Retirement time - What to do with a commercial office building???
Okay, I'm pretty new to BP and have commented on a few forms over the months. I have some questions I wanted to ask the field for some advice on some strategies I've heard of. In this scenario, I'll say I'm "asking for a friend" who is looking to move on immediately and retire.
Say for instance you have an older historic house that's paid off and you've been using this to operate your business out off. The area likely will have interest from buyers has also had interest from the city to purchase in the past. So when it finally comes time to retire (now) what are some of the options available? House is on approx 1 acre, estimated around 1.5MM.
1. Sell
- I think they are motivated to just be done with it and I respect that. I feel they are in a rush to sell, but I don't know if they need to put an emphasis on speed if the property is paid off. Am I wrong? Are there going to be any significant tax triggers? Closing costs? May as well wait for an offer that is fair instead of settling for something below market.
2. Lease with or without a property manager
- I like this option for them better than selling outright (you can only sell once). This option, however, may take some work or some research on finding the right property manager to find/manage tenants. Is there really more to this aside from properly vetting these companies? This may just be me as an outsider thinking this is ideal for them, but if they just want to be done with it, I can still respect them taking option 1
3. Triple Net Lease
- This is a new concept to me that a friend of mine had suggested. I just am unaware if this is common, or if these tenants are far more rare than typical leases, or if this is a guru "good idea" that sounds good in an article or podcast, but difficult to make happen.
4. Cash Out Refi
- I also only know of the general concepts of this. If for instance, the property appraises for 1.5M, are you able to determine how much cash you pull out? I'm sure they could pull out some cash for retirement purposes and still be able to have some monthly cash flow from the tenants.
My advice to them was to ask their realtor plenty of questions. Consider consulting a tax professional, some property managers, and potentially some lenders. Right now they just plan on talking with a realtor to put up for sale and I want to make sure that they know there are a lot more options than just selling.
Any help on these options would be great! I hope this is enough information to generate some discussion points. If I need to add information please let me know. If you were in retirement shoes where working was no longer an option, which sounds most desirable to you and why? I do apologize if this is all over the place, but I appreciate your help!
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