The following is an idea I've been kicking around in my head:
If you were in my shoes, how would you feel about the prospect of borrowing against the restaurant (land + building owned, both 100% free and clear) to purchase another commercial property such as a self-storage facility or car wash, or even a 5+ commercial multifamily residential property?
Our family-owned (tenant-occupied) restaurant building is doing fine and bringing in about $7,000/mo in net profit, well positioned in the center of a thriving commercial zone in a growing town just outside a Metro area, and is valued between $1M and 1.2M.
Thanks in advance.
How would you feel about leveraging a commercial property (restaurant) to purchase another one?
byu/Smelson_Muntz inrealestateinvesting
Posted by Smelson_Muntz
2 Comments
Great idea! In my experience, have 25-30% down payment, great history with a commercial bank, excellent income history (proof = tax returns), owner occupied is best (not just landlord).
Also, consider creating a proposal for owner financing; have available 30%+ for down payment and terms.
Most banks will require a 5 year balloon or sometimes a 10 year note.
Good Luck!!
The cost of the real estate is extremely important.
Build where the land acquisition doesn’t risk you ever turning a profit.
Self-storage facilities are a more resilient investment due to their lower operational costs and consistent demand, while multi-family residential properties can provide stable rental income and appreciation potential.
Storage units require a lot of real estate, but don’t need to be close to the city center.
Car washes can also be very profitable but may involve higher operational complexities and costs. If you’re talking about a modern drive thru car wash that’s going to cost $6+M to build.
I can’t see you building 5 residential apartments for less than $1.5M.
Why not build a 20 unit structure with some low risk amenities such as in-unit laundry, fitness center, high-speed internet available, and pet-friendly features units (all tile vs. carpet). Soundproofing between units, including triple pain windows. No one living above anyone else. Outdoor space, smart home technology, and a community area for socializing.