Buying a B&B

This week a listener emailed the following question:

Q: My partner and I have had a long time dream of owning a Bed and Breakfast, and we are thinking more seriously about starting to look in Provincetown. Can you tell me about the process and how much we will have to put down as a deposit?

A: There are over 85 Guest Houses in Provincetown. There are 12 on the market offered for sale, priced from $699K to $3,000,000. Most often, Guest House properties are sold completely furnished and equipped.

It is important to speak with a commercial lender at the beginning of your search so that you can determine the price range in which you should be looking. Here are some questions to ask yourselves: Will one of you continue to work at your present job while the other runs the inn? Do you own other properties? Do you have an outside source of income? The lender will ask these types of questions and use all of your income to pre-qualify you for a loan. Generally speaking, you will be expected to put down at least 20-30% of the purchase price. This number will vary, depending upon your personal financial strength and credit history while also taking into account the income of the property you are considering.

Once you have identified a property and a lender, you will work with your real estate agent and your attorney to negotiate all of the details of the sale. The lender will order a commercial appraisal of the property and in some instances, an environmental inspection. The appraisal is a critical part of the process, as the appraiser will use the income to value the property. The lender may also ask you for a business plan.

The present climate is very favorable for commercial loans – interest rates are low and there are some great loan products for you. In addition, there is money available through the Small Business Association (SBA). 

Once you own your inn, the fun part starts! You will meet people from all over the world and become a part of their special memories of Provincetown.