^^^^what^^^^he^^^^said^^^^
RV raises some valid points.
The topic of "why do business owners prefer to rent rather than own their premises" has been discussed many times in this area of the forum and the overall sentiment, is that most would rather invest the capital back into the business to get a better (short to med term) return.
Yes, there are valid reasons for a business owner to purchase their premises however this usually occurs for one of a few reasons...
- They need a very specific building built to spec and no landlord is willing to go down this path with them..
- The business has established itself firmly within the location and is certain it works and is right for them. They also must be certain that they will not outgrow the location to quickly.
- They have oodles of cash and can't bear the thought of paying rent to a landlord.
By the sounds of it, your friend fits into none of these categories so I would be seriously considering RV's advice and going down the path of leasing first (even it means a significant fit-out) and validating the business viability first.
Perhaps another option is he negotiates an advanced purchase "option" in 2 years with the current owner.
He could negotiate a clause that gives him first option to purchase the property for "$X" (x can easily be determined via rental increases and lease options etc) but it doesn't necessarily lock him in should he change his mind.
At the very least, he'll then be able to invest the spare capital back into the business right at the beginning (when he needs it most) and he'll still have the option of purchasing once he's on his feet.
He'll also be a better position to negotiate rates with the bank once he has two solid years of trading as a restaurant under his belt.
And if it all goes t*t's up, he's only responsible for the lease rather than loosing the lot..
Cheers
B.D