Commercial Buy, Rehab, ReFi, Rent

[Warren Smith]

Investment Info:

commercial investment investment.

Purchase price: $190,000
Cash invested: $200,000
Sale price: $470,000

Purchased 4500sf steel frame office building, 1974 build, used by dentist. Single occupant at time, rehabbed around current dentist to create 4 more units, one for my primary business, a massage suite with 3 treatment rooms, small professional space and small commercial space. When dentist moved on remodeled his office now houses financial adviser. Currently run my primary business out of 1750sf, have had full occupancy for almost 3 years, generate more than $4300/month gross.

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

I was outgrowing my current office space, owned that building, so sale was in order to allow further primary business growth. This was an opportunity to buy on the the main business corridor at a low cost due to rehab need, and the ability to customize to my needs. Added bonus was having ongoing rent income during the remodel process.

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

Found through real estate agent.

How did you finance this deal?

Traditional bank lending and construction loan

How did you add value to the deal?

I was able to build to suit for a massage therapist who I have a working relationship to build her an expanded suite to suit her needs to expand her business.

What was the outcome?

More energy efficient, better set up to my work needs. Rent incomes are $1500/mo greater than expenses and loan service.

Lessons learned? Challenges?

Time frames can be challenging and challenged. Our contractor did nice work, but had some family issues that slowed his progress. He busted his *** to complete on time (we had to move out for closing of old office location on specific date), but strained our relationship (now since restored). Future I would require added verbiage in contract for incentive to finish on time to encourage contractor hiring more adequate team to complete on or ahead of schedule.

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

John McDermott at McLeod realty was great to work with. Sold my other other building and helped facilitate purchase of this one.