Commercial deal advise

4 Replies

My friend and I are in california.

Looking to buy commercial office and warehouse property as Partners in Florida - Lakeland area US HWY 92, 

The owner is willing to provide do Owner financing with 10 year balloon payment at 5.5%

Its current leased yearly gross income 130k and occupied cap rate 9.25, down payment at 10% appraisal value 1.135.000

Should each of us form individual LLC in Wyoming or form a Partnership?

We intend to buy more SFR and duplexes as well.

What about taxes, what do you recommend we do from taxation standpoint?

We are in the process of getting current lease agreements reviewed, along with gross and net incomes for the last 3 years.

What else should we ask for?

@Alex Kholodenko

Alex, see my responses to your inquires below (obligatory disclaimer, I'm not an attorney):

1) In my experience, you'll want to form an LLC in which both you and your partners are members to purchase the building

2) An LLC is a pass through entity, so your respective shares of taxable income and depreciation would be taxed at the individual level. This is very typical for partnerships or syndicates.

3) I highly recommend you conduct a thorough tenant interview. As a commercial investor, the value of your investment is going to be tied to your tenants. Be direct - ask the tenant their future plans - inquire as to if they intend to stay at the property long term. If their creditworthiness is in question, ask for 3 years of tax returns and financials on the tenant.

Best of luck! DM me if you have any specific questions about the leases - I'm happy to field your questions.

What kind of lease? Triple net or modified gross?  Where in lakeland?  West side is hot for warehouse, some areas of us 92 are not.. message me for more info.  I’m a residential/commercial investor and agent here in lakeland.

Gavin

Don't forget the operating agreement between you and your friend for the LLC. Think of it as a prenup and plan for a nasty breakup. There should be buyout clauses etc.

Keep the commercial LLC separate from any SFR or residential deals. You may combine SFR into a single LLC, but your lawyer can advise on these things.

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