Updated over 4 years ago on . Most recent reply
Commercial Financing - owner occupant
Case study/Analysis:
Commercial property: 40,000 flex space with limited bay door access. Used as athletic space currently. 50% occupied with long term tenants with short term leases. They all want to stay and would be negotiated into long term leases during due diligence.
current rents: $10,000/mo, $120,000/year.
Vacant space is a little over 50% of the building. 20,000 sf @ $6 sf for the owner occupant = $120,000/year
Yearly Income: $240,000/year (with owner occupant) yearly expenses (waiting on full breakout...not NNN, but will negotiate with tenants before sale to include some costs): 20%?? approximating $50,000/year
projected NOI= $190,000
Using a 6% cap rate= current value: $3,200,000
Current asking price of the building: $2,700,000
My questions:
1. Would a lender use the appraised value with the improved lease Income from the owner occupant?
2. Is there a scenario they would not require down money?
3. What % down money/rate is needed with 30 year term?
4. I am most worried about cash flow in the early years.