Northeast Parkway (office building)

N. E. Parkway (office building)

(2001) This building was purchased as an investment that I expect to hold more than five years. A 5800 square foot, story and a half office building. Cost of the building was $425,000 with $25,000 more for improvements. When we conducted the due diligence we found about $20,000 worth of repairs and deferred maintenance that needed to be done to the building.

We found this by hiring a professional building inspector to check the building. Moisture was found to be in the walls on the single story section of the building, this was not detectable without the use of a moisture meter. The leaks were caused by bad roof flashing that the roof inspector had missed when he inspected the building. Correcting the problem involves re-roofing that area of the roof, removing the sheet rock on the exterior walls, replacing the insulation, drying out the walls, re-sheet rock, texture and paint. The sellers credited me for the repair cost.

I also did $40,000 in improvements that we actually got done for $26,000 by sub-contracting them ourselves. They consisted of a new interior wall with a door and windows. We added 16 covered parking spaces on the existing parking lot and some miscellaneous construction to the interior. $20,000, of the $26,000, was financed in the loan. I sub-contracted out the $20,000 in repairs, thus saving $8,000 on them.

I leased part of the building to one of my companies and plan to rent out the rest on the open market. Anticipated rent is $68,000 per year with a positive cash flow of $12,000 a year when completely occupied. The goal is to increase the value of the building to $550,000 as a tenant occupied structure, pay down the loan over the next five years, and then trade up to a larger building, or apartment building. I could also consider buying the lot behind my building and constructing another office building.

Since I purchased this building, a new Lowe's home improvement center and a new Super Wal-mart have been announced to begin construction one block away. This improvement to the area will help increase the value of my building.

Up Date 2008:The office building is bringing in $72,000 per year and is for sale for $620,000