industrial warehouse purchase

[Thomas Gray]

Investment Info:

Industrial commercial investment investment.

Purchase price: $2,500,000
Cash invested: $750,000

Purchased to use for manufacturing and holding inventory. Currently updating building before moving into the space. By purchasing it reduced lease fees for investor on other properties currently occupied. This warehouse has tall ceiling that will allow for tall racking system that will allow investor to reduce cost and overhead.

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

Turned a Long term tenant paying more monthly on a lease than it cost monthly to purchase a warehouse in better condition. The overall result in lower overhead costs.

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

Property was found on the MLS. It was listed and had a few interested parties.

How did you finance this deal?

Used Chase commercial lender and used a conventional 20% down payment.

How did you add value to the deal?

I represented the buyer, in a multiple offer situation. Negotiated a 4% price reduction due to condition of property. During feasibility ordered a phase 1 Enironmental report and walked client through the process.

What was the outcome?

Turned a tenant into an investor by purchasing warehouse and to stop renting. The leases in place at other properties allows for tenant to sublet the properties. Now my client has asked me to lease out (sublets for the next 10 years) on 2 large warehouses. Client is going to make a healthy spread that will significantly discount the purchase of this new investment.

Lessons learned? Challenges?

Partner with experts. key is finding a skilled lender that can close deals with firm deadlines regardless of scope or complexity. Fire marshal requirements very depending on use. This warehouse was racked high for beverage distributor and my client is storing electronics in the same space but is required to improve current fire suppression system before occupying the space. Schedule the Marshall to walk through a space during feasibility to prevent expensive updates.

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

Worked with a great lender Joe Plucinak Sr.
Relationship Manager
Business Banking
Bank of America