My landlord sucks...should I buy him out?

[Michael Spittler]

Hello BP,

So this here is a bit of a complicated question so I thought the best thing to do was to bring it to the forum... Little bit of a back story is in order I think. I operate a brick and mortar business which was opened in January 2016, the building consists of a 3000 sq ft bar and (2) 1000 sq ft retail store fronts in which my business occupies 1 of the 1000 sq ft spaces. My landlord reached out to the tenants approximately 6 months ago expressing an interest in selling the building. He ran the bar for years and years which is why he bought the building and then burnt himself out and shut the bar down so now the bar is just leased to another tenant. The other 1000 sq ft retail space is also leased out so the building has tenants that want to stay where they are but my landlord has no interest in running the building effectively... the roof leaks and no maintenance is ever done on his part. Anyways, I was the only 1 who responded to his inquiry about selling the building and he does not have it listed nor is he actively working with an agent on selling it. Anyways I did have a serious conversation about buying him out so I was able to get further info from him on the deal however I told him that I wouldn't be able to make a serious offer until January 2018 because I wouldn't be able to show 2 years of income from my business until then. 

Anyhow, long story short I have 1 residential rental unit so my experience is limited and no commercial experience at all. He has offered the building to me for $450K, he owes $230K on the building so if I am able to finance $230K he is willing to carry the balance at 4% for 8 years. 

Current monthly rental income: Bar $3000 ( currently under 3 year lease with 2 lease options taking it out to 9 years), retail units $1000 each ( both under 1 year leases) $5000 total

Taxes: $12,500 annual

All my other expenses are estimated:

Water $200

Trash $100 

Insurance $300

The building is in need of some repairs but all the tenants are good long term tenants that would be more than happy to stay if some kind of upkeep on the building was happening so I don't really think a huge chunk of money needs to be dropped into the property right on acquisition but the CAPEX and maintenance fees are definitely going to be high.

$450K seems high to me even with the owner financing at 4% but on the flip side if I am looking at 10 or 12% for commercial financing then maybe my expectations are unrealistic not his... 

Additionally I am also assuming that I would be looking at around $57K (25% of $230K) down at closing and around $10-$12K in closing costs. 

HELP!!!....Any help, information or advice would be greatly appreciated.