Ways to finance a building project?

[nsxtra]

I recently acquired a piece of land on a major street in front of a hospital being built. It is about 1.26 acres. I was interested in building a strip center right in front of the hospital, so that doctors, insurance agents, mri diagnostic centers, etc. might lease there. I am 27 yrs. old and when I went to the city they blew me off as if I was too young to pull this off. Next, I went to the bank, to inquire about an SBA loan. That didn't work out because thay said that I would have to occupy 51% of the building . Now why would I want to do that, if the whole purpose of this project is to maximize lease space. Anyways, aside from taking donations for this $299,000 project to my paypal account: [email protected].:biggrin:, I was wondering if anyone on here did something similar to this, or if you are a loan officer for commercial lending, or just plain interested in investing, let me know.

I'll post pics this evening.

 

[Dtrigg]

Is this a spec project? Do you plan on keeping the building and renting space, or are you planning on selling it? Have you checked into a construction loan?

You should speak with the city regarding traffic patterns. You should also check into occupancy rates and rents in your area. I read an article yesterday about the high rate of empty commercial space in many cities. If you want to rent to physicians, etc. that's a very tricky layout to meet their requirements. Ask me how I know.

 

[donwon]

Excellent points Dtrigg.

I may be interested in investing. I think I know the area you are reffering to. Do you have the details worked out?

 

[Dtrigg]

Excellent points Dtrigg.

Thank you...

 

[nsxtra]

Dtrigg:

What do you mean by spec?
I plan to keep the building and rent it out.
I didn't look into a construction loan yet.

Here is a link that shows my property. It is the one right in the middle of the screen with the three trees.
The large empty piece of land to the northwest is where the hospital is being built.

http://maps.google.com/maps?f=q&hl=en&q=mesquite+tx&ll=32.777497,-96.595713&spn=0.00516,0.012188&t=k

 

[Dtrigg]

"What do you mean by spec?
I plan to keep the building and rent it out.
I didn't look into a construction loan yet."

A spec project means you are building it for the purpose of selling it. Sometimes spec projects are sold before the project is completed. On the othe hand, sometimes people get involved in a spec project and can't get rid of it.

Look very closely at your construction costs if you are building for physician offices. Remember all the pluming and sinks the last time you went to see your doctor? Medical construction is very expensive.

Have you thought about a JV deal with the hospital?

 

[Ski_Banker]

Dtrigg:

What do you mean by spec?
I plan to keep the building and rent it out.
I didn't look into a construction loan yet.

Here is a link that shows my property. It is the one right in the middle of the screen with the three trees.
The large empty piece of land to the northwest is where the hospital is being built.

http://maps.google.com/maps?f=q&hl=en&q=mesquite+tx&ll=32.777497,-96.595713&spn=0.00516,0.012188&t=k

Doesn't look like there'd be enough room for a parking lot??

Don't build anything unless you have a tenant, contracted, in hand. Carrying costs can eat you alive. I'd just network/advertise for someone interested in franchising a gas station, McD's, etc. if zoning works. Lease them the land and save yourself the headache and RISK. There's plenty of vacant land nearby judging from that picture so once developed, you can't charge any more per sq ft. than anyone else, but you risk losing a lot of cash developing the land esp since you aren't an experienced developer. Sorry thats not the answer you prob wanted to hear.

 

[flaminio]

$300K is all you need? Maybe it's just because I'm a Californian and everything is crazy-expensive out here, but that doesn't sound like a lot of money. How much do you have already? I should think that if you could muster up 20%, you should be able to find someone to pony up the rest, although they might want a stake in the project.

Out here, I'd just write a check from my HELOC for that amount...

 

[Ski_Banker]

I recently acquired a piece of land on a major street in front of a hospital being built. It is about 1.26 acres. I was interested in building a strip center right in front of the hospital, so that doctors, insurance agents, mri diagnostic centers, etc. might lease there. I am 27 yrs. old and when I went to the city they blew me off as if I was too young to pull this off. Next, I went to the bank, to inquire about an SBA loan. That didn't work out because thay said that I would have to occupy 51% of the building . Now why would I want to do that, if the whole purpose of this project is to maximize lease space. Anyways, aside from taking donations for this $299,000 project to my paypal account: [email protected].:biggrin:, I was wondering if anyone on here did something similar to this, or if you are a loan officer for commercial lending, or just plain interested in investing, let me know.

I'll post pics this evening.

I admire the ambition though. I had the same thing happen to me. I was 19 in college, and wanted to buy a building at a CO ski resort that was for sale $200k. I walked into a local bank, looking like a typical college kid, and with a straight face asked the first banker I met "I want to get a $200k loan for a building in Colorado." BANKER [looking at me strangely]: "Well, ok, what is your income for the mortgage?" ME: "Uh...what? I can't just borrow 200 grand and pay you back in a few years when I'm rich?" BANKER: "No, sir."

hated those retail bankers ever since hehehe. :tongue:

 

[nsxtra]

The map that you guys see there is a couple of years old. There has been a lot of development since.

My contractor and I went to the city today and got this information.

1. The land is zoned Commercial Office. (business professionals, real estate agents, bankers, doctors, accountants, in other words no retail allowed unless I spend the money and time to apply for a zone change.

2. Some of you said something about parking. The city requires 3 parking spaces for every 1000 square feet currently. If I were to change the zoning to general retail then it would be 4 per 1000 square feet.

3. As far leasehold improvements (build-out), I currently own a Quiznos Sub, and when I negotiated leases around here I found that most landlords did not provide anything other than the shell. It was my responsibility to build-out my space.

4. Real estate in Texas is a whole lot cheaper than most other states. The majority of the cost involved is labor. And here in Texas we have lot of cheap labor.

5. I own the land outright, so I found out that it could be used as partial collateral/down payment for my share of the expense when I go and apply for a loan.

I am going back tomorrow, and I'll post-up anything new that I find out.

 

[comquat1]

I currently own a Quiznos Sub,

I'm pissed I didn't become the first franchisee in Grand Rapids on those guys three years ago. They were nowhere! Now they're all over the damn place! Love that chicken carb on rosemary parm! yum yum!

 

[Dtrigg]

Go speak with the CEO or Administrator of the hospital. Often services in a hospital are contracted services. For example, emergency room services are contracted from a separate corporation, and the physicians are employees of that separate group.

You may be able to provide facilities for a radiology group, an anesthesiology group, or some other sub-speciality group that the hospital is contracting with, or would like to contract with. I've also done deals to have a physician group move to my hospital and have privileges by offering incentives like office space. For example, the hospital administrator could provide office facilities for a cardiovascular surgery group and get them to use their hospital for their surgical patients. Win - Win.

A critical factor is the type of hospital you're working with. If they have big plans, you could do well. If it's a new neighborhood hospital, you could be out of luck. If it's a corporate owned hospital, like a Tenent or HCA, you're screwed. Also, you don't want pediatricians or general practice physicians as your tenants. They don't use hospital facilities that much.

Sorry for the long post. Good luck.