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My friend and his wife own a Bed and Breakfast and sell Surf lessons to their hosts.

The Bed and Breakfast business is doing really good. They host peoples in their own house. They have 3 bedrooms: a suite for a family, a double bed room for a couple and a 3 beds room for a small group. They mainly sell on AirBnB. They are top rated hosts in their area because they focus on quality over quantity. Now, most of their hosts are repeatable hosts. B&B is mainly managed by my friend's wife.

The Surf lessons business is run by my friend. He has a garage where he store a dozen of surf boards and a dozen of wetsuits. He has 10 years experience as a Surf teacher and has a licence from the government to provide lessons. They are based in Portugal, where Surf is good all year round but not consistent. Winter is too cold to Surf (only experienced Surfer come on Winter). So they are fully booked from April to October.

Last year, they have been trying to rent another house to expand their business. They didn't found the right one (not sure why, I didn't ask)

I have been in their Surf camp multiple times. So, I have a rough idea of how their business work. Now, their are looking for investors and I have money to invest.

It's a real brain teaser to find the right business model. I thought to:

  • Buy an additionnal house in cash and rent it to them. I would have to rent it at the market price. So, I would get back something like 5% a year. Real estate risk on me. With that solution, I'm wondering why wouldn't they rent any other house by themself? They would not have to be engaged for many years with me, and they could cancel the rental whenever they want.

  • (I) Loan the money at the bank, invest it into my friend's business and ask him a pourcentage (~7-10%). I was wondering if a bank could do that in place of me with much lower rates. But I don't think that my friend has the capacity to loan bank money at the moment (they have a mortgage on their house)

I though as well to ask for a pourcentage of the business profit. But unfortunately, some guest might pay their stay in cash which might not be declared by my friend (and so to me).

Questions are: Are any of my investment ideas above good? or What business model could work with such investment?

Please take in consideration that I'm living in a different country that my friend. Also, I have good experience on online Marketing/Business which could be a good asset to help develop my friend's business online.

Thanks,

  • Would buying a property in cash be a significant portion of your investment portfolio? I'd rather own property than lend money, but there are a lot of pieces to consider, I'd likely steer clear. – Hart CO Mar 1 '18 at 17:35
  • Does your friend's wife already do the cleaning, laundry and ironing? We have two holiday rentals, and when there's only four hours to clean both it requires paying someone else to help, reducing our margins. (fortunately that mainly happens in the summer when the kids are home from University ;) From your point of view, the important bit is that the second house is not going to be as profitable as the first. – Rupert Morrish Mar 1 '18 at 19:11
  • @HartCO Owning a property paid cash other there would represent half of my personal capital. – PtitSlip Mar 1 '18 at 19:21
  • @RupertMorrish Her wife does these tasks. They favor guest who stay multiple nigths to avoid full cleaning everyday. For sure, second house would not be as proftable as the first one as they would favor their own house on low season. That's a good point though, that would definitely require to ask for a FIX percentage. Thanks – PtitSlip Mar 1 '18 at 19:24

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