How to Buy When My Rent is Cheap
I run a profitable restaurant in a two-story commercial building. (The second story is another commercial space but is unoccupied.)
I have been approached by the mortgagee (a private lender) to suggest a deal that would enable me to acquire the building. The current owner is extremely delinquent and interested in selling the building. The mortgagee is also putting pressure on the owner to sell.
With no tenant upstairs, and that I have a transferable (if it sells) lease on the building for $1,000 / month for the next four years, I'm struggling to find a deal that works for me and the others.
That said, the building is in need of some serious repairs which puts my business in some risk. Also, if the building was to sell to a competitor, they could force me out. So circumstances may force me to pay more.
The building needs about 20-40k in repairs. Roof and masonry work.
The building is probably worth, 135-150k depending on the extent of repairs done to it. The outstanding mortgage with interest is $175,000.
I have been considering offering 100-125k for the building, but without a tenant upstairs, this only increases my costs --- at least for the next four years. (But at this purchase price, I think the mortgagee would release the lien.)
There is (a small) chance the mortgagee would foreclose and could evict me. I believe this is doubtful, but it is possible. Very doubtful in our situation.
Can anyone suggest a creative buying strategy that might satisfy all parties? Or is the answer, my costs are going just simply going to go up if I want to remain in that space. (The location is ideal. It would be difficult to find something better.)