Creative Building Finance

If you are like a lot of business owners, your cash flow has been down the last three years. And now of course, the price of buildings have dropped dramatically. Interest rates are also way down, but you do not have the down payment to allow you to buy today. I am working with a company now who is facing these same issues. If they purchased, the monthly debt service on the building purchase would be less than their monthly lease payment.


I went to the building owner and offered a creative plan to get everyone what they wanted. I asked the owner to give the buyer the right to lease the building now, under some reduced rate and allow them an option to buy within twelve months.


This was a new building, and the buyer needed some customization improvements to make it fit their need. They had someone to do these improvements for them so it would not involve the landlord footing that bill.

I wrote a letter of intent to the owner for a three year lease, and asked for two months free rent to allow the buyer to move and improve the space as needed. I then asked for three months rent at half the normal rents with regular rents thereafter. I included an option to buy the building in the first twelve months at a rate comparable to other spaces selling in the area, with a little premium for the seller. I included a clause that after twelve months the purchase price would increase to the greater of three percent or the average price of sold listings for comparable properties in the area.

This is what I call 'Creative Finance.' This particular buyer had expectations of some growth and needed additional space. They were expecting a big contract in the next few months which would allow them to buy. This plan allowed them to move now, with significant reduction in out of pocket expense, tie up the building they wanted, so they didn't lose it and then give them a lease price comparable to match their budget, but in new space that they could own when their cash flow improved.

The building owner was getting the cost of carrying a vacant building paid for, a market rate lease if it didn't sell , and the liklihood to sell at a good price when buyer got their big contract. It was 'win-win' for both parties.

Sometimes you need a broker on your side to find a solution. We don't make any money unless some property changes hands, so in this market, we have to be creative. Call me to discuss your situation. Let me be find a creative solution for you.