I live in New York, but I'm on the mailing list of a bookstore in San Francisco that I've visited on several trips. Said bookstore is a local institution, but because of (what else?) skyrocketing rents in the Bay Area, they've been in danger of being priced out of existence.
Rather than close up shop, the owner of the bookstore is looking to buy a building outright, so that he'll no longer be at the mercy of the real estate market. Long story short, he's found one. But due to several factors, one of which being a lower-than-normal down payment, he hasn't found institutional lenders willing to finance the purchase.
He reached out via the store's mailing list to people who've supported them in the past, asking if anyone is willing to, basically, crowdfund a mortgage. The owner said that rather than have one person loan the entire amount, he's looking for 15 or more people who can collectively contribute the sum needed, to spread out the risk.
This is something I'd potentially be interested in doing. I have the money to lend, and it would be nice to have some diversification. Plus independent bookstores are a passion of mine, I'd feel good about supporting a worthwhile business. $20k or so would just be fun money at this point, and I'm probably not going to go much above that.
However, I'm not an expert in real estate, so I want to know what I'd be getting into. That's why I'm turning to you wise Mustachians for advice.
Obviously, I'd want to find out what interest rate and payback period he's proposing. I also know this is well into lawyer territory, so I'm going to make sure there's a written contract and hire an attorney to look it over. Other than that, is there anything I should know or insist on? Is this kind of deal common in the real estate world or is it venturing onto new ground?