Investments in Commercial Real Estate: Office Buildings. How best to analyze various properties?
SmittyJ asked:
I’m interested in investing in an office building in the Seattle area. What are the best tools to anyalyze various properties? Are there any websites someone might recommend?
I’m interested in investing in an office building in the Seattle area. What are the best tools to anyalyze various properties? Are there any websites someone might recommend?
Mudisfun:
The first step I would do is contact a GOOD commercial real estate appraiser. Speak to them about the properties in question so you will have an idea not only of what the value may be but also what the capitalization rate in the are is along with a good idea of what the market rents in the area are.
Next determine whether or not you will be an owner user of any of the offices or units. Take a look at the current leases on the property to see if the rents will offset the mortgage payment. Most lenders want to see a debt service ratio of somewhere between 1.2-1.4% on a purchase. (Debt service ratio: Take the total rents/mortgage payment = X) DSR greater than 1 means the property is making money… less than 1 and not so good.
Keep in mind when purchasing commercial property that your maximum loan to value is going to be low compared to the home loan market… no 80/20’s here. Depending on the type of property you may have a maximum loan to value of only 65% meaning your coming in with 45% down.
If you would like to discuss your situation in detail feel free to give me a call or drop me an e-mail.
Kevin 866-562-6838 x 106
June 13, 2009, 2:13 pmDuane M:
Kevin who answered your question above definitely knows what he is talking about the only difference with us seems to be our programs. I have done deals exactly like the one your talking about with my client putting only 10 percent down. For more information contact me at
June 17, 2009, 12:26 am