Renting a property

[Jeffreyjohn527]

Hello to all here at Hostel Management....

I am starting a hostel in the US and am trying to rent a property but the problem that I keep running into is that most landlords want nothing to do with a hostel being run out of their houses. Any ideas on what to do here?

[Hostels]

Welcome to the site...

What kinds of objections do they bring up?

[Jeffreyjohn527]

They are not interested in having a bunch of travellers in there property. They think that it will destroy the property, I keep insuring them that it is in my best interest to keep the property clean and nice but still, no one wants to deal with the "problems" that can happen.

[Hostels]

Have they ever stayed at a hostel before? Maybe if they could take a tour of a good hostel they would see that it doesn't have to be as bad as it might sound...

[aboriginalhostel]

They are not interested in having a bunch of travellers in there property. They think that it will destroy the property, I keep insuring them that it is in my best interest to keep the property clean and nice but still, no one wants to deal with the "problems" that can happen.

If you want a small hostel, where there will be no big groups, you can tell your landlord about people who stay long term ruin down the property much easier than the travelers you would like to host. Groupies can do big mess for sure, but I think a tourist doesn't make as big mess as a worker. People who just rent out won't care. At least tourists can be charged for making big mess or breaking facilities, also most of the time they are out in the city, spending the recreational time outside of the hostel.

Also you should focus on the cleaning management, where everyday cleaning and maintenance is important. Pretty much if you want to run a quality business, then you don't want to let the place run down, as you want to keep up the quality for your business.

If these reasons won't convince him, just offer a bigger deposit and a long term contract which ensures you take responsibility for fixing damages.

Btw, prepare yourself for some re-design of piping and electricity... Those facilities wasn't planned for catering that many people...

[santa klaus]

They are not interested in having a bunch of travellers in there property. They think that it will destroy the property, I keep insuring them that it is in my best interest to keep the property clean and nice but still, no one wants to deal with the "problems" that can happen.

That sounds familiar to me.

These are only excuses. They do not believe that a hostel can make enough money to pay the rent.

We had a lot of trouble like that before we started. Apparently, my bosses found a banker with a daughter who just returned from a backpacking trip. Of course they have never stayed in hostels themselves - they think hostels are for homeless and alcoholics.

Make it clear that your hostel would ONLY be for travellers, that there´ll be a maximum stay of, say, a week and that you would NEVER accomodate other people as travellers, because travellers don´t like to share rooms with homeless and drug addicts. Besides, they like CLEAN rooms and good facilities, not ramshackle properties.

Maybe there are already successful hostels in the area - show these to your potential landlord.

[maatnee]

tell your landlord that you're setting up a bed and breakfast, then market it as a hostel .... they're very similar, but a bed and breakfast sounds less offensive ...

[Green Mango]

interesting to read all exchanges here...

you mentioned rent long-term...how many years minimum, 10 years or less? there is often problem of landlords who refuse long-term lease...

regards

Green Mango Inn, Philippines

[ng0rader]

I would only rent as a last resort, when you have fully exhausted all other options. Even then, I would have to set on that particular location as the deciding factor. Actually, on second though I would never rent.

I guess it also depends on what your timeframe is?

Find people to help with financial backing or obtaining loans. Bypass the landlord and use the bank, especially with the downturn in the US housing market. Much of the housing bublle has burst and it is now going to start a slow climb back. Rates and prices are pretty low (relatively) Check out with the SBA there may be some HUD loans you could get, remember if it is the ghetto now it may not be that way forever with the explosion of urban redevelopment in the US ghettos are being forced into the suburbs. If you aren't a single white male, then there is a loan out there for you if you look hard enough.
One of the biggest advantages over renting is the appreciation of value of the property. As you pay the mortgage you increase your owner's equity in the business. Hotels typically own the land they are on, it is one of your biggest assets. It also provides financial leverage should you need to borrow money in the future. Should the mortgage get paid off, there is your retirement.
Here is Hilton's annual report, they lease less than half of their property, but that is probably because they are a multinational public company, not one person of a small group of people working on their nest egg.
http://library.corporate-ir.net/libr...Statements.pdf

All public companies will have their financial information under Investor Relations on their homepage.

[gordo]

as much as i agree with the above, buying a property and doing it up and turning it into a business adds... well, lets say a 'considerable' amount of required cash.

im doing numbers at the moment and figure i need about 7000 sqft for what i want to do - thats not a small amount of building. i can rent for about $17 per foot... or buy for about $5 million. as much as id like to buy, arranging that sort of capital isnt easy and thats just for the property, not improvements or operating capital.

and of course, upping the capital invested increases the risk involved - not necessarily a bad thing if you've done it before. but if you're relatively young (as more than a few of us here are), if something goes sour - good luck digging yourself out of that one.

dont get me wrong, i think buying IS a better idea but its not always realistic.