Light Indsutrial Building With 11 Units Can It Go Condo?
I currently lease 1 unit in a light industrial building in CA with 11 units. The buidling is up for sale and I am worried that the new owner will give me the boot at the end of my lease or up the rent considerably. The owner is having trouble selling. The asking price is 2.5 million. If I could purchase just my 1500 sq. ft. for 1/11 of the asking price I would jump at the chance. I suspect some of the other tenants would do the same. Has anyone ever heard of dividing a commercial building up condo style? What would be the procedure for such a venture?
I can be done and is common in certain areas. To capitolize on the profits, the best way would be to buy it and then individually deed the units as business or commercial condos. You will probably be able to get a loan a lot easier if you have a majority of them presold before you buy it. Or set it up as one lender doing all the loans, in turn paying off the current owner firstly and pocketing the profits on the rest.
If the seller is having problems selling it, see if he will put a short term mortgage to you, then sell off the units to pay him off. Or take a second for whatever you cant get financed. Or you could Joint Venture with him and split the profits anything over a certain price. Or if he has a mortgage in place offer what he has on the mortgage and 50% of the profits after that.
You will need to contact a realtor (for unsold units), mortgage broker (or bank) or both to do the deal, and they should have insight as to the process for help. You should most importantly hire an attorney to draw up the contracts. A good attorney will have potential buyers for the unsold units as well.
Dont forget that a company should be set up to handle the condo fees that will take care of whatever you offer for the condo association. This could include items like: Management, landscaping, snow removal, general maintenance, signage maintenance, insurance, Parking maintenance, window washing, etc etc. All of which can be done for a small monthly profit. I would suggest hiring a person to manage the condo association, like a property manager rather than a company. But a company can be less stressful, but less profitable as well.
A lot of work, but a lot of profit to be had as well.
Good Luck,
Kyle