We are looking at purchasing a Storage business and had some questions. Facts about the building:
- Asking price is $350,000.
- Work to finish building is estimated at $40,000
- The owner will finance for 30 years @ 8% with 10% down.
We are looking for suggestions in terms of how structure the deal:
- We cannot afford 10% down, plus pay the monthly note and fix the building.
- We also do not want to invest or fix the building without owning it.
Any suggestions on how to structure this would be much appreciated. Thank you.
I assume from the given info that this compound is not producing any income. I’m not sure if the $40,000 is to finish an incomplete building or to renovate the existing building. But none the less, this is not a good deal for someone who can’t support the payments for several months after the work is complete. The storage business is not as hot as it used to be so you will be paying out of pocket for a while after the work is complete. There aren’t too many lenders who will let you skip the first year of payments/ pay for the construction/ and pay for your 90% first.
The only smart way to continue this deal is with a $partner$.
No, it is not producing income, as it was damaged by hurricane Katrina. We assess the repairs to be about $40-50,000. It looks like the owner started then stopped due to other obligations that were not insured.
It will be turned into more than just storage - food vending and possible market area/events on weekends. The financing will be with the owner not the bank and he seems to be flexible.
Is there anything we need to make sure we put in the contract to cover our investment? We were looking for a creative way to structure the offer so we were not paying and renovating at the same time.