How to get out of this mess?

Question

I bought 2 small commercial properties next to each other so the buildings actually connect to each other. I bought them for $750k, I put $200k down and invested about $200k in renovations. Its a seller finance deal and my monthly mortgage is about 7k due to covid i closed down the business so it's an empty building right now. I had a food truck outside and inside people will play board games so it was like a board game cafe with a retail shop, we did sip and paint nights, plaster painting for the families etc. However all of that stopped in March. We sold everything we could and I want to sell this building asap but given the situation I don't know who would be adventurous enough to start a business now. I also thought about finding 5-6 people who are willing to come up with $100-$200 per person to pay the original seller the balance left on the mortgage and then figure out what to do? I have not idea like seriously the building hasn't generate money to pay the mortgage so i am coming out of pocket to cover it and I don't want to continue to do that any longer. Any ideas would be greatly appreciated.

Joshua D. · Answer

@Victoria Amador

As the others have said, I would ask to renegotiate the terms of the agreement. The seller has to be understanding and if it is only for 6 months.

However, I'm getting the feeling that you want out of the business anyway? You didn't seem to write with passion for it in the future. Am I reading that wrong? Cuz that is a whole nother question...

Alfonso Giacomucci · Answer

Try asking the food trucks if they know of any looking for community kitchen space. Some states require them to have a brick & mortar kitchen for storage and such. You'd have to sink some cash in, but may be able to figure out how to turn some of the space into rental space.

Ronan Donnelly · Answer

How about turning the space into a COVID testing site until more regular business resumes?

Rene Owczarski · Answer

@Victoria Amador You could renegotiate the terms on the seller financing (extend out the term with a temporary forbearance, or change the payment schedule to an escalating payment schedule, etc.)?Could you do a sublease on part of the building to generate some revenue?

Have you talked to the seller and told them your situation?

Mark Gallagher · Answer

Hey Victoria,

Sorry you're in a sticky situation. My gut tells me that in a few months your business will be booming with people who can't wait to get back to normal. I would connect with the lender and see if you can halt payments for 6 months. These things were certainly beyond your control and you should be back on your feet soon enough. If you want to sell, the market is hot depending on where you're at, but like you've said the commercial aspect is not going to be friendly to selling. I would approach the lender first and foremost about working something out.

How to get out of this mess?

How to get out of this mess?

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