Mixed-Use Property with Well Established Owner-Run Business in Need of Financing
I have the opportunity to purchase a mixed use property with a fully operating well established business located on site that will be transferred to the new owner along with the property. This site is an incredible generating property.
The property is currently an active farm site on 10 acres with a variety of structures on the premises, including a 3 bed 1 bath house, detached garage, bunk house with running water, a heated shop, two pole barns, 90,000 bushels of grain storage and a barn which has been used for dances for the past 60 years.
I plan on renting out the entire property with the exception of the barn, which I will continue to operate the dances out of. I have ran the numbers every which way for weeks, looking at best case, expected and worst case scenarios, and can't find a feasible situation that the property does not cash flow even under relatively short term and high interest rate mortgages.
The barn alone will be generating a minimum of $41,000 net including insurance, taxes, utilities and repairs, with top end figures being up over $125,000 net per year. The current owners have reported through many regional newspapers that they bring in an average of $60,000 per year through dances. I figure I can rent the rest of the property out and net $8,250 per year including the majority of taxes, insurance, repairs, utilities and vacancies. I've figured the additional whole property costs of management (self-managed and can be reduced drastically if needed), capital expenditures, property taxes, licenses, extra utilities, landscaping/snow removal, legal fees, accounting fees and the mortgage to be right around $45,000 per year, leaving $41,000 + $8,250 - $45,000 = $4,250 cash flow per year and close to a 17% cap rate in a worst case scenario. The figures I truly and honestly expect the property to produce are a cash flow of $41,500, NOI of $70,500 and cap rate of 39% all things considered including higher management and capital expenditure draws.
I am seeking financing for $180,000 (about 90% of the property value before considering the value or income of the established business) in exchange for first position lien security and either a 12% fixed APR for 15 years, 10% for 12 years or 8.5% for 10 years, your choice.
This is an extremely diverse property with a lot of income generating structures. It's a great opportunity to put your money to work in a secure setting making good margins. Please let me know if you've got any questions, are interested or know anyone you think may be.
Thanks!
Dustin