Buying and converting an old commercial bank -- need some help!
Greetings BP friends,
So, my business partner and I live in Los Angeles and we are in the entertainment business. We've decided to create a new business entity to combine our companies and scale up our services. We produce TV shows and work with some high profile NFL athletes, and found a commercial building that could really make us stand out, especially when meeting with clients.
We found an old mid century modern bank in an area of LA near the new NFL stadium (which opens in 2 yrs) and the place has been meticulously taken care of and it's on a very desirable corner lot. It has enough square footage in the offices upstairs to house our production business, and the down stairs lobby and bank vault is perfect for a retail business (we've had two offers from coffee roasters to lease the spot already), so we are confident that we could generate income that way.
The building also comes with a very tall monument sign, which could be rehabbed into a digital billboard and generate passive income as it is visible for a mile in both. directions (it's the tallest sign on the street). From my research, this could produce a fairly good income.
We love this place and are pursuing an SBA loan as a way to leverage into the property at 10% down, and we have the cash to make that happen. There is very little construction cost (some demo) which we will handle with our own contractor, so the space is fairly turn key. It also has a long term tenant in the building who is willing to stay and keep paying rent as we transition over and plan our new space (about 6 months).
So here is my question -- we are not commercial real estate investors, but we believe this could be a great deal for our company and for a real estate investment. The location is excellent. And the city has reviewed our business plan and they are so excited by it that they are connecting us with funding through their economic development department (which uses SBA 7a loans). They have money earmarked for bringing small business to the area.
However, there is another non-profit that is also very excited by our plan, and they have offered to finance this through a combination of SBA 504 loans (40%) and a conventional loan for the remaining 50%. We would still put 10% down. The SBA 504 is about 4.76% interest rate, but the conventional portion may be higher and may come with some type of balloon payment. The 7a loan through the city could land anywhere from 7.5% - 11% but that would be locked and amortized over 20 years.
Does anyone out there have any experience with a property or situation like this? We are doing our best at crunching the numbers on our own, but we have never purchased a commercial property before and could use some third party assistance to make sure we aren't missing anything (we are even willing to pay a consulting fee).
Our agent is also the listing agent, and while the double agency is actually putting us in a great position to buy this property, we want to make sure our best interests are looked after before sinking into this long term.
Anyone out there have experience in something like this?
Thank you!
Josh