Good summary. However, is he going to share with you the statements from his accountant? Profit and Losses?
Even though all that stuff might not even be 100% accurate.
Have you bought property before? It seems like you are doing this deal without a Real Estate Agent? That is cool but I suggest you get a lawyer.
Seems like you are a business owner already too. So you have your LLC right?
Steps (imo)
1) Get your funding ready. Get a preapproval for a commercial/mixed loan. Or if you have cash then you are good.
2) You should get a comparative analysis to see if the $350k asking price makes sense.
3) Then you should do a thorough check of all units in the spot with your own eyes. Apartments, Kitchen, Laundry etc.
Check for cracks, water damage on the ceilings, floors, walls etc, check for pests, check foundation, check the dryers make sure they work and are hot! I am telling you to check yourself is because the next step would be a professional appraisal. You want to have looked it over so when you read the appraisal everything will click.
4) Next, have your experienced attorney draft up an offer letter with contingencies. The major contingencies should be a clear title, successful appraisal and a certificate of occupancy. Therefore if the appraisal finds major issues you do not want to deal with you can withdraw your offer. Or if you find issues but still want to purchase you can further negotiate your offer.
(You don't have to use an attorney to draft your offer letter. You can google and find good offer letters. However, an attorney that is good, makes it easier and should know the contingencies to put in based on your state and area).
5) Get a title search and appraisal
6) Review the appraisal carefully. Look at pictures as questions. What needs to be fixed immediately, is this dangerous etc. Renegoiate based on findings.
7) If everything is good then proceed and close.
8) Remember if there are tenants in the building, you buying the building means you have inherited those tenants. You need to get a copy of their original lease and see when it expires. When it does, you hit them with new leases!!
Insurance
You mentioned insurance being $1,200. That seems a bit low to me. Is it for the entire property? Is it liability insurance and property insurance?
Make sure it is liability and property. I would focus on the kitchen and laundromat cause those will see the most frequent clients.
I am talking someone trips and breaks their neck, eats some bad food, etc.
Make sure you have great insurance!!
Good luck. This is dope. I am excited for you!
Let me know what happens. Hit me when you close.
Remember new PPP is coming and SBA loans and I am sure their are grants in your area.
I only can go off of what he told me, so i'm assuming he'd share the profits and loses...
I'm be honest, I'm say the profits probably aint where they were in the past years, mainly because of the guy recent health issues
(cancer, slight heart attack, eye surgery and a few other nagging complications) those issues slowed him greatly. Those profits loses will come into play later!!!
LLC, yes for lawn service. I started that company to give me brother and son, some guidance and direction. I worked in the chemical field so i really never went full time with it. So, yes i have LLC but never did anything major with it, like reporting anything.
I had a sit-down with myself and said, "It's time to get this business right, so u don't have to go back to the chemical plants, unless u want to, not that u have to".
1. will do so, i don't have that cash, i aint a BGOL baller...(but i do have a uncle who's can make it happen asap, just trying to see want i can do one my own first)
2. yes sir, will do
3. i've been using the laundromat for the pass year, i bring my work clothing there. There was another spot i went to, its own by some asians. One day during December of 2019, i was on here reading a thread about supporting black business etc...
I though, "IIn 2020 i'm start bring my money, to the lil spot on the other side of town where ole man JW own"
so over the last year, I've used the location often.
He made improvements to the store and laundromat. Ceramic tiles were installed in throughout the store and laundormant. 4 new washers were purchased, two commercial and two normal top load washers. All the ducts work for the dryers were redid. plumbing for washers was replaced. He painted the both area. This aint what he's telling me, i saw these improvement.
The kitchen, he just got a new fryer and flat grill. The gas pipes looked new.
The diner area didn't get no TLC but that aint no problem. It looked like there may have been a leak at one point because i saw that the sheetrock was different. Don't look like it was changed last month but its not the original ceiling.
The other spots i didn't go into(the apartments or the extra room).
Now, what i expressed is from using the laundromat and glancing at things last night.
Next visit i'll ask more question, check the water pressure on the faucet and toilets, check the ac/heater, how well the doors shut and close and so on...
I know there will be somethings i'd like to change but long as it serviceable at the moment.
4-8 got cha, I'm look at all of that
insurance, its property insurance i specifically asked, "What about property insurance what do u pay"
(now I like to believe he have liability, but we never know)
plus i have other business ideas, so all of these question got me in a little better spot..
PS. i just called my cuz, about the price of a appraisal, she just closed on a house last week.
The appraisal cost $550. I just called her to get an idea. She also mention, "The people was telling me about a guy whom cut grass, but i told them no thanks, my cuz have a lawn service, i rather give him the money".
So she wants monthly price.
man i appreciate all the info y'all spitting at me, this gonna be a BGOL purchase...
