Need financing for restaurant bldg leased to national brand in GA
OK, I finally pulled the trigger and going for the purchase of a restaurant of a national brand in Atlanta MSA GA. Following are the pertinent details. One of the posts suggested using the following template to explain the need so here you go.
Your goals and story: My goal is to add a new stream of income. Currently I have income from my day job as tech guy in SF Bay Area and a few single family residential investment properties. I am not able to scale up additional SFR properties because I prefer managing the properties myself and I feel I am now capped out. Going for an Absolute NET commercial property seems to augment my long term strategy of receiving passive income without a whole lot of management hassle as well as the ups and downs of the residential real estate.
Type of property: The property I am buying is a restaurant building leased to a national brand.
Location of property: Atlanta MSA, Georgia
Purpose of financing: I am doing a 1031 exchange and would like to make enough downpayment that the property rent will pay the mortgage and some .
Type of financing sought: I prefer interest only loans but I am sure those are difficult to come by. I prefer non-recourse loans to mitigate risks to my existing portfolio and net worth even if it means I am expected to pay a higher down payment.
Current or prior ownership of real estate: I have been a landlord since 2002 and bought and sold over a dozen properties over the years. I currently have 7 SFR investment properties in LA and SF Bay Area and I manage all these myself.
Occupancy: The national brand restaurant signed a lease 16 years ago for 15 years. At the end of the original lease, they extended the lease by another 5 years (exercise of first option - they have two more options of 5 years each with 10% rent escalation) so there is still 4 years lease remaining. The current lease expires Dec 2024.
Value of property at present and/or your offer price: $ Offered at over 2 Mil. I negotiated to 1.7M and signed the PSA.
After repair value: $ No repairs are expected and this is an Absolute Net lease.
Anticipated or actual appraisal issues: Haven't gotten there yet.
Current rents per month: $13,333$ Absolute Net.
Fair market rents per month: $ Not sure. I am thinking probably 10-12,000.
Down payment or equity: I am open for a down payment of up to 35% of the purchase price to seek a non-recourse loan. That would be 600K.
Source of down payment funds, if applicable: Downpayment comes from the 1031 exchange of a SFR home that I am selling. Property is in escrow already and will close before end of the month. There is no contingency on the 1031 though. I have enough funds to pay for the down payment if the SFR sale doesn't follow through.
Income Source: I have a day job in IT in bay area that pays reasonably well. The residential investment properties bring in an extra income. And of course there is rent from the property.
Gross monthly income (optional): $ The subject property brings in 13.3K through rent which should be far more than the debt service. I have approx 12k in positive cash flow from the investment properties.
Monthly debt obligations appearing on credit report, plus (if applicable) personal rent and alimony/child support/etc: Nothing unusual. A family of 3 having decent expenses (perhaps 6k - 8k a month)
FICO: Last checked, it was 820+
Credit issues: None
Additional details: