We Bought A Commercial Property!

Typing that out gave me the biggest sense of achievement… We bought a commercial space! We own it! It’s ours! It’s been a long time coming but I figured I’d write up about the process of buying a commercial building for those who may be interested in following along or doing it for themselves.

This is a big, meaty post about a lot of specifics, but it’s still not specific at all, so I’m going to be writing posts about all of the things during this whole process! We plan to share how we saved for this, the floor plans and mood boards, the process of codes and permits, the build out.. all of it!

We bought the commercial space for our coffee equipment business.

Jake and I co-own a business here in Nashville called Technico. It’s a specialty coffee equipment service and sales company. Right now, it’s a 2-man operation. Juuuuuuust the two of us. We’ve wanted to expand our workforce for a few years, but we didn’t feel like it was appropriate until we had a space of our own, whether we rented or owned one. Technico was born in our basement workshop and I didn’t really want to have the basement be a communal space for people outside of our family.

So, the search began.

The search for a commercial space was long and exhausting.

We live in Nashville, Tennessee and if there’s one word to describe the property market as a whole in this city, itโ€™s hot. This city has grown exponentially over the last six years we’ve lived here, and for better or for worse, property is hard to come by. We went over the pros an cons of renting versus buying commercial property, and we ultimately landed on waiting a few years to save up some money and buy.

In a city like Nashville, time was not on our side. Every year that went buy without us purchasing a commercial property was another year of higher and higher property values. There were so many times over the last five or so years since Technico’s inception where the perfect building came around and we just couldn’t afford it yet. There were even a few times where we were so close to buying something, but decided we didn’t want to be stretched too thin by a hefty mortgage.

During the fall of 2019, Jake and I met with our longtime realtor Mark Nash to discuss our options. We needed about 1,000 square feet to effectively do our job, and our budget was pretty healthy. We assumed we could afford up to $400,000 if we rented out part of it.

Like I said, Nashville’s housing market is hotter than hell, and Mark went over some options with us. There were about four real contenders: an old mini mart, a former pizza joint, a home that had been rezoned for commercial use, and an office. Four options in our budget. In the entire city.

Mark informed us that if our budget was closer to $500,000, we’d have more options, but 400 was our absolute max and even that felt a little scary. We were faced with a sad reality: maybe we couldn’t afford to buy commercial property in Nashville. Mark suggested we reach out to friends and neighbors to see if they know of something that hadn’t hit the market, and he’d do the same and send us properties as they became available.

We felt defeated, but we were still hopeful.

A month or so went by and we pumped the brakes on searching. Nothing new was available and it was nearing the holidays which is a weird time for the housing and commercial market anyway. We figured we’d pick our search back up in the spring when people are more apt to sell.

And then, me being me, after we had already decided to slow our roll.. I was like, hey I’m just gonna post in our neighborhood Facebook page! I wrote up a post about how we live in the neighborhood (which we love dearly), we want our business to be here, and our budget was under $400,000, and to please please please let me know if something comes about. A few people gave us a few good ideas, but one person in particular led us to a condo complex in a great part of town near our neighborhood that was building a commercial space geared toward really small businesses like us.

We immediately reached out to the complex for more information and we went for a look the next day.

Jake was apprehensive, I was ecstatic.

We went into this whole viewing with an open but skeptical mind. The price was fantastic, but the details were a little confusing and it was a unit in a condo complex, not a freestanding space.

The concept is this: you buy a unit, and you build to suit for your own needs. The units have a concrete floor with an unpoured open space for you to run plumbing, a ceiling, and no walls — you build those too. It’s basically a shell. The reason for not including walls is because the units are 960 square feet with the option to purchase adjacent units to have more room. The units boast industrial modern vibes with 25′ ceilings, concrete floors, and a glass garage door in the front, and some units come with larger utility garage doors out back. We were interested in a unit with both a front and back garage access door.

The price was great because of the build-to-suit nature, and even with the added cost of a monthly HOA fee due to being in a community condo complex, it checked off all of our needs and came in under budget. Plus: no lawn or landscape to take care of! Heck yeah!

The build-to-suit option was really jiving with us because with the type of business we own, we would’ve needed to reconfigure plumbing and electrical to accommodate plenty of drains and the 220v that espresso machines require regardless. This would’ve been the case in whatever we bought anyway, so having the option to build all of that in from the beginning was music to our ears.

It’s funny though, because not everything about starting from scratch was a good thing. This is where Jake and I’s brains (and personalities) clashed: I could picture the building all finished. I could see the work benches. I could see the end result. Jake’s brain does not work this way. Jake’s the type of person who can tell you what’s wrong with a car by listening to it, but he couldn’t tell you what something will look like without looking at a picture to give him an idea. So, with the units being wall-less, floor-less shells, I literally had to walk around flailing my arms (THIS is going to be a wall! Here’s another wall! THIS is going to be the future bathroom! Workbench here! Workbench here!) trying to help him see what I was seeing.

How did we pay for it? And all of the nerdy money things.

All of the signs were pointing us in the direction of this property, so then we had to figure out what the final numbers were going to be. Especially since we have a real number to work with. We hadn’t consulted a bank before this because we assumed it was going to be a lot like a conventional mortgage which we have experience with.

Um, it’s…. not like that.

A conventional mortgage, which we have had on both of the homes we’ve owned together, works like this: you put 20% (or more) down as your down payment, and the rest of the loan is paid back at or around whatever the current interest rate is for either 15 or 30 year terms. Over the last few years, it’s floated somewhere between 3-4%. We knew commercial loans had higher interest rates and were paid back in less time, so we assumed maybe 6-7% over 15 years. Keep in mind: we just assumed this and hadn’t put much work into figuring out if this is how it worked.

We called quite a few banks and lenders around town, including the lender we’ve used for both of the homes we’ve owned in Nashville, only to find out that most of them don’t offer commercial mortgages or commercial loans at all. Most of the banks and lenders we reached out to informed us that they would do a small business loan that we could, in turn, use to purchase whatever we want. The interest rates for small business loans vary depending on the type, so I can’t stay definitively what they were.

We continued to call around and the way it worked out with most of the lenders who offered commercial real estate loans was complicated. From what we found, most of them worked like this: your loan will be a 20-year term with the interest rate being the federal rate + 3.5% and this was re-assessed every five years, meaning your interest rate will change every five years. Meaning, yes, your payment amount will change every five years. Generally speaking, this loan is similar to an adjustable-rate mortgage.

Ever the future-planners, we don’t really like surprises — especially in our finances — so we weren’t really comfortable with this option. We kept looking for other options when we decided to reach out to a family member about a private loan. This option can either be a smart move or a complete disaster, depending on the lender and an individual’s ability to repay. Since this property came in well below our initial budget, we proposed a down payment of 20% and financing the remaining 80% at 4% interest over the next 20 years. The family member agreed to the terms, seeing as how 4% is higher than the interest that their savings account yielded. Win-win for all parties involved!

And something weird happened on accident.

We accidentally did all of this without a realtor.

Our realtor Mark was working with us in the beginning, but once we found the unit via our neighborhood Facebook page, we just sort of did the rest on our own. Seriously, it was an accident.

We had meetings with the builder to negotiate our terms of closing, our final price, and some construction included in that final price. When we walked out, we looked at each other and said “uh, so I guess we’re doing this on our own!” The builder really liked Jake and I (he literally told us this in one of our meetings) and even without the help of a realtor, we were able to negotiate a deal that included getting the walls built and insulated by the builder’s team so we wouldn’t have to find a builder ourselves *pats selves on backs*. I’m not sure we could’ve done this successfully had we not done it twice before, but I’ll just write up a whole post about this one day.

Oh, and in case you were curious, we informed Mark and he was still super excited for us. He’s amazing.

The final paperwork was signed and keys were exchanged during the third week of March.

Yep, folks. We bought a commercial property… During a global pandemic.

Nothing super interesting here other than we were informed the day of closing that someone with a confirmed COVID-19 case would be in the closing office, and we were okay to just sign the paperwork and leave it in their secured lockbox outside the building. We met with the builder’s realtor later that day where he handed off the keys in a socially-distant manner.

Here we are pretending to walk into our unit! We didn’t have our keys on this day so we had to just pretend and take pictures from outside.

And guess what? We’re opening a coffee shop, too!

UH, YEP.

I will not lie to you — this was NOT part of the plan until we met with the builder. Jake and I had on-and-off chats about opening a tiny coffee shop for the last few years. When the builder heard what we did for business, he told us that the people who live in the condos have been asking for a coffee shop up there in the complex. I looked at Jake right there, in the meeting, wild-eyed and said “let’s do that!” What I meant by “letโ€™s do that” is actually hey I’m going to do that so save some of that 960 square feet for me!

Like I said, we’ve had talks about opening a coffee shop for a few years anyway, and my job as a nanny will be coming to a close as my oldest kid is turning sixteen soon. My sister-in-law and brother-in-law own a coffee shop here in town too, and we obviously do a lot of work with other shops in the area and we love them all dearly.

But for me, I want to open a silly type of shop. I want it to be fun and playful, both in color and in concept. To me, I envision a place where I embody a lot of what I feel about myself. A place that doesn’t take itself too seriously, knows how to have fun, and isn’t afraid to push the envelope and laugh at itself. I admire a lot of what Christina Tosi of Milk Bar has done in the baking community: she’s not afraid to be playful and childlike, and she’s a firm believer in using artificial vanilla extract in nostalgic recipes.

A few times over the last month, I’ve found myself yelling weird ideas to Jake (usually when I’m rinsing shampoo from my hair mid-shower). “WHAT ABOUT _________!? OR WHAT ABOUT _____________!?” I won’t disclose any of these ideas yet because they’re weird and no one is doing them and I don’t want to spoil it. Maybe people aren’t doing these things because they’re a bad idea?! We’ll see!

I had a mood board drawn up because initially, we were just going to open a home espresso outfitter of sorts and so I was embodying a more masculine, homey vibe. Since then, we’ve decided to shift gears a little bit and bring the focus to building out the coffee shop and less of a focus on the home side of things. I’ll share the mood board here, but let me tell you: I don’t want the shop to look anything like this. Hahahaha. I will update what I’m thinking in a future post.

This is not, and I repeat: this is NOT what the shop will look like. The shop will probably be more like our house.

Love you forever.

Anyway, to sum up, thanks for even being interested in this! When I asked y’all on Instagram if you were interested in this process, an overwhelming amount of you said yes! Which is exciting, but also scary because like… Now we HAVE to make this happen.

We’re still in the very, very early planning stages with all of this. So early that I have no clue what I want it to look like. We still have to go through codes to get permits and run electrical and plumbing through the unit, as well as close in the bottom 4′ of drywall and paint the entire thing to even start on the fun stuff.

This business, both the coffee shop part and the technician workshop part, will be labors of love. We plan to do most of it ourselves and definitely on a budget. I’ll keep you posted as we go along with this crazy idea of ours.

xox

6 thoughts on “We Bought A Commercial Property!

    1. Yes!!! Probably will eventually.. itโ€™s the size of a postage stamp so layout could only efficiently be one way, but we ended up with a 12 foot long bar. Not bad!

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