B&B Talk

[viachar]

Hi all,
My Wife and are looking to buy a bed and breakfast. We are having trouble finding how to get a mortgage/loan for this. Is it a business or a home? This is very important because of the amount of money needed for the down payment. Any help or advice will be greatly appreciated.
Chrissi and Chuck Via

[Kit Cassingham]

Any mortgage you get will be based on the inn's track record and your financial ability. It's a house and a business! If you have the income to support it, and it's not too big to be reasonable, you could buy it as a house. But that can be tricky too.

Where are you looking to buy your B&B?
_________________
Sage Blossom B&B Consulting
Kit Cassingham, "The B&B Lady"
PO Box 668
Ridgway, CO 81432
U.S.A.
970-626-2277

[swirt]

Kit, is it possible (adviseable) to negotiate two sales. The sale of the house and property, and the sale of the business. It seems that doing it as one sale would make the assement higher (since many locations re-assess the property at whatever it is on record as being sold for) and as a result you end up paying higher property taxes than you should.

For example if the house and property would normally sell for $300,000 but becasue it is an established business with furniture and whatever, it sells as a business for $400,000. You'd be paying 25% more property tax every year thereafter. Is there a way around this?
_________________
Steve Wirt
Wine Country Cabins Bed and Breakfast in the Finger Lakes
and Inngenious Bed and Breakfast Website Promotion

[Kit Cassingham]

I have had clients break the sale into two parts, and not just for tax reasons. Reasons for splitting the sale include financing options, keeping the seller involved and interested in the property, at some level, and taking advantage of lower interest rates on the real estate aspect (if being financed by an institution).

I don't know if it's the sale price that impacts the taxes as much as how the property is used. Some states at least are willing to prorate the taxes between percentage of the property involved in the business and that which is used "just" for the residential aspect.

Being creative is important in negotiating a real estate transaction. And B&Bs tend to be tough to finance, so money and creativity are that much more important.
_________________
Sage Blossom B&B Consulting
Kit Cassingham, "The B&B Lady"
PO Box 668
Ridgway, CO 81432
U.S.A.
970-626-2277

[viachar]

Hi All,
Has any one bought an existing B&B? How did you finance it? As a business or a home? I already know anything is possible. I want to know how this should be done.
Thanks Chuck