21 August 2019/ sale_retail_guide

Top 7 tips for buying a leisure property

Don’t let the heat of the moment cloud your investment judgement

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It’s the moment you’ve been waiting for. You’ve done your research and found exactly the right premises in a great location that’s buzzing with potential customers and it looks like a really good deal. However, before you take that next big step and invest in any leisure property – whether it’s a pub, restaurant, gym or concert hall – take a breath. There are a few searching questions that need to be asked before you buy...

Can you afford it?

The first thing you should do when considering buying a leisure property is establish your budget. Bank funding can be tricky to nail and, unless you have other assets to secure a loan, you’re likely to need to put down 40% of the purchase price as a deposit. Then, of course, you’ll need to have funds available for fees, rates, utilities, insurance, repairs and refurbishment, stock and staff. Make sure you have a water-tight business plan, outline a realistic budget and stick to it.

If possible, choose a good time to buy – ideally you don’t want to do it when prices are high. Look at trends such as values, supply and appetite of competing investors in both the local and national leisure property market. A commercial agent will be able to give you advice, but your own due diligence will undoubtedly pay off.

Will owning this leisure property suit you?

The leisure industry can be brilliant and profitable – but make sure you know what’s really involved in the type of business you’re planning to take on. Do you have a clear idea of what trade is being achieved by the current owners? Are they just really good at what they do or are they discounting to drum up trade? What’s the competition like? What can you do differently to make your venture stand out and deliver a healthy profit?

Is everything up to scratch?

The last thing you want is to have to fork out for unexpected costs when you first take over. Make sure any equipment or machinery is in good working order, so you know exactly what you’re taking on.

Are you primed and ready to quiz the agent?

There are three essential questions that you need to ask:

  1. Why is it being sold? If the reason seems uncertain or the agent gives an incomplete response, this should set alarm bells ringing.
  2. What is the level of interest and have there been any other offers? This is the intelligence you need to establish the balance of power when it comes to negotiating the best deal.
  3. Have any issues or concerns been raised about the business or repair of the property? If the agent blusters, remind them that they are obliged to disclose any information that they are aware of.

And never, ever do this...

Under no circumstances, make an offer and, in the same breath, say that you’ll up it if it’s not acceptable. This gives the agent no option but to advise their client to reject the offer knowing full well that you’ll increase it.

Do you have an experienced solicitor lined up?

If you manage to keep your cool and have an offer that you’re happy with and have accepted, you’ll need to appoint an experienced solicitor to guide you through the legal process up to completion. They’ll check all the finer details – including whether the property is freehold or leasehold, the length of lease and any terms and conditions that relate to it. Then you’ll need to put your funding in place, ready for exchange.

Are you ready and set for business?

Once you’ve got the keys and, with your water-tight business plan to hand, it’s now time to implement it. But remember, successful businesses never stand still. Keep doing your research both on the business you are buying and the competition. Things can change and you need to be the first one to know if they do.

Looking for retail property to buy? Check out Realla and find your next retail property for sale!