Need help on my commercial property!

5 Replies

Ok, well... I have a liquor store and someone offered me $890,000 with inventory and everything. An unsolicit offer. I also had another broker that said that he could sell the business ONLY for $500,000 which I can possibly rent out for $4,500/mo. But heres the catch, he's charging 10% if he could find a buyer thats willing to pay full price. Do you guys think thats kinda much for a commission? Im trying tell the buyers to give me some time because theyre being kinda pushy. Just curious, what would you guys do? Sell property for 890k or sell business for 500k and get 4500/mo rent?

How much is the land worth? Are these buyers coming to you through this Broker? Have you already signed a listing agreement with this broker? Commission is negotiable and you could try negotiating a lower rate (if you haven't signed a listing agreement yet).

How is the economic environment of the surrounding neighborhood and are any zoning changes being considered? Is there a higher and better use for the land in the near future? If so, you may want to sell the business only and keep ownership of the land.

well... the land is worth 400k. The offer was unsolicit. We did not list it with a broker or anything. My dad, being a motivated seller, signed a closing agreement which was effective until may 31. It has expired and is ineffective. They are having second thoughts about selling to their first offer. The area is pretty old, but the city is doing new projects in the area to modernize it up. They just had 4 modern condos go up and a set of townhomes.

Well there's your higher and better use... maybe the reason some potential buyers are pushing you to sell. I am very new to real estate investing and hope someone with more experience steps in here.

Is the lot large enough for townhomes or condos... or?

How much would a developer offer?

Just more questions I would consider. Of course, you still have to consider the value of the business and if it could be relocated.

A reputable business broker may offer some valuable advice.

What's the length of term on the lease?

If the area is developing, the longer you wait, the more it's worth. Do a 5 year lease with an option to buy at appraised FMV on exercise.

I'm assuming that the type of broker you are dealing with is what is called a business broker---I wasn't aware that the margins where so rich in that area, did he suggest 10% with a straight face?

Aside from knowing the value of the real estate (land and improvements), one would need to know how much net income (after operating expenses) the business creates, the value of inventory & accounts receivables, etc. to determine value of your business.

Business acquisation and real estate acquisation are apples and oranges---this might be outside the scope for most on this forum.

Regards,

Scott Miller