O/T - Buying Commerical Property

[miniman]

Right, I've always wanted to own a hotel, preferably in Cornwall and a bit "in the sticks". Lots of people have told me recently to go for it but I know nothing about business loans / mortgages etc.

Anyone got any experience of this kind of thing? I'm wondering whether to go to a high street bank or a specialist lender? What sort of investment do they expect from me?

And my name's not Basil, right?

[CVP]

One of my friends used to be a small business adviser at one of the high street banks and gave me the following advice;

1. Develop your business plan. It's great to have dreams but the bank doesn't care about them, they simply want to establish if you'll be a good risk or not.

2. Think about how much you need and what type of finance. Do you need help to buy the business, or do you need an overdraft facility to help with running the business. You'll have to decide (with their help) on things like how much as a term loan, how much overdraft etc. This can be part of your business plan.

3. They'll want to see some experience or you hiring someone with the appropriate experience to manage the business.

4. They will be expecting you to either a) give them a charge over the property (if you buy freehold) or be putting a substantial amount of cash of your own. They may lend against a mortgage of some kind on your house.

Basically the bank will want to minimise it's risk as far as possible. Remember they will have probably been hit quite hard with businesses in the leisure sector due to foot & mouth etc. So they may not be pushing big wads of cash at you.

Approach the high street banks as they have guides to starting your own business, these may help to focus your ideas.

I'm sure plenty of PH'ers will chip in as to the pitfalls of running your own show and all the things you'll have to consider.

Hope I haven't put you off doing it, but you should try and be as prepared as possible and take a good long hard look at it as most businesses fail in the first 12 - 18 months. Having said that I know quite a few people who have run their own show and despite the hard work they enjoy it much more than their previous jobs.

Best of luck

Chris

[mondeoman]

Based on my own experience, if you can't put in at least 50% of the initial capital yourself, then you're in for a very hard time.

Bought a cottage complex/ex pub in Cornwall a few years back, and got stung bigstyle on the mortgage, (like 4% over base!)