Commercial Mixed Use Building

[Andrew Chapman]

Investment Info:

Large multi-family (5+ units) commercial investment investment.

Purchase price: $540,000
Cash invested: $85,000

Acquired a three story mixed-use commercial building. The primary intention is to house our business offices. First floor is a salon and eatery - both long term tenants. Second floor is our real estate brokerage, property management and maintenance offices. Third floor is wide open space that we are trying to develop into four 1 bedroom apartments.

What made you interested in investing in this type of deal?

Needed an office space and didn't want to rent. Found an off-market building in an up and coming location with tremendous visibility for our businesses.

How did you find this deal and how did you negotiate it?

It was a referral and was a bit of a tough negotiation with the seller who is an attorney.

How did you finance this deal?

We used conventional financing through a local Credit Union.

How did you add value to the deal?

We updated the entire second floor, systems, electric, plumbing, added a kitchenette, renovated the baths, all new flooring, lighting and paint. We outfitted the offices with nice furniture and equipment.

What was the outcome?

This is a long term hold. Potential for 20 years plus.

Lessons learned? Challenges?

Speed is important as the seller's didn't want to grant us an extension for our financing. Also, the SBA 504 loan takes FOREVER and the amount of paperwork is like nothing I have ever seen.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

I am a licensed broker so I coordinated the transaction.