I am new to the Brick and Mortar Business and have some questions that will help me a lot. Let me give you the details first. I want to buy this bar, in a kind of bad area. It has a nice setup and some nice tables and tvs, and also comes with the whole little strip mall of 3 storefronts. As of now it's not doing so good with the economy, and the 2 adjacent stores haven't been rented for almost 4 years now. I'm going to get the profits from the current owner very soon, But I except to see 30-40k profit for his last year of income He wants around 200k. What's a standard deal for this kind of investment, and what should I offer him.
Standard prices are often based on what similar businesses have sold for. Alternatively, calculations like Net Present Value (of expected future earnings) are used by accountants. I'd caution you to check for disguised employment costs. Is the owner paying himself a fair wage for his time?
See what the profits are, have a think if you could keep it steady/increase profit and are really willing to put the time and effort in, then if it's making 40k profit, do you want to be doing that for 5+ years? (of course before calculating your living expenses and any possible loan payments)
Is the place worth 4x his current profit, or am I just paying mainly for the realestate with this deal? Is the realestate alone worth the cost? its about 10,000 squarefeet on a main road? The Reason I say 4x his profit last year, is that when you buy a site online you usually offer 10-14 months of their profit, is a brick and mortar investment that much different? Thanks
Asking us these types of questions without pictures, sufficient information on a location, et al you're going down the wrong path. Unless you get sound advice from a) an accountant and b) a real estate developer/agent I'd advise you to not move forward at all.