The Decision to be made: To buy my 1st commercial real estate deal. it was a single tenant building
How long ago was this: almost 1 year
Greed Motivation: To own your 1st commercial building, pretty much set your self apart from any other investors on the field
Fear Factor: Too much leverage, unable to cover the mortgage if the tenant moves out, environmental control because it is a dry clean, interest rate is high.
Logical Sense: The deal looks good on paper. the operator is an experience.
Why do you want to make this decision: breaking into the commercial real estate. more passive income because of the TRIPLE net lease instead of tenant toilet and termite
Describe the surrounding: Not very supportive. since not a lot of people I know done commercial deal before. very limited knowledge. the bank doesn’t like it either because of the single tenant factor
Anyone pushing to make the decision: the deal syndicator
What will you do if everything works out? enjoy the cash flow and the equity build up
What will you do if shit hit the fan?: have enough reserved capital for the mortgage and also focusing on finding the tenant quickly
how do you feel? not very stable, I was pissed at the deal syndicator. This affects my judgment
Have you done your due diligence: Yes appraisal was order and environment phase 1 order. phase two is no need. I later on find out commercial appraisal was a joke and can’t be trusted
What is some reason to say NO to this deal: not very typical operator running the deal, high-interest rate, single tenant, possible environmental issue, the number is not attractive in the beginning
Describe some way to mitigate this risk: running environmental phase one study, find a better bank, re-negotiate the deal, have the deal in writing.
Could this be a life-changing investment: NO
What can be changed to make it a life-changing investment? the deal is too small. need to have like 10 of these to make it a life-changing investment. It is, however, a very good stepping stone looking back
Knowing what you know now? would you go ahead and did this deal instead: yes