Commercial Building Evaluation

[Tyler Rumbold]

I have stumbled upon a building that has professional offices on the main floor and apartments on the second floor.

I own and manage a small portfolio of single family rental homes. Therefore I do not have a ton of experience in evaluating a deal like this. In my opinion all the rents are low for the area. My question is what documents should I request from my realtor to evaluate the property and what should I be looking for in those?

Any advice on do's and dont's would be greatly appreciated or best practices.

Thanks Tyler

[Priyanshu Adathakkar]

Ask for copy of leases, rent roll and 3 years of tax returns.

In the leases look for a) when was it signed b) how long is the lease and how much of that lease term is left c) What if any is the renewal term. Watch out for month to month leases.

Rent roll will give you the historic vacancy rate.

Tax returns will tell you if the property is making money or losing money.

Also ask if there is any deferred maintenance.

Honestly, your Realtor should be doing all this, unless he/she is an inexperienced agent with no commercial experience!