Help!!! Real Estate Deal in South Georgia - Posted by Todd

Real Estate Investing
1

Posted by Don Dion on July 02, 2003 at 09:47:10:

what kind of building is it? office, industrial, multi family ect ect. If its office I have lenders doing 80 to 85 % of purchase price on 10yr fixed 25 n 30yr amort.

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Help!!! Real Estate Deal in South Georgia - Posted by Todd

Posted by Todd on July 02, 2003 at 07:05:33:

Hope all is well. I have just found a commercial real estate property and would like your thoughts on
how to fund it.

This property is located about 75 miles south of Atlanta.
Price: $4.9M
Occupancy: 100%
Sq. Feet: 39,400
Investment: Cap Rate: 10.40% actual
Factors: Cash-on-Cash: N/A% actual
Price/ Sq. Feet: $124.37 (this is the price if this property was in
the heart of Atlanta)
Built: 1994

We have done a market analysis for this area and know that the asking price for this square footage is not realistic. Should be somewhere between $44-57/sq ft. with a top end asking price of around $2.4M

Funding:
Provided that the existing tenants are happy and have longer term leases of 3-5 years (or longer) remaining, I figured that I could take the leases and some cash (??) to bank as receivables. I also have another small building in the area worth about $100K or so to bring to the table

Questions:

  1. Where could I find a lender to make this happen?
  2. How can I make a lender salivate to fund this deal?
  3. How much cash should I look to bring to the table?

Cheers,
Todd

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Re: Help!!! Real Estate Deal in South Georgia - Posted by Todd

Posted by Todd on July 07, 2003 at 15:46:03:

Hi Everyone,

Thanks so much for your responsiveness! Within the same day of posting for help, I learned that this property went under contract. Ed and others wrote and provided me with some excellent advice on how to proceed further.
I am back in the hunt.

Cheers,
Todd

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Re: Help!!! Real Estate Deal in South Georgia - Posted by Jim

Posted by Jim on July 06, 2003 at 21:43:36:

Todd, I invest in R/E part time but my full time job places me in front of Community Bank lenders and Presidents. Let me know if you would like me to put you in touch with a few. I have some contacts in the area that you describe.

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Re: Help!!! Real Estate Deal in South Georgia - Posted by Les

Posted by Les on July 03, 2003 at 10:07:12:

Todd,

If I understand correctly, you want to factor the future rents as a means of raising cash for the down payment–Is that correct?

It may be possible that someone would do the factoring, BUT, a mortgage lender would not look favorably upon it since you would not have the future income to cover your operating expenses and service the debt.

As a general rule, you should expect to put at least 10% into the deal, with any difference between that and the loan (80-85%) made up typically by a seller second. You could either borrow from your existing properties as a means of raising your DP, or some lenders will cross-colateralize with other properties.

Drop me a line if you have any additional questions.

Les