All Forum Posts by: Charlie MacPherson

I'm a business broker and I have a buyer for a business I have listed for sale (somewhat north of Portland).

The business being sold is a party / tent rental company in business since 1998. They provide tents, chairs, tables, dance floors, etc. for weddings, corporate events, fairs, family parties, and anyone else who needs tents.

High level numbers for this company:
Sale Price: $220,000
Gross Sales: $220,000/year
Cash Flow: $122,000/year

The buyer has recently purchased a bakery, which could be a good synergistic fit, each company benefiting from the other. Due to the recent
purchase, the buyer's SBA borrowing ability is limited, so I'm looking for an alternative.  He has $44,000 cash for a down payment.

There is no real estate transacting as the buyer already has a location from which to run the tent company.

The buyer may be able to offer his personal residence (appraised at $436,000) as collateral, but part is pledged against the bakery purchase. The seller is guaranteeing that he will have at least $60,000 in orders booked for the upcoming season by closing.

If you want a place to park some money, please contact me and I'll put you in touch with the buyer.

PS - I am not looking for any sort of compensation or cut of the lending fees. I just want to get this business sold!

Nice place, but watch out for the Burrowing Owls.  These little owls literally dig into the ground to make burrows for shelter.  They are very, very protected in Cape Coral as it's home to a lot of them.

If you are looking at property, be sure there are no burrowing owls there.  You cannot relocate or even disturb them.  Nests are typically marked off with 4 wooden stakes and have plastic / caution tape wrapped around the posts.  

You don't.  Wholesaling only works if you can find a seller who is so desperate that they'll take a bad deal to get out of whatever situation they're in.  That or someone who is completely ignorant about the true market value of their property.  In other words, a sucker that you can take advantage of.

A bank who is auctioning a property isn't going to fall for your lowball offer.  A seller in pre-foreclosure might be desperate enough for you to screw them out of whatever equity they might have - but chances are pretty good that they'll have little or no equity.  If they did, they'd sell the house with a Realtor and get full market value, which would help them an awful lot more than your lowball offer.

Maybe get into rehabbing.  You take a bad property and make it into a good property.

The seller wins by getting rid of a headache.  The neighborhood wins by making an eyesore attractive again.  The buyers win by getting a newly rehabbed house.  The town wins by getting a derelict property back on the tax roles.  You win by making an honest profit.

That's a win, win, win, win, win.  Everybody wins.  (And you can sleep at night)

There are a LOT of lenders that will write SBA loans for a gas station.  You can most likely combine a 7A (prime+2%, 10 years) on the business component of the sale and a 504 (Prime -2%, 25 years) on the real estate component.

Be prepared to pay for at least an EPA Phase 1 inspection and depending on the outcome, a Phase II.  If there are any findings of contamination, proceed with extreme caution or you could find yourself on the hook for a very expensive cleanup.

Also investigate the age of the underground tanks and what the state requirements are.  Here in Maine, new tanks (double-wall, usually fiberglass over steel) are permitted for 30 years (the length of the warranty) and can extend another 10 years with a passing inspection.

Good luck.  PS - I have a couple on the market in Maine!

You can request it, but why on earth would you invest in or work on a property that you do not yet own?

Sure, it's under contract, but there are tons of things that can go wrong between now and closing.  Seller gets sick.  Seller dies.  You lose your job.  Fire damage to the property.  Interest rates spike making a good deal not so good anymore.  Flood damage.  A tree falls and wrecks the roof.

That list goes on and on ad nauseam. 

If something happens and makes the closing either impossible or undesirable, you lose whatever time and money you've put into that property.

Worse, if damage or loss to the property can somehow be traced back to work you or your contractors did, guess who is getting sued.  Yep.  You are.

I hope that's enough to convince you that working on a property before you own it is a HORRIBLE idea.

Quote from @Colette Major:

I have to ask... not to be resistant, because I am not. Who do you think I will capture in the Facebook funnel that I am missing via frequently visited rental websites? I will try it, though. Am concerned about too many dead ends of people just wanted to visit but are unqualified to occupy.

I think in a situation like this, you try EVERYTHING.  You might find a renter or someone who knows a renter and passes your ad off to them.  FB is pretty low cost too.  Not a lot to lose by advertising there.

As others have mentioned, you've missed the annual window.  Buyers with kids typically want to be settled by the start of the school year in early September.

The condition looks to be very good.

Rather than dropping the price, try something a little different, like offering up to $5,000 to pay for a professional moving company to move them in.

Dropping the price MIGHT be the answer, but if your comps are good, it's probably not that.  I'd be reluctant to do that, unless you were getting a good number of showings but were also getting price objections.

I agree with others that getting it on Facebook Marketplace is a good idea, along with MLS, local newspapers, and I hate to say it, Craigslist.

Now it's a matter of ROI.  If it's going to cost you $10,000 in legal fees to collect $10,000 in damages, it's probably not worth it. 

The first step is to figure out how much you stand to collect if successful in court.  The second is to figure out what your chances of success really are.

Also check to see if the damages are less that the upper limit for small claims court in your jurisdiction.  That can be an easier and less expensive way to sue.  I've been to small claims twice and prevailed in both.

In the meantime, maybe your attorney can write a threatening letter to persuade the seller to unwind the deal.

Good luck!

The fault is yours for not doing proper due diligence. 

However, it sounds like the seller misrepresented the transferability of the license and you relied on that promise to your detriment.  If I understand the situation correctly, he sold you a license that cannot be sold.

@Patricia Steiner may well be right, but I'd at least talk with an attorney about it (and I'm not one).

You clearly have damages and that may be worth pursuing.  Maybe the best possible outcome is that you unwind the deal and get your money returned.  You'll have to eat some expenses if that works out, but you can minimize your losses. 

Side note:  When I sell a business that has licenses that are hard to transfer or contracts that we don't want to open to renegotiation, we do a stock sale instead if the usual asset sale.  I don't know how your local regulations are written, so I don't know if that strategy would work.

If you're submitting an offer, be sure you either have a clean title contingency or run a title search before you bid.

You could end up getting a great deal on a nightmare.