Closed the deal today

[SHEP]

It's a done deal. I closed today on a 4500 sq. ft. bar/grill with 3000 ft of bar, plus dining area, kitchen, etc. Has a walk-in cooler and freezer.
Rent is $3300 mo + property taxes, making it $3900 mo. total. Initial 45 month lease and two renewals for 36 months each. Almost 10 years. By then I'll be well past 70 years old and ready to call it quits.

Supposedly the seller had $250,000 plus doing the build out 18 months ago. Wanted $120,000 for the business. I ended up at $75,000. I got everything in the place. 22 TV's, two big screen projection TV's bar, bar stools, tables, chairs, 8 camera security system, etc and a fully equipped kitchen. Included the liquor license.

[MainSqueeze]

Ya done good sounds like. I especially like the 2 renewal options, gives you good flexibility along the way.

Have fun.

[David]

good job buddy!

[casabar]

Thats about as bullet proof as you can get, Congrats!

[Michael Black]

If the location is half way decent, it sounds like a great deal to ride out in the sunset- good luck to you.

[marvao]

It's a done deal. I closed today on a 4500 sq. ft. bar/grill with 3000 ft of bar, plus dining area, kitchen, etc. Has a walk-in cooler and freezer.
Rent is $3300 mo + property taxes, making it $3900 mo. total. Initial 45 month lease and two renewals for 36 months each. Almost 10 years. By then I'll be well past 70 years old and ready to call it quits.

Supposedly the seller had $250,000 plus doing the build out 18 months ago. Wanted $120,000 for the business. I ended up at $75,000. I got everything in the place. 22 TV's, two big screen projection TV's bar, bar stools, tables, chairs, 8 camera security system, etc and a fully equipped kitchen. Included the liquor license.

Sounds like a great deal. Good luck!

[marvao]

It's a done deal. I closed today on a 4500 sq. ft. bar/grill with 3000 ft of bar, plus dining area, kitchen, etc. Has a walk-in cooler and freezer.
Rent is $3300 mo + property taxes, making it $3900 mo. total. Initial 45 month lease and two renewals for 36 months each. Almost 10 years. By then I'll be well past 70 years old and ready to call it quits.

Supposedly the seller had $250,000 plus doing the build out 18 months ago. Wanted $120,000 for the business. I ended up at $75,000. I got everything in the place. 22 TV's, two big screen projection TV's bar, bar stools, tables, chairs, 8 camera security system, etc and a fully equipped kitchen. Included the liquor license.

Also Shep just curious did you try and value the renewal options by any chance?

Is there a formula out there that people use to quantify options or assign values to leases before they offer on them?

I imagine everything gets roleld up into the offer anyways but curious as I am in the middle of working towards offering on a leased space.

[Steadydoses]

I'll stop in if i'm ever in your neck of the woods!
God Bless

[kegnation]

Sounds awesome, congrats!

[MainSqueeze]

Is there a formula out there that people use to quantify options or assign values to leases before they offer on them?Marvao, there is a renewal option I'm familiar with that assigns value to renewal periods based on the then-current market rate. The wording is lengthy, but essentially the new rate can be determined by outside appraisers if needed, which represents additional costs neither party really needs if you ask me. So you try your best to work out an agreeable number yourselves; it's pretty easy to call around and get comparable rates and terms.

I might be able to scrounge up a copy of that wording if you need. Just email me and I'll see if I still have it. (However, it may be a few days before I can find this forum again with all the new changes to it.)

Hope this helps.

[Rainee]

As an aside, I hate this "market rate" renewal option, although it does seem to be popular with property owners. As the tenant, the only thing this type of option gives you is that it prevents the landlord from just kicking you out at the end of the lease term.
Since the renewal option is at market rate, the landlord should be indifferent keeping the current tenant and getting a new one, minus the cost of finding a new tenant for the vacant space, which actually puts it in favor of current tenant. Thus, this option has value only when the landlord doesn't like you and wants you out, in which case there are a million ways he can make your life difficult.
I think this type of renewal option can give you a false peace of mind, but doesn't give you much that you didn't already have without it. I would estimate the actual economic value of the option very close to zero.

An option with real value should specify a price at which you can renew. Unfortunately, you needed a lot of leverage to get one of those during the past several years, but maybe now it has gotten easier . . .