building valuations

The Greyhound Pub - case study of commercial property survey and buying a pub.

The Buyers' Story

Jan Thomas ran an accounts department supervising around 60 people, but she was hankering for a total change of career and had been thinking of running her own wine bar for sometime.   One day she went into work as usual and on the spur of the moment decided that it was time to make a decision about her future life and handed in her notice there and then.   She had decided to follow her dream.   She rang her husband and told him of her decision and despite his surprise he said he would back Jan all the way.   Jan had never worked behind a bar before, her husband had - but many years previous to this.

With her notice handed in Jan and Paul talked about their new venture and decided that one of their criteria would be to be located fairly near Jan's family, particularly Jan's mum who had a background as a cook, and would be working in the new establishment.   They set to work researching businesses available.

Jan had initially wanted to run a wine bar, but they kept their options open and found a pub quite quickly, which was on a tenancy basis, but another couple with 20 years experience in the trade pipped them to the post.   Undeterred they found another, but again that did not work out.  

Jan and Paul scoured the quarterly magazines, Daltons, Christies etc. and spent some time on the internet searching and came up with a list of 'possibles'.   They spent a Saturday visiting them all posing as customers.   They kept an open mind about the type of pub and area and looked at all types of pubs in a variety of conditions.   They kept in the fore of their minds the cost of the rents and rates, they had a price in their minds that they could afford and they knew they wanted to be close to family.   They liked the Greyhound Inn the most, looking beyond the amount of work they could see was needed and felt it had potential.  

They revisited the Greyhound the next day taking Jan's parents with them.   Although the pub was rather run down they telephoned Guy Simmonds, (www.ukpubsales.com, a national company which specialises in the sale of licensed businesses) on Monday morning to inform him of their interest.

With Jan's accountancy background she was able to produce her own business plan herself, this was the third one she had prepared since their search began.   The next step was to visit their bank manager deciding to use the equity in their house to secure the deal.   Jan advised us that care and thought should be given to this decision as the sale of your property may not happen quite as quickly as you may desire.

Jan and Paul also went on various courses, some of which were compulsory, including a Licensee Induction Course and a Cellar Management course.  It was at this point that Jan and Paul commissioned Gem Associates Limited to carry out a Schedule of Condition on the property.

The Surveyor's Story

A few months later we were instructed by Mr and Mrs Thomas to carry out a Schedule of Condition on the Greyhound Inn in Brackley, Northamptonshire.

We have considerable experience of the licensing trade and our Schedule of Condition is a unique report being a mixture of a Structural Survey for leaseholders and a Schedule of Condition that should protect the leaseholder in years to come from Schedules of Dilapidations.

One of our surveyors duly visited the Greyhound Inn and detailed all the problems with the building, recording its condition with photographic evidence, and in this case we took in the region of 300 photographs, pointing out faults and areas that needed attention.  

We use 'Action Required' paragraphs in our surveys to pinpoint areas of concern and to focus our clients' attention on the main issues.   We also give the client an idea of the anticipated costs of the work that needs doing.

Our Reports are written with the layperson in mind and all technical terms are defined throughout the report. We are also very keen that clients should be able to speak to their surveyor as many times as they feel necessary after they have read the survey and ask any questions they need clarification on.

The Greyhound Inn was found to be in a poor to dilapidated state but with potential.   Our surveyor found various areas where work would be needed to be carried out to bring the Inn to a reasonable standard.   Work was required to the chimneys, roofs, gutters and downpipes, external redecoration, internal decoration and there had been some movement in the building.   There was no central heating and the electrics were very old and there were also environmental health issues.  

Our surveyor felt that 'considerable risk' was being taken by Jan and Paul based on the property having a 'full repairing and insuring lease'.

Due to the works that were needed to the property we were subsequently asked to follow the survey up with a Valuation Report and our clients were able to negotiate on the price of the Inn based on the work that was required to the property.  

 

Six Months Later - Return Visit to The Greyhound

Six months after this survey was carried out we decided to make a follow up visit to the Greyhound to find out how the new landlords were getting on with the refurbishment and whether they felt they had made the right decision.

We were also keen to see how our survey and advice had helped the new landlords in making their decision to buy the property and how it had assisted them with their refurbishment task.  

Jan and Paul have found that the stock management is probably the most difficult part to manage, particularly as their cellar is quite small.

Jan filled us in on what had happened after they received the Schedule of Condition.   Armed with her Business Plan and our Schedule of Condition she was able to meet with her bank manager again to discuss the purchase of the pub.   We were delighted to hear that her Business Manager had said that our Schedule of Condition was one of the best reports he had seen.

Jan described the Schedule of Condition as her 'bible' over the next months.   As workmen came and went during the refurbishment she was able to copy pages from it to give to the tradesmen employed for them to then carry out the repairs and alterations.   The report gave them a starting point.   Lots of work was needed to the property and once the structure was opened up more problems were detected that could not have originally been identified.

The Refurbishment

The refurbishment has been a big task.   Substantial work has been done to the roofs and Jan and Paul were able to use the roofers contacts for other jobs and he oversaw the work done on their behalf.   Jan advised that if they were to do this over again they would use a Project Manager.   This is their first major refurbishment and there were a lot of technical issues that they did not feel informed enough about to make decisions on.   They felt that professional advice would have helped.

The refurbishment took longer than expected. Jan said that as the project had progressed they had had to find extra money for the works for which they received invoices from the contractors, which then had to be taken to the bank to authorise the payment.

Re-opening to the Public

Jan and Paul went through two opening dates, the end of June and 10th July and eventually opened to the public 11 weeks after they had signed the leasehold agreement.  

They actually had three opening nights.   They put an advert in the local paper, put board notices out and signs in the windows and distributed leaflets around part of the town.   They were overwhelmed by the response having about 250 customers in on each night.   Family were roped in to help behind the bar, making the events a great success.

Business has been good since the opening and Jan and Paul have not regretted their somewhat 'snap' decision even though the hours are rather long with Jan's typical hours of work being 8.30am - 1.30am.

Plans for the Future      

We saw lots of changes when we re-visited the Inn and things had improved greatly, though there is still work to be done in the private accommodation and Jan and Paul are also in the process of refurbishing two en suite rooms so as to provide Bed and Breakfast accommodation.

Jan advises doing things in little stages. For example they started serving lunches Monday to Saturday and are now serving a Sunday Roast and evening meals Monday to Thursday. Jan's mum is working in the kitchen and plans are now underway for Christmas and New Year events. Was it all worth it we asked. The answer was 'Yes'.

 

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