Buying small office, subdividing into 5 single offices

[Joshua Holt]

Purchase price is $300,000. Seller is willing to finance with 30% down. Space is zoned commercial and currently set up as single office but in need of work. I'd like to put up walls and turn it into 5 single offices for professionals in the area.

I'm not too concerned about the business plan. I've run the numbers and feel comfortable. Putting $90K down is also not a problem.

I've never bought commercial property before and, as a lawyer, I'm mainly concerned about missing something I'm not thinking about. Given that the seller is willing to finance (which I think is good), I'm also aware that without a third-party bank lender I won't have them watching over my shoulder making the normal checks.

Is the best course of action to hire a local real estate lawyer with experience in commercial property to make sure I don't miss anything big?

[Joshua Holt]

@Pavel U. - Thanks! It's an interesting idea for sure. This is a small office space and I'm quite confident I can make more by renting out 5 small offices (i.e. single office rooms) rather than renting out the entire space. What I'm proposing is basically a coworking space without the coworking ... just five single private offices available for rent. Communal space with be minimal.

Of course, that's the risk in the business plan as I may not be able to find 5 tenants. However, I was looking for a single office in the area and couldn't find any inventory on the market. When I finally did find a few options, they were considerably farther away and many of the places offering single offices had waiting lists. This property is in the heart of an urban area just outside of NYC, so I believe there are lots of professionals in a similar position to me that would be interested in renting "flex" office space. My business plan forecasts renting the units at a price 17% lower than the comps I could find.

Curious what you meant by responsible for all property taxes and insurance. Of course, my models always assumed that is the case but I'm not sure if you meant that you think property taxes and insurance costs will be higher if I have multiple tenants rather than one?