Real Estate Tips |6 min read

US Office Buildings Are ~70% Off: How to Buy Them ASAP

Empty office buildings are experiencing a real estate rebirth right now. Investors are snapping them up to repurpose them as residential buildings. Not only that but their prices have been cut at steep discounts, some up to 70%! Learn more about this trend and how you can strike on the occasion below.

office-building-loansMain Takeaways:

  • Media company Fortune has reported that office building prices in the US are dropping up to 70%. With expedited hard money loans, you can strike on these deals before competing investors snap them up.

Table of Contents

Discounted Office Buildings: A New Trend

Our Baltimore hard money lending team is excited to report on a brand-new Fortune editorial piece that cements a new turning point in the real estate industry. In June 2024, the media company observed that real estate investors are buying office buildings at huge discounts.

As you probably know, since the pandemic, people have not been commuting to the office in the same droves they were before. As a result, many office buildings have become vacant ghost towns.

Thanks to that, empty office spaces’ prices have dropped to 30, 40, and even sometimes up to 70% off. For example, in Fortune’s investigations, they uncovered CoStar data that a San Jose empty office sold for a 70% discount. This was an astonishing $56 million off its original price.

Also, Fortune discovered intel from Bloomberg that a Manhattan empty office sold for 67% off. For context, the building is selling for under $50 million now, while it originally went for $153 million in 2018.

Similar developments have inspired owners and investors to convert office buildings to other kinds of real estate. And you can take advantage of this opportunity, too!

To capitalize on this shift, you must have the funding required to strike while the iron is hot. Luckily, you can use bridge loans, like real estate hard money loans, to do this.

What are Real Estate Hard Money Loans?

Real estate (RE) hard money loans are short-term, asset-based, private real estate loans. These commercial space loans are different from “soft,” or traditional, loans in various ways.

Fundamentally, hard money loans are designed to be ultra-expedited loans. This means that borrowers can receive them within weeks, rather than slower traditional loan timeframes. Furthermore, hard money loans are crafted so that borrowers can complete the borrowing process faster than traditional loans.

Situations When RE Loans Are Your Best Option

There are some stages in your investment process when you might need an accelerated hard money loan instead of a traditional one:

For buying and selling properties simultaneously:

If you need your old property sale funds to buy your new commercial space, a hard money loan can be of use. It can provide short-term funding or help you afford payments on the new property.

Buying in a competitive market:

Hard money loans can help you stay at the top of a seller’s list if you’re buying in a competitive market and property. Rather than involving a sale contingency in your offers (which sellers may not accept in a multiple-bid scenario), you can bid on office buildings with the assurance that you have funding.

For time-sensitive purchases:

By using time-optimized loans, you can strike while the iron is hot on empty office projects that urgently require immediate financing. As you know, many deals can slip through your fingers if you don’t make it in time, at the exact, necessary moment. So, if you have funding already in hand, you don’t have to miss out. You can bridge the gap and secure funds without impeding your plans.

Supplementing lost or insufficient money: 

As an investor, you likely will face times when your existing financing arrangements are insufficient or momentarily inaccessible. With hard money loans, investors have the power to undergo their investment projects without interruption or delay. In turn, this can be a buffer for future financing as you await incoming funding.

When you need negotiating power:

You can use hard money loans to advance your negotiations, armed with funds you already have prepared and ready. As such, you could be able to settle on more favorable long-term loan conditions, get lower prices, or just generally have an edge above the rest in your dealings.

If you want flexible criteria:

One big bonus of hard money loans is that many lenders give borrowers extra flexibility in their eligibility and collateral criteria. Due to that, investors who endure challenging conditions or financial obstacles may still be qualified for asset-based hard money loans. That said, this flexibility provides more types of investors with access to investment funds.

In times you want faster underwriting processing:

Hard money lenders typically have a quicker underwriting procedure than traditional lenders do. With this, you can achieve your goals at a speedier rate.

Projects where you want to start payments off slowly:

Good hard money lenders understand that the beginning of your real estate project is a risky, delicate time. After all, your plans can change at a moment’s notice. Because of that, they should start you off slowly with interest-only payments so that you can smoothly transition into a consistent loan payment cycle.

Using Hard Money Loans for Empty Office Renovations

One of the biggest ways investors can generate short-term value additions for empty office buildings is through renovations.

They noted investors should plan on upgrading the assets within a short timeframe. This way, investors can minimize risk, appeal to tenants, and get an ROI sooner. Most importantly, it will pay off in the long term: enhanced assets can provide a decade of consistent cash flow.

To accomplish such an outcome, though, investors need to find and secure diversified funding for their empty office buildings.

Unfortunately, many loans do not provide room for borrowers to cover renovation costs. This can be an enormous problem for investors who work on a strict timeline. Because their loans aren’t exactly ideal, they must scramble to scrape up remodeling funds immediately, out-of-pocket.

However, with hard money loans, you can buy renovations exactly when you need them. This way, you can get the renovations you require without delay and without having to pay for them yourself immediately. It’s the best of both worlds.

Buy Office Buildings with MHML

When navigating a competitive market, quick funding can make or break your deal. Utilizing hard money loans is a strategy that helps enable you to beat other buyers when there are multiple bids on the table. In essence, it can allow you to be the first in line.

When buying empty office buildings, you need the backing of real estate professionals who have years in the business. More importantly, you need to choose a small business that pays attention to detail, one that can assist you exactly when you need it. Luckily, our experienced team does just that, all day, every day. Contact us today to gain a powerful lending partner in your investment business.

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