All Forum Posts by: Bill Patterson

Hey Jon,
Jackie & I used to be in the Chinese Restaurant business. We would build them out at a cost of about $120-140,000 (7-10 years ago) to seat 30-50. If you are buying the business from the owners, don't pay too much. If they are not making it and looking at the lease payments when they close, then maybe they just need to walk away and let you take over their lease. A good lease rate with some options is probably all that they have of value. I'd look at that aspect. As far as the renovation costs go, we would look at how long we needed to capitalize our costs and at least have a lease period and options for that term. We had a great partner (Chinese) and we were able to get our investments back in less than 1 year for each one that we started. When they were up and running at a good gross, we would sell them to other Chinese families at a very healthy profit! We did 3 of them and thy are all still in operation and doing well! You have gotten lots of good advice on the operation and risk of restaurants. My concern would also be in the experience of your chef/manager. It's tough to get the whole package in one person (although we did) and the comments on the restaurant failure rate are probably a bit conservative from my experience.
Good luck and Happy Fathers Day!
Bill

Chris, I think Eric is talking about renting the property that they don't own, but have a lien against, until the lender can foreclose on it. Probably the tenants don't know until it is foreclosed. I see his point!
Bill

Mark,
This is sounding more like a typical student rental situation. If each tenant is responsible for the total apartment rent, then there must be a "joint and several liability" clause in the lease. If that is the case, then there must be one lease for the apartment. Most landlords do this as well as have a guarantor for each tenant. That way, they have the best chance of collecting. That being said....going back to your original post, the landlord should not be able to remove a tenant and place a new tenant in the apartment without the other tenant's approval. If the tenant violated a major clause in the lease such as drugs, firearms, etc. that would be cause to remove at least them, and with joint and several liability, all of the tenants. The remaining tenants would have the option of picking up the "ousted tenant's" share of the costs or finding a new tenant themselves if the whole apartment was not evicted.

I'm still not sure if this is a University owned apartment or a private apartment.

Good Luck,
Bill

I think that Seth was looking for an agreement that would help establish standing in the event that one tenant paid their landlord for another tenant's share of rent and expenses and wanted to go to court to collect from the dead beat tenant. This is not a bad idea. I used to rent to over 500 college students and every once in a while this situation arose. Roommates are a crap shoot at best, even when you think that you know them well!
Bill

Great post on subcontractor retention. Some GC's will sell out their subs for $100 lower cost and the quality of their projects reflect that. J Scott treats his subs the way I treat mine. Nothing like a grill, some hamburgers & brats and a few "thank you's" to keep your quality subs happy! Also, don't forget to pay them right away for their work. Things like this will keep your projects moving smoothly and on schedule!

Hi Seth,
I have not seen a contract like you describe, but most rental contracts contain a "joint and several liability" section that would make all tenants liable for rent, damages, etc. in case one or more moved or could not pay. I think this may be what you want to protect yourself from. The best protection is to know your roommates well and be sure that they can afford their share of expenses.

Other than this advice....check renter forums on line. Maybe some of them will have some type of an agreement that may help you if you need to collect in court from a deadbeat tenant.
Good luck,
Bill

Jonathan,
This is just one of the "life lessons" that you need to learn! I wouldn't worry too much about your past mistakes. Take your time, get your work and credit history back in shape with all of your income accounted for. Buy your new home next year! There will still be fantastic deals, interest rates are still forecasted to be low and you will have more time to save a bigger down payment!
Good luck,
Bill

Michael,
In the mid 90's I had a couple units in a condo hotel on Mackinac Island, in Michigan. Back then, they cost about $60,000, cash flowed and when I kicked them out a couple years later in a 1031 exchange, I had appreciation. That was and still is a very popular resort area. I would say to run the numbers and verify past performance. It may still be a good plan. When I did it, condo hotels were a new concept (at least to me). I'm not sure if it is still a condo project, but the hotel is still going strong!
Good luck,
Bill

Hi Michael,
I lived near Rockford for many years and now am in the Kalamazoo/Portage area. We do mostly short sales, throught out the state and nation wide.
Good luck in the GR area!
Bill

Hi Scott,
Welcome to Bigger Pockets! We are in the Kalamazoo/Portage area and concentrate on short sales, locally, through out Michigan and nation wide.
Bill