Commercial Property Financing - Posted by Frank Notaro

Posted by Clair-MO on September 18, 2004 at 17:36:33:

Frank, I forgot to read over my comment and I notice that I said that I was bashing you for using banks. What I had in mind was simply I wasn’t bashing you for using banks because there are other ways to gain “control” of the property. My personal feelings are simple ones if a seller gets to the point of seeing you as a friend. Most likely he will sell to you before he sells to a total stranger.

Commercial Property Financing - Posted by Frank Notaro

Posted by Frank Notaro on September 17, 2004 at 21:57:11:

I want to buy a commercial building and I only have $20k for a down payment. The building costs $800k.

Would a bank give me a 75% loan if the owner gave me a 25% second?


Re: Commercial Property Financing - Posted by Clair-MO

Posted by Clair-MO on September 18, 2004 at 12:29:39:

Frank, You need to recognize that the mind set you are reflecting is a “traditional” or “conventional”. You need to to open up your mind to new and creative ways/methods for purchasing commercial properties!!! I bashing your idea of using banks or other institutions for getting a loan for purchasing commercial properties but you might want to think it over before you do use banks and other institutions as lenders. Here are four ways you can creatively do a commercial property:

  1. Use a partner who has the down payment and can to an agreement with the seller to do a Master Commercial Lease Option for 12 to 72 months then refinance the property through a bank for a lower interest rate.
  2. Find out what the needs of the seller are and fill those needs by asking questions. I am going to send you a copy of an actual conversation with a tired land-lord who did a Master Commercial Lease for 12months on a 24 Units apartment complex. I’ll do something much better than sending it individually to you. I’ll post it in this comment. Here it is!!

Clair: Good morning! My name is Clair and I am looking to purchase an apartment complex in your area. A friend of ours, Tom Reynolds mentioned that you were looking someone to purchase your 24 Units, am I correct? May I ask what your first name is?
George: George Harris and yes, you are correct. I am wanting to sell the apartment complex!
Clair: George, If I could show you a way where you can get your asking price, and it is a win/win situation for both of us. Is there any reason why you wouldn’t sell your apartment complex to me?
George: Clair, to be truthfully with you, no!
Clair: George, Would you mind very much if we sat down so I can ask you a few questions to see if it will be feasible for me to give you an offer, fair enough?
George: No, Come into my Office, What do you need to know?
Clair: George, Why are you selling?
George: I have owned this complex for over 25 years and I am at the age, that I want to retire. I want enough income where my wife and I won’t have to work again.
Clair: Am I correct that what you are saying basically is, you are wanting to retire and not to be bothered with tenants calling you tom fix something in the apartments when something goes wrong, right?
George: You’re right!
Clair: George, The next question is a simple one but I want you to think seriously about it, fair enough. How much money do you realistically need to live comfortably per month?
George: Well, Clair, I think between $5,000 to $10,000 would do per month.
Clair: George, How much rental income do you take in per month from the apartments?
George: Just over $15,000.
Clair: What are the expenses per month?
George: $3,500 per month for expense.
Clair: What you are telling me is that these apartments are producing over $15,000 as positive cash flow. Am I correct?
George: Yes, Clair.
Clair: George, Is there any more revenue coming in besides the monthly income?
George: Between $500 to $600 from the laundry facilities.
Clair: You are telling me the monthly income from the apartments is $15,000 minus the expenses of $3,500 leaving a balance of $11,500 plus additional income of $500 totaling $12,000, right?
George: The total of $12,000 is positive cash flow, Clair!
Clair: George, As an investor, I want to be fair with you and you with me. Do you have any problem with that?
George: No problem!
Clair: George, Here is what I can do for you.

  1. I will purchase your apartment complex at your asking price but I am not able to give you the down as you would like.
  2. What I am willing to do a lease option or a Master Lease for 12 months also I will give you per month $5,000 until the option period is completed then I will cash you out if we can sign a contract today. Are you willing to do what I have proposed right now? (I have contract setting infront of him waiting to be signed).
    George: Sure! You will be cashing me out in 12 months, right?
    Clair: Yes, sir! That is correct.
    George: Let’s do it!

  1. Notice, how the seller’s needs were filled and what those needs were. You can always learn from the experienced investors on this site and I would strongly recommend that you join the chat room for I am there on a regular basis.