Claude and Mariette Gagne, real estate agents specializing in B&Bs, have been helping aspiring innkeepers make their dreams come true since 1995. It's not uncommon for those dreams to involve inns that sell for more than $1 million -- sometimes much more than $1 million.
The Gagnes answered a few questions for us about their role in the world of B&Bs, what aspiring innkeepers should look for in a million-dollar inn, and more.
How did you get involved in selling bed and breakfasts?
We had a B&B for sale in Hickory [North Carolina] that had been for sale for two years with no success. We took the listing and began advertising it nationally. Within three months we had a contract on the property, and by then several new listings.
We've advertised nationally ever since and slowly began our association with other agents in different parts of the country that were interested in working with B&Bs. Claude took a B&B seminar in 1994, and have since accumulated enough B&B material and know-how that we now conduct seminars in a dozen cities in both the U.S. and Canada. We began our B&B and Country Inn Marketplace magazine in 1998, and after a rocky beginning, we're now on course with a decent publication, that we produce in-house four times a year. Our database has has grown to over 40,000 B&Bs, buyers, inn associations, agents and suppliers in the U.S. and Canada.
When and where did you first stay at a B&B?
About 20 years ago, driving back to Montreal from the Thousand Islands area. (Mariette is from Montreal.) We were on the Canadian side and stopped at a charming place on the St Laurence River. The inn had two-foot thick stone walls, and the innkeepers were so very nice, and what a breakfast we were given!
Have you ever owned your own B&B?
No, we never have, everyone just assumes that we have. We learn from every experienced innkeeper we meet. We always have an experienced innkeeper give a major part of our seminars, and we learn a little from each one.
What do you enjoy most about selling B&Bs?
Travelling to see the different properties and how each is so well decorated. Also the buyers we work with are tops. Most buyers are professionals that are fed up with corporate America. They are seeking a more laid-back lifestyle. It may be much more work for them with longer hours, but the stress is gone, or nearly all gone.
What services do you offer?
We conduct seminars and assist buyers with business plans, financing and setting up credit card processing, telephones, and property insurance.
When aspiring innkeepers contact you, what are some questions you ask?
How serious are they, and do they know that they will need about 25 percent or more of the purchase price in cash. That determines the price range they should be looking at.
What are some of the first questions they have for you?
Most want to know where a certain B&B is located, as they would like to do a drive-by. We try not to disclose this until they have signed a confidentiality agreement, and agency representation documents. We know from experience that drive-bys often become stop-ins, and the innkeepers object to our sending un-accompanied buyers. That is what we are paid to do, rather than waste the innkeepers' time with unqualified buyers. We always show our properties.
What are some common misconceptions aspiring innkeepers have?
That this is a get-rich-quick occupation, and that innkeepers have nothing but time on their hands which they can spend with guests. Also that they can purchase a B&B with 5 to 10 percent down, as they can a residential property.
How many million-dollar inns do you have listed?
We currently have 42 properties offered at over $1 million, although five of those are in Canada with a lower valuation because of the difference in exchange rates.
What are some common features in million-dollar inns?
The number of rooms, which translate to a large customer base, but more important, a higher cash flow with the ability of the inn to cover a larger (when sold) mortgage and associated operating expenses. Many of the larger inns also have more land and are in better locations. Remember location, location, and location are three important factors when deciding upon a purchase of an inn.
Most large inns also have spacious lobbies and lots of amenities to keep guests coming back time and again.
Should a novice even consider a $1 million purchase?
It would be a big first step, and unless they have had hospitality experience elsewhere, we do not advise it. Best to learn to walk first, then run later.
How can aspiring innkeepers make a $1 million investment pay off?
Verify the books of the inn for the past four or five years. Is the trend is up, or is it down? Can you turn around a poor performing inn with more marketing? Some buyers are wizards at marketing. Maybe the food operation is in need of an overhaul. There are many things to consider. Try to find a well-run operation with a good cash flow. Pay a little more for the property, but sleep easier at night.
How many low-cost inns (less than $200,000) do you have listed?
We have only eight, possibly nine if we count one in Canada with the exchange rates.
What should buyers expect from a low-cost inn?
Fewer rooms, less square footage and a lower gross income. Good inns do not sell this low. Good inns are priced according to their cash flow.
Who should consider purchasing a low-cost inn?
Someone who thought they could buy a $500,000 inn with 5 to 10 percent down. The reality is that maybe this is all they can afford. Maybe by improving the performance of a smaller property, they can re-sell in a few years and re-invest their profits into a larger inn.
Many thanks to the Gagnes for taking time to answer these questions. For more information about their services, visit them on the Web at InnMarketing.com. Note: This article was originally published in July 2000.
