Analize this deal? Financing Suggestions... - Posted by Scott P

Posted by Random on April 08, 2003 at 17:17:30:

If you had an 8% note for all $1.4MM, you would have NO cash flow (probably negative actually.) Remember, this is a BUSINESS as opposed to rental real estate. You either have to manage it yourself or hire a manager. There’s not much upside if you are 94% full other than slowly increasing rents, but the deal will hinge upon finding truly cost-effective financing. Even at 6.5% financing 100% of the way, you may not have enough cash flow to pay a manager + utilities + other operating costs. You’d have to use a razor to find the profit at this price.

Analize this deal? Financing Suggestions… - Posted by Scott P

Posted by Scott P on April 08, 2003 at 13:43:19:

Offered by a local broker…I just need any suggestions to go forward (ie, questions to ask, etc.)

Business: Mini Storage Facility
Location: Northwest Arkansas
Gross Sales: $122,000.00
Selling Price: $1,442,000.00
Inventory: $0.00
Income Source: Income Statement
Owner’s Benefit: $100,000
Real Estate Included: Yes-5 acres
Asset Value: $1,200,000.00
Down Payment: Negotiable
Terms: Negotiable
Reason for Selling: Several other business interest

Summary: Outstanding Mini Storage Facility with 250 rental units, 4,800 sq. ft. warehouse, outside storage rental and several additional rental facilities. Located on a major highway with room to expand. Average occupancy rate around 94%

Re: Analize this deal? Financing Suggestions… - Posted by Don Dion

Posted by Don Dion on April 28, 2003 at 13:48:34:

If your looking for a mortgage broker to help you with this transaction drop me a line and I will run thru the numbers with you. You will need complete package from the seller 2000, 2001, 2002 and ytd 2003 numbers to do the package. Max LTV 75% choice of 5, 7, 10, 15 or 20 yr self amortising with amort schedule of 20 or 25 years, aprox 275 to 325 over the US treasury. If this sounds like what your looking for drop me a line. I will go over the details with you and work up a complete package that is sent into 1 to 6 lenders for the best deal on your purchase.

Re: Analize this deal? Financing Suggestions… - Posted by ray@lcorn

Posted by ray@lcorn on April 17, 2003 at 17:23:03:

Scott,

The first (but not only) thing you need to value income property is the real operating numbers. Your listing shows “gross income” which I suspect is a projected NOI. Even if that is the case, it sounds overpriced.

ray