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View Full Version : Advice on leasing a bar/restaurant please



lurcher2006
19-07-2011, 11:57
hi great forum by the way.
i wonder if anyone could give me some advice please i am currently looking into the possibility of buying a freehold of a bar/restaurant and leasing it out. so it can make some money for me while i am in the uk. so would like to know how soon could it be before someone takes the lease. is there much money to be made on this sort of investment amd how easy is it to do this any help will be greatly advantageous to me kind regards jon

BobMac
19-07-2011, 12:02
At the moment, bars are closing down rather than opening because they are losing money

The trend on Tenerife at the moment is that the Tour Operators are moving everything to All-Inclusive packages.

lurcher2006
19-07-2011, 12:13
thanks for your reply bob what are your views on buying a property to rent out seems a big call on here for people looking for propertys to rent. i just want something with a steady income and something i can retire on in the future hopefully in tenerife regards jon

sleepy
19-07-2011, 12:29
thanks for your reply bob what are your views on buying a property to rent out seems a big call on here for people looking for propertys to rent. i just want something with a steady income and something i can retire on in the future hopefully in tenerife regards jon

I'd say if you have the money to buy a freehold bar/restaurant at a good price and assuming it's in the correct location,you could do very well by renting it out to the right people.Some luck involved too but I know a few people that have done this and are now reaping the rewards.

lurcher2006
19-07-2011, 12:40
hi thanks also for your reply.
my main aim is to eventually take early retirement so just want a project that can just tick over and make enough for me to retire on. i read that you can get upto 35.000 euro sum down on a 5yr lease and around 1500euro a month in rent for the right business is this true?? regards jon

sleepy
19-07-2011, 12:47
hi thanks also for your reply.
my main aim is to eventually take early retirement so just want a project that can just tick over and make enough for me to retire on. i read that you can get upto 35.000 euro sum down on a 5yr lease and around 1500euro a month in rent for the right business is this true?? regards jon

Well for sure you could command those sorts of figures in rent and more.The hard bit is finding a good workable business for sale as a freehold at the right price.

lurcher2006
19-07-2011, 12:57
thanks for your help i think i will keep checking over the next yr or so to see if i can get a good deal for a property in the right area. prosumably los cristianos or las americas is the area i am best looking into?? thank you again for your replys

atlantico
19-07-2011, 13:17
this is your biggest problem, as I'm also a commercial property landlord - finding a freehold bar/restaurant at the right price. The risk/return on investment is not very good compared with what Spanish freehold owners want to part with their property. ie €400k for a €30k rental income PLUS the risk

What I'd do is find an empty local that has Bar/restaurant potential, but's never been one - as existing property/business property in the restaurant market demand too much money.

I'd find the local, fit it out as a bar/restaurant then sell the traspaso for the setup costs ie €10-20k plus a decent rental price. Someone else has paid for the setup costs and if they sell it on you can put a 10% charge on the trespasso for transferring it to new owners.

doreen
19-07-2011, 13:39
my main aim is to eventually take early retirement so just want a project that can just tick over and make enough for me to retire on. i read that you can get upto 35.000 euro sum down on a 5yr lease and around 1500euro a month in rent for the right business is this true?? regards jon

I'm not sure where you have been getting your information ... you might be confusing what one new tenant pays to the old one to take over the business - the landlord could be entitled to a 10-20% share, but in the current climate, the only "traspasos" that are moving are at around 30.000- 50.000, so even 20% of that will not give you a huge sum ... and the devious tenants often try hard to avoid the landlord getting much, by taking payments in "black" or doing side deals (hey, it's Tenerife).

What many landlords look for is an "aval" .. anywhere between 3 and 12 months rent in advance in a sort of bond (personally 7 months in La Terrazza, 12 months in O'Jangles) - if the tenant defaults, you apply to the Court for this to be paid out to you - can take many, many months.

I know of one freehold for sale in a very popular area - rent 3.500 per month, he's asking 900.000 min - not a great return, I would have thought. I know of another property front line in Las Americas - keys are in the Courts for over 6 months for a Desaucio (eviction) - agent cannot show it.

Tenants normally pay the Community Fees, but often not the IBI (annual rates) - you will be taxed at source on the paying over the rent (19% retención/withholding tax), you will have to charge IGIC (VAT) at 5%. Agents will charge you for finding a tenant if property is empty.

... lots to consider even before you find the "right" place, not to mention the right tenant :)

lurcher2006
19-07-2011, 13:54
hi doreen and atlantico
thanks for your very valuable advice it is very much appreciated. it seems like alot of risk for not alot of profit not to mention the hassle when it is not leased out. i just browsed through a few agents sites was amazed by how many people were selling freeholds due to ill health! haha that sent alarm bells ringing... so in the style of dragons dens duncan "i for that reason am OUT" haha but will keep checking to see if a bargain comes up! but thanks for your comments keep up the great work kind regards jon

atlantico
19-07-2011, 15:43
are you sure the one's you've seen are Freeholds ? People don't usually sell them due to ill health - they use that excuse to sell a business !

An investment tip from me - buy a cheap local/shop which is empty and just rent it out as that , a shop/office etc, with no Traspaso, no lease, just a month in advance and rent payable monthly - just as with an apartment etc. Although, finding tenants isn't easy !!