Happy New Year to anyone who happens to read this.
I met with a friend of mine who is a RE Broker yesterday about a property I've had my eyes on for some time. It is a commercial property consisting of two buildings. An 810 sqft building leased at $700 a month as a local flower shop. The other building is 2772 sqft, has been empty for a few years (casulty of a Country Time Mortgage site). I actually inquired about the space over a year ago as I was looking for a space to lease for a Physical Therapy practice, my primary occupation. At the time, couldn't get a loan from the bank without $40K down, so I put the project on the back burner. Eventually, a local investor purchased the property for $150K according to the county property sales info. Its currently listed at $205K.
I might be able to get the property at $190K + $5K down, 30 year mortgage with owner financing at 7% through a land contract with a 7 year balloon.
My plan is to put my PT clinic in there and lease the space to my therapy practice for $2500 a month. So, the property should be generating $3200 gross rent a month. Taxes are $4K a year and insurance would be about $800 a year so that would add another $400 a month to the mortgage of about $1264 to equal $1664, for a net of $1536 a month, or $18432 a year back to me. I also think there would be benefits of depreciation of the buildings that would be tax benefits as well.
I have an accountant but I don't yet have an attorney. This would be my first deal. I plan on this being a buy and hold since I will be practicing in the larger space.
Any suggestions for things that should be included in the land contract and any other advice is welcome. For instance, I am thinking it would makes sense say after a year or so to refinance it traditionally through a bank at a lower rate as long as they stay there. From what I understand with the 7 year balloon, I have 7 years to do so and fully pay of the investor.
Thanks for your help and suggestions...hope 2011 is great for everyone!
Happy New Year to anyone who happens to read this.
I met with a friend of mine who is a RE Broker yesterday about a property I've had my eyes on for some time. It is a commercial property consisting of two buildings. An 810 sqft building leased at $700 a month as a local flower shop. The other building is 2772 sqft, has been empty for a few years (casulty of a Country Time Mortgage site). I actually inquired about the space over a year ago as I was looking for a space to lease for a Physical Therapy practice, my primary occupation. At the time, couldn't get a loan from the bank without $40K down, so I put the project on the back burner. Eventually, a local investor purchased the property for $150K according to the county property sales info. Its currently listed at $205K.
I might be able to get the property at $190K + $5K down, 30 year mortgage with owner financing at 7% through a land contract with a 7 year balloon.
My plan is to put my PT clinic in there and lease the space to my therapy practice for $2500 a month. So, the property should be generating $3200 gross rent a month. Taxes are $4K a year and insurance would be about $800 a year so that would add another $400 a month to the mortgage of about $1264 to equal $1664, for a net of $1536 a month, or $18432 a year back to me. I also think there would be benefits of depreciation of the buildings that would be tax benefits as well.
I have an accountant but I don't yet have an attorney. This would be my first deal. I plan on this being a buy and hold since I will be practicing in the larger space.
Any suggestions for things that should be included in the land contract and any other advice is welcome. For instance, I am thinking it would makes sense say after a year or so to refinance it traditionally through a bank at a lower rate as long as they stay there. From what I understand with the 7 year balloon, I have 7 years to do so and fully pay of the investor.
Thanks for your help and suggestions...hope 2011 is great for everyone!
Ryan