All Forum Posts by: Dan Wallace

@Ori Skloot there are a few moving parts here with your transaction. 

Is the sales price indicative of the business cash flowing as-is or based on the repairs being completed? If the purchase price reflects the repairs/upgrades being done then you may have a few issues. First, the price may be too high or too speculative. If you decide to move forward you may want to consider an owner-carry component with certain earn-outs to make sure you are not overpaying for the business. Second, if the purchase price is based upon the anticipated cash flows then you may have an issue with financing since the future cash flows may be speculative and will take a strong case to get underwriters on board. Again, a good reason for an owner-carry that is either "set-aside" or based on certain benchmarks.

One final thought, if this business requires a certain degree of industry expertise, do you think you have that expertise and more importantly will a prospective lender? I do think the SBA or a similar govt-guaranteed program is your best bet. Of the billion plus SBA portfolio for 60 lenders that the group I work with services, I am sure we have a very similar loan we have done very recently.

Best of luck. If I can offer any other suggestions please let me know.

Hey Hemal, I have seen a number of similar projects re-purposed to assisted living facilities. Obviously, there would be a number of upgrades that would have to be done but assisted living facilities have shown very strong occupancy rates over the last few years and therefore demand is high.

Hope this helps.

I have seen situations where the appraiser was not given access to a property for various reasons such as a non-cooperating owner (foreclosure) and even a situation where the property was too unsafe for an appraiser to enter. In these cases, the appraiser will indicate he/she was not able to access the property and their value assigned is reflective of a lack of access. 

There are also other ways to determine value such as a BPO (broker price opinion) where essentially a realtor pulls comps, etc. Clearly, there are limitations to this type of valuation but depending on what you are trying to accomplish, there are a number of ways to get an indication of value remotely.

Before I would contact the bank I would make sure you have reviewed the terms of the existing mortgage to make sure you even want to continue with that loan. Make sure you understand any loan covenants, pricing adjustments, etc. If the bank that holds the note allows for the note to be assumed, the bank is going to fully underwrite your ability to perform before they will release the current borrower/guarantor. Essentially they look at the loan as a new credit and you may just want to entertain getting a new loan. You may also benefit from a new loan with a new, longer term or pricing.

If there is a business acquisition involved it may be easiest to secure financing on the entire project including the real estate. 

Best of luck!