Owner Occupied Office Space
what is right price to pay for a wel located office building I presently own 25% of. NOI is in 65000 range counting my rent . Other partners want out but value is question current rents do not cash flow unless I sink a lot of cash into it in addton to my equity due to vacancy rates etc
You might want to pose this question under the COMMERCIAL forums rather than residential. You will probably get a better response.
There is a Red tab in the Upper Left hand corner that will get you there, kind hidden behind the Residential tab.
Then select forums.
You know dits, I'm completely confused about this building.
Trying to put together the various pieces from your various posts this building appears to be a total of 12,000 square feet on two floors.
Yet the first floor appears to be 4,400 squre feet. So that means the second floor is 9,600. Odd building. Perhaps the parking is covered by the larger second floor? But there are 33 parking spaces and only 5,000 square feet covered, there must be some adjacent vacant land. . .
Now you say that half the first floor is vacant and the total vacancy rate is 35%. (I'm starting to feel like my high-school algebra class where I'm supossed to calculate a formula with two variables. . . .)
The second floor is 90% occupied which means it should have about 960 square feet vacant. But you say the total vacancy is 4,400 square feet half of which is on the first floor so there must be a total of 2,200 square feet vacant on the second floor. So where did the extra 1,200 square feet of vacant space come from? Perhaps some portion of the building occupies another dimension?
Are you managing the rental of this building or is another one of the partners doing that? Apparently no-one is on a lease except the guy moving in April?
That said it seems your main concern is that the other partners will sell to a user who wants the whole building. Why not just sign a 5 year lease with yourself to protect your portion of the space and sort out the value issues later?
well commking what do you think ?
how can I sign a lease with myself ,the building is owned by llc of which Iam a member ?
Well that is a little clearer.
So you have a 10,000 square foot (net rentable, approximately) building.
2,200 square feet on the first floor is vacant.
2,000 square feet on the second floor is vacant or soon to become vacant.
Another 1,000 feet on the second floor is owner-occupied which would vacate on the sale to you.
So the building is effectively half rented.
If fully rented the building would net about $65,000 annually.
What is the NOI with only the tenants remaining?
What portion of that NOI do you pay as rent?
I thought the building was owned by an LLC of which you are a member. Who is the owner who occupies the 1,000 square feet on the second floor?
How rentable is the vacant space? If the bulk of it has been sitting there for 5 months how long do you think it will take to rent it?
A word of advice, the advice you get on internet message boards is largely a function of the information you give and the question you ask. GIGO, as they used to say. If you garble the facts and ask too general a question the results are pretty worthless (which is why the advice you got on the other thread was mostly go hire yourself an appraiser and let him sort it out).
As to how to sign a lease with yourself this depends on the language in the LLC agreement. Are any of the members allowed to commit the LLC or only a managing member?
If only a managing member then go to him, say you are tired of the uncertainty of the situation and want a 5 year lease otherwise you may have to consider looking for more suitable space leaving them with an even higher vacancy.
thanks to all whom responded , it seems everything I read is investors are taking a lot less than 10 % cap on office these days . A lareg reit is investing in strip center across street and a PF chang rest is going in at corner (one block up) . I have heard that bodes well for area in general though not sure why it makes an office better , any opinions on that