I am looking for Creative seller financing ideas?

[Spencer Gibson]

I am currently trying to purchase a 2.5-story building that also comes with a parking lot. This building is already divided into 3 parcels but is being sold together. Its parcels are divided by Top, bottom, and parking lot. The existing building is currently a 2.5-story office building. I would like to use the bottom floor for my hair salon location which is one block from my current salon location. The top IMO if converted into a 3k sqft condo would be a great long-term rental or corporate rental as this area brings in big dollars for rentals. But the top could also be flipped for a profit. It would not be a good candidate for short-term rentals due to the area's strict STR policies. The parking lot could be developed into a mix of retail and multifamily as all the parcels are zoned urban commercial and the current parking would allow for residential whereas this is normally tough to do because of parking constraints.

My issue is I can really only afford to purchase the bottom floor and possibly the top floor of the existing building but the parking lot puts me over the edge from a carry standpoint. ESPECIALLY during the year or so, it will take to renovate the existing building into a salon/condo.

The seller has mentioned they would entertain seller financing at a reduced market rate. No idea on rate and terms they would entertain yet but I am assuming it would be an interest-only loan with a 5-10 year balloon. 

My overall issue with this project is the carry costs on the debt that I would incur during the renovation time period which I project would run 12-16 months. I have thought about asking the seller if they would entertain a much lower rate for the first year and the rate would go up to the final rate by year 2 to help with some of the carry costs in year 1. 

My question is and what I would like to get some feedback/ideas on... what creative financing structure ideas do you have for me? Specifically when I need some help with carry costs in the time it takes to renovate and get up and running? I am curious if you guys could share some of your personal creative seller finance stories where you had similar issues with the initial carry burden. Thanks

[Spencer Gibson]

@Brock Hoffman Thanks for your response! I have been running a ton of different scenarios and have come to the conclusion that unless I am able to find a partner to help me tackle the top as a flip or conversion and/or help with buying the parking lot then I am at a standstill. I can really only afford to take on the costs of the bottom parcel without losing sleep. I do have some potential partners in the works but unfortunately, their timelines and needs are a little further out than mine. Albeit only a few more weeks according to them but the agent on this property was fired a few days ago and they are about to go live again with a new agent. Not ideal obviously. So I am hoping I can figure out something before they drum up more eyeballs. There are a lot of exit strategies with this building, especially considering that it's already divided up into 3 parcels, amazing location, and has ideal zoning. The problem is as you may know because it is at such a high price point whether you keep it as is or convert the top into a condo it may sit for a while before it sells. I have considered keeping the top as office space and continue renting them out but feel that when I start a full-fledged reno of the bottom for the salon that they will likely start to move out due to the noise. All the leases on the top floor are month-to-month at this point. Ultimately that mortgage carry is the problem and the uncertainty of how long I'll have to carry it until I am open for business is what I am hung up on and most definitely need a partner to take this down. That said, there are a few angles that you mentioned that I have considered but have not totally gone deep on. Thanks again for the thoughts! If you happen to know someone wanting to partner on a cool property in downtown Charleston SC let me know!