Buying commercial contracts ?

Discussion in 'Lawn Mowing' started by flalawnboy, Apr 24, 2005.

  1. flalawnboy

    flalawnboy LawnSite Member
    Posts: 6

    I was out last week mowing, and passed another LCO on my way to another customer. The other lco called the number on the side of my truck, and said he was moving out of the area and wants to sell his commercial accounts. He said there were a total of 10 year round accounts with contracts. The guy told me that the total yearly income was 30,000.00. When i ask him how much he was selling them for he told me 15,000.00. I told the guy i would get back to him in a couple of days. I know 15,000.00 is to much to pay for the accounts. I would like some oppinons on the best way to handle this. By the way most of the accounts are churches and doctor's offices. Thanks for any help.
     
  2. nobagger

    nobagger LawnSite Gold Member
    from Pa
    Posts: 3,065

    If you are able and willing to spend any $$$ on them , make him a deal tell him you will give him x amount of dollars and then a percent of the contracts that go with you for the season. But if he is moving then he probably wants cash. Might not be bad if you can get these customers to sign with you for a 2 or 3 year deal, at least then you know you can make that money back. That or wait until he moves then approach his customers yourself, or do it now :p
     
  3. BCSteel

    BCSteel LawnSite Senior Member
    Posts: 876

    First I'd go over the contracts to make sure that his billing was in line with mine. Then I would want to meet with the managers of the buildings where the contracts are with the seller to make sure that the transfer of work is acceptable. Then, I wouldn't pay more than one months billing for any one contract that was accepted.
     
  4. rodfather

    rodfather LawnSite Fanatic
    Posts: 9,501

    When did commercial contracts become transferable I would like to know :dizzy: When one or more of the the parties change, they become null and void and new contracts must be re-written. Business law 101 explains that clearly. Period
     
  5. lawn_pro

    lawn_pro LawnSite Senior Member
    Posts: 284

    If the guy is still in business, why is he selling the accounts? I would want to see everything and pricing for each.
     
  6. Mdirrigation

    Mdirrigation LawnSite Silver Member
    Posts: 2,754


    If the contract is properly written , it can be sold , just like mortages . The main reason for contracts is to have an assett that can be sold.
     
  7. rodfather

    rodfather LawnSite Fanatic
    Posts: 9,501

    I will go along with that.

    BUT, how many 1 year maintenance contracts are written so they can be sold later? And how many mortagages are transferable as well? Banks don't like transferable mortagages. They want their money back so they can then lend it back out at a higher % again. After 4 mortagages, I have kind of learned that...
     
  8. Mdirrigation

    Mdirrigation LawnSite Silver Member
    Posts: 2,754


    I would say maybe 2 to 3 percent of maintenance contracts are written so they can be sold . Most arent even worth the paper they are printed on , they are glorified estimates. Most mortages are sold within a week , Fannie May and Freddie Mac , buy them and they are sold as packages to investors.
    Very few banks hold their paper . They generally keep a small portfolio of mortages , but they sell the majority.
     
  9. Davis Lawn Mowing LLC

    Davis Lawn Mowing LLC LawnSite Senior Member
    Posts: 318

    I would not pay more than 1 months billing per account as stated above. If the guy thinks your nuts, tell him to visit Lawnsite and see for himself.
     

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