Best deal I have done so far.

[Jeffrey Coke]

Investment Info:

Office Space commercial investment investment.

Purchase price: $465,000
Cash invested: $180,000

Bought this with the proceeds from 1031 used 125k down and 55k to renovate the building as 1 side was just a shell. We put in a new bathroom, conference room, kitchen/breakroom, 2 offices, lobby on one side. The other side was just paint and carpet. We currently just leased it NNN for $12,500 per month 5-year corp guarantee and 2% annual increases with two 3 year extension options. The only expense is the PMC at 8%. In the next 6 months, we will list the building for sale at 2.2M 6.25% cap.

[Jeffrey Coke]

Quote from @John McKee:

Winner Winner Chicken Dinner!! Congrats on this deal! What was the most challenging part of you deal? Was it leasing? The 1031 time line? How did you find this deal? How many square feet? Any concessions for the tenant like free rent or TI? Does PMC mean property management Cost and shouldn't the tenant pay for that if it's a true NNN? Let's do a deep dive!

 Hello John, 

The building has been currently leased for 10k a month since I bought it at the end of 2019, but I have had 2 of my own companies in the building so essentially paying myself rent. I no longer needed the space as I have sold the 2 companies. This was my first 1031 and it was very easy on my side our real estate agent helped with the whole process as he sold our old building and found us a new one and recommended the intermediary for the 1031, we did have to pay some capital gains taxes on the 55k cash I kept back from the 1031 for the building renovation. PMC = Property Management Company

The building is a 5,000 sqft office/warehouse. The lease is $2.50 per sqft security deposit is $25k there is no free anything. As for the NNN, the tenet pays everything, property tax, maintenance, repairs, trash, water, electricity, no TI, etc. The only expense I have as the building owner is the PMC company at 8% and let me explain why the PMC expenses are mine. With the commercial lease, I could have used a broker or my attorney to draft the lease and would have paid roughly a 3% fee of the lease value 750k my fee would have been around 22k. Instead, I used my PMC that charges me monthly 8% of collected rents in this case $1,000 per month. I plan on selling the building in less than 12 months so my total expected cost will be no more than 12k out of pocket, half the cost of using a broker or attorney. When I sell the building my PMC has the opportunity to continue with the building if the new buyer wants which is just a bonus for them and they know I'm just going to go buy more for them to manage anyways. The reality is there is not 1 single commercial office/warehouse for sale or lease where I am. So the property gets a premium. I have purchased one commercial lot and am closing on another one end of April to build some more commercial space. Please let me know if I covered it all and thank you for asking the questions.
P.S. the PMC company I use here is great so I'm happy to give them the business.