Business Buy vs Business+Property Buy

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by a searcher
in Orlando, FL, USA

1yr ago

Business Buy vs Business+Property Buy

How good buying strategy can be used to buy a business with its property? Most recently I have encountered owner operators who are only interested of selling their businesses with properties. When I add the cost of property, the number is no longer working.

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reply by a lender 1yr ago
in Falmouth, MA, USA

If the property is essential to running the business, I’d consider buying it at the right market price. However, if it’s not critical, taking on additional leverage and being tied to a Class C property might not make sense. A leaseback could also be a viable alternative. If the numbers don’t add up, it’s likely that the business price is too high, the property price is too high, both are too high, or the leverage is excessive for the transaction size. :)

reply by a searcher 1yr ago
from Northwestern University in Chicago, IL, USA

SBA won't have the same amortization for real estate vs. the business. In fact, its likely you'll end up using a 504 for the RE, I had a 20yr when I did mine. For the business (unless you have significant FF&E), you'll likely do 7a which is typically 7 years. Business owners like to sell the business separately and continue collecting rent on the property. Buyers like buying the property as it creates long term wealth and reduces the likelihood of a tenant/landlord dispute, which could present a potential risk to the business, especially if the real estate is a key component of the business.