Investor · Charlotte, NC · Member since 2015 · 2 posts · 0 votes
Hey folks,
I have couple questions: I'm new on this and during my initial marketing I found a house (built in 1952, 1196 total sqft, 3b/1b, lot 0.34 acres) in distress (it needs to be rehabbed, new roof, new windows, a couple of foundation problems and right now it is empty), this used to be a house but now the land is ruled as commercial, it is on a busy street in front of a little gas station, and few houses from the same block have started to be used as commercial.
My questions are, how do you start analyzing a deal like this, where an old house is sitting on a commercial land?, how do you run the comps for this situation? where could I search for how much it could be rented (in case, the house is rehabbed as is and try to rent it as little office), or what would you analyze to consider remodeling to create two retail spaces?
hopefully somebody could point me to the right direction, thanks for your help, regards,
First I would check the price against price per square foot land and price per square foot building. Since the property has contrasting zoning/building it has to make sense either as it exists or as a tear down in a worst case scenario. If the property is priced close to other undeveloped lots then I would consider it. If its priced higher as if it were a local residential property I would pass on it.
Leasing to a business is different because the property you described could be used as a dog kennel, contractors yard or used car lot. Or on the other end of the spectrum as a retail business, professional office etc. In the second case the extra lot size hardly matters.
I would then figure the price per square that other empty lots are leasing for. I would also find the lease rate of other commercial retail or office buildings in the immediate area. This should be found through local real estate listings.
Then, I would evaluate the demand for either the use of space or the use of interior office. If the property doesn't make sense being leased as an office or retail based on the price then you had better make sure you can lease it for its use as a land space.
There is a lot of room on these types of deals to make good money if you can create good value for a potential business owner.