From Residential to Commercial-where to begin?

General Real Estate Investing
1

Hi everyone,
I own a few residential properties and I’m interested in investing in commercial. I have approx $100k to put down, good credit score and I’m looking at a floor in an 3 level office building. The price is about 325k, approx 7,500 sq feet. Where do I begin? What are the mechanics of the commerical loan? Shold I buy it as a corporation (which I don’t have yet) or as an indvidual? Any information helps!

2

Well - There is a lot to know and the answer could be long. Are you looking to occupy the property yourself, or will it be tenant occupied?

Remember, all commercial real estate investments are based on NOI or Net Operating Income.

Please give me a little more about what you are seeking.

3

Whatever type of property you buy, you will want it in a corporation (LLC, C corp, S corp).

For different property types, the amount down (LTV) will vary. For office building, you can expect LTVs between 80% - 90%. Per your message you are looking at a “floor” in an building. How can you just buy a floor?

I would suggest that you do a little bit more research.

Regards,
Patti Porter

4

Thank you for all your responses!
I’m buying into a partnership that owns the bulding, but I will only own one out of three floors in the building, which is 20% of the partnership. I don’t know if that makes any sense

5

If the property is in condo regime, it makes perfect sense. Just make sure that it is and you are in good shape. If you owner occupy it, you can get some great leverage.

6

No, I’m not going to be occupying it-I’m two states away from the property. Why do you say it’s a good deal? What should I look for in a commercial property of this type? Thanks!

7

These types of properties (office condos) are very popular and can provide a long -term stable income. Without owner occupying it, you could get up to 90% leverage, full-doc.

I suggest investing in the four food groups, as they call them - office (multi-tenant), apartment, retail and industrial. These are the easiest to finance, with the best terms, and easiest to tenant on vacancy.

Hope this helps.