Darlene Smith Commercial Deal


Darlene Smith Commercial Deal

Moncton, NB
Darlene Smith with Louiselle Collette

Commercial Details

Property City: Moncton
Purchase Price: $438,850
Repair Costs $61,146
Sale Price: $1,200,000

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Case Study

How did you find and structure the financing of this deal?

This was actually our third deal of this kind. We started when a social worker friend of mine had a DREAM to own and operate her own special care facility, but had no business experience, but I did. Thatâ??s when we partnered to find the 1st facility. Great match of the different skills required. Purchased a 9 bed, increased to 10 bed. Then for #2 bought a duplex, did the rehab to open a new 16 bed.rnrnWe found this deal after searching for a building that could be rehabbed for the new 20 bed license, and not locating one big enough. We reached the decision the best solution was to build new. Then the challenge was to find vacant land big enough, zoned correctly and good location. We found 2 separate vacant lots side by side, right zoning, excellent city location, walking distance for residents. We had to research and find who owned the lots. Then located and contacted him and find out if he would sell the 2 lots. After he finally said yes, we completed the P&S agreement and closed the sale in 10 days paying cash. We were able to combine the 2 separate lots into 1 large corner building lot. rnrnFinally, funded the deal using 'Canadian Small Business Financing Program' to keep the down payment at 5%, with a Commercial Mortgage from a credit Union. Used line of credit from rental properties to buy the 2 vacant lots.

Provide a summary of the repairs and improvements you made to the property.

Purchased 2 vacant lots in the city. Designed the building layout, had professional blue prints prepared. My business partner had a nephew who had his own business preparing blueprints. He did have past experience doing a plan for a facility, so was helpful in knowing what was involved and required from the many departments codes and regulations - there are many different building codes and regulations we had to follow in the design of the facility. (Example City building codes, fire regulations, health department, government social service department etc..). We used 'functional' criteria for the design. Then we had 3 construction companies complete bids for the construction of the building. Once successful bidder was selected, the building construction began.

How did you find a buyer for the property if you sold it?

Commercial Realtor had approached us to see if the Business was for Sale. Worked out the details and the Realtor did the private search for a buyer of this turn key business. Could NOT be publicly market it was for sale. Sale Price $1,200,000 Mortgage payout $ 439,094 Miscell exp $ 61,150 Vendor Take back $ 100,000 Cheque amount $ 600,004 Net Profit $ 700,004

What are some of the major lessons learned that you would like to share with other students that they can learn from?

When I put the project out for companies to bid on, the questions asked were just like speaking with a contractor to do a house rehab, but you have to be careful with commercial deals. Learn the rules of the game before starting. You need to know what all of the standards and regulations from all departments involved in the operation of a business are. Make sure you do your due diligence always, but especially for commercial deals. The numbers are bigger and it takes longer to complete, but the reward is larger at the end.

Shout Outs & Testimonials

Took the Systems learned in rehabbing houses and applied to a higher level commercial deal. The numbers are just bigger and timeline is longer.

Before & After Photos