Questions, Questions

The meeting was all four of us and the Vendor and his Son at the Blue Bell, we arrived, had coffee, chewed the fat and got down to business.
It seems that just before Christmas the Vendor had received a list of 92 questions from our solicitor, many he felt were unreasonable. Apparently when he bought the place freehold the process had been extremely simple and short and didn’t like this long protracted procedure, we agreed to get our solicitor to ease up on the requirements, The Solicitor, in fairness, was only protecting our interests but perhaps in this case was being a little overzealous. We explained the problem with the VAT, and offered our remedy, it was a worry as it was rather radical, and actually quite obvious, and something of a surprise that the “experts” hadn’t come up with it.

Post Christmas Blues

There only option apparently open to us was that the vendor should put his son on the deeds, at a cost to him of around £3k, he wasn’t willing, There was also something else wrong, couldn’t tell what but the vendor was sounding difficult and like he was wanting to pull out, he’d intimated to me previously that if this sale didn’t happen he would keep the place and run it for another 5 years!!!. We arranged a visit in early January 2007, we had another option, well Nathan had come up with it, run it past the solicitor and accountant and they agreed with it. And wondered why they hadn’t come up with it.

How much Stamp Duty?

Now since he isn’t involved in the purchase of the property, they effectively have two businesses and since we are buying the building it becomes an investment opportunity, not a business and vat is payable on the value of that building, in this case, requested to be £515,000. That’s a lot of VAT, and a lot of Stamp Duty. Now the VAT is coming back to us but we simply did not have that kind of cash available to us, and we doubted that LloydsTSB would be willing to cough up.

A Christmas Story

Now the waiting game, whilst the Solicitors do their thing, and Christmas is now approaching. I get a call from Christie & Co, a rather confusing and worrying call, Due to the way that the vendor had set up his business; we would have to pay VAT on the purchase. EH? Frantic calls to Solicitor. Bit of background research and this is what we are having to contend with discovered on 23rd December, just before closing down for the period….When the Vendor originally took over the property it was as a tenant, whence he started his business and then at some point incorporated his son into that business along with his wife, about 4 years ago he and his wife bought the freehold, i.e. the building. Notice what’s missing. Yes… The Son.

Win the bidding war

We received our offer from Steve Smith at LloydsTSB who had already been impressed with our presentation and credentials with the Hotel in Alston, who was offering to give us £435,000 + a 15K Overdraft facility.

Pinders to The Rescue

Anyway, lets instruct Survey, and given our previous experience, lets use another company. Pinders, again accepted by most banks, in particular the two banks leading the running to fund our venture. Pinders spend a long time returning the result and at one point it may have returned a value of lower than the offer, but no, in it comes at £600k. So we instruct our Solicitor. Peter Amos of Stockdale Reid in Whitley Bay and simultaneously finalise Funding.

How Many Pennies?

A call from Christies confirmed the asking price of £610,000…..OUCH!!, but after a little deliberation, we decided that it was fairly good value.
Offer time! We throw in at £575k, not surprisingly declined. We go back with £600k, £10 below asking.
At this time the property was not even on the market, and I’m now informed that the asking price was in fact £625k. Hmmm, here we go again. The Offer is accepted…..Great but was it our imagination that the price went up £15k between us visiting and offering??

We Get Our Bell Rung

Its now August (obviously not NOW! Its February 2007 but this is me recounting the heady Summer of 2006) and we start again. I get the heads up from the Agent at Christie and Co, place coming up for sale should have further details soon but it was a Pub, restaurant, 5 Rooms, accommodation. BUUUUUUT higher than our budget. Well it costs nothing to look, so off we went to The Blue Bell Inn. On the A697, just 4 miles south of Coldstream.
Great Location, and our visit demonstrated a very fine establishment with 5 Very good quality letting rooms, 60 odd cover Restaurant, nice accommodation, well looked after and showing good, if slightly depreciating profits, The vendor was retiring and had possibly taken his foot of the gas a little.

Black Bull falls over

Christies informed us that the previous bid had been accepted. I called the vendors who had not been informed of our matching, however they decided to stick with their deal with the Brewery. Ah Well, back to the drawing board!!

Black Bull Bids

A couple of visits later and a bid went in. Less than asking but that’s the norm. the Agency; Christie & Co received a higher bid the same day from a brewery, Higher than ours but still below asking. We informed Christies that we would match it. We were confident since we knew the vendors we not keen to give the place over to a brewery and they were in no real rush to complete.

Bulls Eye...Dead Centre!

So, where to next? We look at the details on a few places but nothing to excite us, til we find details of a place in Haltwhistle; arguably the Centre of Britain and a place very close to The Centre of The Centre of Britain. The Black Bull – Small place, very pleasant and helpful vendors, very good profits, right price – substantially less than the Alston place – good reputation for quality food, potential for accommodation.

Lawyerly Advice

This worried us more than a little however we proceeded and set a date for contract exchange, the day approached and information was still lacking, with the vendor pushing for exchange.
The day before exchange and we received communication from our Solicitor voicing his concerns, and his suggestion that we were looking at long term problems made us realise that we should reconsider.
We pulled out…..STOP! Nathan received a number of pretty aggressive calls from the vendor, but hey, we’d been saved.

"Survey" below expectations!! (Do I need to explain it?)

When we received this survey we (and by we I mean, ourselves, lenders, Advisors etc) were astounded by the lack of quality. No further inroads into the financials, and in particular taking the vendors word that all was well, one statement went like this “ we noted signs of damp at the top of the wall, the vendor informed us that this had been treated and was awaiting painting”. Well that’s OK then!! No need to check the accuracy of that statement then, no need to request sight of invoices showing the work carried out, no proof necessary!!, this was just one example. Shoddy, very shoddy!

Thats "survey" it goes (see what I did there?)

We arranged a formal viewing. Even better, a good portion of land too, apparently, possibly usable for development. Asking price, just about at our budget, so we made an offer, which with a bit of dickering was accepted…..woohoo, we were on our way to ownership. We arranged funding (which I’ll detail later) and thus followed months of work. Strangely the vendor was struggling with a number of things, firstly we had a real struggle getting any kind of structured financial details, lots of requests from solicitors etc, but we could get barely more than sketchy details. Strange!! Anyway, full of enthusiasm we instructed a Commercial Survey, we commissioned Christie & Co. good reputation, international company, results accepted by most banks.

The Moors The Merrier!

Nathan and I were driving back to the North east after visiting a property in Shap, Cumbria, when we drove into the Town of Alston, A lovely place, The highest Market Town in the UK just over the border into Cumbria, we discovered a Hotel which Nathan recalled from his communications with an Estate Agents, He made a call to confirm and we ventured into the Hotel for a quick covert pint and a look see. We were both very impressed, good Size, well laid out, land to develop into terrace/patio to deal with the Smoking Ban due in Mid 2007. Food Service, Letting Accommodation, Managers Accommodation. It ticked all the boxes. The Location worked too. It sits beside one of the best driving roads in the country giving us access to the tourist and also the Bikers, very close to the Pennine way and the Coast To Coast routes which would bring in lots of business from walkers and cyclists. Close enough to the town to give us some local business.

Our thought on Properties

We viewed a number of places from Shap to Middleton-In-Teessdale, many of which took one look and no further action taken, other elicited a second look and in depth conversations regarding pros and cons (the comments we have to make about premises, will define whether or not we name them)

The Story So Far

The Story So Far

Sourcing Premises

When we decided that Running our own property was for us, we considered a number of things, Style of property, Style of service, Demographics of the areas etc and we decided that none of us wanted Urban problems, of course the potential for greater profits are there but at the cost of massive problems, Bouncers, CCTV, Violence towards Staff, and all the things that I’m sure everyone knows about Urban Premises, Of course each to his/her own and we appreciate that these premises have their place but its not for us. So, Rural Pub, strong leaning towards Food Sales, and some accommodation would be nice, especially if it required little or no work to bring up to spec. Budgets were discussed which would clearly have an effect on location, we set a budget of £500,000 which would buy less if we decided on somewhere like the Lake District, where property and Land is at a Premium. Clearly we wanted to be within travelling distance from our homes which could be a bit of a problem since we live 45 minutes apart, but we kind of loosely and informally agreed that Eastern Cumbria, Northumberland, Durham and Tees Valleys areas were where we would focus our efforts.