Potential deal : Automotive business and the owner owns both the commercial property and the business. Does anyone have experience assigning the business(finder fee), and then taking down the commercial property to add to the portfolio? If this works out ill have 2 more in the pipeline 10plus units to lend on.
Interesting!:
I worked in the automotive industry for over 12 years as a technician and at one point ran the shop for the owner. One of the biggest problems the owner had when trying to semi-retire was the property is only usable for the purpose it has, an auto shop, without massive additional expenditures. Another one of the guys who trained with me, and I worked along side of, started his own shop.
One advantage you may have here is the sheer volume of regulatory red tape most aspiring shop owners face just getting local officials to approve the permitting for the shop. Theoretically, you would bypass all of this by having a ‘grandfathered’ property that doesn’t need to be approved. This would be your selling point.
However, you can let me know if you have automotive experience yourself and you probably already know this at least, most of the time you take down a business you’ll want to take down one that has room for growth, or already has a management staff and structure in place so you don’t have to run the day-to-day. (I want to keep in mind you said you wanted to Assign the business purchase. I think you might have trouble finding a buyer for an automotive business due to the need for automotive industry knowledge necessary to take this on. I could be wrong. In this case the property should stand on its own.)
Do you know if either of these things are the case?
1) Does the shop have a manager, service writer or group of service writers, customer service staff, and technician/s? (Side note, it is EXTREMELY difficult to find skilled technicians. It’s the biggest challenge an auto shop faces. Is the owner of this business also the technician?)
2) Or, is there an opportunity to add digital marketing to the shop and increase the customer base and workflow to increase the value of the business?
These are the two biggest value adds you can give any shop. Outfit the shop with support staff to improve the customer experience and add digital marketing, social media, and modern technology to the workflow.
Now lastly, whether or not the aforementioned improvements have already been done, does the shop have accurate books that you’ve been able to verify to show true financial cashflow numbers?
Just in case I’m completely off base or misunderstood your question, please feel free to clarify if I’ve gotten anything wrong.
I think if these details are considered it can be a great creative deal. I wish you massive success!
I honestly don’t know if you can assign the rights to purchase a business like you can real estate. That sounds like a clause you could potentially add to a business entity purchase and sale agreement. I would consult a business attorney on this one. If anyone else on PMC knows about this I’d be grateful to know as well!