If you are thinking about purchasing a B&B Access Commercial Ltd can help. We can provide up to 100% mortgages and finance solutions tailored to your specific needs. Our finance department offers help and advice with all aspects of Bed and Breakfast purchases so contact us today to discuss how we can help you.
What is a Bed and Breakfast Property?
According to Stewart Whyte, author of "Starting & Running a B&B", a traditional Bed and Breakfast establishment consists of ‘privately owned premises that offers value for money, accommodation inclusive of breakfast, quaintness and hospitality, and opportunities for the guest to exchange ideas with the host and be the recipient of sound, local, sightseeing advice’.
Most B&Bs tend to be large houses, where the business proprietor and family live on the premises, usually having more interaction with paying customers than in other types of guest accommodation. B&Bs usually offer fewer facilities than hotels; guests do not expect a bar or 24-hour room service, just a bed for the night and breakfast the following morning.
Banks and other commercial lenders offer mortgages on B&Bs. In most cases they will advance up to 70 percent of the value of the property, if they are satisfied with the applicant’s business plan and income forecasts.
Most B&Bs are bought and run by couples. A prospective lender will want to know about the borrowers’ current financial situation, previous experience, current employment and whether either partner intends to continue in their current job (on a full time or part time basis). If the property is currently being run as a B&B, the financial institution will also want to inspect recent accounts to ascertain the current trading position and potential future prospects of the business.
As with any residential mortgage, the lender will also require a report on the physical condition of the property in order to be assured that it is structurally sound. Projected costs for ongoing maintenance and refurbishment should be included in the applicant’s business plan because wear and tear is likely to be a bigger issue for a B&B than it would be for a private residence.
- Commercial mortgages are readily available for B&Bs provided that applicants can meet certain criteria
- Lenders expect a comprehensive business plan and income forecasts from applicants for B&B mortgages