16 Unit Office Building Purchase

[Will Bowman]

Investment Info:

Office Space commercial investment investment in Cockeysville.

Purchase price: $1,425,000
Cash invested: $100,000

In April of 2021, my partner and I purchased a medium-sized, class B office building in Baltimore County, MD. We purchased the property for 1.425M and raised ~$350k through four Limited Partners who each received 12.5% equity ownership in the deal.

The property hadn't had any capital improvements completed for decades and was run down, and below market value. After purchasing, we repaved the parking lot, put on a new roof/gutters/fascia, renovated the 6 vacant office units, and are now in the process of leasing the newly renovated vacant offices.

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

We found this deal through a wholesaler that we had a previous relationship with. We were able to negotiate a seller credit on the purchase to help fund some of the capital improvements we would be making.

How did you finance this deal?

We used ACNB Bank based out of Westminster MD for a commercial property loan. 25 year amortization at 3.6% interest

How did you add value to the deal?

The property hadn't had any capital improvements made in decades. We completed all necessary capital improvements and renovated the 6 vacant office spaces.

What was the outcome?

After leasing the vacant offices, we will be in a position to cash-out refinance on the property at a projected 1.9M-2.1M valuation

[Will Bowman]

@Luke Angel, thanks! They are "townhome style office suites." So the two doors that you see per townhome either bring you to the upstairs suite or the downstairs suite.

The market for office space of this kind has been strong for a few reasons:

1. These are small offices (600sqft) so folks who have been working remotely and are tired of being at home or need a quiet dedicated workspace that isn't a coworking space have been very interested. 

2. The building is located a block from the main business corridor in Baltimore County so it is an attractive location and somewhere that businesses who are client facing are happy to bring their clients to

3. The spaces are newly renovated and well priced - what I've heard from the folks we've leased to is that there is not a lot of affordable, decent quality office space available. It is a challenge for small 2-5 person businesses.