An emailer asks: If a business property is in foreclosure, what is the likelihood of getting access to the previous financial records? Business in question is a bar and grille. Is it possible to estimate a budget without these records?
How easy is it to get those previous financial records? Very hard, if you’re thinking some higher authority is going to turn some legal switch somewhere and make it happen for you, and relatively easy, if you realize that the people who now own that business — some bank that’s foreclosing it, or the previous owners who have failed to pay debts — would probably be delighted to have somebody like you interested in taking it over.
Don’t get stuck on the legal red tape here, get on the phone and start calling, see who the people involved are, and tell them what you want. They’ll probably be happy to know you’re interested, and they’ll want to at least appear cooperative.
Can you estimate a budget without these records? You better be able to; if you can’t, run, don’t walk, away. In fact you’d better be prepared to estimate a budget on your own, whether or not you get these records.
Always compare previous financial records to your own common sense and your own knowledge of the industry. Since you’re probably thinking about owning and operating a bar and grill, you should have a good idea already about how many people it takes to run that business, given it’s size and location and such, and how much each person would normally earn in a month. You should also have a pretty good idea of what the monthly rent or mortgage is, what the furnishings are worth, and the other key elements of a budget.
It’s never a good idea to just believe somebody else’s financial reports, particularly not when it is somebody being foreclosed who might look at you as a way out of a difficult financial problem. Be skeptical.