I have heard and researched that 100% Commercial financing is just not out there.
Here is what I am looking at:
Self Serve Car Wash with Land $750,000.
Annualized Gross 75K less expenses 60k Net
Assumable mortgage $500,000 @ 6% and the rest I would just have to come up with.
I do not have 250k, but I have good credit and it might be a stretch to get to the 5% down even.
Would I be able to get the loan for 250k and consider the 500k as "seller financing" ? Many Thanks.
Full Version: car wash
Medical:
A couple of comments:
1- Why are you using an annualized revenue number? Is this a new business?
2- You are netting $60,000 on a $750,000 asset. Your return on this asset is 8% {it seems a bit low}
3- Expenses seem to be understated even for a self service business. Taxes and utilities? How much is the water bill?
Your question:
” could I be able to get the loan for 250k and consider the 500k as "seller financing" ?”
No you can not. Seller financing involves the seller receiving a note as partial payment. In some times the seller will formalize this arrangement by placing a lien on the property in a ”junior position aka second mortgage”. The existing mortgage is in first position. If anything the seller would have to be willing to take a $250,000 note and let you assume the mortgage.
No lender will give you a loan for $250,000 when there is already a lender ahead of them with a $500,000 mortgage for a property that will probably appraise at $600,000 at the most {this is just an educated guess as I do not even know where it is, but the business is certainly not making enough money for me to come up with a higher number unless there is a better use for the property than what it is now, the property {and the business} does not seem to be worth that much}.
A couple of comments:
1- Why are you using an annualized revenue number? Is this a new business?
2- You are netting $60,000 on a $750,000 asset. Your return on this asset is 8% {it seems a bit low}
3- Expenses seem to be understated even for a self service business. Taxes and utilities? How much is the water bill?
Your question:
” could I be able to get the loan for 250k and consider the 500k as "seller financing" ?”
No you can not. Seller financing involves the seller receiving a note as partial payment. In some times the seller will formalize this arrangement by placing a lien on the property in a ”junior position aka second mortgage”. The existing mortgage is in first position. If anything the seller would have to be willing to take a $250,000 note and let you assume the mortgage.
No lender will give you a loan for $250,000 when there is already a lender ahead of them with a $500,000 mortgage for a property that will probably appraise at $600,000 at the most {this is just an educated guess as I do not even know where it is, but the business is certainly not making enough money for me to come up with a higher number unless there is a better use for the property than what it is now, the property {and the business} does not seem to be worth that much}.
If you wanted it bad enough you could always create an LLC with the seller, you be the sole signatory refinance the property and give the seller the funds, while he is a silent partner. There's a lot more to this strategy but I'll leave it at that. The income as you have listed wouldn't be able to sustain the debt.
It's best to let 100 good deals go by, then to get stuck with a bad one. In commercial where you truly make the most and benefit the most is on the purchase. So if you lose on the purchase there will be bigger problems on the sale, if you could make it that long with such minimal inc.
It's best to let 100 good deals go by, then to get stuck with a bad one. In commercial where you truly make the most and benefit the most is on the purchase. So if you lose on the purchase there will be bigger problems on the sale, if you could make it that long with such minimal inc.
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