Floral Business and Underlying land up for development

[Robert Freeborn]

Hi BP! I’m an agent and Investor up in Bellingham, Washington. I recently had another agent approach me with an off-market property, which I’ll explain below.

I think this is an amazing deal. I’d LOVE to do this myself, but I’m not sure how to approach it.

So, ultimately, I’m looking advice for how to get into this deal myself. 

The deal consists of the following.

A 4-acre lot with a 35-year-old floral business on it. The business has over 600 repeat clients (businesses) and generates over 1mil in revenue a year. Business has been used to pay the existing mortgage, on the land and the small house on the property, of approx $4,800 a month. The business has about 10 employees and a general manager in place who would stay. There is potential room to grow. The business generates an additional $75,000 a year in profit for the owner. Business can be moved to a new location as the greenhouses are able to be relocated (after the development option is green-lighted, for example.)

There is also an exclusive option to buy the next-door lot, 4.4 acres, for $400,000.

The zoning, SFT Medium density, is zoned for up to 6 units an acre. Possibly more, but that might be a challenge.

Homes in the area sell for 399-499. Average home price in Bellingham is in the mid 400s, and the homes at these prices go very quickly.

The owner might be willing to consider owner financing, but I currently have available no money for a down payment (tied up in 3 other properties right now)

So, who has innovative recommendations for how to get into this? 

[Bob Langworthy]

@Robert Freeborn, 21 years ago I opened a wholesale greenhouse in Maine with 4 partners and we ran it for 5 years before I got out. It was on the way down when I left and was foreclosed on the next year. Here are some thoughts and questions:

1) If you're talking about running it, do you have any experience in the industry? Managing people?

2) The industry is highly dependent on the weather. A few rainy weekends in the spring can kill the entire year.

3) $75k for the owner is very slim.

4) $900k in debt is huge. I would want to know why a "successful", 35 year old business has such a high amount of debt, particularly given that revenue is only $1M. Something doesn't add up.

5) Is the owner involved in the day-to-day operations? If so, that $75k won't be for you. You'll need to replace them.

Hope this helps,