Buying a Bed and Breakfast – Part 2 – Using due diligence and making an offer
As a buyer, it is your responsibility to exercise due diligence. Inspect a potential property for problems, such as termites, and also for wear and tear that may go beyond what you’re willing to accept. Are there any repairs you will need to make to the property to bring it to your satisfaction? Not all sellers will hold properties to their standards, so make sure you know what you are buying before entering into a sales agreement. You don’t want to pay your best price if you later have to address deferred maintenance issues. Remember, this is an active business you are looking to purchase, not a new home.
Examine the property’s financial records carefully. An accountant familiar with business accounting can be an asset when examining not only financial records, but also tax returns. Keep in mind that you are making a purchase for a business, not just real estate. Get comfortable with cash flow.
Know what you’re getting, to the best of your ability. Research future plans for the surrounding areas so you don’t have any nasty surprises later. Please confirm that you can run the B&B however you wish. Look around. Look more than the B&B itself. Be sure to check the surroundings of the property, including any local laws that govern the area to make sure you can run your bed and breakfast the way you want.
Be prepared to negotiate. Do your homework and then make your best offer, but keep in mind that most people want to negotiate. It is important to know how you would like to negotiate before making an offer. There are advantages and disadvantages to different trading strategies. If you make a low offer, it may be rejected without consideration or a counter offer. A seller may feel that any future offers are being held, that you may not be making your best offer. However, if you initially present your best offer, there is no room to negotiate later. Be prepared to counter offer and find a reasonable compromise. Getting an idea of the seller’s motivation to sell will help you in this process. It’s not always easy to determine their true motivation, although many innkeepers are happy to share some of their reasons for sticking with it.
Above all, be patient. It can take months, or even years, to find a bed and breakfast that’s right for you. Take plenty of notes and photos, with the seller’s permission. Be flexible with the process, and most of all, have fun.