damons, end of season, plums-4452658.jpg

Posted by: lily768 Aug 9 2004, 10:45 AM
My husband and i are interested in purchasing a home to start a bed and breakfast in. we both love to entertain, but beyond that, my husband has previous experience in the rest. biz and i was a gm for a major retailer for 15 years. fortunately, my husband will be able to retain his current job, while still being available in the morning to cook for guests. i will not be taking a paycheck, as my husband will be working. we will use approximately $ 100,000 from the sale of our home as a down payment or for start up funds. we have prepared a profit and loss statement for the next 5 years as well as a break even point. we plan on having 4 rooms 100% occupied for approximately 140 days of the year. the average nightly rate will be $185.00. i think we have done most of our homework,but we have one major obsticle….our personal credit. due to a major illness, our credit suffered for approximately 5 years. for the past year, we having been paying on time but our current credit score is under 600(ouch!). previous to that, i had excellent credit. does this factor alone eliminate us from even starting this adventure? we would need a loan of approximately $900,000 to cover the purchase of the home(we would live in it), renovations, and start up costs. is this completely absurd???!!!
Posted by: loanuniverse Aug 9 2004, 12:07 PM
Being completely honest here:

1- $100K in down payment against $900K in debt…… Highly unlikely that you can get a lender at this level.

2- I am guessing that the season is those 140 days, and you are assuming 100% occupancy. I consider this very rosy of a forecast.

3- Your Average Daily Rate is $185.00 That is high. How do you support this in your business plan?

4- The fact that you haven’t managed a similar business is a negative.

5- This is essentially a startup. Most banks will not do a startup.
Author: Commercial Loan Underwriter