[Gaulkin]

This is a dedicated server hosting business that i found for sale. He
wants $5k its 2 months old and makes $400 a month net profit. It comes with a
website, 10 servers and 6 clients. The guy selling it wants to be the manager of the company after
her sells it to me and make 30% of the profit, he has been in this
industry for 5 years and working for alot of companys. Ive seen all the paper work and things needed to ensure this is a real business. If i do this i will fly and sign the contracts with him in person. I would like to know if this is a good deal or not please state why. Thanks

[The Stealthy One]

Can you verify that this person has worked in the industry so long? Try to get professional references.

[The Stealthy One]

Additionally, if you ultimately decide to make the purchase, work out a payment plan - do not pay the full $5,000 up-front. In fact, a strong contract would enable you to remit no more than 10% up-front, with the rest of the payments due in increments according to criteria agreed upon by you and the seller.

[Gaulkin]

Yes he gave me references about who he has worked for and what he has done.

[The Stealthy One]

Have you verified these?

[Gaulkin]

Yes i have

[syia]

do you have any relation with the person that is selling to you or do you know his credential?

[David Rocci]

What are the plans for aquiring new customers? Why is he selling? Understanding the motivation for selling can uncover hidden issues.

How solid are the contracts on the 6 existing clients? How long are they locked in for?

If you retain 70% of the company, then that $400 of monthly revenue turns into $280. It will take you 18 months just to break even ($5000/$280 = 17.9). And that doesn't account for any of the costs associated with running the business.

Are the servers owned free and clear? Do you have to pay colo costs or anything for bandwidth?

-dr

[Gaulkin]

I met this person online and do not know them. He is selling because he does not want to run it all on his own because its to much work and he has no time to expand the business, he wants to manage it instead. The 6 clients are not under contract it is month to month. 6 of the servers are owned free and clear and 4 are rent to own. Yes we have to pay that but it still comes out to 400 net profit at the end of the month. He also has not spent any money on marketing. The payment will be 500 upfront and then 1000 a month for 5 months.

[Paint and Air Sportz]

I would personally say its not worth it, the risk to return ratio just isnt strong, their are much better online business that you can buy for 5000$

[jasaunders]

I am not sure of the value of the servers, but if they are estimated at $1000 each, you have $6k in assets right there. Based on the very, very limited information given, it would sound like a feasible deal.

[Gaulkin]

Nope the servers were bought used and the best one is worth 500 and goes down from there. He however knows how to buy them extremely cheap so expanding the business does not cost alot. For 3k i can get another 6-10 servers.


Ps. What other internet business would be a better investment?


Pss. The contract would be made by a florida attorney and signed in another state, he is also underage and would require his parents to co sign.