Boarding Kennel Valuation – Part I

As a former real estate agent and current kennel operator, I’ve gained a unique perspective on boarding kennel valuation. I’d like to share some of these insights to help the buyers out there shopping for a boarding kennel business.

First of all, if you have the opportunity to purchase a kennel and the numbers make sense, DO IT! Unfortunately, the latter portion of that statement about the numbers making sense can be the difficult part as many sellers have overpriced their kennels. At the end of the day, a kennel is worth the income that it brings in. Expensive land is great, and a beautiful building is fantastic, but if the kennel doesn’t have the potential to generate a good income, it’s a bad business move.

I’ve seen gorgeous kennel facilities opened in poor locations that lack the demographics to support a kennel. And, the seller wants to recoup their cost in putting together an A+ facility. Present your offer based upon projected income. You can give a small allowance for a nice facility. But, it all comes down to income, income, income!

I’ve also seen people with kennels on expensive land where surrounding properties sell for a premium. Often times, they’ll determine the value of their business upon the value of the land + the value of the business. This is completely irrational. For example, if the highest and best use of that land is for residential development, then the kennel should be torn down and houses should be built on that land. If, however, the highest and best use of the land is for the operation of a boarding kennel, then the land will NOT be used as a residential development and price should NOT reflect the value of residential land in the area. Besides, if land is expensive in the area, the cost of living should be higher and the kennel income should reflect those higher boarding rates. So, once again, calculating value based upon income should be the overriding issue in determining value.



Source by Phil Miller

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