Restaurant financing, Ed? - Posted by Wieds

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Posted by Ed Garcia on January 24, 2001 at 23:51:19:

Wieds,

You don’t tell us what kind of loan your parents have on the property. We don’t know the terms and conditions. You also don’t tell us your age? When you tell us that the restaurant has doubled in size as far as gross income goes, that may be so with the business, but that doesn’t tell us the LTV of the property. You also don’t tell us if the lender is a bank or what kind of lending institution it is?

Since this is, for no better choice of words, a family business, you father could show that you are also an owner of the restaurant and ad you to the mortgage, setting the stage for a refinance later on. You mentioned a wrap with a LLC, so I’m assuming that was for the benefit of liability, because you father and mother are on the loan. If I knew more about you Wieds, I could have several suggestions, but I’m sorry to say that I don’t know enough about you or the circumstances.

Ed Garcia

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Restaurant financing, Ed? - Posted by Wieds

Posted by Wieds on January 24, 2001 at 14:52:57:

Does anyone know of a mortgage company or some other lending institution that lends money for restaurants? The situation arises because my sister and I are running a restaurant that is owned by our parents, who have owned the place for about 2 1/2 years. Well in that time the business has doubled in size as far as gross income goes and the place is probably worth twice as much as my parents paid for it now. Unfortunately my parents, who really don’t take a management role anyways, feel that they are getting up in age and don’t want this mortgage over their head as they are nearing retirement. They want to either sell the place outright or sell it to my sister and I. My sister does not have near good enough credit to buy the place from my parents. I am willing to buy the place and I have good enough credit but not enough money to put down for a conventional loan because I know many lenders feel this is very risky business. My parents will sell the place to me for the amount of the existing loan, which is around $180,000 and I am assuming that conventional lenders would want 20% down, which I don’t have. My question is are there places where I can get a loan for little money down if my LTV is low enough, the place probably appraises around $400,000. Or is there a way to give my parents an easy way out of the loan without going through the whole loan process again? This place is wrapped in a LLC so is there maybe a way I could transfer ownership of the mortgage to the LLC seeing that a steady stream of gross income has been established. I don’t want to let this place go because my sister and feel that it is starting to take off. I thought that since Ed has been in this business for quite some time that he could give me some ideas or anyone who might have some valuable information.

Thanks in advance,
Wieds