Strip Mall Deal Structure
I have an opportunity to purchase a small, corner strip mall with a laundromat. Several tenants have been in place for 10 plus yrs and the laundromat needs a retool which I would run. Question is:What's the best way to set up the management structure if I own the property and operate one of the businesses as well?
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Quote from @Michael Loftus:
I have an opportunity to purchase a small, corner strip mall with a laundromat. Several tenants have been in place for 10 plus yrs and the laundromat needs a retool which I would run. Question is:What's the best way to set up the management structure if I own the property and operate one of the businesses as well?
Set the laundromat as a separate business than the center.
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#3 Commercial Real Estate Investing Contributor
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- Dallas, TX
LLC to own real estate, separate LLC to own laundromat, need a somewhat arm's length lease between the two entities.
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@Michael Loftus I think the main thing to consider is whether you will sell the laundromat in the future or if you will hold the entire deal and sell them together someday. You will obviously want to have separate businesses here so you can create a more legitimate lease that works with the laundromat once you get it up and running. Then you have the opportunity to go whichever direction makes sense.
A lot of small businesses end up buying the building for themselves. It creates an advantages tax structure for you since you can move money back and forth between the real estate or the business and charge yourself what you need internally.
