ThuderingWind
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- Dec 30, 2012
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I am getting way too many answers to the question of how to finance the purchase of an existing B & B. Owners are now older and want to sell. 4 rooms with private baths and possible to add 4 rooms with shared bath (at lower rate). Minimal marketing (only on State Inn Assoc. website plus their own website that may or may not be found using Search Engines) and they are making money with an 10 year running average 50% Occupancy and $54K income. Could market more (we plan to) and market local usage of grounds for summer weddings, and house for small, formal dinners, etc......
Most Inn Consultants are telling us that in our Plan we need to be looking for funding to reach: Purchase Price, 4 years Operating Expenses, furniture (some does not stay with the property), "salary" for owner, and some repair costs using the data provided by the current owners. This takes us to $1,000,000 (One Million). This also gives us funds to convert a two car garage into a garden suite/Innkeepers Quarters so we can then offer the 4 rooms with shared bath instead of living in them. This also puts funds in the bank to earn some interest and service the debt incurred in addition the regular income.
Some banks are telling us we need 30% down for the property and have the rest of the cash on hand before the will even give a loan application. Some tell us they will take our application and NON REFUNDABLE Application Fee before they will tell us exactly what they want or we need.
We do not have much cash on hand. We are a military family getting ready to retire. We pay cash for most things and help our kids instead of them being on any kind of government aid (this economy really hit one daughter and son-in-law hard). We have two loans outstanding, $5K in a Parent Loan for college for one of our kids and $25K in student loan for a graduate degree for DW (military required for promotion but not paid for by GI Bill - silly rules). Cars are 20, 18 and 62 years old - paid cash.
I am looking for some real-world examples of how you did it.
Most Inn Consultants are telling us that in our Plan we need to be looking for funding to reach: Purchase Price, 4 years Operating Expenses, furniture (some does not stay with the property), "salary" for owner, and some repair costs using the data provided by the current owners. This takes us to $1,000,000 (One Million). This also gives us funds to convert a two car garage into a garden suite/Innkeepers Quarters so we can then offer the 4 rooms with shared bath instead of living in them. This also puts funds in the bank to earn some interest and service the debt incurred in addition the regular income.
Some banks are telling us we need 30% down for the property and have the rest of the cash on hand before the will even give a loan application. Some tell us they will take our application and NON REFUNDABLE Application Fee before they will tell us exactly what they want or we need.
We do not have much cash on hand. We are a military family getting ready to retire. We pay cash for most things and help our kids instead of them being on any kind of government aid (this economy really hit one daughter and son-in-law hard). We have two loans outstanding, $5K in a Parent Loan for college for one of our kids and $25K in student loan for a graduate degree for DW (military required for promotion but not paid for by GI Bill - silly rules). Cars are 20, 18 and 62 years old - paid cash.
I am looking for some real-world examples of how you did it.