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re: To sell or not to sell commercial property?
Posted on 1/27/24 at 9:26 pm to Mohican
Posted on 1/27/24 at 9:26 pm to Mohican
Commercial banker here - sell it if it’s that kind of life changing money to you. A one year lease is a short fuse and a lot can change between now and then. Plus if you switched out tenants you’re probably looking at a few months of no income plus all the expenses of doing upgrades for the new tenant (given you can finance that in to the new loan).
On the flip side if you have a much stronger tenant in your back and can get the bank to finance in the rehab work then keep it. A stronger tenant at market rates is going to make the value of the building go up even more. But have that tenant in the back of your pocket. Don’t go to the bank looking for a new loan with a single tenant lease in place that has less than a year to it. Might not be a great conversation.
Why don’t you sell it, 1031 the money and put it into two or three cash flowing properties to diversify your holdings? Get with a good COMMERCIAL broker and discuss the options. Whatever you do, don’t use a residential realtor.
On the flip side if you have a much stronger tenant in your back and can get the bank to finance in the rehab work then keep it. A stronger tenant at market rates is going to make the value of the building go up even more. But have that tenant in the back of your pocket. Don’t go to the bank looking for a new loan with a single tenant lease in place that has less than a year to it. Might not be a great conversation.
Why don’t you sell it, 1031 the money and put it into two or three cash flowing properties to diversify your holdings? Get with a good COMMERCIAL broker and discuss the options. Whatever you do, don’t use a residential realtor.
2
Posted on 1/27/24 at 9:51 pm to Im4datigers
quote:
Im4datigers
Awesome stuff. Thank you.
I think some of my gut-feeling trouble is I don’t feel like I’ve maximized my leverage. If I’m getting list price before listing it, what would happen if we did?
Also I’m troubled by the fact that we haven’t even tested the lessee market. Is a prime tenant a phone call away as well?
I’m also fighting the emotional attachment to the building. It’s a nice building and sort of one of a kind for the area. Never thought I could own it when we started out in it. But perhaps it is time to let it go and realize the fruits of our labor.
Posted on 1/27/24 at 11:03 pm to Im4datigers
Im4datigers hit the nail on the head. A year-to-year tenant situation.can put you in a tough spot in multiple ways, especially with low cash reserves.
Run this by a few different commercial brokers that are active in the same asset class. Gaining a long term tenant at market rates would be ideal but you’ll need to determine if you can fund a market commission and tenant improvement allowance.
Run this by a few different commercial brokers that are active in the same asset class. Gaining a long term tenant at market rates would be ideal but you’ll need to determine if you can fund a market commission and tenant improvement allowance.
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