When possible avoid leasing
• EXPENSIVE RESTAURANT LEASE DRAFTS
• HIGH RENT AND ESCALATING INCREASES
• CAM CHARGES AND POOR MAINTENANCE CLAUSE
• RECAPTURE CLAUSES
• PERCENTAGE RENTS
• PERSONAL GUARANTEE
• TRANSFERABILITY CLAUSES
• VERY EXPENSIVE BUILD-OUT ON LANDLORD’S PROPERTY
REAL ESTATE CASE STUDY
EXAMPLE; land and building is purchased for
$1.5 Million. The building is 6,000 SF Building and
1.5 Acres of valuable highway property. The initial investment is $250,000 as down payment.
The restaurant is a success and does over
$3 Million in annual sales with a cash flow of $275,000. The debt of $1,250,000 is $7,900 per
month of which the average principal reduction over 20 years is $5,200 per month. With 3%
appreciation annually the property would be
valued at $2,709,166 in year 20 and the debt would be paid off.
Investment: (250,000)
Value in Year 21: 2,709,167
Equity: 2,709,167
20 Yr Cash Flow (Est): 7,886,034
Estimated Tax Savings: 350,000
Total Benefits: 10,945,200
