Best way to finance restaurant build out"....... (credit, lending, mortgage)

[westchester]

Here is my scenario....
1 . Own a 3 story 16000 sq ft building.
2.on the first floor is a tenant who occupies 3500 sq ft. Been their 20 yrs. rent paid is 4500. Per month
3 Second and third floor 2 separate tenants leaving 6200sq ft per floor.
4 On these floors I want to build out a restaurant /bar w a catering room attached. I will be actually removing 3000sq ft of third floor to make room for a huge outdoor Patio for parties and dining.
5. I hope to generate a 65/35 split on liquor / food...

6. My question is what is the best EASIST way to get financing for the build out....

As the building stand now it is worth 1.5 m I own it free and clear
If I was to lease out same space to someone else rent would be 15-20 k
I want to borrow approx 800-1.2 m which will all be put into upgrading my building.
This should bring my property value upto 2.3 m with the upgrades and the rental increases. ( the top 2 floors had sweet heart leases only paying a combined 3200k per month.

So should I look for a bussines loan or a refinance loan. Or just look for hard money lender.... Thanks for any and all input

[PureHapa]

Here in California, the local banks have been sending out feelers for months - letting me know that they are doing business loans. I opened a small account at a different bank recently to feel them out. They are completely local - six branches in two towns, and are aggressively lending for business and commercial, especially construction loans. Try your local banks first.

[MrRational]

Originally Posted by westchester

My question is what is the best EASIST way to get financing for the build out....

Start with an existing building that already has the commercial kitchen in place.
Tune it up and start selling burgers & beer right away.

[westchester]

Thanks mr rational. For not answering my question. ????

[Wartrace]

I would think about a refinance on the building since the money is going to be used to make improvements to the building. Also, the repayment period for commercial real estate loans is longer than for business loans. I have also been hearing from various sources that banks have yanked business lines of credit or called loans unexpectedly causing major problems for business owners. (It isn't ikely to happen with a commercial mortgage)

The downside is you will have to pay for an appraisal and they are expensive for commercial property.

Now- totally unrelated....... You BETTER have plans to put in an elevator While many Amercians are perfectly capable of climbing three flights of stairs a lot of people are too lazy to do it.

[sunsprit]

So you are going into the restaurant/bar business?

It's going to take a lot more total up-front than the cost of build-out alone.

Do you have a background in this business? If not, then perhaps you'd be better off partnering up with an experienced restaurant owner/operator ... who might be a source of funds. You're bringing to the table a building, retail location with traffic, and an investment in the build-out ... they bring a split on the funds for the build-out and the operating capital.

You could still consider a mortgage on the building to raise your capital, but your numbers suggest that you'll need to get close to 100% LTV to make this all work.

[westchester]

Thanks sunspirit ,,I have been in the food business for over 20yrs...and I will be taking in some partners...It just depends how much I want to give up as far as the %....

[MountainBiking]

What I understand is that banks do not give loans for restaurants. They don't like the word 'restaurant.' Restaurants have the highest failure rate for any business in the United States. If you have a chain of restaurants with knock-out revenue and profits the banks will at least listen to you. If you're a minority forget about it. You won't get squat. The banks will conveniently raise their requirements so you won't have a chance. Most minorities set up their businesses with hard earned cash. Forget about a Small Business Loan. Those guys are even worse than banks.

-Cheers.