Would You Buy This $2M Light Industrial Property? Looking for Honest Feedback

Question

I'd really appreciate some honest feedback from experienced commercial real estate investors.

I'm currently under contract on a light industrial property in Orlando FL and am in my due diligence period. Before making a final decision, I'd like to hear opinions from investors who own industrial properties.

Property details:

• Purchase Price: $2,000,000
• Approximately 11,000 SF
• Currently divided into 3 tenant spaces currently being used as body shop automotive
• Current rental income: Approximately $9,000 per month
• Leasing brokers estimate market rents at approximately $11–$15 per SF NNN, depending on the space and condition a
• Older building being sold "as is"
• Good industrial location with plenty of parking
• Currently completing the Phase I environmental inspection

My biggest concern is that the current tenants are paying well below market rent. If I purchase the property and eventually raise rents closer to market, I'm concerned some tenants may leave. On the other hand, several brokers have indicated the current rents are significantly under market.

If I move forward, my plan would likely be to keep the property as the existing three larger bays rather than trying to subdivide it into additional units.

Currenty one space 8000 sf bay and the others are  1500 sft  each

My questions are:

• Would you purchase this property at $2 million?
• If you inherited tenants paying well below market, how would you approach rent increases?
• Would you keep the property as three larger bays or look at subdividing it in the future?
• Does a projected market rent of $11–$15 per SF NNN support the purchase price in your opinion?
• Is there anything about this deal that would concern you or make you walk away?
• I am not sure how hard it will be to re rent after I have never done light industrial

I'd really appreciate honest feedback from investors who have experience with industrial properties and below-market leases. Thank you in advance!

Tabish Masood · Answer

I may be late here, but my biggest focus would be understanding exactly why the tenants are paying below market. If they’re long-term, reliable tenants with strong payment history, there can be value in that stability even if rents are under market.

At $9,000/month, you’re currently around a 5.4% gross yield on a $2M purchase price, which seems low for an older light industrial property. If market rents of $11–$15/SF NNN are realistic, the upside could certainly justify the acquisition, but I’d want to verify that with signed comps and actual lease transactions rather than broker opinions alone.

I’d also pay close attention to:

• Remaining lease terms and renewal options
• Tenant financial strength and payment history
• Environmental findings from the Phase I, especially with auto body tenants
• Deferred maintenance and capital expenditures
• Actual leasing demand if one or more tenants vacate

Personally, I would probably keep the three larger bays initially unless local demand clearly supports smaller spaces at significantly higher rents. Before underwriting future rent increases, I’d assume at least one vacancy scenario and include downtime, leasing commissions, and tenant improvement costs.

If the property still meets your return requirements under conservative assumptions, it could be a solid opportunity. If the deal only works assuming immediate market rents with no vacancy, I’d be much more cautious.

Vijay Friedman · Answer

@Scott EsmailIt sounds like you're asking the right questions during due diligence. I'd focus on verifying that the projected market rents are supported by recent industrial lease comps and understanding the rollover schedule before making assumptions about future NOI. If the rent growth is realistic and the tenant risk is manageable, the upside could be compelling. Best of luck with the remainder of your due diligence.