How do I determine the Value of the B&B

  

Why are there so many Bed and Breakfasts for sale in Niagara on the Lake?

Bed &Breakfast owners in Niagara are usually on their second career and are empty nesters. They have the ability to put a large down payment or have no mortgage but are too young (especially at heart) to stop working. The average age of an owner is 55 to 63.

After a few years (5-10) Bed & Breakfast owners are ready to completely retire and leave the gardening & entertaining to someone else. They have made great friends from around the world and are ready to visit them. B&B's are usually large houses and are no longer needed - hence it is someone else is turn to welcome guests. Time to sell the Bed & Breakfast! Again there are around 300 bed and breakfasts in the Niagara region. At any given time if 5% of the Bed and breakfasts in the Niagara region are for sale then that would be 15. Not all of the Bed and breakfasts that are for sale are listed on MLS, nor are there signs on the front lawn (that would hurt business).  If you would like information sent to you on all that I know are for sale contact me and I will send then to you. 

What is a Bed & Breakfast Worth in Niagara on the Lake?

The value in Bed & Breakfasts that are for sale in Niagara on the Lake is in the real estate.  The chattels in the house may or may not be included and yes there is some value int he furniture for you the buyer because it is going to save you time but really what is the value of a used mattress.  The value in the name, website and reputation is harder to determine and yet they are very important for the first 2 years as you are establishing your own clientele. However in Niagara on the Lake very Little if any value is put on it, mainly because I know that it takes maybe 2 years to get to full swing. 

Things to consider

The first thing to determine is what is the reputation of the establishment. There is of course the guest book for a good read but also you can go on line and check out http://www.tripadivsor.com/ . Find out what people think of the place before you start to put a value on the next items. One way is to stay in the establishment on the QT and see how the owners run the place and the reactions of the guests. If the other guests are impressed and indicating that they will be back then you know the reputation and good will is important.

Owners Quarters and your lifestyle should be on the top of your list for importance.

The name of the establishment - Is the name transferable, if the name are the owners last name they many not want to sell the name. You may consider doing a transition phase of 2 years and add something to the name of the B&B.

Phone number – not as important as it once was. URL and website much more important. DO you really want their friends calling you. 

Website  - is  important again for helping the past clients find you, if you are keeping the name.  They may not remember the phone number, the owners name or even the full name but they will know how to find the B&B on the internet.

One of the items to discuss is how much of the B&B business is repeat and how much is new business each year. Niagara, as mentioned, is a very popular get away. Staying busy on weekends in high season is easy - repeat customers are usually the ones that come in off season or mid week and they are valuable.

Net Operating Income

If you are purchasing the B&B, then you are going to want to see the books but when it gets right down to it – we do not keep them. Truly, hard to believe but as I mentioned, I have been running one for 12 years and I do not keep books. Why? Because I do not need to. Simple. Yes, I pay taxes, each year I do a spread sheet for my tax accountant and he does my taxes and tells me what I owe. Worse than that when people start to think about selling, they slow down, close off Sundays and Mondays.  How can you really get a picture of how much a b&b can make? 

You will need to understand what are the income tax implications and qualifying deductions.

There is much more to discuss. That is why you should contact me.

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