After crunching the numbers…the BIG numbers…and doing a full and complete evaluation of the renovation needs, carrying costs, return on investment (ROI) and mortgaging options we just can’t make the numbers find common ground. This one is another ‘not to buy’.
While the potential for increased value and the potential revenue stream from commercial leases are both very high the numbers for us at this moment in life just don’t work. Here is the quick rundown:
The purchase price is about $900K. The renovation at minimum is $80K. Potential lease revenue $5500/mth. (Sweet!) The downpayment required is 35% = $345K. (Not Sweet!). Sigh.
No matter which way we tried to shuffle numbers and finances we just couldn’t find it in our means to mortgage and afford this place they way it should be done. (we probably could have done it if we sacrificed our morals and values but that isn’t our style)
The tough part is the commercial property zoning status. Traditional financing methods that people use to purchase residential properties is not available on commercially zoned buildings…even if they are 50% residential.
At the end of the day, the risk vs reward for all parties involved was not jiving and as such our house hunt will continue.