Commercial Flip Deal Detail Help
I have a tenant at a strip center that needs more space. He wants 3000-4000 sq ft of open space. A friend of mine has such a facility and has been trying to sell it to me for some time. There is about 10000 total square feet. About half is office space and the other half is warehouse type of space. There is also a decent sized yard as this structure is in the shape of a L. Adjacent to this land is another tract of land about the same size as the property listed above owned by the same gentleman.
I want to purchase the building, provide a space for my tenant that needs to move, and then sell it to him. He will be doing about 100k worth of improvements and wants an option to buy on whatever he rents. The seller is willing to do many different deals. He has offered me owner financing on 350k for the building. 7% simple interest or 6.5 @ 20yrs. Taxes and Insurance are about $175 and the income is at around $3700. He would like to sell the building outright and then do a joint deal on developing the adjacent land.
I am not sure how to handle this. I am pretty new as I have just bought and managed residential and commercial property before. I am not sure how to handle this option angle. What should I be getting in return for giving an option. How should I handle my seller. I think I should make around 75-100k on this flip. I would be willing to stay on and get the building fully rented to my buyer to offset his costs. I am now sure how much he is willing to deal with tenants. I could manage it all for a discount for a period of time.
What are you thoughts?
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