Unique deal, tell me what I don't see
First of all thank you in advance for any bit of advise or comments. I have been a Bigger Pockets stalker for a couple of years. Have read countless forum posts and listened to many podcasts, so thank you very much for the education. Please give your advise, knowledge or comments to help me through my angst of moving forward with this property (just because it's my first one and I'm nervous and excited at the same time).
Background: Old house 1300 sq feet (built 1900) in downtown Lafayette Colorado main street where properties are hard to come by and the rental market is out of control. The house was converted to an office space and used as a realtors office for past 20 years. The owner/realtor passed away ~1 year ago and the building is know in an estate which is owned by her son and daughter. The daughter is patient of mine (I am a chiropractor) and approached me to buy the building without her listing the property. There is a 1 bedroom apartment attached on the back of the main house. She informed me that the building was appraised at $360,000.00 shortly after the death of her mother, and since then had a realtor do a new market analysis which came back at $375,000. Currently the remaining realtors in the office are pay $0 for their desk spaces and the renter in the back is paying $1,000.00/month. There is no liens or mortgages on the house and it qualifies for the historical tag but is not officially a historical building. However the city has told me that they will not force me to register as historical but they will make it very difficult for me to do anything add on or tear down. The building is in great shape with new roof and new foundation. The deal also comes with the lot next door that is empty and zoned mixed use.
This building is in the heart of the city's downtown revitalization area. Since this is a small town people have gotten wind that I am trying to buy this property and city's revitalization director contacted me to ask if she could give my info to an existing company in downtown looking for a bigger space to rent. I have talked to him and he would love to lock down a lease starting August if I purchase the building. She has also told me that a restaurant is interested in leasing the property. They have contacted me and shown interest. I estimate $2,200.00-$2,500.00/month rent for the main house. No NNN. Tenant pays all utilities. I would cover snow removal, trash and lawn care.
My offer: They are willing to do an owner finance deal with me so here is what I offered.
Purchase price: $340,000.00
Down payment: $35,000.00
6% interest 30 year amortization period and balloon payment after 5 years with no pre payment penalty.
Counter offer:
Purchase price: $375,000.00
$100,000.00 down payment
6% interest 20 year amortization period and balloon payment after 5 years no pre payment penalty.
Their attorney and my attorney ironically share and office (told you it is a small town). My attorney informed me that they appreciate my offer and really want to work with me to finalize a deal and they expect me to counter their offer (for whatever that is worth?)
I currently have $130,000.00 liquid capital money for my investing purposes and would love to be in the position to buy a multifamily unit when the crazy Denver market cools down.
Probably some details I have left out but it's a start!! Any bit of knowledge, advise good or bad please let me know.
Thank you,
Jason