One Way to Convert a Tenant to a Buyer
February 27, 2012
As an agent selling commercial real estate in San Diego, how often have you had a Client say, “I am
looking to Lease but would rather Buy my own building?” If there were ever a
time, that time is now!
Below is a simplified
worksheet which compares the monthly cost of commercial real estate Leasing vs.
the cost of Owning. This outcome will vary based on interest rates, sale
prices, and /or Association fees (if you are dealing with a condominium, or if
the purchase entails a multi-tenant purchase).
For the sake of this
example, let’s keep it simple. I have a Tenant that is looking to Lease
approximately 6,500 square feet for their Contracting Business. The first question
I would ask is, “Would you rather buy if it were an attainable goal? Nine times
out of ten times the answer will be “Yes” or at least “Maybe.” I
need to know if they have a down payment in the bank…and then get them in touch
with a Lender for commercial real estate in San Diego to get them Pre-Qualified.
Below is a simple way
for a commercial realtor to show that Property Ownership is attainable –
looking at it from a monthly cost basis.
Subject Property: 12345
ABC Dr., El Cajon, CA 92020
Building Size: 6,500
Land: .23 Acres
Type: Industrial
Manufacturing
*Note: Consult with your tax advisor.
|
SBA – 10% Down
|
Conventional
Lending – 20% Down
|
Lease
|
|||
|
Building Size (SF)
|
6,500
|
6,500
|
6,500
|
||
|
Mo. Rent/Purchase
Price
|
$715,000
|
$715,000
|
$4,680
|
||
|
Price Per Square Foot
|
$110
|
$110
|
$0.72
|
||
|
Down Payment
|
$71,500
|
$143,000
|
|||
|
Total Loan Amount
|
$643,500
|
$572,000
|
|||
|
Interest Rate
|
4.84%
|
3.85%
|
|||
|
Monthly Mortgage
|
$3,684
|
$3,453
|
|||
|
Property Taxes
|
$670
|
$670
|
|||
|
Insurance
|
$450
|
$450
|
|||
|
Total Monthly Cost
|
$4,804
|
|
$4,573
|
$4,680
|
Property Ownership is
not only attainable but can at times be less expensive than leasing San Diego real estate.
Disclaimer: There are no representations, recommendations or
warranties as to the validity of this information. The above comparison is for
illustration purposes only and is based on several assumptions that may not be
applicable to a potential purchase by a Prospective Buyer. Pacific Coast
Commercial does not make any representation or warranty, explicit or implied,
as to the accuracy or completeness of the above comparison. It is strongly
recommended that Prospective Buyer consult with your own tax advisor.
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