Urgent Price Cuts Over 75% For Commercial Building
Ken McElroy Show
Ken McElroy
4.8 • 692 Ratings
🗓️ 26 March 2024
⏱️ 34 minutes
🧾️ Download transcript
Summary
Ken McElroy and Danille McElroy discuss the challenges and economic realities behind converting vacant office buildings into residential apartments. As the pandemic shifts working habits, many office spaces find themselves vacant, leading to financial distress and even bankruptcy. They delve into an actual deal Ken has reviewed, which helps identify and explore market trends.
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Visit Ken's Bookstore: https://kenmcelroy.com/books
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ABOUT KEN: Ken is the author of the bestselling books The ABC’s of Real Estate Investing, The Advanced Guide to Real Estate Investing, and The ABC’s of Property Management. With over two decades of experience in real estate investing, Ken McElroy is passionate about sharing the good life by helping real estate investors grow and prosper. This podcast is a place for Ken to discuss numerous topics connected to real estate investing, including finance, budgeting, the entrepreneur mindset, and creating passive income. Ken offers a wealth of personal experiences, practical advice, success stories, and even some informative setbacks, all presented here to educate and inspire. Whether you’re a new or seasoned investor, the information and resources on this channel will set you on a path where you and your investments can thrive.
Ken's company: https://mccompanies.com
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Transcript
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| 0:00.0 | Welcome to the Real Estate Strategies podcast. Let's get right into this episode. So we just got an |
| 0:05.7 | exclusive deal across my desk of a 100% vacant office building that was probably worth |
| 0:14.2 | somewhere between $30 and $40 million for $7 million. Wow. It's 100% vacant. And it's not something I want to buy. So that's the |
| 0:23.6 | interesting thing. So we're just now seeing the very, very beginning of obviously, you know, |
| 0:29.8 | this vacant office building collapsed. It's very interesting. Awesome. So you're not buying this |
| 0:35.4 | building. No, no. I'll tell you why. We're on to what like. Yeah. So this is exactly buying this building for a huge discount, right? Yeah, like it. So this is |
| 0:40.4 | exactly what I've been trying to tell everybody. It's basically worth the land plus demolition. So it's, |
| 0:48.6 | it's listed at seven and a half million dollars. Now just to just to give you a little perspective, |
| 0:57.5 | it's a hundred and,000 square feet. |
| 1:03.5 | So that's a pretty big office building. It's four stories. It's in great shape. And, you know, but it's 100% vacant. So if you just take a look at the math, I figured it's probably, you know, $250, $300 a foot roughly to replace it, not included the land. |
| 1:18.1 | So, you know, it's somewhere north of $30 million, we'll just say. |
| 1:22.1 | That means there's a lender of $20 million, probably at least. |
| 1:27.5 | And that also means that there was equity from somewhere, okay? |
| 1:32.1 | Right. |
| 1:32.4 | So those are the two things, and it's being sold for seven. |
| 1:36.5 | And I don't know. |
| 1:38.2 | I don't even think, I'm not interested in it at seven. |
| 1:41.2 | Right. |
| 1:41.9 | Because it's like seven acres. |
| 1:44.0 | So they're basically asking a million |
| 1:46.7 | bucks an acre, not including the demo. So what's like a normal price per acre, would you say? |
| 1:53.5 | Well, you know, traditionally, it depends on the height. Obviously, you can go four stories because |
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