It’s one of the most important questions to ask yourself before creating a restaurant business plan. Should you buy your own space? While leasing is the right decision for some aspiring restauranteurs, there are also many advantages when it comes to purchasing an eatery—and owning it outright.
If you’re planning to open a restaurant, here are a few reasons to consider becoming your own landlord…
You own your property
There’s a big difference between paying a mortgage and paying rent. Choose the former, and you’ll have an investment with the potential to provide an impressive return if and when you choose to sell. While you might think that purchasing property is out of reach, leasing can (in some cases) be the costlier long-term option.
Of course, there’s no denying that restaurant space in Toronto comes at a premium. That said, the potential benefits of buying an eatery (especially if it’s the full business as opposed to just square footage) may make you want to set up shop outside the city.
You’re investing in yourself
What happens if an otherwise perfect restaurant space doesn’t have the right power requirements for your eatery? What if the ventilation isn’t up to snuff? As a new restaurant owner, you’ll want your kitchen and dining room to be as close to perfect as possible. If you invest significant money into making that happen, you should be the one to reap the rewards.
When you own a restaurant space, any improvements you make to it will benefit you. If they’re carried out in the right way, they’ll make for a more appealing and efficient restaurant—and a higher return when you sell.
You may be able to live on-site
Many buildings that contain eateries are also home to residential units. That’s great news if you plan to be a hands-on restaurant owner, since buying a property with built-in housing could allow you to live on-site.
The benefits of residing in the building where you operate your business extend beyond avoiding lengthy commutes. With the help of a good accountant, you may be able to save on your taxes by ensuring that both you (as an individual) and your restaurant are in the lowest possible bracket. If the home you lease also serves as your office, you may be able to write off some renovations or upgrades as well.
You could take in rental-property income, too
What if you find the ideal mixed-use property, but you don’t want to live on-site? In that case, you could be looking at a major investment opportunity. Rental properties provide passive income and tax benefits—plus they’re worth more over time.
If you’re looking for a building where you can open up your eatery while bringing in some monthly rent, you’ll find great value in places like London and Hamilton. Your dollars will go further in these increasingly-desirable cities, and (if your purchase is strategic) you can expect to see some significant returns.
The bottom line
It’s true that leasing space is the best option for many aspiring restauranteurs. That said, don’t discount the idea of owning a business on property that belongs to you.
Being your own landlord means making an investment in yourself—and it may be a lot more affordable than you think. A real estate agent with hospitality-industry expertise can help you explore your options.
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