Mattress and Breakfasts, Cap Fees & Valuation Problem – Rating: 2

4 thoughts on “Mattress and Breakfasts, Cap Fees & Valuation Problem – Rating: 2”

  1. Hotel appraiser here who also does some B&B valuation. You’d have to have a decently long operating history (a few years) or at least find an appraiser who has access to a lot of reliable comp data to get a valuation done on an income approach basis. They might do a quick revenue multiplier as a test of reasonableness, but are likely going to rely on sales approach for something this size. B&B’s in my experience are not valued on a cap rate at all, rather a revenue multiplier.

  2. You need to make two valuations. One for the real estate and one for the business. What would stop anyone from buying a similar big house and making it a BnB? If nothing then you would just value the real estate using sales comps. Usually the business is just a multiple of the gross sales but if there are no booking then the only value would be the personal property such as beds, etc.

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