Thoughts on a previous dollar store for sale to then rent to a gym & salon in a semi-rural small community?

[Account Closed]

For geography, the property is ~20 miles NW of San Antonio, TX in a neighboring county. The recently-built dollar store lost the battle with then neighboring dollar store and the small grocery/hardware store. I hear the owner is asking $270k. An area independent gym and salon owner has been doing well for a couple years in a small strip center a mile or so away and would like to lease this building. If I could somehow do 100% financing (owner financing or bring in a cash partner), what is the collective wisdom on what the rent would need to be to cover all costs (PITI, Capex, etc.)? Or, what other info is needed to answer the question? Any other advice? If it were to happen, this would be my first REI deal. Thank you in advance.

If this is posted in the wrong forum, please let me know where is more appropriate. 

[Chris Winterhalter]

@Account Closed 

How big is the area?  Where is it trending?  What's the retail scene like in the area?  Does it have a solid location on a high traffic road?  How's the ingress & egress?  

Regarding the tenants, you mentioned they are independent, are these their only locations?  How long have they been in business?  You will underwrite the tenants as much as the deal especially on something like this.  What do their yelp scores look like?  How much competition do they have in the area?  

Have you talked to the seller directly?  Are they willing to seller finance or are they leveraged?  Are they flexible on price?  Is a broker involved?  

Who's going to be responsible for the TI (tenant improvement) or build out?  If they need you to handle this make sure to account for the increased cost.  

What's the going rate for space in this area per square foot.  You will probably lease the property on a NN basis where the tenant is responsible for property taxes, insurance, maintenance, utilities, etc, but you would be responsible for the roof & structure.  It just depends on the NN structure.  You will also need to account for CAM (common area maintenance) if it's a shared space with the gym & salon.  

You probably want to consult a commercial broker in the area that is familiar with this type of property, pricing, leasing, etc.  What would you do if the tenant moved out?  Make sure to account for long periods of vacancy as leasing can take much longer. 

It could be a solid deal though, underwrite it as if you don't have a tenant lined up though.  

Good luck!