More Than 50% Equity - What Would You Do?
Got a lead on a building that the seller is asking $2.5 million but I was told by a commercial builder it would cost $5.3 million just to construct the build.
The building is 83,000 sq ft on about 7 acres, it used to be a business similar to Home Depot.
It sits on a very high traffic street.
What would you guys do?
The seller wants all cash. (Everyone does, I know)
What is the market like to get a new tenant? Have you spoken to commercial brokers to determine how long it would take to fill the space? Could you do a purchase option that would allow you to try to market and fill the property with a tenant before buying the property?
Reproduction cost has very little bearing on current market value. Talk to some commercial retail brokers in your area. They should be able to help provide some realistic scenarios.
Debt financing is like your typical home mortgage...you have a defined payment plan. Equity financing is like having another partner to invest with you - the better the property does, the more return the lender will receive.
Thank you both!