Waterfront property restaurant purchase
My client is looking for financing on a pre-established restaurant that closed its doors after 100 years or so. Great location, property is listed at $2.79m. He is seeing a loan for the purchase of the land and the buildout, renovation of the pre-existing restaurant there is a cottage on the property that was a bed and breakfast. He is looking for $1.5m for that. All in $4.3m. What would you expect he will need to put into this deal to obtain financing? Would prefer responses based on deals actually funded.
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For a waterfront restaurant property, I would separate the real estate underwriting from the operating-business story. Focus first on zoning and permitted use, flood and wind insurance, environmental condition, deferred capital work, parking, utilities, and what the property could support if the current concept fails. Then test debt service using conservative real-estate cash flow rather than optimistic restaurant revenue. The downside question is especially important with a specialized asset. Is the value primarily in the existing business, the building and land, or a redevelopment opportunity?