Contigency plans for purchasing commercial real estate

[Adam Rees]

I have not cut my teeth on a buy and hold yet. But have good opportunity with an extremely motivated seller. on a two level 1938sqft top and 1938sqft bottom level and 3/4 of it is already built out. 

He has a place listed at 375,000 and contacted me begging to buy it from him. 

Realtor is offering to set up a 'contingency' in the purchase agreement that if I cannot get it leased within 30days....deal is off. 

I'm extremely skeptical of the contingency. Have no problem going to work on finding a tenant but cannot afford to be left with a $2,500/mo if it doesn't happen within the 30days. 

Has anyone heard of this contingency? 

And does anyone have experience and willing to help? 

number is 3194308317 and I'll be watching this forum like a hawk now. 

Thanks!

[Nick L.]

OK so there's not enough information here to help. Some questions:

- Is this a residential duplex with 1938 sf each top and bottom? 

- When you say 3/4 is built out, does that mean that it's unfinished new construction? Or the seller was gutting it and can't finish the job? Or something else?

- Why do you think it's unfinished? How much money and time would it take to finish?

- What would the fair market rents be when it's finished?

- What are the area and tenant base like? A/B/C/D quality

- Where does the number $2,500/month come from? Does that include principal, interest, property taxes, insurance, vacancies, management, utilities, maintenance and capital expense budget?

- Is the seller suggesting that he finances it, that you get bank financing, or something else? Are you financially qualified?

- Sorry for all the questions but I am confused by your post and want to make sure I understand before offering any suggestions.

To answer the question in your post, a leasing contingency is reasonably common in commercial deals. For example you buy a restaurant property on condition that you can get a tenant signed within xx days. I have never seen it for small residential properties but there's no reason you can't do it.