Originally posted by @Kristin Horowitz:
I guess I'm really confused why this is so vague for some of you? Stuff like "climbing gym not mentioned" - it was in the first sentence? I'm sorry if there's not a ton of details, but I think I'm looking at high level solutions vs concrete ones to start - get gears turning, you know?
I'm currently occupying a space worth $1.4 million as a rental with the non-profit and I'd personally like to buy it and rent it to the nonprofit. My personal assets, as I said, are pretty limited (it took all of them to get the gym successful and running in the last ten years). The next location may be something more like a $4 million acquisition about 4 years down the line if possible so it makes sense to try to figure out a way to buy the existing building first for a few reasons.
Anyway . . . it looks like I got some really good advice. The 401k was a good idea, but as Randy says, not an option for what I'm going for.
The crowdfunding might be a brilliant idea - a way for EVERYONE to have a personal investment in the next gym without having to worry about the non-profit aspect of it (no one "owns' a nonprofit nor can they take shares.) Since I'm looking to find a way to get an asset in this scenario, things like grants aren't going to work.
Beyond that . . . I guess my final question would be this one: for my existing property owner with the $1.4 million dollar gym I'm renting, what encourages him to buy vs sell? It was an option but like I said, we had too much pressure to lock down the rent and get the gym going first, my investor friend was pushing me to get a purchase option in the lease but no matter how hard I push my real estate agent to get it handled, he wouldn't. Now that we're in there, I'm not sure what a creative offer to the landlord would be that would entice him. We're a stable business that won't leave for thirty years or more. He stands to make more money off us renting than selling.
Your broker did you a disservice by not negotiating an option to purchase.
You are right to question what would motivate your landlord to now be interested in selling you his property. In all likelyhood, unless there is a personal or fiscal need to sell he's probably not going to be interested in selling. I've had publicly traded tenants in my buildings for multiple years and I wouldn't sell them the building for three times its value. There will certainly nearly zilch motivation to structure any kind of creative financing, unless as I mentioned a need to sell develops, but those hanging onto a hope and a prayer.
Now, to address how to buy. As others have mentioned, you can possibly qualify under and SBA loan program. With a traditional SBA loan normally the principals of the business buy the property personally and then execute a lease with the business for the term of the SBA loan. The loan terms are 25 years, and the lease is executed for this same time period. Its a requirement of qualifying for the loan.
I believe there are non-profit loans that are similar to SBA loans and/or there is a modified SBA loans that are designed for nonprofits. You would need to speak with your bank or a bank that offers SBA loans to ferret out the best SBA loan option for your circumstances.
One of the reasons SBA loans are popular with small businesses is because they allow a borrow to put down as little as a 10% downpayment. The loans are also amortized over a full 25 years making them easier than conventional loans. Easier to qualify for and easier to maintain. Conventional commercial loans typically have call dates of 7, 10, or 15 years. So even though the loan maybe amortized over 20 or 25 years, the loan is due and callable in the time frame reference above.
Since you have four years until you're next location perhaps you and your husband can set up a long term plan to put aside enough each month to build up to the downpayment for the next building. I realize that's not an immediate solution, but maybe the savings you do set aside can be used to grow the downpayment "fund".
You seem like a sharp cookie, and obviously your here learning more about real estate. Maybe you can use those saved funds to buy a really good commercial deal, I mean the once a decade type of deal, and turn it for a profit. You know what it takes to operate a commercial building, its systems, and the likes and dislikes of tenants. Maybe a small industrial or office or retail building comes available down the street or one or two towns away that is just too good an opportunity not to buy and then improve, fix, re-tenant, and or then re-sell. They come to me nearly everyday. So I know they are there, you just need to be looking for them all the time.
I wish you the best in buying that commercial building.
