Commercial Restaurant Space - Where do I start?!

[Kara Beckmann]

I have been wanting to get into commercial real estate this year and I have come by what could be a great commercial deal, however I am realizing just how different commercial is from residential when it comes to running the numbers. 

Current building is 5,200 with 61 parking spaces. Current site plan attached uses the existing building and permitted construction drawings have raising the roof and a whole new facade with a drive thru. 

The seller is willing to do seller financing on the deal, however how will I be able to pay the seller during construction and if I can't place a tenant right away. 

The numbers alone are seeming hard to get exact figures on- future assumptions, fixed - paid expenses, projecting rent, cap rate, tenant improvements, etc.. 

I would love to bring a partner in on this deal who is more familiar with this industry, however I don't know the numbers to present to them. 

ANY ADVICE would be greatly appreciated!

[Joel Owens]

There is a different level of risk for a national tenant build out compared to regional and mom and pop.

You are putting in money expecting an equity return on the back end. If the tenant fails early on before you resale money can be lost.

Additionally whether you reface a building or tear down can depend on age of the vacant building and what it would take to attract a new tenant.

Example if you are getting the land and the building for dirt cheap then likely a mom and pop tenant would go in a decades old building with just some paint and other things to open up. If it's a national tenant that has a high end and specific layout and finish they might only do a brand new ground up building. You then have  a building worth nothing that costs you money to tear down rather than land already scraped and ready to go.

Different tenants with newly minted leases and credit ratings trade at different cap rates once open for business. A chick Fil A can be a 4.5 cap versus a Bojangles with the same box size can be 6.5 cap. Might want to tie the property up until you get a solid forward commitment with a tenant for the lease.