I'm still new to the site and very new to real estate investing, but I have an idea that I'd like to get some feedback on. Over the past few years my wife and I have been kicking around the idea of starting a reception hall venue near our home in central Wisconsin. My wife is an event coordinator and for years we both have noticed a need for a new venue in the area. We do not know if buying or building is a better option and we would most likely need an investor as we only have around 35k to put towards it. I know there are a lot of variables in this scenario, but I was wondering if anyone had some experience on the business side or advice on purchasing or building a commercial property like this. Any input would be appreciated, thanks.
I'm on the other side of the state from you and have a little experience in this. I've found that in our area, existing commercial can still be bought for half of replacement cost (cost to construct that same building) if the place is vacant and need of some TLC. The issue with existing banquet halls is the changing tastes of consumers. Many people are looking for a different ambiance either country weddings, downtown historic buildings, etc. If I were going into the event business, I would be looking for historic properties that can be repurposed. High ceilings, rooftop decks, woodwork, etc. However remodeling historic buildings can be expensive. I know Wisconsin has a number of historic renovation and non-historic renovation grants up to $500k that are run through the municipalities. They nominate one project per year to the state. It's competitive but possible
Thank you for your insight. At this point, my wife and I are leaning towards new construction on a timber frame structure in a rural setting. In addition to what you were suggesting with historic properties, there aren't that many to choose from that have potential as an event space and also provide parking area.
I can't say that I have researched any programs historic property grant programs, but I will certainly give it a look. Thank you for your input, it was appreciated
Banquet halls can be great for the right locations. I saw one for sale a couple years ago, where it was booked every friday/saturday and some weekdays. There needs to be enough demand and little supply. In your situation, a rural setting might not be the best location. You will not see enough demand to generate any business. Keep in mind, expenses such as utilities and janitorial expenses. The people booking will just pay you a flat rent.
Biggest problem you will have is that you need a full service kitchen with refrigerators and stoves. Banquets typically include food. A good kitchen can cost you a 100k. You need two bathrooms each for men and women. Simply throwing together four walls and calling it a banquet space won't cut it. There is a lot to consider.
Thanks for the input. I'll just clarify the situation a little more just so there is a better picture. The location I have in mind is about 3 miles off of a major interstate and there is about a population of 150,000 within a 20 mile radius. In central wisconsin a majority of the current banquet halls are very outdated or else have contracts with vendors that make it difficult for people to plan an event to their specifications. We need to do a bit more research but there certainly seems to be a demand. There would be a kitchen prep space for starters. Quite a few caterers in the area can cook the food off site and simply need a place to prep and warm it up. Over time I think a full kitchen would be added as the funds appear. I do understand it takes more than 4 walls to make a banquet hall and tried to keep the topic concise and general just to introduce the question. Thanks again for your insight.
Everything sounds good in theory. The truth tends to be in the real world experience of others who have actually performed it in practice.
150,000 in a 20 mile radius is a huge ring.
When we look at properties typically demographics go in an 1,3,5 mile ring radius. Rural you might have to expand further.
I don't count a 20 mile radius. You can have crime zones and depressed areas with low median income scattered about without being in your sweet spot. Is your place so special that people will drive 20 miles to book it and have an event there??
Thanks for checking in to the discussion. After reading your comment I guess I'm slightly confused about what your trying to convey on the topic. Are you saying that having a wide demographic to choose from is a bad thing? If you could clarify it would be appreciated.
In response to your question, I can't tell you that the venue is so special people will drive from 20 miles away to book it. Mainly, because it doesn't exist yet. Second, when people want to book an event, the people who run the venue matter just as much as the beauty of the venue itself. Customer service is a high priority to us and after years of building a steady clientele I event planning there have been many referrals and much positive feedback. I understand there is more business and marketing involved in following this dream. So what advice and recommendations can you give for this situation?
Let me clarify on what I think Joel is saying. You say there is a pop of a 150,000 in a 20 mile radius and while that sound great. It really is nothing special. I am in the hotel business and let me tell you why your banquet hall will have a hard time competing. If there is a 150,000 population, then there are some high quality hotels with great banquet halls in top notch locations that you will be competing with. The hotels will probably in the most dense areas of the town/city. Your location is going to be more rural. A 20 mile radius is simply too large of a demographic you are trying to encompass. As Joel mentions, typically 1,3,5 are what you need to look at.
I understand there is a quality factor of the venue, but your end goal is to make money and not just enough to buy a soda, but enough to do well. That's what I am trying to point out for you. Now I very well may be wrong, so you have to look at all aspects.
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