Professor Wesley J. Ley
June 7, 2012
Wells Street Case
I have the opportunity to purchase a small mixed use property at 664 North Wells Street, (the property includes 664, 666, 668, and 678 North Wells) in the heart of the River North District. After doing some online research, I have found a brokerage firm (Chicago Brokers) that has several listings for properties in the area. I prefer use this brokerage firm because I am in the market to purchase the property, becoming the property owner. In choosing this brokerage firm, I am aware and understand that the commission will be paid by the current owner and split between the brokerage firm representing me, and the brokerage firm representing the current owner of the property. I am assuming that upon my purchase of the property, the existing tenants will remain in place through their current leases. If I am to become the owner, I will then solicit the expertise of the brokerage firms that specialize in retail and restaurant leasing, because as the existing tenants leases expire, I would like the option of renewing their lease, or have the brokerage firm schedule appointments and manage the offer and counter offer process with prospective new tenants that have a stronger, long-term financial outlook and that will be compatible with the dramatic population growth and positive changes that are taking place in the District. I will not be in need of the services of the brokerage firms that specialize in apartment rental because this property is, and will remain, exclusively commercial.
I have an existing relationship with Bank of America, this relationship will allow for me to obtain an 80% loan based on the appraised value that would be amortized over 25 years but would balloon in 5 years. This would be a recourse loan. Bank of America would require that I pay the first year’s insurance in advance. The total mortgage payment will be principle and interest each...