UNDER CONTRACT on first office building - couple questions

[Adam Craig]

I finally made the jump from residential to commercial.

I am under contact on a hold historic home converted into a 5 unit office building near a popular trendy/quaint down town area. Its walking distance to all the trendy restaurants and coffee shops. Purchase price 275K - seller is carrying 55K and the rest is financed through 2 of my private lenders and I will bring some cash also. Plan is to do carpet/paint type rehab, lease it, then refinance.

I am going to use 15% of the building as my office and lease out the rest. 4 of the units are small-ish so they are pretty strait forward. The question I have is on the bigger unit which was used for a small/medium sized law firm. It has 4 offices, reception area, bathroom and storage area. To be honest this is the space that scares and confuses me. Do I try and break up the space into 2 smaller spaces because I know the large the space the harder it is to rent.

Since this is my first go around leasing office space would it make sense to contact a commercial agent/broker and get some ideas or have them help lease it? Picture of the common area in the bug unit is below...

[Bob Langworthy]

Congratulations! I own a similar property and here's what I would do:

1) List the space as is.

2) Talk to a commercial agent to get some ideas.

3) Only modify the space if you can't lease it in the current configuration.

If you haven't already considered it, you may want to work with a commercial agent on the listing. They may charge a month's rent, but in my experience, it's worth it.

Hope this helps,

[Adam Craig]

Originally posted by @Bob Langworthy:

Congratulations! I own a similar property and here's what I would do:

1) List the space as is.

2) Talk to a commercial agent to get some ideas.

3) Only modify the space if you can't lease it in the current configuration.

If you haven't already considered it, you may want to work with a commercial agent on the listing. They may charge a month's rent, but in my experience, it's worth it.

Hope this helps,

 When you say lease the space as - we were going to do new paint/carpet/lighting throughout the building. Are you saying leave it as "build to suit" and dont remodel?

[Bob Langworthy]

@Adam Craig, sorry for the confusion. Freshen it up as you suggest, but don't mess with the floor plan yet. Once you look at dividing it in to smaller spaces you'll have to give careful consideration to bathrooms and egress.

[Ronald Rohde]

Contact a commercial broker. And be sure to sign a lease for yourself to pay rent.

[Adam Craig]

Originally posted by @Ronald Rohde:

Contact a commercial broker. And be sure to sign a lease for yourself to pay rent.

 Thank you! That was another question I had. I assume it makes sense because when I refinance with the bank they can count that lease towards the debt service. So I will have the write off on one and end income on the other?

[Bob Langworthy]

@Adam Craig, you will want a lease with yourself because you should be dealing with two different legal entities: your business and the entity that owns the real estate. But I'll let the lawyers here go in to more detail.