Ray's insights on these 2 choices

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Posted by Mike S on May 19, 2009 at 20:54:37:

I have 800G in a 1031 escrow account. Looking at 2 deals, one is a absolute NNN auto repair building with a regional company. The other is a partnership with a reputable developer rezoning and developing an obsolete building into a multi use/Independent living facility in a retirement community.

The auto repair buisness has a 10 year corporate guarantee and comes in at a 8.5 cap, however the financials don't look very strong to me. They have been in business for 30 years and have over 30 locations that they franchise out.(they dont actually operate any of their locations) I haven't seen any of their franchisee's go dark that I know of.

On the other deal the developer will give me a percentage owenership (12.5%)based on our equity positions and will pay me 4% on my money while remodeling/building/leasing the warehouse and ILF. Total cost will come in at 24 million financed by HUD. He figures 2 years before my return starts going up and 5-6 years to get things running on all cylinders. This developer has been very successful over the last 30 years, has experience in retirement type homes, has done mostly redevelopement/rezoning of obsolete properties and his financials are very strong.

I do own your course, however any thoughts on these specific deals would be greatly appreciated. Good to see you back Ray.
Thank you,
Mike

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