- Thread starter Seamonkey
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Lease costs
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Without answering your question you need to search these forums and spend some time here before you even consider such a bold move.
There are more restaurants here than tourists and I have seen many close.
There are plenty for sale and if you buy one you could eliminate your competiton !
Been doing tons of research for quite some time now, the question I asked is part of it.
QUOTE=mike l;798996]Without answering your question you need to search these forums and spend some time here before you even consider such a bold move.
There are more restaurants here than tourists and I have seen many close.
There are plenty for sale and if you buy one you could eliminate your competiton ![/QUOTE]
QUOTE=mike l;798996]Without answering your question you need to search these forums and spend some time here before you even consider such a bold move.
There are more restaurants here than tourists and I have seen many close.
There are plenty for sale and if you buy one you could eliminate your competiton ![/QUOTE]
Not to be a "Nay-sayer", but just coming from a $$$ perspective, I think I saw a "restaurant" in the Top 10 WORST investments for 2010 (Forbes).
Especially in these times, we need to always look into what is called "next best alternative". This gem on day 1 of B-school, suggests that if I have a quantity of $$ to make an investment, then I need to examine the scenario where I have 5 potential projects where I can sink X dollars: Where is my Next best Alternative.
I'm not sitting in NY right now, but if I were, and I had 50K, my "last best alternative" is moving to a foreign market and plunking down a business (where I feel I can be successful because I was successful in NY).
Disclaimer: This is not a proposition, advice nor was it intended to offend. Just an opinion.
Especially in these times, we need to always look into what is called "next best alternative". This gem on day 1 of B-school, suggests that if I have a quantity of $$ to make an investment, then I need to examine the scenario where I have 5 potential projects where I can sink X dollars: Where is my Next best Alternative.
I'm not sitting in NY right now, but if I were, and I had 50K, my "last best alternative" is moving to a foreign market and plunking down a business (where I feel I can be successful because I was successful in NY).
Disclaimer: This is not a proposition, advice nor was it intended to offend. Just an opinion.
You know, that is an excellent question, and I did a couple of off the cuff analyses on commercial leases when I was last there. I asked around but there don't seem to be any statistics or reference material regarding. Firstly, I'm unaware of any grading system for retail or mixed use or office space....I believe commercial real estate is not that developed, nor is residential real estate for that matter. In my area we at least have access to Loopnet or Costar for comparison and market analysis. Pedro Clisante retail and mixed use space is Class C or D at best and you should pay within that tier. I couldn't find any Class A or B space anywhere within walking distance of Sosua's hub. I don't think it exists.
Please anyone, correct me if I'm wrong, but I believe lease prices to be a wild variant along Pedro Clisante, with tenants paying whatever landlords set without regard to what is being paid next door, and vacancy rates are comparatively high using just an eyeball analysis.
Regardless of what some people think of Sosua or its nightlife, if you are able to lease space as close to ground zero as possible (El Flow is an excellent example) you could have success if your business is tailored to the masses. Unfortunately the 800 pound gorilla on the street draws a certain demographic...you need to tailor business to El Overflow...
There may be a good real estate agent in the area who knows commercial..but I believe you should keep your business plan and negotiations for real estate as two different entities.
And, since there is no standardization of training, data collection, code of ethics, no local multiple listing service for agents to use, or licensure for agents you need to get with someone there who really knows real estate. Your lease will be your single biggest recurring expense notwithstanding your employee outlays...you need to see analysis...if you don't get it move on to the next agent, or if every agent tells you it doesn't exist, you are subject to the whims of your landlord.
Please anyone, correct me if I'm wrong, but I believe lease prices to be a wild variant along Pedro Clisante, with tenants paying whatever landlords set without regard to what is being paid next door, and vacancy rates are comparatively high using just an eyeball analysis.
Regardless of what some people think of Sosua or its nightlife, if you are able to lease space as close to ground zero as possible (El Flow is an excellent example) you could have success if your business is tailored to the masses. Unfortunately the 800 pound gorilla on the street draws a certain demographic...you need to tailor business to El Overflow...
There may be a good real estate agent in the area who knows commercial..but I believe you should keep your business plan and negotiations for real estate as two different entities.
And, since there is no standardization of training, data collection, code of ethics, no local multiple listing service for agents to use, or licensure for agents you need to get with someone there who really knows real estate. Your lease will be your single biggest recurring expense notwithstanding your employee outlays...you need to see analysis...if you don't get it move on to the next agent, or if every agent tells you it doesn't exist, you are subject to the whims of your landlord.
Also, there is a BIG difference between business being for sale and negotiating lease terms. If you are simply buying a business you are probably inheriting what could be a flawed lease that may have caused the sale in the first place.
My best recomendation to you is to negotiate your best terms on vacant space and then tailor your business plan to the lease expense.
My best recomendation to you is to negotiate your best terms on vacant space and then tailor your business plan to the lease expense.
Pig, I think that any "new" development money will work best with business that draws the local demographic, yet has enough interest within the expat and tourism components to accomodate spikes in business. I see the same mistakes made over and over again down there...businesses sometimes have such a tight focus that any downward trend in expat or tourism traffic kills revenue.
The question is, really, what type of business is there that could draw the local demographic during both daytime and evening business hours? Or, should the focus be on daytime hours or evening hours traffic only? Two very different types of business are represented. It is quite a perplexing dilemma. I think any business focus should be on what the majority local demographic both wants and needs...give them a reason to go there and spend money, and let the expats/tourists find it as business expands from a strong base.
The question is, really, what type of business is there that could draw the local demographic during both daytime and evening business hours? Or, should the focus be on daytime hours or evening hours traffic only? Two very different types of business are represented. It is quite a perplexing dilemma. I think any business focus should be on what the majority local demographic both wants and needs...give them a reason to go there and spend money, and let the expats/tourists find it as business expands from a strong base.
What an interesting thread this has become. You look at Sosua and think, WOW this place is brimming with natural beauty - it's certainly one of the most beautiful bays I've ever seen. The more grim aspect of the town just doesn't go with that and with the changes overall to Sosua, Puerto Plata, Cabarete, etc. in the last 4 years, we've long been thinking that Sosua is a prime place to begin again. Developments like Infiniti Blu (not anything to do with me btw) perhaps begin to set a new standard of quality accommodation that can be infectious.
At the moment, the buildings that line the bay are a mish-mash of 'style' and mostly no style at all which does Sosua no favours. It may be kidnapping the original OP's question, but nevertheless, a serious redevelopment of Sosua (given that there is no current 'care' of the environment) would be good for the North Coast of the DR imo, even if along the way many pockets are filled up. Or, am I being very naive?
At the moment, the buildings that line the bay are a mish-mash of 'style' and mostly no style at all which does Sosua no favours. It may be kidnapping the original OP's question, but nevertheless, a serious redevelopment of Sosua (given that there is no current 'care' of the environment) would be good for the North Coast of the DR imo, even if along the way many pockets are filled up. Or, am I being very naive?
This post has gotten interesting eventhough it has taken a bit of a detour. When I first starting looking at Sosua as a place to invest, I saw potential due to "new money" coming in. The new proposed marina will be great for the economy. Being a sailor, I can honestly tell you that it would be a great new destination for many as there isn't much in terms of service on that coast. Ocean World is pretty, but extremely expensive for the average sailor. I can only hope that the Sosua marina will be affordable.
I've read many negative comments on this forum about how slow business is in DR and how one should stay away from going into business. As we all know, things are slow in most parts of the world, but things will pick up again soon and the travellers will be back. We must weather this storm. The DR is still one of the least expensive places to visit. Anytime you invest money, you must research the proposed venture, no matter where you are in the world. Perhaps it's true that you that one must lower his expectations on the ROI, but as long as you know that going in, there should be no surprises. Life is about taking risks, appreciating each day and meeting new people.
I currently work 60 hours/week and our Canadian Government legally takes 50% of my income for tax...and that is legal? For me, getting into business in Sosua isn't about getting rich, it's about the quality of life, making a decent living and escaping this rat race. ....and the great weather!
I've read many negative comments on this forum about how slow business is in DR and how one should stay away from going into business. As we all know, things are slow in most parts of the world, but things will pick up again soon and the travellers will be back. We must weather this storm. The DR is still one of the least expensive places to visit. Anytime you invest money, you must research the proposed venture, no matter where you are in the world. Perhaps it's true that you that one must lower his expectations on the ROI, but as long as you know that going in, there should be no surprises. Life is about taking risks, appreciating each day and meeting new people.
I currently work 60 hours/week and our Canadian Government legally takes 50% of my income for tax...and that is legal? For me, getting into business in Sosua isn't about getting rich, it's about the quality of life, making a decent living and escaping this rat race. ....and the great weather!
Some very true comments here already and there is no real code to answer your question with but let me give you an example. One of the major bars in prime position on Pedro Clisante is paying approx US$4.50 per m? on a 5 year lease. The rent increases at a pre-determined amount each year. I pay approx US$12 per m? on Alejo Martinez.
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You really need to learn Sosua if you are even considering a six figure purchase of a bar!
Calle Alejo Martinez is the road parallel to Pedro Clisante, a major street, but not as commercial as Pedro C.
http://www.sosuabaygrandcasino.com/images/sosua_map.gif
This may sound really arrogant, but if I had 100 large in my hand, the last place I would put it would be in a restaurant or bar in a market where my research is limited to a blog. Hmmmmm
#1 Mistake Americans make is that they think their successes in buisness in the States or EU is a Trump card for success in DR.
You simply cannot throw a US model at this place and expect it to work. AND, by the time you "try and learn" from your mistakes in some sort of a process improvement model, you lost your $$$.
Open an Etrade account with the 100K and live here as a vacationer.
I know what I'm going to write sounds negative, but I think it's for the most part realistic.
- you could quite likely work 60 hours/week to keep your restaurant running
- Dominican taxes assuming you do things legally... flat 25% corp tax on your restaurant's profits, 16% ITBIS on everything you sell, 10% required tax on each sale to supplement employees salary, 1% tax on corporate assets
- Don't forget to set aside 1 month pay per employee annually for liquidation (severance pay). If I'm not mistaken, unless the employees are liquidated prior to you taking over... you inherit the need to pay their liquidation upon termination.
- Dominican taxes continued: Personal Income up to
- RD $290,243.00 annually: exempt.
- RD $290,243.01 - RD $435,364.00: 15%.
- RD $435,364.01 - RD$604,672.00: RD $21,769 plus 20% of income above RD $435,364.0.
- Income above RD $604,672.01: RD $55,630 plus 25% of income above RD $604,672.01.
- Add in your residency costs so you can work legally
- You're right, you likely won't get rich
- Quality of life... depends how much money you arrive with & whether it buys the quality of life you want. Don't count on supporting a 'Canadian lifestyle' with the earnings from a small restaurant in Sosua. It's not a sure thing.
- Making a decent living... many (perhaps most) restaurants and bars in Sosua don't make much money. Some do, you might get lucky with the combination of location and what you bring to the business.
- Escaping the rat race... you're trading Canadian rats for Caribbean rats
It's not impossible to do & it can be fun. If your finances are iffy upon starting... it can be a very difficult road.
The reality is most on here would like to see you succeed. Many have the same dreams. Those who've actually attempted businesses here (or have friends in business) have a taste of the realities that are hidden to newcomers.
If you have the money... come down, rent a place to live, and work beside someone at any restaurant you choose. Volunteer if you have to. Find out how to deal with suppliers, employees, police, etc, etc. Then when you're comfortable... make the leap. Even if you don't see for sale signs, many are for sale. You'll also not have to ask 'where is that street?' You can go into business from a stronger position than jumping into a specific location/situation from 1000's of miles away.
Also... if you do earn a sizeable amount... you're probably legally obligated to pay some taxes in Canada? :\
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OP, CFA is right to open your eyes to the beginning of the Dominican tax and labor codes, BUT...
The reality of a restaurant is you will "most likely" have to dig into your pocket to make payroll and meet costs weekly. It's a slave business and exponentially reduces your quality of life. Let's not even approach employee theft. Good supply chain is VERY tricky here as well.
Again, unless you've been in the biz for years and you live for it, it's simply not a good model here in DR. You said you had 100K to invest -- I personally would look at the "next best alternative".
Not everyone wants to live as a vacationer! I for one get bored by the 2nd week! And this thread has gone the way of so many others where someone posts fairly specific question and ends up getting a million reasons why they will fail in business in the DR!
No disrespect to anyone, just my observations!
No disrespect taken. And the 'negativity' is a repetitive theme... but perhaps it's repetitive because in reality truly thriving businesses run by expats are few & far between?
Why isn't anyone writing how great it is to be in business in Sosua & how they strongly recommend jumping on the opportunity to buy any particular business because you won't find a similar gold mine any time soon? :smoke:
The reality is there are a lot of businesses in Sosua that can be bought for US$75k and much lower. That gives you some idea of their value/earning potential.... and an inflated idea at that. If business were so good, why would the property owners themselves settle for collecting rent of say $400-$700/month? Hmmm?
Black Dog,
Fair enough, BUT show me where the rest biz is the best alternative for an investment. If he wants to do something to keep busy, dairy may be an alternative. You're in real estate, right? Again, NOT a slave business.
Besides, dude, to be fair, I have many of your replies that have gone off topic. No offense taken.
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