Do you own or lease your hostel location?

Leased for first two years. Purchased a beautiful building in the core of the city, third year.
I would suggest lease if you dont have $$$$. Then with a proven business model attack the purchase.

Well, in its entirety its actually a 10 year (5+5) Lease, with purchase options for both time periods

It works like this:

NET Lease: Over the course of the next 5 years I have a regular NET lease (base + ops costs) NET meaning the owner pays the insurance/utilities/taxes

Purchase option: On top of that I have a purchase option on the property. I can exclusively purchase the property within a predetermined time period at a predetermined price.

Lease-to-own: A portion of my lease money each month goes to towards the purchase of the future property purchase. My lease rate is the same as it would be if I were just leasing the property.

From a value perspective, I actually am not spending any more or less that I would had I just signed a lease and decided at a later time to purchase. But I have an option to purchase and a guaranteed purchase price with this deal, some of my purchase cost is slowly knocked down over the course of the five years to ten years. If I find I do not have the capital after 5 years or the access to credit - well, I have another 5 years to purchase it (though obviously the pricetag changes after the first 5 years).

Well, I negotiated the deal myself, though my landlord had a realtor that I deal/dealt with intermittenly but I find it much better dealing directly with the landlord. The reason being is that you both have motivation to get the deal sealed, realtor's are more worried about getting the best commission aka highest price (right now) they can out of the deal whereas the landlord wants his property filled and the lease revenue coming in. My landlord has actually been a huge help to getting this project going and I see him as a stakeholder in my business. My success is means his success. I make money, and he makes money. When we all make money, we are all happy, happy, happy.

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I started my search for a property with a realtor of my own, then I found out that trying to make anything happen took forever - I would talk to my realtor, then he would talk to the landlord's realtor, then the landlord's realtor would talk to him then the reply comes back again through the realtors. It was like trying to talk through water. Also I would refer my realtor to potential leasehold properties, he would in turn call the realtor associated with the ad. If the other realtor said no to our use as a hostel he would accept no they are not interested in us. I don't really accept no in business (in my experience, "no" is an obstacle and just means make a better offer). SO I would then call the other realtor myself and get a viewing, helping him understand exactly what a hostel is. So the entire time I really didn't see any benefits in having a realtor other then they slow down the process and make it more difficult. So I dropped them and just did my own research on commercial leasing. (basically a whole new education on the subject)

Another reason I got rid of the realtors (and I leave the lawyers at bay until the last minute) is negotiation. Why let someone else negotiate such an important deal for you, they have no real motivation in it other than getting a good deal for themselves and getting you to approve it. Negotiation is business and business is negotiation - one and the same. Anyways enough euphemisms, realtors have left a bad taste in my mouth and I doubt I will ever use one again.

One other thing that will help is making sure you know the city zoning bylaws inside and out, it would have helped me save a lot of time when I first started looking.