Buying an Industrial Condo (investment, fees, condos, price)

[SoCalMomma]

We are looking for some commercial property for our small business. I recently came across a small industrial condo that is in our price range.

We'd rather have a free-standing bldg but I dont think we can afford that. I wanted to get some information on the pros and cons of an Industrial condo.

This complex has about 30 units, in 3 bldgs. The units vary in size & prize, but average about $300 per sq ft. I assume there are also some sort of 'association' fees, too, like when you buy a residential condo to cover the bldg itself, common areas, etc.

Also curious about resale, and how easy these units would be to resell later.

Anyone have any input, as a realtor/owner/buyer of an industrial unit?

Thanks!

[DMenscha]

I represented the first office condo in the state of Washington back in the early '80's and I think it's an outstanding way for small business to go about operating their business.

They work exactly as residential condos do, you own the space and the common areas are subject to HOA dues.

Resale is no different than a residential condo either, except the demand for such space may be less subject to the whims of the real estate market.

Sounds like a winner.

[SoCalMomma]

Thanks for the info.

I think an office condo would be an easier decision. We are looking at an industrial condo - basically a large space with cement floors and a restroom, roll up door. No office or anything. I guess I am worried most about resale, because who knows who else will be in the complex. Since they are industrial units, it could be anything! At least in an office condo bldg, you have 'offices'.

We are going to need a mix of warehouse & office, so an industrial unit is best for us. I am just worried that when we outgrow it we wont be able to sell. I guess we could wait and see who else moves in. Industrial zoning in our area allows for just about anything!

[DMenscha]

Your other options are leasing a space to suit your needs now. Leasing is 100% deductible of course. If you buy the condo as a separate investment entity (set up an LLC) to rent it to company you will gain the tax befits and equity build-up inherent in investment real estate.

The factors that mitigate your decision to buy are;

Will you outgrow the space in a short period of time?
When it comes time to sell, where will the business cycle and real estate market be?

When you do outgrow the space you need to remember that there ought to be other business that are in the same situation as you are in now. Even if you find yourself outgrowing it as a business, you also have the advantage of leasing it to the next business rather than selling it, which becomes a tax decision more than a business one.

I survived the early '80's real estate bust by doing commercial leasing. It was much less subject to the vagaries presented by 18% interest rates. I think your investment in the condo is more prudent than you realize.