Purchasing commercial property without good P&Ls

[Aimee Haasteaby]

Hi all,

My husband and I are interested in buying a resort for sale in TX but the owners won't share the financials because they didn't keep good records. The agent says it's not a cash-flowing property but has huge potential because the owners aren't maximizing all resources (eg restaurant onsite not being used, available space for additional cabins or RV spaces, little to no marketing, festivals,etc).

The owners had an appraisal done on it but because the appraisal was done with their other resort, they can't share the appraisal but they did share the value.

The agent shared some numbers but not enough to substantiate the purchase price.

Asking price $2.9m

Appraisal $3.25m

On market for 1.5 years

$50k in reservations so far for 2024

Sellers offering $500k financing in 2nd position

They'll share financials once we see the property and put in an LOI.

Can someone explain how commercial appraisals work? Do they consider the crappy P&Ls in this case?

What other questions should I ask?

I've also been told not to buy anything based on potentials but what can I do in this situation?

Would greatly appreciate any advice or input on this situation because we're very interested in the property and feel like because it's been for sale for so long that we might have a chance at getting the price down.

Thanks!