Before you start thinking about running a guest house you need to be ready to put in the investment. Now you must be thinking that I’m trying to help you to set up a guest house but on the first step itself I’m mentioning factors that’ll make you run away from the idea. That’s because not everyone is built to run a guesthouse, it requires patience and a decent upfront investment.

The primary factors your investment will depend on:

Property Ownership Status

1. Own a property – Minimal Investment. It’s the Best Case Scenario obviously.

2. Lease a property – Minimal Initial Investment but bites on your profit margins forever. Recommended if you’re giving a guesthouse a shot and aren’t sure if it will work out.

3. Buy a property – High Initial Investment. It’s recommended for the experts but not for someone who’s looking to start their first guesthouse. When you buy a property you’re looking to run the guesthouse for at-least 5 to 10 years.

The Wait to Break Even

You should be ready to invest your money and should not expect any profit for the first year. Most homestays, bed and breakfasts, guesthouses usually break even in the 2nd or the 3rd year. But you can always be an exception and break even within a few months.

You don’t need to do a detailed cost and revenue analysis at this level but just be ready for an investment. We’ll be coming to the cost and revenue analysis at a later stage.