When you go over all the different thoughts in your head about buying a pizzeria, buying the real estate may be the last one to cross your mind. In the beginning, securing the funds to just open a shop is hard enough. You may be more interested in making sure you get a favorable lease. That is all fine, but in time your mindset should evolve. Now, this is not legal advice (just a friendly tip from one business owner to another), but when you negotiate that first lease, make sure you include something that states the following:

Nick Bogacz, founder and president of Caliente Pizza & Draft House in Pittsburgh

Limited Right of First Refusal for Sale of Building 

1. Landlord Right to Sell Building to Members of Family. Landlords shall have the absolute right to sell the Building to a Member of Landlord’s family and assign this lease to a Member of Landlord’s family.
2. Tenant First Right in the Event of a Contemplated Sale to anyone other than a Member of Landlord’s Family. In the event that the Landlord intends to enter into an agreement of sale to sell the Building to a purchaser, other than a Member of the Landlord’s family (“Prospective Purchaser”), during the time in which Tenant is leasing the Premises, Tenant shall have a first right of refusal to purchase the building under the same terms and conditions as the Prospective Purchaser under the agreement of sale. (a) Upon receipt of an offer to purchase the Building (“Building Purchase Offer”), Landlord shall provide written notice to Tenant of the terms of the Building Purchase Offer. Tenants shall have thirty (30) days after receipt of a written notice of the Building Purchase Offer to match in writing the Business Purchase Offer, on the same terms and conditions. If Tenant fails to match the terms of the Building Purchase Offer in writing within thirty (30) days from the date of the receipt of the written notice of the Building Purchase Offer, Landlord may sell and transfer the Building to the Prospective Purchaser.

Now that you have the verbiage to eventually buy the building that your pizzeria is in, let’s discuss the upside of buying real estate. Owning a building lets you build equity that can be used in many ways, whether to strengthen your current pizzeria or use it to purchase another pizzeria or building. I have found that owning thousands of dollars of equipment is a necessary thing for a restaurateur, but banks often hate lending against equipment. They love when you own property and will lend on the equity.   

Another advantage is that any improvements you make to the building are capital improvements that may help your tax bill. If your building has other tenants, that will also help offset your mortgage. And one day, when you sell the business, you can hold on to the property and become the landlord, allowing you to still bring in a strong stream of income.

Ultimately, owning your building and renting some of it out will help your cash flow, and benefit you in your business and personal endeavors. Next month, we will discuss in depth some ways to control and manage your cash flow.

Nick Bogacz is the founder and president of Caliente Pizza & Draft House in Pittsburgh.  Instagram: @caliente_pizza