All Forum Posts by: Matthew Stewart

I am (still) working on a deal to acquire a manufacturing company. The owner of the business also owns the real estate, and it must be included in the sale.

I am very knowledgeable in the business, but not in commercial real estate. I have been estimating an offer price based on an appraisal from 2010, which was independently done by a bank for a re-fi the owner did. I have added some amount for an extension that was added to the workshop building, and some appreciation.

My questions:

1. Generally, how variable/judgemental are the commercial real estate valuations?

2. How can I determine a fair market price? Using my crude calculation as a purchase price, and the financing I am able to obtain, the company cash flow comfortably pays for the monthly mortgage payment, taxes, utilities, maintenance, etc.

3. For my own calibration, how can I determine a fair market value of leasing? I know the lease rate that the operating company currently pays (to separate RE holding), but I do not know if this is a market rate.

Thanks!

MS

I am planning to purchase a small business in Texas. The current owner holds the real estate in an LLC, separate from the operating company.

I would like to make parallel calculations regarding P&L and cash flow for:
(a) purchase of the real estate and have it in a separate LLC. The operating company would pay rent to this ... generating passive income as I understand.
(b) "lease to own" ... offer the owner to buy the operating company, and lease the real estate for ~2 years with an option to purchase.

I would like to compare the relative returns, but I need some guidance how to start and if there are templates that can be used.

I have fairly good business acumen, but this is my first time getting into this type of question, so I appreciate any advice!

(originally posted in the ite Q&A by mistake!)

Regards,
Matt

I am planning to purchase a small business in Texas. The current owner holds the real estate in an LLC, separate from the operating company.

I would like to make parallel calculations regarding P&L and cash flow for:
(a) purchase of the real estate and have it in a separate LLC. The operating company would pay rent to this ... generating passive income as I understand.
(b) "lease to own" ... offer the owner to buy the operating company, and lease the real estate for ~2 years with an option to purchase.

I would like to compare the relative returns, but I need some guidance how to start and if there are templates that can be used.

I have fairly good business acumen, but this is my first time getting into this type of question, so I appreciate any advice!

Jerry K., thanks for the links! I will ask them, but wanted to see if there were any other opinions or experiences outside of theirs.

Thanks again, I appreciate it.

Regards
Matt

Jerry K., thanks. Do you have a link that you can share? I invested in one of the Comain funds, and would like to see how they split purchases in that instance.

And yes, I was referring to a tax lien fund. I know that it will vary depending on numerous factors, but if anyone has experience it would be useful to benchmark.

Regards
Matt

Jerry,

How did you review the Feb AZ results?

Anyone - how long until a portfolio of tax liens should start delivering interest income (not accruals) which exceeds the management fee?

Thanks ... first time poster!

Matt