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BED AND BREAKFAST FINANCING

Bedand BreakfastFinancing.com is the marketing division of Rick Newman's Commercial Capital Network. Rick specializes in niche lending programs that are perfectly suited to accommodate the unique needs of the B&B / Inn industry.Rick joined the InnConcierge team of professionals to offer our clients nationwide lending with the convenience of dealing with one person who takes the time to understand your investment objectives.

From larger commercial inns with fine dining to smaller properties that are more residential in nature, these loan programs can be individually tailored to accommodate the borrower’s long and short term investment objectives. Rick was the first in the nation to offer non-bank conventional and stated programs to the Bed & Breakfast Industry. He introduced an innovative and useful program to use one’s 401(k)/IRA assets toward the down payment on a Bed and Breakfast/Inn property.

 

ASPIRING INNKEEPERS...2009 FINANCING UPDATE!

2009 will be a challenging time in the financial markets as bank and non-bank lenders alike are forced to re-evaluate lending parameters to adjust to the pressures of the time.  The number of lenders has diminished in the last twelve months and the loan committees of the remaining institutions enjoy the luxury of an increase loan applications and the enviable position of lending to the most qualified buyers and the most desirable properties from a cash flow perspective.  

The good news for Aspiring Innkeepers is that financing opportunities still exist for properties that show well on their tax returns.  Reductions in Prime combined with developments in the financial markets are working together and we are seeing stabilization in interest rates although many lenders are unwilling to fix rates for the full term of the loan.  Who can predict when interest rates will hit bottom? How long will rates stay at any one level? How can one know when to jump in and begin the process to time the peaks and valleys in the market?

Because the level of scrutiny has increased it is currently taking  60 to 90 days to process and close a commercial loan; for that reason now may be a good time to begin the process so that you are ready should you decide it prudent to take advantage of both a “Buyers Market” and reduced interest rates.
The losses Aspiring Innkeeper’s may have experienced in the stock market, their 401k/IRA’s and or equity in their homes, equates to a reduction in cash/equity they have available for a down payment, this reduction in purchasing power may require the buyer to seek seller financing or a shift to less expensive Bed & Breakfast/Inn.  401k/IRA assets may be used toward a buyers down payment, see IRA/401k article www.bedandbreakfastfinancing.com

Aspiring Innkeepers who have their hearts set on acquiring that “Fixer-Upper” or an underperforming inn AKA “A Gem in the Rough” from an income perspective, should think twice before spending time and money on the due diligence process unless you have the following:

1.    A seller who realizes that an under-performing business is worth less than a profitable one and has priced it accordingly.
2.    A seller who is willing and able to hold financing for any shortfall between the appraised value or Loan to Value, and your down payment
3.    Cash or IRA/401k assets equal to 25%  of the anticipated purchase price
4.    Cash reserves necessary to offset losses while increasing the cash flow from point A to point B in the business plan
5.    A resume that contains direct hospitality experience or transferable qualifications

Tax Returns are everything….  It is quite common to the industry that Innkeepers would desire to reduce their taxable income by claiming every justifiable expense they can on their tax returns; this practice may work from a tax perspective but can make financing an inn these days extremely difficult.  P&L Statements may be used by a perspective buyer and his/her advisors to make a buying decision, but lenders use tax returns when underwriting a loan request; P&L’s are only used by the Underwriter to cover the Year to Date (YTD) as the return has not been filed.

Loan Program Highlights

•    Finance up to 85% loan to value (LTV)
•    $200,000 to $5,000,000
•    Up to 25 years fully amortized term
•    Pre-approval in 48 to 72 Hours
•    Closings in 60 to 90 days