Skip to content
×
Try PRO Free Today!
BiggerPockets Pro offers you a comprehensive suite of tools and resources
Market and Deal Finder Tools
Deal Analysis Calculators
Property Management Software
Exclusive discounts to Home Depot, RentRedi, and more
$0
7 days free
$828/yr or $69/mo when billed monthly.
$390/yr or $32.5/mo when billed annually.
7 days free. Cancel anytime.
Already a Pro Member? Sign in here

Join Over 3 Million Real Estate Investors

Create a free BiggerPockets account to comment, participate, and connect with over 3 million real estate investors.
Use your real name
By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.
The community here is like my own little personal real estate army that I can depend upon to help me through ANY problems I come across.
Buying & Selling Real Estate
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

Updated over 10 years ago on . Most recent reply

User Stats

36
Posts
6
Votes
Nate Crump
  • Provo, UT
6
Votes |
36
Posts

Question on Buying Business with Real Estate

Nate Crump
  • Provo, UT
Posted

I've seen that when buying rentals you use a cap rate. Cap rates of 6-12% seem to float around.

Then, as far as buying a business, it is common to buy in multiples of earnings, ie. 2x-5x earnings, or more or less depending on the industry.

Now, I was once looking to buy a convenience store (franchise) and it seemed as if I'd be buying around 2.5 times earnings, so higher than a 6-12% cap rate, but obviously that makes sense because it is much more work than a semi-passive apartment complex with a manager, or something along those lines. No land was going to be purchased, just the business.

OK, but here is my real question: Is there a formula of sorts for when you are buying a business that also comes with the land? We can use the same example, maybe a convenience store/gas station with the land included in the purchase? Thanks for any replies.

Loading replies...