In the world of commercial real estate, withco occupies a unique space. Unlike most institutional commercial real estate investors, we seek out single tenant commercial properties occupied by small businesses—with the goal of helping them work toward purchasing the property from us down the road. Achieving success as a small business owner in a local community has always been full of challenges, and recent world events have only stacked the deck more against them. We’re here to change that reality by helping local business owners own the space where they operate.
For brokers, all of this means we bring the kind of speed and certainty to these local credit properties that’s typically reserved for much larger national credit transactions. Working with withco is, in many ways, similar to working with any other institutional investor, but with a few key differences—dare we say, unique advantages.
The first thing to consider when approaching us with a prospective property is whether it fits our buy box. Generally speaking, what we’re looking for is single-occupancy properties in all 50 states valued at less than $5M, with a cap rate typically greater than 6%. Our innovative, data-driven approach, as well as our commitment to investing in small business, positions us uniquely to serve this segment at scale.
Once we have a prospective property on the table, we’ll look at two things: the property itself, and the business operating there.
Essentially, for this step we’ll simply do some due diligence to ensure the property fits our buy box. Beyond the basic qualifications in our buy box, we’ll run the property through our underwriting process and pull market comps to determine a fitting purchase price.
Since our goal is to help the tenant own the property down the road, we’ll have a quick conversation with them to understand more about them, their business, and their interest in and capability to purchase the property in the coming years.
How this works for the tenant: Entering into our lease-to-own agreement is like any other lease with one large distinction – the small business tenant has the option to purchase the property from us at the end of the term with no upfront costs. That’s right. We give them the cash they need to cover their down payment so that they can take out a mortgage to purchase the building from us. They then continue paying for the space in the form of a mortgage which tends to be lower than their monthly rent.
One of the most standout benefits of working with withco is that you’ll receive a fair offer within 48 hours of initiating the conversation with us about a property that fits our buy box. And, like other institutional investors, our offer is-all cash — so you can be certain the deal will close as quickly as possible once the offer is accepted.
In fact, our properties typically go under contract within 2 weeks. Following contract is a 45-day diligence period, during which time we do our due diligence on the property and the tenant to make sure everything is solid for not only the initial purchase by us but the eventual sale to the tenant. This step of the process can move much faster depending on how quickly the tenant can provide us with the right information and documentation. We typically close just 10 days after that (or even sooner, if the broker and seller are quick to respond and provide necessary documents). Congratulations — once we’ve closed, you get to walk away having made the sale and contributed to the strength of the local business community in the process.
Right of first refusal
You’re probably familiar with a ROFR (Right of First Refusal). This is common option included in most leases so that if an offer is made on a building, the owner is obligated to take the negotiated terms and price to the tenant and offer the tenant the right to step in and purchase the property first. Typically most small business tenants cannot act on a ROFR given the costs associated with buying the property.
At withco, we provide much more transparency and certainty on day one (and don’t forget the downpayment). When we purchase the building, we give insight into what the purchase price of the property will be at the end of the term. Therefore, the tenant not only knows how much they will be paying for the building in five years, but they can also begin to invest in the space knowing they are on the path to ownership. In addition, at the end of the lease when we transfer ownership of the property to the tenant they receive their down payment credit, avoiding any upfront costs. It’s a win-win for both parties involved.
It’s important to note that we don’t do traditional sale leaseback purchases. Instead, if a current owner-occupant needs to access capital in their property but wants to eventually resume ownership down the road, we can do a modified sale leaseback that puts them back on the path to ownership to re-purchase from us in 5 years. Think of it as a sale leaseback sale. It’s essentially the exact same lease-to-own product as our standard purchase process, but in this case we’re buying from the current owner/occupant rather than a separate landlord owner. This ensures that the small business can get back onto the path of ownership, knowing all of the benefits that come with it.
Smaller properties. Big investment muscle.
Because of our unique mission and the resulting buy box sizing, withco offers the perfect solution to one-off properties that fall outside the parameters typically sought out by other institutional investors. You get the certainty of an all-cash purchase and an accelerated timeline on a property that might otherwise be more effort than reward.
Proprietary, unique SMB underwriting tools
SBA guidance notwithstanding, SMB mortgage lending has long operated in a gray zone between the rigorous regulation of residential lending and larger CRE transactions. At withco, we make it easy for SMBs to own their space and build equity in their building. SMBs no longer have to feel overwhelmed or underqualified for this type of opportunity.
Ultimately, we’re passionate about revitalizing the dream of small business owners to own the space where they operate in their communities. That’s what drives us to innovate in this unique lending space, and it’s what makes us the best partner for any SMB property you might have that fits our buy box.