Opportunities
Renovation & Remodeling for Real Estate Investors in Houston
Owner works part-time and does no field work!
Specifications
The owner of this company works part-time and does no field work! With an infrastructure set up to support larger clients and maintain relationships, a highly skilled staff of 12 is already in place and continues to build solid relationships with their clients. Employees include PT Admin Assistant, PT Office Manager, PT Network IT, Operations Manager, Residential Estimator, (2) Superintendents, Commercial Specialist, (2) Client Support, Document Control, Inside Sales and field crew. Clients include corporate real estate investors, private entities, some residential work, along with commercial and military when needed. Assets include $261k worth of equipment, $124k in vehicles, $180k in A/R, and $210k in work-in-progress. The 4,200 sq. ft. warehouse, ½ acre equipment yard, and 2,500 sq. ft. office building currently used is available for sale or lease, separate from the sale of the business.
The team works all over Texas, with 70% of their work being done in Houston, 20% in San Antonio, and 10% in Dallas. Services vary from complete home remodels and home additions, to maintenance, repair, and interior design. The owner’s position has been designed to be strictly part-time operations and financial work.
Priced at $1,200,000, a down payment of $150,000 returns $221,312 in the first year after debt payments – a 148% return on investment! The current owner is willing to stay on for 6 months to 1 year, if desired. Growth opportunities include expanding into business to consumer residential projects as well as taking on more governmental commercial contracts.
Business Highlights
- Year Established: 2004
- Location: Houston, TX
- Service Area: Houston (70%), San Antonio (20%) and occasionally Dallas (10%)
- Services: Light Remodeling and Renovating
- Clients: Large real estate investors, private entities, some residential, commercial and military
- Building: 4,200 sq. ft. warehouse; 1/2-acre equipment yard; 2,500 sq. ft office building (3 offices, 15 workstations, conference rooms, etc.)
- Reason for Selling: New non-competing endeavors
- Employees: 12: PT Admin Assistant, PT Office Manager, PT Network IT, Operations Manager, Estimator, (2) Superintendents, Commercial Specialist, (2) Client Support, Document Control, Inside Sales and field crew
- Hours: M-F 8-5
- Seller Training Period: 6-12 months
- Growth Opportunities: Take on more governmental commercial projects
- Current Owner’s Responsibilities: Part time operations and financials; no field work
Financial Highlights
List Price: $1,200,000
- Cash Flow: $374,772
- A/R: $180,000
Cash Flow
| Description of Financial Statement | Tax Return Total | Tax Return Total | Tax Return Total | Tax Return Total | Notes |
| 2019 | 2018 | 2017 | 2016 | ||
| GROSS SALES | $2,442,221 | $2,115,793 | $1,804,951 | $2,405,220 | |
| Net Income Shown on Financial Statement | $29,868 | $-235,826 | $-18,837 | $14,653 | |
| ADDBACKS | |||||
| Compensation to Owner | $97,000 | $97,000 | $97,000 | $97,000 | |
| Other unrelated Salaries | $12,000 | $18,000 | $18,000 | $18,000 | Family members - don't actually work in the business |
| 11% Tax on total W2 Salaries | $11,990 | $12,650 | $12,650 | $12,650 | |
| Depreciation | $7,474 | $97,457 | $7,657 | $11,940 | |
| Interest | $42,778 | $11,251 | $8,848 | $6,969 | |
| Auto-Personal Use | $40,129 | $8,508 | $8,508 | $8,508 | |
| Meals & Entertainment | $1,503 | $2,032 | $788 | $1,485 | 70% personal |
| Cell Phones | $4,200 | $4,200 | $4,200 | $4,200 | Cell Phones- $350/month for 4 personal lines |
| Travel | $21,791 | $23,920 | $4,055 | $14,732 | 90% personal |
| Insurance | $8,343 | $11,644 | $11,644 | $11,644 | |
| Amortization | $31,656 | $31,658 | $31,657 | $31,656 | |
| Contributions/Donations | $3,193 | $1,606 | $1,584 | $0 | |
| Employee Benefit Plan | $5,881 | $18,149 | $11,454 | $0 | Paid for owner & family |
| Management fees | $116,966 | $251,972 | $194,242 | $140,302 | |
| MBA Program | $0 | $4,728 | $0 | $0 | |
| FR Assoc Deferred Payments | $0 | $24,285 | $25,790 | $10,643 | |
| GM Wage | $-60,000 | $-60,000 | $-60,000 | $-60,000 | |
| TOTAL ADDBACKS | $344,904 | $559,060 | $378,077 | $309,729 | |
| Seller's Cash Flow = Total Addbacks + Net Income | $374,772 | $323,234 | $359,240 | $324,382 | |
| Profit Margin | 15.35 % | 15.28 % | 19.89 % | 13.49 % |
Typical Clients
- Real estate investors
- REITs
- Private entities
- Residential projects
- Governmental commercial contracts
Specific information regarding clients is available upon the receipt of a signed Non-Disclosure Agreement.
Services
- Complete home remodels
- Home additions
- Roofing
- Concrete projects including foundations, driveways, flat work, etc.
- Interior design
- Maintenance and repairs
Service Area
Employees
- PT Admin Assistant
- PT Office Manager
- PT Network IT
- Operations Manager
- 1 Estimator
- (2) Superintendents
- Commercial Specialist
- (2) Client Support
- Document Control
- Inside Sales
- Field crew
Growth Opportunities
- Expand into business to consumer residential projects
- Take on more governmental commercial contracts
Valuation
The Firm Advisors used a cash flow valuation methodology to determine the purchase price of the business.
Cash flow is the sum of business net income plus any owner perks and any non-onward expenses. Then we prescribe a multiple based on 20 parameter which valuate the health of the business. For this valuation, we used the 2019 Cash Flow value making the business price much more favorable to the buyer.
The formula used is as follows:
Cash Flow x Prescribed Multiple = Fair Market Value
With this information, the computation is as follows:
$374,772 x 3.2 = $1,199,270
Funding Example
Purchase Price: $1,200,000
| 12.5%Buyer Down Payment | $150,000 | Must be unborrowed funds |
| 12.5%Seller Financing or Equity | $150,000 | 5-year term at a rate of 4.50% = a monthly loan payment of $2,796 |
| 75%Bank Loan | $900,000 | 10-year term at a rate of 6% = a monthly loan payment of $9,992 |
- Cash Flow: $374,772
- Annual Payment:
- To Seller: $33,557
- To Bank: $119,902
- Net Profit (after expenses and loan payment): $221,312
Funding Details
Business:
Offer Price: $
% Buyer Cash Down at Closing: $
% Seller Carry Back via Promissory Note: $
year term at a rate of %
% of Purchase Price secured by Buyer and Seller
Total Bank Loan Need: $
% of Purchase Price
Desired Loan Type:
Desired Bank Terms: year term at a rate of %
Total Business Assets, Inventory, and A/R: $
Total Undercollateralized Loan: $
Loan Payments
| Monthly Payment to Bank: | $ |
| Yearly Payment to Bank: | $ |
| Monthly Payment to Seller: | $ |
| Yearly Payment to Seller: | $ |
| Total Monthly Debt Service: | $ |
| Total Yearly Debt Service: | $ |
Conclusions
Fixed Charge Coverage Ratio
The bank will require a minimum ratio of 1.5 to be lendable.
|
Cash Flow: 2019 Cash Flow |
$ |
| Annual Debt Service: | $ |
| RATIO: |
Buyer's Net Operating Income (NOI)
The amount of money the Buyer will retain as profit.
|
Cash Flow: 2019 Cash Flow |
$ |
| Annual Debt Service: | -$ |
| NOI: |
Buyer's Return on Investment (ROI)
The rate of return on the Buyer's down payment.
| Down Payment: | $ |
| NOI: | |
| ROI: | % |
Attachments
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210 N 78th St. 2nd FloorOmaha, NE 68114
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