Buyi The Convenience Store?
Have only done residentials and rehab so far, so I'm a little out of my depths here, but.... Found a Ma and Pop convenience store (not franchised or affiliated; would that help?) for sale by owner. Nice shape, built 1989. They are keeping the house. Advertised only locally. Rural, on paved road in vacation area, also on snowmobile trail. 2 compliant gas tanks 10k gallons each.
Threre's a separate laundry/car wash building of 800 Sq Ft that could become a rental house ("wasn't making money" says owner), could rent for $450 or so after adding stove, shower, etc.. Gross sales around $150K annual, about $30K net. Presently doesn't sell lottery tickets or take credit cards. Has some empty space inside for...deli? Coffee shop? Tables? On 7 nicely wooded acres 1/4 mile from Mississippi River, with development potential. Asking price is $120k.
Current strategy is to offer $100k, maybe settle on 110K, try to advertise widely and flip before closing for $140K or more. Feasible? I could borrow the $$ myself, then sell on CD to help me sell it for more, on terms. If I can't sell, I could use the store as an office and work while tending the store, but running a C store is not a long term goal. Nearest competing gas/C store is eight miles away, town of 12,000 is ten miles. The 7 acres are quite nice, and could provide a couple of nice building sites.
I'd like to increase proifts and add lottery, credit cards, maybe live bait (big fishing area around here), and maybe a small RV park. Would this be an easy property to flip? Too big an undertaking to run if it doesn't sell? Thanks for sharing your own experiences.
I like the RV park idea. With that idea, I'd leave the laundry / car wash alone. I think you could probably grow the business somewhat, but it seems like you should capitalize on folks coming to see the woods and fish. I would think that once you get it more profitable you would be able to sell it for a lot more.
As for being easy to flip, I don't think it will be too easy to flip if it's too far away from town.
Just my $0.02
This is like a lot of deals which look like real estate deals but really aren't-- doesn't mean they are bad. Just means its not really real estate.
The value of the store as a store is a function of its business operations. That means that you have to run it. The store is worth 2 or 3 times one year's net operating income after salaries.
The value of the land, etc. is largely determined by comparbles.
The package is probably worth the land value plus the value of the store.
Does the $30k net included salaries (amount?) or debt service (amount?)?
The net does not include salaries because there were none, save for the owner's 'draw.' He was/is the only employee, spotted occasionally by his wife the banker who does the books.
There is no debt service. He owns it outright, and he is getting old. He says he wouldn't live long enough to enjoy the rewards of a CD. That's part of why he wants to cash out and I cannot get him excited about terms. Right now I'm working on getting him to agree on a ten year, or even five year note, but that would really mess up my potential cash flow if I cannot flip it and end up running it awhile, adding other services and trying to build up its value.
Any other ideas? Thanks.
LOON --
Here is a partial quote from your post "...and maybe a small RV park."
Unless the land is currently zoned for RV park ... you will probably be out of luck for that future use. Best check with the county or city planning department to see exactly what the property is currently zoned and the possible uses within that zoning.
If you follow up and purchase then flip ... you would not want to falsely advertise the future use potential to your buyers.
Cheryl Lopez
If the area will support it an RV park might not be a bad idea - but don't underestimate the cost of doing so. Running high voltage electrical hookups, sewage, and water to each site will not be cheap. You will also need a dump station for sewage. Is the place currently on septic - it will need to be greatly enlarged.
With 7 acreas to work with - you either won't get very many sites in or they will be very close together. Overnighters don't mind the sites close together - but if you want people so stay for several nights at a time you need to leave space between the sites, tables, firepits, and etc.