I need help analyzing a deal for a building for my HVAC company
Thank you for taking the time to read my question. I currently own (2) duplexes and (2) single family rental properties, so I have limited real estate experience. I have no experience analyzing commercial property.
Long story short, I own a commercial/industrial heating and air conditioning company. We currently rent 4800 sq feet and need more room. Instead of renting a larger space, it seems more prudent for me to purchase a property and have my company rent from me.
One of our customers has an industrial/mix use property for sale that is 23,400 square feet in the area which I am looking (east side suburbs of Cleveland, Ohio). The property is broken up into (9) 1800 sq foot units (building 1) and (5) 1440 sq foot units (building 2). Each space has a 12x12 over head door.
My company would take over building 2, and the build out would be done through the company as leasehold improvements.
With my company taking over 7,200 square feet, the building would be at 100% occupancy.
The property is currently triple net lease. Utilities are individually metered. Rents are $5 per square foot. Taxes on the property are around $25,000.00 and i am projecting insurance to be $8,000.00. I have figured a 10% vacancy rate.
The property is listed for sale for $950,000.00
Based on my initial analysis, the list price seems pretty high. I end up with slightly negative cash flow. However, I am by no means a commercial expert. How would you value this property? What would be a reasonable offer? Are the sales price and a reasonable offer too far apart to make a deal work?
Bigger Pockets has always been helpful. Thank you in advance for your insight and expertise.
Chris