Bed and Breakfast Inns and Small Hotels & Motels

TABLE OF CONTENTS

Important Notification - Disclaimer
Why consider owning your own Bed & Breakfast Inn?
"So, you want to own a Bed & Breakfast Inn"
It's the Law - Regulations regarding health and safety for B & B's
 What are you looking for in a Bed & Breakfast
Sample Analysis Sheet
 APOD (Annual Property Operating Data Sheet)
Current Properties On Market (some w/pictures)  
 Selling your Bed & Breakfast, things you need to know
Marketing of A Bed & Breakfast (Services Offered)  
Real Estate Terms 

Important Notification - Disclaimer

The information contained in the following pages has been prepared to provided summary information for  prospective Purchasers and Sellers to establish a preliminary level of interest in the business of Bed & Breakfast/Inns and Small Hotel/Motels. The information contained herein is a small amount of information that has been provided in some cases by third party individuals, it does not contain all the material and information, including risk factors, associated with an investment of this type and it is not a substitute for a thorough due diligence investigation.

Why Consider owning your own Bed and Breakfast?

In recent years the Bed and Breakfast Inns have seen an increase in numbers and clientele. A nationwide study reveals that 71% of today's travelers prefer to stay in a "Bed and Breakfast Inn" over large Hotels/ Motels.

Due to the uncertainty of jobs today in the large corporate community, people who are reaching their 40's and 50's are seeking an interim career. They are looking into the Bed and Breakfast Inn industry.

This interest in Bed and Breakfasts Inns has sparked a need for a qualified professional to assist those persons looking for that type of property, as well as protecting the investment of the current owner of the property. This is where I come in: I specialize in marketing of Bed and Breakfasts in the Great Pacific Northwest. As a member of the National Referral Network of Bed and Breakfast Inn Brokers, I can offer insight and guidance in the whole process.

"So, you want to own a Bed & Breakfast Inn

Are you ready to become a stage manager , choreographer, director and producer? As a Bed & Breakfast owner you might well consider yourself being one or all of these at times.

As an Innkeeper, you get to create your own stage and stage your own show. You orchestrate a one-of-a-kind production, utilizing material of your choice or craft. No matter how many books you have read or classes you have attended, your Bed & Breakfast will be unique in all the world. No other establishment will bear much resemblance to yours, because, after you dress up the rooms, assemble the recipes, clean the house and buy the face towels, the rest of the cast arrives and the dynamics commence.

The amazing and wonderful guests whom you have attracted interact with you; they interact with your home and they interact with one another. Within a few hours conversations with people you have never met, you feel like old time friends. This type of relationship could never have occurred had they been seatmates on a four hour flight or a dinner engagement.

Another wonderful observance is the interaction between guests that have never met before. In the mornings as guests arrive for breakfast they begin exchanging polite greeting, move on to discussing travel itineraries, and then on to share some travel experiences. Within fifteen or twenty minutes, the room is filled with laughter and animated conversation. So often, the breakfasters conclude the meal with exchanges of address, plans to meet elsewhere, and promises to keep in touch. Maybe they will and maybe they won't but for a special time, they have connected in a truly joyful way. I wonder - had these folks been seated near one another at a Sunday Brunch at a Sheraton or Hilton Hotel, would they have related to one another so openly, so delightfully? It is not very likely. In my own personal experience, even at special interest functions people will usually talk with the people they know.

Being a Bed & Breakfast host is a lot of work. It takes more time than you might have imagined. Like any professional production, attention to detail can make or break the show. But, this job can be fulfilling for the creative energy that so many other occupations tend to stifle.

The cordial environment of that Bed & Breakfast that you so much enjoyed and would like to emulate is illuminated with a certain difficult to define quality. Whether it is a Rustic lodge, draped Victorian, spare Shaker, elegant Federal, chrome and glass Bauhaus, the backdrops are varied but tangible. What the successful keepers of small Inns and Bed & Breakfasts provide for their guests goes beyond the delightful architecture and furnishings. It is, a warm, welcoming atmosphere expressing the personality of the hosts, while leaving plenty of room for their guests to express their personalities. It's an unspoken invitation to participate in a special little drama.

It's the Law - Regulations regarding health and safety for Bed and Breakfast establishments

Perhaps the most daunting prospect before the new Bed & Breakfast owners is apprising themselves of the myriad of rules and regulations with which their new Inn must comply. Codes, regulations, statutes and restrictions can comprise a mine-field through which the provider of services to the public must navigate. Even if you are considering the purchase of an established Bed and Breakfast, be aware that codes and such are revised continuously, and a change of ownership may require compliance with regulations that did not affect the previous owners. Nearly all States have uniform Health and Safety Codes, often augmented, but never mitigated by County Regulations. A brief Sampling of provisions in  Washington's rules regarding dishwashing follows

Washington

WAC 246-215-100 EQUIPMENT AND UTENSIL CLEANING AND SANITIZING (b) Mechanical dishwashing which washers and then sanitizes by: (i) A high temperature final rinse with a minimum of 180 f. measures by gauge; (ii) A high temperature rinse with a minimum of 160 F. measured at the surface of the utensil; (iii) An approved concentration of chemical sanitizer, automatically dispensed…. (Community/environmental Health Programs Olympia, WA 98504-7826)

What are you looking for in a Bed & Breakfast (Check list) 

When planning your Bed & Breakfast Inn or Small Motel/Hotel there are items to consider, please be prepared to discuss these as we engage in our counseling sessions. I will educate you to the present market and all available inventory of interest to you. In addition, I will represent you, maintain confidentiality of your information including anonymity if you so desire, as well as provide instant information about new listings.

This form can be printed, faxed, saved or E-mailed.

Sample Analysis Sheet  

How to assess profitability and potential in a Bed and Breakfast prior to purchase.

Property: My New Job for Fun and Profit

List Price: $350,000

Current Room Rates:

1 - King Suite with private bath - $75 a night

$75 x 1 = $ 75 x 365 days = $27,375

3 - Queen Suites with private baths - $65 a night

$65 x 1 = $ 65 x 365 days = $71,175

Total $98,550

Gross income based on occupancy rates: (does not include any Special Events income)

40% -	$ 39,420
50% -	$ 49,272
60% -	$ 59,130
70% -	$ 68,985
100% -	$ 98,550

Estimated Monthly Expenses:

Taxes	$ 200
Marketing/Brochures	$ 250
Utilities	$ 200
Food	$ 275
Insurance	$ 150
Telephone	$ 150
Office Expense	$ 50
Repairs/Maintenance	$ 100
Supplies	$ 150
Total Monthly	$ 1,525
	X 12
Total Annually	$ 18,300

Debt Service Breakout:

Purchase Price	$ 350,000
Down payment 30% - (20% to 30% standard)	($ 105,000)
New Loan	$ 245,000
Monthly P&I Payment	$ 2,092.70
Interest Rate (prime + 2.0)	10.5%
Annual P & I	$ 25,112.50
Lender Ratio	X 1.2
Debt Service	$ 30,135

Total Debt Service:

Debt Service:	$ 30,135
Operating Expenses:	$ 18,300
Total	$ 48,435

If the Bed and Breakfast occupancy rate is at 50% or greater, this property would support itself in the eyes of a lender. To increase the new owners profitability would be to increase room rates on a projected increase to cover the projected Total Debit Service.

APOD (Annual Property Operating Data) (Worksheet)

Purpose _______________________ Date _______________

Name: ________________________

Location:_______________________ Price: $_____________

Type of Property ____________________________________

Loans: $ _________________ Equity: $ _________________

Assessed/Appraised Values:

Adjusted Basis as of ___________ $_______________

FINANCING

Selling your Bed & Breakfast, things you need to know

The SELLERS guide to a SUCCESSFUL, STRESS-LESS, TRANSACTION

3 COMMON OBJECTIVES SOUGHT BY OUR CLIENTS

• Time (Sell in the least amount of time.)
• Money ( Get the Highest possible net.)
• Convenience (With the least inconvenience to you and your family.)

RECIPE FOR A SALE

There are 6 main ingredients that make up the sale of your Bed & Breakfast:

Location : We usually cannot move a house! To coin the favorite phrase of appraisers: "Location, Location, Location." The pricing of your property must reflect its location.

Condition: The upkeep and presentation of your property is crucial to obtain the highest value for your Bed & Breakfast in any given market at any given time. The pricing of your property must reflect its condition.

Price: Price is the number one factor in the sale of a home. A property is really only worth what one person is willing to pay another to gain ownership. Price must be in direct relationship to the other 4 ingredients and it is the most important of all!

Terms: The more terms available on your property the more potential purchasers you reach. The pricing of your property must reflect the kinds of terms available to purchase it.

The Market: i.e. Interest Rates, Competition, and the Economy all make up and influence the state of the Market when you sell your Bed & Breakfast. The pricing of your property must reflect the current status of the Market.

Records: In order to assist the property you must have records to back up the ability of the property to hold it's own. If you are currently running the property as a viable Bed & Breakfast make sure your books are in order. As an independent contractor, I know that we tend to write off all the items we can on our taxes, however to ensure the highest price for your property, two (2) years prior to selling your property make sure to pay taxes to show true worth of the property for lending purposes. It will also help you in purchasing another property or business.

When all of the above ingredients are in agreement we have a sale! If just one is out of line, it will take a longer time to sell, and the more ingredients there are out of line the longer it will take before the sale of your Bed & Breakfast takes place.

MARKET CONDITIONS

Times have changed in the real estate business.

Real estate marketing has changed dramatically since the first real estate transaction has taken place. One of the best marketing strategies was to just stick a sign in the yard and run a newspaper ad. Today, things are quite different.

You need more than the same old things to get your Bed & Breakfast sold.

I know that exposing your Bed & Breakfast to as many people as possible is the key to selling it for a fair price in the shortest amount of time.

Could you be getting shortchanged?

Getting value for your money is as important today as ever. When you ask me to sell your Bed & Breakfast, you will not only get me, you will have access to my entire team. Including all the marketing programs available at no additional cost to you.

Before you choose an agent , ask them if they offer a Marketing Plan, Seller Service Agreement, or what programs do they offer for their fee.

PRICING IT RIGHT IS THE KEY

If a property doesn't sell within a reasonable time, taking in account for market conditions, usually it has to do with price.

Price is determined by the market & the buyers. We look to previous sales that have taken place in your area, adjust as necessary for square footage differences, lot size, construction, age, bedrooms, baths and overall appearance. Also the correlation between current listings and listings that did not sell are added to the equation. All this information is correlated and an opinion is given. This is normally called a Market Analysis.

A price is determined...

• Not always will you agree with that opinion. Since an appraisal (a paid Market Analysis) is required in financing a property, it's futile to price a property for more than it is worth .
• Potential buyers won't even look at overpriced homes, thinking it's out of their price range.
• Overpricing tends to dampen the other Real Estate agent's attitude, making it less likely to be shown.
• Overpricing lengthens marketing time and invariably results in a lower selling price than would have otherwise been obtained.

After a tour of your Bed & Breakfast, we will sit down and analyze the current market conditions, and come to an agreement on what price to price your property to get you what you want.

MARKETING THAT MAKES CENTS

1^st things 1^st

The following items are common in the real estate industry.

• Input into Multiple Listing Service (MLS).
• Place a Sign in the front yard.
• Place a Key Box in a convenient location for you and the agents.
• Schedule a Tour by our office.
• Mail "Just Listed" material.
• Schedule Either or Both, Public and Broker's Open

The following are additional items that I can provide.

• Create Property Profile.
• Create a Flyer for the flyer box on the sign.
• Create a Flyer specifically for agents to be delivered in your area.
• Add listing to the web sights.
• Upon decision on having Public Open House send out invitations to possible buyers and surrounding home owners.
• Assisting you with a walk through on items that enhance the sale of the property: Example: Paint, caulking, carpet, earth to wood contact, Hot water heater (pop-off valve), electrical items (improper wiring). Sometime suggest having an inspection prior to sale in order to prevent problems at closing or at time of contract.

On-going Marketing Strategies.

• Follow-up with agents who have shown property, and report to you the response.
• Every two weeks provide you with a updated CMA (Competitive Market Analysis)
• Revise and update agent and flyer box flyers.
• As necessary advertise in local Real Estate Magazines.
• Follow- up with you and keep you informed of the market conditions and the progress of the marketing of your property.

WHAT YOU CAN DO TO HELP (Staging)

Remember that 1^st impressions are lasting.

• Tidy up the yard , keep the lawn trimmed and edged. Make sure that it is clean.
• The front door and porch are what buyers see first. Be sure to scrub and repaint if necessary.
• Front windows, Garages that face front need to have their best foot forward. Make sure windows are clean, curtains, drapes or mini blinds are properly installed and working. Garages propose a special concern. Make sure garage doors are in working condition including painting if necessary.

Upon entering the property the following are some things to keep in mind:

• Less is better. You are moving start packing. Pack up some of the knickknacks. These items are very special to you, this insures there safety. Remember to minimize the furniture and create proper traffic flow.
• Kitchens and Bathrooms are special parts of the house. Be sure that they are sparkling. $20.00 worth of paint and a little elbow grease save you money and get you a higher sales price.
• Let there be LIGHT. Don't forget to have all light bulbs in working order. Let your Bed & Breakfast give a warming glow.
• Tidy and Clean. Wash dishes, put away clothes, straighten up newspapers, magazines and the mail. Let you Bed & Breakfast show off its own features. Bedrooms that are neat are inviting. Please make up the beds. If it's the children's room it ok for their stuffed animals to hold center stage.
• Pets. Most all of us have that special pet. However, it is best if your pets are put in one central location. There are many reasons for this, (1) Your pet may escape while the agent is opening the door. (2) Some people are allergic to animals. (3) Some animals get too frightened with so many people coming in and out of their property.
• Give the buyer space. Avoid having too many people present during showings. The buyer will feel like an intruder and will hurry through the house, not seeing the features they are looking for. It is best not to be home during showings. Allow the Agent (Salesperson) to show your property (unless they ask for your assistance.) The agent knows what the buyers needs, wants and desires are and can best emphasize the features of your home.
• Silence is Golden. It is in your best interest to allow your agent to discuss any terms, conditions or any other factors concerning the sale with the other agent or buyer. Your Realtor (agent) is qualified to bring negotiations to a favorable conclusion with your best interests in mind.

Stand Back and Look at your property as though your seeing it for the 1^st time. We only have one chance to make a good impression.

INCREASING PROFIT

Today's market is facing some economic times that haven't been seen since the 80"s.  We are working with pre-foreclosures, short sales and Real Estate Owned (REO) properties.  Most activity happens within the first three weeks on the market.  Any listing that has not produce any activity within 30 days should be reassessed. Every day the Bed & Breakfast stays on the market costs you, the seller, money because purchasers will offer below asking price on "shop-worn" listings. Among the most important factors that influence sale-ability are:

Condition

• Have you staged your Bed & Breakfast? (What you can do to Help).

Pricing

• Review all comparable sales since the listing date. Have other better properties come on the market and sold for less since your listing was taken? If so, there will be no support for your current price when the appraiser does his work.
• Check out the competition. Know what you are up against.

Accessibility

• Key boxes are the answer. Allowing the agents to access your property without waiting for someone to be home or picking up a key will increase the number of showings.
• Make sure you are accommodating the agents in times and availability to show. Is the family cooperating?

Financing

• What is financially happening in the market place? How are the interest rates? Your agent can answer those questions and discuss them with you.
• Can you help with closing costs or loan fees?
• Ask about Seller-paid buy-downs (3/2/1) on interest rates.
• What loans are most popular or can be used in the sale of your property. FHA, VA, Conventional or a type of Rehab.

Sales Activity

• What has sold since your property has been placed on the market? Compare your property to the ones that have sold. Reevaluate with your Realtor (agent), and strategies you can put in to place to make your property more appealing.

New Marketing Plan

When you have made the appropriate changes in price and condition of your property, your agent should kick off a new marketing plan.

• Broker's Open
• New flyers for the flyer box and to all the agents.
• Target mailings to potential purchasers
• Possible Public Open
• Agent to call previous showing agents and advise of the changes in the listing information.

Tracking the new changes will be done and updates will be given to you.

Marketing of a Bed & Breakfast (Services Offered)

MARKETING TOOLS AVAILABLE TO MARKET YOUR PROPERTY

Commercial Multiple Listing Association) State Wide MLS
 Multiple Listing Service

National Referral Network of Bed and Breakfast Inn Brokers

NEWSPAPERS

Denver Post
LA Times
Sacramento Bee
Seattle Times
New York Times
Houston Chronicle

MAIL OUTS

To Potential Customers
Investor List

Contact (800) 851-8643 Penny  Romito CRS, GRI, PMN Designated Broker WA Associate Broker CO