Vancouver is well-known for its promising real estate market, both residentially and commercially, with enough buyers to make any opportunity tempting. For prospective entrepreneurs or anyone looking to make a choice acquisition, there's at least three pitfalls worth knowing about before investing in a business for sale.
Pitfall #1: Purchasing a business during city-run auctions.
Every November, and potentially on other occasions, the city of Vancouver auctions off properties with very low starting bids. Although these are almost always residences, it is not impossible for a business's current owner to find their business auctioned off as part of a city-run "tax sale".
Unfortunately, although a 2.4 million dollar purchase could start as low as $24,000 in one of these auctions, the main intent is not always for the property to r switch hands. These "tax sales" exist as incentive for the current owner to pay what they owe. Most bidders on the property are bidding to benefit from the six-percent interest rate that these sales provide.
Since other bidders will probably be happy to bid higher than the competition and increase their investment, and because a business that's found itself in a tax sale is probably a poor business investment to begin with, it's best to avoid these auctions when looking to acquire a Vancouver business for sale.
Pitfall #2: Overpaying for a particular business.
Considering the fact that business real estate is highly competitive in Vancouver, many sellers will ask for a higher going rate, even when their situation is not good enough for their business to be worth the amount that they’re asking.
When looking to buy a business in Vancouver, the most important thing is to think long and hard before jumping on an opportunity. Your goal is not to close the deal as quickly as possible, but to find the best deal possible. If a seller applies too much pressure in getting you to buy, it may be best to look elsewhere.
Pitfall #3: Choosing a business with too much competition.
The competition in Vancouver's real estate industry applies to other businesses in the city as well. Research the business you intend to purchase before you do so. For instance, a start-up restaurant competing with other more established and popular restaurants in a certain area is more likely to close up shop as it does not have a stable market or loyal following yet. Any business for sale in Vancouver is being sold for a good reason. Ensure that you know what that reason is.
Vancouver real estate bargains for sale, with a catch, CTVNews.ca
Top 10 Mistakes Made When Buying a Business, AllBusiness.com