Starting Out in Commercial Real Estate (Questions)
For starters, I'm primarily an insurance agent/mortgage broker but I'm also licensed as a real estate agent. I've only done residential so far but recently I've had some opportunity for commercial real estate. I've been asked by a family friend to find a liquor store for a group of investors with $2.5 million in capital.

I understand I might not be the most experienced but I'm very eager to learn this industry, and am receptive to any information you guys can give me. I don't know any commercial real estate agents to talk to because we're a small family brokerage that focuses on residential, so I'm going to you guys. I'm extremely green so this is what I've done so far since we've received information of this deal.

I've looked into local MLS, LoopNet, BizBuySell and searched for businesses with liquor licenses with very little success. The few businesses I've found, are unwilling to cobroke, and the one that I found in our area is also a restaurant which my clients have informed isn't the direction their heading. 

So my primary questions are:

1. How do I find listings after all my obvious resources are exhausted?

2. Do I just cold call liquor stores in my county and ask them if they are willing to sell?

4. How should I pitch it in my cold call?

3. What do I ask for? (Sales Price, Revenue, Location, Inventory, License Status)

And if there's any great resources you guys can give me to learn more about CRE (Like how to analyze deals.), I would be eternally grateful.



[{"id": "djy5pjw", "text": "People don't sell liquor stores that are making money.  Just doesn't happen.  Look for good demographics, good strip center with frontage on a fairly high traffic road.  They can get their own liquor license when you find a location.", "replies": [{"id": "djy62qu", "text": "I agree (liquor license attorney and commercial realtor here). Some places DO sell if they are retiring, but in this case it seems that for that amount of money it would be easier to find an empty slot and start from scratch. \n\nThe other part of it is that, at least where I am, all the liquor store owners sort of know each other or, at least, can get a feeling about which stores are doing well. My point is that it may be difficult to break in to that works with no connection to it. ", "replies": [{"id": "djybgfa", "text": "Weird, I was just told by a commercial real estate agent this. Do you think cold calling liquor stores is a good idea?", "replies": [{"id": "djyne4u", "text": "It couldn't hurt, but I feel like nobody is going to give up a successful liquor store without you paying a huge premium for it. I guess my argument is that you could spend less money and start your own thing. \n\nThe flip side of that is that someone may want to sell you a distressed liquor store, but unless you know how to turn the store around and do better, it doesn't make a lot of sense to purchase a bad asset... Unless it's really cheap. \n\nOn the other hand, there may be a good reason to purchase: location, difficulty in getting a license otherwise...", "replies": [], "depth": 4}, {"id": "djynr1l", "text": "One thing I would say, though: when you find a location, don't do anything until you check zoning and licensing requirements. You don't want to be locked in to a great place and then realize that the reason why there are no liquor stores in the area is because it's not zoned for it. Even after that, you may want to put contingencies in your contracts which would allow you to back out if you can't get a license. (This is where residential and commercial brokerage can differ greatly). \n\nFor that matter, you may want to explore each of your party's qualifications to hold a license. You don't want to be far down the road to acquiring a property only to realize that one of the investors can't, by law, hold a license. Better to get that sorted out as best you can first. ", "replies": [{"id": "djyqgkj", "text": "Wow, thanks so much for all this. Since your a lawyer, can I ask what would stop someome from being able to get a liquor license? I know it will differ from place to place but maybe some generalitied. I'm not sure how hard it is to get in my area but I know they are really expensive. \n\n", "replies": [{"id": "djzol2c", "text": "Felonies tend to disqualify people. Where I am there are bans against people or their relatives who hold governmental positions too. Ymmv. ", "replies": [], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}, {"id": "djybe7e", "text": "Thanks letting me know! I guess that's kinda true for all businesses though. What are the good demographics I'm looking for?", "replies": [{"id": "djyck9c", "text": "Not really true for all businesses but especially liquor stores.  They just turn into simple to operate cash cows if the location is good and managed well.", "replies": [], "depth": 3}], "depth": 2}, {"id": "djzrm96", "text": "&gt; They can get their own liquor license when you find a location.\n\nThe licenses are basically what you buy some places.  New issues some places by me may not occur during my lifetime.", "replies": [{"id": "djzsczh", "text": "That's valuable then.. liquor licenses are unlimited here.", "replies": [{"id": "djzt3ao", "text": "yeah, just saying op needs to figure this stuff out ;p  \n\nWe have some types of non quota licenses and some places are under quota (I work across two states, which side of the border you are on makes a significant difference).  Also hilariously enough here if you are over quota you can transfer from other over quotas too so it winds up a bit of a free for all (Again in some places, others will just say join the wait list, its probably about 30 years long).  \n\nliquor license laws can be complex :)  There is lots of good help here but if he doesn't understand how they work by him its hard to understand his situation\n\n", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "djzrh7l", "text": "You really should refer this to a commercial agent familiar with liquor license laws.  Since I'm sure you won't though, here ya go.  \n\n1.  You don't.  If they are listed what you listed probably would have turned them up.  \n\n2.  Yes.  You should pull the list of liquor licenses in the areas you are considering and contact them.  \n\n3.  You should say you are representing a buyer who has interest in their business, and you'd like to know if they are open to discussing a sale.  \n\n4.  Sales price- you are going to get \"well how much you want to pay?\"  I ask that question more like \"Well I think your location could work here, but I haven't done anywhere near enough research to figure out what kind of price is fair.  Did you guys have anything in your mind so I don't waste a bunch of your or my time here?\"  \n\nRevenue- Yeah you need this.  You will need tax returns to verify at some point (I'd really try to get them as fast as there is interest).  \n\nLocation- I mean you should know this.  I don't get why you'd ask this.  If you called me and asked if I wanted to sell then asked me where my property/business was I'd figure you aren't real serious.  \n\nLicense Status-  You should know this too prior to calling.  \n\nThese deals are much more business brokerage specific than RE actually.  If you buy an existing business you should commission it higher.  Your valuation is going to be based off a combination of proforma income, existing income, license value, equipment etc + inventory.  Inventory value comes later and your buyers need to get into that regardless so ignore that until later in the deal.  \n\nYour people need an attorney who does this.  They actually are a good source of leads too.  Find one that only does licenses and bring them into your transaction.  \n\nYou need to understand how licenses work by you.  Are they quota?  What areas are below/above quota?  What are the rules for transfer?  How much is a license worth if you have to transfer?  What power does the city have to object?  Will they?  \n\nI sincerely hope you have a signed rep agreement here.  If this is a \"well my buddy wants a liquor store, he will spend 2.5 mil, you got anything?\" where they are shopping this to 25 people skip it.  This is a hugely time intensive project unless you get real lucky.  If you were already an expert in this you can fish around and keep their name, but starting from scratch you can expect this to go nowhere a large percent of the time.  \n\nYour coop comment concerns me.  If I rep a buyer I don't give a shit.  They are contractually obligated to pay me so it is winding up in the final agreement or the buyer will just handle my comp.  \n\nGood luck!", "replies": [], "depth": 1}, {"id": "dk36e53", "text": "what state are you in OP? ", "replies": [{"id": "dk37xsc", "text": "The great state of New Jersey", "replies": [{"id": "dk4izm0", "text": "looks like it's controlled at the municipal level. I cannot find any information on caps on the number of licenses (you can find this in Ohio for example). Probably best to contact an attorney in the town where you're looking to open. ", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}]