Thinking about buying a commercial building

[GrumpyNerd]

Hello HVAC Nerds.

I'm thinking about buying a commercial building for my business and I'm doing a little research. I'm not trying to get a quote or specific sizing information so I can make an informed decision on the purchase.

Here is the deal with the building; Historic structure built in the 1920s, 2200 sq-ft & 20ft ceilings. The building is a combination of very thick concrete and brick-concrete walls. An unknown type of very slightly pitched but otherwise flat roof. West facing front with about 500sq/ft of windows. Location is Northern Florida.

If we buy the place we're going to use it as one large open space with 20ft ceilings. Minimal heat load inside 6-8 people, computers, lights the usual office stuff.

My thought was we'd use a pair of matched A/C systems with spiral duct running from back to front. Simple, cheap and looks nice for our kind of business (technology) I'm guessing 3 or 4 ton units. Let me know if that guess doesn't sound like it's in the right ballpark. Also let me know if you think it would be better to plan to use one larger unit rather than two small ones.

Last thing; the building is serviced by 3 phrase power. Is the eff. boost of 3 phase power worth the extra complexity and cost for a building of this size?

Thank you for your time.

[basshound71]

I don't believe that is a big enough system. Call a local contractor.

[flange]

why not consult with a local contractor that you found here? only good ones come here to learn more in most cases.

[Some Dude]

I have seen numerous customers buy buildings BEFORE they spend a few hundered dollars to have a pro look through them.

I have seen the same customers spend tens of thousands of dollars fixing things they had never anticipated.

Renting is the same game, once you sign , its yours.

[ga-hvac-tech]

IMO when running the numbers on a RE deal; there are some things one should now:

1) Are all the utilities available and working (water, sewer, elec, N/gas).
2) Are all the trade serviced systems in the building in safe and functional condition (elec, water, sewer, HVAC, etc), and if not; how much will it cost to repair/replace them to bring the building to usable status.
3) Will there be structural needs, roof needs, etc...

IMO as both a trades professional and an experienced investor; the couple of hundred bucks one spends to have pro's out to check things is a small and worthwhile investment.

As in residential home sales, there are light commercial structural/mechanical inspectors, which will give the building a 'pencil whipping' for a couple hundred $$$. I would get one of those, and then get an HVAC guy out. Be careful that some HVAC guys that specialize in residential may not have the experience to do commercial well.

Only AFTER you have gotten your reports from both of these folks; can one run the numbers to see if the building is a good investment.

Let us know how it turns out.

[luckee]

With the information you gave 4 tons will not be adequate. The only way to know for sure is to have a contractor do a load calculation.

[springer ray]

U need to have a pro take a look at it does not sound like you will have enough to take care of it

[bjones]

IMO when running the numbers on a RE deal; there are some things one should now:

1) Are all the utilities available and working (water, sewer, elec, N/gas).
2) Are all the trade serviced systems in the building in safe and functional condition (elec, water, sewer, HVAC, etc), and if not; how much will it cost to repair/replace them to bring the building to usable status.
3) Will there be structural needs, roof needs, etc...

IMO as both a trades professional and an experienced investor; the couple of hundred bucks one spends to have pro's out to check things is a small and worthwhile investment.

As in residential home sales, there are light commercial structural/mechanical inspectors, which will give the building a 'pencil whipping' for a couple hundred $$$. I would get one of those, and then get an HVAC guy out. Be careful that some HVAC guys that specialize in residential may not have the experience to do commercial well.

Only AFTER you have gotten your reports from both of these folks; can one run the numbers to see if the building is a good investment.

Let us know how it turns out.

What he said...

Also

:worthless:

I'm a firm believer in buying a commercial property for your business and then leasing (renting) it back to your HVAC company through a triple net lease.

The trick is to buy it right and rent it back to yourself through an LLC. In other words, buy the property, form an LLC (limited Liability Company) (you can do it yourself through Legal Zoom cheap) and fund the property as it's sole asset. The LLC owns the property, you own the LLC. You'll do it that way to protect yourself (your personal assets) from liability should someone fall down and get injured, etc.

You'll write the check out of the HVAC business account for the rent, deposit it in the LLC account, pay the mortgage out of the LLC account and keep whats left over (cash flow) for yourself. It's a flow through set up but gives you some protection.

Pay for all other expences for the property (insurance, taxes, repairs, additions, upgrades, etc etc) out of the HVAC business (remember, you have a triple net lease). The tenant, your HVAC company, pays for everything. This way you can expense more out of your company (more to legally right off) while personally enjoying the cash flow (which of course you will have to claim and pay income taxes).

Do it right and it can be another source of income.

Be sure to check all this out with an attorney and an accountant as laws differ from state to state.

Remember the very important real estate formulae, "buy low, sell high"!;)

[ga-hvac-tech]

What he said...

Also

:worthless:

I'm a firm believer in buying a commercial property for your business and then leasing (renting) it back to your HVAC company through a triple net lease.

The trick is to buy it right and rent it back to yourself through an LLC. In other words, buy the property, form an LLC (limited Liability Company) (you can do it yourself through Legal Zoom cheap) and fund the property as it's sole asset. The LLC owns the property, you own the LLC. You'll do it that way to protect yourself (your personal assets) from liability should someone fall down and get injured, etc.

You'll write the check out of the HVAC business account for the rent, deposit it in the LLC account, pay the mortgage out of the LLC account and keep whats left over (cash flow) for yourself. It's a flow through set up but gives you some protection.

Pay for all other expences for the property (insurance, taxes, repairs, additions, upgrades, etc etc) out of the HVAC business (remember, you have a triple net lease). The tenant, your HVAC company, pays for everything. This way you can expense more out of your company (more to legally right off) while personally enjoying the cash flow (which of course you will have to claim and pay income taxes).

Do it right and it can be another source of income.

Be sure to check all this out with an attorney and an accountant as laws differ from state to state.

Remember the very important real estate formulae, "buy low, sell high"!;)

And after a decade or so, hopefully with the economy back in good shape, you can sell the building for a bundle! The LLC can 're-invest' the funds with less cap-gain issues because it is not personal tax rules.

Win-win deal; however as noted above in bold: Get your acct and atty to do the papers!!!

Personally, I would not use Legal-Zoom... too much chance of a fubar at tax time.

[bjones]

And after a decade or so, hopefully with the economy back in good shape, you can sell the building for a bundle! The LLC can 're-invest' the funds with less cap-gain issues because it is not personal tax rules.

Win-win deal; however as noted above in bold: Get your acct and atty to do the papers!!!

Personally, I would not use Legal-Zoom... too much chance of a fubar at tax time.

Good point, you do have to insure you get it (the LLC) done correctly for your state and they (Legal Zoom) do a good job to insure the LLC is done correctly. I did have mine reviewed by my attorney, who is a flying buddy of mine, but you might get some push back as most attorneys hate Legal Zoom.

By the way, FWIW, just to lend some credibility to Legal Zoom, I've copyrighted two logo's (getting ready to do a third) and created two LLC's and have had no problems with the legality of either using Legal Zoom.

I also did a trust and will through Legal Zoom for my uncle a few years ago and just this last month settled his estate (he passed away and I do miss him dearly).

The estate consisted of two homes, a dog kennel out on Long Island, a car, mortorcycle and three bank accounts. He lived in his home in Macon, Ga and had the house and kennel up here in NY. It went off pretty much wihout a hitch inspite of his estate being in two states.

But to ga-hvac-tech's point, be sure you have them looked over by professionals.

[supertek65]

3 phase is not more efficient than single phase and usually costs more per kw
you can use smaller wire, thats all

[timebuilder]

If the building is served by three phase, then that is simply what you will be using. If it's 208-230 three phase, then you will have no problems. If this was an industrial building and has a 460v service, then you will need a transformer for conventional office needs. Depending on the KVA, they can be a little pricey, with the cost of copper and all after that earthquake. You may have a good transformer on site if this is the service for the building, but be certain before you buy on all of these issues.

DO have all systems checked as a prerequisite to purchase. Get some advice on which outfit you should use. A home inspector is usually unable to do this type of inspection. A commercial GC could be consulted.

[supertek65]

this tiny little 2200 sf bldg
most likely 208????????????????????



If the building is served by three phase, then that is simply what you will be using. If it's 208-230 three phase, then you will have no problems. If this was an industrial building and has a 460v service, then you will need a transformer for conventional office needs. Depending on the KVA, they can be a little pricey, with the cost of copper and all after that earthquake. You may have a good transformer on site if this is the service for the building, but be certain before you buy on all of these issues.

DO have all systems checked as a prerequisite to purchase. Get some advice on which outfit you should use. A home inspector is usually unable to do this type of inspection. A commercial GC could be consulted.

[supertek65]

Art

we had a friend here in town.
open a pretty small bar!
everybody told him 3 phase was cheaper so he had a different xmr put in and went 3 ph

ofcourse he saved a little on wire but all his appliances were 4 times as much!!!!!!!!!

then the elec co nailed him with a hifger rate for the 3 ph!!!!!!!!!!!!!!!!!!!

i told him but he did not listen!!!!!!!!

[yellowirenut]

My thought was we'd use a pair of matched A/C systems with spiral duct running from back to front. Simple, cheap and looks nice for our kind of business (technology)

A good looking exposed spiral duct system is not cheep..there is a lot of things u are not taking into consideration...be prepared.

[supertek65]

i love spiral duct!!!!!!!!!!!!!!

i would like it everywhere in my house!!!!!!!!!!!:bsing:






A good looking exposed spiral duct system is not cheep..there is a lot of things u are not taking into consideration...be prepared.

[timebuilder]

Art

we had a friend here in town.
open a pretty small bar!
everybody told him 3 phase was cheaper so he had a different xmr put in and went 3 ph

ofcourse he saved a little on wire but all his appliances were 4 times as much!!!!!!!!!

then the elec co nailed him with a hifger rate for the 3 ph!!!!!!!!!!!!!!!!!!!

i told him but he did not listen!!!!!!!!

You definitely need to research before you buy, or change, or implement.

Another thing about three phase service is that if you have a meter that does not clock kilowatt hours, you need to be mindful of how much inductive load you have on your site, as power factor variance will lead you to be paying for reactive power that you don't actually use.

[genduct]

Think about a mezzanine ( I hope you won't need ADA addressed) to get additional use out of that 2000 SF Usually 1/3 space won't change much with the code etc.
How about a sock vs spiral for duct.
If you get hit for demand on your single phase electric then the existing 3 phase sounds like the way to go even with your little system. Check electric rates and do the math.

[supertek65]

duct sock is cool!!!

i like it!!!!1

but you would get hit with a higher rate with 3 phase than with single phase!!!1

and if you have more single phase stuff than 3 phase stuff???

you are getting charged for watts you are not even using!!!!!!!!!

small space is better with single phase.

mainly because of equipment cost.

but what it gets down to, is, a watt is a watt!!!!1






Think about a mezzanine ( I hope you won't need ADA addressed) to get additional use out of that 2000 SF Usually 1/3 space won't change much with the code etc.
How about a sock vs spiral for duct.
If you get hit for demand on your single phase electric then the existing 3 phase sounds like the way to go even with your little system. Check electric rates and do the math.

[cactusjack]

i love spiral duct!!!!!!!!!!!!!!

i would like it everywhere in my house!!!!!!!!!!!:bsing:

Put in a fake spiral system for a customer in a similar open building..have to admit it turned out better than I expected.

Also had 3-phase but went with single phase twinned R-22 Heat Pumps.

[supertek65]

i do not personally do duct
but my company does
we just did a pretty big job
i think about 6 million dollars
all the rooms like living quarters were metal duck!
bu all the common areas and the indoor pool are duck sock!
it is very quiet and really cool!!!!!!




Put in a fake spiral system for a customer in a similar open building..have to admit it turned out better than I expected.

Also had 3-phase but went with single phase twinned R-22 Heat Pumps.