Thinking about pursuing this but it’s kinda fishy…
http://www.redmol.com/listing/view/9/
With seller + assumable financing, potential zero to 5% down. But the scary part is the sales leaseback part… Any issues you might be able to think of?
If the assumable loan is 575k and the owner will carry 719k, the price is not 899k as published.
Businesses will often sell their real estate if they get financially pinched. They then stay and lease back. Good deal for the buyer? You have to run the figures.
You have the risk on the lease back that the business will go under. But you run that risk with any tenant that you might have.
If the seller quits and moves out, can you get that much rent from the next tenant? How hard would it be to find a new tenant?
I wouldnt touch this deal without a corporate guarantee from a national tenant.
More and more often businesses are focusing on their business and realizing that owning real estate is another business altogether.
The Canadian Federal government recently sold off over 20 office buildings and leased them back.
I see a lot of insurance companies and retailers doing the same thing. They can use their equity more effectively in their primary business.
This deal depends on the quality of the tenant and the lease.
dave
Sale/Leaseback transactions can be a very lucrative form of cash flow when investing in commercial real estate. The 2 most important items to qualify will be:
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The credit quality of the seller/tenant. Will they personally guarantee the lease or show you assets that can support the lease obligation?
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Are you buying a good piece of real estate? In the event that you lose the tenant, how easy or difficult would it be to find a replacement.