OfflineI am about to make a offer for a commercial property that I want to keep and run it my self. I am not sure how to go about it. The owner is willing to hold a note. We did not discuss anything yet because i have to go through his realtor. the property has been closed and the price has dropped a few times. the only thing i know that there is a issue with the heating system. It is a equiped dairy mart and restaurant with a liquor license and apartment in a very good location.
I am looking for some ideahs anyone would have.
I have no cash and poor credit. i am self employed with no income verication.
I have vacant land worth 60,000 that i could use as collateral and am willing to pay a note for 5 years with a balloon based on getting bank approval for the balance of the loan.
Please share your thoughts!
I would like to start out as a property locator and work from there. I am lookind to partner with serious investors.
I travel 13 counties in north east Pa including the Pocono Mountain Area working as a Realtor and property inspector. I am very knowledgeable in research and can find deals. I am willing to check out properties and submit contracts for interested investors. I can not wait to get started and appreciate your input.
Debra L Sebelin
I would suggest getting your own broker specializing in CRE. The listing broker is representing the seller and his best interest. So anything they tell you/present, trust but verify! To many variatables that definately more than one set of eyes analysing is best. Plus your agent will be able to assist in/how to structure your LOI as well as if you've calculated your offer price appropriately. A clearly written and negotiated LOI will save you some time and expense of the back and forth when it comes to having your attorney handle the purchase and sales agreement, entity formation (I suggest having each commercial property in it's own entity - but consult your professional team to best suit your needs) if seller accepts your offer.
Clearly state your due diligence timeframe defined as to when any earnest deposits (collateral) become non-refundable. Typically 30 days to allow a thorough analysis of his last 2 yrs P&L, FS and tax returns, etc.(even though maybe currently closed), professional inspections, soils/environmentals, market analysis, traffic counts, licenses, permitting, insurance quotes, RE tax verification, any and every expense whether it's cost of deferred maintenance to expensed items that will be industry specific to your business. All that will be a determining factor as to whether you proceed and/or if your initial offer price/terms will need to be re-negotiated. Since it is currently nonproducing you will use his last 3 year actuals to make a calculated projection.
Income less expenses less debt servicing to determine your potential noi/pretax cashflow, cap therefore determining your offer price. noi/cap=mop
I'd also make sure I knew WHY they are closed. Ruling out any forced closures by City/Health Dept. etc. for a non-compliance with anything pertaining to the structure itself.
Best wishes! Excited for you and keep us posted on the details!
God bless,
Jen
I am a Realtor and did not disclose that yet because i am just in the question stage. You gave me some more items to think about and to work with on my offer. Thank you.
I would like to start out as a property locator and work from there. I am lookind to partner with serious investors.
I travel 13 counties in north east Pa including the Pocono Mountain Area working as a Realtor and property inspector. I am very knowledgeable in research and can find deals. I am willing to check out properties and submit contracts for interested investors. I can not wait to get started and appreciate your input.
Debra L Sebelin