All Forum Posts by: Cor Bay

Our intentions are this:
Buy the building. Do some cosmetic and other updates to the main floor. Carpet, paint, exterior landscaping, signage, etc....

Then the basement becomes the second part of the project. We hope to line up at least 1 tenant for the basement space before we start that work as to reduce the chance of having to redo new construction to meet a new tenant's needs.

Have a contract on a 10,000 sq ft (main floor) commercial office building with a mix of tenants such as dentists, massage therapists, insurance agent, and real estate company. I know the building well. The seller got a divorce, moved away, and was motivated.

Smaller stable upper Midwest town of 15,000. Good demand for space. The building needs some updates such as a roof (not immediately) common areas such as hallways need paint and carpet. All in all a decent property with an excellent cap rate.

The numbers:

Purchase contract: $325,000

Commercial appraisal (just completed) $450,000

County Assed value: $450,000

Vacant basement renovation costs: $400,000

After basement renovation value via same appraisal: $800,000

The issue is my lender will only finance 70% of the lower of the two numbers either the appraisal price or the purchase price. I definitely prefer to go off of the appraisal. After a short period of time, they will refinance 70% of the appraisal. Seems silly to me. What is the purpose of an appraisal?

Previously I have used local smaller banks, but as I make a move into more commercial I would like to maximize my leverage. We have a great track record and good credit.

My wish list: 80% of appraisal, 20-year amortization, 5+ balloon term.

Any national commercial lenders who will have competitive rates, terms, and fees? What do you normally see on something like this?

Thank you in advance.

Depends on the competition in the market.

If there is little vacancy in the market you have the upper hand.

Overall I prefer to keep my property up and tenants happy, but also don't like to give away anything I don't have to.

I would say you eat 50% and he eats 50% as Tanh suggested. Or you do it and raise his rent enough to recover it in 2-4 years plus a little bit for "financing it" over the 2-4 years.

Give the tenant options and let them pick.

Hello fellow investors. 

Looking to develop a 4.75 acre site along an interstate hwy at an interchange.
I currently have a business at the site with a 6700 sq ft shop that I plan on renting out.

I would like to put up several shop rentals 1500-2000 sq ft each for rent by plumbers, electricians, mechanics, etc... And maybe some smaller unfinished storage units that are larger than normal self-storage units but are unfinished and not heated.

Anyone in the business give me some feedback on this? Pros Cons? I have been in residential and some commercial real estate for over 20 years so not a newbie. Just not as familiar with this business.

Thank you!

Have already spoken to an architect about the project. After we close they are mapping out the building to recreate a floor plan. There are 2-3 stairways out of the basement and it sounds like it would be possible with the existing building code (for existing structures).

Sounds like we can use a chair lift vs a full commercial elevator.

Keep the feedback coming.

Thank you,
Corey

I am moving away from single-family rentals (been doing them for over 20 years). While they have helped me build some decent wealth I am ready to move on to other ventures.

I am currently under contract on a 10,000 sq ft office building that consists of small offices. Real estate brokerage, dentist, insurance, massage therapist, and commercial cleaning company.
This building has stayed full as long as I can remember or anyone I have talked to. We are under contract at around a 10% cap rate after we replace the roof.

Here is the interesting part. There is an entire 10,000 sq ft basement gutted and empty with 7.5' ceiling height. Many years ago it was occupied with a govt office. Unfortunately, there is no natural light. Looking at what the best use of this space would be. I am looking at putting a coworking space in there. Offer small offices with MTM affordable rents, a conference room, and some pay as you use office equipment. Keep the rental about 25% lower than the main floor. Also considering putting in a wheelchair verticle lift to make it accessible. It would be new construction with lots of artificial lighting.

Any other thoughts or ideas? Does anyone with similar property have feedback?

Have a contract on a 10,000 sq ft commercial office building which the main floor is almost completely occupied. 

Currently, the basement is only about 10% occupied by main floor tenant storage.

The rest of the basement is almost gutted and wide open (except load-bearing walls). Many years ago it was small office-type space but there is no outside light at all.

As I already will own the building and this space is wasted what could I put down there? Is there a market for lower-priced rent in basement units or not? Thought of document storage space but imagine most companies have digitized most of that by now. 

Any ideas especially those that currently lease out similar type of spaces. 

Thank you

Let me add one more detail.

There is a business that we own that is included in the 1.3 mil, but we are giving the property most of the value and the business little value in the sale.

We are ready to move on to other ventures so we want to sell. Lots of details I won't bore you with.

That is why we can't pull the current equity from the property.

Tining is a concern, but we do have other assets we care work from in the short term.

Help me with this idea. Maybe it is a good idea and maybe has pitfalls I am unaware of. 

I have a property I own almost free and clear. Have owned it for sometime. Looking to sell it for $1.3 mil.

I have a project I am looking to develop in Mexico.

I don't really want to take a 30% hit on the cap gains tax, but yet need funds to develop the Mexican project.

Can I 1031 into another property in the US (apartments, storage units, etc...), then turn around and borrow as much equity as possible in order to fund the Mexico project (guessing 75-80%)

Thoughts?

Thank you in advance.