we are purchasing this business which is a fantastic investment. The asking price is quite large and we really dont want to place our home up for collateral. The business is a gro/deli/postoffice/garage/gas station together plus a small trailor park. 6-8 trailers on 2 acres of property. what I would like a small more insight on is if the asking price is 550,000 will all of these assets stand as the collateral or will be have to still come up with some cash down. Someone said that if it appraised for the value we would not have to have a down payment also that it would be based on the average income that the business brings in. Can anyone help answer my questions.. We are in the waitng process and its nail bitting!
For a few hundred dollars you can hire a property manager to go an assessment of the rental situation; do you know anything about liability control? Are you ready for tenants to call you at 3 am wanting you to get their water turned back on? Are you prepared to carry out an eviction? Reckon about it.
Your lender sincerely does not want to lose money on this loan. It will go a valuation of the assets themselves in case of foreclosure and establish if the business will provide enough income to pay the interest on the loan. The lender may question for a down, but may not, it’s up to the lender.
Calculate the payment on a $550k loan over the term of the loan based on the interest rate; has the business produced at smallest amount that much income after taxes for the last few being? Have there been lean times? Have there been any huge, one-time expenses? Are the buildings in ship-shape or does some of the gear (A/C, heat, tools) need replacing? It all adds up.
Hire a consultant in the Commercial Real Estate field (Yellow Pages, local). An expert analysis on this property is required before you make the sale. Your question does not state whether or not you have ever run a business and you propose to run several kinds of businesses all at once.
Renting to people has its own special problems, really you need to find out the downside of renting land before jumping into it.
it comes down to the appraisl , income a sound 5 year business plot with a excellent credit score.
References :
For a few hundred dollars you can hire a property manager to go an assessment of the rental situation; do you know anything about liability control? Are you ready for tenants to call you at 3 am wanting you to get their water turned back on? Are you prepared to carry out an eviction? Reckon about it.
Your lender sincerely does not want to lose money on this loan. It will go a valuation of the assets themselves in case of foreclosure and establish if the business will provide enough income to pay the interest on the loan. The lender may question for a down, but may not, it’s up to the lender.
Calculate the payment on a $550k loan over the term of the loan based on the interest rate; has the business produced at smallest amount that much income after taxes for the last few being? Have there been lean times? Have there been any huge, one-time expenses? Are the buildings in ship-shape or does some of the gear (A/C, heat, tools) need replacing? It all adds up.
Hire a consultant in the Commercial Real Estate field (Yellow Pages, local). An expert analysis on this property is required before you make the sale. Your question does not state whether or not you have ever run a business and you propose to run several kinds of businesses all at once.
Renting to people has its own special problems, really you need to find out the downside of renting land before jumping into it.
References :
Engineer
MBA student
First of all it sounds like your business type will require at smallest amount 10% down payment. There is no such thing as 100% financing by commercial bank. Sorry. And there are no grants. See http://www.blquest.biz/Warnings.htm
If you use equity in your house wisely you will not need to come up with additional collateral. Do a cash-out refinancing with the power mortgage (http://by0835.wlgweb.com/lending/) – it is one of the cheapest way to borrow money for down payment.
You can compute available business collateral using the following formula:
Collateral = Real estate value*0.8 + Gear value *0.5 + Inventory *0.1
Business routine IS additional collateral too. But it is hard to clarify how it works in this small answer.
The approximate business value can be calculated using this formula:
Business Value = Net Income * 2 + Real Estate Value + Gear Value + Inventory Value.
For more information about buying business see links below.
Sincerely,
Marina Lando
President
Business Loan Quest
References :
“The Steps to Buying a Business” – http://www.blquest.biz/buybusiness_info.htm
“The Importance of Discretionary Cash Flow” – http://www.blquest.biz/cash_flow.htm
“So I’ve Bought a Business, Now What?” – http://www.blquest.biz/article_NowWhat.htm
Business Acquisition Aide – http://www.blquest.biz/BusAquisitionHelper.htm