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Q-talk *ON TOPIC ONLY* QUALITY ON TOPIC discussion of Backyard BBQ, grilling, Equipment and just outdoor cookin' in general, hints, tips, tricks & techniques, success, failures... but stay on topic. And watch for that hijacking.


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Unread 05-23-2006, 10:54 AM   #1
MrsMista
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I want opinions from you guys who run a que joint. Those who don't can chime in too.

Do you rent your facility or do you own it? Also give me some of the advantages and disadvantages either way.
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Unread 05-23-2006, 11:09 AM   #2
bbqjoe
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I own mine.
Advantages:
Property values increase. If I had to close and sell right now, I would be able to pay off the note and still put something in pocket. Especially when you purchase used equipment to open with. Used equipment, such as stainless tables, sinks, ovens etc. aren't going to depreciate any further than they already have.

If I feel like changing something in or about the building, I don't have to ask permission from an owner.

Disadvantages:
You get all set up. People learn your location, and then your landlord decides to terminate the lease for any number of reasons.

You are not building any equity by renting. Just more money down the drain.

Need a loan for something? Banks are happier when you own your building rather than leasing one.


Just a few quick thoughts Mrs. !
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Unread 05-23-2006, 11:16 AM   #3
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I've never owned a business, so take it for what it's worth.

I'd rent with a 6mo -1yr lease. When things take off, then start looking at buying while I'm in business with an income. Might just be able to work out any kinks before purchasing a building.

Of course this is all relevant to property/rent prices in your area.

Maybe even talk it over with someone from the small business adnmin.
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Unread 05-23-2006, 11:23 AM   #4
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Buy the property!! They are not making it anymore!! Even if you Bust, you can still lease the land to another business and still have something to show for it.
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Unread 05-23-2006, 11:50 AM   #5
MrsMista
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Quote:
Originally Posted by bbqjoe
...Used equipment, such as stainless tables, sinks, ovens etc. aren't going to depreciate any further than they already have.

If I feel like changing something in or about the building, I don't have to ask permission from an owner.
Are you still able to depreciate used equipment? Also when you change something do you find it difficult to determine the difference between capital improvement and deductible expense?
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Unread 05-23-2006, 12:36 PM   #6
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Joe has two sets of advantages for owning My wife and I had a home interior business (Wife and me as hired back) When after 5 years of lease the leftover inventory was all we got out of it (tax laws suck for small business especially retail) The lease in a not so great location which went down over the 5 years was high enough we could have purchased a nicer location and built equity. We did this business out of pocket so the banks were not an issue but the cost of purchase was out as well. Hard lesson "Be very careful with your debt and buy the building"!!! Not BBQ but business is business.
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Unread 05-23-2006, 12:36 PM   #7
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'bout ten years a go a local couple decided to go the Q joint and rented a spot around the corner from me. Put a lot fo time and money into the set up. Really nice. One day went by and saw they were gone. Evicted because the property had been increased in condition and th owners wanted to put an antique shop in. The Q was so-so, they are in a twon over now, but they lost like 85k with that activity. Scott
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Unread 05-23-2006, 12:58 PM   #8
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Quote:
Originally Posted by MrsMista
Are you still able to depreciate used equipment? Also when you change something do you find it difficult to determine the difference between capital improvement and deductible expense?
I'm sure you can depreciate some. But what I'm saying is if you buy a stainless table used for $200 bucks instead of 5 or six hundred new, you know you'll always be able to sell that table for $200.
Some of the other stuff is best left to your tax man. That's why I pay him, to figure that stuff out.
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Unread 05-23-2006, 01:34 PM   #9
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I have never read anything that professed renting a restaraunt location being better than owning.
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Unread 05-23-2006, 01:48 PM   #10
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I just want as many pros and cons for either one to help may my decision more difficult.
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Unread 05-23-2006, 02:22 PM   #11
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Seriously MRS, the amount you pay for rent is more than likely to be higher than what you're going to pay for a mortgage. Remember, the Land lord is using your rent money to make HIS land payment, and then tacking on some more for a profit.
The only inconvienience to owning, is that you will be responsible for all of your own repairs. Then again ever try to get a Landlord to fix something?

Owning, for whatever the reasons, IMO, is just hands down a no brainer.
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Unread 05-23-2006, 02:55 PM   #12
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Quote:
Originally Posted by bbqjoe
The only inconvienience to owning, is that you will be responsible for all of your own repairs. Then again ever try to get a Landlord to fix something?

Owning, for whatever the reasons, IMO, is just hands down a no brainer.
I'm inclined to agree that owning is better especially with the point you make about repairs. Fixing something that doesn't belong to me would be a waste.

My problem then would be the price of real estate in California. That's a whole nother issue
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Unread 05-23-2006, 02:59 PM   #13
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Quote:
Originally Posted by MrsMista
I'm inclined to agree that owning is better especially with the point you make about repairs. Fixing something that doesn't belong to me would be a waste.

My problem then would be the price of real estate in California. That's a whole nother issue
That....I can't help you with.
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Unread 05-23-2006, 03:47 PM   #14
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Quote:
Originally Posted by bbqjoe
That....I can't help you with.
Think I'll have to fast that beast carefully with a whip and chair.
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Unread 05-23-2006, 04:05 PM   #15
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MrsMista,

I'm not a Q jont owner, but a business owner. Most owners I know are incorporated or have a LLC set up under their business name, but own their property, vehicles, equipment and building(s) personally, under another company name. That way you lease everything from yourself. When you buy an asset, eventually you will pay it off. By leasing to yourself, you can lease your asset back to yourself forever.

Visit with your local Small Business Development Center (usually state funded and free) or a CPA to check out options. There is no sense not taking advantage of the business and tax laws.
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