Should I buy a wedding venue with its land or only the business?

Many wedding venues are run by the family that owns the land, so a sale raises a structural question: do you buy the property along with the operating business, or buy the business and lease the property from the seller? Neither is right for everyone. The choice changes how much you need to raise, how a lender looks at the deal and how secure your position is. For the wider decision, see should I buy an existing event venue or open a new one.

Buying land and business together

You own the grounds, barns, ceremony sites and parking, and you decide what to build, repair or change. You also carry the property and the business risk together, and you need more capital. Lenders may look at the real estate and the operating income separately. Ask for an appraisal of the land and buildings on their own, apart from the business.

Buying the business and leasing the land

A lease lowers what you need up front, but your business depends on the lease. Read the term, the renewal rights, who pays for repairs, whether you can alter buildings and what happens if the landowner sells. A short lease on a venue whose value is its location is a real risk. Your lawyer should review the lease, and BDC’s 13 terms to understand before signing a commercial lease is a useful reading list.

Questions to settle either way

• Is the rent, if any, set on terms an arm’s-length landlord would accept?
• Can the lease be renewed, and on what basis?
• What does the lender need to see for the land and for the business?
• Does the seller want to keep the land for a reason that affects you?

Your accountant can explain how each structure treats the purchase for tax. Local land-use questions belong with your lawyer.