Hi all,
Posted on biggerpockets my first deal back in 2011, this forum gave me the confidence to get it done. Amazing what this community has turned into. This is my first commercial deal and 2nd seller financed deal. I would appreciate any advice on anything I may be missing with putting this together or should neogotiate before finanlizing.
Negotiated so far:
Property: 9 Unit - 7 Apartments + 2 Commercial Garages (4 unit apt building + 3 unit apt building w/ commercial garage attached + standalone commercial garage on same lot)
Background/Why owner is selling: A seasoned builder of 50 years, the owner purchased the property in the 1970s for around $8,000.00, later developing three apartments and two commercial structures. They acquired the neighboring four-unit in the 1990s for $150,000.00. With everything paid off, they’re looking to slow down but are hesitant to sell due to capital gains considerations.
Purchase Price: $1,750,000.00
Downpayment: $400,000.00 - Will do a 1031 - Selling two of my SF properties for the downpayment (bought for 120k + 146k back in 2017 & 2015).
Seller financing: Note for $1,350,000.00 - 7% amortized over 30 years with balloon payment after 7 years, interest only. ( I am trying to get the first year at 6% to stabilize then go to 7% remaining 6 years)
Property Condition: Above average. Properties built with steel beams, both roofs less than 10 years, all heating systems under 5 years etc. Walking through, I can see that owner is the type that spares little expense with his own properties.
Value: I am paying current market value. I will evaluate per building. No 4 unit multifamily has sold in the last 2 years. They are rare. Reviewing comps it would sell quickly at $800,000.00 (conservatively). The 3 apt + 2 Commercial Garages is a unique property. Doing my best to comp, it would be around $1,000,000.00.
Leases in place: 2 apt Leases will expire in 2026. All others are month to month or expiring this year.
I used a spreadsheet I typically use to analyze a financed deal. Here is a screenshot. Appreciate any advice at all.
Things to note: I have a well qualified plumber tenant for the bigger under house garage already. The garages will have 3% increases year over year once leased. The rent increases are with no added renovation besides typical unit turnover. I expect to outperform these numbers.
