Posted by Connie Stephens on September 17, 2008 at 11:52:36:
A cap rate of 10% is great. And with it being an industrial sale/lease back, this makes it a favorable loan for a bank, since we can depend upon your tenant having the cash to pay the lease. Industrial and Manufacturing are two great property types to purchase right now, if you can find the right deal. Lenders love them because they usually carry long leases, the companies are usually larger and more stable, and the buildings are built to last decades and withstand lots of wear and tear.
I wouldn’t worry so much about the age of the building. You should focus on the structure and get an inspector to review the property and determine the structural integrity of the building. If after the inspection, it is determined that the building’s structure will not last more than 1/3 of the amortization of the loan before extensive renovations are necessary, then I would approach the seller about a price reduction. When purchasing any real estate an inspection is key, because you become an “informed buyer” and you have a negotiating tool to use as leverage with the seller.
If you have any more questions, please feel free to email me anytime.