Taking over a small Post Office, advice please

mrs_tooti-frooti

A small post office and general store/corner shop has come up for sale near me and I'm wondering how viable it would be - if at all - to buy it.

It's up for sale at 300k and consists of a shop with a post office and accomodation with 4 bedrooms.

I've had an online chat with Natwest who say that in an ideal world they would lend 50% and I would have to find 50% cash:eek:
yeah, right, just got that in my back pocket, and because I would be borrowing more than 25k they would want our house as security as well - I thought they would want the house but not as well as the cash payment?

Can anyone give me a bit of advice please - is it worth looking in to? the post office pays 16k a year so on the post office alone its not worth doing but I thought with the shop it might be ok?

Thanks

earthstorm

First thing.

why are they selling?

no trade, no profit, ill health, retirement

You are need to make enquiries so you can have look over the books to see if its profitable.

yes banks will always ask for a contribution towards such a loan, especially on a business loan as this is what you would be asking for.

Acc72

earthstorm wrote: »

First thing.

why are they selling?

no trade, no profit, ill health, retirement

And second thing, why are you thinking of buying ?

motorguy

mrs_tooti-frooti wrote: »

A small post office and general store/corner shop has come up for sale near me and I'm wondering how viable it would be - if at all - to buy it.

It's up for sale at 300k and consists of a shop with a post office and accomodation with 4 bedrooms.

I've had an online chat with Natwest who say that in an ideal world they would lend 50% and I would have to find 50% cash:eek:
yeah, right, just got that in my back pocket, and because I would be borrowing more than 25k they would want our house as security as well - I thought they would want the house but not as well as the cash payment?

Can anyone give me a bit of advice please - is it worth looking in to? the post office pays 16k a year so on the post office alone its not worth doing but I thought with the shop it might be ok?

Thanks

I would very very very wary of buying something like this.

The property - presumably you're not going to live in it, so is it viable to rent it out OR is it integrated in to the shop (ie, access only through the shop?) If so, could access be changed? Would anyone want to rent it?

My dad looked at several of these set ups over the years and we came to the following conclusions...

(a) if they've been at it less than 5 years and are selling, invariably its not making money, but they'll not be telling you that - it'll be 'new opportunity', emigrating, etc, etc.

(b) People rarely sell the goose thats laying golden eggs. They'll stick at it, or sell it to a friend or relative, or put a manager in. If its being sold outright, why?

(c) If they're "retiring" are they really retiring or throwing the towel in?

(d) what do they know that you dont? Is there a TESCOs opening up? Is there a bypass planned? Is trade on a terminal decline? Are the post office going to pull out which will then reduce shop trade too?

(e) people are unscrupulous lying weasels who will happily take your £300K and watch you crash and burn due to circumstances they know about but you dont.

£300K is a massive commitment.

motorguy

earthstorm wrote: »

yes banks will always ask for a contribution towards such a loan, especially on a business loan as this is what you would be asking for.

Scope for commercial mortgage if its property?

mrs_tooti-frooti

Oh thank you so much for all of this.

They are retiring - but I am aware that it is a lot to do with ill health as well. I know the people who run the business - but not so much of a 'lets talk through the business' sort of well if you get what I mean.

They state that the turnover is £470,000 which to me - who knows very little - seems very high, and they say that profit is 20%.

We have looked at it as it is in the next village to us so its close, I'm not working at the minute so could work and run it straight away and then if all went well my husband could leave his job and come into the shop with me.

We wouldn't be looking to move into the property and it does have its own access. The house side is very nice. The owners now have been there for approx 15yrs and have totally renovated the shop and house.

At this early point do I get an accountant or the like to look at the books? Its like you say, its a hell of a lot of money. Nat West have said about a Commercial mortgage which would take a 25% deposit but have said to be wary as figures can vary?

Mojisola

mrs_tooti-frooti wrote: »

They state that the turnover is £470,000 which to me - who knows very little - seems very high, and they say that profit is 20%.

We have looked at it as it is in the next village to us so its close, I'm not working at the minute so could work and run it straight away and then if all went well my husband could leave his job and come into the shop with me.

How much retail experience do you have?

Without a reasonable amount, the Post Office might not accept you as a candidate.
https://www.gpl51.dial.pipex.com/becoming_a_subpostmaster.htm

earthstorm

mrs_tooti-frooti wrote: »

At this early point do I get an accountant or the like to look at the books?

I would say if you are seriously looking at this then yes as you will see the exact business figures and not just something they say they are making. It will also tell you if trade is in decline.

Also contact local planning dept. to check their is no supermarket / bypass plans in the system for the area

A bank would need a business plan and a summary of the books and forecast before they would lend that type of money.

then you would need to apply to PO to be accepted as a sub post master

mrs_tooti-frooti

I do have retail experience just not post office, thats why I say that £470,000 seems a lot for the shop.

I didn't realise that the PO wasn't 'sold' as such and you apply for the position.

Thank you for all your comments. They are all appreciated.

Atidi

As others suggest think very carefully before embarking on this venture.

Small post offices are closing down all the time. Our local post office shut down about 2 years ago even though the post office (and the local politicians & councillors) didn't want it to. No one was prepared to take it over.
They are still stuggling to find a new sub-postmaster. Meanwhile the shop remains empty & shut.

The post office have even asked other local shops (and even a major supermarket) if they would take over the post office business into their existing stores, but no one is showing any interest whatsoever, despite a clearly identifiable need for such a local service here.

Ask yourself how you think you can make a business pay when so many others are not interested.

Ask yourself if there was any profit in this, what are the current owners selling up for. I know you say it's to retire, with with most shop workers only being paid minimum wage, the owners could just employ a couple of people to run the shop ... and trouser the profit for themselves.

But instead they are hoping for a windfall by selling ... something that probably has no value at all and would probably just end up as a liability. (the building probably has a value, but unless you can get planning permisiion to change it into entirely residental use, then you'll probably be hit with a high rates bill every year and it's value will be limited in this economic climate)

If you really want to run a post office, you can come and run ours. I understand there is no purchase price and the landlord is even prepared to thow in a years free rent just to get the building re-occupied.

System

Its a risk but you have to take some risks to be successful