Our First, and only, Commercial Building

[Joel B.]

Investment Info:

Office Space commercial investment investment.

Purchase price: $1,000,000
Cash invested: $200,000

This is a 20,000 square foot commercial building. It has two anchor tenants and has been cash flowing since the time of the original purchase. We maintain 100% occupancy by adjusting our rental rates to meet demand. Vacancies are few and do not last very long.

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

I made this investment with my dad and brother. Our company was renting space in the building and when the building came up for sale, we were approached to see if we were interested in purchasing the building.

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

We were personal friends with the owner. When he decided to sell the building, he asked us if we wanted to purchase it since we were the anchor tenant of the building.

How did you finance this deal?

We initially financed it through our friend, but then changed to bank financing after a few years.

How did you add value to the deal?

We have made significant improvements to the building including remodeling the interior, new ac units on the roof, new roof, and adding an atrium area in the middle that was previously open space.

What was the outcome?

The building value has increased to around two million dollars.

Lessons learned? Challenges?

I would say that taking a risk is the biggest lesson learned. I would add that over time the next lesson I have learned is that I want to do future investments without my family. They are more risk averse than I am and I feel a little stuck since we have made no further investments beyond this building.

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

No.