Commercial Office Condo Deal Analysis help

[Greg W.]

Hello,

I'm trying to figure out how much to offer, or even if I should offer, on a couple of different commercial office condos and would like some help analyzing the potential deals.

Both office condos are in a large office condo complex in a medium sized town in a suburb of Northern IL. They are both short sales.

The numbers below are without financing, for comparison sake. All expenses are accounted for in NOI's (gas/electric, property tax, property insurance, maintenance and condo fee).

#1 $199,900 asking price, $13,500 NOI/yr, 2,080 sq.ft. (5 individual condos within the main one, four are rented on one-year leases.) Sold for $425,000 in 2004.

#2 $399,900 asking price, $45,500 NOI/yr, 4,170 sq.ft. (One tenant with 5 yrs left on lease.) Sold for $459,698 in 2002.

What should I base my price on? Cap rate, price per sq. ft., IRR, recent comps.?

I would need to partner with someone on deal #2.

Then, how would I determine what to charge tenants on a per sq.ft. basis? And does that have any relation to the price you pay for the property?

Any thoughts or advice would be appreciated!

[Jon Klaus]

I also am not a fan of office condos. I might look at one as an owner occupant. I do have a friend in OC, CA who bought one three years ago and has has great appreciation, but that was about timing, not the condo.