I did not have any idea on what to look for in a B&B. I was only thinking that if we could pay most of it off with the proceeds from the sale of our home in Oakland and from our 401K, that we could keep ourselves afloat as inn keepers. My mind went back to that first Bed and Breakfast that I found on Zillow, listing an inexpensive one next to Killington Ski Resort. Looking back, I realize how naive I was.
I decided to book a room at the Inn with the owner’s blessing. They were excited to have me come out to see it in person. Little did I know, it would be quite the four days.
Overall, it was a really fun trip. However, I also found it very exhausting. I had been working a full time job managing several hospital projects in San Franscisco. I needed to take a couple PTO days to fit this trip into my busy life and work schedule. It wasn’t easy. Dylan was on Christmas break from school so I decided to bring him along with me. Luckily, we had an at home nanny caring for Caleb and Ryan was working full time as well, so this helped him out immensely. I had to jam pack the long weekend trip with several places to check out including the B&B. We visited the elementary school (right next to the ski resort) and also checked him into a day of ski school, so he could experience what his new life would be like. We also travelled through several small towns throughout Vermont to experience what daily living would be like.
Just a few minutes from this Inn was the town of Woodstock. (Not to confuse it with Woodstock, NY.) Woodstock, VT is simply the most adorable town on this planet. I literally had goosebumps pulling into town with the snow covered landscape, rustic barn covered bridges that are typically seen throughout Vermont. It had all the historical charm imaginable in the small village located right on main street. There was a huge, beautiful Inn located right in the center of the town. It was called Woodstock Inn and Resort. I mean seriously, it looked like a smaller version of the White House. Now this was a B&B and I couldn’t imagine how much work there was to run a place like this. It was February and had been snowing, so the decorations and beauty of the front facade stood out perfectly. I really started to envisioning our life there, the quintessential place to own a B&B.
The B&B I was there to visit (and could actually afford), was this really old farm-style Inn. It had 10 gust rooms, all with their own bathroom, a small owner’s quarters, a nice commerical kitchen and dining room. The current owner’s were running a restaurant that sold breakfast to the public. It also had this really great huge old barn, which needed a lot of retrofitting. The owner even mentioned that the barn was probably worth more torn down and sold for it’s extra long wood beams than it was up. There were obvious huge cracks in the foundation. There went my dream of selling barn-style wedding packages.
This was my first time seeing a B&B in this capacity, so I had a ton of questions. Looking back, I had quite a lot to learn about the industry and probably should’ve held off on this trip. Traveling across the country is expensive, especially since I brought Dylan along with me.. I thought it would be a nice way for him to learn about this huge change we were about to commit to. He really loved being there with me to see it. In the end, I think the old Inn scared him. It was in rough shape and we didn’t sleep so well honestly. The beds were creaky and like with any old place, floors had settled and the structure made some really crazy noises at night. Suffice it to say, the prospect of buying this Inn didn’t look promising. Upon leaving, Dylan wasn’t thrilled with the idea.
While we were away in Vermont, Ryan had ran across this team called Inn Partners. They were out of Vermont and specialized in advising prospective inn keepers about the Bed and Breakfast process. Little did we know at the time, but there is so much to understand about this very specialized industry. It’s not exactly like buying a business because there is the added feature of it needing to fit your lifestyle and to provide you and your family a home to live in. It’s not just buying real estate either. Come to find out, there are not many realtors out there who actually specialize in Bed and Breakfasts. While they have their commercial license, they don’t typically understand the details required for a prospective buyer to work with the SBA and banks for funding. For a little context, I’d like to provide you with an example.
We asked several realtors for more information back about the B&B’s for sale that they represented. Most of them were able to deliver a fairly decent package consisting of the listing, occupancy rates and sales for the past three years, this is pretty typical to provide. If they were really good, they would send additional photos. In many cases, they would ask us right away when we would be out to visit the property like it was expected. For a typical commercial listing, this would make perfect sense. But for a couple like us who are specifically looking to purchase a B&B, we could literally spend thousands of dollars just visiting these properties alone not to mention what a waste of our valuable time. Unlike a regular commercial listing, where a buyer would be looking for a property in that particular area, prospective buyers of Inns may be looking at several locations mainly due to how few B&B’s there are for sale that hit all the criteria. So it’s not usually the location that the person is really set on, although that helps.
Additionally, I would think that most B&B buyers are very interested in what the owner’s quarters look, but we found many listings completely missing these photos from the listing altogether. In some instances, we had to ask for additional photos and even when they were provided, they still lacked a good understanding of what the set up was like. For a family like us with two kids, the living situation for us is more important than the actual business to be honest. If we can’t make the living situation work for our family, how in the world would we be successful business owners?
So Ryan decided to call Inn Partners to discuss what services they could offer. For a reasonable fee, they described many areas of assistance that they could provide us. It was a no brainer. We knew we had to work with them if we were ever going to get anywhere with this.
When I returned from Vermont, we spoke with our advisor, Eben Viens from Inn Partners. We gave him some of the tidbits I learned from my visit. There were a couple of red flags that he pointed out. One was that the sellers were not thrilled with me working with an inn advising team. They made a comment that they were not willing to show their books to us if our advisor was going to be brought into the equation. In inn keeping, this is apparently a very big warning sign that the business is not being financially organized in a manner that would lend itself to running smoothly once it transitioned over to us. The SBA or a bank would definitely not work with us on a loan without the seller’s cooperation to see the books. This would have been a showstopper immediately. Some of the other red flags included: the restaurant serving breakfast to the public and the physical shape that the B&B was currently in.
The owners had said to me many times that without the restaurant serving breakfast to the public, they probably wouldn’t be making enough to keep the Inn open. Ryan and I had no interest in running a restaurant alongside what we knew would be a very busy operation of running a B&B. I admitted this to them and their response was that it was super easy to run with fast cash left for their pockets. When I explained this to Inn Partners, Eben stated that restaurants from an Inn typically don’t generate much revenue compared to what the rooms can bring in. The rooms currently, needed a lot of work and several of the common areas would require facelifts too.
Even though I really liked the owner’s and could see myself up for the challenge of bringing the place up to par, it did seem like it was in our best interest to continue our search. There were probably dozens of other inns out there that might just be a little easier for us to start business from day one in our current price range. Soon however, I would be served a reality check.
(to be continued)
Good Medicine 