Hi! I am looking to buy a fitness center that grosses 175k a year and has a cash flow of about 70k. It has 175k in electronic draft contracts from members alone. The questions i have are how much more should i borrow than the asking price of 175k? It seems to make good profits. Also i will not qualify for such a loan but have wealthy family member that certainly can. Can I get the loan by their co signing?

It seems to me as if you are looking for 100% financing of the purchase price. Normally, you will not be able to get a loan under such conditions.

The question then becomes, How wealthy is your family member?

Dear Ann:

If you are confident of the revenues that the fitness center will bring you, you should go ahead and buy it. If the asking price is $175K then dont be shy to quote your own price. Before you do, have your finances in place so the seller does not have too much time to deliberate.

If you quote $150K for the fitness center, there are numerous finance companies that can help you finance this deal. I'd be glad to help as well, as we are very creative in how we structure deals for our clients.

If you do not qualify for the loan, your wealthy relative may be able to co sign for it. It takes 48hrs to fund a small amount such as $ 150K. However, ensure that the company is incorporated under your name and you are identified as the borrower. Thus, you will be liable for all loan repayments.

There is only so much that I can advise without looking at your paperwork. If you need any advice/suggestions feel free to give me a call.

Good Luck!

There are only a few investors catering to special purpose real estate deals but when it comes to business loans, there are a slew of options that you have.

My suggestion is to form a business plan if you don’t already have one, with a convincing argument i.e. the ET (electronic transaction account) contracts and shop around. You will not get 100% financing as any investor/institution will either want personal equity OR will look for valuation of the business to be much higher than $175K. Be sure to check out the site admin's past posts on ratio etc. It’s a good business to be in. People will not stop working out any time soon.

Best of Luck!

There are other alternatives. Find a lender that will lend you 50% on the loan amount, and is directly affialited with the SBA. They will typically loan 40% with not to much effort. Then you have your 90% loan. IF purchasing a club of this nature Im sure you will be able to verify 10% of own funds. Im not sure what city you are in, but find a SBA affiliate in your area, This is probably your best bet. I am affiliated with both companies and have found its much easier than finding a typical 80% loan at a higher rate. Any qustions send me an email. You will need a commercial appraisal though, probably a limited summary. They can be expensive. Good luck!! Any questions dont hesitate to write me an email.