All Topics / Hotch Potch / Deal to be scrutinised

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  • Profile photo of GavinGavin
    Member
    @gavin
    Join Date: 2002
    Post Count: 42

    Hello everybody,

    I have located a petrol station for sale details are as follows:

    Sale price $700,000
    Freehold value approx $500,000
    Therefore business value $200,000
    last 3yrs net profit to vendor
    30/06/01 $135,595
    30/06/02 $163,890
    30/06/03 $196,059

    The vendors have indicated that they would listen to the idea of leaving money in the business.

    I guess my question is, if the vendors will finance 30% would it be realistic that I could get finance for the remainder 70% based on the business alone without having to say put your house up as a guarantee.
    What interest rate would the vendor normally receive ie 10% and what is the term of the loan ie 5yrs.

    Any input would be appreciated.

    Best regards,

    Gavin

    Profile photo of Mortgage HunterMortgage Hunter
    Participant
    @mortgage-hunter
    Join Date: 2003
    Post Count: 3,781

    Gavin,

    This type of finance isn’t packaged up and sold like residential loans. What I mean is that a rate cannot be advised until the deal is put together and submitted to a lender.

    I would strongly recommend you use an appropriate business finance broker to put this deal together for you. I have seen many people try to do it on their own only to fail with what should ordinariliy be a straight forward application.

    I don’t do this financing myself but if you email me I would be only too happy to forward your email to someone who does!

    Cheers,

    Simon Macks
    Mortgage Broker
    [email protected]
    0425 228 985

    Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    Gavin

    I agree with MH. This type of financing is tough. It is not normal commercial and there are only a few financiers willing to lend for petrol station. The LVRs may be around 60%. And they are worried about site contamination etc. valuations (and legals etc) are expensive, like $2000+ and have to be paid upfront and can vary a lot because of lack of comparable sales. And they wold probably only lend on the value of the security not including the business.

    It sounds like prety good deal if you could get the vendor to finance the deposit for you. I think in these sorts of deals the vendor would get between 10 and 20% pa. depends on how desparate to sell they are

    Terryw
    Discover Home Loans
    North Sydney
    [email protected]

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    https://terryw.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://Terryw.com.au/

    Profile photo of picja1picja1
    Member
    @picja1
    Join Date: 2003
    Post Count: 144

    Also, most lenders will want your property as security as well. They want you to take the risk too. If your not willing to do that, why would they be.

    Profile photo of bribiebribie
    Participant
    @bribie
    Join Date: 2003
    Post Count: 67

    Gavin,

    Without knowing where the service station is I would suggest you will need to do your due diligence before progressing too far. Check with the Main Roads Department to see if they have any changes planned which may effect passing traffic? Years ago, I worked for BP and in those days, the fuel sales paid for the lease on property and equipment and the workshop was your cream. Nowdays with a lot of self serve outlets, the shop is probably the cream and if there is a workshop attached, it maybe leased out.

    bribie

    Profile photo of GavinGavin
    Member
    @gavin
    Join Date: 2002
    Post Count: 42

    Thanks to everyone for you replys.

    Simon, i will contact you and would be much appreciated if you could pass my email address on to a business finance broker to see if it is possible to get this deal over the line.

    regards,

    Gavin

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