All Forum Posts by: Morgan Wells

2500 Property Tax seems incredibly low at 700k purchase price. Usually tax gets reset with a purchase as an fyi. Be careful there. 

Hi guys, one of the commercial real estate books I read (published in 2004) mentioned many commercial investors use a website called "Realtyrates.com". It supposedly lists typical cap rates, vacancy rates, average financing terms etc for commercial properties. This would obviously be valuable info to have. However, I visited the site and the user interface looks like it hasn't been updated since 2004. Does anyone active in the commercial space actually use this site? If not, is there something similar elsewhere?

Thank you,

Morgan

Good evening guys, I am buying my first commercial office property. We are just a few weeks away from closing. I hired an attorney to help draft the PA and generally help protect my interests. Purchase price is only 590k but attorney has already billed for over 5k in fees.

Deal structure is pretty vanilla and I've spent about 20 min on phone with attorney. Certainly they took time to draft the PA, but I assume this fee is very much on the high end, correct? Is there a rule of thumb I can use to estimate what I should be paying in future? Market is Minneapolis. Thank you

Good morning, I have signed an LOI on an office building for the first time. If we close, it will be my first commercial property purchase as well. I am the only investor/owner of the deal. I have basically zero experience in this area, and would value the community's analysis of this deal, particularly from those with experience in these types of properties. Details below. Thank you in advance!

Location: Suburb of Minneapolis

Price: 590K. 

Building: Office built in 1952, brick construction. Total 14,000 sq feet. 7000 sq feet upper level, 7000 sq feet basement/garden. 

Tenants/Leases: Main tenant on upper level is paying 6200/month gross and takes the entire 7000 sq feet space. Lease expires in 3 years. Basement only has one tenant who is taking 1000 sq feet. He is paying 1200/month gross. Remaining space in basement is vacant. 

Operating costs: 21k in property taxes, 17k in gas/electric/sewer (owner pays), 2500 property insurance.  I don't know how much to budget for capex, maintenance, property management. What is typical operating cost/sq foot for a small office building?

Capital: I can put 30% down, and bank has mentioned they can offer 4% lock for 10 years, on a 20 year amortization schedule. 

Questions for community: 

1. Does this deal pass the smell test?

2. Obviously main upstairs tenant is crucial. If they leave, how difficult is it to lease out 6000 sq feet? Is it typically easier to divide the space and rent to 4 different tenants at 1500 sq feet each?

3. What are typical operating expenses for a small office building? How much should be reserved for roofs/hvac/larger capital items? 

4. Building is on a hill, so basement has several "garden view" small offices, of  200 to 600 sq feet each. Does anyone have experience renting out these type of spaces? 

5. Any other advice/guidance would be greatly appreciated. I feel a bit sheepish after writing this post, as i'm realizing how little I know about offices specifically or commercial real estate in general!

Thank you!

Thanks all, I really appreciate the insight. I'm not looking to flip, I'm looking to buy largely finished properties and hold long term. I'm leaning towards hiring a property manager to keep the stress as low as possible.

Hello, I am a young professional and my job is high paying but very stressful. As such, I'm hesitant to invest in anything that takes time/energy. However, looking at the current investment landscape, traditional options appear pretty limited. The stock market rally is pretty long in the tooth, bonds are yielding next to nothing, and commodity speculation isn't appealing to me.

Due to this, I am considering purchasing my first investment property to rent out. I'm primarily looking to store and grow wealth, not necessarily yield income. Also, I am considering real estate because it is a great shield from the tax man.

Before taking the plunge, my one biggest, biggest concern is the stress/hassle. For those of you who have day jobs and kids, how much time does it take to manage one property? Even if one hires a property manager, does it still take up a significant amount of your personal time?

Thank you in advance for your replies and advice,