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Updated about 4 years ago,

User Stats

96
Posts
31
Votes
Bennet Sebastian
  • Investor
  • Orlando
31
Votes |
96
Posts

How do I finance this commercial office deal?

Bennet Sebastian
  • Investor
  • Orlando
Posted

OK, so I'm going to try and follow the suggested framework for asking financing questions. 

Your goals and story

I am in the early stages of evaluating the purchase of a small multi-tenant office building that is 50% partially leased with an asking price of $500k. The remaining space is a shell and would need to be built out at a cost of an additional $100k.

Type of property

Office

Location of property:  

Central Florida

Purpose of financing

Purchase, renovate and buildout. 

Type of financing sought

Not sure. 

Current or prior ownership of real estate

I own one medical office currently. Have owned, leased and flipped several offices and a townhouse in the past five years. 

Occupancy

Gross lease at $15/sf (about $10 NNN) on half the space. Tenant is on a 1 year lease with several 1 year renewals.

Value of property at present and/or your offer price

$450,000

After repair value

$780,000 based on a $62,500 NOI and an 8% cap rate.

Anticipated or actual appraisal issues

Not sure

Current rents per month

$15/sf gross

Fair market rents per month

$15/sf gross

Down payment or equity

Depends on the loan amount available

Source of down payment funds, if applicable

Own funds and limited partners

Income Source

Day job is general contracting

FICO

Excellent

Credit issues

None

Additional details

Goal is to hold this property for between three and five years. Purchase price of $500k and improvements of $100 for a total requirement of $600k. Should I use short term private money to purchase and buildout the property and then put conventional financing after it's stabilized? If so what kind of terms would I be looking at? Wondering what would be the appropriate financing strategy here. 

Thanks

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