Is Office hacking possible? Advisable? Any lessons or thoughts to share?

5 Replies

I am a full time IT consulting business owner and part-time real estate buy and hold investor - residential (SFR)/equity partner investor/condo. I have been following the posts and the podcasts on BiggerPockets for the last 1 year and hear a lot about House hacking (living in one home of a multi-home dwelling). I have never come across "Office hacking" - which to me would be one business owns the building and leases suites/space in the building to others. while using part of it for their own needs. I wanted to know if any of you in the Commercial Real Estate space has come across or dealt with office hacking. For my IT business, I could use a small space of our own (we currently lease space in a building shared with other small businesses with common facilities) but we are not sure if there is any precedent or tips to go about. Favorable interest terms perhaps?

Our ideal space would be small office/business friendly small office or suite type arrangement with shared facilities - conference room,kitchen, restrooms etc.  I am looking to do this in Irving, TX or Plano, TX or somewhere in between. 

@Ranjith M. It is absolutely possible. I can't remember the exact podcast I heard it on because I've listened to so many of them but I remember @Josh Dorkin and @Brandon Turner talking to someone who had done it. Best of luck and keep us updated!

I know there are trendy words going around like "hacking" but what you're describing is simply becoming an owner/user commercial landlord.

Yeah pretty easy get a SBA 504 loan in which you can finance 90% of the total acquisition cost and TI's, you bring in 10% down and must occupy 51% of leaseable square footage then do your numbers from there to see if that rental income can offset your monthly expenses. (commercial owner occupied).

You can always go conventional commercial financing but that will require 25-35% down payment.

Thank you Carlton, Joe, Martin & Albert for the words of assurance and insights. Hope the @username works for Carlton and Albert below.

@Ckohls22 - I shall definitely go dig up those old podcasts and must have been one before I discovered BP. Currently, we only rent a office suite i.e. a very small portion of a building as most of our employees work from home or remotely at customer locations.

@Fin_savvy  - I doubt we will be using over 50% of any significant property and too bad will miss out on the SBA 504 loan. Seems like I may have to go for conventional commercial financing with 25-30% down or go for a real tiny structure/building. I shall let you folks know how it turns out.

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