As a former real estate agent and current kennel operator, I gained a unique perspective on kennel valuation. I’d like to share some of these ideas to help buyers find a kennel business.
First of all, if you have the opportunity to buy a kennel and the numbers make sense, DO IT! Unfortunately, the last part of that statement about the numbers making sense may be the hard part as many sellers have overpriced their kennels. At the end of the day, a kennel is worth the income it generates. Expensive land is great, and a beautiful building is great, but if the kennel doesn’t have the potential to generate good income, it’s a bad deal.
I have seen great kennel facilities open in poor places that lack the demographics to support a kennel. And, the seller wants to recoup their cost by putting together an A+ installation. Submit your offer based on projected income. You can give a small allowance for a good installation. But it all comes down to income, income, income!
I have also seen people with kennels on expensive land where surrounding properties are selling for a premium. Many times, they will determine the value of your business on 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 demolished and houses built on that land. However, if the highest and best use of the land is for the operation of a kennel, then the land will NOT be used for residential development and the price should NOT reflect the value of the residential land in the area. Also, if land is expensive in the area, the cost of living should be higher and the kennel income should reflect those higher housing rates. So once again, calculating value based on income should be the overriding issue in determining value.