I am under contract on a property that is currently zoned commercial. It has a 1200 sqft 3 bed 1 bath home on the front side of the property facing the busy highway and the back side of the property is open land where the possibilities are endless. The front of the property sits on a busy highway with 20K+ cars a day going by the property. There are roads on both sides of the property for multiple entry points if needed. The owner of the property ran a antique shop there for the last 15 yrs and is looking to retire.
I will not close on this property for another month. I am seeking advice on the next best step to get the right tenant in the property and at the right price. The area is growing quickly and I feel like it is a great location for a long term investment.
I am also thinking of putting up advertising next to the busy highway and would love to hear your thoughts and any advice you may have on something like that!
thanks a lot!
@Derek Clark I have a few properties like what you describe so I can provide some info but I'm new to them as well so hopefully you'll get some other responses from more experienced commercial investors.
First, on the advertising, this is a great investment but is much harder to get than what you might think. A single billboard on a busy street can make you as much as a tenant with no expenses. The problem? There are very strict regulations on how many and what type of billboards can be put up and what I found was that if it's a good area for a billboard they are usually already there. In my case I had the perfect spot but there was an existing billboard within ? (set by local regulation)feet of it already. You can check this easily by calling one of the big billboard companies and asking. I talked to Lamar.
As for the property itself, I'm a big fan of picking up properties with great commercial potential but with current cash-flow to pay for it while I wait for it to realize it's potential.
Really what you want on a parcel on a busy street is re-development to highest and best use, fast-food, hotel, strip-mall, etc.
To get that you need a good commercial broker. I'd suggest contacting several like Marcus & Millichap, CBRE, and Bull realty and have them come out and tell you what they think should go there.
Likely for that the existing structure is worthless because the best land is the closest to the street so it would need to be demolished.
But if you don't make any headway with a commercial broker, I would rent the existing structure and be patient. Some ideas for that, insurance agent, tax preparer, hair dresser, bridal shop, massage, tattoo. Just look to cover your costs and only sign a 1 year lease. That way if you do get someone interested in the dirt you can terminate quickly.
One last thought. You didn't say how big the parcel is. But some uses need a fairly large contiguous piece of land. So take a look at your neighbors as well and find out if you might be able to buy or option them as well.
For billboards most use the digital led kind now. So if that advertiser stops paying they are immediately deleted from the board with a click of a button on your computer......... : ) They could be re-activated when they pay. LED you can also put a ton of advertisers on there hedging your bets of repayment.
The oldest billboards had one advertiser on there and you had to spend money to take down and replace. Then they went to double sided where you might have the same or different advertiser for both sides.
Next was the flip billboards that turn a few times and had 3 to 4 advertisers on there.
The ordinances on these can get onerous from state,county,city,etc. State is more for main highways. Ted Turner that owned the big media company covered these pretty well in his auto biography book.
The key question is with your land can you get a national or regional tenant that wants the dirt? I am a retail developer, investor, and broker. There are a ton of metrics that go into it. Some operators just want to buy the dirt instead of agreeing to a ground lease, NN, or NNN on it.
@Jeff Kehl appreciate the response. I knew there were regulations but was unsure of where to look to find out what they were. I went through the city and county websites but did not see anything regarding what I needed for advertising on a hwy. I will start with Lamar!
I agree with you also on having a plan to cover the cost of the property. I have 4 other rentals in the area and am very confident it could cash flow if I turned in back to residential. This is my first commercial property so having that plan B to go back to residential was a big plus. I am going to research the commercial opportunities first.
I will research the top commercial brokers in my area and see how they can help. Very helpful, thanks!
@Joel Owens Yes the digital type of billboard is exactly what I have in mind. I love the idea of being able to control the ads/display settings from my PC at home and the fact that you can add as many ads as you want (within reason).
I will definitely look up Ted Turners auto biography.
I am not sure what you mean by buying the dirt, can you give me some more detail on that? Pricing/Terms/etc. Have you had experience doing this? Thanks for you reply!
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