All Forum Posts by: Joshua Holt

I'm surprised this thread hasn't listed the resource that has all of this information for doctors:

Doctor Loans: https://www.whitecoatinvestor....

Actually, CPAs are eligible for a bunch of these programs. Where are you looking to borrow? 

The commercial condo I'm buying apparently has a fuse electrical main system in the common space electrical room in the building (see photos). However, there is a circuit breaker sub-panel system in the actual unit. 

Any reason why I need to get the main fuse electrical system upgraded to a circuit breaker system? I find it odd that they aren't the same but (1) future commercial tenants won't have access to the fuse panel, which should prevent them from messing with it and (2) the circuit breakers in the sub-panel should flip if there's too much load, which means in theory the fuse in the main panel shouldn't ever to get the point where it is overloaded.

Are there other reasons why it makes sense to upgrade the main fuse electrical system to a circuit breaker? And if so, does anyone want to give me a ballpark guess at how much that would cost?

@Ronald Rohde I'm going to defer to your knowledge here and say you're probably right. I better not miss a payment!

I agree with your premise but not the conclusion. I doubt he wants to go through the trouble of suing me for breaching the loan, foreclosing on the property, etc. If he had concerns about my ability to pay back the loan, I think he’d insist on me finding financing as he already knows I could qualify for financing from a bank. The seller financing was an offer to make the deal more attractive because he knew it would take a couple of years to build up a record of cash flow to get better terms from a bank (and because Seller financing would involve less fees). Although, I fully admit I could be wrong about his motivations and you could be right. Plus, I like the way you’re thinking. There’s no reason I should be assuming the seller is on my side.

@Michael Jones - I completely agree. I don't think he's being malicious and given his offer to seller finance the transaction, I assume he wants me to succeed as much as a bank would. That said, I think he's just telling me what he thinks is the answer without knowing for sure that it is correct. All of this is to say that your earlier suggestion to talk to the city as a first/biggest step still makes a lot of sense to me.

@Pavel U. - It's a single unit inside a larger building, so the HOA (snow removal, roof, elevator, etc.) isn't going to change based on how many tenants I have in the space. I'm planning on charging $750/month for each office. The coworking space in the area starts at $900 for a private office and has a waiting list. I've actually been on that waiting list for 2-3 months now. So while I don't think I can get $1,000 right away, it's not really out of the realm of possibility.

@Michael Jones - Thanks! Makes sense on the multiple contractors. That would definitely be my plan. I also appreciate your feedback on how to structure the offer. I hadn't really thought about the permitting process taking months. The current owner will continue leasing space from me for the first two years at the $750/month rate, so that covers about 70% of my non-principal payment carrying costs. My assumption has been that it'll take me 10 months before I'm fully leased up, although of course I'd like to do better than that.

@Michael A. - Awesome! Sending you a PM now but I'm also happy to have the conversation in public in case anyone comes across this thread in the future. I asked the question you raised to the current owner (i.e. will I have to adhere to ADA if I make changes to the interior of the commercial space) and his response was that since I'm not changing the zoning of the property but only reconfiguring the space, I wouldn't have to do things like that. The property was originally built in 1890 so as you can imagine this would be a significant undertaking. I'd love to get further feedback from you about bringing on an architect. I want to do this the right way, even if it's more expensive, as the business plan contemplates selling this business to someone who wants to own the property/website/tenants to someone in five years.

@Ronald Rohde - Got it. The opportunity cost is definitely real. I could definitely see having to carry the property for 10 months before getting the units leasable. I wouldn't think it would need to take that long but often I'm the bottleneck on stuff like this as it would be a side project for me. Thanks for reinforcing this for me.

@Pavel U. - Thanks! It's an interesting idea for sure. This is a small office space and I'm quite confident I can make more by renting out 5 small offices (i.e. single office rooms) rather than renting out the entire space. What I'm proposing is basically a coworking space without the coworking ... just five single private offices available for rent. Communal space with be minimal.

Of course, that's the risk in the business plan as I may not be able to find 5 tenants. However, I was looking for a single office in the area and couldn't find any inventory on the market. When I finally did find a few options, they were considerably farther away and many of the places offering single offices had waiting lists. This property is in the heart of an urban area just outside of NYC, so I believe there are lots of professionals in a similar position to me that would be interested in renting "flex" office space. My business plan forecasts renting the units at a price 17% lower than the comps I could find.

Curious what you meant by responsible for all property taxes and insurance. Of course, my models always assumed that is the case but I'm not sure if you meant that you think property taxes and insurance costs will be higher if I have multiple tenants rather than one?

Another broad question I have for you guys is that with respect to the renovation and making an offer, how does the process typically work. Do I get a contractor out to look at the property, get quotes, etc. before making an offer? My preference of course would be to find out all this information first (i.e. permits required, whether anything unexpected would need to be brought up to code on account of the renovation, renovation costs, etc.) and only then make an offer. I'm sure the Seller is of the opposite opinion ...

@Michael Jones - Good point. I will give the city a call. I asked this question to the Seller (who presumably just gave me the answer I wanted to hear) but since the space is already zone commercial and set up for office use, he said we wouldn't be forced to bring other aspects of the unit up to code. This is one unit in a 14-unit building. Like you said though, perhaps something about adding interior walls will require permits or otherwise trigger some other actions, so I will ask the question.

On the bank financing, I think that's also a good point. I could pursue it with them just to see what type of questions / diligence they start asking for.

@Ronald Rohde - Apologies for the confusion. I have a business plan. I meant that I'm comfortable with my business plan and therefore my concern is essentially the "unknown" things I'm not thinking about due to lack of experience. Yes, I would absolutely be concerned if the bank would only loan on a value of $250K, so it sounds like your suggestion is that notwithstanding the Seller financing option, I should pursue financing with a bank to understand how they value the unit.

As for $90K being the beginning of a money pit, other than runaway renovation costs, what did you have in mind?