Curious what others would be thinking about doing if you were in my shoes.

I'm an attorney (not in real estate) and have purchased a 11,000 sq building off Parmer to house my firm and have 1-3 other tenants (I'm presently renovating the 5500 sq ft second floor for my firm's use).  Even with a note in place, the property should cash flow pretty well, and with the CARES act, the interior renovations are subject to bonus depreciation rules, meaning, I believe I can expense the entire renovation as the costs are incurred and carry over the loss year to year until the renovations are fully expensed. 

Anyway, as I finish up renovations and get moved in, what kind of property would you be looking at? This purchase made sense to me b/c it's owner occupied. However, I'm not sure what direction to go for another property. Once my little project is complete, I was originally thinking of building or buying another building, and migrating my firm into it while looking to lease out the 5500 sq ft I'll occupy; basically looking to leap frog from one building to another with my law practice as the anchor tenant. But I'm not as attracted to that idea b/c it would be an office building: with all the subleases on the market, 100,000's of sq ft coming on the market in the coming year or 2 years, and perhaps a permanent shift to more work from home companies (or hybrid models), office REI would seem a
little dubious.

Thoughts?

Hi Jeff,

I've done something similar to what you're talking about. Started with a small office space, originally purchased as an office for my company. When we outgrew it, rented it out and bought a bigger one and moved our offices there. The larger building houses my business and we also rent space in it to others.

The office market has definitely taken a hit in the last few months. I think what's to come is yet to be determined. I see some local economists saying it's going to recover quickly, my gut says we're not going to be so lucky. Not that office space will necessarily sit vacant, but market rates might drop significantly making it an undesirable purchase. 

The commercial properties I've looked at in Austin over the last few years have not excited me. Without buying to house one of my businesses, which enables me to justify value differently, makes it really hard to make the numbers make sense when you talk about purchase price + property taxes vs. rental rates.

So what to buy? Personally, I've moved outside of Austin for commercial. I've invested in a property in SA that was purchased by the anchor tenant, I'm under contract on organic farmland that is being purchased for a farmer to rent back from us to grow crops, I'm looking at some land development deals, and of course I'm still doing spec residential new builds (which is my bread and butter).

Happy to discuss if you ever want my input. You know where to find me. 

Lynn, good to hear from you and hope all is well.  If you have any down time this week let's get together and chat.  I'd be interested in hearing more, and I also tend to agree that office is pretty risky right now.  I'll shoot you a note.