Expert: Phil Nicols - 3/15/2010

Question
What should you look out for when looking to purcheae a bowling alley ?

Answer
Hi Howard

Sorry, I don't know much about bowling itself.

I had a client buy a bowling alley, in order to tear it down and build an office building which is very successful today.

First thing with ANY real estate investment is LOCATION. Is it close enough to a major centre where people are going to make use of it? or is t far enough away that you will only attract die hard bowlers?

second, whats the income? can it be proved? (don't believe the books - usually small business has two sets of books, one for accounting, the other for tax purposes ;~)

third, what are the hard expenses? cost, interest to carry the loan, taxes, maintenance, insurance.

I would definitely get a qualified engineering firm to look at the building - NOT a home inspector! Those guys get a "licence" for 300.00 and think they are qualified to comment about structural engineering! I had one standing on top of 12 storey office building which was for sale for 12,000,000.00 and hes telling the client that the roof only has 3 years life left! I said, "Gosh thats some skill you have there. Can you tell me what stocks to buy as well?"

Environmental is HUGE! You need an environmental audit as well and definitely no home inspector is qualified to do that. Usually, banks (at least bacnks here in Canada) will NOT lend on a commercial venture without enviro - audit.

thing is, if the roof collapsed tomorrow, home inspector can only be sued for the cost of his "appraisal" which is usually $3-400!!!

I belong to a network of commercial real estate specialists. If you want I can have someone further assess your venture for you basically anywhere on the planet - sometimes for free if you end up buying something through them. They might charge you a little if you buy without them but a few dollars invested initially can save, or make much more in future.

let me know if that would be something you might be interested in.

best, Phil