Small commercial property to house business

[mlwilliamson]

Hi all,


I am highly considering joining rein. I really do believe in the straight forward way that Don seems to deliver information. However I have a scenario which I was contemplating doing in the next short while.

Scenario
I have a financial service business which I am presently leasing space to service my clients. I was thinking of purchasing a small commercial building to house by business, ideally with other tenants to help in the cash flow. I own a home with some equity. I don`t own any other investment property outside of land in south florida with a tax value of $30,000.

Considering I am going to start the quickstart program. Will it be recommended of me to start with something smaller are is this a possibility for my first purchase.

Thanks for your reply,


Michael.

 

[Nir]

Hello Michael,

You should distinguish between the best place to have a "financial service business" and the best place to invest in real estate. Do you see where I`m coming from?
What is the probability that where you currently operate your business is also the best place to invest in real estate in Canada (or Ontario where you live)? close to zero!
So now you`re left with the question can you get unlimited mortgages like some VERY well educated and experienced real estate investors here can?
if the answer is yes (lucky you) then you can purchase where you are now if it will cost you less than you currently pay for rent (simple calculation). if the answer is NO - you can not get unlimited mortgages, then refer to my first statement above and invest elsewhere.

Good luck & Regards,
Neil

 

[mlwilliamson]

QUOTE (investmart @ Jun 9 2008, 02:04 AM) Hello Michael,

You should distinguish between the best place to have a "financial service business" and the best place to invest in real estate. Do you see where I`m coming from?
What is the probability that where you currently operate your business is also the best place to invest in real estate in Canada (or Ontario where you live)? close to zero!
So now you`re left with the question can you get unlimited mortgages like some VERY well educated and experienced real estate investors here can?
if the answer is yes (lucky you) then you can purchase where you are now if it will cost you less than you currently pay for rent (simple calculation). if the answer is NO - you can not get unlimited mortgages, then refer to my first statement above and invest elsewhere.

Good luck & Regards,
Neil

 

[mlwilliamson]

QUOTE (investmart @ Jun 9 2008, 02:04 AM) Hello Michael,

You should distinguish between the best place to have a "financial service business" and the best place to invest in real estate. Do you see where I`m coming from?
What is the probability that where you currently operate your business is also the best place to invest in real estate in Canada (or Ontario where you live)? close to zero!
So now you`re left with the question can you get unlimited mortgages like some VERY well educated and experienced real estate investors here can?
if the answer is yes (lucky you) then you can purchase where you are now if it will cost you less than you currently pay for rent (simple calculation). if the answer is NO - you can not get unlimited mortgages, then refer to my first statement above and invest elsewhere.

Good luck & Regards,
Neil


Hello Neil,


Actually I run an accounting practice in the GTA and although I understand the tax implication of most deals. I know that there is a lot of issues pertaining to purchasing real property.

I Do understand where you are comming from? I may not be able to find the ideal property where I would like to house my business (close to clients, etc.).

Of course I am in the research stage of this and have not put together a plan as yet. I was hoping that the quickstart program could help in empowering me? I spoke to a BDC loans rep and he said it would be about 20-25% down, 25 year mortgage, prime plus 2 on a small commercial- multi tenant or mixed used building (don`t no if that good or bad).

If this not my first deal under the quickstart program, can it help me to put this in place later, considering I could use the rent that I pay now to pay towards the mortgage. Does rein have a plan of action for this sort of investment?

Thanks again.

Michael

 

[Nir]

Have you read Don Campbell's book "Real Estate Investing In Canada"?

It will answer many of your questions as there are other things to consider/investigate before purchasing an investment property.



Also, what's the CAP rate of the subject property? you can refer to this if needed:



http://myreinspace.com/public_forums/Real_Estate_Discussion/62-4445-ROI_as_a_Function_of_the_CAP_Rate_Mortgage_Interest_and_your_Down_Payment.html



Cheers,

Neil