Private lending or other ideas?

[Laxputs]

Myself and two others are interested in a .96 acre commercially zoned property in town.  Commercial zoning is relatively limited and they won't be rezoning any time soon. The property has an awesome location. We have a good idea of how we want to develop it and have sat down with the municipal business director who informally gave us the green light on it.

 

The property currently has a few trailers on it being rented out (no business license), and an old drunk owner living on it. Banks will not give out a residential mortgage on a commercially zoned property. Banks will not give out a commercial mortgage on a property with no cash flows.  The property is listed at 600'000$. I think it could be got for closer to 500'000$. We aren't looking to put down more than about 30% on it, so approximately 150'000$.

 

Anyone with experience in rent-to-own for commercial locations? Anyone with experience in private lending? Any thoughts on how to move forward on it?  The property is likely still for sale because of the difficulty of getting a mortgage and then the cash needed to develop.

 

There is little downside on it because one could just put a few trailers there without renovating/developing it, make 2500$/month, and more than cover the mortgage until moving on with the development/business plan.  The property is worth all of the listed 600k.

 

Preliminary stages here, just brainstorming... Thoughts?

[gfp]

Seems like you could get a commercial loan for the redevelopment and property purchase together - with the redeveloped proposed income supporting the loan.  But then you would have to redevelop the property immediately.

 

Sounds like it may be worth asking the drunk owner if he will sell the property on Land Contract.  He gets the down payment and you make payments to him.  Basically the same as owner financing.  Look into Land Contract / Contract for Deed / Owner Financing to get advice on how to structure it to protect yourselves.  If you default the seller generally keeps the downpayment and any payments made (and keeps the property as well of course).

[bookie71]

owner financing?

 

[Laxputs]

Thanks, guys.

[fareastwarriors]

Keep us updated as you move (or not) along with this opportunity. Would love to learn more about it.