The main risk associated with working with a merchant builder is that the tenant may not stay in the building for the duration of the lease. If the tenant vacates the building before the lease is up, the merchant builder and the investor(s) may be left with a property that is difficult to rent out. This could lead to a loss of income and a decrease in the value of the property.
Another risk is that the merchant builder may not be able to secure the necessary financing for the project. This could lead to delays in the construction process, or even the abandonment of the project altogether. In this case, the investor(s) may not be able to recoup their initial investment.
Finally, the merchant builder may not be able to secure a tenant for the building. This could lead to a decrease in the value of the property, as well as a decrease in the potential returns for the investor(s).