Renovating above an OLD downtown building (investments, fee, property tax, rent)

[cityflair]

We own a restaurant in an OLD downtown building. We only rent the space. We are thinking about buying the building and renovating the upstairs for our home with help from a grant. The space is 5,000 dilapadated square feet. There are no systems (plumbing, heat, etc.) at the present time. We have children and a dog. Currently, we own a lovely home in the country. Any thoughts? Expected costs?

[Aran]

That'd be about $texas, you'd have to worry about zoning as well as all the permits.

Plus, you live in a lovely home in the country.

[Narfcake]

Thoughts ... what does the municipal say about mixed use buildings? Cost ... perhaps like $5k if you're doing everything (including all the design, MEP systems, structural calculations, etc.) yourself and using all salvaged materials (ala Junk Raiders) ... to multi-millions if everything is to be hired out and top quality materials. There are too many variables here that anyone could say across the internet ...

[cityflair]

Narfcake (nice name ) We would need to get permit for "change of use" for the upstairs. Someone barfed out the number $250,000. ?? We'd surely save on gas money. :-)

[DowntownVentura]

Does your city have a redevelopment organization? There may be grant money available. At least some sort of property tax breaks and/or permit fee waivers.

Personally, I like investments in downtown areas if it is a downtown with something going for it. Gentrification while maintaining the old character can really provide a nice area.

[cityflair]

I am researching the grant money right now. I have mixed feelings of spending money that isn't mine, or maybe mine through taxes :-)

[chet everett]

...is cash-flow. Most folks that I know with restaurants don't exactly have a predictable income stream. Some years they do great, other years they cut till hurts.

The tough thing in doing a reno in a really old building with NO systems is that you are gping have to do everything to current code, which the building was built with those things in mind. Thus even if you are expert scrounger and have some ability to do things on your own you are not going to just just sail along smoothly. You have to use the "high cost" estimates on a per sq basis even if you forego all luxuries as retro fittings Are more costly than going with a modern building.

5000 sq ft @ $50/ sq ft is a low / mid estimate. You might have to increase that considerably...

Of course with a "raw loft" effect you might really only do about 2500 sq ft of actual finished renovation and leave lots of exposed concrete / beams / mechanicals if code will allow that (some systems will probably need to in more finished space space for fire / safety code...) so maybe thar is the ballpark your friend was going from...

Bottom line, you are a small business owner, in a field with lots of failure and unprdictable income. Even if a lender financed the purchase and you could do the reno, is this is thie best use of capital? Is the restaurant profitable? If you needed to get estimate of it's value to an investor would ir cover the debt you'd incur?


I am not saying "don't do this" just "ask the right question of yourself"...

Personally I know a few people with access to non-traditional funding that this worked out pretty well, but that is not the norm. Even with a grant it is not just the money, it is the impact on your ability to continue running the resturant profitably -- a very difficult task all by itself! If you have a deep pocketed partner with experience and connections it can make all the difference...

[cityflair]

Chet, You always give the BEST advice! Are you really my dad dressed up as "Chet"? :-) Thanks