Saturday, January 15, 2005

Restaurant

A few weeks ago I was tentatively offered an opportunity to invest in a restaurant nearby. There is another investor ahead of me and apparently one of the current owners is hesitant about bring more partners aboard. The owner that I have spoken with seems pretty confident in the likelihood that I will be have this opportunity.

From their perspective, I am a great candidate for the next partner for three concrete reasons: 1) I used to cook professionally as both a line, head breakfast and pastry chef, 2) I am a lawyer and would be able to do any contracts without incurring outside counsel fees, and 3) although a relatively new arrival to the scene, I have become pretty entrenched with the bikey community and share the same ideas and vision about bicycling and environmental responsibility.

From my perspective, I am interested in investing in this restaurant for several reasons--some practical and some less tangible. First, I feel really excited about the idea of saving money for this investment in a way that saving money for a house down payment does not excite me. I think I would be very diligent and disciplined with my finances to make this work. Secondly, I expect that my ownership interest in the restaurant would be able to be used as part of a down payment (probably as equity securing a line of credit) towards a condo in May 2006. These are my practical, responsible reasons the restaurant appeals to me. A less tangible reason includes me wanting to have a steady outlet for cooking--I am very excited at being able to work with menu development along with actually cooking for the restaurant at times. I think I would like to work about one day a week, probably running brunch and/or preparing dessert components/pastries for the upcoming week. Even though my time is limited, working at the restaurant is very appealing to me. Additionally, ownership in this restaurant would cement my position in the bikey community and give me additional chances to meet more cool people.

Anyway, coming home from the Vampire Ride this morning, I stopped at the Bank to inquire about my ability to obtain a loan for this investment. First we talked about getting a personal loan--but the interest rates are crazy for an unsecured loan--plus there are penalties for paying the loan off early. I mentioned using some of my parents' assets as collateral, but in that instance my parents would need to be the primary lendee--yuck. Finally I suggested using the share in the business as collateral to secure the loan and this is the best option. Luckily the restaurant is old enough to have all of the necessary documentation for obtaining this type of loan. So on the financing front this is definitely feasible. Now all I have to do is wait to hear from the rest of the partners and really crunch some numbers to determine if it is a good investment. Some of my law friends who work with business transactions have readily agreed to help me review the books to make this decision. Very Exciting.

On a separate note--I will pay down my remaining credit card debt with my next paycheck. So less than four months of working will negate my year and a half of unemployment--sweet.

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