HOSPITALITY OWNERSHIP
ESSENTIALS
1. EXPERIENCED ACCOUNTANT IN HOSPITALITY
2. STRONG HOSPITALITY REAL ESTATE ORGANIZATION
3. EXPERIENCED LEGAL COUNSEL IN HOSPITALITY
4. KNOWLEDGEABLE BANKER AND INVESTOR
5. HOSPITALITY MARKETING FIRM
6. HOSPITALITY STAFF WITH ONE COMMON GOAL
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
