From January 1, 2015 until February 28, 2017, seven B&B's, Guesthouses and Inns Sold in Key West. Sale prices ranged from $2.675M to $9M. Presently five such properties are For Sale with sale prices ranging from $2.49M to $4.8M. Each of these properties offer unique accomodations and services with one also offering a pair of retail stores. As noted in Part I of this two-part sequence, B&B's and Guesthouses have been providing owners and investors with solid long-term gains regardless of other market influences. Let's review the five For Sale for an investment opportunity.
As noted in Part I of this report, B&B and Guesthouse Occupancy Rate for 2016 ranged from a high of 90% (March 2016) to a low of 73% (September 2016). Weekdays, weekends and Holidays, you're going to be busy. Guesthouses are a tough business with rewards measured as much (maybe more) in Trip Advisor Ratings as in dollars. But if you can differentiate yourself from your competitors, you'll have an opportunity to prosper while making someone's Key West dream vacation come true.
Let's see what opportunities are presently on the market -
Andrews Inn - 223 Eanes Lane
The Andrews Inn is located 1/2 block off of the 900 block of Duval St. in downtown Old Town, Key West. Andrews Inn was formerly a single-family home built in the early 1900’s. The surrounding affluent neighborhood was in the center of Old Town and was home to Ernest Hemingway who lived for many years right next door to the Andrews Inn. In the early 1980’s Andrew Cleveland purchased the property, hired a team of live-in carpenters to restore the property and was opened as Andrews Inn in the early 1990’s.
The Andrews Inn proactively participates in the The Florida Green Lodging Program, a voluntary initiative of the Florida Department of Environmental Protection (DEP). The Two-Palm designation of the Andrews Inn recognizes the Inn as making a commitment to conserve and protect Florida’s natural resources.
The Andrews Inn has six ensuite guest rooms, has been on and off the market since February 2015 and is offered For Sale at $2.49M.
Knowles House - 1004 Eaton St.
The Knowles House is located at 1004 Eaton St., just 5 blocks from Duval St., and 3 blocks from the Historic Seaport and boardwalk area of Key West. The property was built in the 1860's as an all-wood, one-story, two-room-plus-loft family home with a pitched roof. In 1935 a second floor was added, along with modern plumbing, electricity and a large concrete cistern. In 1997, the current owners added a rear wing and converted the property to a bed and breakfast.
Guests can relax inside, or outside around a palm-fringed pool garden with soothing fountain and Jacuzzi, a comfortably furnished porch or atop a quiet rooftop sundeck that overlooks the pool and garden.
The Knowles House has eight guestrooms, has been on the market since August 2016 and is offered For Sale at $3.355M
L'Habitation - 408 Eaton St.
L'Habitation is located at 408 Eaton St., 1/2 block off of Duval St., in the heart and soul of downtown Key West. The property is a 10 minute walk to sunset at Mallory Square or to the "Little White House" of President Truman. L'Habitation dates to 1874 as a single family home and through the years has maintained all the architectural charm of a true Key West Conch House with Victorian and Bahamian accents.
L'Habitation has 11 oversized guestrooms and bathrooms, has been on and off the market since June 2015 and is offered For Sale at $3.595M.
Andrews/Eyebrow - 516 Olivia St.
The Eyebrow House is a charming, detached house at 516 Olivia St., 1/2 block from the 900 block of Duval St. It contains a luxurious 1 bedroom suite with a fully furnished living room (including a sleeper sofa), dining room and completely functional kitchen. The Eyebrow House is perfect for those who want a little more privacy during their extended stay.
The Eyebrow House is a part of the Andrews Inn complex and is not available separately.
The Eyebrow House has 1 large bedroom, has been on the market since February 2017 and is offered (in conjunction with the Andrews Inn) for $4.2M.
Maison Sur Duval - 824/826 Duval St.
Maison Sur Duval is a two story, dual-use, condo-retail, concrete block, commercial property located at 824-826 Duval St.
The 1st floor has two retail spaces that directly access Duval St. The autograph and memorabilia business "Millionaire Gallery" operates from both spaces under a triple net lease. The 2nd floor contains 6 transient licensed condos available for overnight rentals. In the rear there is a pool and parking.
Maison Sur Duval has been on the market since November 2016 and is offered For Sale at $4.8M.
I have been tracking guesthouse pricing and performance for the past 2 - 3 years. During this time period, regardless of the number of transent licensed rooms and operating incomes per property, the most consistent variable has been the average sale price per transient license - calculated simply enough by dividing the Sales Price by the number of Transient Licenses.
This resulting average figure has held steady at $400,000 - $415,000 per transient license. The seven SOLD properties shown in the above graphic average to $416,000 per transient license. The five FOR SALE properties average to $529,000 per transient license in large part due to the additional retail opportunity presented by Maison Sur Duval.
As always, if you are interested in a business opportunity, obtain a 3rd party appraisal in addition to a physical inspection.
If you have any comments or questions, please contact me here.