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Considering purchasing this bar. Does this pencil out?

November 1, 2013


1. A roadhouse style bar in a rural California area. Owner wants 275K for the business and 725K for the property. He is willing to take my 100K down on the business and carry 175 for 5 years. Willing to sell me the property for zero down and carry for 20 years, both at 7%. He claims to have income of 43000 per month and that his profit is 32% of that while paying his trust a 3100 lease payment. My total loan payments would be around 9400 per month. I penciled it out and determined that I would have an income of about 6400 per month if this is true. He has owned the bar for 10 years and has 2 bartenders who have been with him that long. He has other employees, including his daughter, that would want to stay. The property is just over 1/2 an acre and includes an unpermitted shack of a house currently renting for $700. His brother in law runs the food portion of the business and no income would come from that.

2. A wine/beer only bar in a more touristy area of mountain California. $175000 for the business with a 1700 dollar per month lease. Business is only 6 months old. I don't know the particulars of cash flow yet. I really like the look and ambience. Only 1 employee.

3. Dive bar in the same area. 200K. 2000 lease. I don't know much else at this time.

Any thoughts?

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