Agent Rock Star Wannabe

Sometimes I wonder what’s in people’s mind that makes them do things which makes them look totally stupid..... this is the story of Real Estate Agent/ Rock Star Wannabe- For the sake of this story we will call him “Agent P.”.... nothing to do with R as in Rock or S as in Star , Agent P. just sounds better …and it is my blog after all!

                                                                                            Agent P- Courtesy Disney Channel

A buyer comes into town and shares his willingness to purchase a pre-construction condominium overlooking the bay, Agent P is a good residential agent with knowledge of the local condo market and every new project that is being built or will be developed in the area .... he even works as a member of the inside sales team for a high end developer and apparently does a decent job. 

                                                                                                                           Downtown Miami- The Arsht Center

Me on the other hand, although I know how to perform in a residential sale because I have done many myself, I decided to pursue Commercial Real Estate. At the beginning of my career I sold anything from low end condos to high end units in high rises, low and high end single family dwellings.... you name it, I’ve sold it!  But it was all the same over and over and over again and quickly got bored;  many years ago I decided to pursue the commercial side of Real Estate, only to realize that it is a monster with many heads and within every head there are many smaller heads that wear different types of hats...which makes it even more challenging and interesting. 

                                                                                Cerberus- Courtesy of Allison Smith, Amosink Interactive Week

As I have mentioned in other posts, every time I close a commercial deal I take home not only my commission check but also the knowledge and experience that the deal made me gain which is priceless.

Agent P. came to me one day asking about what did I have that was a good deal for, presumably, a group of his investors. I told him more or less what was there and asked him to give me a synopsis of his buyers, I would sign a Non Circumvention and a NDA as I usually do and that way I could even meet them in person and do what I do best, make the deal happen…..FOR BOTH OF US! I waited for about 2 weeks for him to set up the meeting and one day I encountered him; the first thing he told me was “you left me waiting for that list of properties”... to which my only reply was “I told you to set up a meeting with them because probably you will not be able to answer specific questions that will go way beyond the square footage of the property and what kind of return they can expect”- End of story haven’t heard back from him ever. This guy pretended not only that I gave him a list of confidential  listings from other agents that have entrusted me with them but also pretended to handle a commercial transaction by himself which most likely has never done one before, he probably has not even seen one on Twitter or YouTube.... 
Greed took the best of him.....unfortunately I have seen Greed taking the best of most real estate agents that I have met throughout these years.

                                                    Shakespeare Sacrificed: Or the Offering to Avarice by James Gillray.

You get a lot of those Agent P’s that tell you that they do everything from residential sales, to leases, to commercial deals going from industrial to single tenant passing thru raw land and cemeteries with knowledge in shopping centers and restaurants, not to mention their expertise in office buildings and commercial leases but the minute you ask them things as simple as : “What about IRR or environmental issues, or ask them to explain how would a 1031 exchange work in a specific case, then all you get as an answer is uuuhhh, ahhh, ehmmm.... see... ehmmm…. I will get back to you with the info” , and trust me that questions from seasoned investors go a lot deeper than that... so you gotta be prepared and totally dominate the subject at hand.

                                             Jim Carrey as "The Riddler" in Batman Forever- Courtesy of Warner Bros.

My dear friends, all I’m trying to say is, don’t look like an ass in front of a buyer; credibility is one of the most precious assets a Real Estate agent has and losing it is not an option. It is far better to share a deal with someone that really knows what he is talking about than trying to be Jack(ass) of all trades- 

                                                                                       Courtesy of Katie Colombo

When a buyer comes and asks for a specific type of investment, if you really  know what you are doing, without your ego getting in the way, so be it, go ahead and handle it but if you feel a slight doubt then be wise and associate yourself with someone that knows that specific type of deal or that could have the ability to steer your buyer to what he knows best, because sometimes buyers think they want something and in reality they do not even know what it is that they exactly want (I will write about this issue in another post).

As I have said many times before, I stick to what I know and believe me it is not a limited niche, I have positioned myself in the mind of many people right where I want to be, and I have accomplished that by thoroughly experiencing those markets that I deal with on a daily basis.....and I still consider that I have a lot to learn about them, imagine if now I would go and try to sell let’s say a Marina or a Hotel not knowing anything about these type of businesses .... it would be totally ridiculous unless I take the time and study.

See you on my next blog!’

Cheers

moz@avantiway.com

So....! You want to open a Restaurant....! (PART V)

Hello again, and let’s start with PART 5 which will be the last of this series-

There is a trend that has been going on for quiet a few years: Foreigners fleeing their country of origin or residence in Latin America and landing in the Land of the Free, looking for a better future for their families, I’m talking about educated, well mannered and wealthy individuals that are contributing a great deal to our community by investing their capitals in our cities, and Miami has been the one MSA that has benefit the most with all thee Venezuelans and Brazilians that for one reason or another come to South Florida in search of a new horizon, a fresh start away from their worries and troubles in their country.... BUT....and there’s always a BUT..... enough of the romantic chit chat- 

It is time these people face reality and stop loosing their capitals!!!!! Although they may have experience in any given business, there is no guarantee that they know what they are doing here in the US- 

                                        Courtesy of fotosearch

See? This is what happens a lot; they get here, they are desperate trying to find something quick to do, fearing that their cash in the bank is not producing anything, they get in touch with a real estate agent, literally just a random one that it is introduced to them by a friend to whom he rented a condo or he is maybe a family member that got here a couple of years prior and happens to have a real estate license but has no experience whatsoever in either selling businesses or commercial real estate, therefore no due diligence, no homework and after they disburse their capital it is too late to go back. I have seen this scenario countless times-

So, to get to the point, you get this foreign investor with years of experience in Restaurants, his knowledge was acquired and applied by him for years by operating in his country and now wishes to start, as many have, that same concept that he already had ...but here in Miami; they go ahead and get in touch with the same real estate agent that found their residence and together they find a retail space that they like...including the Realtor likes the space...what a coincidence !!!

Mr. Investor (asking his realtor): “What do you think?”

Realtor : “I think it is just perfect, it has a nice terrace on the lake, the sun hits from the West giving a nice reflection thru the front door and the wall colors can be changed to whatever tint you like....let’s sign the lease”

See the picture here??? What about everything else that I have discussed in Parts 1 thru 4? And that is not even a fraction of the totality of aspects that need to be addressed, revised and analyzed- Do yourself a favor, as an investor hire a real estate agent that knows and understands the subject at hand, whereas is a Restaurant, a Laundromat or any other type of business.

As per you Mr. Real Estate agent with no knowledge, I am not blasting you because of it, I am just asking you to be professional, do not pretend to know something when you don’t- Feel free to write me an email, I’ll be happy to co-broker any commercial deal if you have any renters or buyers- And you will learn something new in the process.... I always learn something with every deal-

I will get more in depth about this in my blog about Agent/Rock Star..... coming soon...maybe!! 
And for now, I want to thank you all for reading and for all your support- May God bless you all....always !

moz@avantiway.com

So.... you want to open a restaurant....! (PART IV)

Hello everyone and let me say thank you for all your support!! 
Let’s get started with PART "QUATTRO"of this series-

So.... you think you found the perfect space for your restaurant, the size is great, good location and the rent is even better so you say to yourself and to your partners “This is a great f@*#*g deal !!!! Let’s sign the lease before we lose it “ right? Caveat Emptor and do your homework- 

                                                        PBC Building & Zoning 

First off, before you run and sign that lease document, you need to do your due diligence as far as finding out if a restaurant will be allowed by local authorities in that particular address; different municipalities have different rules and regulations when it comes to allowing a full scale kitchen being built in any given commercial space, also when it comes to serving alcohol they have rules that may or may not allow you to do so; is there a school or a church nearby? 

Jesus making wine from water in The Marriage at Cana, a 14th-century fresco from the Visoki Dečani monastery


If so, how many feet away are they located from the potential location for your stage..... I mean .....restaurant? 

Obviously, I’m talking about a raw space versus one that had a pre existing food operation in it; nevertheless even if the latter was the case go on and find out things like "how would a change of name and/or ownership affect the interior layout", as in for example : the bathrooms. It will probably cost you the same amount of capital to remodel an existing non ADA compliant bathroom than building one from scratch. As I mentioned in PART I....I think ...or PART 2 (go back and look or actually scroll down and read the whole series rather), if your capital is somehow limited, it is better to find an existing operation that closed down; but even if that's the case, an alteration, such as modifying bathrooms, needs to be known and addressed before you sign that lease on the dotted line; not only will cost you money that was not included in your business plan (you have a business plan don’t you? ) but also, it will greatly affect your square footage, therefore affecting the number of seats or efficiency in the kitchen by reducing space in any of those areas to add it to the restrooms- So let's say you found the space with a pre existing restaurant already built out and all of the sudden you find yourself with a big initial budget shortage to accomplish your goal. 

As I also mentioned in PART I (or II), the main reason why restaurants go out of business on their first or second year of operation is UNDERCAPITALIZATION- Do your homework before signing- You could either ask for it on your proposal or just do it while negotiating the lease terms, it will only take you a few days to go to your city hall and find out all about it. To walk away is easy ....before you sign-

Let’s go back to the “raw space" scenario, all of the above applies +++ PLUS you need to know if there’s a grease trap available.

Most likely if you found a “Vanilla Shell Space” that has just being built, the owner/developer/landlord has pre-destined the spaces that will allow a restaurant attending to all of the above issues, therefore your due diligence is partially done, but .....and there’s always a “but”! You still need to go and corroborate.

Why am I telling you all this? Wasn’t PART IV supposed to be about Lease and Landlord Issues? You’ll figure it out in a minute!

Last but not least, get a general contractor and an architect with experience in building restaurants; DO NOT HIRE YOUR COUSIN VINNIE to do the job just because he has a  GC license !!!

                                                                Courtesy of Disney Junior-(TM)

Ok, now I will tell you why I have gone thru all this before talking about the lease and the landlord issues- See.... it basically comes down to the fact that you may encounter a fly by night developer that has built this nice shopping center....in, let’s say for the sake of giving a random city name....HIALEAH, FL and given his condition of “improv” and without any bad intentions will give you the “hell of a deal” that you thought it was when we started this PART 4 post, so you went ahead and signed a 7 year lease and only then you found out you cannot serve wine or beer because there is a school 350 feet from your place, you go back to Mr. Landlord and ask him to kindly rescind of the contract and he would answer “Son.... I might be a fly by night as you just mentioned, but my lawyers aren’t” you just signed a 7 year lease contract with a 7 years personal guarantee that makes you responsible for the whole amount of dollars of the monthly rent TIMES those seven years and there it goes your business plan up in smoke and facing a potential “suit to perform” and a potential judgement on your credit file.... “Not such a fly by night after all huh? “

So, bottom line is (and to wrap this up) -

If is too good to be true.....Take time to do your due diligence, also work with reputable GC's and architects with experience, hire a lawyer when it comes to revising the lease contract and work with a commercial real estate agent with experience in this area, obviously I will suggest myself and here is my direct email address moz@avantiway.com Commercial Division Director at Avanti Way Realty, but I have to warn you, I have been very busy bloggin' lately so my time is limited ! 

                                       Dante Alighieri, detail from Luca Signorelli's fresco, Chapel of San Brizio,Orvieto Cathedral.

I will see you in the last  PART V of this series where I will be addressing “Foreigners with experience in their own country that come to the US to open a restaurant “ ‘til then.... Cheers!

So.... You want to open a Restaurant....! (PART III)

Hello my dear readers and welcome once again !!!!

I have been very busy this last couple of days looking for a commercial space for lease for a group of clients that want to open .....you’ve guessed it.... a restaurant in Miami !!! 

I told them about this blog and about this post in particular, so they will be joining us.

Let’s start this PART 3 by talking about square footage, a very complex matter that will expose many issues that you may or may not know. 

            

Someone comes to me and says “I need to rent a space to open a Restaurant and I need 1,500 to 2,000 Sq.Ft.”!!!

First of all... How did this person came up with that number? Well, turns out that these people are not hypothetical, they are real and as a coincidence we crossed paths right at this time that I’m writing this series, so I will use them as a “case study” and they will be very happy about it since they love being in the spotlight, after all....they want to open a Restaurant. 

                                                         Def Leppard at the O2

They were working with another real estate agent that did not know much about the subject and who started throwing numbers about amount of $$$ per Sq.Ft. as in “RENT AMOUNT” and that’s all he cared about... the amount of rent which meant the amount of his juicy commission that now he’s not getting because, my now clients, figured this out before they wasted any more time with him. 

                             "YOU ARE FIRED!!!! "

                                                                                    Donald Trump's photo courtesy of The Apprentice and NBC.com

He stuck by their request of square feet needed without asking them why... See? What happens is that in my field you cannot do it all, you cannot know it all, like I do not know jack about let's say.....marinas for instance, it is just not my thing, so I do not attempt to strike a deal related to something I do not have knowledge of, and that is exactly the beauty of Commercial Real Estate... but let’s stick to the subject of this post shall we?

                                   This Photo Break is brought to you by 

                                    ( ADHD moment )

                       

So, I asked several questions to my new clients and it turns out that 2,000 Sq.Ft. was not going to cut it !!! “What type of food? What’s your business plan like? Is it a high end fine dining concept that you’re thinking about running? What’s your start up capital? Are you going to have delivery service? 

All these questions were answered -luckily and in part- because these particular group of people own one restaurant already (but not here in the US....which is important- and I will be discussing this in the last part of this blog) so they have some knowledge necessary, luckily I met them and they fired their real estate agent, and sure as hell they won’t fire me ! 

As I said, you cannot know it all, or at least you cannot fool yourself that you do (I will blog about this ...”Agent/Rock Star”)

You may be probably asking yourself “What does the type of food has to do with the square footage?” Well, the more complex the menu is, the more efficient the kitchen needs to be.

                                     Venison Mille Feuille w/ mint couscous @ Angie's World Cuisine in Coral Gables, FL

                          Photo Courtesy of MYSELF,  shot with my Nikon and a fixed 50 mm lens that I got from Santa

The menu ultimately determines the size of the kitchen, quality of the food and the amount of “covers” that will be served efficiently with the lowest margin of mistakes, which translates in the quality of service given to the customers. Now....watch this- The Menu dictates the size of your dining room as well, which is the amount of people you are going to fit into your space, according to the concept you will be designing around “The Menu” !!! See how everything is inter related? Do you realize how intricate and complex this thing is? 

           Courtesy of MYSELF, I took this pic when I bought my mew Nikon. Shot with a 18-200mm Nikkor Lens

Do you still want to pursue this illusion of having a restaurant? Let’s continue since my new clients will, and I will tell you how all this turns out-

If you are going to serve fine dining cuisine most likely you will need several people in your kitchen and each one of them will have a station where they are going to perform their duties - Think of the scene of Remy with Chef Gusteau describing from above each one of the positions in the kitchen. 

                                                                              Courtesy of Disney/Pixar

Now let’s move onto the dining room of Chef Gusteau’s restaurant, which is obviously a fine dining experience, and analyze how separated the tables are from one another, see how it all starts to make sense? 

If you think about running a sandwich shop then the mount of space needed everywhere (aside form ADA compliant bathrooms for which you will need aprox. 400 Sq.Ft. standard) is not as in a 5 star high end restaurant- 

Rule of thumb is : 27 to 32 Sq.Ft. per person including kitchen, bathrooms, dining room, and server stations are needed to run any restaurant, then you will need to adjust it around building codes in your city, concept (fine dining, cafeteria, mid range trattoria style etc.) and features such as full bar, a stage, maybe you want to put a nice fountain right in the middle of the dining room, etc. All this data needs to be  on your business plan’s spreadsheet to see if the math adds up; in the case of this new clients of mine it turns out that they will need between 3,600 to 5,000 Sq.Ft. of space so they have to go back to their drawing board and adjust their initial numbers of their original business plan.

On Part IV of this post I will be discussing the lease and landlord issues which is another big piece of the equation to be considered and will definitely impact your bottom line $$$$ .

See you in a few days!!

                             Courtesy of Ratatouille/Disney/Pixar

Cheers!!!

So.... You want to open a Restaurant....! (PART II)

Hello and welcome to “part deux” of this post about restaurants; mind you that I will just be giving you a general overview of this complex subject; I simply cannot tell you everything I know because first of all it is not that much what I know, and second of all it would take roughly 23,456,986 parts or chapters to get in depth addressing every single issue.

To begin with I will start with the obvious, and that is “Location, location, location “ 

                                                 Kemah Boardwalk- Houston, TX
As simple as it may sound and as repetitive or trivial rather, the location of a restaurant is not only important because of the amount of traffic you might or may not get given any specific quadrant or street or corner, but instead it is very important because it is directly related to the food and concept you will be presenting to your potential customers...

...and also you may want to consider demographics before deciding on a certain spot. 

Most likely if you live in the city where you are thinking about opening your restaurant you already figured out what concept would go and in what neighborhood.

                                                          Puglia, Southern Italy


Here in Miami for example there are two different kinds of crowd, tourists and locals, each one of them with its own sub-categories but we are not going to get into that. Will you cater to locals? Will you cater to tourists? Or will you cater to both!

                                                                                       Beacon Hotel -South Beach, FL

Once you are totally ready to commit suicide find a good real estate agent that knows about this things (like me for instance)moz@avantiway.com   Commercial Division Director at Avanti Way Realty in Miami, FL

Then you have to find and architect, a contractor which will recommend a person that “walks the plans” thru the different departments to obtain approval for building permits, then you need to establish your business plan (very important) and design (also very important) - 

The main reason why restaurants fail in the first two years of operation is 
                      “UNDERCAPITALIZATION” 

which is a direct consequence of a poorly prepared business plan because of lack of knowledge. 
Think about it, you put on your excel spreadsheet your expected dining room rotation per day  times 12 months times your projected average ticket of X amount of dollar amount, and turns out that after your Grand Opening you were off by 67% and you are already riding that wave..... Plus you did not include things like insurance premium, security deposits for the landlord, pre paid rent, beer and wine license, coffee machine, etc. Turns out that there is an extra $50,000.00 that you overlooked and were not included in your business plan!!!!
Bottom line is that even If you think that you know what you’re doing, your business plan must be accurate or hire someone to do it for you- A feasibility study for any given area is in order; you cannot just go by the way you think or see that restaurants are doing in a certain neighborhood, like this one in this photo.... 

....that would be the dumbest financial move to make!!! 

Second item relates to another big issue and that is construction costs, I can only tell you what is more or less standard for my area, being Miami one of the largest metropolitan areas in the US, construction cost for a restaurant will start at around $80 per Sq.Ft. with low end finishes that is, once you start getting into high end touches like polished concrete floors, specialty lighting, sound system, etc. you will be in the $200 to $300 per Sq.Ft. range..... easily !! 

                                             Stephan Pyles Restaurant- Dallas, TX

I personally think that the best deal is to find a pre-existing restaurant already built out that closed down so you don’t really have to deal with construction from the ground up but rather some remodeling to fit in your concept and everything else related to a change of name and ownership, plus lots of advertising to make people notice that it is someone else with a different concept in that same spot, I assure you it will be a lot cheaper than building one from scratch. The good thing about this scenario is that you will most likely find all the most expensive and biggest headaches already in place, such as kitchen hood, grease trap, sprinklers, chairs, bathrooms that are ADA compliant and the BAR- Plus you will not have to deal with permits, construction, building inspections, new plans, etc, etc, etc.

These are the most expensive items that I could think of in a restaurant. 

If you still need a brand new space and wish to build it from the ground up then I invite you to read PART III of this series. For now ...... 

Cheers !!!

So.... You want to open a Restaurant....! (PART I)

Are you sure!!!? 

                                                                                       Photo Courtesy of Pari Dukovic

That is my first question to any prospective buyer that comes to me looking for restaurant space, followed immediately by my next one question without even letting them answer the first: Have you ever been in the Restaurant business? Do you know anything about it? Have you had restaurants in the past?  That’s rather 3 or 4 questions but they are all necessary; what happens is that I have encountered many people in the past that have come to me because of my experience and track record in both the real estate field and the restaurant business and I have found many times a common denominator, and that is lack of experience or lack of knowledge together with a strong desire for being in the spotlight; after all owning a restaurant looks very glamorous, elegant, gives you the illusion of belonging to the jet-set, of being part of a high class/VIP crowd, it’s a self esteem booster; all these ingredients together are a strong cocktail which will lead an investor to financial disaster- SO....!! Do you really want to open a Restaurant and do you really know what you’re doing? If so I will be happy to help you find the right spot or even build one from scratch...

                                                                               Apotheke in NYC - Photo Courtesy of Noah Kalina

...but if you have not been in the business, and regardless of all the warnings you are so hard headed that still want to venture in dangerous waters, then there are a few things you need to know which I will be discussing in the following PARTS of this short series. I am dividing it in “PARTS” because there are many topics that need to be discussed and if for you this is something new, and still want to do it, then it is better going slow so the digestion of information will be more effective. 

I will be discussing on PART II and PART III of this post things such as permitting, construction, design and concept, on PART IV we’ll be getting into leasing and landlord issues which are a key factor needed to be taken care of BEFORE getting into a commitment and on PART V we will be discussing what I have been seeing a lot lately and that is foreigners with experience in restaurants....in their country. 

Cheers!