Expert Commercial Advice Needed
Hi everyone,
I'm experienced in residential (36 units and counting over the past ~15 years) and have a request for the experienced commercial folks..
I'm under contract to purchase a 6,100 sq ft commercial Class B office space in the Raleigh, NC area. It's in a good area, well maintained 15yr old building. I'm 30 days into the 60-day examination period. My plan is to lock in tenants during the examination period, otherwise I bail from the deal.
My problem is: the numbers are pretty good and I want to make sure I'm not walking away from a gold mine. I don't have a commercial mentor/expert so I'm turning here for any advice:
- If we rent at $22.50/ft/yr that's about $11,400/mo gross rent.
- HOA dues are $1,250/mo and covers the exterior/roof/landscaping
- Taxes are $800/mo
- Insurance premium is quoted at $150/mo
- Utilities are tenant-paid (although negotiable until we find a tenant)
- Property management is 7% or $800/mo
I can carry the mortgage + expenses, but would obviously buy a building with a tenant ready to move in. My lender isn't a fan of me buying a vacant building for an unknown period of time. Covid presents somewhat of an unknown risk/reward here.
To the experienced folks: is this a deal I should walk away from if I don't lock in tenants?