Bed and Breakfast Due Diligence Checklist for Buyers
A tour of a charming inn and a stay in its best room can leave a strong impression, but impressions are not records. Bed and breakfast due diligence is the period in which a buyer verifies what the seller has described: the earnings, the bookings, the permits, the building and the arrangements that keep the inn running. A thorough review protects the buyer and gives the lender what it needs to evaluate the loan.
This checklist is general guidance for buyers of existing, operating bed and breakfasts and inns. Every property is different, and buyers should involve qualified attorneys, accountants, inspectors and insurance professionals. Rules vary by state and locality, and nothing here is legal, tax or regulatory advice.
Financial Records
- Several years of tax returns and financial statements that reconcile with each other
- Bank statements tied to reported revenue
- Monthly revenue by source: rooms, food, events, packages and retail
- Documentation for every proposed add-back, especially household expenses run through the business
- Lodging and sales tax filings, where applicable
- A schedule of existing debt and liens
Reservations and Guest Data
- Reservation history reconciled to deposits
- Future bookings and advance deposits the buyer will be expected to honor
- Cancellation and refund policies and recent history
- Share of direct bookings versus bookings through third-party channels
- Guest lists and how guest data may be transferred under applicable privacy rules
Our article on bed and breakfast guest reviews explains how reputation and direct relationships are evaluated.
Zoning, Licenses and Permits
Request copies of zoning approvals, any conditional use permits, short-term rental registrations, lodging licenses, food service permits and fire inspection reports, along with any notices of violation. None of these should be assumed to transfer. See our article on bed and breakfast permits.
Building and Property
- Professional inspections of structure, roof, systems and life-safety features
- Any historic designation, easement or preservation restriction
- Records of past repairs and known issues
- Environmental questions, such as older fuel tanks or private water and septic systems
See our article on historic inn inspections.
Owner’s Quarters
Confirm how living space is laid out and used, how it is described in permits and appraisals, and how the seller has treated it for tax purposes. Our article on inn owner’s quarters explains why lenders ask.
Events and Food Service
If the inn hosts weddings or serves meals beyond breakfast, review signed event contracts, deposits held, vendor arrangements, permits and any limits on guest counts or hours. See our article on inn event revenue.
Staff and Operations
Review who does the work today, including family members and the seller, along with payroll records, contractor arrangements and key roles. Classification questions should go to qualified professionals. Our article on innkeeper workload covers staffing in more depth.
Contracts, Insurance and Personal Property
- Vendor, linen, maintenance and booking system agreements and whether they can be assigned
- Insurance policies and claims history
- An inventory of furnishings and other items included in the sale, separating the seller’s personal belongings
- Rights to the inn’s name, website, phone number and social media accounts
US Professional Funding helps buyers finance the acquisition of existing, operating bed and breakfasts and inns once due diligence supports the deal. Learn more about our bed and breakfast acquisition financing.
