Hello, All! First off, thanks for any advice that I can get. I am learning as much as I can but there is so much to all of this. My wife and I have been discussing what we can do to leverage some of our money and diversify. We both currently work in semiconductor/technology. She is a senior level manager and I am an engineer, to sum it up, I make about 1/4 of our income which last year was over mid 6 figures... we do fairly well together but have discussed the possibility of diversifying as we are heavily invested in our current company. We have 1 rental which was my house prior to us moving in together and getting married. It is self sufficient for now and has appreciated quite nicely. Our current residence is paid off and we have no debt. What I am looking at right now, just as an example, is the purchase of 2 car washes here in town. I have contacted the sellers agent and they are willing to share financials with me when I sign a CA. My Questions: Where should we start? I have been scouring BP for any and all info I can find, but there are some things that are more difficult to find. 1. How does financing work with something like this... the deal would be ~2.5M for both car washes. What are we looking at loan wise for this? 2. Should we start an LLC? and if so, I am assuming we would provide the "startup" money for this LLC then the LLC would purchase the properties. 3. In the end, ideally, I would be quitting my day job to run this company. My wife, the breadwinner, would be funding it. What sort of Tax benefits are we looking at as we are quickly moving up tax brackets and are looking for write-offs. 4. Any other advice? Thanks all, for any help and patience with my complete noobieness.

Where do I begin? Commercial investing -- ie: Car Wash

Real Estate Agent · Alexandria, VA · Member since 2014 · 184 posts · 78 votes

9y

1) What are you buying? The land or the business. Generally, when we sell a commercial business, we sell the business and the land separate. Many folks on bigger pockets speak towards buying land+improvements, buildings such a multi-family, where they are buying land + improvements. When you buy a business, you have to determine what is the standard multiplier of the business. For example, if a business makes $1 Mil and is listed for $1 Mil, you have a multiplier of "1". Some businesses are worth more than "1" x gross.

For Financing, you will want to talk to a commercial lender. Other options include, assumption of the current owner's loan or owner financing.

2) You definitely need to start up a corporate structure. Do not do this by yourself. Consult a CPA who can advise you on the tax benefits and loopholes through owning a business. For instance, you can pay yourself from the CPA and contribute towards 401K and Roth and minimize tax liability.

3) Read "Rich Dad Poor Dad", owning a business is the best way to minimize your tax liabilities. You need to find a great CPA to help advise you. Do not try and do this by yourself.

4) Find a business broker in your area. I would look at multiple deals. Partner with someone who knows the business. Most of my investors do not "go it alone". They own their assets in groups. There are many people that specialize in "Flipping" businesses. Find someone in your area and pick their brain.

Where do I begin? Commercial investing -- ie: Car Wash

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