Let's Buy a Guest House in Key West

Catchy name for a place to stay, eh! Maybe the GAYWAY MOTEL isn't your vision of the kind of guest house you envision owning, but I have a property that just might fit the bill. The Victorian House at 806 Truman Avenue in Old Town Key West is looking for a new owner. I think this place could "go gay" or stay "straight" and still be a good "buy".

The listing Realtor describes 806 Truman this way:

"***PRICE REDUCED*** Elegant and spacious historic home with three transient rental licenses. Great sitting rooms, formal dining room, five bedrooms, five full baths and two half baths including a beautiful 1/1 guest cottage. Dade County Pine, elegant architectural features, high ceilings and a new kitchen with high-end appliances. Wonderful outdoor lanai, separate heated pool and heated spa, off-street parking for two vehicles and lush tropical landscaping. An opportunity for a beautiful single family home or maintain as a vacation rental with great rental income. Property generated $175,000 in gross income in 2010. The Victoria House is an Historic Gem in the heart of Old Town Key West."

Here are the basics. 806 Truman Avenue is now offered at $1,895,000. The main house was built in 1918. The total square square footage is 2651. The property measures 57'x175' or 5729 sq ft. Click GOOGLE MAP for a aerial perspective of the property and its proximity to Duval Street and other Old Town destinations. Use the toggle switch for a ground view as well. Then recall what I have written before about the value of location when owning a guest house in Old Town. A lot of first time travelers come to Key West without a room reservation. Owning a really attractive property that is easily seen by unprepared tourists could put extra money in an innkeeper's pockets on those few nights when all rooms are not reserved. This property is not offered "furnished", but I suspect it can be purchased fully equipped. There are just three transient rental licenses even though the property as five bedrooms. An owner could live on the property I suppose and give up significant revenue for 365 days per year. The better option would be to purchase two additional transient licenses to take full advantage of the earning power of this great property.

CLICK HERE to view a slide show of photos I took of this property a few weeks ago. I had shown the property when it was for sale several years ago, but I forgot how delightful. This place is in just wonderful condition. Every surface is clean. Really clean. I only noticed one area on the second floor rear deck that needs some wood repair. Otherwise, everything on the inside and outside is highly maintained. I was particularly impressed with the quality of the furnishings (which I noted are not included in the offering) and the fixtures in the bathrooms. Nothing is Home Depot "cheap". To the contrary, all fixtures are high quality and durable. The result is that a new owner will not have to be doing repairs. The third floor has a fire suppression system plus rear stairway to the ground floor for easy access to the pool or as an emergency exit.

There is another place in town that was for sale a couple of years ago. It was my poster child example of what I would not want to own as a guest house. It had a lousy location off the beaten path surrounded by low income apartments . It had no pool and, in my opinion, no charm. It appealed to low budget travelers. I often see tourists dragging their luggage down Truman heading toward that place. Maybe they arrived by bus. I'll bet they took full advantage of the coupons for budget dining as well. I can't imagine working all year long to spend one lousy week in a Key West when you could do just the opposite.


I can imagine being delighted at the prospect of staying at 806 Truman. Each of the rooms is different and delightful in its own way. Each room has a private bath, television, and lots of charm. Each has immediate access to a private or semi-private porch or deck. Being able to sit outside and dream about living in Key West full time is part of vacation therapy. I'm sure we have all dreamed of living in a favorite vacation spot. I know I dreamed of living in Laguna Beach, Palm Springs, LaJolla, the South of France, and parts of Italy. I had to "settle" on Key West and have never regretted it. The important thing is that guests have private outdoor space to relax and unwind.


I think the Victoria House could be a very good candidate for a conversion to a gay guest house and maybe a name change. It has a great location and all the amenities that would appeal to gay travelers.

While there are only five guest rooms, this place is not "small". The rooms are large and the entire property seems quite large. Nothing is cramped nor compromised. One does get the feel of being the guest in a grand large old home. And that, Dear Readers, is the point of staying at a guest house instead of a motel on the boulevard or an economy guest house off the beaten path.

CLICK HERE to checkout the Key West mls datasheet and to view listing photos of this property. This property is currently managed and rented as a single home with guest cottage on a weekly basis. Seeing the property requires advance notice and planning so that guest vacations are not interrupted. If you would like to see this property or any other property in Key West, please consider working we me, Gary Thomas, 305-766-2642 or by email at kw1101v@aol.com. I am a buyer's agent and a full time Realtor at Preferred Properties Coastal Realty, Inc. in Key West.

So You Want to Buy a Guest House in Key West

Cypress House - Under Contract - $4,600,000

So You Want to Buy a Guest House in Key West! Join the crowd. There are lots of folks just like you. Folks that dream of leaving their lives up north and moving to Key West where they can live their life their way. I get it. I had the same dream.

Ever since I made my first trip to Key West many years ago I noticed there were always several guest houses for sale. I started looking at the properties for sale and gathered the financial statements so that I could compare income and expenses to see which of the properties looked the most promising. Of course, I always wanted to buy the prettiest property or the one that I thought I could magically transform into the best place in Key West. What an ego I had back then.

Eventually I decided that I wanted to buy the Cypress House at 601 Caroline Street. It is located at the corner of Simonton and Caroline Streets - only a one block walk to Duval Street. The building itself is one of the most beautiful on the island. Hands down. When I made my written offer in 1986 the owner was the estate of "the former owner" who had passed away. The property had been on the market for some time so I was in no rush to submit an offer. However, when I finally made an offer another party made submitted one at the exact same time. The executor of the estate was the brother of the former owner. He called me directly one Saturday (by-passed the real estate agent) to discuss my offer which he told me was higher than the other offer. He was concerned that I had no hotel experience, and that I would not know how to run a guest house. The estate offered to carry a new mortgage on the property. I understood his concern. The estate ultimately sold Cypress House to the lower bidder because that buyer had real life hotel management experience. The next year the new owner passed away himself, and his estate has been running the property since then. I have written about mistakes and regrets I made in Key West real estate. Not getting the Cypress House is one of the Biggies! What a property it is. The asking price back in 1986 was about $565,000 if I remember correctly. I offered $535,000 and the guy who got it paid $525,000.

The Cypress House has been on and off the market several times over the past few years. It was offered for sale at $7.8 million in May 2008. The price was later reduced to $6.9 million. Most recently it was offered at $4.6 million. And this week it went under contract. I have no idea as to the contract price. If it sells at the asking price, the buyer would pay $191,000 per room (for 22 rooms as cited in the mls). Guest house and hotel rooms are normally sold on the number of rooms offered and not a on per sq ft basis. Just as with houses in Old Town, some places are grand and some places are 'dogs'. All command high asking prices. Smart buyers today know they are buying a business first and a lifestyle second.

Long time Readers may recall that I owned Eaton Lodge (511 Eaton Street). I purchased that property at a public auction held on the property in October 1993. The second big mistake I made in Key West real estate was selling it. Guest houses can make a lot of money. I fell prey to my own greed and took a quick profit instead of staying the course and making a bunch of money over a protracted period of time. Owning a guest house can be a lot of work. It can be a lot of fun. It can be rewarding or it can be losing proposition. Owning a guest house in Key West is like life everywhere: it is what you make of it.

There are only a few guest houses on the market at this time. They include Papa's Hideaway ($1,495,000), The Victoria House ($2,295,000), the Curry House ($2,950,000), The Duval Inn ($3,199,000),and Marrero's Guest Mansion ($4,450,000). The very real and very famous Big Ruby's is offered at $5,900,000 and Pearl's Guest House is offered at $9,900,000.

Papa's Hideaway $1,495,000

The Victoria House $2,295,000

The Curry House, $2,950,000

The Duval Inn $3,199,000

Marrero's Guest Mansion $4,450,000

Big Ruby's Guest House $5,900,000

Pearl's Guest House $9,900,000

I think the dead of summer is an excellent time to actually act on fulfilling your dream and buying a guest house. The American economy is still in turmoil and that uncertainty makes buyers reluctant to commit. If you are willing to commit, you may snag the opportunity while others stand on the sidelines. Whether you are a cash buyer or are financing the transaction, you will need a few months time to close the transaction. If you close a transaction in October or November, you will have a couple of easy months to learn the guest house business before season starts the day after Christmas. A well located and properly run guest houses stays packed through Easter and remain busy the rest of the year but at reduced rates.

Having a two to three month get acquainted session with a new business is the best training a new owner can have. You can learn how to make your business plan actually function, how to book rooms to maximize room revenues, and how to manage your staff.

Having a location near Duval Street is very important. Having a web presence is critical. Returning guests like be near the action. First time guests find a place to stay either by the Internet or drive-by. You would me amazed at the number of people who decide to drive to Key West without having a reservation. Knowing your market audience (gays, straights, budget travelers, or high rollers) is the key in getting new business. The lead time will enable you to work out our web presence and other marketing strategies.

If you want to buy a guest house in Key West, please consider working with me, Gary Thomas,305-766-2642 or by email at kw1101v@aol.com. I am a full time Realtor at Preferred Properties Coastal Realty, Inc. in Key West. Believe in your dream. You won't regret it.

525 Simonton Street - Old Town - Key West

525 Simonton Street - Old Town - Key West

I know the property at 525 Simonton Street pretty well. That is where I first worked when I got my real estate license in 1997. The real estate offices were on the main floor. The rest of the main building and the detached cottage were The Watson House Guest House. The prior owners did a very nice job of renovating the buildings. They operated the three unit guest house to capacity all year long. The current owners converted the previous office space into residential living space and condominiumized the property as a whole.


Fast forward to the present. This beautiful Key West landmark property is now a Short Sale. The listing Realtor describes the property this way:

"***Short Sale****The Watson House on Simonton is an historic estate beautifully renovated and restored. It is currently being managed as an upscale 3 unit guest house with excellent revenues streams year round. The home includes high ceilings, crown molding, large open floor plan with amazing covered decks overlooking the private pool. It also offers off street parking, and a separate guest house."

This property is located on Simonton Street between high-end Marquesa Hotel to the north and Sarabeth's to the south. It is one block off Duval Street. (Guests can find their way home even in the dark!) There is off street parking, a beautiful pool, and large suite like facilities as presently configured. A new owner might keep the rear cottage as an owner's unit and rent out the rooms in the main building. There are lots of possibilities on this property.

Off street parking-in Old Town!

The asking price on this property was just reduced to $1,999,000. This dear Readers, is a bargain in my opinion. If you have been looking for a guest house and have been dismayed by the high asking prices, condition, location, or all three, this may be a workable and bankable alternative.

Please contact me, Gary Thomas, 305-766-2642 or send me an email at kw1101v@aol.com for more information on this property. I am a buyer's agent and a full time Realtor at Preferred Properties Coastal Realty, Inc. in Key West. Turn this short sale into a big opportunity.

Papa's Hideaway and other things...

I think most of us go through a learning process of what works in life and what does not. This process must include who we love (and often learn to hate); how we earn money (and the amount of crap we are willing to put up with from bosses and fellow workers); and what gives us pleasure and makes our lives worth living (and what we hate about where we are in life).

When people come to Key West they see a collective group of locals that appear to live a life less normal than what goes on up north, in America. Or anyplace else. They see a quaint little town with cute little cottages and grand old homes sitting behind white picket fences with yards filled with palm trees and exotic foliage of all types. They walk up and down the streets and take pictures of the commonplace and muse to themselves how wonderful it would be to live in a place like Key West. Except there is no other place like Key West. It is a one-of-a-kind place in life and in the world. Of course there are other quaint towns across this country and elsewhere. I don't deny the obvious. Our wonderful weather and our community make this little town the place that inspire many to dream of moving here to live life wearing a tee shirt, shorts, and flip-flops and saying goodbye to overbearing bosses, insidious co-workers, daily commutes from jobs they can't stand, and weather from hell.

Some think of buying a guest house in Key West and living a life less stressful but more meaningful. If you have dreamed this dream, read on. Papa's Hideway Guest House at 309 Louisa Street is now listed for sale at the asking price of $1,495,000. (This equates to $373,750 per transiently licensed room.) Papa's is located one block east of Duval Street near the Southernmost Point. You may have walked near or driven by the place but you probably did not notice it because it sits behind another property that fronts on Whitehead. The street itself dead-ends at the end of the property which abuts a small city park.

The listing Realtor describes Papa's this way:

"Price Reduced! Seller will carry $1,000,000 1st mortgage. Papa's Hideaway: densely landscaped private guesthouse compound - versatile boutique facility - [4] transiently licensed daily, weekly, units + a large, architecturally ornate 2bdrm/2Bth home with wraparound porch overlooking heated pool. Located on a short,dead-ending Lane means peace & quiet. Street side parking. Short walk to Duval Street's restaurants, shops & a few blocks to South Beach. 80'x118' lot, towering palms, blooming foliage - high privacy fencing. Easily managed guesthouse with a monthly vacation furnished home for large groups -or- live on site in the house with an established income stream from the 4 units. 15 yr track record - advance bookings in place & website."

I would describe Papa's as being more like a compound consisting of a two story house divided into four rooms with private porches, a small cottage to the right (or east) where the office is located, and a large old Florida style house on far left (or west) side. A large pool separates the old Florida house from the two story house. So many places in Key West have a closed-in feeling because buildings are so tightly spaced and the grounds are densely peppered with palms and sometimes gigantic old trees that tower in the sky. The grounds at Papa's Hideway are lush and tall palms and huge blue skies make this place seem immense by comparison to almost all other guest houses and many large private homes in Key West.

Large inviting pool

The main house

Wrap around porch at the main house

The listing Realtor says Ernest Hemingway used to box in the main house. The space is certainly large enough to have had a boxing ring. Today the house looks more like just an old Florida home with four or five rooms with wrap around porch. Don't get me wrong, the architecture is wonderful. I think this wonderful space is under utilized. I found old photos of the main house and the two story building. The two story house appears to have been added onto a couple of times over the years and it no longer looks anything like the old photos. Today each room has a semi-enclosed porch with minimal views of the grounds. A singular staircase bisects that building.

The main house as I call it as it appeared in this 1965 photo

The two story house appears to have doubled in size compared to this old photo

I think a new owner could have a field day redoing this property. A new owner might redo the main house and convert the space into two large luxury suites. (This would require the purchase of two hotel room transient licenses.) I'd redo the stairway to the two story house and create a more Key Westie feel and open the porches so that guests can see the beautiful grounds and pool.

Since this place is so hidden a new owner might develop a different business model to appeal to a different clientele. I'll go out a limb here and suggest this place might appeal to the clothing optional crowd - either gay or straight. Another very popular "all welcome" guest house in Old Town has a very successful business and it is clothing optional. I think a new owner could upgrade the rooms and service and turn Papa's into a real chic boutique hotel. I am not saying the present owner is doing anything wrong because that is not the case. But a new owner is going to have to increase revenue and one way to do that is to change the business model. My suggestion might be one way to do that.

The current owner is willing to carry a mortgage but that may require a new owner to operate the business in a manner approved by the seller. Local banks are lending money to guest house buyers. I suggest that a new owner develop a strong business plan that details exactly what he or she will do with any guest house and demonstrate not only the projected revenues but also the method by which the guest house will be operated. To say "I am going to raise room revenue" won't cut it. A potential new owner must be able to show how the place will really generate the projected revenue.

I used to own a guest house in Key West. It is an easy business and it can be a hard business. You can be a success if you make people feel at home and provide a clean and safe environment. Having toilets that work and cleaning rooms each day pays off. You would be surprised how many places cannot or do not offer even that minimum standard of care. Guests that have a good experience return to the same place year after year because they know they exactly what they can expect. A small place like this would be an ideal property for a buyer that wants a small business operation - a real Mama and Papa place so to speak.

Two Key West guest houses sold in Key West during the past three weeks. Neither is anything like Papa's Hideaway but I offer the sales info for your review.

The former Nassau House at 916 Fleming Street was an nine room guesthouse with 5 transient licenses that became a bank owned property. While I recommended it as a potential buy, the place had a bunch of "issues" to say the least. The place is going to undergo some renovation and will reopen under a new name. (If you read Trip Advisor you will certainly know why.) This property sold for $1,275,000 or or $255,000 per room.

The Paradise Inn with 18 transiently licensed rooms, pool, and off street parking located at 819 Simonton Street sold for $4,400,000 or $244,444 per room. The Paradise Inn is one of those boutique hotels that returning visitors flock to year after year. Don't let the disparity in sales price mislead you as to the quality of either property. The Paradise Inn is a first rate operation. The Fleming Street property had four phantom unlicensed guest rooms that played in the ultimate price paid.

If you are looking to leave your old life behind and buy a guest house in Key West, please consider working with me as your Realtor. I did the same thing. I wish I had done it sooner. Please call me, Gary Thomas, 305-766-2642. I am a full time Realtor at Preferred Properties Coastal Realty, Inc. in Key West, Florida. Don't grow old and gray living a life of unfulfilled dreams.

The Curry House - Key West Guest House

The first floor veranda welcomes you to The Curry House

Just re-listed, The Curry House - not to be confused with the Curry Mansion.

This is how the listing Realtor describes this Key West classic (and classy) accommodation:

"Great new price! Boasting classic Old Town Key West charm, the historic Curry House Bed and Breakfast offers a unique opportunity to own one of the few B&B's with a commercial kitchen to provide hot meals to guests. Built in 1889, this charming three-story house has 9 guest rooms, wrap-around porches, private verandas, parlor and spacious rear patio opening onto the large heated pool and gardens. Rooms feature hardwood floors, Dade county pine, refrigerators, cable TV, phone, wireless internet, A/C and ceiling fans. Located 3 blocks to Duval Street and the Historic Seaport, this alluring B&B welcomes gratified guests year after year. 8 transient licenses and managers unit. Turn-key operation."

The current owners prepare a cooked to order breakfast served poolside

The Curry House is all of the above and more. Let me start my remarks by getting a bit nostalgic. I've mentioned before that I learned of Key West by an article I read in After Dark Magazine sometime in the 1970s. After I read about Key West I needed more info and as luck would have it a story soon appeared in The Advocate Magazine. The article said Key West was the new gay travel destination. The article included info on the Curry House which was the first all gay guest house in town. There were photos and the story of how the two owners bought an old mansion and turned it into a gay guest house. Later, when I was making my plans for my first visit to Key West, I called to book a room at the Curry House. Couldn't do it. There was no room at that inn because it was solidly booked. After I got to Key West I did walk past the place and was very impressed. I was happy with were I stayed but I also felt I missed out on something better.

The Curry House has traded owners the 25 years since my first visit. The current owners converted the Curry House into an "all welcome" guest house meaning it is no longer exclusively gay male. They added four poster beds in most rooms and did a bit of necessary updating. They replaced the old pool with a new one, and boy does it look enticing. (See the photo below.) The other photo below shows a view from the second floor rear veranda. What a view it is! All but one of the guest rooms have direct access to an outside porch right off the guest room.

The new pool as seen from the second floor veranda

Looking south from the second floor veranda - isn't it lovely?

This is the front second floor veranda looking out to Fleming Street

The Curry House is located on guest house row at 806 Fleming Street. Other guest houses on Fleming Street include The Oasis, The Coral Tree Inn, Coconut Grove, The Equator, Alexander's, The Island House, and Nassau House. The Frances Street Bottle Inn, the Island City Guesthouse, and the Popular House are also located nearby. The location is great for visitors because it is close to the Historic Key West Seaport where you will find great restaurants, fishing, para sailing, and snorkeling trips. Duval Street is just four blocks to the west. It's an easy trek back to the room even after a night of too much pasta or too many cocktails.

CLICK HERE to checkout the mls datasheet and to view lots of photos of The Curry House. The Curry House is offered at $2,950,000.

Some readers may know that I eventually purchased and ran a guest house in Key West. I have sold others as a buyer's agent. I think I have some valuable insight that I can add to help a serious buyer decide if the Curry House or any other guest house might work for a particular buyer. If you are thinking of buying a guesthouse in Key West, please consider working with me, Gary Thomas, 305-766-2642. I am a full time Realtor at Preferred Properties Coastal Realty, Inc. in Key West. Thirty years ago you had to wait for a magazine to tell you about far away places like Key West. Today the Internet can provide lots of information by the click of a link. Having a Realtor who used to own and run a guest house might prove useful to a buyer seriously considering making the move to Key West.

Key West Guesthouse - Bank Owned !

Just Listed, but not by me, the Nassau House guesthouse located at 1016 Fleming Street in the heart of Old Town Key West. This property is now Bank Owned and it has been re-priced to sell. This listing agent describes this property as follows:

"Bank Owned Guest House in Old Town Key West. Well known 9 room Guest House with full kitchen, outside decks and porches. Lush landscaping. Spacious rooms, each individual in it's location in the house, as well as it's theme. Lock out units provide flexibility in booking larger parties. Lagoon pool and Tiki hut provide relaxing area to congregate, as well as decks and porches on each floor. Priced to sell. Bank says Bring Offers."

Nassau House is a well established guest house located right in the heart of things at 1016 Fleming Street. For point of reference the famous Eden House is located across the street (it was the home of Goldie Hawn in the movie Criss Cross filmed in Key West in 1992). Click the MAP for the best view of the location. (Google maps give viewers great perspective views of the area as a whole and then zeros in onto the neighborhood. The street view is great as well.) The location is great because guests can walk to any number of nearby restaurants (Azur, Michael's, Cafe Sole, The Marquesa Cafe, A&B Lobster House, etc.). The Tropic Cinema, the Red Barn Theatre, and the Waterfront Playhouse (where you will occasionally see something deliciously naughty) are all within a ten minute walk. The seaport is only a five minute walk and the nightlife on Duval Street is a comfortable stroll both going and returning.

This property has been listed for sale over the past two years at an asking price as high as $2,750,000. It is now offered at $1,700,000. There are nine guest rooms but there are only five City of Key West transient licenses. The city is aware that this guest house, like many others, has more guest rooms than it has licenses. There is an inherent risk in buying a place with less licenses that the law requires. Yet, the law has not been enforced for years. Someday a new city administration may enforce the rules and only permit guest house owners to rent only the number of rooms for which they hold a valid transient license. My advice to a prospective buyer is to discuss the legal ramifications with a real estate lawyer in Key West. My opinion is that the city will continue to take the bed tax and look the other way. That being said, CLICK HERE to review the mls information and to view more photos of this property.

I used to own a guest house in Key West. I bought a place that had been foreclosed and I got a very good deal. I regret now that I sold it. But what I know now more than ever is the value of a good location and a good name. Tourists know what they want or expect for their money. People that want beachfront location and luxurious amenities don't stay in guest houses and vice versa. I suggest that a prospective buyer develop a good business plan that fits the expectations of guest house visitors and not to develop some grandiose miniature Ritz Carlton. Providing a clean and comfortable room, a friendly environment, and TV and internet that works, a pool and a place to get that enviable Key West tan plus a good cup of coffee in the morning are the framework for putting lots of heads in beds.

I think this property ought to sell fairly quickly at the asking price. I would love to work with a buyer that wants a Realtor that actually knows something about the guesthouse business. And having just listed or sold other guesthouses does not necessarily bring any expertise to the table. Like I said, I purchased a bank owned guesthouse and ran it. I know first hand what a prospective buyer will face. If you are looking to purchase a guesthouse in Key West and would like to see the Nassau House, please contact me, Gary Thomas, 305-766-2642 or send me an email at kw1101v@aol.com. I am a full time Realtor at Preferred Properties Coastal Realty, Inc. in Key West, Florida.

Do you want to own a Guest House?

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.

Key West Guest Houses -- For Sale

I know something about Key West Guest Houses, because I used to own one -- Eaton Lodge located at 511 Eaton Street. Selling it ranks in the top five mistakes of my life. Buying it was one of the best things I ever did. Taking as long to buy it cost me big time. The time value of money.

I pretty much decided that I wanted to own a guest house after my first trip to Key West in 1984, but I put off even looking on that trip thinking I was being too impulsive. I had stayed in other guest houses in Provincetown and California during the four previous years and those experiences led me to believe I could be a very good innkeeper. Kind of like Bob Newhart on NEWHART.

When I first started to look at properties guest rooms were being sold in the range of $25,000 - $35,000 per room. Most recently the rooms have been sold around $300,000 per room. Quite a dramatic increase in20 years. Yet the prices pretty much fall in line with the price appreciation of single family homes in Old Town.

The reason it took me so long to buy a guest house was my failure to listen to my Realtor. I kept on insisting on over-lawyering every offer I made. I kept trying to weasel the last nickle out of every deal. And I kept not getting any deal done.

I ended up buying Eaton Lodge at a public auction conducted by the Small Business Administration. It had foreclosed a mortgage on the property and let the building sit vacant for two years. It is a beautiful Greek Revival building with mature gardens in a heck of a great Old Town location. Because of the auction, I was forced into accepting the building "as is" and without any ability to negotiate anything. I couldn't over-lawyer or nit-pick. Thank God.

I tell buyers to consider the following factors when looking at prospective guest houses:

1. Location. Once vacationers arrive in Key West, they can't drive anywhere. Pick a good location that is easy to find and that is near Duval. Many visitors come to Key West without reservations, so the better the location, the more likely you are to stay full.

2. Improvements. Every guest house that I know of was built and was used as something else before converted into a mini-hotel. And even though guest houses may be priced similarly, the fact is that each property is very different in the quality of renovation and utility for it's end use. Some buildings have more deferred maintenance than others. Others may have code violations. Or some properties may have more guest rooms than transient licenses. Some may have locational problems (noise, lack of any nearby parking, distance from Duval, etc.).

3. Book of Business. It is virtually impossible to create a new guest house out of an existing building. The City of Key West has so many restrictions on buildings that it is just easier to buy an existing business. Look for a business that is operated as a business. Request and study the business's financial records. Study the reported income for the periods of January through April. Well located guest houses ought to be near 100% occupancy during the entire period. If the numbers are not there, then something is wrong with the numbers or the operation. Some owners operate "off book"--they do not report all cash income. This can have a severe impact on a potential sale because all banks require appraisals based on the number of legal rooms (rooms with transient licenses) and verifiable income. Operations that are successful are easier to takeover than businesses that are mismanaged. Sometimes property costs more because it is worth more.

4. You are not Newhart. Many people think they will live in one of the guest rooms and live the life of Bob Newhart in his charming Inn. Wrong. You have to be rich, really rich to live on site. On most properties you would lose $200 or more per night in room income for 365 days a year. It is less expensive and easier on your mental health to live near, but not on the property.

5. Help. No, not "help me!", but how many employees will you need and how much will it cost to pay them. A mom and pop type of operation can usually handle a small guest house with 6 or 7 rooms with one or two additional employees to help as maids and relief from the front desk. But that mean mom and pop will be doing a lot of the work as well. Guest houses with 13 to 14 rooms become very profitable because you can afford to have enough employees to let you run the business and mingle with the guests as necessary. Some guest house owners use a service company that provides maids on an hourly basis, so the owner pays a flat fee to the company and that is it. The worker is not an employee of the guest house so there are no FICA or unemployment taxes to pay. However, many very successful guest houses run just the opposite. They pay their employees a good hourly wage, offer some form of medical insurance, and maybe even paid vacation. The latter businesses have employee loyalty and longevity. And returning guests know the names of those employees and come back year after year because they are treated nicely. In employee relations cheap labor can be very expensive.

A Realtor should be able to help you understand how these factors impact your potential investment in a Key West guest house.

Earlier I said "Selling it ranks in the top five mistakes of my life." After I sold Eaton Lodge I understood that I had thrown away years of easy income for a quick (real quick one time profit). Running a guest house is not an easy business, but it is not hard one either. Making the right choice and operating a business as a business and not as a hobby can provide a good and stable income and significant property appreciation.

To view all current Key West Guest Houses that are for sale CLICK HERE.


CLICK HERE to checkout all current Key West mls listings. Then give Gary Thomas, that's me, a call for more information. 1-305-766-2642.

The Artist House Key West -- For Sale

The Artist House

Located at 534 Eaton Street, The Artist House has what other innkeepers
wish they had: a magnificently appointed and truly historic property.

This seven unit property is located one-half block off famous Duval Street on Eaton Street--old Key West's millionaires row. Eaton Street is one of two main corridors that bring traffic in to the Old Town area. So this is a very high visibility location and because of its innate beauty, attracts many would-be lodgers who failed to make reservations in advance or who mistakenly booked a room at a huge motel on Roosevelt Boulevard.

(I used to own Eaton Lodge at 511 Eaton Street. I know the guest house business and I know the value of owning a beautiful and historic property on that particular block.)

The property was the home of Dr. Thomas Otto and was named for his artist son, hence the name "The Artist House".

The rooms are large and most feature original fireplaces, crown molding, high baseboards, and period finishes that transport the lodger back to a grander era.

The Artist House is priced at $2,599,000. It has six licensed guest rooms. This beautiful property could be yours and you could fulfill your dreams of being the next Bob Newhart--but you would just be living in Paradise instead of New England.

More info: Please call Gary Thomas 1-305-766-2642