All Forum Posts by: David Wolber

What is the property zoned as? I'm assuming since there is an established practice on site that it should be zoned commercial. Therefore this would be a commercial real estate deal. 

Due to the residential units on the property I'd be willing to bet the dentist office is not a NNN, but you will easy determine that when you look over the leases

You should definitely look over the leases so you know what the cost shares are this is the best way to determine the NOI and therefore valuate the deal appropriately. As above-mentioned I am assuming this is commercial so asking the seller for active leases should not be a surprise

As far as the space goes and with most commercial spaces, vacency can last a bit longer for some types of businesses. So definitely plan on it. However, converting the space for a future tenet is negotiable but usually the tenet takes the responsibility of build out. 

Do you know how long the current lease is? How much time is remaining? Is the current doc wanting to leave or is he happy? If he isn't happy, what can you do to make him happy and keep him?

Also, if there is only a small time remaining on that lease and he's planning to leave, that means the building is worth less. 

Good luck!

HAHAHA @David Friedman we're not quite to that point out here in CT where cannabis cultivations is game for legit commercial leases.  Though there are a few around for the medical folks.

Another data point is my business partner / better half / wife is an owner occupant in this particular office building so checking the data wouldn't be that much of a chore.  And the unit is WiFi enabled.

What about a three month probation time in the lease as an evaluation period?  Basically it would allow me to monitor their use, then adjust the rent if needed??  Otherwise I have no data as to how much they will use.  They operate out of a home space currently so no previously rented spaces.  Though I could ask them I suppose.

Thanks!

We are currently leasing the office spaces in our building as gross leases.  Mostly are target tenants are therapists and wellness practitioners; single office type business that utilize shared waiting rooms.  The 2nd floor of our building isn't rent ready yet, but have had interest from a person who wishes to have a photography studio in there.  Our concern is that our rent numbers are based on a 5-day per week standard office use (lights, computer, etc) and this will be significantly more electricity use.  And of course, the building isn't wired for separate meters.

So in my head there are only two obvious conclusions: guess how much electricity they will use and set rent accordingly -or - meter or monitor their use somehow and charge them separately for the electricity.

There are a few circuit monitoring product's on the market for around $600 that seem feasible, has anyone used something like this?

http://www.brultech.com/greeneye/

Does anyone have any other suggestions that are not apparent to me?

Thanks in advanced!

@Ken Vingua Thanks Ken! The more and more I try to run the numbers and make it work it never seems to. I think it only sounds good, but like most things in REI, it's all about the numbers. I think the best thing to do is not to mix the strategies and do flips or buy and hold, but not an attempt to hybrid.

Again, thanks for your insight!

Partner one has funds and only wants to flip. No real construction ability.

Partner two is cash poor, fantastic W2 and has contracting ability to perform flip with desire to buy and hold.

Am I all messed up here or could it work out like this:

Partner one finances down payment and both get leverage. Partner two puts in lots of the sweat equity into the property. Then once completed, refinance into conventional loan in partner two's name with cash out for partner one.

So could this work provided the property would cashflow post repair?

What would a decent rate of return be for partner one who put in all the initial cash?

I see this is a good deal for partner one because it is a garenteed buyer after the flip.

Thanks!

@Julian Merchant I know this post is old, but would like to talk about the logistics of turning a SFR into a 4plex.

Entrances - you now need 4 independent entrances and usually secondary egress for emergency for each unit

Utilities - The best way is to have 4 meters installed.  This means an almost complete re-wire of the ENTIRE building to ensure each unit is supplied by it's own power source.

Plumbing - you have to run all new plumbing to all the bathroom that you just installed which needs to have proper venting and drainage.  Not to mention if it's a septic system, then you need to make sure the septic tank is rated for how many bedrooms you are making the thing.

Structure - Depending on the style, a new stair case may be required, which may require installing a few supporting beams where the stairs go through the upper or lower floors.

Fire stops - you will, depending on local codes, be required to have a fire stop between each unit, such as a 1-hr burn rated wall.  5/8" drywall between each unit. 

HVAC - separate furnaces or single furnace?  Independent heating supplies or different zones?

Heat supply?  Oil? Gas? separate or independent?

Hot water supply - again, like HVAC are you going to run everyone off the same source and hope one doesn't use more than the others or run individual hot water heaters to each unit powered by the new separate meter you had installed.

Oh, and zoning.  I don't think anyone brought up zoning... ;)

OR you could, I guess, just lump everyone into a all utilities paid situation, but then you will always have people who will take advantage of that.  Oh it's too hot??  lets just open a window in Dec.  Why not, they don't pay any extra for utilities.

I can see how this could work in a college town type scenario, but not for a well maintained cash flowing property.

Partner one has funds and only wants to flip. No real construction ability.

Partner two is cash poor, fantastic W2 and has contracting ability to perform flip with desire to buy and hold.

Am I all messed up here or could it work out like this:

Partner one finances down payment and both get leverage.  Partner two puts in lots of the sweat equity into the property.  Then once completed, refinance into conventional loan in partner two's name with cash out for partner one. 

So could this work provided the property would cashflow post repair?

What would a decent rate of return be for partner one who put in all the initial cash?

I see this is a good deal for partner one because it is a garenteed buyer after the flip. 

Thanks!

@Amit Kal It's got a 1.8 mile walk to Ocean Beach and in a more desirable area near a hospital.  That's about it. :(

Perhaps an AirB&B rental??

@Jamie Engledow It just seems like most houses around here are around 2000sqft at best.  I am worried the large area might be hard to land a tenant that is willing to take on the utilities of such a large place.

@James C. Great call on zoning!! I didn't even think of that. It's zoned R-1, so single family only. So I guess unless I would want to go and try to get it re-zoned, SFR it is! There are several MFR up the street two blocks so it's obviously not impossible, but may not be worth the headache.

Also, thank you for all the advice for the analysis and rehab costs.  But I disagree, fire and gasoline is a lot of fun... :)