Commercial Real Estate on Long Island

[chrisd1163]

Anyone here experienced in this? I moved my business into 2 joined buildings in West Babylon. We came here and took over another company and they own the buildings. They are 7k ft each and they haven't paid the mortgage in nearly a year. He owes 450k on one and 570k on the other. My partner is going to buy one and I will buy the other. He has offers of 650k on each of the buildings from a local bakery but since he now works for us and depends on us to keep his business alive we can get them for 600k each.

I have a friend in the mortgage business that's telling me I'm crazy to buy them. He said LI comm RE is going to go down another 20%. The current owner paid over 700k for each of the buildings when things were good.

I just spent 50k moving here and building new offices so I am kind of in a spot to act now. I don't want to take the chance of losing the buildings.

[Old Fart]

what purpose do these buildings serve you?
are they on a main road or a industrial area?
taxes?

I would see if the current owner can hold the note to avoid having to secure financing and closing costs.

securing a mortgage today is very hard, the books for that business better be squeeky clean to secure financing and the downpayment will need to be substantial.

I honestly dont think commercial will come down another 20%, it might stay steady for a while but 20% is alot.

[chrisd1163]

what purpose do these buildings serve you?
are they on a main road or a industrial area?
taxes?

I would see if the current owner can hold the note to avoid having to secure financing and closing costs.

securing a mortgage today is very hard, the books for that business better be squeeky clean to secure financing and the downpayment will need to be substantial.

I honestly dont think commercial will come down another 20%, it might stay steady for a while but 20% is alot.

The current owner is back on payments nearly a year now.

Not worried too much about getting a mortgage, I can put about 40% down and so can my partner for his. His house in babylon village has almost 2 mil in equity anyway.

This is where we house about 2 million dollars worth of equipment, I am running my 2 business' out of here and I'm in the process of taking over a 3rd business which I will also operate out of this location.

[Old Fart]

then try to make a deal with his bank, if he paid $700k and its not worth that im sure they would rather someone pay the loan, they dont want that property they want their money

[ERR]

my mother has had a lot for sale for 900k for two years now. nobody is buying. tough market.

[Old Fart]

I would imagine a empty lot being harder to sell, it would be good if she could make a deal with someone to develop something on that site, but what is selling these days to build?

[TheHipHopBillGates]

the important question is how long to you plan on holding these businesses, if these are only short term investments no way do you buy the property. If this is something you're in for the long haul I agree with your partner there will still be at least 20% depreciation, but it'll go back up long term(10 years).

[GeorgeJung5]

not to change the subject...but what kind of business do u run?...just curious...

[Lance Burkhart]

Question... You said the company you bought owns the buildings. Dud you mean that? Do they have the mortgage or is it under a different company or mortgagor?


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[chrisd1163]

Question... You said the company you bought owns the buildings. Dud you mean that? Do they have the mortgage or is it under a different company or mortgagor?


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We took over their book of business, not their debt or property, lol.

[chrisd1163]

not to change the subject...but what kind of business do u run?...just curious...

a few....lol

I have a flooring business for 10 years now. I operate it out of here. I'm a partner in a large printing company. That's what occupies 90% of the building. Big presses, cutters, folders, binding machines. Lots of digital printers and poster printers.

I'm in the process of taking control of a baggage delivery company that delivers all of the luggage that gets screwed up on connecting and canceled flights. I've been a silent partner in the company for over 2 years now and it's simply not making the money I expect it to. I will take it over and make it profitable like it should be.

[bcde916]

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[chromeheart]

so u took over another printing company ? correct. riggers to move all equipment if u have full ink presses will cost a ton. we took over a quilting company not to long ago and to just move the equipment out cost clsoe to 6 figures... we are on LI as well. took us 3 yrs to sell some buildings we had . BUY THE BUILDING at a deep discount. god forbid ur business goes to shit make sure u have something to catch u. worst case business drops u can sublet out part of ur building and recoup some monies .

[Old Fart]

one of my customers rents yard and office space to one of those baggage companies, isnt it better to be closer to the airports?

[chrisd1163]

one of my customers rents yard and office space to one of those baggage companies, isnt it better to be closer to the airports?

I don't need any storage/shop space for it. Just a phone really. We don't take any luggage here. It all goes from airport to destination.

I still haven't taken an active roll in the company. I have too many other things going on right now.

[chrisd1163]

so u took over another printing company ? correct. riggers to move all equipment if u have full ink presses will cost a ton. we took over a quilting company not to long ago and to just move the equipment out cost clsoe to 6 figures... we are on LI as well. took us 3 yrs to sell some buildings we had . BUY THE BUILDING at a deep discount. god forbid ur business goes to shit make sure u have something to catch u. worst case business drops u can sublet out part of ur building and recoup some monies .

yes, we took over another printing company. I don't think I mentioned that the two buildings we're buying are attached as well. We moved from Plainview and sold the 2 presses that were there. It would have cost about 25k each to move. The other company we took over had 3 presses. The move still cost about 30k with all the other equipment but the facility here is real nice now so it was worth it.

Still not sure about the buildings. There are SBA loans on both currently so our legal team is trying to negotiate with the SBA now and see if we can steal these buildings. I am really not in the postion financially to do it but I do think it's a sound investment. There has been a solid increase in business and margins due to some changes I implemented and I only see it getting better.

[Old Fart]

how long ago did the other guy buy them?

[chrisd1163]

how long ago did the other guy buy them?

He bought the 1st building wehn he bought out the previous owner 5 years ago. The second building he bought about 3 years ago.

[Old Fart]

pre-payment penalty on SBA is 25%, but its only 3 years, you should be good.