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Updated over 4 years ago,

User Stats

53
Posts
5
Votes
Kyle Davis
  • Appraiser
  • Ottertail, MN
5
Votes |
53
Posts

Zero Down Deal....Tight Cash Flow...Thoughts?

Kyle Davis
  • Appraiser
  • Ottertail, MN
Posted

Hey guys!

So I'm looking to acquire a seller financed large commercial property.  Single occupant...but is a solid tenant (national flagship bank) and has been there for 10 years and custom built out this large facility to meet their needs.  They have 4 years left on their new 5 year lease (Triple Net) with option to extend for another 5 years.

I can acquire it for $5.8 Million and seller is willing to finance it for zero down.  My concern is Net Cash Flow after everything is said and done is $20k a year.  Which seems very tight for a 5.8 Million property.  This is my first large deal and I will have a partner or two on it.  I think the cap rate is around 6% for it and cap rates for this kinda building is around 5.5% so there is a small amount of equity built in.  

Building was built in the early 2000's so it's not terribly old.  

After 5 years, with debt pay down and appreciation it will be worth around 6.35 Million so it would get some good equity in it.  

Feel free to poke holes in this at your leisure.  I want to get into bigger deals like this...but can't afford for this to go badly either!

Kyle

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