Leverage

searcher profile

June 29, 2021

by a searcher in South San Jose, San Jose, CA, USA

Hello All,

I wanted to know can you leverage real estate/land to buy a business that is on it?

I have a deal in the pipeline that includes:

Gas Station
Car Wash
Pet Wash Station
Building
Land: 1 Acre of land that it sits on.

I really need advice on how I can swing this. I asked if the seller would finance, but no word yet.

Thank you,

Aaron G.

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commentor profile
Reply by a professional
from University of Akron in Charlotte, NC, USA
When you have limited resources as most of us do, I strongly advise not buying real estate because like the above poster said...It's not cash flow producing.Money is power / king.You have to battle to protect every last penny.And, when you must use it, use it wisely and only on cash flow assets.

In this deal,if you can save say $100k in your capital buy not buying the RE, that $100k could go towards buying another $2 million business.
commentor profile
Reply by an investor
from University of Nebraska in Austin, TX, USA
Talk to a bank to see your options are - depending on the NOI/EBITDA, there is probably a debt combo that makes sense.

Another option to consider is to exclude the land from the purchase...only purchase the cash generating assets and negotiate a long-term rent agreement with the seller. This would probably make the equity required to buy the business less. You may not want to do this given how intermingled the assets are.
commentor profile
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