How One Lease Made Us $1.3M In Value And Added $125k A Year In Cash Flow

[Matthew Drouin]

Investment Info:

Office Space commercial investment investment.

Purchase price: $2,750,000

Back in 2023, we bought this high rise office building in Downtown Rochester, NY. It was a 50,000 sqft building that was made up mostly of NYS government tenants.

Here are the details on the acquisition:

$2.75 Million Purchase

$2.20 Million in debt sourced through a local community bank.

We had to raise $750,000 to cover down payment, closing costs, some operating cash, and some cash set aside for tenant improvements. There was about 8000 square feet of vacancy.

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

The entire investing community redlined office out after covid and we decided to take a contrarian approach and find opportunities that were overlooked and low risk.

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

We actually found this deal on Loopnet! NOBODY wanted office so it was easy to find attractive office deals. We underwrote it and it was a great buy at it's asking price. We asked for 60 days due diligence, 60 days close.

How did you finance this deal?

$2.2M from community bank and $750k from private investors.

How did you add value to the deal?

We leased up 8000 square feet of vacant space at the building with one of the already existing tenants who needed more space.

What was the outcome?

The property appraised for $4.1M and we are in the process of refinancing it now. We will be able to get all of our investors cash back at closing!

Lessons learned? Challenges?

Lessons learned is sometimes the better deal is not the one that appears better at face value. We picked up an amazing relationship with a new investor that we are excited to work with in the future.