All Forum Posts by: Rowan Gratz

Asking for a friend...

My Friend owns a restaurant business that was severely affected by Covid 19. During the pandemic he was able to get refundable PPP loans to help offset the 50% drop in Gross Receipts that affected his business. He kept on as many employees as possible and switched to take out etc. In 2022 he ran through the bulk of his stimulus and simultaneously one of the biggest employers in the region closed up and relocated to a new area. Faced with declining revenues and a struggling local economy he tried to keep his once profitable business open using his last available funding source. Business Credit cards and a SBA EIDL loan. 

Over the 2023 calendar year he used up his line of credit and most of his SBA loan.. still business never rebounded to pre pandemic levels and his P/L is negative. 

To add to his woes, his Landlord has indicated that he will not renew the lease that he held for the previous 10 years. 

Forced to relocate or sell he tries to sell his business to pay off his debts. However in the context of the sluggish economy with many businesses already for sale. No buyers are willing to accept his proposal at market value. 

Running out of time on his lease he is forced into liquidation. On the hook for SBA debt and Business lines of credit. He sells some of his equipment at firesale prices but doesn't recoup much from his auction. 

What does he do next ? His restaurant is held in an S-Corp with negative equity,his only remaining capital is in a few pieces of valuable real estate acquired over the last few years. How does he protect his capital even as his small business goes under ?

Any constructive ideas appreciated. 

 The plan is definitely for us to run it, we love the area and I think there is about 9 months of the year that we will have decent occupancy rates. 

Can we make it happen again ? Missed the first one, thanks!

This Property was un-listed but I knew the landowner so We (my partner and I ) basically helped him decide to sell it by writing a contract and convincing him that we could make the payments (owner carry). 

..4 months later we are done with the bathhouse and working on our Glamping Platforms. 

A lot of sweat equity but so far all paid with cash. Realizing that having a silent partner to help with bookings & marketing and some financing would help move the project along faster. 

Thanks for asking !

Investment Info:

Other buy & hold investment.

Purchase price: $500,000
Cash invested: $50,000

Glamping Resort on the Trinity River. 12 Acres , River Front, 5 Unique Glamping Suites, Shared Bathhouse, Communal Kitchen/Laundry. EV Charging . Private River Access, Beach, Swimming, Kayak Launch.

What made you interested in investing in this type of deal?

There is nothing better than coffee overlooking the water and a refreshing swim in the River.

How did you find this deal and how did you negotiate it?

Persistent hustling and getting property owner to sign on the contract.

How did you finance this deal?

Cash+Owner Carry.

How did you add value to the deal?

Sweat Equity, Building out the property myself 3 days a week . Used labor from other contractors when I couldn't figure it out.

What was the outcome?

TBD, I have not listed it yet as I am not finished .

Id like to attend, please send an update to this forum a few days before the event. 

Thanks !,

Rowan

Same, I'm in Arcata. Have (1) Rental but looking to grow. Anyone want to get a meet-up going ?