Possible Deal (by GKARL [PA]) Feb 16, 2018 6:51 PM
Possible Deal (by Ken [NY]) Feb 16, 2018 7:31 PM
Possible Deal (by Deanna [TX]) Feb 16, 2018 7:47 PM
Possible Deal (by Frank [NJ]) Feb 16, 2018 7:47 PM
Possible Deal (by Luba [NY]) Feb 16, 2018 7:49 PM
Possible Deal (by GKARL [PA]) Feb 16, 2018 8:00 PM
Possible Deal (by GKARL [PA]) Feb 16, 2018 8:05 PM
Possible Deal (by nhsailmaker [NH]) Feb 17, 2018 4:01 AM
Possible Deal (by razorback_tim [AR]) Feb 17, 2018 4:40 AM
Possible Deal (by Robin [WI]) Feb 17, 2018 5:52 AM
Possible Deal (by plenty [MO]) Feb 18, 2018 3:17 PM
Possible Deal (by Barb [MO]) Feb 18, 2018 5:17 PM
Possible Deal (by GKARL [PA]) Feb 18, 2018 6:05 PM
Possible Deal (by Nicole [PA]) Feb 19, 2018 9:35 AM
Possible Deal (by GKARL [PA]) Feb 19, 2018 10:12 AM
Possible Deal (by BRAD 20,000 [IN]) Feb 20, 2018 12:06 AM
Possible Deal (by GKARL [PA]) Posted on: Feb 16, 2018 6:51 PM Message:
I've been casting around looking for another purchase. I've put in a few offers and have gotten beat out. It's like a feeding frenzy and cap rates for the most desirable properties have compressed. I don't see how some of these guys are going to make money at a 5 to 6% cap. Some of these people must be planning on tear downs and developing something else or anticipating future appreciation. That's too way speculative for me at this stage of the game as I need to be making money out of the gate. So out of frustration, I hit up some contacts to see if they knew of anything decent and available and it turns out one of them did and made an introduction.
Seller has a mixed use building and is behind on the mortgage and needs to bail. The residential portion is rented but below market. The commercial portion is vacant. This is located in a neighborhood that is densely populated and is a mix of residential and commercial with lots of convenience stores, eateries and etc. I was out canvassing the area today and two businesses that come to mind that would work well in the commercial spot would be a deli or one of these vape shops. There is no C of O for the commercial area as the seller has run out of money to complete. I would need to complete, obtain the certificate and rent. I'm guessing the improvements are about 90% complete. I would need to carry for a while until at least one of the commercial units was rented.
Fully rented at market, I'm looking at a 14% cap at the seller's asking price or nearly a 2% deal. I'm thinking of offering a price slightly below to bring it right to a 2% deal. It's a risk but one that could pay off handsomely if I get it fully rented at market. If I did that, I could force a significant amount of equity making the place worth over 1.5 times what I'd pay. The risk is the place being half vacant and finding the commercial tenants. There's a vacant storefront right down the street from the place, but that's the only vacant storefront I saw. As I canvas the blocks around the building, I noted no other vacant storefronts. Again the area is densely populated, so there's a lot of walking to stores and eateries. This is a class C area with some gentrification occurring in spots but not in the immediate area. Building physically appears to be solid, but I will have inspected. If I decide to do this, we'll put this deal together quickly.
Thoughts and advice?
--207.172.xx.xxx |
Possible Deal (by Ken [NY]) Posted on: Feb 16, 2018 7:31 PM Message:
I approach these situations more from a standpoint of what do you need as opposed to what do you want. Meet with him and find out where he stands he might let you take over the mortgage payments if you bring it current but call and find out taxes owed and check the county for leins judgments etc lots of times these deals come with taxes owed and a judgment or two and the owner doesn't understand they attach to the property.often if you are helpful figuring it all out you can get it for what is owed plus a little walking away money as opposed to setting a price at the outset --66.87.xxx.xxx |
Possible Deal (by Deanna [TX]) Posted on: Feb 16, 2018 7:47 PM Message:
Good luck!
I'm impressed that the commercial space is looking healthy in your area.
When I hear "lots of convenience stores" in an area, the first thought that comes to mind is-- how many laundromats are in the area? A deli or a vape shop or some other third-party customer would be very hands-off, but a laundromat, if there's room in the area to support one, would seem like it might be worth consideration. --96.46.xxx.xx |
Possible Deal (by Frank [NJ]) Posted on: Feb 16, 2018 7:47 PM Message:
With all respect I would be leery of such in the current commercial rental market if it is the key element to profitability.
I hope you have half the good fortune with thi you have had with the rooming house --70.208.xx.xxx |
Possible Deal (by Luba [NY]) Posted on: Feb 16, 2018 7:49 PM Message:
GKARL, if you will take it, please tell how you will deal with it. We are at similar situation, but your numbers are much better. We are massaging a building with a couple of rented below market apartments and not rented store.
My plan is to contact Score and ask for data analysis about which business will be best for this area.
Keep in mind that some restrictions can apply.
In my village prohibited to open an eatery if some other eatery located closer than sertain yards from the proposed one.
--69.120.xxx.xxx |
Possible Deal (by GKARL [PA]) Posted on: Feb 16, 2018 8:00 PM Message:
One of the thoughts is putting something in there I could run. A laundromat would be a slam dunk as I know of none in the immediate area. Moreover, the building has a parking lot attached that could accommodate that sort of traffic. I'd have to come up with the money to hook into the city sewer and before that, get the guys who sell the machines into evaluate. They do a free evaluation. The area is dense and there's no place to build anything anew. --207.172.xx.xxx |
Possible Deal (by GKARL [PA]) Posted on: Feb 16, 2018 8:05 PM Message:
Luba, it's my understanding eateries are tough to deal with, but if the tenant is on the hook for the build out, then that's their problem. I do know that when I've looked at buildings with restaurants attached, the bank was talking about a 60% LTV for lending. My thought is to broker the search for the tenants out.
Commercial tenants are far easier to deal with and have long tenancies, the downside is long vacancies and that's a concern. --207.172.xx.xxx |
Possible Deal (by nhsailmaker [NH]) Posted on: Feb 17, 2018 4:01 AM Message:
Commercial leasing is a lot of foot work. People with established business DO move - find one that needs more parking. Do you have enough room for a drive through? - you need a relationship with a commercial broker to make this work. --24.34.xx.xxx |
Possible Deal (by razorback_tim [AR]) Posted on: Feb 17, 2018 4:40 AM Message:
I like the laundromat idea.
More cash for you.
You don’t have to worry about your commercial tenant going under and leaving you with a vacancy. --70.178.x.xx |
Possible Deal (by Robin [WI]) Posted on: Feb 17, 2018 5:52 AM Message:
If your tenant was paying market rent, would the property at least cover expenses? If not, do you have enough spare cash to support the property until you get the commercial space rented?
Also, check to see whether the rental properties in the area have their own washer/dryer facilities. If every apartment building has its own basement facilities, you won't get much business. --204.210.xxx.xxx |
Possible Deal (by plenty [MO]) Posted on: Feb 18, 2018 3:17 PM Message:
Lots of holding cost. Sounds fun if you are looking for a project! Talk with some of those neighbouring businesses about their experience with that area. You didn't mention parking or the need for parking. So many businesses have drive thurs... Any possibility for that? I would not want to live over a vapor store! Do you think any small business would want more square footage? I'd ask those neighbouring businesses what they know about that empty commerical space up the street? They are your go to for inform! --99.203.x.xxx |
Possible Deal (by Barb [MO]) Posted on: Feb 18, 2018 5:17 PM Message:
Talk to Speed Queen about the laundry. They have a division for it. You will need to have someone on site when open, so that means hiring hourly people. The ones here make more money and pay for the hourly person by taking in dirty laundry and doing it as well as offering coin operated machines. You might even be able to work out a deal for linens with a local eatery or beauty shop. --192.168.xxx.xxx |
Possible Deal (by GKARL [PA]) Posted on: Feb 18, 2018 6:05 PM Message:
There could be a drive through situation. Holding costs can be funded by my other rentals temporarily.
I drove the area again yesterday. I don't think that I would have a challenge getting it filled. I'm also thinking of places like wireless phones and phone repair places that might go in there. There's ample parking in the lot plus there's some street parking as well. I think the on going debacle in commercial retail space is an issue for larger retailers affected by Amazon, but smaller local businesses remain unaffected by the advent of on line sales and my challenge would be lining up the stronger commercial tenants.
Some years ago, I did some research on laundromats and the wash and fold is a critical piece of that business, so yes, you need to hire someone who could double on handling the wash & fold along with general duties. Ideal person would be a retiree looking to supplement their income. Plenty of those guys working in fast food and grocery stores and it's a simple enough function where it shouldn't be a huge problem. You'd need to set up some accounting controls however to ensure all that wash and fold collections don't wind up in the employee's pocket.
Biggest challenge would be zoning and the hookup to the city sewer. Those are not insignificant costs and profits would have to justify.
--207.172.xx.xxx |
Possible Deal (by Nicole [PA]) Posted on: Feb 19, 2018 9:35 AM Message:
I am in the slums/hood a lot lately. a few months ago I walked up to the corner business (wasn't really sure what it actually was) to grab a drink. I was quite surprised. Some Mexican folks ran it ... it was a combo take-out and convenience store. Basics in the convenience store - not outrageously priced like the chains. I'd bet in this center city neighborhood people buy more than you'd think at this type store. The food take out was amazing. You ordered to go only ... they have the majority of the food prepared on little steaming trays and you can see what the daily specials are. I believe it's generally one or two specials and then 3 or 4 additional "staples". The food is REALLY good and it's cheap ... steady business.
Bottom line of all that is - not that you'd want to run that type business yourself, but sometimes you can own the business and get someone to run it for you... more oversight required but also more control rather than small businesses that open up and shut down.
also, depending on the place, local rent a center places (again, not chains) do a TREMENDOUS cash business. --72.70.xxx.xx |
Possible Deal (by GKARL [PA]) Posted on: Feb 19, 2018 10:12 AM Message:
Years ago, I lived in northern NJ and there was a fish place that I would eat at nearly every weekend. It was nothing fancy and was located in a hole in the wall type place. The food was excellent however and they did land office business. They ultimately sold that business to someone else. I agree totally. Sometimes, the simplest businesses without all of the trappings work the best and that particularly applies to restaurants which can be fickle businesses. It is very costly to set up a restaurant "experience" with waiters, waitresses or cooks who may or may not show up to work and when they don't you lose business (often the employee pool for small business is the same as the tenant pool folks often complain about). Far easier to focus on the food and take out and the less employees to manage the better.
I've often thought about setting one of those up. A simple fish fry place can make money. It would be best for me to back someone with those sorts of skills and maybe work out some sort of profit share. You can run that sort of operation with about 3-4 people.
Also, point noted on the rent a center places as well. I may have to seriously consider setting up another business! --64.121.xxx.xxx |
Possible Deal (by BRAD 20,000 [IN]) Posted on: Feb 20, 2018 12:06 AM Message:
GKARL,
My father in law had multiple laundromats. He said they only work if they are on a corner with 2 entrances so people can park within a spot or two of the entrance.
Drop off laundry by the pound was a big money maker. The attendant and the machines were already there.
I learned to count quarters real fast when hanging out at their house!
BRAD --68.51.xx.xxx |
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