Commercial Renovation in Historic Building

[Tyler Graffigna]

Investment Info:

commercial investment investment.

Purchase price: $400,000
Cash invested: $400,000

Private investor in vacant retail renovation in an historic landmark building. Project required ground floor facade restoration.

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

I knew that the acquisition price for the property was below market value and that the ownership needed private financing to complete their due diligence and renovations. With the right commercial tenant, I believed there was an opportunity to double my investment.

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

I discovered this deal over a casual conversation I had with someone I had met through Rotary. I told him I was looking to invest in the neighborhood and he referred me to the owners who were looking for a private investor. I had to hire an attorney and together we worked on the terms of the investment.

How did you finance this deal?

My first round was all cash and the second round was through assuming a loan and guaranteeing a promissory note.

What was the outcome?

We ended up signing a national A-credit tenant to a 10-year NNN lease with 2 5-year options. The CAP rate on my investment starts at 15% and increases to 25% over the next 15 years.

Lessons learned? Challenges?

You have to listen to what the market is telling you. The original plan for the space was an upscale bar/lounge. It ended up being a coffee shop. The quickest path to financial success was to pivot to becoming a commercial landlord vs. being an owner/operator.