We are coming into full summer and busy times for many areas of the country. Indications are that 2015 will be an active year for Inns and Bed and Breakfasts. This should be a good year for property transfers as well. Indeed, there is much preliminary activity in the pre-sales arena; information requests, visits to properties for sale and other signs of interest; often detailed requests for information not necessary to move forward.
This is where the Bogeymen step in. Some of them are wide ranging; the economy is going to tank, the Republicans (Democrats) will ruin everything, Global Warming will destroy the coast, skiing, food supply and the climate. These Bogeys are hard to wrestle down. Prospective non-buyers cling to them for the very reason that disputing them is difficult.
Some Bogeymen are more specific and usually less difficult to refute. Among the more popular ones are Airbnb is stealing business from legitimate B&Bs; the market is saturated; financing is difficult to get; interest rates are high and B&Bs are overpriced.
In truth, Airbnb, with its hundreds of millions of subscribers worldwide, is broadening markets at an entry level of interest. Over time it will feed new guests into the mainstream of B&Bs and Inns. More immediately the strong performance of B&Bs in the marketplace currently indicates that the competition, rather than being a threat, has helped to expand the consciousness of the general public in terms of Inns and Bed and Breakfasts.
Insofar as financing is concerned, there has never been a better time to get adequate financing. It is true that the large interstate banks have no interest in our market, as they live off the myths of hospitality as dangerous ground. The opposite is true of smaller, community banks, savings and loan institutions and credit unions. They actively pursue our business. This is supported by the SBA loan programs, particularly the SBA 504 Loan Program which provides the long term, low interest financing portion of an Inn purchase.
Smaller banks in many areas are competing for business and often put more focus on Appraisals than the traditional Cash Flow Ratios. Interest rates for small Inns and Bed and Breakfasts are at historic lows. A typical financing package might provide interest in the range of 4.5%, usually fixed for at least five years. It is true that interest rates will probably go up over time. This is a good argument to think about buying now rather than when the rates have gone up.
Finally, for now at least, we hear the complaint from many frustrated Inn buyers that everything is overpriced. There is some credence to this because many properties are listed by brokers who do not know how to value Bed and Breakfasts, resulting in fantasy prices dreamed up by the owners. However, if you invest the time and effort (our seminar is a good investment) you can learn, at least to some level of understanding, what real prices should be.
Professional services are available, including Inn Partners, to help you to price properly Inns that are available in the marketplace.
This has been by necessity a broad overview. We would be happy to explore any of these with you in greater detail. Also, our Seminar for Future Innkeepers would be a worthwhile investment to tame these bogeyman and put them back in their cages!
For further discussion, contact Inn Partners at 877-957-2360 or firstname.lastname@example.org.