From the mailbag: Persons Interested in Lake Worth Doing Some Cyferin' Re-Post

Editor's Note: It has been many days since this was posted and no one has offered an alternative analysis of Mr. Ovtime's numbers. I will publish any alternative analysis by any party if one wishes to challenge the findings.

My wife and I are investigating whether to operate a Bed & Breakfast in Lake Worth, FL. A good friend who lives in town went over the pros and cons. For the most part, it all evened out taking into account the improving economy, a stable municipal government, and overall attractiveness of Lake Worth as an investment opportunity. The one outlier is the city's proposed bond issue up for a vote in August of this year. We are really not the patient type so we had an enterprising researcher (Nick Ovtime, CPA) advise us about what we could expect if the bond issue passes. A big tax bill could be the deal breaker.

The property is actually two properties on Golf Vista Boulevard. It overlooks the Municipal golf course and very close to the intracoastal. It has so much potential, however, more taxes would chop away at our renovation budget.

Here is the information our crack researcher discovered:

The property is two parcels with 7 rooms.According to PAPA the assessed value was $407,361 in 2011, $448,098 in 2012, and $492,908 in 2013.

The total taxes for those years was $12,288 ($10,390 AV/$1,898 non-AV) in 2011, $12,792 (total AV/non-AV) in 2012, and $13,865 ($11,975 AV/$1,890 non-AV) in 2013.The AV taxes have Lake Worth operating at $2,708.28 for the 2013 taxable value. Multiplying .00345 times $492,908 yields a tax of $1700.53 ($141.71 per month/$32.70 per week); the current adjusted rate of .00318 yields $1,567.45 ($130 per month/$30.14 per week).

Mr. Ovtime went on to divide that by the 7 rooms we are considering on the property and that total is $4.30 per room/per week. If my wife and I manage a 50% occupancy rate (taking into account our media savvy and business skills that is a no-brainer) the increase we would expect if the bond issue passes is $1.23 per room/per week.

Our project manager, Ms. Renee Sance, anticipates room rates advertised from $149 to $249 per night.

Mr. Ovtime cautioned his numbers could change. But even if they did he anticipated his $1.23 per room/per night number calculation would be off by pennies.

At our last meeting my project manager and CPA concluded that if the Lake Worth 2020 bond measure passes the impact on our future B&B would be insignificant. Ms. Sance even suggested the bond passage would become an advantage for the project, she reasoned if the whole city looked more appealing and more people frequented the downtown, we would attract more customers.
That's why Renee Sance is such a good manager. She can see past next week.