Need Help With Our Appraisal

[Emeo C.]

Hi all,

Happy holidays! : ) So glad to find a forum that is so lively and full of friendly members. I need some help with appraisal and would like some advice.

I own a 11-room guest house with a partner. We have been operating for the last 7 years. However we are starting to get a little tired and would like to sell it if we get a decent profit.

Our NOI is about $150K a year (2008 - 2010). And our occupancy rate is about 65% for the last 5 years.

2 weeks ago we hired a lcoal bank-approved appraiser and we just got the appraisal back.

The appraised amount was not that great. But looking into some detail and we found that the appraiser had forced a $30K "management fee" into our NOI and now we only have $120K NOI.

Also the appraiser got a cap rate survey from a company in Florida. Based on that survey, the range for our industry was 9% - 17% and he decided to give us a 12%.

Here are my questions:
1) This business is small enough that we manage it ourselves. We never hired any managerial help. But we do have part-timers to cover some of the hours at front desk on weekends, and we did include it in our original "operating expense". So is it fair for him to force an expense like that?
2) I have been doing some homework myself prior hiring the appraiser. I have searched online and found HVC, BCRE and other Bed & Breakfast valuation professionals have surveyed or mentioned a much lower range of cap rate for hospitality industry around 9 - 11%. So we are a little bit puzzled.

We will meet with the appraiser next Tuesday and I am planning to bring all the research I have done to show him. I am hoping that he would adjust the appraisal.

What do you guys think? I would appreciate any opinion. Thanks. : )