Evaluating a Commercial Building

[Dan Cho]

Hi I'm new to the forum and still trying to piece everything together, and if someone could provide a link on how to analyze a deal as well that would be great. But my question here today is that I'm in the middle of buying a commercial building for my current existing business and I needed some help evaluating the deal, so that I can know if I got a decent deal or not.

Sale Price: $750,000

Down Payment: $100,000

2 Bank Financing: 

Bank 1: $375,000, Amortized 20 years, 4.5% interest

Bank 2: $300,000, Amortized 20 years, 5.15% interest

Banks Expense: Debt Services Annually $52,000 (Can someone tell me what debt services are for banks?)

Sq Ft Approximate: 7,400

Divided into 4 separate units.

Unit 1 Rent: $18,000 year/ $1,500 monthly 

Unit 2 Rent: $19,500 year/ $1,625 monthly

Unit 3/4: Vacant, although I'll be taking Unit 3 for my business.

CAM Reimbursement: $11,000

Estimated Expenses:

Insurance: $4,800

Taxes: $11,300

CAM Expense: $12,300

Reserve (.35/SF): $2,600

Current Location not at new Location:

Rent: $3,500 but raising to $4,000+ uknown CAM charges.

I have a lot more information with stuff I've never heard of and I don't know if they are needed for deal analysis but they are stuff like mortgage debt services, DSCR, CFADS, LTV, etc. If you think they would be helpful I'd gladly post.

So do you think this is a good deal? and also how would I go about analyzing this deal?

[Howard Abell]

There is not enough of the pertinent information to tell you if this is a good deal or not. However from your questions about debt service and DSCR, etc I can only suggest that you find a competent commercial real estate broker and have him/her represent you in this deal. If the seller will not pay a commission for your representation then you will find it cheaper paying him/her yourself then trying to do this deal by unrepresented.