Return To Opportunities List

Opportunities

Professional Renovations for Multi-Family Housing

Client base is predominantly professional portfolio real estate holders!

CASH FLOW
$454,327

Specifications

  • Price
    $1,400,000

  • Revenue
    $2,744,636

  • Equipment
    $261,120

  • Down Payment
    12.5%

  • Location
    Houston, TX

  • Account Receivable
    $175,000

  • Service Area
    Houston (70%), San Antonio (20%) and occasionally Dallas (10%)

  • Reason for Sale
    New non-competing endeavors

  • Valuation
    $1,408,414

  • Profit Margin
    17%

  • Employees
    12: 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

  • Intangible Assets
    Solid transferable relationships and communication with clients, adaptability working with larger businesses and corporate entities

The client base is predominantly professional portfolio real estate holders for this company! Based in Texas, this business focuses on complete home remodels (70%), home additions, and some roofing while also providing maintenance and repairs, making them a versatile one stop shop in the industry. Providing services to half of Texas including Houston over to San Antonio and up to Dallas, clients include large real estate investors, private entities, and some residential. A small amount of commercial work includes strip mall centers, government contracts and housing authority projects. The current owner does not do field work and oversees operations only part time.

 

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. Assets include 8 vehicles, 9 trailers, 2 portable pressure washing rigs, manlift, fans, dehumidifiers, water extractors, excavator, 5 commercial mowers, landscaping equipment, computers, office equipment and scanning camera.

 

With an infrastructure set up to support larger clients and maintain relationships, this experienced staff of 12 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. Work flow controlled with integrated order management system, maintains A/R and contractor A/P.

 

The current owner is willing to stay on up to 6 months, if needed. Responsibilities include operations, financials, sales and client relations. 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: Complete home remodels (70%), home additions, roofing, concrete, maintenance, repairs, interior design and engineering
  • 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, Residential Estimator, (2) Superintendents, Commercial Specialist, (2) Client Support, Document Control, Inside Sales and field crew
  • Hours: M-F 8-5
  • Seller Training Period: Up to 6 months if needed
  • Growth Opportunities: Take on more governmental commercial projects
  • Current Owner’s Responsibilities: Part time operations and financials. No field work

Financial Highlights

  • List Price: $1,400,000
  • Gross Sales:
    • 2019: $2,744,636
    • 2018: $2,115,793
    • 2017: $1,804,951
  • Cash Flow:
    • 2019: $454,327
    • 2018: $383,233
    • 2017: $393,450
  • Assets Included in Purchase*
    • Equipment: $261,120; 9 trailers, 2 portable pressure washing rigs, manlift, fans, dehumidifiers, water extractors, excavator, 5 commercial mowers and landscaping equipment, computers, office equipment, scanning camera etc.
    • Vehicles: $123,902 6 Crew Vans, (2) Ford Explorers
    • A/R: $175,000
    • WIP: $185,000
    • Prospective Projects: $1,500,000
    • Intangible Assets: Solid relationships and communication with clients, adaptability working with larger businesses and corporate entities 

*amounts may vary

Cash Flow

Description of Financial StatementP&L Statement
Combines
Tax Return
Total
Tax Return
Total
Tax Return
Total
Notes
2019201820172016
GROSS SALES$2,744,636$2,115,793$1,804,951$2,405,220
Net Income Shown on Financial Statement$140,169$-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$18,000Family members - don't actually work in the business
11% Tax on total W2 Salaries$11,990$12,650$12,650$12,650
Depreciation$9,584$97,457$7,657$11,940
Interest$12,778$11,251$8,848$6,969
Auto-Personal Use$32,259$8,508$8,508$8,508
Meals & Entertainment$1,479$2,032$788$1,48570% personal
Other$4,200$4,200$4,200$4,200Cell Phones- $350/month for 4 personal lines
Travel$21,984$23,920$4,055$14,73290% personal
Insurance Premiums for Owners: Health, Life, Auto$12,386$11,644$11,644$11,644
Amortization$31,657$31,658$31,657$31,656
Contributions/Donations$2,115$1,606$1,584$0
Employee Benefit Plan$7,760$18,149$11,454$0Paid for owner & family
Management fees$116,966$251,972$194,242$140,302
Lost investment $0$0$0$3,500
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$314,158$559,060$378,077$313,229
Seller's Cash Flow = Total Addbacks + Net Income$454,327$323,234$359,240$327,882
Profit Margin16.55 %15.28 %19.89 %13.63 %
.Profit Margin: 17%

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

Employees

  • PT Admin Assistant
  • PT Office Manager
  • PT Network IT
  • Operations Manager
  • Residential 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 Details

The Firm used a cash flow valuation methodology to determine the purchase price of the business. 

The formula used is as follows:

Cash Flow       x          Prescribed Multiple     =          Fair Market Value

Cash flow is the sum of business net income plus any owner perks and any non-onward going expenses.

A multiple is prescribed by a 20 question, 100-point parameter ranking system that is used to analyze the current business health. Each question is based on a scale from 1 to 5: 1 being low, 2 below average, 3 average, 4 above average, 5 high. The average of the responses sum is the business’ prescribed multiple.

For this business, the 2019 cash flow was used with a prescribed multiple is 3.1.  With this information, the computation is as follows:

$454,327         x          3.1       =          $1,408,414

The fair market value found above positions the business list price at $1,400,000.

Funding Example

Purchase Price:                          $1,400,000

12.5%Buyer Down Payment:   $175,000

12.5%Seller Financing:            $175,000

75%Bank Loan:                      $1,050,000

 

Seller financing 5-year term at a rate of 4.50% equals a monthly loan payment of $3,263.

Bank loan 8-year term at a rate of 6% equals a monthly loan payment of $13,799.

After business expenses and loan payments, a buyer with a 12.5% down payment of $175,000 would retain a profit of $249,595, which results in a 143% return on investment in the first year.

A lender is required to have a minimum 1.5 coverage ratio for any business loans extended. At a proposed purchase price of $1,400,000 with the terms listed above, the coverage ratio is 2.22. 

Please note that the decision of whether to extend a loan on any sale belongs to the bank, and this document does not guarantee specific terms or verify that financing is available. 

*The Firm Business Brokerage is not a real estate brokerage and therefore the staff will not handle any aspect of the lease, sale or purchase of real estate.

Purchase Price:

$1,400,000

$
%
OR
$
%
OR
$
Years
%

Bank Loan Needed: $

Years
%
$
$
$
$
$

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

Document Title / Description

This folder is empty.

Access to this Deal Room is restricted

Would you like to access the deal room?

Yes, please

Interested in
this business?

Complete the following information to sign an NDA and see more details!

Already have an account? Log in here.

Click to download NDA form

Print, sign and send to:

210 N 78th St. 2nd Floor
Omaha, NE 68114

Or fax to:

f 402.939.0857

Thinking of Selling?
When selecting an M&A firm, please use the following Scorecard: click here for our M&A Scorecard


The Firm is not a real estate brokerage and therefore the staff will not handle any aspect of the lease, sale or purchase of real estate.