Should you consider investing in a Bed & Breakfast? This is a question that many people across America are asking themselves as they strive to find a higher quality of life with less stress in an uncertain world. The answer can be somewhat complicated, and is completely personal in nature. How can you decide if a B&B investment is right for you?
What are your financial goals?
Most B&B buyers are seeking either a high-level of return on their investment or the ability to replace their day job with something they prefer. Nobody buys a B&B with the goal of making millions of dollars. So it’s important that you honestly assess your financial targets. This reflection on your finances should also include an idea of how much you have for a comfortable down payment, so that you seek a B&B investment that fits your financial limitations. The general rule of thumb is that the B&B should cost roughly five times your down payment, reflective of a 80% LTV loan.
How much time are you willing to invest?
B&B investors come in two varieties: 1) those that want to actively manage the business and 2) those that want to passively manage. Either option requires some degree of time commitment. Make sure that you match this time budget to your B&B investing criteria, and that you’ve properly budgeted the management cost if you are a passive owner.
How much do you like people?
Actively running a B&B is all about people: you have to deal with them by phone, in person, and sometimes calm down the angry customer. It’s “people immersion”. Unlike self-storage or some other real estate niches where you rarely even see the customer, B&B operations are 100% people 24/7. As a result, this is not a niche for those who don’t enjoy talking with and dealing with humans.
B&B investing requires you to examine your personal goals and preferences and make an informed decision accordingly. For true success it’s vital that you be completely honest with yourself and your aspirations.