All Forum Posts by: Bharath Raj

I own a 5100 sq ft medical office space with no restrictions near the University of Houston. I have inherited a tenant who has 1450 sq ft for the next 5 years. This area is turning and there are new businesses sprouting everywhere. My current competitor is the guy next door with a similar building which is already built out fully (Texas children' outpatient office used to be here for a decade). My building is 1750 sq ft built out, and the remaining 1850 sq ft is shell space. I am not a stickler for putting in another medical office in this building. I wanted to explore the possibility of creating several small office spaces with a common reception area and CAM. In order to run my numbers right, I wanted to ensure that I count everything. Here is my list of costs. Please critique

1) Insurance: I have a insurance policy for the whole building. Do I need any other kinds of insurance?

2) I currently have a common area parking and access arrangement with my neighbor for the parking lot and landscaping that we share. I plan to pass the cost to my tenants, proportionate to the sq ft of their office spaces (variable per tenant) and the common area (fixed amount of area)

3) Electricity

4) Water

5) Internet

6) Receptionist fee

7) Telephone

8) Conference room maintenance: Do I need to set up a projector? What are the elements that go into a decent conference room?

9) Break room maintenance: How do I decide what to stock and how much?

10) Restrooms maintenance & common area cleaning

11) Is there a way to recoup the initial built out costs that I would have to absorb to make this work? 

12) Since this office space would be in the 3rd ward in Houston, I would appreciate any local input also. 

Thank you. 

I make the offer and they agreed. Thank you for the support

Thank you for the advice @Joel Owens. I make the offer and the property management company agreed

I recently bought a medical office building and am in the process of owner occupying a portion of it. The whole building is 5100 sq ft. I have a tenant who has 1500 sq ft. I intend to occupy 1000 sq ft. I had my agent list the remaining space for lease. I am negotiating with a property management company, and was given terms of 4% rent collected, which is fair. I wanted to ask them to keep the owner occupied portion out of the 4%. Is that reasonable?

I am looking for recommendations for hiring a property management company in Houston which manages medical office space. My building is 5100 sq ft. About 1483 sq ft is currently leased. It has 1800 sq ft of built space which needs a tenant, and ~1800 sq ft of shell space. I contacted the prior previous property management company, but they never called me back. I understand that they only deal with larger spaces. Any recommendations will be greatly appreciated. 

@Don Konipol, I was hoping for the same, but for some reason, the prior owner kept ~1800 sq ft as shell space for ~12 years. He had leased out the remaining to one OBGyn doc for >10 years. I am hoping to find a tenant. I will keep y'all posted if I have any luck. 

@Joel Owens I did close on the property this last Monday (I bought it) with a title company. I hired a real estate attorney to do all the legwork. I got the inspection & appraisal done. Both looked fine. I have a common area parking and access agreement with the other owner of this medical complex. It basically states that clients can park anywhere on the property, but I am given 6 reserved spots. I share my 1/3rd cost of maintaining the parking lot. I am looking at property management companies right now. I don't intend to self-manage. I have inherited one tenant, who will stay for 5 more year. I have engaged a architect to build out the portion of the building I intend to occupy. I have engaged a realtor to list the portion that I intend to lease out. I put this investment into a LLC, as suggested by @Scott Smith in his podcast regarding asset protection. He was great! I would highly recommend him. 

@Jeff Kehl I am a psychiatrist. My office looks more like a attorney' office than a internist'. 

@Ash Patel I am hiring a property management company. I am still interviewing them at this time. I do have a CPA. I have experience in residential real estate (single family only), but none in commercial. Since I was looking to occupy part of the building for my own office practice, I didn't look at a REIT.

Thank you all for your constructive criticism. I do intend to continue investing, albeit imperfectly. I am just happy that I am taking action. 

@Priyanshu Adathakkar I appreciate your insights

@Priyanshu Adathakkar I bought this building for a owner occupier purpose. I will be occupying ~1800sq ft for my own physician practice. I will still have the remaining space left over, which I plan to rent. I do hope to rent it out. That space is already built out by the prior medical practice which just left. I am not sure how the cap rate is calculated in my situation. 

@Priyanshu Adathakkar Can you please elaborate? I would like to learn.