All Forum Posts by: Adam F

Year 4 of the same goal:

2 New Commercial/Industrial, and pay 1 off from previous year.

25% growth of all existing businesses.

One of my last land deals was with a seller who couldn't get the bank to roll his loan over. Its tough times, and they were putting a lot of pressure on him and his wife. I ended up paying only 10% over his existing note balance. Plan accordingly.

I started in commercial in 2008. My average out of pocket is around 50k. I've had 0 down deals, and 140k down deals. I hold 2.8M in commercial and industrial now. I don't flip, and I only sell to trade up. This may not be a typical picture, but everyone's deals are going to be uniquely theirs. It's a hard question to put a real $ value to without knowing what you are going after and where.

@Karen Margrave

I own commercial and light industrial buildings. I have acreage in heavy industrial and I have city lots in commercial.

Small industrial condo's 1500-3000 sq feet rent well if they are priced well. They are also don't typically have much build out as you are usually dealing with businesses that need space for equipment, not space for lease hold improvements.

I divide spaces larger then 3000 sq feet unless I already have a client lined up, as it's too hard to lease them. We get anything from automotive to composite shops and micro breweries. Aside from making sure the heat and the bathrooms work, there is no maint. Just collect your check.

I've been buying commercial/industrial properties solely for the past 5 years. I have 27,400 square feet between 5 buildings and 2.8 acres heavy industrial and a block of commercial lots spread out.

I've been buying the buildings on average for $32-$45 per square foot, putting 25%-40% down and having the owners carry the balance on a short term note/trust deed. Typically 5-7 years. The lots / acreage I've been paying cash for and offering 60% of assessed value on average or less.

My average lease rate on the industrial properties (unimproved) is $0.55/sq/mo + NNN, for the office Office space we charge $1.20-$1.50/sq/mo + NNN for unimproved, or some of the nicer office spaces $2/sq/mo + NNN.

This all spawned for our need to expand our manufacturing business and refusing to lease after our first experience back in 2003, we had to start acquiring buildings that would work (for awhile) then rent them out once we out grew them.

It can be lucrative. But its a big money game.

LLCs are pass through entities. They are reported on your personal income taxes on the schedule C.

1) Cost 2) Quality 3) Customer service

Pick 2.

Seriously though, you know what to do.

You didn't background your businsess at all. Are you an existing business or just starting out? How would the building impact your cash flow? What percentage of gross monthly revenue would it chew up? How would vacancies affect you?

I own 3 industrial & 1 commercial building for our mfg/dist business. I bought them all in a manner that the combined mortgage cost didn't exceed 15% of my gross revenue per month. This meant paying buildings off early before I aquired more.

I always look at the worst case #s and came to the conclusion the anything over 15% put my company in jeoprady of reducing expansion, inventory, employment and my own paycheck. I would do a similiar worst case scenario of your own before signing anything.

From an investor perspective, I would value it as very little. Find the right buyer and its worth whatever they will pay. I buy businesses for their distinct product lines, intellectual property and their capital assets - typically at .25 cents on the dollar or lower book value. It's kind of like buying a resale business that has no fixtures and no inventory. What are they really buying?

Steven,
If they are offsetting their income by a year, aren't they losing their ability to move pre-tax income into certain retirement plans though? What is the advantage of that? I could have sworn my 401k said last day to contribute for that year was dec 31...
Adam