Contractor · Marshfield, WI · Member since 2020 · 1 post · 1 vote
First time poster!
I am working with a guy that is looking to get out of his restaurant/banquet hall due to age and impending health concerns. It is a large beautiful building outside of town a few miles on a great lot. Because I am a commercial builder we have discussed maybe turning the building into an apartment building, and either selling it as that or keeping that for passive income. Ideally it would be nice for him to be able to sell it to a young ambitious person and see it keep operating. However, it seems like most people are trying to talk him into a land contract and he has no interest in that due to his age and health concerns and he isn't interested in it falling back into his lap.
Does anyone have any experience in a situation like this? Or have any ideas? Him and his Wife are great people that have worked hard their entire lives, and have built a great place over the last 37 years. I want to see them get something for it.
@Cory Mallow I have an investor group contact that is looking for a good location to build a sizable multi-family property. They have the financial ability to make it happen. Please send me the details.
I converted a Restaurant/bar/banquet center into a multi-tenant office building. The layout was ideal for that conversion but it was definitely still a challenge to make the numbers work. Multi-family will be a complete gut, new plumbing, etc. Not sure the numbers would work for that but depends on your local area.
@Cory Mallow If the business is a going concern, he should contact a business broker and sell the business and its assets.
I'd bet that like the rest of the world (especially those in the hospitality sector), he took a hit in 2020 - 2021, but look at his 2018 - 2019 P&Ls and tax returns. If he was making decent money and there are no negative influences aside of COVID, chances are pretty good that it will recover and keep making money.
If it was a marginal business prior to COVID, then closing the business and selling the building may be a better way to go for him.
If he sells the business and real estate to a new operator, he needs to be prepared to continue operating for a year or so because even the best marketing programs take time.
If he has a bad case of the "hardly waits", he needs to understand that he's going to leave money on the table in exchange for a faster exit.
Yes, many buyers want seller financing but that doesn't mean that he has to agree to it. I always tell my sellers that "no" is a complete sentence! When a seller carries a note, the likelihood of that note getting paid rests on the buyer's ability to run the business. If the buyer fails, the seller will have to foreclose. For someone looking to retire, that's not a good scenario.
He should prepare tax returns and P&Ls for 2018 - 2020 and YTD P&L for 2021 and take that to a good SBA lender or even a local credit union. Get the business pre-approved for a loan and take it to market with a business broker. And that means NOT a real estate agent unless they have specific training in how to market a business, because the vast majority don't.