Case Study 3

INTENTIONAL SEARCH PROCESS LIGHTS THE WAY

We were referred to a client who, as a man and wife team, ran a Charter School in a freestanding building they owned. This small but successful charter school ran well for about 20 years until the wife succumbed to cancer.

The man, let’s call him Bob, wishing to retire soon, was advised by his financial consultant to sell the property and ‘carry the paper’ so Bob could have a guaranteed monthly income for the remainder of his life and defer capital gains tax. The problem was in order to do this the original loan on the property needed to be paid off thereby requiring a hefty down payment of approximately $200K cash from any buyer. This is a lot considering the asking price was $525K. (A standard SBA would have been around $52,500 plus fees.)

Nonetheless, we marketed the property under these terms for about 6 months and toured about 20 parties. The first group was an international school in an early phase of development who lost a previous space due to an ownership change. Initially they wanted to buy their new property, but due to board member difficulties, they decided to use all their cash to pay off 100% of their debt. Plus, the school lost a large financial partner along the way. So, while they were debt free, they were not able to buy the property.

Another school contacted us and were able to buy the building under our terms, but only if the seller would transfer his still active Charter Board of Directors into their names. We explored this with our attorney Mr. Ely Sluder, of Sluder Law and finally concluded that since one could not legally sell one’s Charter to another party, this activity might be considered by a judge as a form of fraud. We advised our client not to go forward with this arrangement.
We were back to square one.

I reached out to the International School to see if anything had changed. They were struggling and still looking for a new space and decided they wanted representation of their own. We set up our signature ‘Intentional Search©’ meeting. That process allowed us to climb inside the heads of their group and discover a path to success for what now became both of our clients!

While the International school didn’t have the down payment money, they likely would have it in a year and they needed a place to lease in the meantime. An idea came to mind.

How about we set up a Lease with an Option to Buy. Since the Tenant also wanted to own the property they were happy to sign an absolute NNN lease (taking on all repairs and maintenance and making this easy for Bob) the rent we were able to work out between the parties paid Bob’s mortgage each month plus put some additional funds into his pocket. The Tenant paid an Option Fee which enticed Bob to take the property off the market. Ultimately, we did a 3-year deal with the option to buy at the end of each year and if that date was missed, the purchase price increases.

Of course, all this was reviewed with Bob’s financial advisor and he blessed the deal! School opened this past Monday and the building is sparkling clean and ready for its next chapter.