NeedToUseYou
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Joined: 12/24/2005
From: None of your business
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ORIGINAL: Griswold
quote:
ORIGINAL: NeedToUseYou
Well, I found a building that we would like to buy it is a former government owned building and is as perfect as it could get in construction. A very sturdy huge building, that used to serve as a disaster shelter and coimmunity center in its day. The asking price is a pittance of what I think the building is worth given some elbow grease, and a little cash. I want this building.
However, it being government owned, I have to go about proving I'm the best canidate for bringing value to the community. I've not dealt with the government at this level before.
So, my question is how is this judged? If someone has access to a local level judgement sheet for this kind of thing, it'd be useful. If it is a point system what are the specific points assigned to each attribute. Are things like having a woman, or minority owning partial share of the company counted as points(I know it does in relation to grants and small business loans via the sba website). Are certain businesses more desirable than others. to communities in general(If so what are the most desirable). What are the cut off targets for projected employment brought to the community. Is having many people going in to finance this arrangement better than a sole financier.
Things like that.
I can't express how much I want this to go through, so any help would be appreciated. A general copy of the generic criteria would be great, or a generic copy of the ideal application would be helpful. This wouldn't be confusing for me except its government and they don't really judge the same way a bank does.
I was told when i said we could come up with the whole purchase price, and just pay it, that that wasn't the determining factor. Seems bizarre system they got going. Does not compute. LOL.
Now here's the situation, we have been in business in this region for close to 2 years. I've grown to this point from a initial investment of 8000.00 dollars starting. I'd guess the business itself is worth about 1500000ish now, not including the money we've drawn to live on. And we are now busting out of this place literally!! I need this new building to grow further. So, for example is rate of growth, more important, or is cash on hand. Because I can bring in another significant shareholder that has significant equity, enough to make that a non-factor, if it is important. Or is getting the endorsement of the major property owner in the area going to effect this decision. I believe I can get him to draft a letter of endorsement.
Things like that I need to know. I have no experience dealing with the government at this level
Thanks.
A couple things:
1) Fall in love with the deal...not the property. It's clear you're jonesing for this place. Make sure it's for the right reasons.
2) Unless you've got a Peruvian connection, you're getting cocaine straight from the source and you're selling it retail...suffice it to say, anyone that can grow a business in 24 months from an $8,000.00 investment into a business that someone would pay 1.5 million dollars for...is either a business GOD (at which point you don't need our advice...we need yours), or your calculator is broken.
Your right their is an extra zero in the above. Sorry, typo. It should be 150 thousandish. Sorry. Yeah that was a bit extreme. 1.5 million, not quite maybe in a few more years.
3) You don't give enough information to assist.
a) Where is your business located?
It's a rural city setting, presently about in a town of about 8000, the deal building is in a town near here that has a population of about 20000.
b) How large is the building you want to purchase?
Slightly less than 30 thousand square foot. We are presently in a 6000 thousand square foot building.
c) What is your business?
Our business, is presently based around, refurbing items, increasingly electronic items in nature. However, we deal in Tools(primarily cordless), household items, like vacuums, microwaves, refrigerators, etc... We primarily sell online now, but it would be ideal to sell online and at retail, as many items are better sold face to face than online.
d) What do you realistically believe you could purchase the bldg. for, including all modifcations necessary to occupy same?
The asking price outright is 65000. The building is completely solid reinforced concrete construction. The walls, floors, and ceiling are completely reinforced concret. It's a huge concrete coldwar area structure. My estimates for refurbing the initial portion of the building we'd initially need is not that much. As since one of the points of getting the building is to use it for retail traffic, a large portion of the rest to be used as raw warehouse space(doesn't need to be pretty). The retail portion, would cost about 5000 to stock completely with all shelves, display cases, etc. We can get that at a Wal-Mart auction several are scheduled within distance in the following months(They are closing a lot of Wal-Marts, and opening super wal-marts, selling the displays etc, for pennies on the dollar). So, the retail stuff is as good as taken care of we've bought pallet racking from these wal-mart auctions before. My partner in this, dad and brother are in construction, so labor costs would be practically irrelevant. What I'm figuring initially really outlay cost in dollars would be about 30000, to get the building initially functional. As I've said structurally the building is sound, it's all cosmetic, and labor would cost zero.
e) What is the size of the building you're currently in?
6000 square feet, started in about 3000 square foot before moving here.
f) Are your current income taxes high enough currently that you need a sizable write off and would this purchase provide that?
Not really, as we have purchased, business necessary stuff, that have eatin at some of the profits, and provided writeoffs. Though, next year, do to inventory increases, which are very hard to track in this business, we will probably have more earnings that can't legally be averted. So, business deductions would be good to have for this next year. At least this is what the accountant says.
g) What does your bank say as to assisting you with same, or has your business simply provided you with enough available funds that you can currently pay cash for it?
We can self-finance via company funds, and personal funds that could be injected into the business.
h) What are the demographics of either the town this building is in, or the larger region that you do business in?
It is relatively rural composed of small towns, larger towns around here are considered about 20000.
i) Is the proposed building in fact large enough for your needs or, if it's larger than your needs, could you subdivide the space and get a rent commensurate with the mortgage payment (regardless of whether or not you pay cash for it), after adjusting for your space needs (less any business rent you currently pay), to justify the purchase?
I have one friend that our business would comingle with well, in a synergitic manner. I also have an acquaintance(step mother, nephew), that would rent some space. So, the building would generate revenue from rent. The building is plenty big for our needs for the foreseeable future, the ceilings in the largest room(former gymnasium)are very high, so it works as an ideal warehouse for our bulk storage, and adjoining rooms are fine for small to medium mom pops.
j) Could you rent a space adequate to serve your needs over the next 5+ years at a cost lower than this new property would cost you over the same period (including all remodeling and repairs necessary to bring the new structure, not only up to current building and ADA codes, but to as well, accomodate your and possibly others needs) and would any savings found therein (i.e available cash from profits or cash flow) allow you to grow your business more substantially such that at the end of those same 5+ years your available cash would in fact allow you to either pay cash for a building of similar or greater value (and functionality) or at minimum, provide you with enough improved cash flow that buying a similar building at the then anticipated local current market values (which, as a reasonable assumption, would be a formula/calculation along the lines of whatever local commercial property values have increased over the previous 5 years) for similar type properties, and would that enable you to substantially increase either your net worth, or cash flows through rental values?
I've not seen a better deal, in the year I've been looking. The core construction is as good as you can get (pure steel reinforced concrete). Structurally, it is leaps and bounds better than any other building available for purchase. As far as costs of building impacting cash flow, it won't have any effect, as we plan to fund it via personal "new" cash injection. Giving the initial two renters I can have the first day of opening, it would be nearly self sustaining costs wise day one.
I could hit you with about 300 additional questions, but I suspect you can see fairly easily...you need to ask yourself not only significantly more questions before you make any final determination...you also need to make sure you're being honest about the answers.
Trust me....there's a killer deal in real estate at least once every few weeks in every town, in every state.
Every year.
This one may truly be phenomenal, but be certain...next week (or next month) there will be another equally as good or better.
Ask the right questions, be honest with yourself about the answers, fall in love with the deal...not the property and you'll make the correct decision when the time comes.
(Quick note...if you decide to make a formal offer, attach to your offer a signed cashiers check for a reasonable amount {10% would do very well} made out to the agency holding the property with an attached document stating something along the lines of "this check may be cashed if proposal {for xyz property at xyz address held by xyz agency} is accepted at our proposed price as per attached submittal and is to be considered payment towards said purchase". They can't cash it unless they accept your offer, because they're a government agency they won't cash it unless they accept your proposal, but the most important reasons to do this are: 1) It shows the agency you're a serious purchaser and 2) most importantly...the other guy won't do it).
Final thought...my properties aren't "thinning hair guy properties" and this isn't a "goverment" building.
I don't understand the reference to "thinning hair guy properties".
It's a building.
It is a building but it is the best deal, that I have seen since I've started looking, and the construction is just over the top solid.
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Need people in government to give advice or business pe... - 
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