I posted a while back my desires of opening a pizzeria and a guy was thinkig of selling locally, well that never happened as the guy would respond to me a after a few voicemails and emails. So fast forward to now and there is a building for sale with two apartments above a closed restaurant in a nearby town. I was thinking of buying the building and having the apartments pay the mortgage on the building while the pizzeria that I dream to open would hopefully sustain itself.
It’s a small town <5k people, but growing albeit slowly. Would you consider something like this at this point with the economy? The other guy that has the existing pizzeria is still open, but his pizza tastes the same as his paper plates he serves them on.
There are a lot of missing factors to this question but based on what you have stated, I would not invest. Closed restaurant, empty apartments. Research the building department and read the file on the property. Learn at least the history of the land, building and occupancy.
The apartments are currently rented, $700 and $500. Enough to cover the mortgage, but no other added expenses if something were to break. The restaurat below was an old pizzeria literally the place is fully stacked with all the equipment. The owners looked to have just up and left. I am waiting to hear back from the realtor as to what is going on with the equipment.
Let alone the INSURANCE that you will need to keep for a mortgage as well as property taxes. Definitely need to charge your business rent to make your bills on the real estate.
Just a word of caution; Normally a new operator of an existing facility, operating or not, will be required to bring the facility up to the building code, NSF regulations and the fire marshals latest requirements.
Don’t let anyone convince you that anything is “grand fathered in” that only applies to an existing operation by the original operator and often not then.
I think it is great for all of us to have dreams. I think it motivates us to live in such a way we can make the dreams happen. But before we jump into a “dream” we have to look into reality.
In the best case scenario, your renters will stay and pay on time. No major repairs. You will unlock the doors to the restaurant, have all the equipment and no major repairs. Oh yeah and you will have enough sales generated to hire a management company. Sounds nice.
But the reality will be more like this.
You are not only opening a restaurant you are becoming a landlord. You will be managing two headaches not one. You will have repairs, You will need insurance as a landlord and a restaurant operator. You will have to be a great bookeeper.
You will need to be prepared for a tentant stiffing you, leaving, destroying your property.
You will need to be prepared to open a restaurant and feel lucky if you can turn a good profit within 6 months.
You need to ask yourself, how will I handle it if I don’t make a dime for 6 months maybe even a year.
I would make sure I had enough cash saved up for at least 6 months worth of operating costs. “Just in case” I would not depend on loans to “make this happen”
Always remember if is was easy, everyone would do it and do it successfully.