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View Full Version : Crossin my fingers...might have a shop...



torker
05-01-2007, 12:54 AM
As some of you know I've been trying to find a suitable shop to rent for some time now.
Still can't find one BUT...I may be buying a business with property etc.
I find out in the next day or so if the bank will go for it. I'm pretty nervous right now. $300 grand is a lot of loot.
Beauty part...it's two and a half acres in the country...zoned for business....NO neighbours...never will be! About a mile out of town.
Only has a mobile home on it but has a decent smallish shop(24X30X12' walls)) and a new open sided storage building (38X60).
The plan is to build a fabshop addition onto the shop. The existing building is prefect for a machine shop. Has a seperate part for a grinding/cutting room.
The biz is a motorcycle salvage/snowmachines/atv's etc.
Get to look at the books tomorrow and may make an offer in a couple days.
OMG...the contraptions I'll build if I get that :D
Russ

BadDog
05-01-2007, 02:48 AM
Best of luck. I want a place like that when the kids are on their own...

pntrbl
05-01-2007, 07:35 AM
Good Luck from me too. If the bank needs any references regarding your mechanical skills just send 'em here.

SP

Evan
05-01-2007, 07:37 AM
Sounds ideal. Only you can decide if the price is right. Good luck.

BTW, 300K doesn't sound that bad to me. The house and land prices in Williams Lake are suddenly taking off. The lower mainlanders have just discovered us and are moving here as fast as they can.

Carld
05-01-2007, 09:23 AM
Don't pay anything for good will or customers in the deal. Just buy the land and buildings and any tools he will leave. If he is doing motorcycles, etc and you are doing machine/fab the customer base will be different and be of no benefit to you.

JRouche
05-01-2007, 09:31 AM
Wow, great feeling, new starts. I hope you get the loan and the property. What a dream, good for you Russ...JRouche

Your Old Dog
05-01-2007, 02:06 PM
Good luck Torker! If I say a little prayer for you will you let me come out there and hunt chucks? LOL :D

bhjones
05-01-2007, 02:31 PM
Are you taking over the business as well (and the permits)?

Many areas restrict auto (or similar) salvage yards to the grandfathered businesses. Where I live in Maine we have a fella that owns two small yards in town. One is for sale and I'd guess 70% of the asking price is the salvage yard permit, not the 2 +/- acres is sits on. Starting a new yard in most areas is simply not possible.

Good Luck.

torker
05-02-2007, 12:06 AM
Thanks for the good words guys. Had a good look at the business end of it today. Wow! They've got a lot more inventory than I thought...or knew anything about.
My initial idea was to run the salvage enough to pay off that part of the loan then move onto just fab/machine stuff.
I still have to make absolutely sure that this is all on the up and up.
Out here it is very difficult to start an auto salvage yard but it seems they have a different view for this operation. All views aside I still need to make sure it's all legit. I'd sure hate to find out that he was selling the business because the guvmint was about to shut him down...that'd be about my normal luck :D
As it stands now there'd be little time to do anything I want to do other than a few small frame repairs etc. From what I can see it's mostly wheeling and dealing...buying used stuff...fixing it or parting it out.
As was mentioned...the zoning of the property makes it very valuable to someone like me but I still have some thinking to do. The salvage biz HAS to go with the property.
Operate it as is for awhile then phase in my fab shop????
Operate it as is and don't have to breath anymore noxious fumes, etc.???
Sit on my butt and watch the world go by???
Maybe I should stay at a Holiday Inn tonight...then I'd have the answers in the morning :D
Russ

BadDog
05-02-2007, 12:41 AM
Couple of thoughts (may or may not apply in Canada).

Sometimes zoned commercial means no habitation.

Watch out for "super fund" type issues. I knew a guy who bought some land that had previously had a "junkyard" (in the old school pre-PC Salvage Yard days) on it. Neighbor had some water tests done and found oil, glycol, something. Next thing you know EPA/Feds are involved and it was a huge mess. Previous ownder dead or otherwise not held liable. At one point, they were talking about taking away soil something like 10' deep over about an acre, and "disposing as hazardous waste". Digging test holes, annual testing, and all paid out of his pocket. I don't know what all but he was SOL. Couldn't sell it, couldn't use it, SOL...

torker
05-02-2007, 12:49 AM
Russ...this is pretty unique zoning. You have to live on the property to operate any business. It's zoned for homebased businesses. Pretty rare. I've looked at a lot of places and there aren't many of these.
Good point on the contaminants. This place has just been developed from raw land so it isn't too bad yet. They've been very careful with oil spils etc. The guy was in the auto wrecking biz for years and has seen his share of government regs come into effect.
It is huge bucks up here for cleanup also.
One can never be too careful nowadays.

BadDog
05-02-2007, 12:56 AM
Ok, sounds really nice.

Oh yeah, I remember them talking about the old guy that ran the junk yard. Those that were around "back then" said he routinely just "dropped the pan" on motors, trans, axles, whatever... never bothered to try to catch anything, just drained it onto the ground. Apparently, the chert (red clay/rock mix used for cheap "paving" if the term is not familiar, classic "dirt road" in the SE US) working area looked like black asphalt over much of its surface from all the oils and stuff that had been dumped on it in 20 or 30 years. But when it was sold, it had been all been covered over with fresh crushed limestone.

speedy
05-02-2007, 01:15 AM
A due diligence clause should afford enough protection while doing your homework?

Good fortune to you.

Your Old Dog
05-02-2007, 06:16 AM
Couple of thoughts (may or may not apply in Canada).

Sometimes zoned commercial means no habitation.

Watch out for "super fund" type issues. I knew a guy who bought some land that had previously had a "junkyard" (in the old school pre-PC Salvage Yard days) on it. Neighbor had some water tests done and found oil, glycol, something. Next thing you know EPA/Feds are involved and it was a huge mess. Previous ownder dead or otherwise not held liable. At one point, they were talking about taking away soil something like 10' deep over about an acre, and "disposing as hazardous waste". Digging test holes, annual testing, and all paid out of his pocket. I don't know what all but he was SOL. Couldn't sell it, couldn't use it, SOL...

I've seen BadDogs scenario played out in Buffalo NY twice. Here many chemical companies stored toxic waste in barrels and then let the old buildings default for taxes and stuck the taxpayers/superfund for cleanup because they could not be found. Hell, we even had a congreation sell their falling down church to another congregation just before it was condemed by the city! Had boulders falling some 70 feet to the ground! The new congregation couldn't afford repairs so they sold it to singer Cheryl Crow and she redid it for a recording studio!

Not trying to rain on your parade just suggesting that maybe a lawyer could tell you if it's something you could guard against. Might also be advantageous to contact the county you live in and see if they have problems with the site as you are interested in it.

Mcgyver
05-02-2007, 09:36 AM
unfortunately the only way to legally protect yourself is to not buy it. Once you are on title or even in possession, you are liable....matters not whether you were the polluter. Used to be (case law may have changed it) that lenders got real nervous about powers of sale on defunct mortgagors as legally putting the property up power of sale is taking possession. Even as a tenant, there is liability and most sophisticated industrial tenants will do an environment survey.

Problem with environmental contamination is the goal posts have moved so much, what was perfectly accepted in the past is a liability now. I'd have a assessment done even though its a pain to spend the $$$. I'd also never buy a business without vendor reps and warranties and some take back (subordinated) financing with rights to offset - if the reps and warranties don't pan out, you deducted the damage from the debenture. of course Vendors prefer cash, and if its really just the real estate that is driving value you may not get a take back....but if its business value that is driving it i would not buy a business without the take back, more so given its small and won't have audited books

Evan
05-02-2007, 09:46 AM
This is one area where legislation and governmental jurisdiction differs considerably in Canada compared to the US. A lot will depend on whether the property is in the city limits or is under the regional district administration. A quick visit to either office to speak to the right people will sort out if there are any current known pollution concerns or other issues.

topct
05-02-2007, 04:59 PM
This is one area where legislation and governmental jurisdiction differs considerably in Canada compared to the US. A lot will depend on whether the property is in the city limits or is under the regional district administration. A quick visit to either office to speak to the right people will sort out if there are any current known pollution concerns or other issues.

I will add. Have you ever done anything like this before?

Is this what you want to do? Or is it driven by emotion?

Sounds like a nice situation, property wise, but.... the rec vehicle, wrecking yard thing aspect?

For what it's worth, I worked at the biggest motorcycle salvage business between Seattle and Chicago.

What would you like to know?

torker
05-03-2007, 01:02 AM
This place is under the RDEK (Regional District) governing body. A lot easier to get along with than the city governments.
Gene...this deal is driven by the idea of finally getting a place where I can operate a business without paying huge taxes and putting up with the "Good Ol' Boy's Club" A bunch of old, rich businessmen who can make a new guys life a living hell if they don't like you.
Rural property is getting harder and harder to find unless you are a millionaire.
The fact that the wrecking yard is on this has actually devalued the property.
The realtor showed me other similar properties that are $50,000 to $100,000 more because they don't have 200 scrap motorsickles on them.
I'm going into this with about $180G down so the mortgage won't be too bad.
And wouldn't you know it...my banker got selected for jury duty today so we can't continue with the mortgage til that's settled. Like all businesses here...they are shorthanded and she's the only mortgage person they have at the moment.
Gene...I prolly will have a couple or four questions for you...Thanks! Kinda bagged right now...I worked all night moving a 400 pound jointer down the stairs into my basement tonight. I'm getting too damn old to be doing this stuff by myself anymore :D
But I'm giving myself a break from renovating...going to spend the day makin metal chips tomorrow....Yahoo!
Russ

BillH
05-03-2007, 10:01 AM
Sounds ideal. Only you can decide if the price is right. Good luck.

BTW, 300K doesn't sound that bad to me. The house and land prices in Williams Lake are suddenly taking off. The lower mainlanders have just discovered us and are moving here as fast as they can.

Evan, prepare yourself, it is the beginning of the end! Same crap happened to my families lake, all the hollywierdo's moved in, prices went sky high, a small fishing town turned into a yuppy tourist attraction! Too damn many people on this planet, pretty soon your going to need to be filthy rich in order to afford to be on the water.
All the nice people were taxed out of their homes, moved in type A jerks who think they own the first 50 ft of lake in front of their house that tell you that you cannot fish there!! I've had to flip em off a few times already!
Evan, you need to scare em off before its too late! No Joke!

Evan
05-03-2007, 10:28 AM
No worries. The area I live cannot be subdivided or rezoned. Most of the surrounding area is Crown Land which is owned by the government and is not for sale. I live outside the town and town taxes don't affect me. Property taxes are determined by the mill rate which is adjusted when property values change. An increase in valuation does not mean an increase in tax.

bhjones
05-03-2007, 03:23 PM
Property taxes are determined by the mill rate which is adjusted when property values change. An increase in valuation does not mean an increase in tax.

I'm in town govt. in my small maine town and we base our tax burden yearly on what is approved at town meeting, with the mill rate adjusted accordingly. The mill rate and the system that it's generated from strikes me as a simple as can be, but there are a surprising number of people who just don't get it.

Every year during the budgeting period and around town meeting time (early March for us) all sorts of people start bitching and moaning about the mill rate and how the Selectmen (I am one of five) are tax and spenders, etc, etc, etc. In fact the selectmen don't control taxes, residents at town meeting do, but that is an "inconvenient truth" to steal a line from the creator of the internet.

This last year we were required by state law to adjust the towns valuation which was like throwing high test on a fire for some. We got lots of "people being tax out of their homes" talk. In fact, many home owners now carry a lighter burden after the revaluation than they would have if it had not been done.

This issue has baffled me for a long time.

A town in southern Maine (Kennebunkport maybe) has not adjusted it's valuation for years and years and I'm told refuses to to it. It has a large number of very high dollar properties along the shore and if the voters there supported an adjustment, a huge amount of the property tax burden would shift to those shore properties, but it seem everyone thinks it's going to cost them a pile of cash if they do it.

Sometimes you just can't convince people that waters wet and fire's hot.

snowman
05-03-2007, 03:38 PM
I can't read.

Evan
05-03-2007, 03:41 PM
Yes, valuations are based on "comparables" in the area. Because of the way the tax is calculated the valuation doesn't mean much except for insurance purposes and of course when you sell or borrow money.

wierdscience
05-03-2007, 07:52 PM
Hey Russ,how big is my room??:D

Seriously though,here the banks checkout the property for enviromental issues before they lend money on it.After all if the folks they lend the money to default them the banks owns it and all of it's flaws inculding "toxic waste".

Getting the seller to provide a enviromental statement before the sale might be a good idea too.

dicks42000
05-03-2007, 09:47 PM
BHJones;
I like the explanation about taxes, thanks. We have a similar system in Canada & the same type of complainers. Everybody wants something for nothing but won't volunteer/ give away their time/ services/ etc. except for a few. (Eg. vol. fire fighters, paramedics, reserve forces, Coast Guard Aux....)
As for Kennebunkport (maybe) resisting valuation....Isn't it the Kennedy family summer home ??? Hmm.... Guess I read too much Vonnegut when I was young.
The black helicopters are on their way to Canada...
Rick

bhjones
05-04-2007, 12:05 AM
As for Kennebunkport (maybe) resisting valuation....Isn't it the Kennedy family summer home ??? Hmm.... Guess I read too much Vonnegut when I was young.
The black helicopters are on their way to Canada...
Rick

Worse if we're going to head down that road named conspiracy, it's the present home of Bush Sr. and former drunken stomping ground of Bush Jr.

The Kennedy's did all their skirt chasing and drinking (In Teddy's case, drinking and driving into the bay after a successful skirt chase) in Massachusetts on the Cape and outlying Islands.

sandman2234
05-06-2007, 10:21 PM
Good luck with it,
David from jax