Hiring a B&B Broker or Consultant
How do you hire a B&B Broker or Consultant? You look at their background and track record. Ask if they are actively involved in the B&B community. You evaluate your comfort with their working style and to do that you need to talk to them to discover who they are and what their style is.
Why hire a B&B professional to help you? To avert and avoid problems — problems like zoning, representation, and lack of seller follow-through. People have bought houses that their agent told them were zoned for a B&B only to find out after closing that it never has or will be zoned for their purposes. I’ve seen operational B&Bs that weren’t zoned for their business, but they swear it’ll be fine for the next owner to continue operating as they have done. A certain level of business cash flow is represented by the seller and the buyer finds the reality is much less. The sale is represented as including the furniture and fixtures the seller is operating with presently; when the buyer moves in after closing either some of the antiques have been replaced by cheap alternatives (not necessarily even replicas) or some of the furniture is just removed. Perhaps you find a B&B that’s represented as having a strong special events business but the truth is the zoning doesn’t allow for that.
A buyer who doesn’t know to ask the right questions could find they don’t have advertising in place because the seller let it lapse or that the phone numbers or business name didn’t transfer with the sale. Even buyers who have experience buying commercial property but don’t know the B&B industry can get caught off guard and buy a lemon. I’ve seen many unfortunate transactions because the buyer didn’t hire professional help in a field they had no experience in. Many such buyer have gone bankrupt, or at the very least sold at a loss. This book is intended to educate you about the issues you will face in seeking and buying a B&B but it still doesn’t replace the need for a professional; it just makes you better prepared to be a good team player.
I’ve heard buyers comment that if they work without a B&B Broker or Consultant that they will save money because they won’t have to pay the fee (be it in the form of commission or hourly charge). That’s pound-wise and penny-foolish. The mistakes a professional will help you avoid will more than make up for the money it costs.
What kind of background is ideal for a B&B Broker or B&B Consultant to have? A history in the B&B industry either as a Broker or Consultant, or as a B&B innkeeper. If you can find someone with both histories that’s even better. Ideally the person you are looking for is also active in the B&B community; attending the various conferences, advertising in the B&B-related publications and web sites, and networking with B&B innkeepers.
Conducting B&B real estate transactions isn’t the same as conducting residential or commercial real estate transactions. The person you are dealing with needs a sensitivity to the innkeepers’ schedules and a knowledge of their business. It takes more than a purchase contract and inspection to buy a B&B. The horror stories I have heard through the years about B&B transactions gone bad, generally because the real estate agent wasn’t versed in the business, would be enough to make you turn and run. The transactions conducted with a B&B Broker involved generally have much happier stories attached. There are horror stories in even B&B Broker-related transactions, but it’s generally the personalities and integrity of the various players that create those stories, not the capability of the B&B Broker.
Real estate agents and consultants have different ways of working with their clients and it’s up to you to determine what style works for you. Some take the approach of “whatever the client wants is ‘fine’ and is their business” while others take the approach of educating and guiding their clients and even playing devil’s advocate to the positions/attitudes/decisions their clients take. Do you want blunt honesty and openness, quiet guidance, or for the professional to follow your orders? You are the “boss” in this transaction so you call the shots. However, you are also inexperienced so should pay attention to what you hear and learn from your professional. [I have had clients who wouldn’t heed my advice or counsel because they felt they knew better or didn’t want to pay any for more professional help. Those transactions rarely went well or produced the results the client wanted. In some cases the transaction went well, but the resulting business wasn’t what the client wanted.] Know what you want from your professional and then proceed to find and hire the person who will work with you in the manner you are most comfortable. And then be sure to heed their counsel, or at the very least pay close attention and have sound reasons for not heeding it if that’s the path you choose.
By hiring a B&B professional you are creating a team. The idea is to work together to find a B&B, research the realities for your situation of that B&B, and conclude the sale transaction — not to sit back while the professional does the work for you nor to second-guess or criticize everything the agent does on your behalf. If you find that you don’t like working with the professional, change to another one, after checking your attitude about working as a team player. For example, as you and your broker search for possible properties for you to examine, if you find the property before the professional does, that’s not necessarily an indication the professional isn’t working hard for you. As challenging as finding the “right” property can be, that’s the easy part of buying a B&B. Your professional really starts in on their work after you find the property you want to buy — work you need them to do for a satisfactory conclusion to your purchase. You have your work to do too, like verifying licenses and zoning, reviewing the financial and guest records, and getting the loan you need to buy the B&B. Each team member has their own set of strengths and weakness. By working together you make a strong, united front and a successful team.
Flexibility on your part makes for an easier search and transaction closing. There are many ways to make your B&B dream work and be viable. If you are set on one way of making your dream real, then don’t be surprised if the dream never comes to fruition. You have to take into account how much money you have to invest in the purchase and how that affects size, location, inn viability (think cash flow to support the inn and you), and whether you’ll need an additional source of income to support you until the B&B can support itself and you.
Here are some examples of inflexibility I’ve seen in buyers, and the resulting struggle or failure in acquiring their inn. I’ve had several clients who insisted on maintaining their present lifestyle and have a self-supporting inn. In one case each of their four children have a room of their own; few houses in their price range would be big enough to satisfy their personal and business needs. In another case, two friends wanted to buy an inn that would let them have separate living quarters, enough yard for their dogs to run, and be in town; a tall order to fill and one they didn’t succeed in filling. Another family bought a viable B&B inn but insisted on having both her mother and their daughter’s family live with them at the inn; they took enough guestrooms out of commission for family to live in that the inn quit being viable.
I’ve had clients who required space for a hobby, like a garage to allow the husband to maintain his auto mechanic hobby. They rejected every inn on the market in their price range because it either didn’t allow for the hobby space or because they didn’t like the location, architectural style, or business strength (in one case it was too strong and that scared them). Most of them never bought a B&B, and wasted a lot of time and money during their search.
Some clients have had only enough investment for a small inn and were insistent on a specific location. One client partnership insisted on a large inn so it would be self-supporting but couldn’t/wouldn’t pay the price for such an inn; repeated low-ball offers were made on the inns they wanted and all their offers were all rejected — they failed at ever buying a B&B inn. Another tried to buy a small inn with the idea of expansion only to learn that community wouldn’t allow for a larger property. Another client succeeded in buying a lovely, but small, B&B and then renovate to create what they wanted. Construction being what it is, they ended up spending more than they expected on the renovation and didn’t leave enough money in reserve for slow times.
One client couple I worked with couldn’t verbalize what they wanted in the property that they were going to renovate into a posh B&B inn, yet they expected me to find the a property that fit their mental image. Of course, each prospect I found that could work zoning-wise missed the mark in several categories that they hadn’t previously specified. These people were good at knowing what they didn’t want, but were impatient when they did not find what they did want in the very small geographical area they selected for their business. If you can’t state what kind of property your want, you haven’t done enough homework.
But examples of flexibility abound too. One husband/wife client wanted to ultimately work together at the inn and start and raise their family there. Initially they both worked outside the inn with the notion that once it was self sustaining at least one of the would quit their outside job. Because they wanted to maintain their previous lifestyle of frequent, long trips, they both had to continue working outside the inn. Even after they started their family and the inn was doing well they worked both the inn and their outside jobs. That sounds like a lot of hard work, but they created the business and lifestyle they wanted.
One client couldn’t find the ideal B&B in their preferred location so they moved their search to a different location and quickly found their dream B&B. They succeeded in buying an inn that was the right size and price range for them and was self-supporting.
Another client found an inn that worked well for them except it was larger than they wanted and the owner’s quarters weren’t to their satisfaction. They renovated the inn to convert part of the guest space into owner’s quarters they were satisfied with and still had a B&B that was viable and self-supporting.
The key: be flexible and open to the advice of the expert you hire to represent you. The result will help you from making your B&B dream a nightmare.
This is a sample from the eBook “Buying A B&B Inn — An Insider’s Guide”. Click here to order this eBook and others in the Series.