Bed and Breakfast: Highest and Best Use Residential or Commercial?

[CANative]

I've done some and rejected others. I love it when they pull up the B&B sign and hide it on the side of the house.

I think this is a judgment call any experienced residential appraiser can make. It sounds sort of like the OP is nervous about it enough to the point where it would be best from a business standpoint to withdraw. But again this is a call for the OP.

 

[Terrel L. Shields]

There is only one sensible reason to start a B & B. That is as a tax break. By creating a B & B, you can depreciate the building which you cannot do as a SFR. Few do it as a serious effort to operate a Hostel - outside a very few high demand and rent areas, such B & Bs are uneconomic upon the face of them.

I also agree that a CR is not a proper license for one as it involves some caution. While I personally don't think it should be that big a deal, it is a safe way to avoid scrutiny from the state.

 

[BRCJR]

B&B = Gentlemen/Hobby Farm

 

[BRCJR]

Sorry, but this is the take of a former investigator from Texas Appraiser Licensing and Certification Board: You are a Certified Residential Appraiser. You are not competent to make the H & BU determination.

Find a General and pay him/her a fee to do the H & B U. If you don't have that in your report, you might be in trouble.

That former investigator is an idiot. License level has nothing to do with competency.

 

[Terrel L. Shields]

But there’s another, often hidden benefit of owning an inn, and it comes in the form of business expenses that can deliver both tax and personal advantages.
[url]http://bandb.about.com/od/runningarticles/a/The-Tax-Advantages-Of-Owning-A-Bandb.htm[/URL]
Because so much of an innkeeper’s life is tied up with the inn itself, it is often difficult (if not nearly impossible) to break apart business expenses from personal expenses. The result is that you get to reduce your overall income by the cost of items not only necessary to the running of the inn, but to your own comfort as well. And lower reported income means lower taxes.

As operated, it is not a "single family residence" in most cases therefore, it is territory left to the CG regardless the CR may be equally equipped to do the appraisal. In that aspect, it is no different from appraising my own property of 80 acres and a house. It is a single family residence but it is also 80 acres that is actively used for agriculture, howbeit apparently from my balance sheet, a non-profit farm...

License level has nothing to do with competency.

Perhaps, but it has everything to do with qualification.

 

[CANative]

As operated, it is not a "single family residence" in most cases therefore, it is territory left to the CG regardless the CR may be equally equipped to do the appraisal.

How about "as constructed?" A big house with foofy wallpaper in many bedrooms.

Could go either way. Usually HBU is owner/occupied SFR.

 

[BRCJR]

..............................
Perhaps, but it has everything to do with qualification.

I do not disagree but, that is not what the post indicated the investigator said.

P.S. Maybe calling him an idiot was harsh.

 

[Terrel L. Shields]

The most common ones I am acquainted with are in areas where they were deliberately built in an area that required them to be zoned as something other than SFR, or they were near a lake, etc. The closest to me just sold by the bank. Never economic, but the builder built it as a B & B but mainly to house a million dollar collection of European and Middle Eastern antiques he had collected while a missionary. It was more house than he needed by far. Finally gave it back to the bank after being on the market for 3 yr or so...million dollar house - pending under $399K as I write.

 

[Tim The Enchanter]

That's some good missionary work.

I've only ever stayed at one small B&B that was a house and guest quarters the owner used on a couple acres or so in the country, and another bigger one that was 2 old mansions connected together in San Fran.

The first was owner run, and it looked like it would be a ton of work. The other had a staff and was more like a small hotel. That one looked like it probably made good money.

 

[Terrel L. Shields]

That's some good missionary work.

I've stayed in a B & B to get away from the office. I have a friend that runs one not so far away on a lake and it is very relaxing...but it was never built as a "business" per se but the concept was to create a building that would draw some income and allow for a significant tax break.