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Posted

I am selling a 5 acre construction yard within the city limits. I have a broker and a buyer.  My broker recommended that I lawyer up for portions of the sales contract.

Land is 100% within the 25 year flood plain and contains a 1200 sqft office, garages, and some equipment canopies etc. I am able to operate my construction business there due to legal grandfathering or luck because the city just doesn't care because they think I have some grandfathering.

We have it developed to about 20 to 25% impervious cover, although most of that number is base.

My current sales agreement has owner financing for 2 years with a balloon payment after that.

My concern are:

What if buyer defaults? How big of a pain is it to repossess?

Bigger concern is buyer gets crossways with the city by bootleg developing or just outright poluting or some such.

If anybody knows a guy that knows a guy or can answer some of those questions. Shoot me a pm or bear it all here on surly. Thanks.

Posted

Owner finance is some ballsy shit on commercial property IMO, unless you have a guaranteed take of revenue or something. 

I know one in Dallas and can ask him got some Austin recommendations if someone doesn't pop up here for you. 

Posted
9 minutes ago, immamac said:

Owner finance is some ballsy shit on commercial property IMO, unless you have a guaranteed take of revenue or something. 

I know one in Dallas and can ask him got some Austin recommendations if someone doesn't pop up here for you. 

My broker has a guy as well. I just wanted to get some opinions and see if same namesbkeep poppong up.

Posted

What's the thought behind two years and then a balloon payment? Interest rates may be lower and refinance? Stuff may fall off his credit report by then? Lol

Posted
Quote

 

Dr Fear 1348

Posted 7 hours ago

#4  

What's the thought behind two years and then a balloon payment? Interest rates may be lower and refinance? Stuff may fall off his credit report by then? Lol

Quote

how much down? 

Two years was buyers idea. If the circumstances were not so odd, I would have preferred a longer time to balloon.

12% down plus first 3 months of amort.

Posted

 Would not do it for 12%.  That'll get eaten up real quick if problems arise and you have to foreclose.  Minimum of 20-25% would be my preference for some cushion.

What rate are you getting? 

Posted

This idea is terrible.  It wouldn't be so bad if it were an office building, but a construction yard?  What if your buyer starts dumping toxins on the property?  Starts storing old tires?  Starts burying random shit?  

12% isn't enough security.   No way, no how. 

Posted
17 hours ago, Gil Bang said:

This idea is terrible.  It wouldn't be so bad if it were an office building, but a construction yard?  What if your buyer starts dumping toxins on the property?  Starts storing old tires?  Starts burying random shit?  

12% isn't enough security.   No way, no how. 

Agree on the environmental risk.  A friend's Dad did this exact thing after he successfully sold his business, but held on to the real estate.  Did an owner finance that he foreclosed on many years later.  Turns out that the buyer did lots of bad pollution stuff while they occupied the property.  No matter, my friend's Dad was considered to be the PRP for the enviro clean up and remediation.  He ended up bankrupt in his final years of life.

Posted
2 minutes ago, DalTxHornFan said:

Agree on the environmental risk.  A friend's Dad did this exact thing after he successfully sold his business, but held on to the real estate.  Did an owner finance that he foreclosed on many years later.  Turns out that the buyer did lots of bad pollution stuff while they occupied the property.  No matter, my friend's Dad was considered to be the PRP for the enviro clean up and remediation.  He ended up bankrupt in his final years of life.

as a commercial lender, we actually wrote off a couple of loans rather than foreclose on the real estate, because of the environmental risk.   I'm talking bad shit where the loans should have never been made, like chrome plating shops and car battery recycling businesses. 

  • Hook 'Em 1
Posted

Well. This thread has run it's course.

Did get some insight.

BTW. As a temporary stop gap, I negotiated a lease with my new company on a month to month basis doing the same thing and using my yard personnel. So I geel less pressured.

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