The real-life selling process of a Maryland bed and breakfast for sale,
and how Inn buyers and sellers can achieve their goals
in challenging economic times.

Buying or selling an Inn or Bed and Breakfast is a more complex process than it was prior to 2008. Real estate values and lending practices have changed, and financing the purchase of a bed and breakfast can be challenging. But with professional guidance, serious buyers and proactive sellers are successful. The sale of the Inn at the Canal in Chesapeake City, Maryland, is an excellent example:

The Inn at the Canal is an excellent property – an historic Inn, tastefully furnished and renovated, with an established business. It is the kind of Inn where guests relax and linger. The location, overlooking the water in a charming harbor town, is not far from major cities. With 7 guest rooms, the Inn can be owner operated, as most Inn buyers envision. Quality antiques and furnishings were included in the sale, making the transfer truly "turn-key."

The selling Innkeepers spent many years developing their business. They wanted to retire and had given much consideration to selling when they contacted Eliot. Through a process that included analyzing the local real estate market, as well as the Inn's business activity, Eliot established the market value of the Inn at the Canal. The Inn's clear financial records were critical to the process – and were essential for obtaining mortgage financing.

The buyers, Bob and Carol Roethke, were soundly qualified to purchase an Inn. Bob had management experience at a large Country Inn in the Finger Lakes. Carol planned to continue in her profession. Wisely, they sold their house while focusing on their search, which put them in a strong position to make an offer. With Eliot's help over a period of eight months, they considered many properties while refining their list of criteria. Three reasons they chose the Inn at the Canal were:

• The Inn was profitable and made sense financially.
• Bob loved the harbor location.
• Carol could commute to her job.

In other words, the Inn was priced correctly and the location was ideal.

As soon as the buyers and sellers reached agreement on a price and terms, the process of getting to settlement began. There are many steps to closing on the sale of an Inn. In the sale of Inn at the Canal, financing and the structural inspection presented the biggest challenges.

Eliot, the buyers, and the sellers were partners in preparing the financial portfolio for mortgage lenders. Lenders expect complete financial profiles of both the buyer and the Inn. Transparency is absolutely essential. The buyers and sellers were willing to explore different financing solutions including the possibility of seller financing (which in the end was not necessary) and Eliot presented the package to a number of lenders. Several national, SBA and local lenders proposed financing with less-than-ideal rates and terms. Eliot introduced the buyers to a regional credit union whose loan officer approved a mortgage with favorable terms after a lengthy review and a personal visit to the property. Eliot recommended a certified commercial appraiser and provided Bed and Breakfast industry statistics to expedite the appraisal process.

During the structural inspection of historic buildings, items that require remediation often come to light. Throughout this process, both the buyers and sellers were flexible as issues were worked out. Eliot and the sellers sought out qualified contractors. Painting conservators and experts in conservation of historic plaster ceilings were found to stabilize and preserve a section of delicate, elaborately painted, 19th century ceiling. The services of a petroleum tank remediation expert were required to remove an underground oil tank, subject to the Maryland Department of the Environment regulations.

As these and other tasks were being completed, both the buyers and sellers were packing and preparing for new careers. Eliot stayed in close contact, following up with contractors, the lender, the accountant and the closing attorney, as well as addressing any eleventh-hour snafus. The process took 16 weeks from beginning to end and the transfer went smoothly on settlement day… The former Innkeepers are enjoying retirement and the Roethkes are planning the menu for tomorrow's breakfast!

Ask Eliot how he can help you with your Inn purchase or sale!