Have an opportunity to buy a mixed use building in the village square from private owners. We bought our business building from them last year and they are good family friends. Building has three large commercial store fronts on lower, three commercial upper and one luxury apartment. All units are occupied by solid companies. Building is $650k, gross rents are $9k/month, all leases are NNN except apartment. Only normal expenses are electric for elevator and exterior lights and normal maintenance. Even with 20% down the building would net $4k per month after taxes/insurance/expenses. My business is also right next door and I'm there all day in the event issues pop up, and only live 10mins away.
My problem is down payment. I don't have $130k cash to get in. Getting the loan is no issue, I've consulted on this awhile back. Seller has a $250k equity loan out on the property and doesn't want to hold a portion of the loan. Also they're getting older and just want the cash from the sale. I've reached out to local potential partners and due to their current acquisitions, are unable to assist with the down payment. Any suggestions?
@Marc Maser , i'm not exactly sure what do you mean by the seller does not want to hold a portion of the loan that they currently have out. as far as you not having the down payment, do a rent to own or a land contract until you build up the 130k down payment. you have 9k/month coming in so using rough numbers say you are paying 3k/month lease payment with option to buy to seller. you take over all maintenance, and utilities, everything really except for taxes and insurance. so in one year you have equity of 36k. so in roughly 3.5 years you have the 130k in equity/down payment built up. then you can go to the lender adn say look the price of the property is 650k. i'm asking for a loan of 520k. at that point you would owe only 520k to the seller since you have been making payments and building up your equity.
look for a private investor who will go into it with you. No problem with this to get started until you build up your cash flow for down payments.
Your best option may be for you to find a way that holding a portion of the loan actually makes more sense to the seller. You said they just want the cash from the sale so I'm assuming they aren't going to do a 1031. Depending on their current situation, what their basis is on the property, and what tax bracket they're in, it's possible they could save quite a bit in taxes by taking a portion of the sale price over a couple of years.
Is the $250k loan the only one on the property?
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