All Forum Posts by: Lawrence Gillett

@Jonathan R McLaughlin well the goal is profitable business -> buy the building or move in local area and purchase a building to become our own tennants.

@Jonathan R McLaughlin that's a good way to view it, we're attempting to piece together what complete start up costs were for this specific franchisee and trying to use that to estimate an opportunity cost.

@Joe Villeneuve The business has a two inadequate owners, neither were willing to be owner operators. My wife currently works as an employee there, so shes got a good idea of exactly whats lacking.

Specifically,

the business model itself supports 4 different revenue streams, the current franchisee is only utilizing one

Labor costs are far too high because many tasks could be done by an owner currently until the business profits

Advertising just hasnt been done, to the point the franchisee was cited by the franchisor for not meeting minimum marketing budgets required.

Even with those short comings, (labor costs 50% higher than they should be, and more revenue streams not utilized) the business was almost break even last year. This year has been worse, due to "owner burnout" and sustained labor costs growing as she tries to do less.

 How dare somebody choose to invest in something they're passionate about. 

Understanding that numbers are the way to decide, that's why i am seeking ways to analyze the business and make an educated decision. 

Thank you for your input though.

Looking a buying a non-performing business of an art workshop franchise. Being a franchise, can't share any of the numbers (signed an NDA).

Labor costs are way too high, and the owner is barely involved. There's always the risk of brick and mortar given the "pandemic" but what do you guys think?

How would you value a cash flow negative business, knowing you could turn it around with proper management?

Any steps specifically to help mitigate risk or atleast plan for it better?

Emotionally want this business, but understand the numbers need to match. Having a hard time converting real estate knowledge into business knowledge.

Thanks in advance!

I appreciate all the great responses guys! I was fairly brief in my first post, as im still just running on observations and not hard facts on the management of the park. 

My in-laws are involved in turnover cleaning service on the 6 cabins rented by the night and general handy man improvements. Maintenance is ran in an as available fashion from the owners. They have my in-laws as well as a few local handy men and trades they use around the park, as well as relying on equipment they own for other businesses ( bucket truck from tree trimming business, skid steer, trailers, construction equipment). I have no data on expenses yet, and approximated income. It's an RV campground, trailers are parked on a yearly lease, with the understanding they are not to stay longer than 3 weeks at a time physically at the RV. A dozen spots are cleared and utilities run but permits wont go through the township without expanding the septic system. 

The property isn't being actively listed, the owner's wife is just done managing it and the owner has offered to sell the park to my in-laws. I have expressed my interest and met the owner's wife, we have a good rapport. In-laws are coming the end of this week, so the first hurdle is selling them on being able to handle something like this. 

Potentially have an in to purchase a 60 unit RV park with 54 being long term yearly rentals, 6 being daily cabin rentals, looking for due diligence opinions. Gatlinburg, TN is huge in tourism obviously, so there's a waiting list at this park, 100% occupied in their long term rentals. In-laws live full time there and have been offered the option to buy the place and manage it, but they aren't interested. Currently they are on site maintenance and love it, while the owner's wife runs the office. Other than the obvious of rent rolls and expense sheets, what else should i be asking for reasonably to see if this is an option to buy? i have no experience in rentals yet, but if done right, this has the potential to give us immediate financial freedom. Classy park with older people, potential increase in rents 100% to market rent, 12 units could be added if the septic is expanded or turned into nightly camping rentals. Very excited about this potential passive income, what else should i be piecing together in this space?

@Kyle Brodwater nice nice, i won't hold that against you... Much. lol. As im sure a lot of people do, I've got a few buddies in the area. One of my ex nukes is currently rocking the dependa life with his wife who's still in. He just got his realtor license, but i know he's huge on helping people, and investments was a huge topic on the used-ta-boat before he got out. I'm not down there but still definitely love the area and miss Mount Pleasant to death.

No experience yet to offer, but a question.Are you a nuke? You say Navy and Charleston and that's my first thought. MMN1 (SS) here in central NC for recruiting duty currently.

I met a local flipper in my area and set up a lunch meetup. I'm interested in getting started BRRRRing and am interested in developing a symbiotic relationship with a few like minded people. Any tips on questions y'all would ask in this situation? Conversely any flippers have ideas on how I can make myself useful for a new acquaintance? Thanks all.