I would like to share with you some thoughts on real estate and my involvement in this industry. I am a professional real estate agent who specialises in the selling and marketing of boutique properties around Australia. I also sell residential property from Twin Waters to Peregian Beach.
I would like to talk about the Boutique Accommodation Industry. I am very knowledgable in this field and I take training for people who are wanting to learn how to set up and operate a B&B or self-contained cottages, I sell and market them as well and I owned and operated a number of B&B’s I find when people are interested in buying a B&B their decision to purchase is quite often around their return on investment or they think it would be a great semi retirement occupation. I usually find these properties are a lifestyle choice, or they like people and enjoy the interaction with their guests or they have stayed in a number of properties and like the concept. Owning a lifestyle property, the income you earn is a like a superannuation payment. The gross or net income is quite small compared to morels, but the owners love what they are doing. Thus return on investment should not come into the scenario.This is where it is a lifestyle choice.
However most buyers are borrowing from a bank to finance the loan. I would suggest not to borrow more than 50% of the purchase price, ideally 45% is more likely the maximum to borrow. Unless one of the partners is prepared to work off site in their chosen profession. The banks as we know today, due to the Global recession, have really tightened up and it is quite difficult to borrow from the bank in normal real estate purchases and seems to be harder in this industry. To borrow from the bank for a boutique accommodation property, the banks will send a valuer out to value the property. The valuers will usually only value the house and buildings not the business. This is where is becomes difficult.
Most of the owners have put a value on their property and believe they have the best property on the market and the price is ok. BUT the buyers are astute today with all the access to the internet, they are very aware of the value of properties. Thus the properties are on the market for a long time, sometimes two to three years. The owners of the property say they are not giving away the property and the right buyer will come along and see the value of the property, love it and pay the price the owners want. This is really not achievable and not realistic. As with all properties you do need to price the property to the market. There are three reasons why a property does not sell quickly: 1) price, 2) presentation and 3) marketing. The owners are not really keen sellers, just playing around.
I have found the owners have listed their property with a business broker or local real estate agent and they know very little about the properties and they have taken quite a sizeable amount of funds for marketing and the property has not sold. The owners start questioning why the property has not sold. They then source a specialist like my self to sell their property. The property is an open listing and the agents are doing very little for them, the specialists are probably the only ones working for them. This is why it would good to see the owners listing their property first and only with a specialist agent like Lifestyle Property Realty. www.lifestylesales.com.au or www.lifestylepropertychoices.com.au
How do you decide a value on your business? I will talk about this in my next blog. Hope you have found this interesting. Cheers Dianne