Bed & Breakfast Finance Going Forward

2020 is definitely going to be a year to remember. Life went from normal to “lockdown” overnight and hospitality businesses were closed down by the government. So does this mean that you won’t be able to buy a bed and breakfast or guest house in the future?

Of course not, what it does mean is that lenders will see the sector as a higher risk post Covid 19 and as a result loan to value ratios may change. Up until now the maximum loan a new to trade operator would have been able to secure on a bed and breakfast or guest house was 65% of the purchase price meaning you needed at least a 35% deposit plus funds to cover fees such as stamp duty, valuation etc. to be able to buy your dream property.

Going forward we are still to see how lending criteria will change but, having said that, Stewart Hindley & Partners have mainstream and specialist lenders who are still willing to lend on hospitality properties. We don’t know what society will look like after the Covid-19 pandemic has gone but one thing we do know is that many people will be looking to take more short breaks and staycations in the UK rather than travelling abroad.

Post Covid-19 could mean a boom period for bed and breakfast owners which would help them to recover from the sudden loss of their incomes and hopefully inject some confidence back into the sector.

If you are thinking about buying a bed and breakfast or guest house and need the best finance deal available to meet your circumstances speak to us here at Stewart Hindley & Partners as we are specialists in the hospitality sector and if we can’t help no one can!

Contact us today and you could have your own bed and breakfast.

How To Turn Your Home Into a Guesthouse

Running a guesthouse can be rewarding and fun, not to mention a great way to make money from your property without having to sell it.

However, it’s important to keep in mind that running a guesthouse is a big commitment, and there are rules to follow and standards to meet.

Here are just some of the things you need to consider if you’re thinking of turning your home into a guesthouse.

Starting a guesthouse business

What do I need to legally open a guesthouse?

Before you can open your guesthouse, you’ll need to acquire the relevant permissions, so your first step should be to contact your local council to see what is legally required.

If you’ll be carrying out building work on the property, you may need to apply for planning permission. Regulations change frequently and vary depending on where your property is located, so be sure to check in with your local planning office.

Even if you aren’t making any structural changes to the property, you might need to complete a change of use application before you can open your home as a guesthouse. Again, ensure you check these details with your local council.

You’ll also need to comply with fire and gas safety legislations, as well as food standards if you’re planning on serving any meals on the premises.  Find out more by contacting your local environmental health department.

Finally, make sure you contact your mortgage provider and insurer. You may need to update your policy and will need to switch your existing mortgage to a commercial mortgage.

Fit out the rooms in the guesthouse

Once all the relevant permissions are in place, you’ll need to ensure that your property is up to the job of hosting visitors. That means properly furnished bedrooms with facilities including WiFi, TVs, storage space, and tea and coffee making facilities. Today, most guests will also expect their room to come with an en suite bathroom.

If you’re offering breakfast or other meals at your guesthouse, you’ll need a dining room where your guests can comfortably enjoy their meals.

Finishing touches such as bathrobes, slippers, and washing products can go a long way to ensuring your guests have a memorable experience.

How to market your guesthouse

If you want to promote your guesthouse effectively, a good website is essential – make sure it’s responsive on all devices, appealing, and optimised for search engines such as Google. Social media platforms like Facebook and Instagram are also useful ways to market your guesthouse successfully.

Running your guesthouse

Running a guesthouse can be immensely enjoyable and rewarding, but you’ll also come up against several challenges.

One thing to always keep in mind is that this isn’t just a hobby, you’re running a business and it’s important to approach every aspect of your guesthouse with a business mind to ensure that it is a success.

That’s not to say you shouldn’t have fun! Part of the attraction of running a guesthouse is the interaction with guests, building lasting friendships and ensuring visitors get the most out of their stay.

Running a guesthouse is flexible – you can choose when you want people to stay and when you’d rather have the space to yourself. But it’s important to set boundaries if you want to avoid working 24/7 and burning out. Have house policies in place, including setting out the times breakfast will be available and when reception service will be provided.

Get in touch

If you’re thinking of turning your home into a guesthouse, get in touch. We can help you find the most effective way to re-finance or release capital to launch your guesthouse.

6 things every successful owner does before starting a B&B

Starting a B&B is seriously hard work. It can be extremely liberating too, breaking free from your day job to pursue your dream. But, if you’re going to be successful, you need to be prepared. Here are 6 things you need to do before starting a B&B business if you want to be successful.

1.    Prepare yourself for what it’s really like running a B&B.

Guests aren’t always grateful, cheery and full of joy during their adventures. Cooking a fried breakfast for 10 people or more is physically demanding, and you can expect to spend around half of your day turning the rooms around and preparing meals.

You should expect your social life to suffer too. However, if this isn’t putting you off, the more successful B&B owners can expect to make around £100k a year. Of course, many more make less than that.

2. Decide whether you’ll be starting a B&B business from scratch or whether you’ll be buying into something that’s already up and running.

Buying an established B&B is by far the easiest option and should start generating revenue faster than a new business particularly for new to trade operators.  If you want to start from scratch you will have to show you have the capital to cover mortgage repayments for at least the first 12 months of trading as well as money to convert the property into a B&B.

3.  Research the area.

What’s the appeal to visitors to come and stay with you? It could be a nearby business that provides a steady flow of contract staff needing a bed for weeknights, or spectacular coastal views and walks. Maybe there are museums and castles that draw visitors from miles around. Whatever it is, it should help you determine the service you’ll offer.

Will you price by the week or offer a separate rate for weekends? Who you are targeting and why they want to be in the area should drive the clientele that you are looking to appeal to.

If you are targeting families looking for a staycation then maybe a games room would add appeal, or if you have the space and the resources, a swimming pool. You can read more on adding appeal  in our article ‘5 ways to help your B & B guests enjoy rainy day holidays’.

If you are targeting local business people, then perhaps a more executive feel with free Wifi in the rooms and shoe polish or ironing boards available may be more important.

4. Consider how you’ll segregate your own living space from the space you’ll offer to guests.

Ideally you should set aside a living room for yourself that guests won’t have access to so you can unwind in the evenings. Having your own space will be essential to making your new business work for you, your family and your guests.

5. Secure finance from a specific hospitality finance provider such as Stewart Hindley.

A specific hospitality finance provider will have a better understanding of your needs and will also have a network of underwriters that fund B&Bs, hotels and restaurants.

At Stewart Hindley, we specialise in B&B finance and can provide support and advice to help you find the right products on the market to fit your individual needs as they stand, and also as they evolve with the growth of your business.

In order to secure finance for your B&B or hotel, you’ll need to be able to present your business plans and marketing plans and financial projections. At Stewart Hindley, we’ll help you pull all these supporting documents together to get you over the starting blocks and secure the finance you need to get your new business off the ground.

To speak to one of our advisors about your hospitality finance or B&B finance requirements give us a call on 01488 393040.

How to turn your home into a successful bed and breakfast

You’ve got a large property, the children have flown the nest and now you’re just rattling around in it. Or perhaps you and your partner have inherited a house but it’s costing the earth to maintain. Wouldn’t it be great if your home could actually make money for you? Converting it into a bed and breakfast could not only enhance its value, but provide an income, offering you a completely new way of life and the means/motivation to keep the property in good condition.

It sounds like such a simple idea, maybe too good to be true, but it’s one which many people have opted for and they’ve never looked back. Here are some points to consider if you’re thinking about turning your home into a B&B.

1. Could you attract business?

The trend for ‘staycation’ holidays is not diminishing. With affordability still the biggest issue for British holidaymakers, not to mention security fears, research reveals that some 77 per cent of UK adults either went on or planned to go on a staycation in 2015. It’s looking good for 2016, too – which is good news for those that run B&Bs and guesthouses.

Before getting on to the subject of B&B finance, one big consideration and contributing factor towards your success is location. It’s vital that you are situated somewhere that would attract guests. HuffPost Travel named among its top staycation destinations the Lake District, the Norfolk Broads, Edinburgh, Cornwall and North Wales. Big towns and cities are similarly a good option. Just consider your situation – is there enough in the vicinity to attract guests?

2. Decide if running a bed and breakfast is for you

In our blog: Why owning a B&B can be a dream come true, we explore the best bits about leaving the nine-to-five and changing your life. You get to be your own boss and meet endless numbers of interesting people.

If you’re seriously considering converting your home into a B&B, ask yourself whether you’d feel happy about having other people coming and going through your home. Also, think about the lifestyle. While many B&B owners say they love their new business, it does require hard work and commitment. However, if you’re fine with all of that, let’s talk money.

3. Know what you’ll need finances for

When arranging B&B finance, in addition to paying the mortgage, remember to allocate sufficient funds for renovating the house into guest accommodation. This covers furnishings, decorations, refurbishments and countless other tasks that will need to be completed before you can open. Then there’s advertising, creating a website and potentially paying staff wages, too.

It’s pertinent you keep funds in reserve to cover all eventualities, as there will be changes in demand and economic circumstances. However, if you get the right advice and choose the best mortgage deal, you should be able to keep a tight control over your cash flow.

Buying a B&B
4. Choose the right bed and breakfast mortgage

One of the questions we’re most often asked by people who are ‘new to trade’ is: ‘Can I get a residential mortgage on a to trade as a B&B?’ The answer is no. Running a B&B requires a commercial mortgage. In fact, using your existing residential mortgage can actually get you into trouble with your lender owing to the differences in rates between residential and commercial mortgages.

You’ll therefore need to replace your existing residential mortgage to a commercial one. As this is a business, there are many more, and different, conditions that need to be taken into account by both lenders and you. However, an advantage of commercial mortgages is that the repayments can track the season, meaning you can pay more during peak times and less when it’s quiet.

5. Get good advice

Running a bed and breakfast is a huge undertaking, so it’s important to do your research and speak to the experts. With regard to finance, contact a broker that specialises in the industry – like us at Stewart Hindley and Partners, who can identify the most appropriate solution to suit your individual situation. We can advise on other aspects of the business, too, helping you to create a business plan and secure a mortgage which allow you to realise your dream.

Another good idea is to contact other B&B owners, or read case studies, so that you can gain first hand insight into the everyday operation of such a business. Learn from their experience, take advantage of their knowledge and see your own business thrives.

Providing you satisfy all of the personal and financial criteria and are sure that this is the move for you, then there’s no reason why you can’t turn your home into a bed and breakfast, enjoying a way of life that so many others can only envy. Why not give it some thought?

If you’d like to discover more about B&B finance, we’d love to help.

The pitfalls of trading a B&B on a residential mortgage

Opening your own B&B is a life-changing experience, one that can be a dream come true. Providing you observe the rules around trading, that is. One of the most common and most costly mistakes made by new-to-trade owners is operating on a residential mortgage when they should have a commercial mortgage for their B&B. It’s something we’ve seen and dealt with frequently; a pitfall which can put people in a very difficult situation.

Continue reading “The pitfalls of trading a B&B on a residential mortgage”

How to finance a bed and breakfast: your questions answered

Owning a bed and breakfast is one of the most commonly held life goals; the dream of those who long for a better quality of life and the chance to be their own boss. Who could want for more?

Securing the mortgage for a B&B purchase is rarely easy, but it’s certainly not impossible – our case studies are proof of that. If you’ve been asking yourself: “How do I finance a B&B?”, the following insight might help.

Continue reading “How to finance a bed and breakfast: your questions answered”