Tips for buying a restaurant

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Otto Dargan
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Re: Tips for buying a restaurant

Post by Otto Dargan »

Hi and welcome to the forums haddin,

If you are looking to buy a restaurant then you may consider applying for a restaurant loan. Please keep in mind that getting approved may depend on your own experience and knowledge of the industry. A strong business plan may also help you get approved with the right lender.

You may have to get the building properly inspected before you apply for the loan. The cost of repairs may be negotiated into the purchase price. You may also request an occupational, health, and safety (OHS) inspection before you move ahead with the sale.

You may prepare a simple letter of offer or Head of Agreement that states your requirements and expectations from the purchase. It may be a helpful document to have prior to the Contract of Sale, along with the deposit.

For instance, in a situation where a certain amount of inventory may not be made available or certain maintenance issues may not be resolved, the purchase of the property may draw to a close before it can move ahead.

You can have a look at our Home Buyer Centre to find resources you can use to learn about how to buy a property.

Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

User avatar
Otto Dargan
Mortgage Specialist
Posts: 7730
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
Contact:

Re: Tips for buying a restaurant

Post by Otto Dargan »

Hi haddin,

A Contract of Sale may not be completely necessary. You may draft up the Head of Agreement with the help of a commercial buyers agent or business broker. The agent may be able to take the property off the market once you have a formal agreement between you and the vendor. This may help you get some breathing space to undertake your due diligence.

In case certain conditions in the agreement fail to meet, you may pull out of the deal and the deposit may be fully refundable. For instance, if the lease is too short for you to qualify for finance and the landlord does not extend the lease.

Aside from due diligence on the business itself, your business plan and forecast may need to consider predicted:
  • Food and beverages sales.
  • Labor and food costs.
  • Menu and pricing.
  • Marketing plan.
  • Training and retention programs.
You can check out our website if you want more information on restaurant loans. We can also be reached on 1300 889 743 or you can fill in our free assessment form to find out if you qualify for a restaurant loan today.

Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

User avatar
Otto Dargan
Mortgage Specialist
Posts: 7730
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
Contact:

Re: Tips for buying a restaurant

Post by Otto Dargan »

Hi Koori,

Generally, if you are looking to buy a commercial property such as a restaurant then there may be two going concern valuation types, which are:
  • Real property and business value, and
  • Lessee’s interest value.
A few lenders may also take into account the:
  • Net gaming takings.
  • Gaming machine commissions.
  • Total revenue and gross margin.
  • Wages for revenue figures.
Please note that valuations may be determined by the owner of the freehold and the one running the business. Lenders may consider the asset quality position, financial performance of each aspect, how they impact the industry and business environment, and competition in the area when they assess your loan application.

You can give us a call or browse through our website to learn more.

Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

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