Commercial Office Investment

[Chad Gray]

Investment Info:

Office Space commercial investment investment.

Purchase price: $285,000
Cash invested: $74,750

Purchased two office condos in North Raleigh to utilize as a furnished shared office space. There are 7 individual offices within the two units that are rented out. Tenants can rent each individual office on a daily or weekly basis. The units were purchased off market direct to seller in which we immediately did a full interior rehab after closing. My wife currently uses one of the offices 3 days a week for her private practice while we rent out the remaining offices. Currently it nets $1600/ month with additional upside. At current rates, if all week days are rented, it will net aprox. $2,550 per month, with the potential to reach $3,700 if it is fully rented on the weekends as well. At the moment most tenants are not interested in renting on the weekends which is understandable. TH=his has been a great learning experience and are currently looking to purchase similar investments in the Raleigh / Durham area.

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

My wife was previously renting a similar type of unit for her private practice. Where she was renting was not exceptionally nice but appeared to have quite a bit of demand from other's with private practices. From my perspective, there is a discrepancy between the lack of supply for this time of furnished unit and the amount of local demand.

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

Purchased off market direct to seller.

How did you finance this deal?

Standard commercial loan from a local bank. We were able to secure owner occupied terms which gave us better financing options.

How did you add value to the deal?

We did a full interior renovation as well as replace the hot water heater and HVAC. Following the completion of renovations we have about 60K in forced equity.

What was the outcome?

So far it is going great and am looking to purchase additional similar spaces in the area.