How Should I Buy my First Commercial Property?

[Kyle Handy]

Hey BP!

My lease is up in May and I'm starting to look for office space to purchase around my part of town, North Central San Antonio.  I'm interested in purchasing something this time around rather than lease.  This would be my first commercial purchase.  I spoke to an SBA lender and feel comfortable purchasing something around $500k or under.  I've looked on loopnet, mls, and other internet sites with no luck finding anything for sale in my area.  What my plan would be is to find something around 2000+ sqft that I can split in two and rent the other side out (SBA lender says so long as I occupy 51%).  I only need around 1000 sqft for my real estate business. I've compiled a list from tax records of commercial property in a 10 mile radius of my home, between 1500-4500sqft, with tax values of $600k and under (306 properties).  I imagine most properties in this price range for this area to be old, fixer-upper type properties (which I'm fine with).  Would a yellow letter campaign be appropriate for trying to find a deal to these prospective type of sellers?  Also, does anyone have any commercial agent referrals for the San Antonio market that are familiar with the property type I'm looking for?  Thanks!

[Joel Owens]

Look up an SIOR broker. There should be some in your area. They have office specialists. On Loopnet go to the leasing section for office. Call those agents in the size of building showing you are looking for.

The property might be for lease but the owner would sell or the broker might have something off market you haven't seen that may be a fit. Generally the larger companies will only want to work on the big stuff.

I focus on retail for instance but generally have a minimum purchase price of 2,000,000 and up. Once a broker is doing larger size deals it makes no sense to work on smaller deals for less money when even the same or more time is required due to the quality of the property being less and the buyer tends to be more marginal as they are going after small balance mom and pop commercial. In residential they might be a larger fish but in commercial a small and inexperienced fish so lenders who want to do a a loan and sellers who would want to sell tend to see the buyer as more risky and work.