Inherited small commercial lot, not sure what to do with it.

Inherited small commercial lot, not sure what to do with it.

Investor · Nashville, TN · Member since 2016 · 15 posts · 1 vote

My father, two sisters and I have recently inherited a vacant small commercial lot (0.23ac) in Tennessee near a growing interstate exit and are not sure how to maximize cash flow with it.  We currently rent it two months out of the year to a fireworks stand at $1500/mo., but that barely covers the annual property taxes.  The property itself is sharing a parking lot with a McDonalds and we have non-compete agreement with them as well, covering food and beverage sales.  We originally wanted to put a Starbucks, but found out they are not a franchise and we would have to "invite" them to lease the lot.  Besides that, we weren't aware of the non-compete agreement so we couldn't do it anyway.  We've thought of a paper or illuminated billboard, but learned that the city limits extend up to the interstate and advertising billboards are not permitted within the limits.  We've considered a small duplex/triplex for leasing to commercial tenants, but I'm thinking the building codes will require a certain number of parking spaces and I don't believe there is enough room to add the required spaces.  Considered a Redbox stand and some others, nothing seems to be the silver bullet. 

Any creative ideas on what we could do with this piece of commercial property?

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Specialist · Victor, NY · Member since 2013 · 823 posts · 844 votes
9y

Could a bank ATM be an option.  We see small pads here advertised for such.  Its essentially a driveway with a curb and the bank puts up a stand alone ATM with a roof....

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  • Investor · Nashville, TN · Member since 2016 · 15 posts · 1 vote
    9y

    It's the "Z" shaped lot, the parking lot being the lower part of the "Z" and the adjacent lot (lower left) is the McDonalds.

  • Clarksville, TN · Member since 2016 · 238 posts · 96 votes
    9y
    Storage place.
  • Investor · Nashville, TN · Member since 2016 · 15 posts · 1 vote
    9y

    Possible, but there's one across the highway and its not exactly a quiet location.  Not sure about people wanting to leave their posessions in a location so highly trafficked by the McDonalds.  Great suggestion!

  • Clarksville, TN · Member since 2016 · 238 posts · 96 votes
    9y
    How about leasing it to a used car dealer?
  • Investor · Nashville, TN · Member since 2016 · 15 posts · 1 vote
    9y

    That might work, but its still somewhat small for that.  It is also awkward in shape... a triangle with one end on the parking one, one on the county highway fence-line, and the other on a cemetery.  

  • Clarksville, TN · Member since 2016 · 238 posts · 96 votes
    9y

    I've seen lots being leased to Storage Shed builders a lot lately.  Anything that will cover the mortgage is good.  

  • Investor · Moseley, VA · Member since 2016 · 49 posts · 28 votes
    9y

    See if the storage lot business across the street would want to lease it from you for RV/vehicle storage?  Gates and gravel would be biggest expense - would ingress and egress be a problem though (i.e. would any entrance have to be through the McD's lot?

  • Investor · Nashville, TN · Member since 2016 · 15 posts · 1 vote
    9y

    @Doug Poff good suggestion.  Only thing is that there is a hotel, McDonalds, and gas station right here so the general feel of the area is commercial.  Yes, an RV/vehicle park could work, but it would definitely change that "feel" and the lot could probably only hold 5 RVs or campers.  Not sure if its big enough for it.  Welcome to my world of head scratching on this one...

  • Investor · Moseley, VA · Member since 2016 · 49 posts · 28 votes
    9y

    This idea probably abrogates the non-compete with McD's - but what do you lose if you breach the non-compete (parking?), and is it formal/legal or informal? I have a similar agreement with one of my professional tenants, but he understands it only legally applies to the parcels that I own as a member of the LLC for the building he actually is in; and only informally (i.e. legally unenforceable) for nearby properties that I am also a member/owner in, though in different partnerships.

    Bottomline, on the informal line, I agreed we will not actively market to his competitors, but if an agent brings one, or we are approached independently, we will consider it.  This agreement also provides good leverage on the lease renewal negotiations with the professional.

    Anyway, for someone in a similar situation but without the non-compete complication, here's a successful idea that I have seen a local entrepreneur do:

    https://www.tripadvisor.com/Restaurant_Review-g609...

    As you can see, there is minimum lot development on your part if you can find a local restaurateur interested in a similar set up.  Where I am, there are also lots of 'trailer BBQ' pop-ups that rent that type of gas-station or hotel corner lots (http://www.drivethrucoffeekiosk.com/). This gent opened this walk-up with a partner, held it for a couple of years until they were established, and then bought or leased a building nearby for their full service restaurant (also in the pix).  They also have a food truck.

    At least a monthly (or weekly?) rent would cover your tax expenses until something else comes up.  

    Other seasonal pop-ups (pumpkin stands for Halloween, Xmas tree stands) would be ideas as well .  If you go that route, you might have to create the opportunity by finding and selling the renter.

    Head scratcher indeed - good luck.

  • Investor · Saint Louis, MO · Member since 2016 · 970 posts · 1k+ votes
    9y

    hustlers club ;P

  • Specialist · Victor, NY · Member since 2013 · 823 posts · 844 votes
    9y
    Originally posted by @Ron Dayley:

    Storage place.

     Too small for storage.

  • Specialist · Victor, NY · Member since 2013 · 823 posts · 844 votes
    9y

    Could a bank ATM be an option.  We see small pads here advertised for such.  Its essentially a driveway with a curb and the bank puts up a stand alone ATM with a roof....

  • Monterey Park, CA · Member since 2014 · 157 posts · 80 votes
    9y

    @Jack Beach

    Just tossing ideas - 

    Is it big enough for a gas station and a convenience store?  Not certain if it will be in conflict with your non-compete and all the local requirement on gas station.

  • Real Estate Agent · Virginia Beach, VA · Member since 2012 · 2k+ posts · 1k+ votes
    9y

    Jiffy Lube?  Car wash?  I also know many small contractors that would love a small storefront with tall warehouse big enough for step vans in back.  1/4 acre might be too small, but might work well.  

  • Investor · Nashville, TN · Member since 2016 · 15 posts · 1 vote
    9y

    @Doug Poff This is great insight.  We are going to review the agreement with an attorney we have in town, possibly might bring that conversation here as well once I get a copy of the agreement itself.  Thanks for these suggestions.  I like the trailer restaraunt ideas alot, and if we can amend the agreement in some way to remove that clause then ideally we want to do a Starbucks or similar.  The location is absolutely pregnant for all interstate traffic and highway traffic to reach the daily-caffeine-fixers out there.  

    @Michael Wagner The ATM option is actually a great idea and we are looking into it now.  We're thinking a drive-through may work as the shape is perfect for it.  I'm going to see about the drive-thru ATM and a RedBox or DVD Now on the backside of the ATM unit.  We've got to check with the city codes department on this, but if we are cleared on this C-4 lot then this is a viable option.  Appreciate your suggestion.

    @Henry J. It's too small for a convenience store and my uncle owns the Exxon location across the street so we want to stay away from competing in the family there. 

    @Lynn McGeein These are good, but too small.  It would have to be a one-bay Jiffy Lube / Valvoline if we did it due to size. 

  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    9y

    .23 acres is super tiny and all of that land is not usable 

    Starbucks would not touch something that small.

    Really not many tenants could fit that space. Is there other land around you could purchase to make your lot bigger? That should open up more tenants that could go there.

    Emissions testing station maybe??

    What about a cell tower?

    Why not sell the extra land for to Mcdonald's for more parking? They won't pay a premium for it but maybe take the money and put into something else. 

  • Investor · Nashville, TN · Member since 2016 · 15 posts · 1 vote
    9y
    Joel Owens the land is still usable, just depends what we use it for. The suggestions mentioned so far are good ones. There is no land we can purchase adjacent to make it larger, unfortunately. McDonald's does not want to purchase the lot, they feel they have adequate parking as is.
  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    9y

    Jack I am a principal commercial broker and retail real estate developer. Go look at the site plans for those national type tenants. .23 acres is really small and they want bigger and it's an odd shape.

    What you can do with it will be limited.

    Might want to try some of the suggestions some have posted and see what happens.

  • Orlando, FL · Member since 2017 · 241 posts · 254 votes
    7y

    Gas station/convenience store. Maybe Pilot would be interested, or WaWa?

  • Specialist · NY · Member since 2016 · 82 posts · 60 votes
    7y

    I’d find out what the zoning is. What’s legally permissible? I’m assuming retail as it’s adjance to a McDonalds. Is there a minimum lot size ? Certain amount of parking spaces needed? What other types of developments are allowed small office. Would drive thur convenice store conform to the non-complete?  in terms of its interm use before developing it...Maybe outdoor storage - yard space etc...

  • Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes
    7y

    Find a use thats legal that the McDonalds would hate , and when they oppose it , tell them to buy the property 

  • Member since 2019 · 60 posts · 28 votes
    7y

    Weekend Garage Sales...  Self contained cubed Ice---  The Tent, Rug salesmen, luggage, Blue Blocker salesmen should love the location.  Small fruit stand, Flower sales, Tree Sales.

  • Member since 2019 · 60 posts · 28 votes
    7y

    In my town a guy put a Retail Detail shop on a tiny wedgie.  Another guy put a auto glass shop on the edge of a Grocery store parking lot.

  • Rental Property Investor · Charlotte, NC · Member since 2019 · 16 posts · 4 votes
    7y

    .23 acres might be too small but some of the smaller oil change guys might take a look at it. They are active in the Carolinas. 

  • Member since 2019 · 1 post · 0 votes
    7y

    A great thing you could look into is either renting it to a construction company or to a company with box trucks... I rented a property to a company that does the logistics for mattress firm. I made a killing off that. Right now looking to talk to a company that does the logistics for amazon. Good luck hope this might help.

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