My first foray into Commercial Real Estate

[Marc Hoeppner]

Investment Info:

Office Space commercial investment investment.

Purchase price: $299,000

Partnered with a local physician to purchase this property utilizing zero down financing. The partner will operate his practice out of the building and cover all operations costs for the property. We formed a new LLC and utilized the equity in one of my personal rental properties to post as collateral with the bank to obtain the loan. The physicians' practice is well-established and they are a very stable investment partner. Just one more way to leverage assets to buy more assets!

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

The partnership opportunity was presented for this specific building and I jumped on it.

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

The physician that we partnered with brought me the deal.

How did you finance this deal?

Leveraged equity in a paid-off rental property to post as collateral with the bank, so we had zero down financing via commercial loan.

How did you add value to the deal?

My understanding of the collateralization of a current asset allowed us to partner 50/50 with neither of us having money down in the deal.

What was the outcome?

Successful purchase in which the partner will be moving his practice and covering all costs of ownership.

Lessons learned? Challenges?

Traditional down payments are not always necessary. Equity is your portfolio can be a huge leverage point.

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

Local lender, Mike DeVoy, at Old National Bank was great to work with on the loan.