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Hypothetical:
Can circumvent a realtor, and the subsequent commission. Seeing as how building isn't actually for sale, just throwing around ideas with a friend, to help one another.
The 244k appraisal is a year old, so let's say it appraises for 250k today.
Let's say he would accept an offer for 235k
Every unit being currently leased.
3 - 1br apt @ 450
1 - 2br apt @ 550
1 - retaill shoppe @ 1000 (3 yr lease)
Do I need to plunk at least 35k as a down payment, in order to get to 80\20, or does this work differently being that the units are leased and the building cash flows?
This will be a commercial loan. You will likely have to put 25% down and go with a 5/1, 7/1 or 10/1 ARM with 25 years amortization. Given the small loan size, the interest rate will likely be high. In the 6% would be my guess. I don't think the DSCR will be an issue given the above numbers. Lender typically requires a DSCR of 1.15 - 1.25.
Appraisal will be expensive. Inspection will be expensive. Loan fees and origination will be expensive. Talk to a commercial lender or two to get an idea how commercial loan works. It's a totally different animal compared to residential.
Meta dumping nearly half a million square feet at San Francisco high-rise
Laura Waxmann Jan 19, 2023
After months of speculation, it's official: Meta Platforms Inc., parent of Facebook and Instagram, is significantly reducing its real estate holdings in San Francisco, listing one of its two offices in the Transbay District on the sublease market.
Meta (NASDAQ: META) confirmed Thursday it is seeking to shed 435,000 square feet at 181 Fremont St., a mixed-use high-rise next to Salesforce Transit Center. Real estate services firm JLL is charged with handling the listing, the largest single available sublease in the city.
The building, which features high-end condominiums on the upper floors, is owned by Jay Paul Co. Its offices are primarily occupied by Instagram employees.
my friend said that the mayor of washington dc is pushing the biden admin to do this especially since washington dc businesses like restaurants and cafes have lost a lot of business due to work from home ...
https://www.bizjournals.com/sanfrancisco/news/2023/04/18/wework-loan-default-s-f-office-building.html
WeWork venture defaults on loan for San Francisco office tower at 600 California
Roughly 20% of the banking sector’s deposits are exposed to troubled commercial real estate assets, amounting to $3.6 trillion worth of risk just as the commercial real estate sector is collapsing—and quickly. That’s according to a new Wall Street Journal analysis that finds commercial real estate could become the next sector to trigger an economic collapse reminiscent of the 2008 housing market crisis. In the period between 2015 and 2022, with interest rates low or non-existent, banks large and small went on a lending spree to landlords, doubling their outstanding loans in just seven years. But the problem is, the commercial real estate sector is in deep trouble. Commercial property prices are down 16% since last February and are expected to fall even more as transactions begin to pick up again in earnest after a pandemic lull.
If real estate investors can’t pay the banks back—partially due to higher interest rates—the banks stop making real estate loans, which drives the price of real estate down, which makes it harder for investors to pay them back. This “doom spiral” will likely be put to the test over the next year, especially as $900 billion in loans will need to be paid off or refinanced by the end of 2024.
Scott Rechler, chief executive of real-estate investor RXR, told the WSJ that the situation is “creat[ing] a backup that will eventually overflow on the commercial real-estate markets and on the banking system.” And Blockworks macro researcher Jack Farley tweeted on Saturday, “I have it on good authority that 84% of office CMBS [commercial mortgage-backed securities] were not paid off in August.”
https://finance.yahoo.com/news/kevin-o-leary-says-coming-230043170.html
Kevin O’Leary Says a Coming Real Estate Collapse Will Lead to ‘Chaos’
Which is about commercial real estate, even though title doesn't mention it specifically.
any interesting commercial deals coming up in search of investors? i’m interested, serious post. i know you are a smart guy with track record of good decisions.
Eman any interesting commercial deals coming up in search of investors? i’m interested, serious post. i know you are a smart guy with track record of good decisions.
A Chicom company abandoned these high rises in Los Angeles : https://en.wikipedia.org/wiki/Oceanwide_Plaza
Now they are victim to graffiti vandalism : https://laist.com/news/downtown-los-angeles-graffiti-taggers-high-rise
Wonder if these high rises will get bought out by an American firm or organization and will be finished.
What's your opinion on these abandoned high rises, Eman ?
Eman i understand, if you guys short half mil, you got an interested investor here.
People who ask for the repeal of Prop 13 actually want to see others suffer and turn people’s life upside down without putting thoughts into it. They’re thinking like the communist. Be very careful of them.
Eman says
People who ask for the repeal of Prop 13 actually want to see others suffer and turn people’s life upside down without putting thoughts into it. They’re thinking like the communist. Be very careful of them.
I do not agree at all. I do not live in Cali but it blows my mind how it is fair for people to be taxed differently. Can a person in California lock in prices for anything else? Can I lock in the price of gas when I bought my first car back in 1980? Or lock in my car insurance bill from 1980? Why not, seems as fair as locking in my property tax bill.
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Was wondering if anyone had any helpful advice they could share.
In my hometown, a friend is looking to clean up some of his debts, in order to take on other new debts to expand his business venture. His brother told me that he figured he'd sell this building in town, if there was a good offer.
So I'm trying to determine first, what a good offer would look like, and second, where to go to shop for a loan for commercial RE. Also, was wondering what are the general parameters and requirements
The building is fully rented
3 - 1 br apt @ 450
1 - 2 br apt @ 550
1- retail shop @ 1000
For a total monthly income of 2900
He said the building appraised for 244k a year ago
#housing