Rent or Sell? Denver Office Condo

[Prepube]

3149 sf Office Condo very close to downtown Denver
Market Value: 425k-475k
Original Purchase price: 225k
Amount remaining on mortgage: Zero--no Mortgage
Gross Rents: ?  I think i could get 20/sf * 3149sf = 62980; also could get 100.00/month rent for each of the 5 parking spaces
Taxes and Insurance (the T&I of your PITI): 6900 property tax, I am not sure about the insurance, which is currently embedded in other commercial and liability insurances
HOA costs: 27600-- i have always thought this was high, but it does cover daily cleaning and trash removal, maintenance of the building and grounds, snow removal, light bulb replacement, utilities, etc.

This office condo is 3149sf, with 5 parking spaces and two good-sized basement storage areas (about 500sf).  I have had it a while and run my business there currently.  I am planning a 2018 exit from work (yaaaay!).  The offices are in an up and coming area close to downtown Denver and the city is pouring gobs of money into redevelopment in this previously blighted neighborhood.  The office is across the street from a nice park with tennis courts and a rec center, walking distance to courthouses, downtown and the University of Colorado, one block from the light rail line.  The offices in front have a nice view of downtown in the winter (when the trees have no leaves) and lots of green in the summer.

This has been a great place to work in and i am sure others will like it just as much.  My dilemma is this: Should I sell the property or rent it.  Rents in Denver, as i am sure you have all heard, are going crazy high and so is the real estate.  I am thinking i could take advantage of the high rents for a while before i sell.  Trouble is, I know absolutely nothing about how commercial leases work (though i am sure i could learn), i have never been a landlord, I don't know how to price it, and i am moving out of town.  The place has had very low expenses (other than the stupid association dues) other than occasional new paint and carpet. So what would you do?  Rent or sell?  I don't need the money from the sale until at least ten years from now. Is it worth the hassle to own something while living far away (Costa Rica or Panama)?  Would my money be better invested in other places? 

[theoverlook]

I'm a commercial landlord, and honestly if you're relocating out of the area and won't have any ties to the area, I would sell.  Your rent amount and return on investment isn't bad but after expenses assuming your $425k estimated sale price is right you're getting a bit under 7% per year.  You can likely beat that with more liquid investments.

It's nice that it's in an up and coming area but maybe that makes now the right time to sell.  People might be excited about it and then you've captured the bulk of the potential appreciation.

Vacancy can be rough in a commercial property.  We're 100% full now but when something is vacant, it tends to drag on for months before filling up.  Meanwhile the expenses keep accruing.  It doesn't take long for the monthly expenses on a vacant space to wipe out the profit for the rest of the year.  The positive is that commercial leases are longer (3-5 years is normal) and the tenants move around less.  But plan on at least 3 months of vacancy when it does end up empty.

I'm not trying to sound negative - if your numbers are accurate it's a good investment but make sure it fits with the rest of your investment plan and isn't going to be an anchor on your freewheeling FIRE lifestyle!

[Prepube]

I don't think you sound negative... This feedback is what I am looking for.  I'm thinking I am not really right for being a landlord.  It sounds like a pain in the ass when I could be having fun.  The income potential is intriguing to me, but you are right, I might do better in more liquid investments.  This place was one of my smarter moves for the business, but I think it's time to let go of it while the market is so good here.  Office condos do not move quickly, from what I have seen, and I should take advantage of the excellent market conditions and get the money reinvested. 

On the other hand, taxes will be a big concern for me and delaying the sale until after my income reduces when I retire may be a smart move, too.  Must speak to my accountant about that. Maybe I will try it once for a three year lease and see if I like it.  It'd be a good excuse to come back to Colorado every once in a while, too.

[adamcollin]

Well if you wish to rent the property, you can hire an agent who can assist you throughout the process.