When you think you’ve found the right area for your hostel, check local laws before you do anything else. Some towns and cities have designated zones for hostels, and running one outside these areas is illegal. Find out where hostels are allowed, then search for a suitable building within these areas.  Many local governments have their zoning laws on the internet. Try searching the local government website for hostel information. Contact the local zoning agency and ask about which areas are zoned for hostels. Most cities require permits and licenses to run a hostel. Check with your local zoning board or chamber of commerce and ask what regulations there are for operating a hostel. Apply for and obtain all the permits before opening your hostel.  Remember that permits often take time to process and cost a fee. Include the potential processing time and fees in your calculations on when the hostel will open. Don't try to save time or money by skipping certain permits. If you operate a hostel without all the necessary permits, you could be fined or even arrested. Operating costs are what it costs to keep a business running every day. Account for every dollar you will spend in opening this hostel so you know how much financing to secure. Calculate the rent, utilities, and any other expenses so you have a full picture of your business finances.  Remember to include taxes in your estimation of costs. Include the outlay for construction, permits, and hiring employees as well. This gives you your total cost for the project. Have at least 1 year of expenses on hand before opening the hostel to support the business before you start profiting. If you don’t have enough savings to self-finance opening and operating the hostel, then you’ll need funding from other sources. Consider going to a bank for a business loan. Another option is finding affluent people interested in providing private investment for the hostel. Whichever option you choose, have financing in place before you start building your hostel.  There are advantages and disadvantages to looking for loans from banks or individuals. Banks may be more conservative and refuse to loan you more than a fixed amount. Private investors may be more willing to offer higher sums, but they want a return on their investment. They might want to own a part of the business and share in the profits. Consider the costs carefully before choosing a financing option. Produce a good business plan, especially if you’re looking for private financing. Investors will want a return on their investment, and if you don’t prove that your business will be profitable, they won’t provide financing.

Summary:
Check local zoning laws to see where hostels are permitted. Apply for any necessary permits to run a hostel. Add up your expected operating costs. Secure financing for the hostel.