Posted by Kirk David on January 13, 1999 at 21:01:48:
Test your acumen! My request is for some genius feedback on a commercial/residential property I wish to purchase.
The current vendor originally listed the (POS) building at 110,000. He wants 30 thousand down payment and he’ll VTB the balance.
So I was curious as to why he wanted a high percentage of the price as down payment and voila?I discover that he is 22m delinquent in property taxes. (Future Note: With the city property tax policy being no more than three years total backtaxes before property can be put to auctionblock, yet property owners are allowed to just pay one year of delinquent taxes to keep the property from that point of city auctionblock).
I then suggested to the owner in a preamble that I would offer 95m, less the taxes by assuming the delinquent tax bill if the city ok’d it (they have!), pay the difference of deposit (30m) initially required less taxes (22m), that equalling 8m, and he would take back the balance of 65m at 10% for 2yr.
Now the city tells me that the taxes owing are from 4th quarter 95 to end of 99 for a total of 28m! The owner then says he will take 10m down, I pay 10m to city on closing for partial past tax (95/96 yrs), I assume the 18m tax balance and he would VTB the 57m balance at 10% for 2 yrs.
The building has a NOI potential of 6500 monthly. Currently drawing 1600 per month from commercial tenants. Needs approx 40m renovations to achieve the full monthly NOI of 6500.
10,800 of taxes is due now because of the city 3yr limit on delinquent taxes.
Should I wait just a little longer and let the POS owner pay the 10m taxes and then make my offer?
What is my best solution in order to actualize this deal!?!