Hi folks,
It’s getting interesting for us… We have the potential to wrap a restaurant to a customer we have at the moment.
Obviously this is a commercial loan ( 70/30 )….. but has anyone else out there, wrapped or LO’d a commercial property before…. any tips on things to look out for ???
We have the property
We have the customer
Terms are acceptable for both parties..Concerns:
– locking guy in, once we buy the place
– not getting left with a vacant property
– re-finance – banks treat re-finance differently at all ???Any tips appreciated from experienced people…
Thanks
Scott
Pelican Investments
http://www.pelican-invest.comScott,
1) If you plan to wrap the property, then my suggestion would be to apply the same rules you would use if you had a buyer pick out a house they want you to buy. ( rather than you buy, then then find a buyer )
2) You BUY on a L/O and reassign it to your buyer on a L/O. Guess what. I’d ask my buyer for , say, $2,500 L/O fee up front, which by some strange coincidence is the same amount you would pay on your L/O.
Scott, I’ve not done this but was working toward it a while back but wasn’t happy with the buyer’s commitment.
Hope it helps a little
I would be real concerned about commercial property, as if the guy disappears you could be left with large non-poerforming property. This poses problems for two reasons, the first is if you try and sell the property (as the value is determined by the tennants (how long do they have on contract, etc)), the other problem is that it can be hard finding new tennants, for example if you take over a commercial space with a warehouse, no one may want it, yet put a fence round the warehouse and a trucking company might throw money at you….
Also don’t lend out on shop fronts that aren’t in popular areas and it can be quite hard to find a long term tennant (one such place I know of has had, in less than a year, three tennants).Also make sure in the contract you can reposes the business assets if they don’t pay (this is in normal commercial leases).
Rgds.
Luicfer_auThanks everyone for your responses.
We decided to go L/O in the end… with a LARGE option fee to lock the people in….
Place is only two years old, and, also has a 2BR house attached to it…..
If we do actually go for it, will post an update….
Cheers
Scott
Pelican Investments
http://www.pelican-invest.comJust a quick update.
Buyer decided to go for wrap instead of L/O…. Their choice….
In the process of doing the legals now, but it seems we have done a wrap on a restaurant building !!!
Cheers
Scott
Hi all, I’m a new member, this is my first post.
We’ve been discussing a deal with a long established and successful restaurant for a few months now. I noticed premises next door to a popular restaurant up for sale. The restaurant own their own premises, but didn’t consider buying next door even though they’re cramped and turning people away at least 2 nights a week. Both premises share a wall, so there seems nothing to stop us buying the vacant premises, opening the shared wall, creating extra space and higher seating capacity etc etc.
A month later we see another one, maybe we’ve been driving past these opportunities for years without noticing.If we can do this deal, we’ll establish a long lease, say 5x5x5, and sell the premises, take the profit and look again. Very interested in feedback from Scott on his deal. Wish you all well and thanks for the forum info, it’s so full of info – thank you.
cheers
thecrest [pleased]thecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
Email Me | Phone Meselling motels in NSW
Hi Crest,
Well, our deal ended up being a straight wrap deal… obviously it’s 70/30 loan which hurts, but we do get a GOOD sized deposit from the buyer.
The place is 2 years old with a 2 br house attached… The guy is going to live in it, so it works out nicely for us…..
All in all quite a straight forward deal….
Your’s however sounds good too !!! good to see you thinking outside the box….. hope your vendor’s go for it……
I’d suggest if they are keen to buy, you best get them signed up first to make sure they don’t pull out…..
good luck !
Cheers
Scott
Pelican Investments
http://www.pelican-invest.comGlad it worked for you Scott!!
Did you do two seperate wraps (just to wring that last bit of profit out??).
Rgds.
Lucifer_auLucifer,
No, we did it as 1 deal….. let’s not get greedy now !!!
We did get our solicitor to draft up an agreement before we bought the place though…. 10k fee for the buyer, so there was no backing out once we bought the place…..
Guy is over the moon…. he’s moving his already successful cafe biz from down the road to the place… so here’s hoping…..
He wants to re-finance in 12 months which suits us just fine [biggrin]
Cheers
Scott
Pelican Investments
http://www.pelican-invest.com
You must be logged in to reply to this topic. If you don't have an account, you can register here.
