All Forum Posts by: Dean George

I'm pretty sure I live in the same building (he must be in the townhouses)....  We are some of the only buildings that haven't appreciated over the last 9 years since I bought in.  In fact, in my personal balance sheet.... 2016 was the first year I believe the value of my condo approaches what I paid for it in 2007.

And this is the booming Portland market!

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That said:

I personally love living in a condo.  I work, come home, live my life, and leave.  When I travel around the world, I don't worry about the house, or garden or whatever.  I just leave.

HOA fees creep up every year (from $350 to now over $600/month!!), but, I pay it and don't think about it. No painting or roof fixing for me on weekends I guess.

I don't think I would ever invest in a condo as a rental, and if HOAs are run by idiots, well, then it's bad news. But I do love living in one, and don't see myself living in a SFH for a long time - just no time for taking care of a house.

Well.... that worked out terrifically </sarcasm>

Had ALTA survey done, no big problems.

Engineering report done.... oh, it has settled 4 inches on three sides... And the connection from the walls (tilt up construction) to roof are deficient.

Roof inspection (third part expert that doesn't do anything but inspect roofs)...roof is totally shot, needs to be replaced. Will trigger design code things to bring up to date.

So, my $1.3M warehouse purchase would cost another $200k in rehab, maybe more.

Gone back to the seller (we're under contract now), saying I don't want to walk away, but, I need a knock on the price of $150-$250k depending on what the contracting estimates come back at.

I'm expecting him to say 'buzz off' so I'm now starting the process all over again. Joy

Thanks Jon :)

I'm at $1.3M for a 10,000SF tilt up concrete building on 15,000SF.
Putting down 10% on the SBA loan and my company will occupy 100%.

Visible from the highway (I don't care particularly), and 2 blocks from the onramp/offramp.

Residential on the other side of the street, and mostly grubby warehouses around.  So, hoping as the city expands, in 10-15 years we'll be pressure in our area to redevelop.
Ideally I'd  like to buy some of the lots around the building as well, but can't at the moment :)

It's not going to throw off much cash for a while, but I'd rather own than keep renting.
For 10% down (and there are serious fees attached to that!), it made sense.

Once we are closed, I'll take a break and then start looking for the next idea :)

Hi All-

I'm sure you were waiting with baited breathe for an update from me :)

After months and months of looking, offers, counters, etc... (and a lot of frustration, but also more lessons learned than I can imagine).....
I'm currently under contract on 10,000SF building in Portland :)

Price per square foot is higher than I wanted, but it's in EG zoning - which here means residential use is not prohibited.  So, perhaps in 10-15 years I'll consider some redevelopment.

For now, going through due diligence and all that.

Doing an SBA 7A loan, even though I could swing conventional, just wanted to keep that cash for growing the business (or finding some residential apartments/plexes that might be a good investment while money is cheap).

Anyway, thanks for all the replies.  It's happening !

thanks for the replies all.

I currently pay below market rent of about $.18/SF Gross ('Market' rate is about $.45/SF NNN).

My sweetheart lease will end in January and the landlord has proposed rent closer to ~$.30/SF. Still low, but now we're talking about $7500/month compared to what I'm paying now.

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The capital cost for a building this size (we're talking old, fairly unimproved industrial buildings) would be around $.80-90/FT. So figure $1M for 12,000SF and $2M for 24,000SF (it doesn't work exactly like that, but that's easy math for this example).

I've been saving my pennies for some years and have enough down for the 12,000SF place, but it will still raise the fixed costs on the business quite a bit. My business would fit fine in 12,000SF. I could speculate and go for the larger building (I'd have to have an equity partner to cover about 45% of the purchase), but there is a lot of upside potential (zoned nicely, up and coming area...).

I'm just trying to understand the decision making people go down.

a) I could probably make more money reinvesting in my existing business or starting another.

b) I don't want to be a landlord at all, hate that thought

c) If I do sell my company, I'd be interested in selling a building I own along with it, or at least signing a long term lease with the new business owner

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I am leaning towards seeing if I can renegotiate my lease at the existing place or find the right 12,000SF building in town to swoop in on with cash in hand....

Choices choices!

Been some years since I posted here, and I did a search and didn't see a similar topic.

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I own a business that operates out of a warehouse in my home city. I've rented for almost 9 years now, starting out in a 6,000SF building and now occupying a 25,000SF warehouse.

My lease is up in 10 months and I've been evaluating purchasing a warehouse personally and renting it to my business.

I've found a broker that I like (interviewed a bunch), and have even located a few properties that make sense.

I've interviewed fellow business owners who purchased their own commercial buildings as well.

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Due to low interest rates, the savings I have stashed away over the years and the ability to put just 10% down with a SBA loan, I'm thinking now would be the time to buy. Prices have gone up a bit in the last 2 years, but it's a longer term play

Long term, I do plan on selling my business, but that might be 2 years or 5 or 10 down the road.

I could afford a $1M building now on my own, anything more I would need investors or equity partners. If I buy a $1M building, chances are only my company would occupy. If I bought a more expensive (and larger) building, I would occupy 51% and sub-lease the rest.

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I'm curious if anyone here has purchased commercial real estate specifically to house a company they own.

Best choice ever?

Worst use of capital ever?

Somewhere in between?

Trying to get all thoughts and ideas before doing a deal that will certainly impact me for many years.

I figured some of the same people would post in BP as FLF!

I have a growing business that is in need of a larger building. I am thinking of buying a 10000sq ft warehouse in town.

Would love feedback.

Currently Renting

We rent around around 6000sqft of light industrial for $2500/month gross ($.40/sq ft). Not a great building, functional, but lots of leaks and no HVAC, etc.

We need around 8000sq ft - so figuring paying more like $.45/sq ft for a slightly nicer building we'd be around $3600/month

Potential Purchase

There is a 10,000sq ft building with two cargo doors, loading ramp, dock and high ceilings very near our current location. New roofing, easy access off the street.

It's near a sub-station and the railroad tracks, but it's not a bad part of town at all. Just... industrial. Older building (1965? Brick/Masonary construction) with new paint so it looks fancy

Offered around $775,000 and my broker thinks they will take $725,000.

Since I will buy the building and install my company in it, we should qualify (if I can survive the paperwork) for an SBA loan of 10% down. I've got that in cash, so we're cool there.

The note will be around 5.25% for 20 years and that means around $4400/month (without taxes, insurance, etc). So, maybe $5k/month in total cost to me the owner.

If I charge my company $.40/month in rent (being conservative even though the building is nicer than our current location), that's $4000/month gross rent I collect to pay the note.

Obviously we're not cash flowing here, I have no interests in being a 'real estate tycoon' I just see a chance to get a building for reasonable price per sq/ft and have my operating company cover most of the costs.

That will increase expenses at the operating company, but frankly I could use some more expenses or the IRS is going to get it all at tax time. We aren't rolling in dough, but we do pretty well. Does this pencil?

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So, good people, what do you say? My company could also take 8000 sq ft and sublet the other 2000 to make up the difference, perhaps at a higher rent?

Is it crazy to buy into a commercial building that doesn't cashflow?

What am I missing, what am I not asking?

**I duplicated this on another business forum, looking for all the angles**

I've replied to one of your other new threads already, with sort of the same theme.

Obviously, if you own ten $100k homes, you are worth $1Million.

--- So what? ---

great links Jason