Vacant Office Building In Foreclosure...Advice Needed
I have the opportunity to buy a vacant office building that is in foreclosure well below FMV. My question is regarding structuring the deal.
I own my office building in the same office park so I am familiar with much about the building. It does need some cosmetic updates on the interior and a new roof. The local office market is very slow with a lot of vacancies at this time. I estimate that the building would appraise at $850-$900K (there are 11 separate office suites & 17,500sq/ft) and I can buy it for $425K. Estimated repairs should run $50K….I’ll say $75K to be conservative.
My intent would be to buy it for $425K and get financing for the full purchase price plus funds for needed repairs. I would like get a private loan for another $100K to cover the negative cash flow and incentives needed to fill it as quickly as possible. I think I stand a decent chance of getting the financing lined up based on the low LTV (for both the 1st and the private lender 2nd).
Of course, if I had the chance to turn it quickly for a nice profit I would do that. I would love to hear some thoughts from more experienced commercial investors on what they think of my strategy and see if they had any other ideas I should consider.
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