Novice - Buying a Medical Condos Building one Unit at a time

[Roy Bhavi]

I’m currently own & occupy 1 of 5 total units in a Medical Offices Condo Building. I have the opportunity to own the entire building over next 1-3 years. I have never dabbled in commercial real estate and worry that I don’t know what I don’t know. Hence I am seeking an advise here to guide me through the process.

The building is 35 years old. My two neighboring MD doctors have expressed desire to retire in 2019 and sell their respective condos right now. The remaining 2 MD doctors also want to retire and sell within 3 years. In other words, I could potentially buy each unit right now, lease it back to the MDs until their desired retirement date, and then replace them with new tenants.

My exit strategy in 3-5 years is to invest some money into cosmetic upgrades to couple of condos and building exterior, put a prominent sign to advertise the tenant businesses, have stable tenants in all condos and then sell the entire building for a profit.

To start with, I need to know three things:

(1) Does ownership of each condo in the building give me automatic ownership of the building and surrounding areas? Or is there an expensive reclassification process to go through?

(2) How do I value the entire building and how to much to offer each seller doctor?

(3) How do I financially model my exit strategy and estimate potential profits?