All Forum Posts by: Siddharth Patel

@Alecia Loveless

Thank you for that insight. I have contacted a few local properties to see their occupancy, and am using the due diligence period to see what their current occupancy and ADR. The current GM does a lot of the leg work, I think I have opportunity to capture the marketing and booking dollars spent by doing that work on my own. 

I built a spreadsheet so i can input the numbers I find during the due diligence period. I am looking to buy this property on a 50% total occupancy outlook. This is due to the fact that summers are VERY slow in New Orleans. If the numbers dont work at 50%, the deal doesnt work for me. Too much risk!

Quote from @Garrett Brown:

Hey @Siddharth Patel, welcome! 

I run a small nature hotel (luxury glamping) that offers similar services to bed and breakfasts. My operations team is top-notch, and I would not have achieved this without them. You will need to get as much of a P&L as you can from the business for the last two years and also run numbers on projections based on your competition's enemy method. You can get the STR data from something like AirDNA and then check out what your competitors offer on sites like Airbnb/VRBO.

Negotiations will also depend on their cash flow and how much of the business you buy. Is it just the property, or are you buying the company as a whole? Running a business like that takes marketing efforts, networking, direct booking functionality, and so much more. Don't just take their word on the P&L as well. Use that as a basis to do your own due diligence. Let us know what you find out!

Awesome! This reinforces my current strategy, this what I have done so far. I requested the last 3 years of their Tax returns, P/Ls, and balance sheets. In review, I found that they have basically made zero dollars after paying out all expenses AND debit expenses. 

The true value is in the property itself. I valued it by looking at comps for similar sized properties sold in the last 3 years, and the assessor's website. My cost to operate using their current expenditures (which I have intentions to reduce) would be at $400,000 conservatively. 

I have now developed a Revenue Stream Strategy that will cover this cost. But I have not confirmed if my pricing will work. Great idea to compare with AirDNA! I intend on providing whole home rental deals for the Top 10 weekends in New Orleans. This will relate well. 

My other Revenue Stream is by selling the property as a venue for weddings, inclusive of all the rooms. 

If I can sell 12 weddings a year, and sell out on the Top 10 weekends I will be able to get a 25% cash on cash return for the year. 

Quote from @Andrew Steffens:

Andrew above makes a good point - is it being sold as a managed property or owner operator?

Otherwise it works a lot like any other business, it is being sold on EBITDA

 It is being sold as a property along with the business. EBITDA is poor. They have lost money every year. Their occupancy is low. 

Quote from @Andrew Syrios:

If it's a bed and breakfast, you'll need someone to run it, not just your typical AirBNB. Do you plan to manage it yourself or look for an operator?

 I have a property manager onsite. They have been with the property for 3 years. I am looking to keep them on, so long as they are open to changing processes, and marketing. The property has under produced based on the P/L of the last three years

First Post! Avid listener, and finally found a good opportunity to buy a Bed and Breakfast in my city of New Orleans. It has the potential space to serve as a event venue, STR, and bed and breakfast. I am looking for guidance and tips on what metrics to evaluate when offering and negotiating a purchase.

New Orleans is very saturated with hotels, and STRs. Summer is also tough to rent out. So I am going with a 75% occupancy to accommodate.