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Bed, Breakfast And Beyond

For Love And Money

Few innkeepers go into the business for the big bucks. Inns with fewer than six rooms find it hard to turn a profit, find some experts. The typical B&B grosses about $153,000 a year, while an inn (more rooms, dinner option) has revenues of about $343,000. But don't expect that immediately, Hardy cautions. For the first three years, the average innkeeper grosses just over $70,000 and nets less than $19,000, and even that number is calculated before paying the mortgage, the owner's draw, depreciation and income tax. Experts figure it this way: 73 percent of income usually goes to expenses, while the remaining 27 percent fills everything else.

That's one reason Nobile kept her day job for three years before going full time as an innkeeper in 1997. For most entrepreneurs, B&Bs are a part-time sideline. But that doesn't mean a full-time operation can't work. In fact, aside from Nobile, all the entrepreneurs we interviewed went directly into full-time ownership. "We turned a profit in one year," says Bruce Libowitz, "and we've been pleasantly surprised the second year: Business is up 60 percent over last year."

However, the rewards of innkeeping are more than financial. "We earn in the mid-five-figures, which is what we made before opening the inn," says Ted Kidwell, "but we are incalculably richer in our lifestyle."

Nobile agrees: "I'm doing something I really enjoy, so it doesn't seem like work--yet my income is now twice what it was as an electrical engineer."

The cost to enjoy this lifestyle? Start-up investments vary widely, depending on real estate values in your region. Suitable houses can be bought for as little as $40,000 or as much as a few million.

Buying a place that's already up and running gives you immediate cash flow. Existing businesses also have track records that help sell your plan to the bank. The downside: Initial expenses can be costly, with the average existing inn being more than $559,000.

That's why many first-time innkeepers buy houses that need rehabbing. Some B&B properties, if also used as primary residences, qualify for conventional mortgages.

"Banks know innkeepers tend to be responsible debtors," says Zane. "Lenders are very receptive to B&B loans these days."

While the norm is still 20 to 30 percent down, it's not a hard-and-fast rule. "All we could afford was 5 percent down [on a $500,000 property]," Liz Evans says. Though the couple did have to put up some stock as collateral for the first 12 months, the bank accepted the small down payment.

If the cost is still too high, consider getting a silent partner to help. Says Kidwell, "We couldn't have done it without our partner."

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