what questions to ask before buying a CRE office building ?
What are  the right questions to ask ? As far as due diligence goes ?

TIA 
[{"id": "ea6fuo8", "text": "Let's back up a bit. Why do you want to buy it?", "replies": [{"id": "ea6g8f8", "text": "Investment/income/cashflow etc. Oh and being a proud building owner ", "replies": [{"id": "ea6h01o", "text": "Let's start with the basics.\n\nIs it leased?\n\nGet a copy of the lease(s). What are the lease payment structures, gross, mod net, nnn etc? Recovery income structures?\n\nOperating history of the tenants, how much do you like the current tenant pool?\n\nAre rents below at or above market? Are you better served by repartitioning space?\n\nWhat do the floor plates look like? What is column spacing like and how will this impact your ability to meet needs of future tenants.\n\nEarly termination rights? Can you recoup unamortized TI from previous owner upon notice to vacate?\n\nWhat does the lease maturity schedule look like? Is the maturity timing ok and do you have a source of funds and ability to carry the property in the event of someone breaching the lease.\n\nHave you underwritten your cash flows with appropriate replacement reserves? remaining useful life of primary building systems? \n\n\n", "replies": [{"id": "ea6nzo6", "text": "sending pm. ", "replies": [{"id": "ea78w1a", "text": "So, here's the thing. Since you're considering a 4-6 story elevator serviced 50,000+sf acquisition as your first, I would only do this if you can afford to take a major bath on them. Buildings that size add significant levels of complexity beyond what I think anyone would recommend for a (I'm assuming) first time office investor.\n\nElevators are a bitch. They can be very expensive to maintain and repair. Also, the chillers and general HVAC is going to be an order of magnitude more expensive than a single story property of equal square footage. (edit, this was an exaggeration) \n\nThere is a large amount of asphalt that looks to be in good shape now, but again it's a sizeable property.\n\nI will say, I like the mid to upper 70% occupancy on the one as  a good value play. \n\nHonestly I would never get into a deal of this size with your experience unless you are partnering with seasoned investors that you trust implicitly. You're going to need to pay out the ass for the best brokers, attorneys, and 3rd party support because of what I'm assuming is a significant lack of experience.\n\nIf you're going to have partners, you've never negotiated operational and control agreements, run numbers on waterfalls and the IRR/cash on cash/ROI, you don't understand how your partners views and profitability analysis can vary vs yours and how to potentially use that to your benefit ....I would do this deal with you twice on sunday, because you have deep pockets and I would likely be able to structure a deal that would ultimately be to my benefit.\n\nI'm not trying to be an ass, just giving one opinion\n\nEdit - If you have the means to jump into a property like this, walk before you sprint. Go find yourself something much smaller, do your homework, make a lot of mistakes on a $400k deal. Then take a look at doing a more complex deal. Also, be very honest with yourself about what you're trying to accomplish. If this is purely about making money, you'll want to make your mistakes on smaller deals first. If there is some ego involved or other non-financial factors, think about how you will respond if things aren't going well, you're under financial stress, social and family stress, and how this will impact your decision making as you're trying to work through problems. ", "replies": [{"id": "ea9rpm6", "text": "Props to ColbysHairBrush, he speaks the truth.  Bottom line: never buy what you don't understand.  In the hierarchy of complexity in general real estate investments, industrial is the most complex... then office.  Office will sink you if any number of things happen: including a recession, a major system needs an overhaul, your biggest tenant vacates, the building needs updates to stay competitive or any number of things happen.  Vacancy and economic obsolescence being the worst. On lots of these deals you have to personally guarantee the loan and they are recourse.  In my opinion, if you don't know how to do an Argus run or calculate the future economic base of a location using NAICS codes/BLS, don't buy office.", "replies": [{"id": "ea9rvmb", "text": "Are you on the new argus yet? I've changed roles at my bank and only ever used DCF. Is it any better?", "replies": [{"id": "ea9uzt0", "text": "No. Not yet.  Besides I only use Argus on the most complex deals, but if I was buying a dated 4-6 story office building with an elevator and knew that I could go bankrupt on it, I would definitely.    \n\n\nFor now, I use \"back of the napkin\" to get a current cap first because most deals are overpriced where I am (Los Angeles) and have no value add potential.  I have my own excel version DCF' which works well and if it looks like a gem, I will do an APOD/IRR (Internal Rate of Return).", "replies": [], "depth": 8}], "depth": 7}], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "ea6g792", "text": "which broker should i use? which attorney should i use? which inspector should i use? do well with these choices and it could help a lot...bc they're the ones that know what to ask ", "replies": [{"id": "ea6h96j", "text": "Agree with this, make sure you know CRE terms otherwise they won\u2019t take you seriously - rent roll, cap rate , ROI, IRR, etc.\n\nApologize if this sounds condescending , not sure of your level of knowledge.  ", "replies": [{"id": "ea6oad3", "text": "Oh I am a total noob and still learning. But I do have building management experience. But being a landlord is a whole different game. ", "replies": [{"id": "ea6oew3", "text": "Yes - but you can definitely pick it up very quickly! There are some awesome CRE books out there about structuring deals, what to look for , etc. literally a step by step process.", "replies": [{"id": "ea6owj7", "text": "I would love to read those. Any suggestions ? ", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "ea6h10r", "text": "Tia,\n\nWhat city/state are you in?\n\nAnd why an office building?  Why not an apartment building?\n\nI am a commercial real estate broker with 15 years experience with about $500,000,000 in properties sold in my lifetime experience. I have sold office, multifamily, single tenant NNN properties and owned many.  I am licensed in NY, CA, GA and am a [CCIM](https://www.ccim.com/about-ccim/what-is-a-ccim/?gmSsoPc=1).   \n\n\nThere's a lot to know about office buildings, but the first thing to understand is the risk you're taking on.  This type of property is one that could bankrupt you if your not extremely careful.  \n\n\nPeter", "replies": [{"id": "ea6pg4j", "text": "Opinion on mobile home, campground (short term or long term) vs apartment? \n\nAlso have any sense for minimum unit quantity for ROI / onsite management as a remote owner.  Thx", "replies": [{"id": "ea9wc5o", "text": "Mobile home parks are good investments if there's upside.  If the park is high vacancy or the rents are low, be cautious still, but there may be a simple reason why - like the owner is old and he can't be bothered, or the park has trouble and there's not enough security.  Either way, try to determine where to add value and what the upside would be, and what getting to it would cost.  Since mobile home parks are typically managed remotely, they can be very similar to NNN, and you can have multiple streams of income on them, I like them a bit better than apartments.  That said, apartment buildings are easier in every sense - easier to find, easier to buy, easier to figure out, easier to manage, easier to find good help, easier to make money.  But typically you can't remote own an apartment building (unless you have trustworthy property management).  \n\n\nROI is going to depend largely on the property is located, I could look at a deal and tell you, but I can't give you a range.  \n\n\nIf you really want stability, remote ownership, and hassle free, I would look at investment grade single tenant freestanding buildings that are NNN leased for 10 years or more.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "ea6ob4b", "text": "you need a broker if you are asking here.  Find one who is skilled in investment office brokerage.  \n\nA VERY brief intro is you:\n\n1.  Receive past tax returns and ongoing information on building ops including vendor contracts etc, and copies of the leases.  Use all this info to build out a proforma and determine the NOI.  Figure out appropriate numbers for vacancy and reserves\n\n2.  You determine what the cap rate is that should be used, mostly by looking at other sales to find similar properties though there is a bit of nuance to this.  Divide the NOI by the cap rate, that is what its worth.\n\n3.  review the leases for other issues that would impact value such as term, credit, gaurantee, early exits, options etc.  Adjust as needed.  \n\n4.  Inspect the building.  You aren't getting a house inspection here unless this is a real small building.  Usually you have a gc quote repairs and have hvac/roofer/whatever other trades inspect and quote issues.\n\n5.  Adjust price and renegotiate.\n\n6. close\n\nThrough this you will have an attorney negotiating the documents/reviewing title/leases etc too.\n\nEvery step I just said takes years of experience to do right and its easy to make mistakes.  You won't even know what you are looking for or what is uncommon or negotiable if you are asking here most likelly.  Hire people who do this stuff for a living ", "replies": [{"id": "ea9vsb7", "text": "A good way to tell if they are a REAL commercial broker is ask them if they can access CoStar comps to get you office building comparables.  Costar costs, a minimum, $500/month.  If they don't have it, chances are they don't concentrate on commercial.  CoStar publishes the name of the brokerage account on all data, so if it doesn't match the name of the broker, you know he doesn't pay for it.", "replies": [{"id": "ea9wzun", "text": "agreed.  id ask what similar listings or transactions they have recently been involved in too", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "ea7391w", "text": "What kind of TI allowance are you going to have to offer in order to lease up the building and what effect will that have on your return?  ", "replies": [], "depth": 1}, {"id": "ea9h3iv", "text": "It depends on who you're asking.  But you should speak to at least one buyer broker, leasing broker, and contractor to understand what you're buying into.  The less you understand about the investment you're making, the longer you can be stuck with it (or lose your shirt.)\n\nHere are some questions that are critical:\n\n* Market Lease Rates\n* In place NOI (operating revenue \u2013\u00a0expenses)\n* CapX Requirements (Remaining Useful Life and cost to repair/replace HVAC equipment, roof, elevator.) \n* Is there is Asbestos/Lead paint?\n* Current Vacancy\n* Market vacancy and absorption\n* Search the leases to see if there are any carveouts, early terminations, etc.\n\nHope this helps!", "replies": [], "depth": 1}, {"id": "ealwki4", "text": "Get a ASTM quality PCA and review previous and planned capex. ", "replies": [], "depth": 1}]