Need Help...what Would You Do???
I've found a commercial property listed in a small downtown setting. The property is 4000+ square feet, good condition, 2 story with an apartment upstairs. Right now there is a restaurant downstairs which is run by the owner of the building. He's old and is looking to get out. Asking price seems like a steal to me - 70% FMV. The apartment is currently rented, and the tenant is looking to stay. The owner has also agreed to leave all the restaurant equipment and everything else would be included in the sale. Only thing is he stops running the restaurant after the sale which means no paying tenant. I barely have enough money for a down payment let alone holding costs for this thing, but I think its a great deal and don't want to loose it. I also have no desire to run a restaurant, nor do I have the time. What would you do in this situation?
Find a tenant and get a lease signed then procede with the purchase. The new lease will be great to show the bank you have everything in order and have the means to make your payments. Go for It, or someone else will.
One thing I would do is confirm what uses other than restaurant are permitted by the current zoning. Also, see if there is a market for the restaurant fixtures. Any offer I'd submit would have a 6 mth due diligence period contingency in it. Depending on what you find out about other permitted uses, include other contingencies as appropriate--showing the property prior to closing, % leased, municipal approvals, etc.
can you convince the owner to keep the restaurant there for another 3 to 6 months after the saleand pay you rent, so you can have time to find another tenant or resell tthe place? Just a thought.
I am a mortgage broker in the Chicago, IL. area, and offfer all types of loans including hard to do situations.
good luck!
Owner has mentioned that he'll stay a couple months, but as to the rent he would pay it is yet to be determined. Zoning will also allow a bar to go in here, although I don't know if this would drive the upstairs tenant out. Right now she's a waitress at the restaurant downstairs. 6 month contingency seems like the way to go. Basically contingent upon me finding a new tenant I suppose. Would you suggest then that I get it under contract first before I start advertising for a new occupant? Any chance I could start advertising now before he accepts my offer?
Advertising before you control the property (i.e., get it under contract) could be risky. You know the power of the grapevine.
Jeff, Where are you located?
I live in the Cincinnati area. Not sure why it stopped showing up under my profile.
My biggest fear is that I buy this thing and then am stuck with a vacant building. I can afford it now, but am going back to school in August for my masters and will not be able to afford 2 mortgage payments. I don't want to let this one slip though.