Finance to buy a pub

Hi there

We are currently looking at options to buy a local pub which has just come up for sale. We have once income of 90k per year which will continue and my husband would run the pub. The current price is in the region of 240k and it comes with a 3 bedroom accommodation. We don't have a huge amount of Savings but could get about 20k together. Any advice on if this sounds feasible from a banking perspective - would we be in the running the get the loan? I presume it's a business loan we would need to apply for which would be more difficult than a standard mortgage? Any advice would be greatly appreciated.

Have you any experience of the pub trade?

Yes my husband has managed bars for the last ten years of varying sizes so has lots of experience and is confident he could make a real go of the place we are looking at

Before the Celtic Tiger, pubs used to retail at T/O. How much is the target's T/O; how would you plan to increase that - because the net-margins from the current T/O would of necessity be lower due to your increased debt service-costs.

serasmith said:

Yes my husband has managed bars for the last ten years of varying sizes so has lots of experience and is confident he could make a real go of the place we are looking at

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Well that's a great start. Does the purchase price include the fixtures and fittings and furniture etc. Have you looked at the current accounts to see if their is even turnover to pay a mortgage and make a living.

It's not an easy life. Would you live there, can you make money by renting the 3 bed accommodation.

You don't even have 10% deposit though. I'm sure a bank would require demonstration of more than that. How would you buy the stock.

Having an income of c. €90K per annum and yet have savings of only €20K would be a warning sign for any financial institution. You would need to be prepared to answer why you have the level of savings you have on a such a relatively high salary.

Someone else has asked what the turnover in the pub amounts to and this will be very important. Will you be paying staff, is there food served, what percentage of turnover is from barrels, optics, soft drinks? Is there a cold room, rates, electric, heating, etc, etc? Is the pub in a big town with passing trade? I'd imagine it is at that price. Only some yrears ago it would be cheap but today pubs are selling for very little unless the turnover is impressive and to have that it would almost have to be in a big populated town. The downside of running a pub is the time element. Customers expect to see the owner behind the counter all day and all night. Impossible I know, but? You'll be first in line for every scam known to extract money from the place, sponsor this that and the other, have a slate, be very community minded and generous with your limited time, rowdy clientelle, hen nights, drunks, puke, theft and everything else. It's grand running a place for someone else and collecting your wages every week for a set time shift. It's a completely different kettle of fish when you own it and have to make it pay. Oh, I nearly forgot, you need to be in good humour day and night with a "smile". Enjoy.