2 unit commercial property. Should I close?

Question

I am set to close on a 2 unit, new construction commercial property in central Texas on May 1. Option period has ended.

The numbers worked, but then the virus hit...Will we back to work soon? Will I be able to find tenants?

The down payment will be $116,000 if I close. My worry is if I do the deal and don't get the units leased, I will be responsible for a $2960 monthly mortgage + taxes, insurance, CAD etc. Should I move forward with the deal or terminate the contract and lose my $15k earnest money?

Tyler Smith · Answer

I've found that commercial is different in that they don't always post on MLS. Harder to find comps. We just have the banking knowledge. All marketing for the units goes live on Monday.

Ronald Rohde · Answer

If it's 100% vacant when you put it under contract, what was results of your tenant marketing since then?

it's not a surprise that you will need tenants so if you've had interest you can base the decision based on that.

Pete Harper · Answer

It really depends on your market and what the demand is for $3750 class rentals. Unless this is downtown Austin or Dallas I would guess it would be hard to fill. In a recession people will be looking to down grade. You might try searching rental comps. How many Similar properties are listed? Have they been on the market since January?

Karl B. · Answer

You can always post a rental ad now and see if there's interest. If you appear to have some good, qualified renters then your risk is minimized and I would attempt to close as early as possible (as long as due diligence is competed) so you can get the keys and show the property ASAP.