alright folks,
i am ready to sell my shop,tell me what you think.
15 years
land $17,300 (1.2 acre) parking for 30 cars
bldng $155,600 (5,200 sq ft)
per recent appraisal
furnishings $32,000 (used)seat 220
equipment $37,000 (used)full service grill and pizza
inventory $12,000-$15,000
cash flow $68,000-$72,000
i am looking for a starting point asking price
First reaction: Building only worth $25 per square foot? I know everything varies by region, but here you won’t find commercial/retail in an area thats worth doing business in for less than $100/foot and sometimes 3 times that. If that is all the building is really worth, consider selling the business, and lease the real estate to the buyer.
I do not know much about real estate,and do not want to have anything more to do with this place if sold,but that is a good idea…the building is old but sturdy(cinder block)maybe that is why so low.
that was a typo on area,i changed it(5,200) my eyes are not to good anymore.
There is not a lort of information in your post, so this opinion is worth what you paid for it but… If by “cash flow” you mean what you are able to take out of the place AND assuming you are paying yourself a market rent before taking that $$; if you were located here and were listing with me to sell, I would suggest that you list the business at 200K and be prepared to take $170. The inventory would be an add-on for whatever the value was at closing. All equipment, fixtures, small wares, supplies etc would be included in the sales price.
If that cash flow number includes what you are paying yourself in rent I would need some more information to help you.
Fundamentally, the commercial property is worth whatever your local market says it is worth. If you have confidence in the appraisor you used, the number you have is probably good. Ordinarily, a commercial property would be worth a mulitple of the net rent it generates (what multiple depends on several factors) but when the space is owner/occupied, you need to go to a market comparable approach to verify the value since oftentimes, owners pay themselves higher or lower rent for various reasons.
When figuring the value of the business, I would look at the cash it generates AFTER paying a market rent and then take into account sales/profit growth rates, condition of equipment etc etc.
Hope that helps.
the cash flow i am referring to is what i pay myself after everything is done and payed for.
i own the property(well the bank does)…i am not sure what you mean by market rent.
sales are around $500,000,equipment is top notch,two 6’ griddles,4’ char broiler,stacked mm360s(1 year old)
3 deep frys,6 drawer ref. chef stands under griddles,double door refer,dbl door frez.,8x8 walk in cooler,
3 other smaller coolers,6’ sandwich prep refer,6’ ref. pizza make table,
new roof, new paint inside and out,7 stainless tables,14" meat slicer,two 40 qt hobarts,
i am opened 1030am-930pm 358 days a year
Do you or don’t you pay yourself rent before calculating the cash flow number? Assuming that you do, is the amount you pay yourself what the going rate would be to rent the same space if the tenant was not also the owner?
Your pizza business and your building are two distinct businesses (or they should be) In most places I would assume that the annual rent for property worth $175K would be around $16K to $21K. On the other hand, I would also find in most places that a business doing 500K per year would be paying between 40-50K in rent!
What would your building rent for if you put it on the open market to lease? How does what you are paying in rent compare to that? If you are not paying rent, you need to sit down and re-figure the books to show the results of the business with a market lease paid before calculating the profit. This is because the market lease rate is the return on investment assumed in the value of the building. A buyer will not count those dollars twice in figuring the value of the combined package.
I do not understand the question.
i pay a mortgage to the bank on a loan @ $2,600 a month
bodegahwy
can we go to the chat room
BODEGAHWY
sorry to run off so quickly yesterday.
i am spinning still from what you were saying,i am not a very smart man when it comes to the “numbers game”
thanks again for your time
How many people are buying their space versus just leasing? If you buy are you doing it under one business name and then leasing to yourself? Buying seems ok if you find a cool space, but does it makes sense for every location that you open?
If you’re only making 70K like this guy, maybe it’s smarter to just lease and pay less monthly. Hopefully he can back what he put into the property.
John, were you open 7 days a week? What kind of pizza and what was the competition?
thx
i am still open…
I think you are over-estimating the value of your equipment. Age and condition have some impact on value, but not as much as I believe you’re asking for it. Naturally, I don’t know what pieces you have, but the price you’re asking seems high for the equipment.
Also, the “recent appraisal”, was that from a real estate agent or the property tax authority? If the latter, get a REAL appraisal. The taxing authorities are often way off.
SNOWMAN
i have spent $105,000 in equipment alone,i figured the used price using a catalog from a near by used equipment warehouse,same with the furnishings.
i am going to have the place appraised by a consulting corp. this week.i will post the outcome.
thanks again for all your input.
If you are selling the equipment rather than business, the value of the equipement is important. If you are selling the business, the equipment necessary to run it is included in the price of the business. When you go to write the contract, you will assign a value to equipment, but it is not an add-on to the business.
10-4
thx
just got my appraisal,
drum roll please
lock stock and barrel $457,500…i was thinking $380,000
Good for you. Please keep all of us posted.
thx kris,
i will i think i will list it @ $460k and see what happens,truthfully,i would take much less…i am tiered of this sh!t
with food prices out of control,wages going up,people just seem to be more of an a-hole nowadays,i used to love what i am doing.
earlier today had a fish on,talked for about 2 hrs and finally got them to make an offer…
387,500 was their offer i am going to counter with 410,900…maybe i will just take the money and run…i am just to tiered anymore…yesterday i found out i have hypertension,my blood pressure is averaging 155/115.
John,
Good luck with the negotiations!
Let us know when you close so we can all raise a glass to your next chapter.
Steve