Hi, I never bought a commercial property like this so I am having trouble deciding if I want to do this. It is an off market property with a 4,400 sq ft warehouse building on it. Currently there is an auto shop renting the building. The owner of the shop claims to be making 80,000 per month. He is willing to sign a 10 year lease at $7,000 per month with a $20,000 security deposit. He wants to buy the property himself but he says needs about 1 year to clean his credit record to get a loan. The shop owner is willing to buy the property for what I paid and another $105,000 on top of that after he cleans up his credit and can get a loan. He thinks it will take him 1 year to do this.
I want to look at the shop owner’s books to make sure he makes what he says he does. I am thinking if the shop owner really is making that much, then this should be a safe deal where I can use the $7000 to cash flow and get $105,000 in a year. What do you guys think about this deal? Is it risky?
