Liquor Store For Sale-Owner Financing Offered
St. Louis, MO · Member since 2008 · 61 posts · 5 votes
Liquor Store For Sale-Owner Financing Offered
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Don KonipolBusiness Member
Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votesAs you acknowledge, you're actually buying an operating business, with property ownership thrown in. Running an operating business is a lot more involved than owning a piece of real estate, it's a full time occupation.
You need to ask yourself the following questions
1- Can I put in the time and energy required - your analysis of running the operation absentee is recipe for disaster!
2- Do I have the knowledge required to successfully operate a small business?
3- Do I have the experience required to be able to be successful managing a business in general and a business of this type in particular
4- Do I have additional capital to see me thru tough times
5- Why is the seller selling
6- Has something changed or is about to change in the market that will negatively affect this business
7- About a million more questions too numerous to state
In real estate investing, the beginner can often be successful. Even if things do not work out as planned, time will often bail the investor out. In business ownership, most people fail. Unlike real estate investing, time is not your friend, it will not bail you out, it will only multiple your woes.
And this is all assuming you have the money required (and/or) credit to purchase the deal!
13 Replies
- 16yDon KonipolBusiness MemberInvestor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
As you acknowledge, you're actually buying an operating business, with property ownership thrown in. Running an operating business is a lot more involved than owning a piece of real estate, it's a full time occupation.
You need to ask yourself the following questions
1- Can I put in the time and energy required - your analysis of running the operation absentee is recipe for disaster!
2- Do I have the knowledge required to successfully operate a small business?
3- Do I have the experience required to be able to be successful managing a business in general and a business of this type in particular
4- Do I have additional capital to see me thru tough times
5- Why is the seller selling
6- Has something changed or is about to change in the market that will negatively affect this business
7- About a million more questions too numerous to state
In real estate investing, the beginner can often be successful. Even if things do not work out as planned, time will often bail the investor out. In business ownership, most people fail. Unlike real estate investing, time is not your friend, it will not bail you out, it will only multiple your woes.
And this is all assuming you have the money required (and/or) credit to purchase the deal!
- Real Estate Investor · Phoenix, AZ · Member since 2009 · 1k+ posts · 1k+ votes16y
Also, most lenders are going to be scared away by the fact that you cannot figure out the monthly income from the annual income.
While advanced math is not necessary for an investor, you do need to train yourself to be more proficient with looking at deal numbers.
- SFR Investor · Orange County, CA · Member since 2009 · 1k+ posts · 1k+ votes16y
Do you have much experience running a liquor store? If not, you may have to hire somebody familiar with the business to manage it for you. This place nets well over $1,000/day, which sounds like it's doing a pretty good volume. How many employees does the business currently have? Does that income take into account payroll?
Finally, how did you verify the income? Did the owner show you valid documentation or just gave you a number off the top of his head? The liquor business is very competitive. I know very little about it, but I do know this:
1. Liquor stores make most of their profit on wine sales. There are a huge number of vintners out there, so it's difficult for customers to price shop. You'll find your best yields here. There's also the "snob" factor, i.e., people will pay more for a bottle of wine just to say it was an expensive bottle of wine. Think perfume: anybody really want a cheap bottle of the stuff?
2. Spirits, especially brand name labels, will earn you very little. Anybody can call around and ask what a bottle of Absolut or Crown Royal is selling for. And pray there isn't a Costco nearby.
3. Cold beer is a money loser. By the time you factor in refrigeration and storage space for the kegs, you'll see you're only selling beer in hopes your customers will buy something else while they're there.
Best of luck. I'd like to own my own liquor store or bar myself some day, but I would probably just drink the profits! ;-)
- Landlord · Seattle, WA · Member since 2010 · 3k+ posts · 1k+ votes16y
The liquor business in my state is highly regulated, not sure what the regulations are in your state. Like several others have said you are buying a business with the real estate.
It is possible to buy the businesses assets rather than the business itself. There is a lot of risk buying an existing business. There maybe liabilities or lawsuits that you are unaware of.
- Real Estate Investor · St. Louis, MO · Member since 2010 · 153 posts · 104 votes16y
Hi Kathy,
Make sure the sale price includes the inventory. This is a little trick they like to use. Running up to the closing they will let the stock run down to next to nothing with bare shelves and such. As i,m sure you know bringing the inventory back up to par levels can be a huge expense for a high volume store.Big out of pocket on day one.
Good luck and let me know how it goes.
Chris - Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes16y
I absolutely do not see this. This is a business. From observing small businesses, including the corner liquor store, they appear to be very hands on. The owner is dealing with the business on a daily basis. I have no idea what the margins are on liquor, but I suspect if the net profit is $448K a year, the gross profit is quite a bit more and the revenue is more still. I suspect this store is taking in revenue (the money coming into the till) more like $4000 or more a day. A bunch in credit cards, no doubt, but still a significant chunk of cash. You want to hire someone and let them deal with all of this for you? You must be prepared to keep a close eye on the situation.
- St. Louis, MO · Member since 2008 · 61 posts · 5 votes16y
Hi...Here's the information...
Asking Price $1,700,000 Inventory included*
Gross Income $3,800,000 Real Estate included*
Cash Flow $448,000 Year Established 1998
FF&E included* Employees 3-4 (Liquor Str* included in the asking price
** not included in the asking price
Stateline Madness !!! High Volume Liquor Sales!!
View Larger Photo of BusinessPRICE REDUCTION...TO $1.7 MILLION OBO... FOR THE OUTPOST LIQUOR STORE (with Inventory) HIGH VOLUME SALES from ARKANSAS's Lake Resort Areas due to Arkansas's HIGH TAXES on Beer, Liquor, Wine, and Cigarettes. Only 7 Miles from Mountain Home Arkansas ! Owner Might Do some Short Term Financing for the right person & Downpayment. Buy the "Ranch House Bar and Grill" next door, Gas Station, Additional Store Building (now rented), Owners Residential Suite, Rental Units, with approximattely 10 Acres for $2,5 M OBO (Health Issue requires negot)Facilities: A Liquor Store Building, R.E. & Parking Area as one Option, or the same as above with Gas Island, Addit'l Store Bldg., Rental Units,Owners Suite, 10. Acres, Ranch House Bar & Grill , Vacant Land for even more ventures.
Competition: Prime location due to high Ark taxes..store is in Mo. Store is #2 in Mo. in Lottery Ticket Sales, Ranch House Bar & Grill that has a great food & atmosphere reputation.
Growth/Expansion: With 10.5 total acres in this Tract, there are approx 8 acres available for adding rental units & new ventures of the purchaser or expansion.
Seller Financing Available: Yes
Financing: May provide
Support/Training: Owner will provide the Buyer up to 30 days training and introductions, and will finance with right downpayment.
Reason Selling: Owners Health & a Family Death
- Landlord · Seattle, WA · Member since 2010 · 3k+ posts · 1k+ votes16y
Commercial real estate requires plenty of due diligence work. You have a commercial property and a business. A wise investor is going to spend some time doing the due diligence on a deal like this.
I would want to separate the CRE income and expenses from the business income and expenses. There can be a lot of distortion when they are combined.
Some issues to consider with the business.
How is the existing business being managed?
Are there any issues with existing employees?
Have there been any law suits?
Have there been any building or liquor store violations?How is business? - I would want to visit several times during different times of the day?
Review tax returns, financials
When purchasing inventory in an ongoing business it is often best to value the inventory at time of closing rather than when you sign a PSA. Inventory levels can change drastically.
Liabilities of the business can change daily as well. If the owner stops paying for goods and services this could turn out to be a huge liability.
Your PSA needs to cover a lot of these issues and you will want to carefully perform your due diligence.
Is it a good deal? I still don't know. It may prove to be a great investment, take your time to investigate all of the areas of potential risk her. I would also lower my purchase price based on the additional risk taken on in purchasing an existing business.
- Real Estate Investor · Milwaukee, WI · Member since 2008 · 1k+ posts · 671 votes16y
This is bad news. The way you describe this to us and the ad are not even close. This is a huge complex with a lot of stuff to manage. I am not sure why your credit is bad, but that often happens from poor money management or planning. You are dealing with big numbers here so I would forget about it and start with a duplex with owner financing. This is a business for the pros or a family of pros.
- St. Louis, MO · Member since 2008 · 61 posts · 5 votes16y
Jeff,
There is more than one business available for sale here. The liquor store can be sold separately. As far as having poor money management skills not hardly!
I actually used to work for a large collection agency representing two of the largest banks in the world doing mortgage collections. After 2.5 yrs I found out the company lied when they employed me about having the right to sell mortgage notes for Chase. Had they not lied I may not be in this situation. I actually used to collect usually about $150,000 on charged off mortgages per month. Chase gave decent accounts and Citi gave the shi**est accounts possible. That didn't keep them from taking the managers out to the strip clubs all night though!
For everyone in real estate I tried to play it safe by learning the field on the inside. I actually used to do quite well for them. After being lied to about what their contract contained I found out down as the Board of Dir for this company are two of the largest foreclosure trustees nationally. I also found out that even if you have a way to pay your bills in 5 days or less you may as well give up. As $150,000 per month for non-performing assets isn't enough to get Citi to sell notes. As they want someone to spend a purchase price of $3-$4m per month. So the next buyer I took them wanted deficiency balance notes in the middle of June-July 07 and they were going to spend $10m-$50m per month. It wasn't good enough for them either. As Citi still wanted to make money on the worst possible notes possible after they sold them.I about fell outta my chair when I was told this. I even made my associate who was bringing me the client call back to Citi to talk with them cause I couldn't believe it! So the question is just what is the definition of sold?
I also have large foreign exchange providers or gold buyers but everything seems to be good until you due diligence and find out how many liars there are in this world!
Hence why I was looking into this. A liquor store seemed like something to easily manage whether there fulltime or not with current staff staying in place.
Our judicial system is f/up...There are various lawsuits going on nationally involving this firm. But yet I was made out to be a liar for trying to expose what I know. MO has to have the most corrupt courts I know. Florida sure is nailing them well.
I can show proof of what I say as well. Alot of homeowners are being sold down the river. Even if the TRUTH is the TRUTH they will remove court documents and everything...Want to fight it? Good luck! In attmempt to clear my name, pay my bills by getting a VALID PRODUCT the Judge Recused for their theft instead of doing anything to stop the financial meltdown we've all been forced to endure. The corruption is HIGH! I don't think anyone could ever predict such a set of circumstances.
While yes I could just give up I'm trying to find something that may give me more than adequate financing to make a purchase facilitating the offer of owner financing.
I thought maybe hard money might work for the intial down payment depending on the terms the seller wants. I think the seller would be flexible on closing terms. Especially if there's a SOLID PLAN FOR HIM TO BE PAID...
Thanks for everyone's HELP!
Kathy
- Real Estate Investor · Milwaukee, WI · Member since 2008 · 1k+ posts · 671 votes16y
I thought we were talking about a liquor store? I am not smart enough to follow your last posting but I think it has something to do with a rant about 9/11 being an inside job? Good luck in the liquor business.
- Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes16y
I agree with Jeffrey that I'm not sure where that last post came from. Sounds like you got caught up in some of the hype around selling notes and bulk REO.
I'll go back to what I said earlier but that you've ignored:
You want to run this liquor store? Great. It sounds like a decent small business. But it is not an absentee owner situation. You wnat to run it, you move to Gainesville and run it. If you just trust the current staff to run it for you, you are doomed. They will very quickly figure out you aren't really interested in running it or dealing with any of the issues that always come up in small businesses. They will realize nobody's watching the day to day operations. You may have some employees that will be upright and honest. But it only takes one to rob you blind. And I guarantee you have that one already working in the store.
You want to convince this seller to sell you the place with nothing down? Move to Gainesville and work in the store. Work for free (that's want the owner of a store gets paid, since they take their income in distributions from the store.) Learn the business. Meet your contacts. Convince the owner you really do want to run the store and maybe you can get him to give you a screaming deal on the financing.
Running a business takes capital. You might be able to buy a piece of real estate with no money down. But even a rental is a business that requires capital to see you through the rough spots. A liquor store is MUCH more of a business even if you own the store.
If you really want to just own the store and not run the business, propose a sale/leaseback to the owner. You buy the property but not the business. The owner either continues to run the store or sells the business separately. Businesses sell all the time without the real estate that houses them. The owner of the business leases the building from you. Set it up as a triple net lease.
If you have the capital for a down payment, you might pull this off. But whether buying a business or real estate, when you invest, you must have some of your own capital. You may be able to find lenders to fund big chunks and partners to make up the difference. But without some of your own money, investing is just impractical. When you have to bring in partners to make up ALL of the capital a bank won't lend you, you give up ALL of your equity. You become nothing more than the manager, and get paid, at best, a manager's salary.
- 16yDon KonipolBusiness MemberInvestor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
Thanks for the clarification, Kathy. Now your absentee ownership theory for the liquor store makes total sense.
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