Got a few hundred thousand dollars laying around earning only 2% interest or so? Are you as afraid of the stock market as I am? Does the rotten economy scare the beejeezus out of you?

Ever since I made my first trip to Key West many years ago I noticed there were always several guest houses for sale. I started looking at the properties for sale and gathered the financial statements so that I could compare income and expenses to see which of the properties looked the most promising. Of course, I always wanted to buy the prettiest property or the one that I thought I could magically transform into the best place in Key West. What an ego I had back then.

Eventually I decided that I wanted to buy the Cypress House at 601 Caroline Street. It is located at the corner of Simonton and Caroline Streets and it is only a one block walk to Duval. The building itself is one of the most beautiful on the island. Hands down. The owner back in 1986 when I made my written offer was the estate of "the former owner who had passed away. Interestingly, another person made an offer at the exact same time. The executor of the estate was the brother of the former owner. He called me directly one Saturday morning to discuss my offer which he told me was more than the other offer. He was concerned that I had no hotel experience and that I would not know how to run a guest house. The estate was going to carry a mortgage on the property, so I understood his concern. The estate ultimately sold it to the lower bidder because he did have real life hotel management experience. The next year the new owner passed away himself, and his estate has been running the property since then.

Several months ago I wrote a piece about some of the real estate mistakes I made in Key West. Not getting the Cypress House is one of the Biggies! What a property it is. And now, twenty years later, it is available for purchase again. The asking price back in 1986 was about $565,000 if I remember correctly. Today the price is $7,800,000. The owner has added two additional properties to create a larger assemblage of buildings including the former William Anthony Guest House located several doors to the east.

CLICK HERE to checkout the property information provided by the listing Realtor and to see additional photos. CLICK HERE to see the Cypress House Website for even more information about the property as a whole and additional photos.

There are many guest houses on the market right now. Several have been on the market for several years, in fact. I am including links to a few of the properties that I think may be economically viable a business if purchased at the right price. But I am not including all guest houses that are listed because I think many are way over priced and are not worth considering. Some of the properties below are also way over priced in my opinion. But some are in or may be near foreclosure and there may exist a buying opportunity for the right buyer.

Most guest house purchases are financed by local banks. They typically require 30% down in cash and a solid business plan on the part of the prospective buyer. Don't expect any freebies on the purchase of a guest house. But don't let the price or the current economy dissuade you from looking. Banks know the rules the City of Key West enforce with respect to guest houses--especially the number of licensed guest rooms. Each room is supposed to have a transient license. Some guest houses have "Phantom Rooms"--rooms for which there is no license. Theoretically, the City could stop the guest house owner from renting those rooms. As a practical matter that seldom happens, but it could. As a result, banks typically will not consider rent from phantom rooms as available income to service mortgage debt. And some guest house owners have two sets of books: one for Uncle Sam and a second one with the real numbers. Banks only consider what is actually reported to the government. Most guest houses owners operate totally legally. I am not inferring that any property mentioned here (or not included here) is operating in violation of the law. But as a prospective buyer you need to be aware that all is not necessarily what it may be portrayed to be. I always tell prospective guest house buyers to engage an attorney when they decide to write an offer.

Now that I have you totally scared lets look at what is available now.

The Artist House guest house. CLICK HERE for more info on this listing. Beautiful building one block from Duval. One of the most beautiful properties on the island. This is a potential short sale. This may be a difficult deal to get worked out, but it is definitely worth looking at.

Seascape Guest House is just off upper Duval and in very close proximity to the Hemingway House. I think there may be some room to negotiate on price. CLICK HERE to more info and pics.

Azul Key West at 907 Truman was renovated in 2007. Great location and the property has always had good operating numbers. CLICK HERE for more listing info and pics.

Duval Inn at 509 Angela is another property located less than a couple hundred feet from Duval. It was redone a few years ago and the rooms in the main building are just beautiful. CLICK HERE for more info.

Why look at buying a guest house?", now you ask. Well, it will take you several months to get your deal completed. And once you take control you need to learn about the place and establish your own operating system and procedures. You may want to do some clean up, painting, renovation, or whatever. But you need to get all of the busy work out of the way before Season starts, because when it happens you will be busy 24/7. And that's when all that money starts flowing in. You will see more money than is reflected on most of the books including commissions from car and bike rental companies, boat operators, and the sale of items in the guest house.

I mentioned several times that I used to own Eaton Lodge guest house. I do know the business and I would love to help you if you are looking a buying a guest house. Give me, Gary Thomas, a call at 305-766-2642 or e-mail me at kw1101v@aol.com for more info on any of the properties listed or even those not mentioned.