Banker · Dallas, TX · Member since 2017 · 23 posts · 2 votes
Can anyone help me with learning how to calculate what type of unit/units would be more profitable? I own a commercial lot and have different ideas on what I want to develop. I debate on mixed housing unit. Multi family unit, or build 4 houses on each lot.
I am sure there are ways to calculate what the best bang for my buck will be.
Thanks and if any investors are interested the lot is located minutes away from downtown Dallas.
The question you are asking is known as the "Highest and Best Use" in the commercial real estate industry.
@Karen Margrave has a ton of experience in new development. I would reach out to her or look at her previous posts to begin your research.
In general, you should understand what zoning allows and go from there. Demand would be your next step.
I have a friend who owns a shopping center in Yucaipa, CA. He handed out questionnaires at all of the big box grocery stores in the city to find out what the city is missing and what there is demand for. Apparently, everyone wanted a Dairy Queen. He now owns and has become very successful by operating the Dairy Queen. Do your research because once it's built, it's very hard to change direction.
@Adrian Macias How many units in the multi-family can be built? Building in Milwaukee, WI cost around $120.00 per square foot. You would have to build the houses yourself so it can make sense. You would sell the houses for sure but I'm guessing you would keep the multi-family, so for the multi-family, you need to know what your ROI will be in 12 months and IRR after a 3-5 year timeframe. You would compare your ROI and IRR to you ROI after selling 4 houses. The numbers will tell you which one to do.
I'm general, the most profitable commercial unit will be those with low labor and maintenance costs. Look at building a storage facility. They are much more profitable than multi family.
The question you are asking is known as the "Highest and Best Use" in the commercial real estate industry.
@Karen Margrave has a ton of experience in new development. I would reach out to her or look at her previous posts to begin your research.
In general, you should understand what zoning allows and go from there. Demand would be your next step.
I have a friend who owns a shopping center in Yucaipa, CA. He handed out questionnaires at all of the big box grocery stores in the city to find out what the city is missing and what there is demand for. Apparently, everyone wanted a Dairy Queen. He now owns and has become very successful by operating the Dairy Queen. Do your research because once it's built, it's very hard to change direction.
It is blocks away from the state fair of Texas grounds. 2 blocks from a major highway that leads into downtown dallas.
It's hard because one side is section 8 housing, and the other side are lofts less than 1000 square ft for 1500. Great view to downtown skyline for sure.
The environment changes in the month of October when the fair is here. Right now, I use it as parking for the fair which helps me pay the property taxes.