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[{"id": "hmscdkr", "text": "I\u2019m stuck on you buying 5% of the building if I read that correctly. For the money you have as a down payment you could buy a small apartment or self storage deal. There are so many questions I have here that it\u2019s hard to give an honest judgment but in short I would say if you are looking to buy 5% of the building (one suite) I would say no. Not likely worth it. Save a little more and buy something you can manage yourself and that essentially leases itself like an apartment or storage deal. 25-30% down is more of the average currently as well. Not to say you can\u2019t get 20% but it is becoming more rare. Tenant buildout for office and retail space and leasing commission can be very costly which will eat into your cash flow if you are not putting sufficient money into reserves annually. \n\nInvestment Broker and Owner.", "replies": [], "depth": 1}, {"id": "hmsd60p", "text": "What do similar structures go for where you are?\n\nHow is it built?\n\nWhat is the area?\n\nCan you afford the payment easily if it remains 100% empty?\n\nYou're buying 5% of a project.  Is it a condo?", "replies": [], "depth": 1}, {"id": "hmsnzgt", "text": "If I was making the investment I would like to know what your competitive set is and what recent leases were completed for similar office deals. Based on the fact your buying new office for $100/SF and they\u2019re leasing for $12/SF/year gross I\u2019m assuming you\u2019re in more of a suburban market (e.g. you\u2019re not competing with high rises). If you were in more of a metro downtown area I would look to make sure the high demand for office isn\u2019t in high rises - a 10,000 sf office building would have a tougher time competing with such buildings.\n\nHow much are the expenses the tenant won\u2019t be paying? If you\u2019ll be on the hook for say $2K/month in electric, maintenance, etc. you\u2019re net operating income will be $10K/month. I\u2019d assume 10% if not more in terms of closing and other capital costs on top of just the sale price, so $1.1M. So you\u2019re stabilized yield would be 11% which seems decent but need to understand your market better. Do you have any sales data? What have recent office sales traded at? You can call a local office broker and see if they have any stabilized offices for sale to get a general idea if you\u2019re getting a good deal or not. The quality of the tenant also matters here.\n\nYou say you can put 20% down immediately, but can you actually get a loan on an office building where you only do put 20% down? Does your friend have a lender he uses that he can connect you with? My guess is that on a vacant office building you would need to probably put 50% down, but again I\u2019d talk to a lender or mortgage broker to get a sense of realistically how much you\u2019d have to put down and the interest rate you\u2019d have to pay.", "replies": [], "depth": 1}]