Advice, Commercial RE, sell or cash out to buy another property
I'm Trying to give a complete picture so I can tap into this great resource of BP.
I own a commercial property, no mortgage. Two appraisals 3 years ago $1.8MM. Raleigh NC, so unlikely to have gone down
Rent $10,400/mo (2% annual increases). Tenant is original to the building, original lease started in 2003. Current lease 2014 – 2019 with two 5 year options. Fair market rent with process in place if we can’t agree on rent at each renewal.
Landlord responsible for roof and structure only. New roof 2 years ago ($45k).
Credit score 800+. I keep approximately $75K in cash.
Made $85-100k taxable last 5 years self employed outside of CRE. Transitioning to more and more RE until I sail away.
Personal Ohio residence has no mortgage. Total debt service non business related $1K/mo. No business debt.
Looking for minimum or no LL responsibility except maybe a lease negotiation, paying loans and cashing checks.
Would you attempt to sell current property or borrow against it? If I borrow against it:
Assumptions: 8% cap rate $1.56MM value. It may be worth more but always trying to underestimate.
20 year amortization @ 5% (Can I get this loan fully amortized?)
Borrowing 700K - 1MM from current property leaving DSCR (ranging 2 - 1.44), Use this money as a down payment on the next and to beef up cash reserves.
Chris