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All Forum Posts by: Dan Wallace

Dan Wallace has started 2 posts and replied 62 times.

Post: Mixed Use Property

Dan WallacePosted
  • Vendor
  • Denver, CO
  • Posts 63
  • Votes 20

Hi Omar,

I have some groups that will lend on this size of a loan. I will send you a colleague request.

Thanks, Dan

Post: Structuring a commercial building deal

Dan WallacePosted
  • Vendor
  • Denver, CO
  • Posts 63
  • Votes 20

I can see if I can help.

Can you send me some details?

Post: What are going loan rates for Storage facilities?

Dan WallacePosted
  • Vendor
  • Denver, CO
  • Posts 63
  • Votes 20

You may be able to get 85% financing on this project with rates in the mid 5's.

We have had very good luck financing self storage deals.

I am not sure what recourse you have in regards to your lease. Did you require a personal guarantee or have some sort of due on sale clause similar to what a commercial promissory note would have? Depending on the lease you used your document may have a transfer of ownership clause or something similar which requires your consent.

If you do not have a personal guarantee or some sort of material change or adverse change provision, I am not sure what recourse you may have with the sale of the business operation.

Post: Looking into taking over the family business.

Dan WallacePosted
  • Vendor
  • Denver, CO
  • Posts 63
  • Votes 20

Evan

I live in the Golden, CO area and am not familiar with La Veta but I may be able to help. I have some investors who may be willing to partner up with your parents to get this business back on track.

Send me a message and I will see if I can help.

Dan

Post: Commercial Lenders/Banks in Ohio

Dan WallacePosted
  • Vendor
  • Denver, CO
  • Posts 63
  • Votes 20

What kind of commercial financing are you looking for, multi-family, retail, office, industrial, etc?

Post: Does this make sense?!

Dan WallacePosted
  • Vendor
  • Denver, CO
  • Posts 63
  • Votes 20

I don't typically finance multi-family projects but you have a lender that will allow you to inject no cash to the project? No equity injection in this type of deal does not seem to be prudent lending terms. I did not confirm your numbers and could not tell if you included a vacancy assumption consistent with this property historically or based upon local vacancy levels. Depending on your vacancy factor, reserves, etc I would think this property may not cash flow adequately with the owner carry.

Post: Min. Amount of Capital Needed

Dan WallacePosted
  • Vendor
  • Denver, CO
  • Posts 63
  • Votes 20

You can get financing for a special purpose commercial property such as a motel/hotel with only 15% down assuming you have motel/hotel experience. Without experience you will need at least 20%. Both scenarios assume you will be owning/operating the hotel. Any special purpose commercial properties (hotels, car washes, restaurants, etc) will generally need more of a down payment and relevant management experience.

The trickier part to getting financing is the underwriting criteria especially considering the business will need to generate cash flow to sustain any proposed debt but also provide you with a draw to cover your personal obligations.

Hope that helps.

Post: Pricing a Motel

Dan WallacePosted
  • Vendor
  • Denver, CO
  • Posts 63
  • Votes 20

@winstonparks I think you need to be very careful here since you don't appear to have any experience with hospitality properties. 

To begin with, to bring a dilapidated hotel property up to standards, especially in order to get a national chain flag, you may be faced with some serious capital expenditures. Furthermore evaluating a hospitality property is unlike any other commercial property in that yes you need to do an income analysis but you also need to establish an ADR, hotel occupany rate, etc. If you are unfamiliar with either of these terms then you need to get an experienced partner. As for whether the land is included or not I would think it is included since otherwise you would just be buying a defunct operating company. 

Purchasing an established well-run hotel/motel is hard enough without any experience but buying a failed property is full of hazards.

Best of luck!

A few things to consider. The financing of 100% is very attractive but only if you are getting the property at an equitable purchase price and if there are any other terms or covenants included. It appears you wife's practice is captive so hopefully they are not charging a premium to purchase the space. As for the financing itself the rate and terms should be consider with comparable market terms. Other alternatives for your wife's space would be 90% financing with rates around 4%.  Also make sure as to what your wife is pledging as collateral. Is she just pledging the real estate or is she also pledging her practice ownership? Will she be providing a personal guaranty?

Make sure to be aware of any covenants such as due on demand if she leaves the practice or any other types of calls or default provisions. As with any non arms-length transaction you need to be concerned that if something happens do you want a business partner as your lender. 

Make sure also to check the dentist's lease to make sure you understand the terms. You may want to confirm the terms of the lease with an estoppel agreement completed by the tenant if you have any reason to believe there may be a discrepancy with the terms of the dentist's lease.

Since this is not an armslength deal and you want to accept the deal they are presenting you can always refinance the real estate and with some programs now offering high loan-to-values on refinances you could re-do the loan shortly after purchasing the space.