I have been in business for 16 years at my current location and looking into buying the property where I am currently. The value is in the property itself as the actual building is actually in ill repair. The property is a little less than an acre on a fairly busy US highway with about 400 feet of road frontage. The owner has agreed to hold the mortgage but my business will not support the mortgage on its own. I need to add value to the property by adding several commercial retail rental units to offset the added mortgage amount above what I am paying now in rent. Also if purchased I will be required to bring my old grandfathered in building up to current codes or demolish and rebuild with the later making the most sense. I am in the beginning of working it all out but honestly I don’t even know what the first step might be to make it happen. Any suggestions to help get the wheels turning on this deal would be appreciated
Hi,
If you start into this, you have to plan out who your retail rental unit leasors will be, and what kind of space needs to be designed / built to attract these prospective tenants.
Then what does your business require? Are you designing with expansion in mind and increasing your current business?
The property is being sold to you for land value I assume as you indicated the current building / buildings are at the end of their servicable life?
You indicated your current business will not pay the new mortgage on it’s own, so I am imagioning your don’t have the ability to make these changes and pay the construction cost’s out of pocket?
Sit down with a couple of copies of your plot plan and pencil in what you want to add to your property and where, draw this to scale if you can, and although it’s rough it will give your next step a lot of insight as your next step is getting with a architect and sitting down to plan the new project.
In the mean time ask your land owner to sign a contract with you, give yourself a long escrow 6 months minimum and ask him if he would temporarily agree to subordinate to new financing if it’s required? You will have to draft out the financial projections and indicate whether you can accomplish what you want, take in a few tenants and still pay the equivelent or less than you pay now? Then you will know if after a construction loan you will have to ask your current landlord if he will carry a small second or not!
I am going to send you a PM so look for it in your box.
GR