Investing in Commercial Real Estate (Office buildings)

[Hoseah Njuguna]

Hi BP.
I have barely seen any posts here on investing in office buildings.  Is this a sector that is not popular or is it that many people have not looked into it?  I happen to work in commercial leasing and come by great tenants willing to do 10yrs + fixed lease term and several years of soft term above that.  I have analyzed a few properties based on tenant's requirements and available properties for sale in those region and they are a healthy investment.
Just want to see if there are some BP members in this sector and what their experiences have been.  I would love to network and possibly be a good resource.
Happy Investing

[Jason Moore]

@Hoseah Njuguna I am a commercial investor as well as a residential investor. I started out building 5,000 & 10,000 sf. Office warehouse buildings along an interstate service road (great visibility). I then had an opportunity to build a new bank but I had to find the land for the bank. But I persevered for almost a year’s worth of searching for land that wasn’t priced as though the ground was covered in gold nuggets when I happened upon a guy I had known through politics who offered to sell me part of his shopping center. There were two 10k sf of buildings (20k in total) where I had already spied that there was enough room to put that new bank building. I’m sure most people on BP will faint when I say this, but it was during that negotiation that I first heard the term “cap rate”! Trust me it wasn’t long until I had studied up on what that word meant but now I know more of the lingo.

The point I’m trying to make in this post is that you should be reading as much as you can about the real estate you’re wanting to buy but don’t let that big you down for years until you “know everything there is to know” about those subjects. I’m a commercial masonry builder then about 20 years ago I started developing property with a partner to put the office warehouse buildings on about 22 acres. Then in 2008 is when I bought the office/retail strip center buildings and then designed & built the bank building in front of those two buildings.

If you have experience already moving in those circles then there's no reason, with a little coaching, reading, etc. that you couldn't dive right in. Of course do your homework and know that some of the same math principles that apply to purchasing SFR, apply to commercial properties; they have to cash flow, you have to account for capex, vacancies, etc.

Keep asking questions! You are on the right track!