Buying a Bed and Breakfast – Part 2 – Using Due Diligence and Making an Offer
As a buyer, it is your responsibility to use due diligence. Inspect a possible character for problems, like termites, and also for use and tear that may go beyond what you are willing to accept. Are there repairs that you will need to make to the character for it to meet your satisfaction? Not all sellers will continue similarities to your standards, so make sure that you know what you are buying before you go into into a sales agreement. You don’t want to pay their top dollar if you then have to tend to deferred maintenance issues. Remember, this is an active business you are looking at buying, not a brand new home.
Carefully examine the character’s financial records. An accountant familiar with business accounting can be an asset in examining not just the financial records but the tax returns in addition. Keep in mind that you are making a buy for a business, not just real estate. Be comfortable with the cash flow.
Know what you are getting, as best you can. probe future plans for surrounding areas so you don’t have unpleasant surprises later. Confirm that you can run the B&B as you want. Check around. Look at more than the B&B itself. Be sure to check into the character’s surroundings, including local laws governing the area to ensure that 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 be aware that most people want to negotiate. It is important to know how you would like to negotiate before you make an offer. There are advantages and disadvantages of different negotiation strategies. If you make a low-ball offer, it may be rejected without consideration or a counter offer. A seller may look at any future offers as holding back, that you may not be making your best offer. However, if you initially present your best offer, there is no room to negotiate afterward. Be prepared to counteroffer and find a reasonable compromise. Getting a sense of the Seller’s motivation to sell will help you in this course of action. It’s not always easy to determine their real motivation, though many innkeepers gladly proportion some of their reasons for moving on.
Above all, be patient. It can take months, or already years, to find a bed and breakfast that is right for you. Take plenty of notes and pictures, with the seller’s permission. Be flexible with the time of action and most of all, have fun.