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A couple of weeks ago I bought a 68,000 square foot commercial building for 2.1 million dollars. I bought this property with a partner, and also plan to open my own real estate office in the building. The building was a great deal, is less than one block from where I work now, and accomplishes one of the goals I set for 2018. I have been trying to buy a building like this for many years, and it feels awesome to finally do it. On this episode o the InvestFourMore Real Estate Podcast I go over why I bought the building, my plans, the loan, and much more information.
How was I able to buy such a huge building? I have wanted to buy a building like this for many years, but it is not easy to figure out how to actually buy a multimillion dollar property. I have done very well as a real estate agent and a real estate investor, but this is a huge step up from anything else I have ever bought. The most expensive rental I have purchased up to this point was $292,000. I renovated that property last year and rented the main floor of it this year for $4,500 a month.
In order to buy a multimillion-dollar building here is what I needed:
A really good deal. If I am going to spend the resources and time it takes to pull off a transaction this large, it better be an amazing deal. Help within the industry. I used a commercial real estate agent to help me find and buy this property. I am a residential real estate agent, but I knew I needed help. A partner. I might have been able to pull this off on my own, but it would have been tough. I have a lot going on with my flips (18 going right now) and I would have to cut way back on those to make this work on my own. Education. I had learned a lot about commercial real estate. I have been an agent and investor for over 15 years, but commercial real estate is extremely complicated. It took me a long time to learn about leases, tenant improvement, expenses, financing, etc. A really good lender. The lender we used was actually my partner’s lender. He was super easy to work with and I think we got a great loan. Is commercial or residential real estate better?
What are the details of this commercial property? I will not post every detail in these show notes because I already wrote an article on the building. Here are the basics:
Bought for $2.1 million with a 75 percent loan at 4.6 percent interest. The building has NNN leases with the base rent about $20,000 a month. There is 9,000 square feet of vacant space. I am planning to open my own office in part of that vacant space. I figure the actual value of the building is over 3 million dollars if we rent all of the vacant space. What have I learned in the process of buying this property? When I ventured into the commercial real estate world I realized how much I did not know. Even after buying this property I am learning more and more things. Tripple N leases can be very confusing because the tenants technically pay all the expenses for the building. Tenant improvement is where the landlord pays to fix up units before the tenants move in. Financing is completely different on commercial properties, and the inspections and appraisals are different as well. It has been a really fun and awesome experience. If I would have waited to know everything before I bought the property, I probably would never buy anything!
What is next for the building? I am in the process of rehabbing the vacant space for my office now. We have already removed the carpet, furniture, and glue from the floors. I plan to start my office June 1st. You can see a video of the property below:
If any real estate agents are looking for an office in the Greeley Colorado area, let me know!
I am also running a sale on my Complete Blueprint Investing Program this weekend. You can check it out here: Complete Blueprint for Real Estate Investing.
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