Potential Commercial Deal - Looking for input - Posted by Curious in St. Louis

Real Estate Investing Retail
1

Posted by AJ on August 03, 2011 at 02:24:44:

We offer private funding if you can’t get the money, we will try to help you.

2

Potential Commercial Deal - Looking for input - Posted by Curious in St. Louis

Posted by Curious in St. Louis on January 18, 2011 at 08:03:27:

My wife owns a practice in a small strip mall in a small, albeit growing town. The unit is 18,000 sq. ft. She has been there for 10 years. She approached the landlord three years ago about buying it but he wasn’t interested. Well, now he wants to retire and is ready to sell…kind of.

Here are the details:

  1. It is a 18,000 sq. ft. unit, and he wants to sell 1/2 of it. He has contacted his lawyer and said it is doable, we would do an LLC together, etc. He is a simple, honest country man who owns a ton of property throughout the area. We have a good relationship with him and trust him.

  2. He is considering doing 100% owner financing. My wife has never missed a payment in 10 years so he trusts her and is willing, at least right now, to do it. His reason? He wants cash flow so he can retire.

  3. FMV six years ago was $750K. We will do a new appraisal obviously, but he is basing his numbers upon this and is selling us the 9,000 sq. ft for $375K. (Aside: The area has grown since six years ago, including a new highway that runs through town and drops people off about .10 of a mile from the strip mall.)

  4. He currently makes $6K per month in income, which we would split, and this total is from tenants that have all been there 10+ years. Here’s the kicker, the man does nothing to rent out about half the space. He has no pain so never really worked on it. His junk takes up a large portion of the downstairs units, which he said he will move out.

  5. Financing would be 15 years at 6.5%, again hoping that he does 100% owner financing.

The long and short of it is that we would end up spending - with the way the unit is rented now (2.3 full) - around $1,100 + expenses per month on a 15 year note. A new tenant is coming in soon at $900 per month, which will cut our payment in half (we get half the revenue).

We are meeting with commercial owners in the town soon, but would love to hear some thoughts from those on this board. We have owned multiple residential units for 6+ years but never commercial.

Any insight would be greatly appreciated.