Businesses that ARE real estate

January 24, 2024

by a professional from Bishop's University in Moncton, NB, Canada

***New Video Alert!

In the world of small business investing, we try to separate operating businesses from real estate because the assets are different and are valued in different ways.

But what if the business IS Real Estate?

Marinas, campgrounds, Bed & Breakfasts, motels, etc?

What different considerations are in place and how do we know we’re making an offer that makes sense?

Watch this week’s video here: https://youtu.be/a-nFc0riJZc

Cheers

See you over on YouTube

David C Barnett

Reply by a searcher
from University of Pennsylvania in Ambler, PA 19002, USA

Thanks ^redacted‌ for creating your great content. This was a question I was exploring the a few weeks ago. My question was a little different as it related to a medical clinic that can't function without the large equipment built into the property that they own. As a result, it is very difficult to separate the business from the property.

In your video, you mention using several databases to determine the rent equivalent for a similar type of property. Could you share which databases you were referring to?

Thank you again.

Reply by a professional
from Bishop's University in Moncton, NB, Canada

I don't think I did.
Rents come from local markets to divide businesses from real estate.
In some business valuation databases, there are examples of businesses being sold with real estate.
In the case you mention of a medical practice, you would definitely have to evaluate the business and the real estate separately and use local rental rates for a normalizing adjustment.

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