Commercial Questions!

[Jason Merchey]

I have a 6500' 2 story commercial project I am two weeks into my DD on. It's a real fixer upper - little updating for the last 20 years, leaking toilets, some old water damage from a leaking roof (I mean LEAKING). I could go on. Basically, it's a great market, superb location, 2 story stucco building that needs a lot of TLC. It's going for $70/foot off the ARV. Elec, plumbing and structure and roof seem okay. HVAC system is old and a bit odd.

My plan is to spend between $20-$30 per foot to remediate all that damage and bring it up to Class B+ (there is no elevator). There are also no sprinklers. I would be spending less than 50% of the value of the building on reno.

1. Do I need an elevator or sprinklers, code-wise? Or will the building be grandfathered in?

2. Should I am to flip it for a 35% profit, or grab 45% equity and hold on to it using a loan at like 5%?

3. My realtor would like it to be a little more lipstick and mascara than I would; maybe it's because I might want to keep it, or maybe it's because I'm a perfectionist. Should I go $20/foot in an attempt to maximize profit but take a hit on my ability to get class A tenants, or should I go $30 and do some extras that will really make it pop and thus easier to rent, sell or hold? 

4. Any other general tips for commercial - this is my first time. I would be putting about 45% of the capital in and borrowing 55%. I am 75% likely to qualify for a commercial loan. My broker is going to tell me what offers I got come Monday or Tuesday.