By Pattie Detwiler | April 15, 2016 at 12:10 PM EDT
From AIHP Innkeeper Magazine I wrote for Innkeepers.
The answer is yes to both. It seems that in the last year there have been plenty of buyers and plenty of sellers. I don’t think the market suggests there is an advantage to being a seller or a buyer at this time in the market. Many Inn properties have changed ownership over the past year at reasonable and defensible pricing reflecting a healthy market. After 2008 when the economy tanked, there were many Inns that couldn’t hang on and did go out of business or had to sell their Inn for less than value. That was also true of the housing market as well.
Commercial interest rates are low comparatively speaking, and many Small Business Administration Loans are being used when purchasing an Inn. There are even USDA Loans available in certain areas.
What are some of the preparation items a seller can accomplish prior to listing an Inn for Sale?
- If there are any repairs needed, or regular maintenance items needed, do them. Don’t say, “Well the new owners can do those things”. That can hurt the value of the property and the perception of the buyer who will be viewing your property.
- List of major repairs that have been completed over the term of your ownership. Especially Roof, Appliances, Heating and Air Conditioning systems (HVAC), etc
- Keep your Financial Information up to date and current. Don’t add items that are not directly related to the expenses of the Inn. Many do this to keep their taxes lower, but the end result is the value of your Inn can be hurt. Profit & Loss Statements for last 3 years & include current year to date information. This is needed to help evaluate and set a sales price and prospective Buyers will ask for this information. You may want to know that the buyer’s lender will want to see the certified tax returns for the past 3 years, so the profit and loss statements provided should accurately reflect the Inns’ tax returns.
- List the items that will be included in the sale by room, and the items that will be excluded. If you are planning on keeping certain paintings or artwork, you may want to replace them before you starting showing the property to a potential buyer. The same goes for pieces of furniture that are special to you and will not go with the sale of the property.
- Buyers want to know what your occupancy rate, average daily rate, and room rates are. Income by month to help establish an understanding of cash flow or seasonal income. Is there a potential for growth if they purchase the Inn.
These are just a few tips for Sellers, there are other items to gather together to be ready to put your Inn on the market for sale. I’m more than happy to answer any questions you may have about preparing your Inn for sale. Pattie Detwiler, Consultant/Realtor, Bed and Breakfast Consultant Service, 561.223.3201 or email your questions to bnbconsultantservice@gmail.com |
