Buyers agent or other services for first time commercial deal?

Question

I'm looking at a commercial office space deal, as a first time commercial investor. After some difficulty getting ahold of commercial lenders, I found a broker to talk to who thought the credit / finance requirements were completely doable (~ 2 million dollar sale price). I'm looking at the next steps, which include and executive summary and personal finance info, and potentially constructing an offer - before investing much more time securing financing.

Having never done this before, what kind of advisory services would users here recommend? Is simply finding a buyers agent in commercial real estate a good idea? Are there other commercial investing services I should look into? Love to hear your thoughts.

Joel Owens · Answer

Hi Charles,

Just be sure they are not a generalist in the commercial space. Some brokers like to dabble in a bunch of things. They tend to have general info and knowledge of various asset classes but do not specialize.

Those nuances and deep expert level knowledge from a specialist makes all the difference in the world when you are buying a property in the millions to tens of million of dollars in purchase price.

For instance in retail commercial I have specific commercial attorneys I use that have specialized skills like I do in a specific asset class.

Hope it helps. The generalist while helpful might miss some key things that affects the out come and performance of your property into the future.

Charles O. · Answer

Thanks for the answers. I ended up talking to a buyers agent in the commercial real estate space. That was very useful - would recommend that as I guess the first step for anybody looking at commercial property for the first time. If we go forward with an LOI, I would probably end up using all the above Charlie, including an attorney, accountant etc.

Charlie McCurry · Answer

@Charles O. I strongly encourage you to identify an attorney, a broker, and an accountant to advise you on each deal you seriously consider. Each of these professionals will have a fiduciary duty to protect your interests and the best are worth every penny. Good luck!

Joel Owens · Answer

I only do commercial retail with clients for purchasing and do not focus on office. SIOR website has a lookup feature for commercial brokers close to where the property is located and they focus a lot on office.

Generally a lender is looking for net worth close to the purchase price of a property or higher and liquidity reserves of 10% of the loan balance after down payment. How much down will depend on going in cap rate.

So 2,000,000 at 25% down is 500.000 leaving a balance to start of 1,500,000. So 150,000 liquid minimum between cash value of life insurance policy, 401k,IRA, CD, Savings,Checking, Stocks,etc.

Buyers agent or other services for first time commercial deal?

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