Auto Malls / Dealerships by Tom Markel
An auto mall or dealership, before the cars come in, is a giant empty building with a huge parking lot. When they're empty they don't look like much and they're not hard to maintain when they're full. Utilities will cost you a fair amount, but maintenance and cleaning can be done in less than the amount of time it takes to do an office building with the same square footage. The only really sticky issue with managing the building is inclement weather. Auto dealership roofs don't hold up well to a few feet of snow, heavy wind or rain, or tornadoes, but all of those can be covered by insurance.
Put like that, the purchase of an auto mall seems to be a fairly simple transaction, so the bank should approve a commercial mortgage pretty quickly, right? If you've been in automobile sales for a while, you know better. Auto dealerships are one of the real estate transactions where banks and other lenders look more closely at the business than they do the building. You need more than just a mortgage if you're going to succeed. You need lines of credit from suppliers and auto manufacturers and you'll need to have substantial money up front when you buy the building.
When the credit bubble burst in 2008, one of the hardest hit was the automotive industry. Dealers don't typically pay cash for new cars. They get them on credit. If you are going to invest in a dealership, the bank that considers you for a commercial mortgage will want to know how you're going to get your cars. They'll also want to know how you plan to sell them and whether or not the line you're carrying is in demand. You can cover all of that in a business plan. Outline a detailed strategy and be prepared to answer any questions the bank has about your industry.
Fill out the iBank commercial loan application. While you're at it, you might want to check off that you could need inventory financing also. Even if you have a source now, in the car sales business you can always use another one. Once the application is complete, click "submit" and we'll start shopping you around to different lenders. We have dozens of them listed here, so your chances of being approved are pretty good. Just make sure you know what you're getting into and that you'll be able to pay back the bank, mortgage broker, or private investor who helps you out.