Posted by ray@lcorn on January 11, 2003 at 19:46:09:
Brian,
Sale/lease backs are a great deal structure with the right players. For me, the owner as a partial tenant and property manager using my money doesn’t turn me on at all.
It sounds like he’s looking for a less painful way to settle his divorce. That can make for a very motivated seller, but not one I’d want to rely on after the settlement hearing.
The numbers don’t make sense without his lease, and there is really no way to know how stable his company is going to be post divorce. If the market is strong and the space would lease at market rates at or above the present amount, then the deal might make sense. But there is no way I would do the master lease back.
Is buying & doing a lease back a good option? - Posted by Brian,WI
Posted by Brian,WI on January 09, 2003 at 15:33:37:
Thank you Ray Alcorn and everyone else that has been giving me advise on a lot of recent posts! I appreciate it.
I have one last one as it pertains to properties I’m looking at to cover a 1031.
First a little about the 1031…Sold a property Nov. 26 for $185,000 that I had a $75,000 mortgage on and came out of it with about $106,000. I also have about $110,000 from a 1033 exchange(long and short of it is I have the $110,000).
Property:
8-studio apartments renting $325/month = $2600
2-2 bd apartments renting $450/month = $900
Beauty Salon $950/month
City Chamber of Commerece $1000/month
Chamber is in 3rd year of 10 year lease, beauty salon in second year of automatic 2 year renewal lease(been there for years). There are also 2 “vacant” units in the rear that would bring in $500 each. These are used by the owner for his electrical contracting business and he would stay there.
The seller is getting divorced. He says he would lease back the space he uses for his business for 5-7 years guarenteed or he will enter into a master lease back of entire building to assure buyer of a 10% rate of return on investment. Same as a NNN to me at 10% so the broker says.
Asking price is $535,000
Expenses 26,385
From this information, do you think it’s worth looking at further?