Help! Creative funding ideas for a Bed & Breakfast property?

[Patrick Diamond]

Hi everyone -

I'm rather new to the site & REI but am hoping I can get a little insight from some more experienced folks.

I have been very successful in the past with short term rental / bed and breakfast properties utilizing Airbnb, VRBO, Homeaway, etc., and have been looking for a place since we had to close our L.A. based B&B this past March when the property was sold from beneath us as the property owner was going through a nasty divorce...

We have found a property in Wrightwood, CA, which is a resort town in Southern California (home to Mountain High Ski Resort and one of the gateways to the Angeles National Forest / San Gabriel National Monument).  The area receives over 1MM visitors per year, and new amenities are continually added, however there is a lack of quality lodging.  We have developed a comprehensive solution to the issue, and our first step is to acquire the only existing 5-star bed and breakfast in the area, which is currently for sale.  We have developed a rapport with the seller, and she has been advising us and connecting us with the local chamber of commerce, lodging association, etc., which has all been great, however, we have a problem:

The current owner treated the BNB as a semi-retirement job, and did not keep good records in regards to the previous stays... many were cash paying guests and were not recorded at all... this has forced her to have to sell the property as a residence, and is making it difficult for us to finance through regular channels.  We have put hundreds of hours into due dillgence and have an extensive and thorough plan, and are confident that we can refinance in a year as a commercial property after we get in and keep good books, etc., and will be able to valuate it as a Bed & Breakfast, which will generate a nice chunk of equity, but the problem is getting in.

I wonder if anyone has suggestions on equity or crowdfunding approaches that we may use. We currently have approval for 70% through a hard money lender, but several people I have talked to from here in the past few days as well as some of our contacts and mentors from our local REI community have suggested we could structure it as an equity dealmore easily than a HML and for less... One issue is that there's kind of a grey area where this deal falls... it's got two standard rentals on site (a guest house and a cabin) as well as the three rooms in the main house which are currently a BNB. We of course plan to convert the standard rental units to short term like the main house to increase our revenues.

If anyone has any suggestions I would appreciate it greatly!  We also have a full plan with financials, marketing videos, etc., already created.

Also:

I created this calculation using Biggerpockets.com with the numbers we came up with. Please let me know any thoughts you may have on it:

https://www.biggerpockets.com/calculators/shared/432470/81e3ff6b-4e6e-4d6a-b345-3bbc4a39df81