Finding the right property for Bush Order Provisions was not an easy task. There were many variables including property size, existing infrastructure, and it needed to accommodate a secondary revenue stream. We were also somewhat restricted to the Kam Lake area as it is zoned for commercial agriculture, with a residential overlay.
In our last post we discussed the path we took to get financing for our new business, but a large factor in getting approved was first identifying the property. Each one was different and the banks looked at them in different ways. In this post we will break down from the start, each property we looked at and how we came to acquire the one we have today. Grab your tea or coffee, it’s a long one. Let’s go.
In reality, this property was a pipe dream. We looked at this property even before we talked with a bank about financing it. It had a big price tag and ended up being the most expensive we would look at.
We were excited about our prospective business. We were naive. It was November 2019.
This first property was a big one in many ways. In size, it was by far the largest that we looked at, which is what drew us to it. It had a level front area that was very uniform, perfect for plots and garden rows. The back half of the property was slightly elevated and semi-levelled. So over time this too could be converted into growing space.
In our naive ways at the time, we thought bigger was better, so we wanted to go as big as we could. Ultimately, the infrastructure wasn’t compatible with what we needed. It only had a house on it and no outbuilding for a bakery/processing kitchen. Building this type of facility from scratch was too big of an undertaking.
After speaking with a local builder we were given an approximate cost per square foot, which when calculated into the size we needed, on top of the property cost, we simply did not think this property was feasible.
We didn’t outright rule it out, but we did start looking a little more aggressively and started working on getting approval-in-principal from the banks.
The second property we looked at was the first one we implemented into our business plan and financials for the banks. This was also the first property we saw with a realtor.
We had our eyes set on this property. It was a beautiful mess of potential. It was almost as large as the first property we saw, and we were still in the mindset of going as big as possible. And on top of all the growing space, there was infrastructure, but it was aging.
There was a small home we could move into when we sold our current home and there was an outbuilding for the bakery and kitchen, which also had potential for a future storefront.
Everything was old and aging though. Buildings may or may not have been winterized properly and there was stuff everywhere.
It had been on the market for so long we thought we would get a good deal for the property. It was a fixer upper, but for the right price we were ready to take it on in traditional farm fashion.
We ended up doing two site visits to this property and went through everything. Walked the property, digging up the snow. Crawled under every building looking for issues anywhere we could get.
When dealing with the banks they asked for all the information we could get on the property including an appraisal, timeline to operations and any secondary income.
With the banks happy we made an offer. With the help of our realtor we drafted up what we considered a fair offer. We offered a lower price, yes, but we also asked that all the items on the property be removed by June 1, 2020. We submitted our offer in mid March, just as COVID-19 was rolling into Canada.
Needless to say, the vendor came back both saying no to our price offer as well as saying our condition of removing their contents from the property was unreasonable.
Knowing what we know now, and considering how much time our actual property transaction took, we could have afforded the time for this vendor to remove their contents.
Having our offer so bluntly refused without any discussion was a reality check for us. It made us really think about this property and whether we wanted to undertake such a large cleanup. The conclusion we came to in early April was no. We did not not want to take this on.
Good-bye second property.
Hello Property 3, 4 and 5, which we looked at and considered all at the same time before finally settling on what we will call Property 4.
With a bit of a wakeup, we started looking at properties that would be more functional and require less maintenance and renovations, while also allowing us the space to grow into. We were learning that going big wasn’t always the answer and there were many market garden techniques that would open us up to high production crops on a 1/4 acre of cultivated growing space.
This third property was the second smallest property we considered but the potential growing space was made even smaller by the fact there were also two buildings on it, one a residence with two units and the other a large garage.
The garage was so large it could have easily converted into our bakery, processing and packing kitchen as well as a garden nursery. At the same time the residence would allow us to live in one unit and rent out the other, creating a revenue stream from the start, alleviating some of our startup pressure. The potential growing space however was smaller than what we had been hoping for and the layout of the property would have the driveway going right through it.
Our realtor said the vendor was eager to sell so there was a good chance we’d get the price point we hoped for, which was well within our budget.
This property was on the cards while we looked at another two options.
By this point we were exploring all our options. We had come to the idea that we wouldn’t be able to purchase a property and start growing on it until the 2021 growing season.
The fourth property we looked at was a bit of a Yellowknife coincidence. Without a doubt there are many property transactions that happen privately. Some might say that is how business is done. Way back in January 2020, while inquiring with a local business owner about a smaller part of our project, we learned they had a property they would be willing to sell. At the time we thought nothing of it. We were fixated on the first property.
Fast forward to April, we circled back around with them and looked into the details. Got their asking price and looked closer at the property.
The property was a rectangle of about 38,000 sq.ft. with only one building in a back corner. The building housed two separate garage bays and a 3-bedroom apartment on the second floor.
We liked the idea of the apartment and commercial spaces in the same building as it freed up space for garden plots. Ironically this property was already being used for agriculture in a small area.
Along with the property came a tenant in half the building with a lease for another two years. This was a big bonus for us as it would allow us short term revenue while we worked on getting operational.
The catch was that this property was more than the other properties we were considering, specifically Property 3.
Admittedly, Property 5 was a far stretch from reality for us. It was an empty lot in the Kam Lake area that had no infrastructure and was only partially levelled. It would have taken a lot of work to get it operational, but on the flip side the price for the lot was low.
We really didn’t want to build something from the ground up but we did consider this lot for a bit. We walked it, staking out areas for a building and growing space.
Making A Decision
As we moved from April into May, our choices came down to Property 3 and Property 4. They both had Pros and Cons.
Property 3 would allow us to sell our house and move into one of the units right away and rent out the other as additional revenue. This would mean more time on our part managing a rental unit in Yellowknife’s transient rental market. However, the property itself was also cheaper.
Because there were two buildings there were two of everything. Heating systems, power meters, water and sewage system. Twice as much to go wrong.
When it came to Property 4 there were a lot of Pros despite the higher sales price.
With only one building on the property the potential for more garden plots and a future greenhouse were very favourable. Not to mention only one set of mechanical systems would be a lot simpler to manage and the building itself was only 3 years old.
Having a longer term commercial tenant would provide us a revenue stream right away.
All said and done, when we compared everything together – rental income, cost of the property, potential expansions, startup timelines, renovation costs, etc – we decided to pursue Property 4.
It was a place we could see ourselves many years from now.
Our next barrier was getting the financing actually approved.