Met with a 76 year old man that is being forced to shut his doors of business after 43 years. He is in the process of selling off all of the equipment. He has a 2 month old appraisal at 860k and it is free and clear. He doesn’t know what it would rent for and I haven’t been able to figure it out either. The place is a metal warehouse 46oo sq. t. in a great location.
I originally was going to buy his house but he recently did a reverse mortgage that ate up all his equity. So, he wanted to sell this instead because he is in need of money. I told him I could give him some money down like 50k and then some payments(cash flow) each month for 10 years. Well, he got really happy when I explained how I could do this. Now, I need to know what my exit would be if I moved forward with this seller.
Any suggestions would be appreciated as I am totally lost. Oh, and I’mm really excited to be a part of this community.
An industrial warehouse is worth $860K? What are your property taxes on the place? 5%x$860K=$43,000/yr? How are you going to pay it if you don’t get it rented? You should also reserve some money for environmental reports prior to buying it so you don’t get stuck with expensive cleanup costs like soil contamination.
Put ownership in a C-Corp to limit your liability and your exit strategy will be to stop making payments and give it back if you can’t get it rented or make anymore payments. A lease-option might be a better route if he’ll go for it.