Sell or refinance commercial property

6 Replies

I just secured a long term tenant for my commercial building which should generate $72k/yr for 10 years. It appraised at $770k. I was offered $950k to buy it with the tenant in place. I owe $350k on the Mortage. Should I take the deal and pay off some lines of credit or refinance and use the equity to purchase single family housing. I'm a newbie and this will be my first deal.

The answer depends on what your typical return on capital is.

Is the return with the equity higher if you sell and pursue a new venture (risk adjusted) or are you better off retaining ownership with reduced cash flow but slightly less capital for a new project?

The answer is simply math and it depends on what opportunities you have available to you to use with the capital.


It can't be answered without evaluating your complete investment portfolio and goals. Rates are low, but unless you know precisely how you want to invest excess capital, not always good to cash out. 

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