Acquiring the Land/Property with a Deal

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September 06, 2020

by a searcher from University of Notre Dame in Cambridge, MA, USA

Does anyone have experience when evaluating a deal, dealing with the property associated with the company? Owner wants to sell the property with the company (which is under a different holding entity). How does this affect purchase price and the loan?

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commentor profile
Reply by a searcher
from University of Pennsylvania in Chicago, IL, USA
This is often a great negotiating lever... by helping an owner with the disposition of real estate that he/she doesn't want to deal with, you can often get discounts on both (business and the real estate). As mentioned above, an "empty box" is not worth the same as a "box" with a 10yr NNN lease, the real estate is typically a low-risk proposition. A particular useful strategy is to put###-###-#### month land contract w/ balloon in place. Same monthly cost as a lease, and it gives you time to build equity and/or find a buyer. At the end of 36months, you have either sold it or you refinance out of the land contract. I did this on my last acquisition. Feel free to PM me if you want to discuss ideas.
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Reply by a lender
from University of Missouri in St. Louis, MO, USA
Daniel- do you want to own the property? If not the previously mentioned sale leasebacks will likely fetch a higher sale price then what you are paying for the building based on the new lease. If you want to own the building you might want to look at an SBA 504 loan. Last month the SBA portion of this was <2.4% for 25 years fixed. This can be done on your deal since the R/E is owned separate. email me if you want to see conventional/7A/504 options on your deal redacted
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