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pgb0606

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We believe our historic home would be suitable for a small B&B. We've already joined our state association and attended its aspiring innkeepers seminar, and we've been reading lots of books, doing research and talking to city and historic zoning officials in our town. We are good number-crunchers. We have full- and part-time income between us, plus ample savings based on what we have researched for startup costs and a year of cushion. We have researched zoning, permits and such already and we don't think those will be a problem. So with our residential mortgage, can we do this? Or is a commercial loan mandatory? There is no language in our mortgage or loan application about not using the home for a business, only that we don't use it for "illegal" or "prohibited" activities and that we occupy it as our primary residence. I've read a lot online about people converting their homes to B&Bs and not seen any real discussion about the mortgage question if you already live in your home, and will continue to do so, and have the income to make the mortgage payments while you transition to other forms of income. I know this is not a legal-advice forum, but am wondering what others have done and how it worked.
 

Joey Camb

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Hello!
Id try and help but in the UK mortgages and things are completely different plus banks have a completely different attitude to B&B as well. Best of luck mind! Think there was a dicussion on mortgages a while back ill try and find it for you but I think the thrust of it was if you have a domestic mortgage you can keep it but if you are buying new you have to have a commercial one.
 

Joey Camb

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Do you have a residential or commercial mortgage? is the thread you want.
 

Alibi Ike

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If you can continue to pay your mortgage and are not engaging in any of the activities your mortgage lender says you can't it doesn't seem as if it would be an issue.
You need a lawyer and an acct to verify anything.
Before you take a single step in doing any kind of conversions, it's really a zoning issue you need to validate. Is it allowable to do what you want to do where you live? What, if anything, will the town require? Will the fire dept require anything? Health dept?
 

Don Draper

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I don't think it matters for your current mortgage, it will matter when you go to sell the property because then you will have to decide whether you sell it as a business or a residence.
 

Breakfast Diva

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You are in a perfect scenario! It is my understanding that you start the b&b after you've purchased your house and lived there, you're good. It's those that buy an existing b&b and "fool" the mortgage company where the problem is. By the way, with all the banking/mortgage changes in the past few years, I think it's nearly impossible to "fool" the mortgage company anymore.
It sounds like you've done a lot of research and have all your ducks in a row. Congratulations! I hope your new adventure is everything you want it to be.
 

birdwatcher

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We had a B & B and it was a residential mortgage, this B & B that we are working at is a residential mortgage, the mortgage has nothing to do with having a business in your home, you just have to get a business license and whatever your county requires for a B & B most have to have a health inspection because you serve hot food.
 

pgb0606

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Wow, thanks all for the fast replies. The "residential or commercial" thread did not seem to provide useful information - other than that some have residential mortgages, but I didn't know if it was still possible to make the conversion. We definitely are consulting an accountant already and will talk to an attorney. We've run lots of questions by the city and historic folks and seen no obstacles so far. No desire to try to "fool" anybody!
Mainly wanted to see if anybody jumped in with dire warnings.
 

Innkeep

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Wow, thanks all for the fast replies. The "residential or commercial" thread did not seem to provide useful information - other than that some have residential mortgages, but I didn't know if it was still possible to make the conversion. We definitely are consulting an accountant already and will talk to an attorney. We've run lots of questions by the city and historic folks and seen no obstacles so far. No desire to try to "fool" anybody!
Mainly wanted to see if anybody jumped in with dire warnings..
The problem I got into was that I did my remodeling after I got a variance in the zoning for the b&b. The zoning HAS to come first. But then the construction had to conform to commercial codes. It was a real nightmare. You should see if there needs to be any permitting that has to be made to your zoning, like a conditional use permit or a variance and then see if that impacts any remodeling you might need to do. In addition to having (ideally) a bathroom for every bedroom, the health department may require changes to your kitchen such as a handwashing sink, or some such. Five or more rooms also requires ADA compliance that could require some remodeling. Some municipalities also require sprinklers. Hopefully you've checked all of this out. I've heard it said that you'll spend at least twice as much and it will take twice as long to finish the project. I live in a dysfunctional community, so it took 4x's as much of both, but I love what I do. Consider yourself fortunate to have found this forum. You'll get all sorts of advice and meet innkeepers with all sorts of perspectives.
 

pgb0606

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Wow, thanks all for the fast replies. The "residential or commercial" thread did not seem to provide useful information - other than that some have residential mortgages, but I didn't know if it was still possible to make the conversion. We definitely are consulting an accountant already and will talk to an attorney. We've run lots of questions by the city and historic folks and seen no obstacles so far. No desire to try to "fool" anybody!
Mainly wanted to see if anybody jumped in with dire warnings..
The problem I got into was that I did my remodeling after I got a variance in the zoning for the b&b. The zoning HAS to come first. But then the construction had to conform to commercial codes. It was a real nightmare. You should see if there needs to be any permitting that has to be made to your zoning, like a conditional use permit or a variance and then see if that impacts any remodeling you might need to do. In addition to having (ideally) a bathroom for every bedroom, the health department may require changes to your kitchen such as a handwashing sink, or some such. Five or more rooms also requires ADA compliance that could require some remodeling. Some municipalities also require sprinklers. Hopefully you've checked all of this out. I've heard it said that you'll spend at least twice as much and it will take twice as long to finish the project. I live in a dysfunctional community, so it took 4x's as much of both, but I love what I do. Consider yourself fortunate to have found this forum. You'll get all sorts of advice and meet innkeepers with all sorts of perspectives.
.
Very good advice, thanks. We will need a special-use permit. We are pretty sure we've learned what we need from the city but will double check before we get the special-use permit to avoid your construction nightmare. Also going to keep everything small enough to avoid ADA, commercial kitchen, etc. As long as we don't host events, serve breakfast only and that only to our overnight guests, meet parking requirements, and so on, we can keep it at the least-complicated level. Bathroom for every guestroom makes sense anyway, and we plan to add one. Our town appears to be fairly B&B friendly. B&B requirements are spelled out in the ordinances on the city's Web site -- assuming they didn't leave something out! City has a unified development code and we can meet with all officials at once (health, fire, zoning, permits, etc.). We have a great contact who is both our Realtor and a B&B operator in the same town. Knows everybody, and she likes us.
 

EmptyNest

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If you already own your home and it is your residence. I don't see any reason why the mortgage should be an issue. It is your house...so what if you eventually turn it into a B & B. That shouldn't be a bank concern..but just a zoning and insurance issue in my mind. You can't use a residential insurance policy, it would have to turn to a commercial one. SOunds like you have done your homework. I hope you are in great location. Just because you have a wonderful historic home..."build it and they will come" does not work....unless you just want to do is as a lifestyle B &B the you should be ok. :)
 

pgb0606

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If you already own your home and it is your residence. I don't see any reason why the mortgage should be an issue. It is your house...so what if you eventually turn it into a B & B. That shouldn't be a bank concern..but just a zoning and insurance issue in my mind. You can't use a residential insurance policy, it would have to turn to a commercial one. SOunds like you have done your homework. I hope you are in great location. Just because you have a wonderful historic home..."build it and they will come" does not work....unless you just want to do is as a lifestyle B &B the you should be ok. :).
We are in a great little town, county seat, near a major city, with a historic square and about three rings of different historic districts, of which we are a part. Everything has to go through normal city processes plus historic commission (but they care about the exterior and we are not planning to change that). The town has a vibrant square with all kinds of businesses -- the first time we visited there, we saw the tour bus drop off folks to visit the local winery! Lots of good locally owned restaurants, close to an Interstate, small private university, and only three other B&Bs in the area. Monthly market days downtown. It seems to have weathered the recession well enough. Our model would be to appeal to business travelers and university parents as well as romantic getaways.
Yeah, cost of insurance is one thing that scares me. That is next on our list to sort out.
... These posts are really helpful. Reading what y'all are saying helps me focus my own thoughts on the reply, to help me decide if I am making sense.
 

Copperhead

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I agree with the others, if there is no fine print in your mortgage all should be fine as long as you do not intend to refinance, then you will have to go to a commercial loan. Insurance is a different animal, you must get commercial property & liability for your own protection!!! (regular homeowner's policies can deny any claim when someone has paid to stay in your home)
It would be my advice to contact the fire dept and arrange for some one to come over to provide an unoffical walk through to point out things that may need to be done prior to opening. This will give you an idea of any hurdles you may need to work on. I noticed you did mention historical home, sometimes you can get exceptions to some safety standards for historical properties. Check the laws and reqirements to become labeled historical if the home is not already.
Good luck! Sounds like you have a good mentor to assist you - that is priceless!
 

egoodell

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We bought our house and property with a residential mortgage and then got the business license. We have commercial B&B insurance.
RIki
 

Generic

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In Quebec, B&Bs aren't businesses, it's entirely a residential mortgage. The law defines a B&B as being in a personal residence.
 

Copperhead

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In Quebec, B&Bs aren't businesses, it's entirely a residential mortgage. The law defines a B&B as being in a personal residence..
Eric Arthur Blair said:
In Quebec, B&Bs aren't businesses, it's entirely a residential mortgage. The law defines a B&B as being in a personal residence.
So do many states but that does not mean that mortgage companies have to see it that way. :(((
 

Joey Camb

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Wow, thanks all for the fast replies. The "residential or commercial" thread did not seem to provide useful information - other than that some have residential mortgages, but I didn't know if it was still possible to make the conversion. We definitely are consulting an accountant already and will talk to an attorney. We've run lots of questions by the city and historic folks and seen no obstacles so far. No desire to try to "fool" anybody!
Mainly wanted to see if anybody jumped in with dire warnings..
The problem I got into was that I did my remodeling after I got a variance in the zoning for the b&b. The zoning HAS to come first. But then the construction had to conform to commercial codes. It was a real nightmare. You should see if there needs to be any permitting that has to be made to your zoning, like a conditional use permit or a variance and then see if that impacts any remodeling you might need to do. In addition to having (ideally) a bathroom for every bedroom, the health department may require changes to your kitchen such as a handwashing sink, or some such. Five or more rooms also requires ADA compliance that could require some remodeling. Some municipalities also require sprinklers. Hopefully you've checked all of this out. I've heard it said that you'll spend at least twice as much and it will take twice as long to finish the project. I live in a dysfunctional community, so it took 4x's as much of both, but I love what I do. Consider yourself fortunate to have found this forum. You'll get all sorts of advice and meet innkeepers with all sorts of perspectives.
.
Very good advice, thanks. We will need a special-use permit. We are pretty sure we've learned what we need from the city but will double check before we get the special-use permit to avoid your construction nightmare. Also going to keep everything small enough to avoid ADA, commercial kitchen, etc. As long as we don't host events, serve breakfast only and that only to our overnight guests, meet parking requirements, and so on, we can keep it at the least-complicated level. Bathroom for every guestroom makes sense anyway, and we plan to add one. Our town appears to be fairly B&B friendly. B&B requirements are spelled out in the ordinances on the city's Web site -- assuming they didn't leave something out! City has a unified development code and we can meet with all officials at once (health, fire, zoning, permits, etc.). We have a great contact who is both our Realtor and a B&B operator in the same town. Knows everybody, and she likes us.
.
That sounds like a good position to be in. In the UK we are very B&B friendly you can pretty much set up anywhere you like and as long as you arn't setting up a huge operation you don't need any permissions.
 

Generic

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In Quebec, B&Bs aren't businesses, it's entirely a residential mortgage. The law defines a B&B as being in a personal residence..
Eric Arthur Blair said:
In Quebec, B&Bs aren't businesses, it's entirely a residential mortgage. The law defines a B&B as being in a personal residence.
So do many states but that does not mean that mortgage companies have to see it that way. :(((
.
copperhead said:
So do many states but that does not mean that mortgage companies have to see it that way. :(((
I understand. Do you have mortgage brokers? Are your mortgages registered agains the property legally?
 

Joey Camb

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In Quebec, B&Bs aren't businesses, it's entirely a residential mortgage. The law defines a B&B as being in a personal residence..
Eric Arthur Blair said:
In Quebec, B&Bs aren't businesses, it's entirely a residential mortgage. The law defines a B&B as being in a personal residence.
So do many states but that does not mean that mortgage companies have to see it that way. :(((
.
copperhead said:
So do many states but that does not mean that mortgage companies have to see it that way. :(((
I understand. Do you have mortgage brokers? Are your mortgages registered agains the property legally?
.
You forget cos you are from canada where banks work nationally and internationally in the USA they are bonkers.
 

Penelope

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In Quebec, B&Bs aren't businesses, it's entirely a residential mortgage. The law defines a B&B as being in a personal residence..
Eric Arthur Blair said:
In Quebec, B&Bs aren't businesses, it's entirely a residential mortgage. The law defines a B&B as being in a personal residence.
So do many states but that does not mean that mortgage companies have to see it that way. :(((
.
copperhead said:
So do many states but that does not mean that mortgage companies have to see it that way. :(((
I understand. Do you have mortgage brokers? Are your mortgages registered agains the property legally?
.
You forget cos you are from canada where banks work nationally and internationally in the USA they are bonkers.
.
camberleyhotelharrogate@yahoo.co.uk said:
in the USA they are bonkers.
MANY things in the USA are beyond bonkers

 
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