Join the fun!

 

[NW BB]

Welcome Iris! Hopefully for that kind of money you could afford to have staff and wouldn't have to do the grunt work yourself. Hmmmm....I'd love to be a "pointer" some day.

 

[Don Draper]

anyone that can afford a place for that kind of money doesn't need to work as hard as an Innkeeper does. It almost makes no sense to me..

That was what kept us going when we were first doing our deal...we knew the place was ours because no one who could afford to pay more for it would WANT to work this hard!

 

[JBloggs]

I believe Iris was referring to the orig post where someones pays in the 2.7 mil range and has only 2 or 3 guest rooms. In other words, a place that does not create revenue or occupancy like a larger inn.