All Forum Posts by: 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.

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,

DO NOT TRY TO SALVAGE THIS! You most definitely dodged a bullet. They are shaming you for not jumping for joy at their odd proposal. If this is the drama they are throwing your way now, just wait until they move in! It will be one story after another with yet another random barter (along with a large helping of guilt).

The only thing I would do different with the next tenant is to require the first month's rent and a different amount for the security deposit. Something like $1795 to move in ($795 for the first month and a $1000 security deposit). 

An old friend of mine offers dating advice to young people that applies here, "Be thankful for the ones that get away."

Hope this helps,

Well done @Hannah Jones & @David Marshall!

@Bobby Pagliarini, a third option is a 1031 exchange from one or more of the multifamily properties in to a commercial property. That way you avoid the capital gains of an outright sale.

Hope this helps,

Your answer probably has to do with NOI and cap rates. The buyers were looking to park their money some place and get a decent return. Possibly a syndication.

To put it another way, you are buying single family houses and they are buying commercial real estate. 

Definitely a good sign that you are in the right asset class in the right market. You will probably need to start looking for off market deals to get the kind of prices you are looking for.

Hope this helps,

You could also contact existing owners directly. If for example, you want to wholesale an office building, find the owners of other office buildings in the area and reach out to them directly.

See what you can get for financial statements and/or tax returns. From there, you will can build out your own projections. Other questions I would want to know:

1) What's the prevailing cap rate in the area? A commercial broker may be able to give you an answer. The cap rate can end up being a negotiating point.

2) What major improvements have they done in the past 5 years?

3) What kind of deferred maintenance exists?

4) Can you see the current leases?

Hope this helps,

You might want to check those figures, because with what you provided, this deal loses money. Here are the monthly figures:

Income: $5500

Taxes: $786.75

Insur: $433.25

Vacancy: $275

Maint.: $550

Mortgage: $4053.49 ($543,675, 20 years, 6.5%

Loss: $598.49

Also, the NOI is $41,460. (Income: $66,000 - Taxes: $9441 - Insurance: $5199 - Vacancy: $3300 - Maint.: $6600). If this deal was priced at a cap rate of 6% - 8%, it would be listed at $518,250 - $691,000.

Hope this helps,

FWIW, I've always been thankful that I used an attorney.