All Forum Posts by: Bob Langworthy

@Tyler Hardy, I own a small office building in Brunswick, ME population 20,000. Here's some info:

1) Prior to purchasing my 4-office building, I rented space in a 15-office building. We had one receptionist for the building and most of the business were 1 or 2 people companies. There were a couple sales reps for a food company as well.

2) I bought my building 4 years ago and had no trouble finding tenants. One tenant left in April of this year due to the impact of COVID on her business. I had multiple great applications for the office space and moved a quality tenant in on July 1.

3) I cover all utilities except phone (most of us use VOIP). I do this because I want it to be very easy for a tenant to move in and just pay the one monthly bill. This would be particularly beneficial for someone looking for their first office. It's a really big deal for the micro-business to get their first brick and mortar office and simplifying that process for them makes them more likely to select your building.

4) Dedicated off-street parking and every office has its own entrance. There's a severe shortage of parking in our small town so this was huge. I have enough parking that in addition to the four offices, I lease 6 parking spots to an area business. 

5) Co-working space is a different animal than what I am doing and may be a good set up for you. It takes more work to manage co-working space, however, and would come with more upfront costs, furniture being the big one.

6) In addition to my accounting practice, I had another tenant lined up prior to closing. That relieved a lot of pressure.

7) Regardless of what the economy looks like post-COVID, I believe that the type of small office space you are describing will always be in demand for exactly the reason that you are looking for it.

Hope this helps,

Here's a couple thoughts:

1) Be VERY careful when dealing with someone who tells you that he's not reporting all of his income. What else is he not reporting to you?

2) Only do the deal with the numbers that he has reported. That's what a bank does when a self-employed person applies for a loan.

3) Are you going to be running the business? Do you know the industry? What is a reasonable profit margin for the industry? Are there costs that can be cut? Revenue that can be increased? Do you even want to buy the business or are you stuck with it?

4) Instead of overpaying for the business, why not "underpay" for it (use the reported figures) and pay the seller an extra amount based on the profit of the business?

Hope this helps,

I would go with UPS and then add another quality tenant to your property. Here are some thoughts:

1) The traffic issue with the pet business is definitely something to consider. 

2) Some may differ with me on whether a pet business is an "essential business" and how it will do in the next pandemic spike, but that would also be a concern.

3) Having three tenants in the building instead of two will also reduce risk.

4) The buildout that the pet business does may not be easily used by the tenant that moves in after them.

Hope this helps,

@Katie Neason nailed it. I did a cash out refi on my office building earlier this year and got my entire down payment and an additional $14k. Infinite returns. Keep finding great deals!

@Adam Craig, Congrats on the new property. It's difficult to make a recommendation without knowing more about your specific area. A couple considerations:

1) Is there a demand for more office space in your area?

2) Event space is risky right now.

3) Storage units?

4) Renovate-to-suit for a mechanic/contractor/etc.

5) Does the building have 3-phase power? If so, that may attract contractors.

Hope this helps,

@Alex F. That's the typical process. What isn't listed here is what you've probably already done, but it bears mentioning. Financial analysis consisting of:

1) 3 years of tax returns

2) 3 years of financial statements

3) Current leases, monthly payments, payment status

4) CAPEX needs

5) Projections that include a reasonable vacancy figure based on asset type, market, and COVID reality

Hope this helps,

@Walter Bennett, you won't get a good answer to this question without providing more information. For instance, if your plan is to hold the properties long term, then a cost segregation study might not be recommended. If, however, you plan on holding the properties for fewer than 7 years and then using a 1031 exchange to buy larger properties, then most of us would say that a cost segregation study is highly recommended.

But one of the candidates running for POTUS wants to eliminate the 1031 exchange, so there's that.

Hope this helps,

@Richert Dart, as has been stated, you need to understand cap rate and NOI (not net income). Richard Harris of Commercial Property Advisors has some straightforward videos on these topics that will help.

Hope this helps,

@Christopher Gosch, if you haven't met the neighbor yet, start with that. Then you can mention the easement and your need to access it. Based on their response, you'll know if you need to involve an attorney.

Hope this helps,

@Eileen McCue, I haven't refinanced an owner-occupied duplex, but I just refinanced (cash out) a duplex in Lisbon Falls with Tyler Zamore of Bath Savings in Brunswick. Justin Laverierre of Mechanics Savings in Brunswick could also find a way to get it done.

Hope this helps,