All Forum Posts by: Bob Langworthy

Congratulations on committing to making your first investment! I would be very cautious about NYC right now. ~500,000 New Yorkers have fled the city since the pandemic began, business are closed and closing, crime has skyrocketed, and major financial firms are fleeing the city. James Altucher has a lot to say about the present condition and the future of NYC.

Hope this helps,

@Jonathan M., I can't give you specifics due to differences from market to market, but I can give you some general guidelines.

1) Review listings on large websites like Loopnet. There are dozens of office spaces listed there with square footage and price per square foot.

2) Check Craigslist. There are dozens of listings there as well.

3) Consider the highest and best use of the space. It may be 3 - 4 offices to individuals who are done working from home and would like a little peace and quiet. If that's the case, consider including all utilities as a way to sweeten the deal.

4) If you're working with a realtor on the deal, ask them.

Hope this helps,

@Clifton Young, here's a few thoughts:

1) They will be looking at your personal financial statement and the merits of the deal.

2) My first deal was commercial (4-office building). It was vacant at the time, but my accounting practice was going to be occupying the largest space and paying enough in rent to cover most expenses.

3) Education and networking will be key to making a good purchase. 

4) Check out Peter Harris of Commercial Property Advisors on YT for a ton of content on commercial deals.

Hope this helps,

A third option would be to purchase a multi-tenant building and move her salon in to a vacant spot. Depending on market, building could be a lot more expensive and time-consuming than buying.

Hope this helps,

@Ekamjot Singh, LTV is loan to value. $700,000 loan on a $1,000,000 building would be a 70% LTV. @Charles Carillo makes a good point: value is determined by net operating income (NOI) and cap rate. It's a simple formula. Value = NOI/cap rate. To increase the value, you will need to increase the net operating income by increasing income and/or decreasing expenses. The nice thing about the formula is that it's powerful. For example, if the cap rate for that type of property in your area is 6% and you increase income by $1000/month, you have just increased the value by $200,000 ($12,000/6%). With a refinance, you could potentially get cash out, a commercial BRRRR.

Hope this helps,

@Matt Hubbard, I would look at other local banks. I purchased a vacant, 4-office commercial building without an SBA loan. My accounting practice was going to be the anchor tenant, and cover most of the expenses, but I still needed to at least one more tenant. The loan officer found a way to get it done. 

Hope this helps,

Definitely common and a definite incentive to the tenant to think long term. I'd rather have a commercial tenant on a long term lease than have it empty for 6 months while I spend a lot of money getting it ready for residential. If it was empty, maybe convert it. But with a good tenant in there paying rent faithfully, go for the easy money and focus your time and resources on the next deal.

Hope this helps,

@Daniel Lochen, I own a small office building in a town of 20,000 in Maine. It has four offices and was vacant when I purchased it. A couple of thoughts and best practices:

1) I use the same lease for all tenants

2) I offer a 1-year or 5-year lease. Smaller annual increases are built in to the 5 years lease. 3 of the 4 current tenants are on a 5-year.

3) Additional parking spots are available. 

4) To sweeten the deal and make it easier for tenants to select my building, I include all utilities. 

5) Tenants expect the rent to go up every year, and so I don't disappoint them. 

6) If you need to renovate, keep it simple and cheap. Light, neutral paint colors. LED lights. 

7) Does the building have a shared bathroom? That's ideal if it does. Make sure it looks decent. For a couple hundred bucks you can get a new toilet and vanity. Some bright lights and a coat of paint will make it look great for under $500.

Message me and I'll send you the lease. It's based on one that I signed when I used to lease space and has served me well for the four years since I purchased the building.

Hope this helps,

@Amy A., you could also get creative with the commission that you are offering. Realtors are driven by commission. If you let all of the commercial brokers in the area know that you are offering two months rent or a higher percentage or an annual check based on length of lease (depending on how you're structuring the commission) you'll get some interest. 

Hope this helps,

@Ori Skloot, that's correct. Probably add 1% for a development loan.