The real estate itself is more valuable than the B&B business which is based on it. The usual valuation methods consider only the greater of two values: the value of the business or the value of the real estate alone. Does this mean that the B&B income doesn't contribute to the property? Of course not. The simple fact is that the property generates very substantial income. From a purely investment perspective, the primary value of the B&B business is its ability to help support the cost of acquiring contiguous beach property in such a special location. To the extent that the new owner uses marketing to increase occupancy, the B&B has the potential to not only pay for the cost of purchase but also generate substantial additional profit.
The information on this page assume that the owner's primary interest in operating the B&B is as a way to help support the purchase of the property. It assumes that the owner will not occupy the Owner's Cottage in The Breezeway House and thus can use it to generate additional income.
Because we have never used the Owner's Cottage to generate revenue, we've had to make some assumptions about the revenue it can generate. To generate the numbers below, we have assumed only it will generate revenue comparable to the highest priced B&B suite. We think this is a low estimate. Like the suites, the Owner's Cottage provides accommodations for a couple. However, it is significantly larger and includes additional amenities, such as a second screened porch, a full gourment kitchen, a fireplace, and garage parking for two cars. Thus, we think it is reasonable to expect it to generate more revenue than the B&B suites. However, we do not include any such increase. Instead, we project the same income as the most expensive suite. Thus, the numbers below are conservative.
Below, we summarize what you can expect from various levels of occupancy. Because we don't advertise beyond a small ad in the local Visitors Guide, the key to increasing occupancy is to do what we don't do: marketing. The numbers below exclude any advertising costs you might undertake to increase the level of business.
Below, we show this scenario using our 2006 occupancy and 2007 prices . To date, 2007 occupancy has been higher than 2006 for 5 of the first 7 months and comparable for the other 2. This is yet another reason why the numbers below are conservative.
Profit and Loss information:
Revenue (according to the conservative assumptions mentioned above):
We have made a good faith effort to provide the most accurate picture we can of what is reasonable to expect. The numbers above are based on our direct experience, and we believe they are conservative, for the reasons given above. We cannot warrant that your experience will be what ours has been. We have extrapolated from our first-hand experience, and made the adjustments we believe are appropriate.
Any prospective buyer will need to be thoughtful about what adjustments they think are appropriate. If necessary, you should modify these scenarios according to whatever facts and assumptions you think are suitable. If you are a serious prospective buyer, we will be happy to help you do this by answering any questions you might have.
This page is about the Investor's Scenario: Using the B&B to Support the Purchase Cost.
Here are links to other pages about Information for Investors and Prospective B&B Owners
Look below for links to the parcels of The Beach Compound.
If you want to stop by and view the property, you are welcome to visit...
Please understand that we cannot accommodate unplanned drop-in visits.
Introduction to The Beach Compound