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All Forum Posts by: Alex Huang

Alex Huang has started 40 posts and replied 143 times.

Post: Feedback on Building Ownership Arrangement

Alex HuangPosted
  • Dayton, OH
  • Posts 143
  • Votes 62

Looking for some advice on the following arrangement. 

Two partners are 50/50 in their business. The business currently rents but they're exploring the possibility of buying their own office space when the current lease is up.

Timing-wise, it isn't great for one of the partners, so the other partner will buy the building (with a third party investor, family) and rent-control the new office for the business, with an option for the other partner to buyout the family member if/when he's financially able to.

What would be the best structure or key terms for the family member's future buyout?

My initial idea was to do a full appraisal and refinance of the property. Let both the partner and family member cashout whatever equity and appreciation has been generated and start over, but it would definitely be the least cost effective since restarting a mortgage gets you back into the most expensive life-cycle of the loan.

The other option I considered was leaving the family member on the loan, and a separate agreement be made between the entering partner / family member with the building as collateral.

I'd be curious to hear if people have any concerns on the arrangements above or ideas for superior arrangements.

Thanks!

Up to this point, all of my investing and experience has been in the residential sector. I've purchased a handful of SFH and a duplex and they were relatively easy.

I'm looking into building a commercial building now for a separate project and I'm at a loss of where to even begin. 

I've identified the plot that I'm interested in - it's currently an undeveloped open field. I've received drawings from the zoning dept regarding the nearby utilities.

Next up, I'd like to get a better grasp of what the total costs would be from start-to-finish. 

Who do I contact or work with to get estimates on the costs of building? Specifically, the costs of pulling the utilities to my plot and getting the land to 'build-ready' grade. What type of company do I contact for estimates like that?

Beyond that, I have contacts who build commercial and plan to utilize their architects and relationships for the design and build.

Any tips or suggestions would be a great help! 

Originally posted by @Joel Owens:

It varies by asset type, air rights, density zoning laws, and parking ratios required.

Some developers are ultra conservative with size of building and still see if numbers work. You do not want a project predicated on a high sq ft per size of land and spend all the money to find out it is not possible. Now you have a deal that is too tight and you lose your investment costs so far and walk away to the next project.

It's kind of like house builders. They might apply for zoning for 300 houses but really only require 250 to be greatly profitable. They know county or city will likely push back on density. If they get 300 houses anyways icing on the cake.    

 Thanks Joel.

Can you recommend any good resources to figure these types of things out?

The building would be for a general physician's office, so the only thing that I would really need is some parking spaces for staff and patients. 

I'm looking for guidance on how much land you need for a new single-story commercial building.

Through some light research, the general rule I seem to find is about 5x your building size. So a 5,000 sqft building would be adequate on a 25,000 sqft plot of land. Is this a good rule of thumb?

Post: Question on Building (Medical)

Alex HuangPosted
  • Dayton, OH
  • Posts 143
  • Votes 62

Awesome thank you!

Post: Question on Building (Medical)

Alex HuangPosted
  • Dayton, OH
  • Posts 143
  • Votes 62
Originally posted by @Nik Moushon:

There isnt always a zoning area called 'medical'. A lot of time its just in a 'business' zone, though there can be several different types. Most zoning code will have a list/chart/graphic of some kind that will list, specifically, what different types of businesses are aloud in each 'business' zone. Once you find out which zones allow medical or not (and some will allow it only through a Conditional Use Permit so it adds a little bit of cost and time but opens up more areas) then you can focus on what areas you want to start looking to purchase land.

As for costs, medical is very expensive. Not knowing your local market but I would guess $150-200/sf is a more realistic number but it will vary depending on what your specific needs are. 

 Thanks

It would just be a GP without need for anything like XRays / Labs etc. I'll get in touch with the local city to get an idea of how complex the 'medical' designation and what hoops need to be jumped through.

The building I rent for my office was sold to an outside investor last Summer. The investor has been pushing me to lock-in to a new 7 year contract (current term is up Dec 2018). My assumption is that the investor is looking to refinance and wants to have the security of tenants in-place long-term.

The landlord must honor the original lease and all of its terms. Is that correct? The lease was signed in 2006.

In my lease, one clause is the option to renew: Lessee, shall have the option to extend the term of this Lease upon the same terms and conditions set forth herein for the following period(s): One term of two years at a new rent rate of $16.50/sqft and then ten terms of two years each under the same terms and conditions also to include a 3% COLA increase in non-mortgage related expenses in each successive year as a tenant"

So rather than lock myself into a 7 year term, I can continue to just exercise my ten options of two year terms all the way through 2026. Is that right? Obviously, I would much prefer that flexibility in lieu of a commitment of 7 years.

Post: Question on Building (Medical)

Alex HuangPosted
  • Dayton, OH
  • Posts 143
  • Votes 62

Hi:

I'm looking at the viability of building a commercial property for an existing practice. Unfortunately, the area I'm looking at lacks much on the market because ideally I would prefer to take an existing building and overhaul the inside, hence exploring the option to build now.

As I look at the existing commercial properties for sale, I see that there are designations on the property type. Usually it's a category like 'retail', 'warehouse', 'medical', etc.

Are there certain traits or characteristics for a building to be deemed medical? If so, what are they?

I know it's tough to provide an exact answer, but can someone who has built before give me a rough guess of what cost to build would be? I've identified some possible land to build on which is currently used for agriculture but has nearby utilities that it can be linked up to. Would something like $100-$150/sqft be feasible? What sort of fees can I expect for the other stuff (architect, engineer, permits, etc)? 

FWIW, I would be interested in ~6,000 sqft with the possibility of going a bit bigger to host other tenants.

Any input from people with experience on building (or dealing with medical buildings) would be greatly appreciated!