All Forum Posts by: Tim Delaney

Nick I think many people got caught on your subject line and didn't actually read your question. My understanding is that you are asking if you should borrow the cash from your parents to make the acquisition and then refinance with a bank and pay them back as soon as possible. You are not really asking if you should buy with cash or a loan.

That said, it isn't a horrible strategy, but I don't think it is going to be as lucrative as you think. The seller probably isn't going to reduce their price enough for you to cover the double closing (once for the purchase and once for the refinancing). Even if your parents don't file a mortgage there will be expenses for you at both transactions. I would recommend you thoroughly investigate those costs (including some interest to your parents for the period you are using their money) to see how much of a discount on a house you would need to make it worthwhile.

Once you do that, you can make two offers on a property, one "cash" for that lower price you determined would still save your money (plus take a bit more off of that to make it worth your hassle) and one with traditional financing. If the seller likes the idea of the potential for a quicker closing they may take that discounted price. Just remember when you do this, you are waiving your financing condition, so once the contract is approved by lawyers and you approve your home inspection you will have to close or forfeit your deposit. 

If you are not willing to lock in a long term lease then the landlord is completely within their rights to charge you more for the risk they face in losing you as a tenant. If your business relies on that space then it is definitely in your interest to lock in a longer term lease hopefully at lower increases.

If he gave you notice in the middle of January that he expects more rent then I would plan on paying it in February if I was you. You can pay him the old rate and if he questions it tell him you thought he meant beginning in March.

Just my opinion, but I think you should care about the business model. If the underlying business is not good and goes under then you are stuck with a building that is very tough to repurpose.

I may come across as a bit harsh here, but if you just bought the business didn't you analyze the rent and tax situation and incorporate it into your pro forma? It may not feel great spending money on rent, but if that is the best thing for your business then just suck it up and deal with it. I would be considering renegotiating if I were you into a longer term lease because, as someone mentioned above, it is to the benefit of the tenant (you!) to know your business location is secure. I know people that have had long standing retail and restaurant businesses and had their leases not renewed by landlords which basically put them out of business because relocation was either too expensive or they never made up their revenue in the new location.

Just so you know where I am coming from, I purchased an existing retail wine and liquor store in a rented space about 7 years ago. I paid my rent and even increased it a lot to get a bit more space at one point. I kept on good terms with the elderly landlord and dealt with his lack of improvements for a few years - but asking him every few months if he was ready to sell the plaza. After years of telling me he was going to die with it so he didn't have to pay capital gains he shocked me one day by saying he was ready to sell and wanted to hold a 90% note. My point being, work with him, get to know him, develop a relationship and show him you care about the property - also let him know you want to buy it.

When you do renegotiate, one thing to definitely include in the lease if he is willing is a right of first refusal to purchase the property. Another option is to try to establish a fair value for the building and just present him a written offer for it - a friend of mine did this to a landlord a few years ago after always having back and forth verbal discussions that never really went anywhere. The landlord signed on the spot and both parties were happy. Yet another option would be to try to work out a lease to own option where maybe you can give him some type of larger down payment now and have your "rent" go towards paying off the property over a fixed period of time (obviously lots of legal and logistical issues here).

You will want to get something in writing from the city that confirms they know there are still tenants. You should probably hire a lawyer as well for something like this.

Make sure it is on Google Maps and all the other relevant online platforms (yext.com can do that for a fee) such as yellowpages.com, etc. Building a Facebook following will make your ads through facebook more effective as well.

I think you need to be more specific about what you are looking for or to do. Are you looking to be a commercial agent? Or an investor, developer, manager?

Every insurance company is different and has different specialties. If you are with a smaller company they may not want the exposure. Since you said broker he/she should be able to shop your business around and find you the deal that makes the most sense. My broker just shopped my commercial property policy and had quotes ranging tens of thousands of dollars from different insurers for comparable coverage.

I know M&T won't consider seller financing towards your downpayment for real estate purchases, but they do for business purchases - so if they consider this a business purchase you should be fine. My business banker is well versed in real estate - send me a message if you want his name. If you cannot use M&T then I would suggest using your contacts within the bank to get introductions to bankers at Evans, Akron, Alden, Five Star or Bank on Buffalo. The banking community is small and very interconnected in WNY so shouldn't have a problem getting connected to someone that can help.

Using seller financing for your "down payment" portion and trying to get a bank to finance the other 80% from my understanding can be tricky. I know that if you are buying a business (not real estate) that the bank will consider the seller holding a portion of the sale price towards your down payment, but they don't like to see that in real estate transactions. If the seller is truly gifting you the 20% the bank is going to want documentation of that. The seller would have to trust you to pay without any legal paperwork. That is what I have been told by my bankers though, maybe other banks have different ways of looking at it.