All Forum Posts by: Eric Brown

I own a mixed use building in a downtown area of a midwestern city. Currently I am a commercial tenant of the space and plan to stay for the next 15-20 years. There are three other commercial tenants in the space in small offices that are on a month to month basis. The upstairs of the space is unrented and plans were drawn and approved to create five 500 square foot loft apartments. Apartments of that size do great in the city I am in and seem to have no trouble renting. The cost to renovate the upstairs is approximately 835k and the rentals would likely rent for 1000-1200 monthly. I bought the building 4 years ago for 399k. I pay 3500 in rent, the other three tenants pay 1675 monthly. Should I go ahead and move forward with the renovation? The bank approved me for a 6.25% construction loan which would then roll into a mortgage once the construction is completed. With the 835k and the pre-existing loan I would likely owe approximately 1,000,000 so depending on rates mortgage would be guessing around 7500. I have been approved for a 10 year tax abatement on the property so taxes would likely remain in the 15k range. I am nervous to move forward as these are big numbers but with me planning to stay in the building for the foreseeable future I feel like it might make sense to move forward. Do you guys think I should move forward with the plan or just keep plugging along or try to rent the upstairs as a commercial space?