Looking to buy the building I rent out of ($1.4m) good/bad deal?
Data points:
-$1.4M asking price (off market)
-24k sqft flex space
-warehouse/office/some newly renovated space
-3 miles outside of major downtown city and from where I live.
-Very nice building with parking lot, multiple entrances, overhead doors, etc. Good curb appeal.
-Growing community and up and coming neighborhoods for near downtown living.
-Reason for sell, owner is sick and wanting to organize some of his priorities and we have a great relationship. I've also invested a lot of money I to my space so he trusts I can get it done.
-$11.7k in current potential rental income including me. A few open units 2 of which I would take over.
-$12k-13k in potential rental income after I take over. Easy rent adjustments, currently now market value.
-$2500-$3000/m operating expenses including my taxes, insurance, maintenance, snow, etc.
I currently rent 2500 sqft but want to take about 8k-10k sqft for my own business. Keep other units rented to tenants. As I grow I can take over more as leases are up or needed.
I've been approved for everything. SBA loan. 10% down, no penalty for early playoff games, working with a city SBA program.
Owner/Seller is OK with any contingencies for work needed to bring up to selling speed. Maybe $60-$90k in maintenance. 1/3 New roof and some interior updates.
My questions:
It's my first deal, does this generally sound good?
My net profit would be $30-$40k/year, that would go to the expenses essentially having me breaking even.
My thoughts were to have my biz pay entire principal then add tenants income to principle as well. Is that good or bad idea?
***Anything particular I should ask when doing inspections? Appraisal?
I don't know what I don't know. I'm not looking to make money, I'm looking to invest in my business and build an asset. Is this smart at this price?
Any advice?!
Thank you!!!