Saturday, June 30, 2007
Have you ever thought of owning a guest house? If so, I have some ideas for you. I used to own Eaton Lodge at 511 Eaton Street in Key West. So I think I can give you some creative pointers when looking for a guest house in Key West or another location.
First is location. Can the public easily find your property? Not every vacationer comes to town with a room reservation. So it is important that your property can be found easily. In Key West there are numerous street booths and referral agencies that can refer tourists to you. But these services charge a fee of 15% to 20% off the top for each night of the stay. That is money off your bottom line. Moreover, having a location in Old Town near the action on Duval or the marina makes it easy for the vacationer to find his way home late at night.
Second is reputation. Word of mouth and printed reviews in books and on the internet are the two biggest sources of new business. Look for repeat business when you review the financials of a prospective business.
Room for improvement. Has the present owner developed the property to its fullest? Is there any upside left for a new owner? Chances are pretty good that the seller is selling because he either has to or he has tired of the business. Under either scenario I would suggest that any prospective buyer scrutinize the P&L Statement carefully. Not every business operator reports all of his income. Surprise! Try to construct a pro-forma operating statement to determine how much money you should make during the year.
We are still in the first week of summer but I think now is the time to consider buying a guest house so that you can get all of the little problems addressed sooner rather than later. We only have 6 months until season starts. That is barely time to get the property under contract and apply for a loan. Then you will need to obtain an inspection, an appraisal, and a title commitment. Commercial appraisals can take up to a month to obtain. I estimate that most guest house closings require a time frame of 60 days from start to finish. So the sooner you start the process the more likely you are to attain your goals.
Late summer and early fall are hot in the Keys and many people are on vacation. But it is an excellent time to do necessary repairs and to prepare your new business for operation once season hits. Of course you will probably be operating prior to season, but your ADR (Average Daily Rate-price per room) will probably be less because that's the way it is in Key West during the off season. Operating during the off season is similar to training for a marathon. You still run your ass off every day, but it really counts during the marathon. The hard work beforehand just makes the race day more fulfilling.
CLICK HERE to review a list of all current guest houses for sale in Key West's Old Town area. Most but not all are near Duval Street. I think several of the properties are way over-priced. And I think a couple of the properties have room for improvement.
One particular guest house you should consider is Seacape Tropical Inn located just off Duval at 420 Olivia Street. It is next door to the Ernest Hemingway house so it gets lots of pedestrian and auto traffic. The guest house has 7 rooms and a small pool. So the size is just right for a regular mom & pop operation. CLICK HERE for more information on Seascape tropical Inn.
CLICK HERE to preview all current mls lisings in the Key West area. Then please call meat 305-766-2642 to help you find your new guest house in Pardise.
The information on this site is for discussion purposes only. Under no circumstances does this information constitute a recommendation to buy or sell securities, assets, real estate, or otherwise. Information has not been verified, is not guaranteed, and is subject to change.
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Gary Thomas in a Nutshell
- Gary Thomas
- Key West, Florida, United States
- I first read about Key West in a magazine called "After Dark" sometime in the mid 1970's. But it wasn't until March 1984 that I made my first visit to the island that would become my home. I had two weeks for a vacation and reserved a room at Colours Guesthouse (now Marrero's Guest House) for one week. I thought that if I didn't like Key West, I could always go back to Miami or Ft. Lauderdale for the rest of my trip. But after a couple of days in Key West, that was no longer a consideration. But when I wanted to extend my stay for the extra week I found there was no room at the inn. The guesthouse owner did find me a room at LaTeDa, the infamous guesthouse/restaurant. That's a story I'll write another day. But those two weeks in Key West gave me the realization that I had found Paradise. Key West has been my home since 1993 and my only regret is that it took me so long to get here. I am a full time Realtor at Preferred Properties CRI. Let me help you find your new home or business in Paradise. Living in Paradise is not a slogan, it's a way of life.