I was recently asked this question via Google My Business. Here is a VERY brief answer.
Each type (existing B&B or start-up) has its own challenges and varying returns on your investment. What is best depends on your financial situation, experience and business model.
A start-up B&B presents more options – location, size, style, etc. The price may be lower because you’re paying for real estate, not an established business. There is potential for greater appreciation. But, it takes substantial resources to support the inn while you build the business. Mortgage financing is based on the real estate value and YOUR income and assets.
An existing B&B has a cash flow to support expenses and a mortgage. Marketing is in place and expenses are known. Furniture is included in the purchase. The result is a quicker return on your investment. But, the acquisition cost will be higher – you are purchasing real estate AND a business with a cash flow. Financing will be based on the INN’s ability to pay expenses and the mortgage.