Looking to rent of my b and b

Themag

i am looking to rent out my b and b but i am not sure what is a fair price to ask for?? is there a rule of thumb say.....
i was thinking 20% of gross income
so say the b and b takes 100,000...
i would be looking for 20,000
discuss

EndaHonesty

Themag wrote: »

i am looking to rent out my b and b but i am not sure what is a fair price to ask for?? is there a rule of thumb say.....
i was thinking 20% of gross income
so say the b and b takes 100,000...
i would be looking for 20,000
discuss

What is the VAT rate on a B&B?

Are there commercial rates on a B&B?

What occupancy rate do you have?

Are you open all year round?

10% of net income (gross income minus VAT & rates) would be a good rule of thumb, IMO

Themag

no commercial rates
yes open all year around.
business does well reason for leasing is i want to travel for a year or 2
10% seems very low, i understand this is what you be looking for a pub or restaurant.

EndaHonesty

Themag wrote: »

no commercial rates
yes open all year around.
business does well reason for leasing is i want to travel for a year or 2
10% seems very low, i understand this is what you be looking for a pub or restaurant.

what is the VAT rate?

could you honestly survive in the B&B paying out 20,000 of your gross income?

Edit: VAT is 9% so net turnover is around 90,000. IMO 1,000 per month rent would be fair.

Themag

lets say its a 5 bedroom b and b
its 40% occupancy rate lets say...
turn over of 44,000
9% tax...
what do we think is a fair rent to ask for....

EndaHonesty

Themag wrote: »

lets say its a 5 bedroom b and b
its 40% occupancy rate lets say...
turn over of 44,000
9% tax...
what do we think is a fair rent to ask for....

The turnover is 44k now, not 100k?

MOH

EndaHonesty wrote: »

The turnover is 44k now, not 100k?

I'd taken the 100k as a nominal figure to make a percentage calculation straightforward, not the actual figure?

CIARAN_BOYLE

Themag wrote: »

lets say its a 5 bedroom b and b
its 40% occupancy rate lets say...
turn over of 44,000
9% tax...
what do we think is a fair rent to ask for....

are you in a city where someone could do it part time with something else? or do you need a renter who would be doing it full time?

would it be easier for you to hire a manager rather than renting the premises out?

Themag

EndaHonesty wrote: »

The turnover is 44k now, not 100k?

Ok stuck with the 100,000 it’s hypothetical.. it’s easier
9% vat
That’s 91,000 profit margins about 60%
Leaving around 55000
Minus 20000 rent..
That’s still leave a 35,000 roughly
Which is good in my opinion...
Still I am looking for the answer
What do people think is a fair % of gross income to charge.... anyone have experience in this
Discuss

EndaHonesty

MOH wrote: »

I'd taken the 100k as a nominal figure to make a percentage calculation straightforward, not the actual figure?

Themag wrote: »

Ok stuck with the 100,000 it’s hypothetical.. it’s easier
9% vat
That’s 91,000 profit margins about 60%
Leaving around 55000
Minus 20000 rent..
That’s still leave a 35,000 roughly
Which is good in my opinion...
Still I am looking for the answer
What do people think is a fair % of gross income to charge.... anyone have experience in this
Discuss

Posting from 2 accounts is confusing...

MOH

EndaHonesty wrote: »

Posting from 2 accounts is confusing...

Are you seriously implying that because I pointed out something that seemed quite obvious to me that I must be the OP? Wow.

jimmii

MOH wrote: »

Are you seriously implying that because I pointed out something that seemed quite obvious to me that I must be the OP? Wow.

It could be read that you used the 100k to make it easier but guess what you meant is that you assumed the op used 100 to make the numbers easier. I can see why it could be mixed up!

jimmii

Themag wrote: »

Ok stuck with the 100,000 it’s hypothetical.. it’s easier
9% vat
That’s 91,000 profit margins about 60%
Leaving around 55000
Minus 20000 rent..
That’s still leave a 35,000 roughly
Which is good in my opinion...
Still I am looking for the answer
What do people think is a fair % of gross income to charge.... anyone have experience in this
Discuss

If it's a one person operation 35k doesn't seem so bad but it would depend on how many hours its likely to take them to keep the place going. It'll be hard to find someone willing to be available for 12 hours a day 7 days a week if they're only getting that much out of it.

EndaHonesty

jimmii wrote: »

If it's a one person operation 35k doesn't seem so bad but it would depend on how many hours its likely to take them to keep the place going. It'll be hard to find someone willing to be available for 12 hours a day 7 days a week if they're only getting that much out of it.

And if the actual turnover is 44k and the OP is still looking for 20% of gross for rent, the actual money available for salary is only around 15k...

Edit: 20% rent leaves about 20k, not 15k. €300 per month would leave around 24k. Still not enough.

jimmii

EndaHonesty wrote: »

And if the actual turnover is 44k and the OP is still looking for 20% of gross for rent, the actual money available for salary is only around 15k...

Yeah if it's 44 they'd probably need to offer the lease for free not much left after a few costs if it's that sort of level.

Themag

Guys nobody is answering the question...
ok start again
100000 turn over..
9% vat...
91,000
Minus running cost of 56,000
That’s 48,000 profit....
Now my original question...

WHAT IS A FAIR % OF TOTAL INCOME TO ASK FOR IN RENT???
20% or 25%

Discuss
Thanks

jimmii

Themag wrote: »

Guys nobody is answering the question...
ok start again
100000 turn over..
9% vat...
91,000
Minus running cost of 56,000
That’s 48,000 profit....
Now my original question...

WHAT IS A FAIR % OF TOTAL INCOME TO ASK FOR IN RENT???
20% or 25%

Discuss
Thanks

Hope you have an accountant :pac:

I would think anything over 10% would be lucky to get much interest 10k/year seems about right. But it would depend a lot on the amount of work needed. Would that running cost include staff?

Sleeper12

Themag wrote:

Guys nobody is answering the question... ok start again 100000 turn over.. 9% vat... 91,000 Minus running cost of 56,000 That’s 48,000 profit.... Now my original question...

If you can give the actual turnover instead of the 100,000 it would be much easier to give you an answer

Sleeper12

Themag wrote:

WHAT IS A FAIR % OF TOTAL INCOME TO ASK FOR IN RENT??? 20% or 25%

Neither

Themag

take it that these are the real figures
100000 turn over..
9% vat...
91,000
Minus running cost of 56,000
That’s 48,000 profit for the person running the business...
they pay 20,000 in rent
and they are left with 28,000 and free accommodation(7000)....
that's not bad

CIARAN_BOYLE

Themag wrote: »

take it that these are the real figures
100000 turn over..
9% vat...
91,000
Minus running cost of 56,000
That’s 48,000 profit for the person running the business...
they pay 20,000 in rent
and they are left with 28,000 and free accommodation(7000)....
that's not bad

91-56 is 35 not 48. Paying 20 in rent leaves them with 15k. Running a b&b is too much stress being left with only 15k would have me say no thanks.

Where is the b&b. If it's in a city it's possible to hire someone to spend an hour cleaning and two hours running breakfast/checkout. If it's small you can do check-in by appointment only and have another job when running a b&b. If so you can have a full time job and accept a smaller margin. If it's rural rent would need to be under 2k in the described scenario. If urban you can push it towards 20k alright.

Themag

sorry that was a typo
it was meant to be running cost at 43000

Themag

i want to rent it out as i want to move abroad i don't want to run it and yes its in a city

pedroeibar1

It's a stupid OP/question. How can you base a 'fee' predicated on income when you have no control over room pricing or marketing input costs. You look at the asset value and base a price on that.

BnB

Hi OP

Firstly, as the previous poster was getting at, I presume you are using percentage only as a way to calculate what to charge. i.e. If you decide 20% - Then their rent is €20k - And that's it - €20k is agreed at the start and that is what they pay regardless of how much they actually bring in.

I would agree with other posters here with the view that 20% of turnover for a standard business is quite high and you would usually be looking at around 10%. However, one thing I think they are not taking into account is that your business (I presume) comes with accommodation. So as well as renting a business, they will also be renting a home.

Taking that into account - 20% doesn't sound too bad.

Ultimately, what will decide the price is the market. If I was you, I would advertise it at the higher end of the scale. 25 or even 30%. If you have no takers or very little interest, you can drop down to 20.

EndaHonesty

BnB wrote: »

Hi OP

Firstly, as the previous poster was getting at, I presume you are using percentage only as a way to calculate what to charge. i.e. If you decide 20% - Then their rent is €20k - And that's it - €20k is agreed at the start and that is what they pay regardless of how much they actually bring in.

I would agree with other posters here with the view that 20% of turnover for a standard business is quite high and you would usually be looking at around 10%. However, one thing I think they are not taking into account is that your business (I presume) comes with accommodation. So as well as renting a business, they will also be renting a home.

Taking that into account - 20% doesn't sound too bad.

Ultimately, what will decide the price is the market. If I was you, I would advertise it at the higher end of the scale. 25 or even 30%. If you have no takers or very little interest, you can drop down to 20.

The OP has said at one point that the actual turnover was 44k.

He has also said that the gross profit is somewhere between 60% & 40%.

So let's say 50% GP.

That's the same GP as a pub, which can also come with accommodation.

The maximum he could ask for a pub with a turnover of that size is 10% of net turnover. So approx. €4k.

I personally believe €300 per month would be fair.

You have to make it as attractive as possible to get a good operator to look after his house while he's travelling.

davindub

Op not to be funny but your price is what the market will bear.

B&B's at 40% occupancy for a short term period are not viable businesses full stop. I apologise for the bluntness, but why would someone take over a business barely making an income, pay 20% turnover, put in a lot of work and turn over the business at the end?

And why would you want only 8k pa for a property in a city? You could get more renting it out?