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  • Mandate: 32006
  • Added: 18 Apr 2018
  • 1383

Investment property with great potential

KwaZulu-Natal, Durban
Mandate 32006
Added 18 Apr 2018
R 7,500,000* ZAR
Stock: R 0
Assets: R 0
Gary Gower
Aldes Ambassadors
KwaZulu-Natal, Dolphin Coast
KwaZulu-Natal, Dolphin Coast

A well positioned property in Pinetown that is ready for redevelopment

Investment property with great potential
R 7,500,000* ZAR
Stock: R0
Assets: R0

A well positioned property in Pinetown that is ready for redevelopment

To gain access to more business info
please supply us with your details below

Fully describe the business's activities?
The business started as a restaurant and expanded into offering Bed & Breakfast facilities

How long has the business been established?
Approximately 26 years

How long has the owner had the business?
Since inception

Fully describe this property and its income earning activities.
This property is situated in Pinetown and consists of two adjoining properties that have been consolidated into one property. There is currently a restaurant situated on the property which has been operating for many years but is in need of upgrading. The property is also used as a bed and breakfast establishment and consists of the following accommodation: 12 x double rooms; a cottage with one bedroom, lounge and bathroom; another cottage with one bedroom, bathroom, walk-in closet and lounge; a three bedroom house. The B & B charges a rate of between R550 and R750 per night and occupancy ranges from 50% to 75%. The majority of guests are company employees who are in the area for work purposes. The restaurant has been in operation for many years and is still trading profitably although it could be doing much better with an upgrade and some advertising/marketing.

What is the approximate age of the buildings?
There are various buildings that have been built on this property so the ages are different

What is the zoning of the property and what can be developed thereon?
The property is zoned General Residential 3 and consists of two adjoining properties that have recently been consolidated into one property. There is currently a restaurant situated on the property which has been operating for many years. The property is also used as a bed and breakfast and consists of the following units: 12 x double rooms; a cottage with one bedroom, lounge and bathroom; another cottage with one bedroom, bathroom, walk-in closet and lounge; a three bedroom house. There is no density control applicable to restrict the number of residential units if the property were to be redeveloped, but at an average of 75m2 per unit the property could potentially yield about 18 residential units. At an average unit size of 55m2 the yield would be about 24 units. General Residential Zone 3 includes the following primary uses: Boarding House, Hotel, Multiple Unit Development, Retirement Centre. It also allows for (by special consent): Base Telecommunications Transmission Station, Chalet Development, Creche, Health Studio, Laundry, Mobile Park Home & Camping Ground, Restaurant/Fast Food Outlet, Shop.

Are there building plans available?

What is the erf size and the size of the buildings?
The consolidated lot measures 5 514m2 but there is a 20 meter wide road servitude which reduces the net development area of the consolidated lot to approximately 4 454m2. The permitted FAR of General Residential Zone 3 is 0.3 so the maximum permitted floor area would be 1 336m2.

Is a property valuation available?
No valuation is available because the current owner is expecting the property to be redeveloped by the next owner.

How does the business operate on a daily basis?
The restaurant is open on Monday to Saturday from 12:00 to 20:00 The B & B is open 7 days a week

How are the clients attracted to the business?
Reputation and repeat business from existing customers.

What Advertising/Marketing is carried out?
No advertising or marketing is being carried out at present because the owner wants to sell the property.

Does the business have any contract work?
There is no contract work although the B & B gets repeat business from corporate customers

What competition exists?
There is not much restaurant competition in the area but there are B & B establishments

What are the seasonal trends?
There are no seasonal trends

Is a property valuation available?
No property valuation is available.

Is the property being let by a letting agency?

Is a copy of all the lease agreements on the property available?
There are no lease agreements because the property is used by the owner as a restaurant and bed and breakfast establishment.

Is the business VAT Registered?

What VAT documentation is on file?
not applicable

Are there up-to-date Management Accounts available?
There is a record of income generated from the restaurant and B & B but no formal management accounts are available.

What Balance Sheet and Income Statements are available?
None, the property is being sold as a potential development site unless the purchaser decides to continue with its present income producing activities.

What percentage of the business is cash/credit?
Approximately 50/50

What is the age analysis of the debtors book?
All customers pay cash, credit card or by EFT.

How could the profitability of the business be improved?
If the purchaser decides to upgrade the restaurant then profitability could be improved by extending trading hours and promoting it in the local newspaper. The same applies to the B & B.

Is Seller finance available and for what amount?

What is the payback period?
Not applicable

What is the ROI?
Not applicable

Who is the bookkeeper/Accountant?
The owner and his daughter manage the business although they do employ an administrative person.

How could the income of the property be increased?
Current occupancy of the B & B section is around 50% and is derived mainly from repeat corporate customers who use the establishment for employees. Occupancy could be increased to 75% with a bit of marketing to other companies. The restaurant, which has a liquor licence, has been in operation for at least 26 years but it has not been marketed at all in the last few years and is now mostly used for the B & B customers for breakfast. It is also only open from 12:00 to around 20:00 on weekdays and even less on weekends. A person with restaurant experience could easily transform the restaurant to what it was in its heyday. The kitchen will need to be upgraded if a new owner wishes to continue with it.

What is the monthly rates and taxes payable to local authority?
The total Rates payable is currently R11 658 per month

What rental deposit has been secured from the tenants?
There are no tenants.

What is the total staff complement?
The owner wants to sell the property for redevelopment so he only employs temporary staff, except for an admin lady who assists with banking, paying accounts, etc.

Give a breakdown of staff/ functions/ length of service?
Not applicable

Do any receive special perks or incentives?
The admin lady currently resides on the property.

Are they on contract?

Do any have management potential?
Not applicable

How involved is the Owner in running the business?
The owner currently resides on the property and attends to the restaurant and B & B customers. His daughter assists from time to time.

When does the current lease end?
There is no lease

Is there an option of renewal & what period?
Not Applicable

What is the annual escalation %?
Not applicable

What are the trading hours?
Restaurant trading hours are 12:00 to 20:00 Monday to Saturday, closed on Sunday. B & B establishment operates seven days a week but is very quiet on weekends.

What is the square meters of the business?
The combined square meters of the consolidated property is 5 514m2 but the net development area is 4 454m2 due to a 20 m wide road servitude.

Who is the Owner/Landlord?
A private individual and his Family Trust

Is a copy of the lease available?
Not applicable

Do you require a licence?
The restaurant has a valid liquor licence.

What lease deposit and/or other surety is required?
Not applicable

What are the main assets of the business?
The main assets is the consolidated property, the buildings thereon, B & B and restaurant equipment.

Are any items not included in the sale?
Everything is included in the sale.

What is their overall condition?
Buildings are in fair to good condition. Restaurant equipment in fair condition.

Do any require repairing?
Yes, but only if the purchaser decides not to redevelop the property.

How have they been valued ?
No valuation has been carried out.

Which assets are on lease/HP and with whom?
No assets are encumbered.

What are their settlement amounts?
Not applicable.

Will Seller settle or Buyer to take over?
Not applicable

Are copies of agreements available?
There are no agreements.

Are they presently insured?

The cost in time and money to consolidate the properties has already been borne by the owner. The property is situated in a very desirable position and is ripe for redevelopment.

The owner has allowed the restaurant to deteriorate and some of the buildings could do with repairs and upgrades.

The restaurant could be more profitable if a new owner invests in new equipment and some marketing. The B & B establishment is currently sitting at 50% occupancy which could be increased to 75% with a bit of marketing.

No perceived threats

What is the reason for the sale?
The owner wishes to retire.

Why is this a good business?
This is a great investment for a property developer who could build between 18 and 24 units, depending on size. It could also be good for a purchaser who wants to upgrade the existing restaurant and B & B and continue running it as such. There are a number of other possibilities that can enhance its income generating potential.

What is the price plus stock and the net profit?
The asking price is R7 500 000

Why is this property a good investment?
This property is situated in a very good area and will increase in value over time due to its prime location. It presents more than one opportunity to an astute investor. Firstly, the restaurant can be upgraded and trade very profitably because there is little competition in the area. Secondly, an investor can add to the existing B & B rooms and increase the income currently being generated.

What is the asking price?
The asking price for the consolidated property is R7 500 000.

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