Running a B&B - getting a mortgage
Discussion
We're looking at a lifestyle change and fancy running a B&B in Devon. The context is that I left my office job earlier in the year and don't fancy going back to my old corporate life, and my other half is a bit of a country sort, so we've decided on a terribly cliched 'escape to the country' with two kids the dog (and the cats, if I'm forced to take them). Devon is our target as she has family there and we love the countryside and pace of life. We also have access to a family holiday home further west in Cornwall, which would be that bit closer.
The stumbling block as ever, is finance - we'd be selling up our current place and I reckon would muster about a 20% deposit on a circa £500k property. I'd run it full time and my other half would stay in her job which she can work from home most of the time with. Commercial mortgages I think need 30-40% deposits; which clearly we don't have; but as more than 40% of the property would be used as our own home, I believe we could get a residential mortgage instead (and take out commercial insurance). Question is, without my old income whether we could use our own researched 'projections' for the B&B earnings to prove we could service the mortgage. Based on the traditional income multipliers for judging affordability, my partner's income certainly wouldn't be seen as enough by a lender on its own. However, the property we're looking at shortly has in the past been used as a B&B (although not particularly recently), so accounts might be difficult to come by. There appears to be another quite successful B&B in the same village but I would have thought there is room for some competition.
This has become a bit of a ramble, so back to the question, are there any B&B'ing PHers who have financed a similar project and could recommend a specialist mortgage broker or advisor to help us? Or indeed dispense some sage advice? TIA
The stumbling block as ever, is finance - we'd be selling up our current place and I reckon would muster about a 20% deposit on a circa £500k property. I'd run it full time and my other half would stay in her job which she can work from home most of the time with. Commercial mortgages I think need 30-40% deposits; which clearly we don't have; but as more than 40% of the property would be used as our own home, I believe we could get a residential mortgage instead (and take out commercial insurance). Question is, without my old income whether we could use our own researched 'projections' for the B&B earnings to prove we could service the mortgage. Based on the traditional income multipliers for judging affordability, my partner's income certainly wouldn't be seen as enough by a lender on its own. However, the property we're looking at shortly has in the past been used as a B&B (although not particularly recently), so accounts might be difficult to come by. There appears to be another quite successful B&B in the same village but I would have thought there is room for some competition.
This has become a bit of a ramble, so back to the question, are there any B&B'ing PHers who have financed a similar project and could recommend a specialist mortgage broker or advisor to help us? Or indeed dispense some sage advice? TIA
I would think that there are two initial steps to this:
Firstly, bite the bullet and get back into corporate employment. That’s probably going to be the fastest and easiest way to accumulate the funds and income required to make the move that is right for you and your family.
The second one is while you are doing this, ask your wife to explain extremely clearly and honestly why she couldn’t wait to run a mile from Devon, leaving her family behind and deliberately choosing to settle down with someone who is not from Devon or looked like they ever wanted to go to Devon.
People leave where they grew up for all manner of reasons but we tend to forget them when we get older and it’s gets worse when kids come along and our brains become cluttered with a load of enhanced, doctored memories.
It’s really important to ensure that your partner is 100% honest with herself as to why she legged it and why going back will be different if she legged it for the most common reason people leave rural, cultural backwaters.
We decided to leave London the other year when Inrealised that my children despite growing up in the same area that I did were not going to have the same upbringing that I had and Indidnt want the all pervading new London lifestyle being a defining aspect of their life.
My wife is Italian and we started looking in Italy but luckily she remembered why she’d actually left and gone to a multicultural, non religious place where you were free to be who you realise you really are.
We had a weekend place in the Cotswolds and I used to go there as a child, my children had some friends there, my wife has always referred to the area as Tuscany without the incompetence and thieving. So we’ve ended up out here but it’s a pretty liberal place, plenty of foreigners, still has a London influence, while retaining the same character I knew nearly 40 years ago as a young child and you do have a choice of provincial towns.
Devon is a potentially quite a big step and I’d definitely want to make sure my partner truly understood. You don’t want to be sitting in the middle of nowhere, leveraged to the eyeballs, tied to a business only for your wife to suddenly remember the real reason she left.
Also, have you compared the lens on starting from scratch v buying an existing B&B? Can lenders take into consideration the existing revenue of a B&B for example?
Firstly, bite the bullet and get back into corporate employment. That’s probably going to be the fastest and easiest way to accumulate the funds and income required to make the move that is right for you and your family.
The second one is while you are doing this, ask your wife to explain extremely clearly and honestly why she couldn’t wait to run a mile from Devon, leaving her family behind and deliberately choosing to settle down with someone who is not from Devon or looked like they ever wanted to go to Devon.
People leave where they grew up for all manner of reasons but we tend to forget them when we get older and it’s gets worse when kids come along and our brains become cluttered with a load of enhanced, doctored memories.
It’s really important to ensure that your partner is 100% honest with herself as to why she legged it and why going back will be different if she legged it for the most common reason people leave rural, cultural backwaters.
We decided to leave London the other year when Inrealised that my children despite growing up in the same area that I did were not going to have the same upbringing that I had and Indidnt want the all pervading new London lifestyle being a defining aspect of their life.
My wife is Italian and we started looking in Italy but luckily she remembered why she’d actually left and gone to a multicultural, non religious place where you were free to be who you realise you really are.
We had a weekend place in the Cotswolds and I used to go there as a child, my children had some friends there, my wife has always referred to the area as Tuscany without the incompetence and thieving. So we’ve ended up out here but it’s a pretty liberal place, plenty of foreigners, still has a London influence, while retaining the same character I knew nearly 40 years ago as a young child and you do have a choice of provincial towns.
Devon is a potentially quite a big step and I’d definitely want to make sure my partner truly understood. You don’t want to be sitting in the middle of nowhere, leveraged to the eyeballs, tied to a business only for your wife to suddenly remember the real reason she left.
Also, have you compared the lens on starting from scratch v buying an existing B&B? Can lenders take into consideration the existing revenue of a B&B for example?
DonkeyApple said:
I would think that there are two initial steps to this:
Firstly, bite the bullet and get back into corporate employment. That’s probably going to be the fastest and easiest way to accumulate the funds and income required to make the move that is right for you and your family.
The second one is while you are doing this, ask your wife to explain extremely clearly and honestly why she couldn’t wait to run a mile from Devon, leaving her family behind and deliberately choosing to settle down with someone who is not from Devon or looked like they ever wanted to go to Devon.
People leave where they grew up for all manner of reasons but we tend to forget them when we get older and it’s gets worse when kids come along and our brains become cluttered with a load of enhanced, doctored memories.
It’s really important to ensure that your partner is 100% honest with herself as to why she legged it and why going back will be different if she legged it for the most common reason people leave rural, cultural backwaters.
We decided to leave London the other year when Inrealised that my children despite growing up in the same area that I did were not going to have the same upbringing that I had and Indidnt want the all pervading new London lifestyle being a defining aspect of their life.
My wife is Italian and we started looking in Italy but luckily she remembered why she’d actually left and gone to a multicultural, non religious place where you were free to be who you realise you really are.
We had a weekend place in the Cotswolds and I used to go there as a child, my children had some friends there, my wife has always referred to the area as Tuscany without the incompetence and thieving. So we’ve ended up out here but it’s a pretty liberal place, plenty of foreigners, still has a London influence, while retaining the same character I knew nearly 40 years ago as a young child and you do have a choice of provincial towns.
Devon is a potentially quite a big step and I’d definitely want to make sure my partner truly understood. You don’t want to be sitting in the middle of nowhere, leveraged to the eyeballs, tied to a business only for your wife to suddenly remember the real reason she left.
Also, have you compared the lens on starting from scratch v buying an existing B&B? Can lenders take into consideration the existing revenue of a B&B for example?
Thanks for your reply Donkeyapple. I should clarify that my partner doesn't come from Devon and therefore hasn't 'escaped' as such, but has family living down there. The reasons for wanting to re-locate are sound and we currently live in a semi-rural place, albeit with easy access to nearby amenities. We're about to look at a property which in the past has been run as a B&B (therefore will have some trading history, although not that recent) and is in striking distance of bigger towns and road/ train links. Being properly cut off from it all doesn't appeal. So we're also mindful to find somewhere near to or in a village with at least a pub/ post office, and preferably a primary school etc. Having a place near to a pub or restaurant which paying guests can have an evening meal at, is also a consideration.Firstly, bite the bullet and get back into corporate employment. That’s probably going to be the fastest and easiest way to accumulate the funds and income required to make the move that is right for you and your family.
The second one is while you are doing this, ask your wife to explain extremely clearly and honestly why she couldn’t wait to run a mile from Devon, leaving her family behind and deliberately choosing to settle down with someone who is not from Devon or looked like they ever wanted to go to Devon.
People leave where they grew up for all manner of reasons but we tend to forget them when we get older and it’s gets worse when kids come along and our brains become cluttered with a load of enhanced, doctored memories.
It’s really important to ensure that your partner is 100% honest with herself as to why she legged it and why going back will be different if she legged it for the most common reason people leave rural, cultural backwaters.
We decided to leave London the other year when Inrealised that my children despite growing up in the same area that I did were not going to have the same upbringing that I had and Indidnt want the all pervading new London lifestyle being a defining aspect of their life.
My wife is Italian and we started looking in Italy but luckily she remembered why she’d actually left and gone to a multicultural, non religious place where you were free to be who you realise you really are.
We had a weekend place in the Cotswolds and I used to go there as a child, my children had some friends there, my wife has always referred to the area as Tuscany without the incompetence and thieving. So we’ve ended up out here but it’s a pretty liberal place, plenty of foreigners, still has a London influence, while retaining the same character I knew nearly 40 years ago as a young child and you do have a choice of provincial towns.
Devon is a potentially quite a big step and I’d definitely want to make sure my partner truly understood. You don’t want to be sitting in the middle of nowhere, leveraged to the eyeballs, tied to a business only for your wife to suddenly remember the real reason she left.
Also, have you compared the lens on starting from scratch v buying an existing B&B? Can lenders take into consideration the existing revenue of a B&B for example?
Looks like a semi-commercial mortgage it is for us. Hoping to speak to brokers once they all get back from the Xmas/NY break. Viewing sorted on a place this Friday....
The pub aspect has another angle. They often have accommodation enquiries that they can’t accept and so a symbiotic relationship can be beneficial to both parties. Our local sends enquiries to a couple of B&Bs in the village because they steer their guests to the pub for dinner etc.
I’ve also always assumed it’s best to set up a B&B in the middle of a load of others as you all then benefit from each other’s marketing as a kind of accommodation hub. A bit like the economic rule that states two ice cream vendors should be next to each other rather than at opposite ends of the beach etc.
I’ve also always assumed it’s best to set up a B&B in the middle of a load of others as you all then benefit from each other’s marketing as a kind of accommodation hub. A bit like the economic rule that states two ice cream vendors should be next to each other rather than at opposite ends of the beach etc.
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