I've bootstrapped multiple seven-figure companies and am sharing hard-earned lessons and insights about entrepreneurship.
$3M+ Class B Industrial Deal Breakdown
Last Month, we closed on this ~24,000 sf property approximately 25 miles from Boston. Before we dive in...
Why Class B Industrial?
1980s-era high bay warehouses aren't known for their beautiful facades and impressive architecture, but they are great investments (in my opinion do your due diligence) for a variety of reasons:
- NNN Leases - taxes, insurance, maintenance, and utilities billed to tenants
- Flat Land - easy to convert to lots to multifamily which garner a higher price
- Tenant Base - critical to local residents (HVAC, last mile, home service, etc).
- Scarce - hard to zone and build in metros, especially with the housing crisis
- Tailwinds - e-commerce + last mile demand more hard-to-build space
- Zoning - who wants a warehouse next to their house?
- CapEx - other than roof and HVAC there isn't much!
The hardest part is getting the deals! I have a team looking for these full-time. If you're interested in our deal flow join my RE investor list here.
Deal Breakdown:
Why do I like this deal?
I could write 3 paragraphs on this so to keep it short, this property was underutilized by an owner-occupier. They neglected the physical structure and weren't committed to allowing the property to fully realize its operational potential. I love the potential upside here!
Here's the deal...
Deal Terms
Purchase Price: $3,025,000
Renovations: $200,000
New Roof: $219,000 (seller paying)
New Septic: $50,000 (seller paying)
Debt Terms:
Rate: 6.75% Fixed
Loan Amount (Acquisition + Reno): $2,400,000
Term: 5 years
Amortization: 30 years
Interest Only: 1 year
Pre-payment: 5,4,3,2,1
Income Opportunities:
Warehouse Units (2) - 10,000 SF - $12.50NNN
Church Building: $15NNN
Office Building: $15NNN
Outdoor Storage $4.50NNN
*not included in 24k SF
Total Potential Rent: $327,000
Risk Mitigation: Keep DSCR at a minimum of 1.5x
We're expecting it to take about one year to achieve full optimization and plan to hold the property for 5-years. Unfortunately, cold weather and snow are delaying our warehouse painting and roof. But, we have fully renovated the office building and it looks awesome (see below). This office was a piece of sh*t about 3 weeks ago! Now it's a perfect home for a contractor and comes with some indoor/outdoor storage opportunities.
Over the next series of years, I plan to purchase, renovate, and economically reposition industrial assets in New England.
Are you an accredited investor interested in hearing more about my thesis and strategy? Send me an email and let's chat.
Email: barrett@ondemandstorage.com
Hi, I'm Barrett
I've bootstrapped multiple seven-figure companies and am sharing hard-earned lessons and insights about entrepreneurship.
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