commercial mortgages - how do they work

emma_nottingham

For a more balanced life hubby and I have agreed that I will leave my job and move into business. Our intention is to buy a guest house / B&B. We need advise on financing this project.
We expect to sell our home which should leave us with about £118,000 towards our move,must inc stamp duty & fees
My husband will continue in his employment earning approx £30,000 PA
Which is the best option financially?

1. Buy an existing and established B&B, which in our chosen area will cost approx £550,000. In this circumstance we will have to pay stamp duty of approx 15,000 plus fees so will only be able to provide £100,000 deposit
2. Buy a property suitable for conversion into B&B which will cost approx £450,000. With this option I will continue working until the business is established earning £27,000 PA. Again will need to pay fees and stamp duty and finance the refurbishment by whatever means?
Are either of these possibilities in light of the maths and is there any useful advise we should consider. The B&B should turn over approx £46,000PA +++

UK007BullDog

Dear Emma,

I am not experienced in commercial mortgages. I suggest you search on the internet, speak to your local bank and also call up some brokers in your area for free advice.

On a more personal note:
My parents and grandparents had a B&B. One thing I can tell you that they worked their backsides off and that I hardly had any quality time with any of them. As you said you would be the only one working in the business it is going to be even harder for you. You have not said if you have any kids. And you have not said if you have any B&B or Hotel experience. If you do not you are making it doubly hard on yourself and risky. One thing I can tell you is do not believe 20% of the stuff you see on TV regarding starting a new life and a new business for quality of life reasons. Working a B&B is hard work where one has to get up at 4 or 5 am to have breakfast ready at 7 am, sorting out the rooms, cleaning and cooking lunch, cooking tea and dinner, customers coming and going at all kinds of weird hours, complaint handling, customers unwilling to pay, no shows, under-bookings, over-bookings etc.... By the time your head hits the pillow it could be 2 am in the morning. The good parts of course are you are the master of your life and any decisions that need to be made are done by you. There will be days were you worry where the customers are but also days where you will make good money.

Have you done a business plan? Researched the area, any prognosis on business for the next 3 years?

Ask the local council if there are any programs for first time business start-ups, to help with putting a business plan together for free.