Trying to understand and figure out if this is a good deal

[Kevin Richard]

I'm looking at a deal to invest in. It's a couple of metal buildings divided into 8 units (4 each) on .46 acres. The buildings total 7500 square feet. They are basically warehouse type of buildings with offices constructed into them. One set has insulation on the whole thing and full baths on the units. The others don't have insulation and only half baths.

These units are fairly old I believe built in the 80's. Annual taxes are $1514 and they are asking $360k.

I've spoken with a few of the tenants (7 of 8 or filled and I actually want the 8th for myself). The rent varies from $450 for some $550 for others and $600 for another.

It's in a decent location with good access and nearby other industrial areas.

The tenants seem happy there... what do you guys think of this deal?

[Ralph S.]

I agree with Brian, not enough information to tell, Kevin. But given approx $4k a month in rents, and asking 360K (a rent multiple of 90 with all units leased), I doubt this is "a deal."

Maybe, if all units were NNN leases and you could pass taxes and other items onto the tenants in separate billing, or the leases you mentioned were the base amounts and include additional CAM (Common Area Maintenance) charges, or if the leases stated that outside areas associated with the units were the responsibility of the tenants, etc. Lots of little commercial gotchas that nickle and dime the tenants might make it look better, but you haven't mentioned any.

Given 7,500 sq ft of buildings on .46 acres (just under 20K sq ft of property), you've got ample common, shared or parking area with these buildings. Who's responsible for the parking lot, lights (and the electric bill), fencing, security, etc.

Many considerations and much more complicated than an 8 unit residential unit. It might also be a great deal at only $600/month!