Office Rehab and Hold

[Tim Garrett]

Investment Info:

Office Space buy & hold investment in New Bern.

Purchase price: $89,000
Cash invested: $66,000

2900 SF building on half acre lot located on third busiest road in New Bern. This building was a successful insurance office for many many years and was inherited by the previous owner’s children. It was obvious the owners were motivated to sell it.

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

I always look for deep value opportunities and this fit the bill. It was my first move into a commercial property and it was in a price range close to my single family home investments which gave me an increased comfort level with pulling the trigger.

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

It was on the MLS. I made a lowball offer to see what the response was. When I didn't get laughed away from the negotiation, I knew I had a deal.

How did you finance this deal?

10 year commercial note with a fixed rate. I actually pledged another property that was free and clear to borrow additional cash for the rehab.

How did you add value to the deal?

Major cosmetic upgrades along with a new HVAC and roof. The building was already set up as individual offices and fit into my vision for the property. I felt that the building was a good opportunity to create individually leased offices at an all inclusive price for small businesses just starting out or individuals that just need a professional space to collaborate or meet clients.

What was the outcome?

I closed on the property on 10/31/19. It took about five months to complete everything that needed to be done. I have 11 offices available for rent in the building and from 4/1/20 to today (6/23/20) I have leased 8 offices.

Lessons learned? Challenges?

Always expect surprises no matter what experience you have and never shy away from low offers when you know what your numbers have to be.

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

I worked with Jason Sanderson for the purchase and I currently work with Ross Beebe as the leasing agent. Both work for Keller Williams in New Bern and both do a fantastic job helping me find and manage property in the New Bern area. Ashley Capps at Select Bank helped with the financing and he is my primary lender at this point. His bank does a great job lending in the investment real estate space.