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Updated over 2 years ago,
Help me purchase my first commercial RE property
I have been leasing a commercial building for my business for five years. It's time to renew the lease but the Owner has made overtures that he would consider selling the property to me if I allowed him to owner-finance the deal. When I asked about traditional financing he simply said, "nope, not gonna take those gains all at once." I didn't probe any further, but why wouldn't he want a check for the full amount up front? Is it a tax thing? Purchase price is somewhere in the neighborhood of $1M and he has mentioned 4-5% interest. Down payment has not been discussed but I have enough saved to put down 15-20%.
Here's my issue... for reasons unknown the owner is not willing to sell to me today. I would have to wait another 2 years. What type of Lease should I negotiate with the Owner? A Lease-to-own? A lease-option? I've read up on a few things but it's a bit confusing. I get the feeling the Owner would not want to sign anything that the IRS would characterize as a sale, and I don't want to pay rent for the next two years unless my rent payments are going toward the purchase price. The Owner has been good to me and my business, and I believe his intentions are sincere and not a tactic. There's something on his end preventing him from selling to me now, I just don't know what that could be.
What's my play here? What type of lease should I sign that sees me as the building owner in 2 years?
Matt