Re: valuations - Posted by ray@lcorn
Posted by ray@lcorn on July 15, 2009 at 11:30:24:
My best advice on income-property valuation is here:
Restaurants are my least favorite tenants because they are so vulnerable to competitive pressure, economic issues and mis-management. We do have restaurants in our portfolio, so my bias does not extend to avoiding them completely.
I typically ask to for personal financial statements from the principals as well as the entity, and require personal guarantees. However since this is an existing lease you are stuck with whatever the current owner got. You don’t mention how long they’ve been in business. If it’s a short time I would ask for sales and financials to establish their viability.
Also, be sure to evaluate the property by general real estate standards, i.e. the “dirt factors” mentioned in this article: