Woohoo!! I drove up July 15, 2009 to the title company's office and officially closed on our first building!! What a tremendous adrenaline rush it was. Seeing as how it was my first deal, I would say everything went pretty smoothly.
The truism in commercial real estate is that you make your money when you buy the property for as cheap as possible & also at the closing table.Deal Highlights:
- Total purchase price: $290,007.50 on our HUD settlement statement. $286,000 was the building price + $4007.50 for settlement charges. An HUD statement is a formal document which shows where money changes hands. I also received the appraisal report back from the bank shortly a week after the purchase, which valued the property at $295,000. Which means, I have built in equity right off the bat.
- Amount I was responsible for: $50,076.69
- Capitalization Rate: 8.03%
- Cash on Cash Return: 15.3%
I also made my first payment to the bank today (
$1367 is the monthly note/payment, for the next 30 years). I also received my first rent check from our tenant that occupies the building for
$5000.00.. they are set to leave at the end of October. So this rental income is an added bonus. The building however, will be vacant until our finish-out starts in March 2010.
Which brings me to the next subject: Buildout!!
- Our contractor has given us an estimate of the remodelling job. It was priced at $90,000 for a high quality finish out. I sent him blue prints of the property, they came and looked at it last month, and last week I also sent them pictures of my favorite offices/with comments that I would like to incorporate in our own.
In the meantime, after getting my feet wet with real estate, I purchased a few books on commercial/residential property investing because I've really enjoyed this experience. Things have been busy.
