Buying a Business with RE but Looking to Sell the RE to an Investor

Seattle, Washington
Multi-Family and Apartment Investing
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Buying a Business with RE but Looking to Sell the RE to an Investor

Jessi Beyer
Member since 2025 · 1 post · 0 votes

Hi everyone! My name is Jessi, and I'm a small business acquirer. I'm currently looking at a business acquisition that includes real estate. The business operates out of the real estate (office space), but the business sellers want a certain value for the real estate that the business's cash flow is not able to support.

Normally, I'd just chalk this up to unrealistic expectations on the sellers' part, but in this case, their real estate is in a prime location to be re-developed into multi-family housing, so the valuation that they're asking for is, I think, realistic.

I'd like to buy the business and the real estate at the same time (makes me a more appealing buyer if I can take both off their hands), but simultaneously sell the real estate to a developer/investor at the value they're asking for and move the business to a new office location. Essentially, I'm looking to do a sale-leaseback, but instead of leasing it back to the business, the developer/investor would just keep the real estate, and I'd keep (and relocate) the business.

Is there anyone in the BiggerPockets community who a) is interested in this type of transaction (the sellers are valuing the real estate between $1-5M -- keeping it vague since I'm under NDA), or b) can help broker this type of transaction? Additionally, if anyone has tips on how to make this type of transaction work, I'm all ears!

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  • Marcus Auerbach
    Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes
    1y
    Quote from @Jessi Beyer:

    Hi everyone! My name is Jessi, and I'm a small business acquirer. I'm currently looking at a business acquisition that includes real estate. The business operates out of the real estate (office space), but the business sellers want a certain value for the real estate that the business's cash flow is not able to support.

    Normally, I'd just chalk this up to unrealistic expectations on the sellers' part, but in this case, their real estate is in a prime location to be re-developed into multi-family housing, so the valuation that they're asking for is, I think, realistic.

    I'd like to buy the business and the real estate at the same time (makes me a more appealing buyer if I can take both off their hands), but simultaneously sell the real estate to a developer/investor at the value they're asking for and move the business to a new office location. Essentially, I'm looking to do a sale-leaseback, but instead of leasing it back to the business, the developer/investor would just keep the real estate, and I'd keep (and relocate) the business.

    Is there anyone in the BiggerPockets community who a) is interested in this type of transaction (the sellers are valuing the real estate between $1-5M -- keeping it vague since I'm under NDA), or b) can help broker this type of transaction? Additionally, if anyone has tips on how to make this type of transaction work, I'm all ears!


    Should be feasible. What you need to know is a realistic fair market value for an investor and that's a question for a local commercial broker. Make sure it's not a pie-in-the-sky price like "if a developer really wants it they will pay whatever I ask". 

    In my market it would be solid if you can put 25% down and achive a 1.2 debt-service ratio or better - that makes it a no-brainer for an investor. But you are in a more expensive market, so there is probably a premium. Ideally, you acquire the RE with a 25% discount to that price, so you have some wiggle room on the sale and can offer a discount if you have to and still come out at least with a zero.

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  • Xavier Milsoni
    Member since 2026 · 32 posts · 4 votes
    1mo

    Running into sellers who price the real estate based on redevelopment potential rather than business cash flow is a headache. We ran into a similar asset split last year when acquiring a local service company attached to commercial land.

    Trying to coordinate a simultaneous close where a developer buys the land and you buy the ops is messy on the legal side. You need clean contingencies in your LOI so you aren't stuck holding the real estate if the investor backs out at the 11th hour.

    When we hit a wall with asset separation, Bridge Point Business Brokers helped us structure the transaction so the business and real estate portions were cleanly untangled before closing.

    Definitely make sure your purchase agreement lets you assign or redirect the real estate portion directly to the developer, otherwise you'll get hit twice with transfer taxes and closing costs.

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