Going Concerns


b&bWhat’s the difference between a bed and breakfast facility (B&B) and a house? Quite a few. To paraphrase Abraham Lincoln, “Calling a house a ‘bed and breakfast facility’ doesn’t make it one.”

Income characteristics, specifically quantity, quality, and durability, are salient considerations while physical characteristics are another. The same standards that determine whether a property is a true B&B must also apply to comparable properties used in the report. While the buyer of a B&B is often unsophisticated with respect to value (versus price) and functional utility, we’re not.




gstationConvenience store value is a function of location, while location desirability can be correlated with gasoline and store sales volume. Consequently, when appraising a convenience store, we weigh historic gasoline volume, and also use (as part of one valuation technique) total sales together with cost of goods sold. This technique conforms with typical investor behavior. Related property appraisals have included truck stops and carwashes.



autoWe have appraised automobile dealership facilities along the I-5 and I-90 corridors. Like worship facilities, no two automobile dealership facilities are alike although most have general characteristics in common. In addition, location, visibility and exposure, the parts department, service department, showroom executive and sales office areas efficacy, as well as site size and configuration, are weighed when estimating value.



Appraising hospitality facilities and restaurants is unique because of upside potential linked to management proficiency. We have seen seemingly marginal properties become very profitable with management changes.

hotelIn one instance, over a two-year period the average room rate doubled and the occupancy increased 20%, with no significant market changes. The question is to what extent business behavior affects real estate value because, in varying degrees, it always does.

Management proficiency is, therefore, a germane concern. Other considerations, in addition to “all the comforts of home,” include destination location proximity, guest profile, room lay-out, sizes, and mix; banquet and conference facilities; accessibility; visibility and exposure.

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