HELP ME UNDERSTAND THIS PROPERTY LISTING

[BigRigGin]

• Leasehold: £119,950
• Rent: £20,000
• Turnover: £265,000 (£5,096 Per week)
• Net Profit: Not Applicable

If I wanted to rent this property.

Leasehold : £119950 - what does this mean to me? Do I have to pay this to somebody ?
Rent : Self explanatory - Rent is £20k P/A
Turnover : Self explanatory - £265,000 (£5,096 Per week)
Net Profit: : Self Explanatory - Not Applicable

 

[Mark T Jones]

• Leasehold: £119,950
• Rent: £20,000
• Turnover: £265,000 (£5,096 Per week)
• Net Profit: Not Applicable

If I wanted to rent this property.

Leasehold : £119950 - what does this mean to me? Do I have to pay this to somebody ?
Rent : Self explanatory - Rent is £20k P/A
Turnover : Self explanatory - £265,000 (£5,096 Per week)
Net Profit: : Self Explanatory - Not Applicable

Unless I'm missing something, the £119K is a lease premium - IE money you have to stump up just to go into the building.

I'd be questioning what it's for - in today's market I'd be expecting incentives, not premiums.

Turnover may or may not be a useful figure - mostly depending on how how it's derived and whether you intend to change the offering.

 

[Paddy @ Hatch]

He must be selling his business for £119.950. With that you would get the remainder of the lease (check when it expires and whether it's renewable) stock, good will, fixtures and fittings, brand, staff etc.

 

[fisicx]

Looks like they aren’t making any profit.

 

[Newchodge]

Why is net profit not applicable. Has it been running at a loss?

 

[BigRigGin]

Thanks for clarifications

 

[japancool]

I'm a little confused as to why anyone would ever buy a lease. I mean, you're going to pay the rent on the place, why would a lease be considered an asset? Genuine question.

 

[Mark T Jones]

I'm a little confused as to why anyone would ever buy a lease. I mean, you're going to pay the rent on the place, why would a lease be considered an asset? Genuine question.

It's not unknown to buy a lease in an absolutely premium location (essentially buying footfall) . At one point it was the norm,but died a death after the banking crash.

More likely you are actually paying for what's in the premises- the value of which will be dependant on quality and relevance

 

[Paddy @ Hatch]

I'm a little confused as to why anyone would ever buy a lease. I mean, you're going to pay the rent on the place, why would a lease be considered an asset? Genuine question.

People pay to have a lease in the best locations.

The figure above is the sale of the business so includes lots of other bits in addition to the lease. The owner might have spent £50k refurbing it, buying new fixtures and fittings. There'll be stock, some value in the good will, loyal customers etc. It might be an artificially low rent also.

 

[Paddy @ Hatch]

Why is net profit not applicable. Has it been running at a loss?

They just don't want the world knowing, so you just have to ring and ask, and maybe sign an NDA.

 

[BigRigGin]

Thanks again for the clarifications, it was the leaseho;d stat I didnt fully understand.

 

[WaveJumper]

And the length of the lease is ?